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Parker Q4 Earnings Up 22 Percent, EPS at 99 Cents Per Share, with Record Full-Year Sales and Earnings and a Positive Outlook for FY 2001

July 31, 2000

CLEVELAND, July 31 /PRNewswire/ -- Parker Hannifin Corporation (NYSE: PH) today reported record fourth-quarter and full-year results for the fiscal year ended June 30, with an 18.6-percent increase in annual net income of $368.2 million, or $3.31 per diluted share. Revenues for the year were $5.36 billion, up eight percent from last year's sales record. In fiscal 1999, the company earned $310.5 million in net income, or $2.83 per diluted share, on sales of $4.96 billion.

The full-year results reflect a good balance of internal and external growth, including 10-percent core sales growth in the company's North American industrial segment, where acquisitions completed in the second half of the year contributed another 4.4 percent. Acquisitions accounted for the 2.7 percent sales growth in Parker's International Industrial business, as weak first-half demand and currency translations negatively affected sales. Aerospace reported a drop in sales as anticipated, although the one-percent decline was certainly better than expected, as slowing large aircraft sales were offset by strengthening demand for maintenance, repair and overhaul equipment and solid growth in original-equipment system sales for regional and business jets.

Parker's North American industrial segment led the earnings improvement posting a 27-percent gain in operating income for the year. Operating income in the International Industrial and Aerospace businesses were relatively flat as a result of the lower sales and business realignment charges recorded in the first half of the fiscal year.

"We entered into this year making alignments where we needed to in our business, and the past two quarters have been our most profitable ever," said Chairman and CEO Duane Collins. "Parker employees turned out a good year of performance, with consistency and discipline through the cycle that positioned us to finish the year very well."

The company generated a record $538 million in cash from operations during the year, up 17 percent from last year's record. This cash was utilized for several acquisitions completed during the fiscal year, leaving borrowing capacity available to finance additional acquisitions, including the Wynn's International deal completed just over a week ago.

Quarterly Results

Fourth-quarter net income was $113 million, or 99 cents per diluted share, on sales of $1.48 billion, compared with $92.3 million, or 84 cents per diluted share, earned on sales of $1.29 billion last year.

Across-the-board growth in the domestic and International Industrial businesses contributed to double-digit increases in sales and income during the quarter, while Aerospace posted higher income on sales 3.8- percent lower than last year, when aircraft builds reached their peak.


Collins said the company's fourth-quarter performance and continuing strong order trends provide a good foundation for it to meet or exceed accelerated growth targets the company recently adopted, including 10-percent sales growth. "We've added significant growth capacity with acquisitions we made during the past year, and we know what we've got to do to integrate these businesses and deliver on our objectives. Our Hydraulics and Filtration Groups are right on track in the integration of their new businesses, and our Seal Group has plans in place to successfully integrate Wynn's."

In addition to integrating acquisitions, Collins said the company will continue to implement profitability improvements in Europe, expanding low-cost production capacity and reducing selling, general and administrative expenses.

"We recently adopted our strategic plan, and have everything in place to grow market share and achieve returns at a consistent premium among competitors and peers. Our focus remains on premier customer service, financial performance and profitable growth, and we have the organization and financial means to achieve much more as both the premier systems supplier and consolidator of choice."

With annual sales of $6 billion (with recent acquisitions), Parker Hannifin Corporation 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 40,000 people in 40 countries around the world. 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     Year Ended June 30,
                             Ended June 30,
    (Dollars in thousands
     except per share
     amounts)              2000          1999         2000          1999

    Net sales           $1,480,178   $ 1,285,266   $5,355,337    $4,958,800
    Cost of sales        1,134,517       989,759    4,156,569     3,869,370
    Gross profit           345,661       295,507    1,198,768     1,089,430
    Selling, general
      and administrative
      expenses             156,347       138,875      575,906       550,681
    Income from operations 189,314       156,632      622,862       538,749
    Other income
      Interest expense     (16,041)      (14,647)     (59,183)      (63,697)
      Interest and other
        income, net           (796)           78       (1,492)        2,642
        Total              (16,837)      (14,569)     (60,675)      (61,055)
    Income before income
      taxes                172,477       142,063      562,187       477,694
    Income taxes            59,505        49,722      193,955       167,193
    Net income            $112,972       $92,341     $368,232      $310,501

