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PH Notes Record Sales & Cash Flow; Profit Offset by Write-downs, Realignment and Recession

July 30, 2002

CLEVELAND, Jul 30, 2002 /PRNewswire-FirstCall via COMTEX/ -- Parker Hannifin Corporation (NYSE: PH) today reported lower-than-expected quarterly and annual results for the fiscal year ended June 30, 2002. With fourth-quarter sales of $1.66 billion, the company reported a quarterly loss of $11.9 million -- 10 cents per diluted share. As previously announced, results were affected by business-realignment costs of $11.7 million pretax and $48.9 million pretax in asset impairments, for a total of $60.6 million pretax, or $51.0 million after-tax, which is 44 cents per share. Before these primarily non-cash charges earnings for the quarter were 34 cents per diluted share. Last year's fourth-quarter net income was $49.4 million, or 42 cents per diluted share, earned on sales of $1.48 billion. This comparison includes 15 cents per share in business-realignment costs and other items and 12 cents in goodwill amortization. Therefore, the quarterly earnings comparison a year ago excluding these items is 69 cents per diluted share, versus this year's pre- charge earnings of 34 cents.

(Photo: http://www.newscom.com/cgi-bin/prnh/19990816/PHLOGO )

The company's quarterly results reflect greater-than-anticipated operating costs amounting to 12 cents, including manufacturing under-absorption and obsolete inventory; higher medical and benefit costs; and increased warranty cost reserves in non-core businesses. Year-over-year, the company's medical, pension and insurance costs were approximately $47 million higher.

For the full year, fiscal 2002 brought a modest increase in annual sales, marking a new record at $6.15 billion, and net earnings of $130.2 million, or $1.12 per diluted share. Before $81.8 million in charges, $66.6 million after- tax, or 57 cents per share, annual earnings were $1.69 per diluted share. Last year, sales were $5.98 billion, and net income was $340.8 million, or $2.96 per diluted share. Results for FY 2001 include goodwill amortization and a net benefit of five cents from non-recurring items, which included a gain on the sale of real estate; business-realignment costs and other corporate accruals. For a clear comparison of last year's results, add 44 cents to reflect the adoption of the FASB 142 goodwill provision and subtract the five- cent benefit for a total of 39 cents. Therefore, earnings last year were $3.35 per diluted share, versus this year's results of $1.69.

The company generated a record $631 million in cash from operations during the year, compared with $532 million last year, due in large part to tight management of working capital, especially inventory, receivables and accounts payable. Washkewicz said, "Throughout the course of this tough recession year, we worked to strengthen our profitability for an eventual economic recovery. We addressed under-performing assets and realigned operations to reflect demand, cutting capital expenditures by more than a third. We also made difficult job-cut decisions, and in total, our divisions cut about 6,200 positions over the past two years." Specific actions include:

  • Facility consolidations netting 50 fewer locations;
  • Greater utilization of low-cost incubators in the Czech Republic, Poland, China, Mexico and Korea;
  • A 5.8-percent inventory reduction in the company's base business (excluding current-year acquisitions);
  • Divestiture of two non-core businesses, Commercial Metal Forming and Wynn Warranty; and
"Going forward, we will remain focused on strategic initiatives to lean out our processes and inventories, which will improve our productivity and profitability worldwide."

Operating Results

After a year of severely depressed demand in the company's industrial and aerospace markets, a few areas showing signs of life in the fourth quarter were residential air conditioning, defense, heavy-duty truck, semiconductor, construction and mobile equipment. Commercial aviation, aside from regional jets, remains on the downslide. The fourth quarter also proved the typical three-month market lag between North American and overseas markets, as demand in Europe and Asia followed North America's downward trend.

In the North American Industrial units, fourth-quarter operating income increased 3.1 percent from a year ago to $39.2 million on $768.4 million in sales. Including $2.6 million in business-realignment costs, the quarterly return on sales was 5.1 percent. Full-year operating income in the North American Industrial units was $141.3 million on revenues of $2.79 billion. With $8.9 million in business-realignment costs, the annual operating margin also was 5.1 percent.

Fourth-quarter income in the International Industrial businesses was 28.4 percent lower than last year. On $366.2 million in quarterly revenues, the units earned $10.6 million for a 2.9-percent operating margin. Business- realignment costs were $6.1 million in the quarter. For the year, the international businesses posted sales of $1.28 billion, with operating income of $55.7 million, including business-realignment costs and asset impairments totaling $14.7 million. With these costs, the full-year return on sales was 4.4 percent.

