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/
