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CLEVELAND, Oct. 19 /PRNewswire-FirstCall/ -- Parker Hannifin Corporation (NYSE: PH) today reported record quarterly net income and earnings for the period ended September 30, 2004, while also marking a record $1.95 billion in fiscal first-quarter sales. Net income increased 134 percent to $132.8 million, or $1.11 per diluted share, compared with last year's quarterly net income of $56.7 million, or 48 cents per diluted share, on $1.59 billion in sales. In the current quarter, earnings were reduced by seven cents per diluted share for an investment write-down and a one-time pension adjustment resulting from a plan restructuring.
(Logo: http://www.newscom.com/cgi-bin/prnh/19990816/PHLOGO )
The company generated $160 million in cash from operations during the quarter, or 8.2 percent of sales, compared with $144 million, or 9.1 percent of sales a year ago. "Our balance sheet remains strong and we will continue to invest in growth opportunities, including acquisitions that are expected to be accretive to earnings such as our recent announcement welcoming Sporlan Valve Company to the Parker family," said Parker CEO Don Washkewicz.
"Thanks to our employees executing our Win Strategy, Parker is winning on many fronts. Outside of North America, we achieved operating profitability exceeding 10 percent this quarter, and our acquisitions are doing very well," added Washkewicz. "We're rapidly improving our financial performance, while focusing on four areas of growth: (1) Growing our market share in Total Parker Systems; (2) Growing globally with our customers in emerging markets; (3) Adding strategic acquisitions that bring great technology to our motion and control portfolio; and (4) Cultivating innovation to accelerate internal growth."
Operating Results
Parker's North American Industrial units posted first-quarter sales of $832.3 million, up 25 percent from last year. Operating income in the current quarter was $119.8 million, for an operating margin of 14.4 percent, compared with 6.4 percent last year.
The International Industrial businesses achieved first-quarter operating income of $66.5 million and an operating margin of 12.1 percent, compared with 7.4 percent last year. Sales increased 30 percent to $549 million, with acquisitions and currency translation contributing more than half of the increase.
Parker Aerospace sales increased 16 percent over the prior year to $331.1 million. First-quarter operating income improved to $51.3 million, for a 15.5-percent operating margin, compared with 13.2 percent a year ago.
The Climate & Industrial Controls business posted first-quarter operating income of $15.8 million on sales of $165.5 million, for an operating margin of 9.6 percent, compared with 11.2 percent last year.
In the "Other" unit, comprised of Wynn Specialty Chemicals and Astron metal buildings, quarterly operating income was $10 million on $69.3 million in sales, for an operating margin of 14.4 percent, compared with 10.1 percent a year ago.
Outlook
"We're encouraged by continued strength in the global economy and improvements we've seen in most segments of our business, including industrial international and the up tick in aerospace aftermarket," said Washkewicz. "Our main concerns at this point in the recovery are inflationary pressures from oil and raw material shortages and the prospects for higher interest rates."
The company raised its second quarter and full-year earnings estimates for fiscal year 2005, indicating it expects to earn between $.85 and $1.05 per diluted share in the second quarter. Full-year earnings are estimated to be between $4.30 and $4.70 per diluted share.
In addition to the information provided herein, 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 http://www.phstock.com .
With annual sales of more than $7 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 .
NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal first-quarter results is available to all interested parties via live webcast at 10 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 may also complete a pre-call system test and register for e-mail notification of future events and information available from Parker.
