CLEVELAND, April 18 /PRNewswire/ -- Parker Hannifin Corporation (NYSE: PH) today reported a 39.5-percent increase in third-quarter net income for the period ended March 31, 2000. The company earned $106.7 million, or 97 cents per diluted share, on sales of $1.39 billion, compared with net income of $76.5 million, or 70 cents per diluted share, earned on sales of $1.26 billion last year.
With an across-the-board rise in sales, all segments recorded double-digit increases in operating income during the quarter. Sales among the North American Industrial businesses were 17.3-percent higher, with an operating margin of 14.9 percent. Continuing momentum in the semiconductor and telecommunications markets led the improvement, which also reflected overall strength in industrial and mobile markets.
The International Industrial operations posted a 6.1-percent increase in sales and operating margin of 8.8 percent. The company attributed the improvement to continuing strength in the Asia-Pacific region and rebounding volume in Europe and Latin America, but noted it still aims to return the International units to double-digit margins. Currency translation reduced International Industrial sales by 9.4 percent.
Parker Aerospace reported a modest sales increase, but posted higher-than- expected operating income, with a 17-percent return on sales. The company said this reflects a shift toward more profitable volume in aerospace-system sales and a higher mix of maintenance, repair and overhaul business.
Parker Chairman and CEO Duane Collins said, "This was one of those quarters best summarized by saying 'everything was up.' We are delighted by the strength our people have demonstrated to drive volume and increase profitability." Collins added that the company's order rates suggest the growth momentum will continue for the foreseeable future. "Financially and operationally, Parker's never been stronger. We're staying focused on improving international profitability and integrating the Gresen and Commercial Intertech acquisitions to achieve greater value."
Nine-Months' Results
Sales in the first nine months of fiscal 2000 were $3.88 billion, compared with $3.67 billion last year. Year-to-date net income was $255.3 million, or $2.32 per diluted share, compared with $218.2 million or $1.99 per share. The increase in the current year-to-date results reflects the strong performance by the North American Industrial operations and rebounding international markets, partially offset by realignment costs recorded in the first quarter in the International and Aerospace businesses.
The company recorded $365 million in cash from operations in the nine- month period, resulting in reduced debt and interest expense. For the same period last year, cash from operations was $279 million. Despite the issuance of approximately $235 million of debt to complete the Commercial Intertech merger on April 11, the Company remains in an excellent position to invest in product development and acquisition opportunities in its core markets.
Outlook
"The third quarter was the first quarter in which we realized sales from the accelerating orders we've taken in past months and we expect this to continue into the fourth quarter," said Collins. "Adding our acquisitions and ever-increasing system strength, we have solidly positioned ourselves for double-digit compound sales growth, and we have real value-creation capacity in our business plan for the coming years."
