CLEVELAND, Jan. 18 /PRNewswire/ -- Parker Hannifin Corporation (NYSE: PH) today reported an 18-percent increase in second-quarter net income for the period ended December 31, 1999. The company earned $75.0 million, or 68 cents per diluted share, on sales of $1.24 billion, compared with net income of $63.5 million, or 58 cents per diluted share, earned on sales of $1.20 billion in the prior year.
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The 3.4-percent increase in sales marks an overall upturn in the company's North American Industrial business, with the semiconductor and telecommunications markets leading the trend. Aerospace sales were relatively flat, which was better than expected in light of a downturn in the original-equipment market for large aircraft. In the International Industrial segment, the effect of foreign currency rates more than offset higher volume achieved by Parker's business units in the Asia-Pacific region.
The North American Industrial segment posted a 30-percent increase in operating income, driven by higher sales volume. Operating income in the International Industrial segment was up slightly, while Aerospace recorded a 12-percent decrease, reflecting the volume and the mix of original-equipment programs, as well as lower capacity utilization.
Parker Chairman and CEO Duane Collins said, "Industrial activity in North America is making a nice recovery, and we are pleased with the strong income improvement our businesses have achieved. Looking ahead at our order activity, we also are encouraged at the signs of life we're seeing in our international industrial markets."
"This quarter's results bode well for us to achieve our sales and earnings objectives for the year," Collins said. "Casting aside a negative currency effect, we are on plan, and looking forward to further growth opportunities in light of our announcement of our merger agreement with Commercial Intertech."
Parker first-half sales for fiscal 2000 were $2.48 billion, compared with $2.42 billion in the prior year period. First-half net income was $148.6 million or $1.35 per diluted share compared with $141.6 million or $1.29 per share. The increase in the current year first-half results reflects the strong performance by the North American Industrial operations partially offset by realignment costs recorded in the first quarter in the International and Aerospace segments.
The company recorded $213 million in cash from operations in the first half, resulting in reduced debt and interest expense. For the same period last year, cash from operations was $123 million. As the company has said before, it is in an excellent position to invest that cash in product development and acquisition opportunities in its core markets.
"The second half is when we'll realize sales from the terrific momentum we've seen in orders," said Collins. "We're pleased to note North American industrials are leading the positive order trend, and also that European orders are showing steady improvement." Collins said that the long-term outlook for Aerospace remains positive. "Even as large aircraft builds decline, demand for regional and business jets is strong, and we've won some great system-business on these planes. And for Parker, that's a more profitable piece of the original-equipment market."
With nearly $5 billion in annual sales, Parker Hannifin Corporation is the world's leading diversified manufacturer of motion and control technologies, providing systematic, precision-engineered solutions for a wide variety of commercial, industrial and aerospace markets. For more information, visit the company's web site at www.parker.com .
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, events or developments are forward-looking statements. It is possible that the company's future performance may differ materially from current expectations expressed in these forward-looking statements, due to a variety of factors such as changes in: business relationships with and purchases by or from major customers or suppliers; competitive market conditions and resulting effects on sales and pricing; increases in raw-material costs which cannot be recovered in product pricing; and global economic factors, including currency exchange rates and difficulties entering new markets.
