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