CLEVELAND, April 17 /PRNewswire/ -- Parker Hannifin Corporation (NYSE: PH) today reported third-quarter net income for the period ended March 31, 2001 of $88.1 million, or 77 cents per diluted share, on sales of $1.53 billion. This compares with $106.7 million, or 97 cents per diluted share, earned last year, on sales of $1.39 billion. Earnings in the current period include an extraordinary charge of three cents per share for the early retirement of debt completed in February. These results also reflect higher interest expense and an additional 4.6 million shares outstanding issued in connection with acquisitions completed since last year.
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"We're cutting back production and inventories in North America so we can retain the strong cash flows that keep us fit for growth," said Parker Chairman and CEO Duane Collins. "What really proves out our strategy is what we see in our other segments this quarter: We managed through a downturn last year in our aerospace business, and now it's performing at record levels."
Among the operating results for the quarter, Parker Aerospace reported a 10-percent increase in sales, 27-percent higher operating income and a return on sales of 19.7 percent. The International Industrial operations posted an 11-percent increase in sales (mostly acquisitions), with an 18-percent increase in operating income and a 9.3-percent operating margin. This is the highest operating margin achieved in years by the company's international operations, the result of improving performance. "Without the negative effects of currency and lower near-term profits from acquisitions, our international business actually reached our 10-percent near-term margin goal this period," noted Collins. "We're pleased to see some substantial improvement, and we're going to keep driving it."
North American Industrial sales were up 10 percent, but without acquisitions, would have been down 12 percent year over year. Operating income was 20-percent lower, with a 10.9-percent return on sales, resulting from the downturn in demand.
Nine-Months' Results
Sales in the first nine months of fiscal 2001 were $4.47 billion, compared with $3.88 billion last year. Year-to-date net income was $291.4 million, or $2.54 per diluted share, compared with $255.3 million, or $2.32 per diluted share, a year ago.
Outlook
Results for the fiscal year ending June 30 are expected to range from $3.00 to $3.25 per diluted share, excluding non-recurring items. The company said it plans to record further charges in the fourth quarter for previously announced operating realignments, the costs of which are expected to offset a good amount of the gain recorded on the sale of property in the first quarter.
"Reaction times by manufacturers are accelerating, so as quickly as our domestic industrial markets have dropped off, we are well positioned with our own lean manufacturing initiatives for the possibility of a sharp upturn," said Collins. "Thanks to the excellent enterprise systems we have in place throughout the company, we're able to watch our inventory levels and order trends very closely, so we can adjust production right on pace with demand."
With annual sales of $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 45,000 people in 46 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 .
NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call to discuss its fiscal quarterly results is available on the day of this release to all interested parties via live webcast at 10 a.m. ET, on the company's investor information web site, 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:
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 in its markets and ability to achieve anticipated benefits associated with announced inventory and workforce reductions. Among the other factors that may affect future performance are: business relationships with and purchases by or from major customers or suppliers, including delays or cancellations in shipments; 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 and general economic conditions, including interest rate levels. In each quarterly earnings report, the company intends to provide a range stating expected earnings per share for the succeeding quarter and full fiscal year, reflecting these ranges as estimates of diluted earnings per share before unusual items. The company makes these statements as of the date of this disclosure, and while it undertakes no obligation to update them, reserves the right to update the earnings projections for any reason during the quarter, including the occurrence of material events.
