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Parker Posts New Third Quarter Records; Income Up 39.5 Percent; Sales Up 11 Percent; EPS of 97 Cents

April 18, 2000

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.


"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.


    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
       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
      - Diluted        110,200,880   109,336,467     110,165,777  109,628,898

    Cash dividends per
      common share            $.17          $.17            $.51         $.47

                            Three Months Ended          Nine Months Ended
                                  March 31,                 March 31,
    (Dollars in thousands)    2000        1999          2000          1999
    Net sales
        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

        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
      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

    (Dollars in thousands)
                                March 31,             2000           1999
    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

    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/

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