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 projections. 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; 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 - SEPTEMBER 30, 2004
CONSOLIDATED STATEMENT OF INCOME
(Unaudited) Three Months Ended September 30,
(Dollars in thousands except per
share amounts) 2004 2003
Net sales $1,947,192 $1,586,918
Cost of sales 1,528,278 1,298,776
Gross profit 418,914 288,142
Selling, general and administrative
expenses 203,298 180,204
Other income (deductions):
Interest expense (16,245) (21,780)
Interest and other (expense), net (10,692) (1,545)
(26,937) (23,325)
Income before income taxes 188,679 84,613
Income taxes 55,896 27,922
Net income $132,783 $56,691
Earnings per share:
Basic earnings per share $1.12 $.48
Diluted earnings per share $1.11 $.48
Average shares outstanding during
period - Basic 118,288,566 116,903,693
Average shares outstanding during
period - Diluted 119,712,032 117,769,743
Cash dividends per common share $.19 $.19
BUSINESS SEGMENT INFORMATION BY INDUSTRY
(Unaudited) Three Months Ended September 30,
(Dollars in thousands) 2004 2003
Net sales
Industrial:
North America $832,338 $667,777
International 548,973 421,824
Aerospace 331,134 284,631
Climate & Industrial Controls 165,470 155,950
Other 69,277 56,736
Total $1,947,192 $1,586,918
Segment operating income
Industrial:
North America $119,809 $43,045
International 66,473 31,332
Aerospace 51,294 37,485
Climate & Industrial Controls 15,817 17,514
Other 9,984 5,733
Total segment operating income $263,377 $135,109
Corporate general and administrative
expenses 25,403 22,962
Income from operations before interest
expense and other 237,974 112,147
Interest expense 16,245 21,780
Other expense 33,050 5,754
Income before income taxes $188,679 $84,613
Note: Certain prior period amounts have been reclassified to conform to
the current year presentation.
CONSOLIDATED BALANCE SHEET
(Unaudited) September 30,
(Dollars in thousands) 2004 2003
Assets
Current assets:
Cash and cash equivalents $290,717 $205,409
Accounts receivable, net 1,185,357 967,866
Inventories 1,044,583 991,306
Prepaid expenses 39,272 38,876
Deferred income taxes 116,991 102,498
Total current assets 2,676,920 2,305,955
Plant and equipment, net 1,575,865 1,632,563
Goodwill 1,206,685 1,113,603
Intangible assets, net 102,582 57,765
Other assets 777,758 772,706
Total assets $6,339,810 $5,882,592
Liabilities and shareholders' equity
Current liabilities:
Notes payable $33,033 $289,041
Accounts payable 509,171 415,380
Accrued liabilities 533,113 466,453
Accrued domestic and foreign taxes 147,724 85,489
Total current liabilities 1,223,041 1,256,363
Long-term debt 955,145 956,356
Pensions and other postretirement benefits 810,468 922,768
Deferred income taxes 64,401 16,975
Other liabilities 170,290 142,269
Shareholders' equity 3,116,465 2,587,861
Total liabilities and shareholders' equity $6,339,810 $5,882,592
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) Three Months Ended September 30,
(Dollars in thousands) 2004 2003
Cash flows from operating activities:
Net income $132,783 $56,691
Depreciation and amortization 64,138 63,379
Net change in receivables, inventories,
and trade payables (46,862) 26,469
Net change in other assets and liabilities 13,496 2,984
Other, net (3,713) (5,491)
Net cash provided by operating activities 159,842 144,032
Cash flows from investing activities:
Acquisitions (2,100) -
Capital expenditures (40,143) (36,799)
Other, net 14,635 5,222
Net cash (used in) investing activities (27,608) (31,577)
Cash flows from financing activities:
Net (payments for) proceeds from
common share activity (96) 13,668
Net (payments of) debt (3,503) (145,647)
Dividends (22,483) (22,131)
Net cash (used in) financing activities (26,082) (154,110)
Effect of exchange rate changes on cash 718 1,214
Net increase (decrease) in cash and
cash equivalents 106,870 (40,441)
Cash and cash equivalents at beginning
of period 183,847 245,850
Cash and cash equivalents at end of period $290,717 $205,409
SOURCE Parker Hannifin Corporation
10/19/2004
CONTACT: Media, Jennifer Eaton, Corp. Communications, +1-216-896-2895, or jeaton@parker.com , or Financial Analysts, Pamela Huggins, VP & Treasurer, +1-216-896-2240, or phuggins@parker.com , both of Parker Hannifin Corporation
Web site: http://www.phstock.com
(PH)
