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CLEVELAND, Apr 15, 2003 /PRNewswire-FirstCall via COMTEX/ -- Parker Hannifin Corporation (NYSE: PH) today reported third-quarter net income for the period ended March 31, 2003 of $48.7 million, or 42 cents per diluted share, on sales of $1.65 billion. Realignment costs, including severance and manufacturing relocations, reduced earnings by four cents per diluted share in the quarter. For the same period last year, net income was $52.4 million, or 45 cents per diluted share, on sales of $1.58 billion, including a reduction of two cents per diluted share in realignment costs.
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Parker CEO Don Washkewicz noted continued weakness in the company's aerospace and North American industrial markets. "Our balance sheet remains strong, and we're maintaining strict controls on working capital and expenditures," said Washkewicz. "At the same time, we're seeing positive progress from all the work we've done to realign operations and implement the Win Strategy. We just haven't seen any improvement in the economy."
Washkewicz said the continuing strength of cash flow from operations enabled the company to make discretionary contributions of approximately $108 million to its pension plans during the quarter in the United States, Canada and the United Kingdom. "This demonstrates the company's commitment to maintaining well-funded pension plans for our employees around the world."
Washkewicz also noted that operating income was up in every segment except aerospace, where sales were two percent lower than last year and the operating margin was 13.6 percent.
In the industrial segment, operating income was up 20 percent overall. In North America, sales were flat and the operating margin was 5.8 percent. The international industrial business achieved a margin of 5.7 percent with a 28- percent sales increase, mostly driven by currency exchange rates and acquisitions.
In the "Other" segment, sales were seven-percent lower than in the prior year, reflecting the divestiture of the Wynn Warranty business last June, while operating income was up nine percent, and the margin improved to 9.0 percent.
Nine-Months' Results
Sales in the first nine months of fiscal 2003 were $4.75 billion, up six percent from the same period last year. Year-to-date net income increased to $147.2 million, or $1.26 per diluted share, reduced by 10 cents per diluted share in realignment costs and an equity-investment adjustment. In the first nine months of fiscal 2002, the company earned $142.0 million, or $1.23 per diluted share, for which realignment costs and an equity-investment adjustment reduced earnings by 13 cents per diluted share.
Outlook
The company did not issue a range of projected earnings for the remaining quarter of fiscal year 2003, citing continued economic uncertainties and limited predictability of aerospace and industrial activities in the current climate. "With no discernable change in market conditions, all we can say is that we expect the coming quarter to be very similar to this one," said Washkewicz.
Parker advises shareholders to note monthly 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 www.phstock.com .
With annual sales exceeding $6 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 44 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 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 company's future performance and earnings projections 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 and strategic initiatives to improve operating margins. 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, including the war with Iraq; the impact of Severe Acute Respiratory Syndrome on global travel; 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 interest rates. The company makes these statements as of the date of this disclosure, and undertakes no obligation to update them.
PARKER HANNIFIN CORPORATION - MARCH 31, 2003
CONSOLIDATED STATEMENT OF INCOME
Three Months Nine Months
(Unaudited) Ended March 31, Ended March 31,
(Dollars in thousands
except per share amounts) 2003 2002 2003 2002
Net sales $1,646,844 $1,578,332 $4,749,949 $4,491,529
Cost of sales 1,368,430 1,309,245 3,927,147 3,710,763
Gross profit 278,414 269,087 822,802 780,766
Selling, general and
