CLEVELAND, Oct. 16 /PRNewswire/ -- Parker Hannifin Corporation (NYSE: PH) today reported first-quarter net income for the period ended September 30, 2001 of $60.6 million, or 52 cents per diluted share, on sales of $1.48 billion. Net income for the same period last year was $125 million, or $1.09 per share, which included a net benefit from non-recurring items of 25 cents. The company's adoption this year of FAS 142, which eliminates goodwill amortization, also affects last year's quarterly comparison by 11 cents per share, making the "apples-to-apples" comparison 52 cents for this quarter, versus 95 cents in fiscal year 2001. Without the contribution of acquisitions and businesses previously held for sale, revenues in the company's base business were down by 11.4 percent, reflecting significantly lower volume, especially in the North American Industrial segment.
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"We've reduced production levels and stepped up consolidation activities, but excess operating capacity continues to weigh on our profitability," said Parker CEO Don Washkewicz. "In the aftermath of September 11th, we want our customers and shareholders to know Parker's fundamentals remain sound. We're getting leaner and strengthening our systems foothold with strategic acquisitions that absolutely are achieving earnings accretion. And the product innovations noted in our latest annual report are being very well received by our customers."
The company's Aerospace segment, which comprises 21 percent of revenues, achieved double-digit increases in sales and operating income in the quarter, as demand held prior to September 11 and the group benefited from previously implemented lean initiatives. The Aerospace operating margin was 18.2 percent for the period.
Against last year's tough comparisons, quarterly sales and operating income in the company's North American and International Industrial businesses were lower. Sales and operating income fell in all of the North American Industrial businesses, most sharply in the company's higher-margin technology markets, including semiconductors and telecommunications. As a result, the return on sales in the North American Industrial segment dropped to 6.2 percent. And, with slowing sales and ongoing realignment in the International Industrial business, that operating margin was 6.7 percent.
In the "Other" segment, which includes Climate & Industrial Controls and the addition of Astron and Wynn Oil since last year, the return on sales was 7.9 percent.
Outlook
"For our near-term performance, it's difficult to predict what the net effect of the current economic climate and unsettled world events will be, so we are managing very tightly," said Washkewicz. "The commercial aerospace sector is facing severe challenges that will most certainly affect some sixty percent of our Aerospace business. Our industrial side will just as certainly be buoyed by interest-rate relief, although we won't see the effects of that soon enough to change our current-year outlook."
For the next quarter, company officials anticipate continued weakness in industrial and other markets, as well as a precipitous drop in commercial aerospace following the events of September 11th. Based on these conditions, earnings in the second quarter of fiscal year 2002 are expected to be between 30 and 42 cents per share. And, with no immediate evidence of an upturn in sight, earnings for the full year are expected to range from $2.20 to $2.50 per share.
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 of $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 45,000 people in 45 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 .
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 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 in industrial and aerospace markets, including any adverse effects related to the events of September 11, 2001, and the company's ability to achieve anticipated benefits associated with realignment and acquisition-integration activities. Among 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; threats associated with terrorism; and global economic factors, including currency exchange rates and general economic conditions such as interest rates. In each quarterly earnings report, the company states a range of expected earnings per share for the succeeding quarter and full fiscal year, 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, 2001
CONSOLIDATED STATEMENT OF INCOME
Three Months Ended September 30,
(Dollars in thousands except per
share amounts) 2001 2000
Net sales $1,475,867 $1,485,131
Cost of sales 1,197,625 1,159,029
Gross profit 278,242 326,102
Selling, general and administrative
expenses 165,415 162,441
Other income (deductions):
Interest expense (20,454) (21,168)
Interest and other income, net 117 51,377
(20,337) 30,209
Income before income taxes 92,490 193,870
Income taxes 31,909 68,824
Net income $60,581 $125,046
Earnings per share:
Basic earnings per share $.53 $1.10
Diluted earnings per share $.52 $1.09
Average shares outstanding during
period - Basic 115,166,914 113,929,685
Average shares outstanding during
period - Diluted 115,752,698 114,561,981
Cash dividends per common share $.18 $.17
Note: Selling, general and administrative expenses for the three months
ended September 30, 2000 includes $14,709 of goodwill amortization
($12,641 after tax or $.11 per share).