    Earnings per share:
      Basic earnings
        per share             $.99          $.84        $3.34         $2.85
      Diluted earnings
        per share             $.99          $.84        $3.31         $2.83

    Average shares
      during period -
      Basic            113,691,025   108,788,284  110,330,711   108,799,974
    Average shares
      during period -
      Diluted          114,481,201   109,829,144  111,244,632   109,678,959

    Cash dividends per
      common share            $.17         $.17          $.68          $.64

                           Unaudited Three Months    Year Ended June 30,
                                Ended June 30,

    (Dollars in thousands)  2000          1999        2000          1999
    Net sales
        North America     $841,855      $679,317   $2,942,419    $2,565,154
        International      341,105       296,958    1,274,590     1,241,256
      Aerospace            297,218       308,991    1,138,328     1,152,390
    Total               $1,480,178   $ 1,285,266   $5,355,337    $4,958,800

Segment operating income

        North America     $130,624       $99,709     $426,630      $335,259
        International       22,008        14,348       84,022        82,245
      Aerospace             54,597        48,111      175,710       177,213
    Total segment
      operating income     207,229       162,168      686,362       594,717
    Corporate general and
      expenses              16,075        11,936       58,210        54,176
    Income from operations
      before interest
      expense and other    191,154       150,232      628,152       540,541
    Interest expense        16,041        14,647       59,183        63,697
    Other                    2,636        (6,478)       6,782          (850)
    Income before
      income taxes        $172,477      $142,063     $562,187      $477,694


    (Dollars in thousands)         June 30,           2000           1999
    Current assets:
    Cash and cash equivalents                       $ 68,460       $ 33,277
    Accounts receivable, net                         840,040        738,773
    Inventories                                      974,196        915,130
    Prepaid expenses                                  32,706         22,928
    Deferred income taxes                             73,711         64,576
    Assets held for sale                             164,000             --
    Total current assets                           2,153,113      1,774,684
    Plant and equipment, net                       1,340,915      1,200,869
    Other assets                                   1,152,271        730,335
    Total assets                                  $4,646,299     $3,705,888

    Liabilities and shareholders' equity
    Current liabilities:
    Notes payable                                   $335,298       $ 60,609
    Accounts payable                                 372,666        313,173
    Accrued liabilities                              394,131        328,147
    Accrued domestic and foreign taxes                84,208         52,584
    Total current liabilities                      1,186,303        754,513
    Long-term debt                                   701,762        724,757
    Pensions and other postretirement benefits       299,741        276,637
    Deferred income taxes                             77,939         30,800
    Other liabilities                                 71,096         65,319
    Shareholders' equity                           2,309,458      1,853,862
    Total liabilities and shareholders' equity    $4,646,299     $3,705,888

    Year ended June 30,
    (Dollars in thousands)                              2000           1999

    Cash flows from operating activities:
    Net income                                      $368,232       $310,501
    Depreciation and amortization                    206,408        202,046
    Net change in receivables, inventories,
      and trade payables                              (3,346)       (33,865)
    Net change in other assets and liabilities       (21,181)       (24,694)
    Other, net                                       (12,073)         5,109

    Net cash provided by operating activities        538,040        459,097
    Cash flows from investing activities:
    Acquisitions (less cash acquired of $1,158
      and $2,609 in 2000 and 1999)                  (351,011)       (89,865)
    Capital expenditures                            (230,482)      (230,122)
    Other, net                                         1,784          6,930

    Net cash used in investing activities           (579,709)      (313,057)
    Cash flows from financing activities:
    Net proceeds from common share activity            1,202         74,076
    Net proceeds from (payments for) debt            154,621       (148,407)
    Dividends                                        (74,963)       (69,461)

    Net cash provided by (used in)
      financing activities                            80,860       (143,792)
    Effect of exchange rate changes on cash           (4,008)           541
    Net increase in cash and cash equivalents         35,183          2,789
    Cash and cash equivalents at
      beginning of period                             33,277         30,488
    Cash and cash equivalents at end of period      $ 68,460       $ 33,277

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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