« Back

Parker Earns 48 Cents For The Quarter With Improving Trend In Operating Margins

October 15, 2003

Click here to view this release in printable (PDF) format

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.

    (Logo: http://www.newscom.com/cgi-bin/prnh/19990816/PHLOGO )

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

Follow Us

Follow Parker Hannifin on social media:
Follow Parker Hannifin on social media