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CLEVELAND, April 18, 2005 /PRNewswire-FirstCall via COMTEX/ -- Parker Hannifin Corporation (NYSE: PH) today reported fiscal third-quarter income from continuing operations of $142.2 million, or $1.18 per diluted share on sales of $2.14 billion for the period ended March 31, 2005, compared to income from continuing operations of $105.7 million, or 88 cents per diluted share on sales of $1.88 billion in the same period last year. In the current quarter, the company recorded a charge from discontinued operations of $2.8 million, or three cents per diluted share. The charge reflects the ongoing accounting for the sale of the company's Wynn Oil specialty chemicals business in December 2004.
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As previously announced, in the quarter the company recorded six cents per diluted share related to realignment costs, divestiture activities, and tax- related professional fees; and a tax benefit of 10 cents per diluted share.
"We are pleased to report record third quarter sales up 14 percent and strong earnings per share from continuing operations up 34 percent year-over- year. We continue to generate strong cash flow from operations at $517 million for the first nine months of fiscal 2005, up four percent from the same period last year," said Parker Chairman and CEO Don Washkewicz. "Our third quarter performance is primarily the result of our employees' ongoing execution of our Win Strategy, including the recent acquisition of Sporlan and Acadia, which should continue to help Parker reduce future revenue volatility."
Third Quarter Segment Results
In the North American Industrial segment, operating income improved 36 percent to $120.1 million on sales of $925.0 million. The segment benefited from strong demand in the oil and gas, mining, construction, and heavy-duty truck markets.
International Industrial units increased operating income 47 percent to $63.1 million on sales of $623.3 million. The improvements in this segment were largely the result of implementing the company's Win Strategy initiatives.
In the company's Climate & Industrial Controls segment, third-quarter operating income increased 24 percent to $26.5 million on sales of $226.8 million. Despite a softening in the automotive market, the business is benefiting from the successful integration of the Sporlan acquisition and the expected seasonal ramp up in the air conditioning and refrigeration markets.
Aerospace reported an increase in operating income of six percent to $44.0 million on sales of $337.3 million, reflecting increased commercial OEM business.
In the "Other" segment, comprised of Astron metal buildings, operating income was $2.4 million on sales of $29.2 million.
Year-to-Date Results
For the first nine months of fiscal 2005, the company's income from continuing operations increased 81 percent to $386.6 million, or $3.21 per diluted share on sales of $6.0 billion. Income from continuing operations for the first nine months of last year was $213.6 million, or $1.80 cents per diluted share on sales of $5.03 billion. Income from discontinued operations for the first nine months of fiscal 2005 was $56.7 million, or 47 cents per diluted share, which includes profit from operations and the gain on the divestiture of the Wynn Oil specialty chemicals business.
Cash Flow and Inventories
For the first nine months, cash flow from operations was $516.7 million, or 8.6 percent of sales. For the same period last year, cash flow from operations was $495.0 million, or 9.8 percent of sales.
During the quarter, inventories were reduced by $48 million, which includes the effects of currency and acquisitions, and the company's ongoing lean manufacturing efforts.
Outlook
The company raised fiscal 2005 full-year earnings estimates to be between $4.72 and $4.92 per diluted share, which includes 47 cents per diluted share from discontinued operations.
"We are on target to achieve record sales and earnings in fiscal 2005," added Washkewicz. "While we have a few markets experiencing some softness, we are very encouraged by the continued strength in our industrial and aerospace markets.
"Our Win Strategy is a multi-faceted approach for capturing and focusing the creativity of our entire global organization. We are especially pleased with our success in expanding our business into high growth regions, as evidenced by our most recent announcement of entering into a joint venture with Tianjin Tejing Hydraulics Company to produce hydraulic systems in China."
NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal third-quarter results is available to all interested parties via live webcast today at 10:00 a.m. ET, on the company's investor information web site, http://www.phstock.com . To access the call, click on the "Live Webcast" link. From this link, users also may complete a pre-call system test and register for e-mail notification of future events and information available from Parker.
With annual sales approaching $8 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 46 countries around the world. Parker has increased its annual dividends paid to shareholders for 48 consecutive years, among the top five longest-running dividend-increase records in the S&P 500 index. For more information, visit the company's web site at http://www.parker.com , or its investor information site at http://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 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 results. 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; the company's ability to manage costs related to employee retirement and health care benefits and insurance; and global economic factors, including currency exchange rates, difficulties entering new markets and general economic conditions such as inflation and interest rates. The company makes these statements as of the date of this disclosure, and undertakes no obligation to update them.