In the company's "Other" segment, including Climate & Industrial Controls and businesses previously classified as assets held for sale, fourth-quarter sales were $236.2 million. Including business-realignment costs of $2 million, quarterly income was 10.2-percent lower than last year, at $9.9 million, for an operating margin of 4.2 percent. Full-year sales were $905.5 million, and income was $54.6 million, for a return on sales of 6.0 percent. Business- realignment costs for the year were $4.7 million.

Parker Aerospace saw an 11.3-percent drop in fourth-quarter sales to $286.8 million, while income fell 38.8 percent, to $37.3 million, with $1.1 million in business-realignment costs. The quarterly return on sales was 13.0 percent. For the year, the aerospace business earned $189.4 million on sales of $1.2 billion, a 16.1-percent return on sales. Costs for business- realignment in the year were $4.7 million.

Outlook

With assumptions for a slow recovery in fiscal year 2003, the company said it expects earnings for the fiscal first quarter ending September 30 to be between 35 and 45 cents per share before business-realignment costs. For the full year, earnings are expected to be between $2.20 and $2.50 per share, not including business-realignment costs previously announced, including severance, operating realignments, plant closures and consolidations in the company's industrial segment.

These additional costs, currently projected at $23 million ($15 million after-tax), or 13 cents per share, will be reflected on the income statement during fiscal year 2003 as they are implemented. As a result of these planned actions and those taken in fiscal year 2002, the company is on track to achieve savings of approximately $12 million in fiscal year 2003. With another $20 million in savings planned for fiscal year 2004, the company should thereby achieve running savings of $32 million per year.

In addition to providing earnings estimates, 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 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 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 .

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 are subject to future uncertainties and risks. All earnings projections and statements regarding future performance, 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 industrial and aerospace markets, including any adverse effects related to the events of September 11, 2001, as well as the company's ability to achieve anticipated benefits associated with its "Win Strategy" initiatives, business-realignment and acquisition-integration activities and its ability to increase sales of higher margin products. 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; competitive market conditions and resulting effects on sales and pricing; increases in raw-material costs that cannot be recovered in product pricing; threats associated with terrorism; and global economic factors, including potential devaluation of currencies and general economic conditions such as interest rates. In each quarterly earnings report, the company states a range of expected earnings per share for the succeeding quarter and full fiscal year, as estimates of diluted earnings per share before unusual items. The company makes these statements as of the date of disclosure, and while it undertakes no obligation to update them, reserves the right to update earnings projections for any reason during the quarter, including the occurrence of material events.

    PARKER HANNIFIN CORPORATION - JUNE 30, 2002
    CONSOLIDATED STATEMENT OF INCOME

                            Three Months Ended June 30,    Year Ended June 30,
    (Dollars in thousands
     except per share
     amounts)                    2002         2001         2002         2001

    Net sales               $1,657,593   $1,484,796   $6,149,122   $5,979,604
    Cost of sales            1,405,807    1,195,520    5,116,570    4,728,156
    Gross profit               251,786      289,276    1,032,552    1,251,448
    Selling, general and
     administrative
     expenses                  184,423      188,346      686,485      679,963
    Goodwill impairment
     loss                       39,516            -       39,516            -
    Other income
     (deductions):
       Interest expense        (19,551)     (19,344)     (82,484)     (90,362)
       Interest and other
        income, net             (6,298)      (5,062)      (6,031)      52,473
                               (25,849)     (24,406)     (88,515)     (37,889)
    Income before income
     taxes                       1,998       76,524      218,036      533,596
    Income taxes                13,848       27,166       87,886      189,426
    Income (loss)  before
     extraordinary item        (11,850)      49,358      130,150      344,170
    Extraordinary item -
     extinguishment of
     debt                                                              (3,378)
    Net income (loss)         $(11,850)     $49,358     $130,150     $340,792

    Earnings (loss) per
     share:
       Basic earnings
        (loss) per share
        before
        extraordinary item       $(.10)        $.43        $1.13        $3.01
       Extraordinary item
        - extinguishment
        of debt                                                          (.03)
       Basic earnings
        (loss) per share         $(.10)        $.43        $1.13        $2.98
       Diluted earnings
        (loss) per share
        before
        extraordinary item       $(.10)        $.42        $1.12        $2.99
       Extraordinary item
        - extinguishment
        of debt                                                          (.03)
       Diluted earnings
        (loss) per share         $(.10)        $.42        $1.12        $2.96

    Average shares
     outstanding during
     period - Basic        115,954,864  114,843,825  115,408,872  114,304,977
    Average shares
     outstanding during
     period - Diluted      116,589,133  115,615,197  116,060,719  115,064,447

    Cash dividends per
     common share                 $.18         $.18         $.72         $.70

    Note:  Selling, general and administrative expenses for the three months
    and year ended June 30, 2001 includes $15,834 ($13,608 after tax or $.12
    per share) and $59,582 ($51,206 after tax or $.44 per share) of goodwill
    amortization, respectively.