With over $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 , 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 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 - MARCH 31, 2000
CONSOLIDATED STATEMENT OF INCOME
Unaudited Three Months Ended March 31, Nine Months Ended March 31,
(Dollars in thousands
except per share
amounts) 2000 1999 2000 1999
Net sales $1,393,659 $1,255,789 $3,875,159 $3,673,534
Cost of sales 1,074,133 989,137 3,022,052 2,879,611
Gross profit 319,526 266,652 853,107 793,923
Selling, general
and administrative
expenses 141,254 136,278 419,559 411,806
Income from
operations 178,272 130,374 433,548 382,117
Other income
(deductions):
Interest expense (14,571) (15,634) (43,142) (49,050)
Interest and other
income, net (796) 2,970 (696) 2,564
Total (15,367) (12,664) (43,838) (46,486)
Income before income
taxes 162,905 117,710 389,710 335,631
Income taxes 56,202 41,199 134,450 117,471
Net income $106,703 $76,511 $255,260 $218,160
Earnings per share:
Basic earnings per
share $.98 $.71 $2.34 $2.01
Diluted earnings per
share $.97 $.70 $2.32 $1.99
Average shares outstanding
during period
- Basic 109,373,820 108,503,957 109,210,607 108,803,871
Average shares
outstanding during
period
- Diluted 110,200,880 109,336,467 110,165,777 109,628,898
Cash dividends per
common share $.17 $.17 $.51 $.47
BUSINESS SEGMENT INFORMATION BY INDUSTRY
Unaudited
Three Months Ended Nine Months Ended
March 31, March 31,
(Dollars in thousands) 2000 1999 2000 1999
Net sales
Industrial:
North America $774,353 $660,368 $2,100,564 $1,885,837
International 331,104 312,166 933,485 944,298
Aerospace 288,202 283,255 841,110 843,399
Total $1,393,659 $1,255,789 $3,875,159 $3,673,534
Segment operating income
Industrial:
North America $115,123 $86,225 $296,006 $235,550
International 29,015 19,760 62,014 67,897
Aerospace 49,126 43,326 121,113 129,102
Total segment
operating income 193,264 149,311 479,133 432,549
Corporate general and
administrative
expenses 13,935 14,608 42,135 42,240
Income from operations
before interest
expense and other 179,329 134,703 436,998 390,309
Interest expense 14,571 15,634 43,142 49,050
Other 1,853 1,359 4,146 5,628
Income before income
taxes $162,905 $117,710 $389,710 $335,631
CONSOLIDATED BALANCE SHEET
Unaudited
(Dollars in thousands)
March 31, 2000 1999
Assets
Current assets:
Cash and cash equivalents $60,715 $41,077
Accounts receivable, net 800,241 718,711
Inventories 909,835 939,041
Prepaid expenses 18,029 19,554
Deferred income taxes 65,725 80,828
Total current assets 1,854,545 1,799,211
Plant and equipment, net 1,237,603 1,186,772
Other assets 810,173 705,344
Total assets $3,902,321 $3,691,327
Liabilities and shareholders' equity
Current liabilities:
Notes payable $83,351 $172,752
Accounts payable 301,193 268,193
Accrued liabilities 322,869 312,903
Accrued domestic and foreign taxes 65,721 46,142
Total current liabilities 773,134 799,990
Long-term debt 706,596 733,504
Pensions and other postretirement benefits 282,642 280,840
Deferred income taxes 30,244 37,004
Other liabilities 73,977 56,359
Shareholders' equity 2,035,728 1,783,630
Total liabilities and shareholders' equity $3,902,321 $3,691,327
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Nine months ended March 31,
(Dollars in thousands) 2000 1999
Cash flows from operating activities:
Net income $255,260 $218,160
Depreciation and amortization 157,006 154,018
Net change in receivables, inventories,
and trade payables (47,294) (72,802)
Net change in other assets and liabilities 7,224 (21,349)
Other, net (7,280) 1,406
Net cash provided by operating activities 364,916 279,433
Cash flows from investing activities:
Acquisitions (less cash acquired of
$431 and $2,609
in 2000 and 1999) (121,474) (89,865)
Capital expenditures (168,131) (166,835)
Other, net 2,437 2,656
Net cash used in investing activities (287,168) (254,044)
Cash flows from financing activities:
Net (payments for) proceeds from common
share activity (4,410) 64,599
Net proceeds from (payments for) debt 13,974 (28,872)
Dividends (55,661) (51,144)
Net cash used in financing activities (46,097) (15,417)
Effect of exchange rate changes on cash (4,213) 617
Net increase in cash and cash equivalents 27,438 10,589
Cash and cash equivalents at beginning of period 33,277 30,488
Cash and cash equivalents at end of period $60,715 $41,077
SOURCE Parker Hannifin Corporation
CONTACT: Media, Lorrie Paul Crum, VP - Corp. Communications, 216-896-2750, or Financial Analysts, Timothy K. Pistell, Treasurer, 216-896-2130, both of Parker Hannifin Corporation/