PARKER HANNIFIN CORPORATION - MARCH 31, 2005
CONSOLIDATED STATEMENT OF INCOME
Three Months Ended Nine months ended
(Unaudited) March 31, March 31,
(Dollars in thousands
except per share amounts) 2005 2004 2005 2004
Net sales $2,141,708 $1,879,057 $6,004,563 $5,034,502
Cost of sales 1,712,884 1,526,297 4,769,640 4,122,981
Gross profit 428,824 352,760 1,234,923 911,521
Selling, general and
administrative
expenses 218,207 195,452 636,187 553,893
Other income
(deductions):
Interest expense (17,116) (17,229) (50,620) (56,247)
Interest and other
(expense), net (1,872) (792) (11,101) (3,188)
(18,988) (18,021) (61,721) (59,435)
Income from continuing
operations before
income taxes 191,629 139,287 537,015 298,193
Income taxes 49,454 33,547 150,454 84,572
Income from continuing
operations 142,175 105,740 386,561 213,621
Discontinued
operations (2,805) 2,108 56,719 6,689
Net income $139,370 $107,848 $443,280 $220,310
Earnings (loss) per share:
Basic earnings per
share from continuing
operations $1.19 $.89 $3.25 $1.82
Discontinued operations (.02) .02 .48 .05
Basic earnings per share $1.17 $.91 $3.73 $1.87
Diluted earnings
per share from
continuing operations $1.18 $.88 $3.21 $1.80
Discontinued operations (.03) .02 .47 .05
Diluted earnings
per share $1.15 $.90 $3.68 $1.85
Average shares
outstanding during
period - Basic 119,173,986 118,242,311 118,787,238 117,545,386
Average shares
outstanding during
period - Diluted 120,769,762 119,637,727 120,534,917 118,803,626
Cash dividends per
common share $.20 $.19 $.58 $.57
Note: Certain prior period amounts have been reclassified to conform to
the current year presentation.
BUSINESS SEGMENT INFORMATION BY INDUSTRY
(Unaudited) Three Months Ended Nine months ended
March 31, March 31,
(Dollars in thousands) 2005 2004 2005 2004
Net sales
Industrial:
North America $924,975 $815,239 $2,576,556 $2,168,428
International 623,343 541,634 1,755,537 1,404,903
Aerospace 337,314 314,651 995,409 889,074
Climate & Industrial
Controls 226,831 181,172 568,807 481,820
Other 29,245 26,361 108,254 90,277
Total $2,141,708 $1,879,057 $6,004,563 $5,034,502
Segment operating income
Industrial:
North America $120,133 $88,605 $339,804 $180,487
International 63,079 42,857 191,167 103,808
Aerospace 43,945 41,638 144,779 113,960
Climate & Industrial
Controls 26,513 21,432 51,241 49,405
Other 2,379 (409) 13,896 2,749
Total segment operating
income $256,049 $194,123 $740,887 $450,409
Corporate general and
administrative expenses 23,447 25,435 79,418 73,441
Income from continuing
operations before interest
expense and other 232,602 168,688 661,469 376,968
Interest expense 17,116 17,229 50,620 56,247
Other expense 23,857 12,172 73,834 22,528
Income from continuing
operations before income
taxes $191,629 $139,287 $537,015 $298,193
Note: Certain prior period amounts have been reclassified to conform to
the current year presentation.
CONSOLIDATED BALANCE SHEET
(Unaudited)
(Dollars in thousands) March 31, 2005 2004
Assets
Current assets:
Cash and cash equivalents $104,284 $169,956
Accounts receivable, net 1,283,675 1,163,145
Inventories 1,072,248 970,880
Prepaid expenses 42,466 36,952
Deferred income taxes 108,384 107,000
Total current assets 2,611,057 2,447,933
Plant and equipment, net 1,620,928 1,622,954
Goodwill 1,481,185 1,218,130
Intangible assets, net 199,349 58,458
Other assets 842,906 808,966
Net assets of discontinued operations 53,921
Total assets $6,755,425 $6,210,362
Liabilities and shareholders' equity
Current liabilities:
Notes payable $18,098 $165,448
Accounts payable 533,674 493,454
Accrued liabilities 567,932 515,526
Accrued domestic and foreign taxes 123,518 137,528
Total current liabilities 1,243,222 1,311,956
Long-term debt 966,814 968,326
Pensions and other postretirement benefits 825,045 955,201
Deferred income taxes 75,911 21,579
Other liabilities 183,382 162,636
Shareholders' equity 3,461,051 2,790,664
Total liabilities and shareholders' equity $6,755,425 $6,210,362
Note: Certain prior period amounts have been reclassified to conform to
the current year presentation.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) Nine months ended March 31,
(Dollars in thousands) 2005 2004
Cash flows from operating activities:
Net income $443,280 $220,310
Net (income) from discontinued operations (56,719) (6,689)
Depreciation and amortization 197,284 188,876
Net change in receivables,
inventories, and trade payables (63,218) 23,760
Net change in other assets and liabilities (2,024) 98,856
Other, net (1,942) (30,114)
Net cash provided by operating activities 516,661 494,999
Cash flows from investing activities:
Acquisitions (net of cash of $4,653
in 2005 and $63,054 in 2004) (530,901) (201,101)
Capital expenditures (112,978) (101,715)
Proceeds from sale of business 120,000 -
Other, net 27,476 27,134
Net cash (used in) investing activities (496,403) (275,682)
Cash flows from financing activities:
Net proceeds from common share activity 5,946 42,443
Net proceeds (payments of) debt (21,175) (277,865)
Dividends (68,880) (66,845)
Net cash (used in) financing activities (84,109) (302,267)
Net cash (used in) provided by
discontinued operations (19,004) 8,735
Effect of exchange rate changes on cash 3,292 (1,679)
Net (decrease) in cash and cash equivalents (79,563) (75,894)
Cash and cash equivalents at
beginning of period 183,847 245,850
Cash and cash equivalents at end of period $104,284 $169,956
Note: Certain prior period amounts have been reclassified to conform to
the current year presentation.
SOURCE Parker Hannifin Corporation
Media, Jennifer Eaton, Corp. Communications, +1-216-896-2895, or after hours, +1-216-407-6165, or jeaton@parker.com, or Financial Analysts, Pamela Huggins, VP & Treasurer, +1-216-896-2240, or phuggins@parker.com , both of Parker Hannifin Corporation