PRO FORMA RESULTS EXCLUDING GOODWILL AMORTIZATION
Three Months Ended September 30,
(Dollars in thousands except per
share amounts) 2001 2000
Reported net income $60,581 $125,046
Add back goodwill amortization 12,641
Adjusted net income $60,581 $137,687
Earnings per share:
Reported basic earnings per share $.53 $1.10
Goodwill amortization .11
Adjusted basic earnings per share $.53 $1.21
Reported diluted earnings per share $.52 $1.09
Goodwill amortization .11
Adjusted diluted earnings per share $.52 $1.20
BUSINESS SEGMENT INFORMATION BY INDUSTRY
Three Months Ended September 30,
(Dollars in thousands) 2001 2000
Net sales
Industrial:
North America $650,840 $770,105
International 296,291 308,084
Aerospace 312,500 270,388
Other 216,236 136,554
Total $1,475,867 $1,485,131
Segment operating income
Industrial:
North America $40,465 $106,939
International 19,828 24,264
Aerospace 56,892 44,276
Other 16,992 11,865
Total segment operating income 134,177 187,344
Corporate general and administrative
expenses 16,939 17,384
Income from operations before
interest expense and other 117,238 169,960
Interest expense 20,454 21,168
Other expense (income) 4,294 (45,078)
Income before income taxes $92,490 $193,870
Note: Income before income taxes for the three months ended September 30,
2000 includes $14,709 of goodwill amortization ($6,691 in Industrial North
America; $2,925 in Industrial International; $1,860 in Aerospace; $1,088
in Other; and $2,145 in Other expense (income)).
BUSINESS SEGMENT INFORMATION BY INDUSTRY
EXCLUDING GOODWILL AMORTIZATION
Three Months Ended September 30,
(Dollars in thousands) 2001 2000
Net sales
Industrial:
North America $650,840 $770,105
International 296,291 308,084
Aerospace 312,500 270,388
Other 216,236 136,554
Total $1,475,867 $1,485,131
Segment operating income
Industrial:
North America $40,465 $113,630
International 19,828 27,189
Aerospace 56,892 46,136
Other 16,992 12,953
Total segment operating income 134,177 199,908
Corporate general and administrative
expenses 16,939 17,384
Income from operations before
interest expense and other 117,238 182,524
Interest expense 20,454 21,168
Other expense (income) 4,294 (47,223)
Income before income taxes $92,490 $208,579
Note: Amounts for the three months ended September 30, 2000 eliminates
goodwill amortization, reflecting the Company's early adoption of FAS 142.
It is intended to assist investors in making year-over-year comparisons
with the three months ended September 30, 2001.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands) September 30,
2001 2000
Assets
Current assets:
Cash and cash equivalents $35,384 $55,190
Restricted investments 86,992
Accounts receivable, net 920,958 953,904
Inventories 1,047,713 1,027,213
Prepaid expenses 43,580 34,741
Deferred income taxes 109,376 86,754
Assets held for sale 241,667
Total current assets 2,244,003 2,399,469
Plant and equipment, net 1,600,157 1,435,642
Excess cost of investments over net
assets acquired 1,083,467 862,892
Other assets 568,348 631,723
Total assets $5,495,975 $5,329,726
Liabilities and shareholders' equity
Current liabilities:
Notes payable $583,428 $596,109
Accounts payable 380,009 360,787
Accrued liabilities 452,821 419,789
Accrued domestic and foreign taxes 81,315 109,832
Total current liabilities 1,497,573 1,486,517
Long-term debt 874,228 953,434
Pensions and other postretirement
benefits 206,427 303,909
Deferred income taxes 144,243 111,401
Other liabilities 192,866 80,295
Shareholders' equity 2,580,638 2,394,170
Total liabilities and shareholders'
equity $5,495,975 $5,329,726
CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended September 30,
(Dollars in thousands) 2001 2000
Cash flows from operating activities:
Net income $60,581 $125,046
Depreciation and amortization 61,763 67,432
Net change in receivables,
inventories, and trade payables 60,965 (124,443)
Net change in other assets and
liabilities 27,300 (12,921)
Other, net (7,512) (35,150)
Net cash provided by operating
activities 203,097 19,964
Cash flows from investing activities:
Acquisitions (less cash acquired of
$5,240 in 2000) (135,545) (485,923)
Capital expenditures (48,798) (66,083)
Other, net (20,210) 71,958
Net cash used in investing activities (204,553) (480,048)
Cash flows from financing activities:
Net (payments for) proceeds from
common share activity (149) 1,725
Net proceeds from debt 35,843 466,007
Dividends (20,731) (19,361)
Net cash provided by financing activities 14,963 448,371
Effect of exchange rate changes on cash (1,688) (1,557)
Net increase (decrease) in cash and
cash equivalents 11,819 (13,270)
Cash and cash equivalents at
beginning of period 23,565 68,460
Cash and cash equivalents at end of period $35,384 $55,190
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, Treasurer, +1-216-896-2130, or tpistell@parker.com, both of Parker Hannifin Corporation/
