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CLEVELAND, Oct 15, 2003 /PRNewswire-FirstCall via COMTEX/ -- Parker Hannifin Corporation (NYSE: PH) today reported net income for the fiscal first quarter ended September 30, 2003 of $56.7 million, or 48 cents per diluted share, compared with last year's quarterly net income of $61 million, or 52 cents per diluted share. Quarterly sales remained flat at $1.59 billion, reflecting a favorable currency effect which offset lower unit volume. Realignment costs reduced earnings by four cents per diluted share this year, and one cent per diluted share last year.
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Operating Results
With no recovery in industrial, mobile and aerospace demand, few of the company's operating units recorded year-over-year growth, yet all marked sequential improvements in operating margin.
"Our hard work is steadily paying off," said Parker CEO Don Washkewicz. "We have yet to see a sustained positive trend in order rates. We're implementing the Win Strategy throughout the company to build long-term earning power and enhanced cash flows from operations. Division by division, it is working."
In the North American Industrial units, first-quarter operating income was $46.6 million on $685.3 million in sales, for an operating margin of 6.8 percent.
In the International Industrial businesses, first-quarter operating income was $31.3 million on sales of $422.1 million, for an operating margin of 7.4 percent.
In the company's Climate & Industrial Controls unit (previously included in the "Other" category), first-quarter operating income was $17.5 million on sales of $156 million, for an operating margin of 11.2 percent.
Parker Aerospace generated first-quarter operating income of $34 million on sales of $266.8 million, for an operating margin of 12.7 percent.
In the "Other" segment, comprised of Wynn Specialty Chemicals and Astron metal buildings, quarterly operating income was $5.7 million on $56.7 million in sales, for an operating margin of 10.1 percent.
The company posted another strong quarter of cash generated from operations. "We're extremely focused on consistent margin improvement and sustaining robust cash flow to invest in growth. This year, we're using new incentives to strengthen organic growth in high potential markets, which we believe will advance the quality of our earnings in the future," said Washkewicz.
Outlook
Noting no change in its fiscal-year 2004 outlook, the company said it expects sales to grow marginally, while further improvement in year-over-year operating margins is expected for every segment except Aerospace. For the purpose of planning, Parker assumed no economic recovery during the year, but noted that the company's international results were bolstered by increasing demand in Asia and Latin America.
In addition to the information provided herein, Parker advises shareholders to note order trends, for which the company makes a disclosure several business days after the conclusion of each month. This information is available on the company's investor information web site, at www.phstock.com .
With annual sales exceeding $6 billion, Parker Hannifin is the world's leading diversified manufacturer of motion and control technologies and systems, providing precision-engineered solutions for a wide variety of commercial, mobile, industrial and aerospace markets. The company employs more than 46,000 people in 44 countries around the world. For more information, visit the company's web site at www.parker.com, or its investor information site at www.phstock.com .
NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal first-quarter results is available to all interested parties via live webcast at 10 a.m. ET, on the company's investor information web site, www.phstock.com . To access the call, click on the "Live Webcast" link. From this link, users may also complete a pre-call system test and register for e-mail notification of future events and information available from Parker.
Forward-looking statements contained in this and other written and oral reports are made based on known events and circumstances at the time of release, and as such, are subject in the future to unforeseen uncertainties and risks. All statements regarding future performance, earnings projections, events or developments are forward-looking statements. It is possible that the future performance and earnings projections of the company and individual segments may differ materially from current expectations, depending on economic conditions within both its industrial and aerospace markets, and the company's ability to achieve anticipated benefits associated with announced realignment activities, strategic initiatives to improve operating margins, and growth initiatives. A change in economic conditions in individual markets may have a particularly volatile effect on segment projections. Among the other factors which may affect future performance are: changes in business relationships with and purchases by or from major customers or suppliers, including delays or cancellations in shipments; uncertainties surrounding timing, successful completion or integration of acquisitions; threats associated with and efforts to combat terrorism; competitive market conditions and resulting effects on sales and pricing; increases in raw-material costs that cannot be recovered in product pricing; and global economic factors, including currency exchange rates, difficulties entering new markets and general economic conditions such as interest rates. The company makes these statements as of the date of this disclosure, and undertakes no obligation to update them.