    PRO FORMA RESULTS EXCLUDING GOODWILL AMORTIZATION
                                        Three Months Ended       Year Ended
                                              June 30,             June 30,
    (Dollars in thousands except per
     share amounts)                         2002     2001      2002      2001

    Reported net income (loss)          $(11,850) $49,358  $130,150  $340,792
    Add back goodwill amortization                 13,608              51,206
    Adjusted net income (loss)          $(11,850) $62,966  $130,150  $391,998

    Earnings (loss) per share:
       Reported basic earnings (loss)
        per share                          $(.10)    $.43     $1.13     $2.98
       Goodwill amortization                          .12                 .44
       Adjusted basic earnings (loss)
        per share                          $(.10)    $.55     $1.13     $3.42
       Reported diluted earnings (loss)
        per share                          $(.10)    $.42     $1.12     $2.96
       Goodwill amortization                          .12                 .44
       Adjusted diluted earnings (loss)
        per share                          $(.10)    $.54     $1.12     $3.40


    BUSINESS SEGMENT INFORMATION BY INDUSTRY
                                  Three Months Ended         Year Ended
                                       June 30,               June 30,
    (Dollars in thousands)         2002        2001        2002        2001
    Net sales
        Industrial:
           North America         $768,368    $691,119  $2,792,315  $2,941,697
           International          366,203     311,117   1,278,694   1,275,516
        Aerospace                 286,807     323,365   1,172,608   1,205,624
        Other                     236,215     159,195     905,505     556,767
    Total                      $1,657,593  $1,484,796  $6,149,122  $5,979,604
    Segment operating income

        Industrial:
           North America          $39,183     $37,990    $141,314    $322,786
           International           10,561      14,755      55,749      92,561
        Aerospace                  37,333      60,988     189,353     218,851
        Other                       9,864      10,988      54,643      41,451
    Total segment operating
     income                        96,941     124,721     441,059     675,649
    Corporate general and
     administrative expenses       23,172      29,970      73,335      85,738
    Income from operations
     before interest
     expense and other             73,769      94,751     367,724     589,911
    Interest expense               19,551      19,344      82,484      90,362
    Other expense (income)         52,220      (1,117)     67,204     (34,047)
    Income before income taxes     $1,998     $76,524    $218,036    $533,596

    Note:  Income before income taxes for the three months and year ended June
    30, 2001 includes $15,834 ($8,982 in Industrial North America; $3,270
    in Industrial International; $1,951 in Aerospace; $1,095 in Other; and
    $536 in Other expense (income)) and $59,582 ($31,056 in Industrial North
    America; $12,369 in Industrial International; $7,800 in Aerospace; $4,347
    in Other; and $4,010 in Other expense (income)) of goodwill amortization,
    respectively.


    BUSINESS SEGMENT INFORMATION BY INDUSTRY
    EXCLUDING GOODWILL AMORTIZATION
                                    Three Months Ended         Year Ended
                                         June 30,                June 30,
    (Dollars in thousands)           2002        2001        2002        2001
    Net sales
        Industrial:
           North America         $768,368    $691,119  $2,792,315  $2,941,697
           International          366,203     311,117   1,278,694   1,275,516
        Aerospace                 286,807     323,365   1,172,608   1,205,624
        Other                     236,215     159,195     905,505     556,767
    Total                      $1,657,593  $1,484,796  $6,149,122  $5,979,604
    Segment operating income

        Industrial:
           North America          $39,183     $46,972    $141,314    $353,842
           International           10,561      18,025      55,749     104,930
        Aerospace                  37,333      62,939     189,353     226,651
       Other                        9,864      12,083      54,643      45,798
    Total segment operating
     income                        96,941     140,019     441,059     731,221
    Corporate general and
     administrative expenses       23,172      29,970      73,335      85,738
    Income from operations
     before interest
     expense and other             73,769     110,049     367,724     645,483
    Interest expense               19,551      19,344      82,484      90,362
    Other expense (income)         52,220      (1,653)     67,204     (38,057)
    Income before income taxes     $1,998     $92,358    $218,036    $593,178

    Note: Amounts for the three months and year ended June 30, 2001 eliminates
    goodwill amortization, reflecting the Company's early adoption of FAS 142.
    It is intended to assist investors in making year-over-year comparisons
    with the three months and year ended June 30, 2002.