PARKER HANNIFIN CORPORATION - MARCH 31, 2001 CONSOLIDATED STATEMENT OF INCOME (Unaudited) Three Months Ended Nine Months Ended (Dollars in thousands March 31, March 31, except per share amounts) 2001 2000 2001 2000 Net sales $1,534,202 $1,393,659 $4,471,644 $3,875,159 Cost of sales 1,213,387 1,074,133 3,509,472 3,022,052 Gross profit 320,815 319,526 962,172 853,107 Selling, general and administrative expenses 159,580 141,254 491,617 419,559 Income from operations 161,235 178,272 470,555 433,548 Other income (deductions): Interest expense (24,243) (14,571) (71,018) (43,142) Interest and other income, net 4,794 (796) 57,535 (696) (19,449) (15,367) (13,483) (43,838) Income before income taxes 141,786 162,905 457,072 389,710 Income taxes 50,334 56,202 162,260 134,450 Income before extraordinary item 91,452 106,703 294,812 255,260 Extraordinary item - extinguishment of debt (3,378) - (3,378) - Net income $88,074 $106,703 $291,434 $255,260 Earnings per share: Basic earnings per share before extraordinary item $.80 $.98 $2.58 $2.34 Extraordinary item - extinguishment of debt (.03) - (.03) - Basic earnings per share $.77 $.98 $2.55 $2.34 Diluted earnings per share before extraordinary item $.80 $.97 $2.57 $2.32 Extraordinary item - extinguishment of debt (.03) - (.03) - Diluted earnings per share $.77 $.97 $2.54 $2.32 Average shares outstanding during period - Basic 114,439,369 109,373,820 114,125,361 109,210,607 Average shares outstanding during period - Diluted 115,249,470 110,200,880 114,880,863 110,165,777 Cash dividends per common share $.18 $.17 $.52 $.51 BUSINESS SEGMENT INFORMATION BY INDUSTRY Three Months Ended Nine Months Ended (Unaudited) March 31, March 31, (Dollars in thousands) 2001 2000 2001 2000 Net sales Industrial: North America $849,439 $774,353 $2,555,046 $2,100,564 International 367,317 331,104 1,034,339 933,485 Aerospace 317,446 288,202 882,259 841,110 Total $1,534,202 $1,393,659 $4,471,644 $3,875,159 Segment operating income Industrial: North America $92,602 $115,123 $311,405 $296,006 International 34,342 29,015 81,660 62,014 Aerospace 62,490 49,126 157,863 121,113 Total segment operating income 189,434 193,264 550,928 479,133 Corporate general and administrative expenses 18,038 13,935 55,768 42,135 Income from operations before interest expense and other 171,396 179,329 495,160 436,998 Interest expense 24,243 14,571 71,018 43,142 Other 5,367 1,853 (32,930) 4,146 Income before income taxes $141,786 $162,905 $457,072 $389,710 CONSOLIDATED BALANCE SHEET (Unaudited) (Dollars in thousands) March 31, 2001 2000 Assets Current assets: Cash and cash equivalents $45,209 $60,715 Accounts receivable, net 888,760 800,241 Inventories 1,006,037 909,835 Prepaid expenses 37,681 18,029 Deferred income taxes 93,671 65,725 Assets held for sale 215,533 - Total current assets 2,286,891 1,854,545 Plant and equipment, net 1,507,047 1,237,603 Other assets 1,457,500 810,173 Total assets $5,251,438 $3,902,321 Liabilities and shareholders' equity Current liabilities: Notes payable $613,328 $83,351 Accounts payable 333,212 301,193 Accrued liabilities 380,487 322,869 Accrued domestic and foreign taxes 60,252 65,721 Total current liabilities 1,387,279 773,134 Long-term debt 865,456 706,596 Pensions and other postretirement benefits 305,186 282,642 Deferred income taxes 120,176 30,244 Other liabilities 82,997 73,977 Shareholders' equity 2,490,344 2,035,728 Total liabilities and shareholders' equity $5,251,438 $3,902,321 CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) Nine Months Ended March 31, (Dollars in thousands) 2001 2000 Cash flows from operating activities: Net income $291,434 $255,260 Depreciation and amortization 200,785 157,006 Net effect of extraordinary loss 3,378 - Net change in receivables, inventories, and trade payables (78,935) (47,294) Net change in other assets and liabilities (78,909) 7,224 Other, net (29,461) (7,280) Net cash provided by operating activities 308,292 364,916 Cash flows from investing activities: Acquisitions (less cash acquired of $8,256 in 2001 and $431 in 2000) (512,716) (121,474) Capital expenditures (263,812) (168,131) Other, net 105,637 2,437 Net cash used in investing activities (670,891) (287,168) Cash flows from financing activities: Net proceeds from (payments for) common share activity 9,824 (4,410) Net proceeds from debt 391,216 13,974 Dividends (59,298) (55,661) Net cash provided by (used in) financing activities 341,742 (46,097) Effect of exchange rate changes on cash (2,394) (4,213) Net (decrease) increase in cash and cash equivalents (23,251) 27,438 Cash and cash equivalents at beginning of period 68,460 33,277 Cash and cash equivalents at end of period $45,209 $60,715
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/