PARKER HANNIFIN CORPORATION - SEPTEMBER 30, 2003
CONSOLIDATED STATEMENT OF INCOME
Three Months Ended September 30,
(Dollars in thousands except per
share amounts) 2003 2002
Net sales $1,586,918 $1,585,904
Cost of sales 1,298,776 1,299,890
Gross profit 288,142 286,014
Selling, general and administrative
expenses 180,204 176,255
Other income (deductions):
Interest expense (21,780) (19,694)
Interest and other (expense)
income, net (1,545) 1,626
(23,325) (18,068)
Income before income taxes 84,613 91,691
Income taxes 27,922 30,716
Net income $56,691 $60,975
Earnings per share:
Basic earnings per share $.48 $.52
Diluted earnings per share $.48 $.52
Average shares outstanding during
period - Basic 116,903,693 116,232,630
Average shares outstanding during
period - Diluted 117,769,743 116,607,735
Cash dividends per common share $.19 $.18
BUSINESS SEGMENT INFORMATION BY INDUSTRY
Three Months Ended September 30,
(Dollars in thousands) 2003 2002
Net sales
Industrial:
North America $685,341 $727,577
International 422,058 365,659
Aerospace 266,833 277,321
Climate & Industrial Controls 155,950 164,738
Other 56,736 50,609
Total $1,586,918 $1,585,904
Segment operating income
Industrial:
North America $46,607 $51,045
International 31,299 26,646
Aerospace 33,955 42,533
Climate & Industrial Controls 17,514 15,012
Other 5,734 3,832
Total segment operating income $135,109 $139,068
Corporate general and administrative
expenses 22,962 20,098
Income from operations before
interest expense and other 112,147 118,970
Interest expense 21,780 19,694
Other expense 5,754 7,585
Income before income taxes $84,613 $91,691
Note: Certain prior period amounts have been reclassified to conform to
the current year presentation.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands) September 30, 2003 2002
Assets
Current assets:
Cash and cash equivalents $205,409 $45,730
Accounts receivable, net 967,866 945,861
Inventories 991,306 1,046,342
Prepaid expenses 38,876 44,998
Deferred income taxes 102,498 80,386
Total current assets 2,305,955 2,163,317
Plant and equipment, net 1,632,563 1,681,958
Goodwill 1,113,603 1,063,925
Intangible assets, net 57,765 58,487
Other assets 772,706 658,730
Total assets $5,882,592 $5,626,417
Liabilities and shareholders' equity
Current liabilities:
Notes payable $289,041 $453,130
Accounts payable 415,380 413,912
Accrued liabilities 466,453 418,725
Accrued domestic and foreign taxes 85,489 51,372
Total current liabilities 1,256,363 1,337,139
Long-term debt 956,356 955,312
Pensions and other postretirement
benefits 922,768 502,289
Deferred income taxes 16,975 89,603
Other liabilities 142,269 128,916
Shareholders' equity 2,587,861 2,613,158
Total liabilities and shareholders'
equity $5,882,592 $5,626,417
CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended September 30,
(Dollars in thousands) 2003 2002
Cash flows from operating activities:
Net income $56,691 $60,975
Depreciation and amortization 63,379 64,073
Net change in receivables,
inventories, and trade payables 26,469 26,822
Net change in other assets and
liabilities 2,984 (22,282)
Other, net (5,491) 15,565
Net cash provided by operating
activities 144,032 145,153
Cash flows from investing activities:
Acquisitions (less cash acquired of
$8 in 2002) - (1,987)
Capital expenditures (36,799) (38,614)
Other, net 5,222 4,933
Net cash (used in) investing
activities (31,577) (35,668)
Cash flows from financing activities:
Net proceeds from common share
activity 13,668 845
Net (payments of) debt (145,647) (90,214)
Dividends (22,131) (20,842)
Net cash (used in) financing
activities (154,110) (110,211)
Effect of exchange rate changes on cash 1,214 72
Net decrease in cash and cash
equivalents (40,441) (654)
Cash and cash equivalents at
beginning of period 245,850 46,384
Cash and cash equivalents at end of
period $205,409 $45,730
BUSINESS SEGMENT INFORMATION BY INDUSTRY
Restated for New Segment Presentation
Fiscal Year 2003
(Dollars in thousands) 09/30/2002 12/31/2002
Net sales
Industrial:
North America $727,577 $669,905
International 365,659 373,921
Aerospace 277,321 275,400
Climate & Industrial Controls 164,738 144,403
Other 50,609 53,572
Total $1,585,904 $1,517,201
Segment operating income
Industrial:
North America $51,045 $27,423
International 26,646 22,321
Aerospace 42,533 42,651
Climate & Industrial Controls 15,012 9,965
Other 3,832 2,480
Total segment operating income 139,068 104,840
Corporate general and administrative
expenses 20,098 19,395
Income from operations before
interest expense and other 118,970 85,445
Interest expense 19,694 19,356
Other expense 7,585 8,043
Income before income taxes $91,691 $58,046
The above schedule restates fiscal 2003 segment results to reflect the
Climate & Industrial Controls business as a separate segment.
The Climate & Industrial Controls business was previously included in the
Other Segment.
BUSINESS SEGMENT INFORMATION BY INDUSTRY
Restated for New Segment Presentation
Fiscal Year 2003
Total
(Dollars in thousands) 03/31/2003 06/30/2003 FY2003
Net sales
Industrial:
North America $727,060 $716,086 $2,840,628
International 416,434 428,429 1,584,443
Aerospace 280,020 276,825 1,109,566
Climate & Industrial Controls 175,132 181,356 665,629
Other 48,198 57,965 210,344
Total $1,646,844 $1,660,661 $6,410,610
Segment operating income
Industrial:
North America $42,166 $34,624 $155,258
International 23,852 23,482 96,301
Aerospace 38,140 33,971 157,295
Climate & Industrial Controls 19,409 19,055 63,441
Other 630 4,642 11,584
Total segment operating income 124,197 115,774 483,879
Corporate general and administrative
expenses 22,662 17,992 80,147
Income from operations before interest
expense and other 101,535 97,782 403,732
Interest expense 20,349 22,162 81,561
Other expense 7,230 1,931 24,789
Income before income taxes $73,956 $73,689 $297,382
The above schedule restates fiscal 2003 segment results to reflect the
Climate & Industrial Controls business as a separate segment.
The Climate & Industrial Controls business was previously included in the
Other Segment.
SOURCE Parker Hannifin Corporation
Media, Lorrie Paul Crum, VP - Corp. Communications, +1-216-896-2750, or +1-330-666-4196, or lcrum@parker.com, or Financial Analysts, Pamela Huggins, VP & Treasurer, +1-216-896-2240, or phuggins@parker.com, both of Parker Hannifin Corporation
http://www.phstock.com