administrative
expenses 182,378 171,764 535,775 502,062
Other income (deductions):
Interest expense (20,349) (20,924) (59,399) (62,933)
Interest and other
(expense), net (1,731) 161 (3,935) 267
(22,080) (20,763) (63,334) (62,666)
Income before income
taxes 73,956 76,560 223,693 216,038
Income taxes 25,293 24,203 76,503 74,038
Net income $48,663 $52,357 $147,190 $142,000
Earnings per share:
Basic earnings per
share $.42 $.45 $1.27 $1.23
Diluted earnings
per share $.42 $.45 $1.26 $1.23
Average shares
outstanding during
period - Basic 116,506,352 115,503,613 116,339,433 115,226,875
Average shares
outstanding during
period - Diluted 116,890,480 116,282,075 116,872,253 115,884,581
Cash dividends per
common share $.19 $.18 $.55 $.54
BUSINESS SEGMENT INFORMATION BY INDUSTRY
Three Months Nine Months
(Unaudited) Ended March 31, Ended March 31,
(Dollars in thousands) 2003 2002 2003 2002
Net sales
Industrial:
North America $727,060 $726,808 $2,124,542 $2,023,947
International 416,434 325,754 1,156,014 912,491
Aerospace 280,020 284,989 832,741 885,801
Other 223,330 240,781 636,652 669,290
Total $1,646,844 $1,578,332 $4,749,949 $4,491,529
Segment operating income
Industrial:
North America $42,166 $38,090 $120,634 $102,131
International 23,852 17,126 72,819 50,161
Aerospace 38,140 48,682 123,324 152,020
Other 20,039 18,358 51,328 44,779
Total segment operating
income 124,197 122,256 368,105 349,091
Corporate general and
administrative expenses 22,662 17,550 62,155 50,163
Income from operations
before interest
expense and other 101,535 104,706 305,950 298,928
Interest expense 20,349 20,924 59,399 62,933
Other expense 7,230 7,222 22,858 19,957
Income before income taxes $73,956 $76,560 $223,693 $216,038
Note: Certain prior period amounts have been reclassified to conform to
the current year presentation.
CONSOLIDATED BALANCE SHEET
(Unaudited)
(Dollars in thousands) March 31, 2003 2002
Assets
Current assets:
Cash and cash equivalents $52,696 $31,917
Restricted investments 98,850
Accounts receivable, net 991,131 981,972
Inventories 1,027,939 1,070,287
Prepaid expenses 43,265 42,248
Deferred income taxes 85,329 98,682
Total current assets 2,200,360 2,323,956
Plant and equipment, net 1,661,714 1,683,768
Goodwill 1,091,795 1,099,413
Intangible assets, net 56,223 43,734
Other assets 745,995 604,146
Total assets $5,756,087 $5,755,017
Liabilities and shareholders' equity
Current liabilities:
Notes payable $410,278 $547,764
Accounts payable 395,658 378,951
Accrued liabilities 468,744 483,631
Accrued domestic and foreign taxes 34,700 73,263
Total current liabilities 1,309,380 1,483,609
Long-term debt 948,164 1,052,174
Pensions and other postretirement benefits 515,378 209,134
Deferred income taxes 133,242 147,726
Other liabilities 126,032 236,145
Shareholders' equity 2,723,891 2,626,229
Total liabilities and shareholders'
equity $5,756,087 $5,755,017
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) Nine Months Ended March 31,
(Dollars in thousands) 2003 2002
Cash flows from operating activities:
Net income $147,190 $142,000
Depreciation and amortization 191,018 180,957
Net change in receivables,
inventories, and trade payables 32,197 80,272
Net change in other assets and
liabilities (98,475) 42,779
Other, net 54,238 11,976
Net cash provided by operating activities 326,168 457,984
Cash flows from investing activities:
Acquisitions (less cash acquired of
$7 in 2003 and $3,117 in 2002) (1,999) (383,144)
Capital expenditures (112,863) (157,452)
Other, net 13,722 (38,460)
Net cash used in investing activities (101,140) (579,056)
Cash flows from financing activities:
Net proceeds from common share activity 3,091 3,930
Net (payments of) proceeds from debt (160,048) 190,132
Dividends (63,739) (62,058)
Net cash (used in) provided by
financing activities (220,696) 132,004
Effect of exchange rate changes on cash 1,980 (2,580)
Net increase in cash and cash equivalents 6,312 8,352
Cash and cash equivalents at beginning
of period 46,384 23,565
Cash and cash equivalents at end of period $52,696 $31,917
SOURCE Parker Hannifin Corporation
Media, Lorrie Paul Crum, VP - Corp. Communications, +1-216-896-2750, or lcrum@parker.com, or Financial Analysts, Timothy K. Pistell, VP - Finance & Administration, +1-216-896-2130, or tpistell@parker.com, both of Parker Hannifin Corporation
http://www.phstock.com
