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CLEVELAND, Oct 15, 2002 /PRNewswire-FirstCall via COMTEX/ -- Parker Hannifin Corporation (NYSE: PH) today reported first-quarter net income for the period ended September 30, 2002 of $61 million, or 52 cents per diluted share, on record first-quarter sales of $1.59 billion. Last year, the company earned $60.6 million, or 52 cents per diluted share, on sales of $1.48 billion.
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"We made good progress this quarter streamlining the company, and we have the bulk of realignment behind us," said Parker President and CEO Don Washkewicz. "The economic environment remains volatile, but most encouraging is the fact that we realized some tangible benefits this quarter from the operating improvements our divisions have been working on for the past year. As the consistent performance of Aerospace suggests, we know that the extension of our lean enterprise and supply-chain strategies will create greater value in our industrial businesses going forward."
"We remain in excellent condition financially, generating strong cash flow, and tightly controlling our costs and leverage position," Washkewicz said.
The Aerospace segment, which is 19 percent of annual revenues, had lower sales and operating income in the quarter primarily due to a marked decline in commercial markets, but partially offset by an increase in military business. This segment posted an operating margin of 15.3 percent, reflecting the group's lean-enterprise discipline.
The International Industrial businesses increased sales and operating income during the quarter, primarily reflecting higher volume. As a result, International Industrial operating margin improved to 7.3 percent.
Quarterly sales and operating income in the company's North American Industrial businesses improved with strengthening mobile-equipment sales, especially in the construction and agriculture markets. North American Industrial operating margin increased to 7.0 percent.
In the "Other" segment, which includes Climate & Industrial Controls and Specialty Chemicals, the operating margin improved to 8.8 percent, despite relatively flat sales.
Outlook
The company noted that it sees no definitive signs of economic recovery in recent order trends. For the fiscal second quarter ending December 31, earnings are expected to range from 33 to 43 cents per share before business- realignment costs. Reflecting continued economic volatility, the company projects full-year earnings between $2.20 and $2.50 per share, not including previously announced realignment costs. These actions are expected to include severance, operating realignments, plant closures and consolidations in the company's industrial segment.
In addition to providing earnings estimates, 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 48,000 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:
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 company's future performance and earnings projections 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 and strategic initiatives to improve operating margins. 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; 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. In each quarterly earnings report, the company intends to provide a range stating expected earnings per share for the succeeding quarter and full fiscal year, reflecting these ranges as estimates of diluted earnings per share before unusual items. The company makes these statements as of the date of this disclosure, and while it undertakes no obligation to update them, reserves the right to update its earnings projections for any reason during the quarter, including the occurrence of material events.
PARKER HANNIFIN CORPORATION - SEPTEMBER 30, 2002 CONSOLIDATED STATEMENT OF INCOME (Unaudited) Three Months Ended September 30, (Dollars in thousands except per share amounts) 2002 2001 Net sales $1,585,904 $1,475,867 Cost of sales 1,299,890 1,197,625 Gross profit 286,014 278,242 Selling, general and administrative expenses 176,255 165,415 Other income (deductions): Interest expense (19,694) (20,454) Interest and other income, net 1,626 117 (18,068) (20,337) Income before income taxes 91,691 92,490 Income taxes 30,716 31,909 Net income $60,975 $60,581 Earnings per share: Basic earnings per share $.52 $.53 Diluted earnings per share $.52 $.52 Average shares outstanding during period - Basic 116,232,630 115,166,914 Average shares outstanding during period - Diluted 116,607,735 115,752,698 Cash dividends per common share $.18 $.18 BUSINESS SEGMENT INFORMATION BY INDUSTRY (Unaudited) Three Months Ended September 30, (Dollars in thousands) 2002 2001 Net sales Industrial: North America $727,577 $650,840 International 365,659 296,291 Aerospace 277,321 312,500 Other 215,347 216,236 Total $1,585,904 $1,475,867 Segment operating income Industrial: North America $51,045 $40,465 International 26,646 19,828 Aerospace 42,533 56,892 Other 18,844 16,992 Total segment operating income 139,068 134,177 Corporate general and administrative expenses 20,098 16,939 Income from operations before interest expense and other 118,970 117,238 Interest expense 19,694 20,454 Other expense 7,585 4,294 Income before income taxes $91,691 $92,490 CONSOLIDATED BALANCE SHEET (Unaudited) (Dollars in thousands) September 30, 2002 2001 Assets Current assets: Cash and cash equivalents $45,730 $35,384 Restricted investments 86,992 Accounts receivable, net 945,861 920,958 Inventories 1,046,342 1,047,713 Prepaid expenses 44,998 43,580 Deferred income taxes 80,386 109,376 Total current assets 2,163,317 2,244,003 Plant and equipment, net 1,681,958 1,600,157 Goodwill 1,063,925 1,083,467 Intangible assets, net 58,487 17,492 Other assets 658,730 550,856 Total assets $5,626,417 $5,495,975 Liabilities and shareholders' equity Current liabilities: Notes payable $453,130 $583,428 Accounts payable 413,912 380,009 Accrued liabilities 418,725 452,821 Accrued domestic and foreign taxes 51,372 81,315 Total current liabilities 1,337,139 1,497,573 Long-term debt 955,312 874,228 Pensions and other postretirement benefits 502,289 206,427 Deferred income taxes 89,603 144,243 Other liabilities 128,916 192,866 Shareholders' equity 2,613,158 2,580,638 Total liabilities and shareholders' equity $5,626,417 $5,495,975 CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) Three Months Ended September 30, (Dollars in thousands) 2002 2001 Cash flows from operating activities: Net income $60,975 $60,581 Depreciation and amortization 64,073 61,763 Net change in receivables, inventories, and trade payables 26,822 60,965 Net change in other assets and liabilities (22,282) 27,300 Other, net 15,565 (7,512) Net cash provided by operating activities 145,153 203,097 Cash flows from investing activities: Acquisitions (less cash acquired of $8 in 2002) (1,987) (135,545) Capital expenditures (38,614) (59,296) Other, net 4,933 (9,712) Net cash used in investing activities (35,668) (204,553) Cash flows from financing activities: Net proceeds from (payments for) common share activity 845 (149) Net (payments of) proceeds from debt (90,214) 35,843 Dividends (20,842) (20,731) Net cash (used in) provided by financing activities (110,211) 14,963 Effect of exchange rate changes on cash 72 (1,688) Net (decrease) increase in cash and cash equivalents (654) 11,819 Cash and cash equivalents at beginning of period 46,384 23,565 Cash and cash equivalents at end of period $45,730 $35,384
SOURCE Parker Hannifin Corporation
CONTACT: Media, Lorrie Paul Crum, VP - Corp. Communications, +1-216-896-2750, or lcrum@parker.com, or Financial Analysts, Timothy K. Pistell, Vice President and Treasurer, +1-216-896-2130, or tpistell@parker.com, both of Parker Hannifin Corporation