PARKER HANNIFIN CORPORATION - DECEMBER 31, 1999
CONSOLIDATED STATEMENT OF INCOME
Three Months Ended Six Months Ended (Dollars in thousands December 31, December 31, except per share 1999 1998 1999 1998 amounts) Net sales $1,239,207 $1,199,021 $2,481,500 $2,417,745 Cost of sales 971,298 943,167 1,947,919 1,890,474 Gross profit 267,909 255,854 533,581 527,271 Selling, general and administrative expenses 140,157 141,370 278,305 275,528 Income from operations 127,752 114,484 255,276 251,743 Other income (deductions): Interest expense (14,028) (17,341) (28,571) (33,416) Interest and other income, net 724 (333) 100 (406) (13,304) (17,674) (28,471) (33,822) Income before income taxes 114,448 96,810 226,805 217,921 Income taxes 39,485 33,278 78,248 76,272 Net income $74,963 $63,532 $148,557 $141,649 Earnings per share: Basic earnings per share $.69 $.59 $1.36 $1.30 Diluted earnings per share $.68 $.58 $1.35 $1.29 Average shares outstanding during period - Basic 109,188,711 108,541,603 109,129,000 108,953,828 Average shares outstanding during period - Diluted 110,205,954 109,422,212 110,150,338 109,775,114 Cash dividends per common share $.17 $.15 $.34 $.30 BUSINESS SEGMENT INFORMATION BY INDUSTRY (Unaudited) Three Months Ended Six Months Ended (Dollars in thousands) December 31, December 31, 1999 1998 1999 1998 Net sales Industrial: North America $658,542 $603,874 $1,326,211 $1,225,469 International 303,918 316,902 602,381 632,132 Aerospace 276,747 278,245 552,908 560,144 Total $1,239,207 $1,199,021 $2,481,500 $2,417,745 Segment operating income Industrial: North America $87,200 $67,170 $180,883 $149,325 International 21,787 21,315 32,999 48,137 Aerospace 36,939 41,937 71,987 85,776 Total segment operating income 145,926 130,422 285,869 283,238 Corporate general and administrative expenses 14,087 15,337 28,200 27,632 Income from operations before interest expense and other 131,839 115,085 257,669 255,606 Interest expense 14,028 17,341 28,571 33,416 Other 3,363 934 2,293 4,269 Income before income taxes $114,448 $96,810 $226,805 $217,921 CONSOLIDATED BALANCE SHEET Unaudited (Dollars in thousands) December 31, 1999 1998 Assets Current assets: Cash and cash equivalents $74,353 $39,940 Accounts receivable, net 692,357 661,261 Inventories 915,037 1,011,723 Prepaid expenses 19,021 20,628 Deferred income taxes 66,722 87,567 Total current assets 1,767,490 1,821,119 Plant and equipment, net 1,214,202 1,191,294 Other assets 740,719 708,939 Total assets $3,722,411 $3,721,352 Liabilities and shareholders' equity Current liabilities: Notes payable $61,123 $350,604 Accounts payable 253,798 282,166 Accrued liabilities 299,742 290,818 Accrued domestic and foreign taxes 39,130 26,266 Total current liabilities 653,793 949,854 Long-term debt 713,592 634,203 Pensions and other postretirement benefits 279,760 280,415 Deferred income taxes 31,247 38,055 Other liabilities 75,075 49,078 Shareholders' equity 1,968,944 1,769,747 Total liabilities and shareholders' equity $3,722,411 $3,721,352 CONSOLIDATED STATEMENT OF CASH FLOWS Unaudited Six months ended December 31, (Dollars in thousands) 1999 1998 Cash flows from operating activities: Net income $148,557 $141,649 Depreciation and amortization 106,962 104,782 Net change in receivables, inventories, and trade payables (14,099) (41,270) Net change in other assets and liabilities (21,637) (74,904) Other, net (6,531) (7,412) Net cash provided by operating activities 213,252 122,845 Cash flows from investing activities: Acquisitions (less cash acquired of $2,609 in 1998) (5,711) (89,865) Capital expenditures (114,114) (114,650) Other, net (9,897) 3,409 Net cash used in investing activities (129,722) (201,106) Cash flows from financing activities: Net proceeds from (payments for) common share activity 3,649 (47,863) Net (payments for) proceeds from debt (5,698) 166,295 Dividends (37,081) (32,700) Net cash (used in) provided by financing activities (39,130) 85,732 Effect of exchange rate changes on cash (3,324) 1,981 Net increase in cash and cash equivalents 41,076 9,452 Cash and cash equivalents at beginning of period 33,277 30,488 Cash and cash equivalents at end of period $74,353 $39,940 SOURCE Parker Hannifin Corporation
CONTACT: Media, Lorrie Paul Crum, VP - Corp. Communications, 216-896-2750, or Financial Analysts, Timothy K. Pistell, VP & Treasurer, 216-896-2130, both of Parker Hannifin Corporation, /