    CONSOLIDATED BALANCE SHEET

    (Dollars in
     thousands)        June 30,                      2002              2001

    Assets
    Current assets:
    Cash and cash equivalents                      $46,384           $23,565
    Accounts receivable, net                     1,006,313           922,325
    Inventories                                  1,051,968         1,008,864
    Prepaid expenses                                48,532            39,486
    Deferred income taxes                           82,421            91,439
    Assets held for sale                                             110,683
    Total current assets                         2,235,618         2,196,362
    Plant and equipment, net                     1,696,965         1,548,688
    Excess cost of investments over net
     assets acquired                             1,083,768           953,648
    Other assets                                   736,232           638,963
    Total assets                                $5,752,583        $5,337,661

    Liabilities and shareholders' equity
    Current liabilities:
    Notes payable                                 $416,693          $546,502
    Accounts payable                               443,525           367,806
    Accrued liabilities                            451,310           436,947
    Accrued domestic and foreign taxes              48,309            61,874
    Total current liabilities                    1,359,837         1,413,129
    Long-term debt                               1,088,883           857,078
    Pensions and other postretirement
     benefits                                      508,313           318,527
    Deferred income taxes                           76,955           131,708
    Other liabilities                              135,079            88,304
    Shareholders' equity                         2,583,516         2,528,915
    Total liabilities and shareholders'
     equity                                     $5,752,583        $5,337,661


    CONSOLIDATED STATEMENT OF CASH FLOWS
                                                      Year Ended June 30,
    (Dollars in thousands)                           2002              2001

    Cash flows from operating activities:
    Net income                                    $130,150          $340,792
    Depreciation and amortization                  281,598           264,527
    Net effect of extraordinary loss                                   3,378
    Net change in receivables,
     inventories, and trade payables               171,078           (42,557)
    Net change in other assets and
     liabilities                                     8,495           (14,729)
    Other, net                                      39,725           (19,246)
    Net cash provided by operating
     activities                                    631,046           532,165
    Cash flows from investing activities:
    Acquisitions (less cash acquired of
     $3,118 in 2002 and $10,143 in 2001)          (388,315)         (583,254)
    Capital expenditures                          (206,564)         (334,748)
    Other, net                                     (13,839)           98,174
    Net cash used in investing activities         (608,718)         (819,828)
    Cash flows from financing activities:
    Net proceeds from common share
     activity                                       20,250            15,971
    Net proceeds from debt                          61,711           308,087
    Dividends                                      (82,838)          (79,921)
    Net cash (used in) provided by
     financing activities                             (877)          244,137
    Effect of exchange rate changes on
     cash                                            1,368            (1,369)
    Net increase (decrease) in cash and
     cash equivalents                               22,819           (44,895)
    Cash and cash equivalents at
     beginning of period                            23,565            68,460
    Cash and cash equivalents at end of
     period                                        $46,384           $23,565
    Non-cash transactions:
      Stock issued for acquisitions                $13,081


    PARKER HANNIFIN CORPORATION
    SEGMENT RESULTS FOURTH QUARTER 2002
    RECONCILIATION OF REPORTED RESULTS TO RESULTS EXCLUDING BUSINESS
    REALIGNMENT CHARGE, ASSET IMPAIRMENTS, GOODWILL AMORTIZATION AND OTHER
    ITEMS
    (amounts in thousands, except percentages)

                                            FOURTH QUARTER FY 2002
                                                                     Segment
                                                                     results
                                                                     excluding
                                                                     business
                                    Segment                        realignment
                                    results   Business     Asset       and
                                      at     realignment impairment   asset
                                   reported   charges     charges  impairments

    Net Sales
    Industrial:
         North America             $768,368                          $768,368
         International              366,203                           366,203
    Aerospace                       286,807                           286,807
    Other                           236,215                           236,215
    Total Parker Hannifin         1,657,593                         1,657,593

    Segment Operating Income:
    Industrial:
         North America               39,183   $2,566                   41,749
         International               10,561    6,063                   16,624
    Aerospace                        37,333    1,120                   38,453
    Other                             9,864    1,961                   11,825
    Total segment operating
     income                          96,941  (11,710)                 108,651
    Corporate administration         23,172                            23,172
    Income before interest
     expense and other               73,769  (11,710)                  85,479
      Interest expense               19,551                            19,551
      Other expense (income)         52,220                $48,904      3,316
    Income before income taxes        1,998  (11,710)      (48,904)    62,612
    Income taxes                     13,848    4,040         5,618     23,506
    Income (loss) before
     extraordinary item             (11,850)  (7,670)      (43,286)    39,106
    Extraordinary item
    Net income (loss)               (11,850)  (7,670)      (43,286)    39,106

    Diluted earnings per share       $(0.10)   $0.07         $0.37      $0.34

      Percent of Sales

    Segment Operating Income:
    Industrial:
         North America                 5.1%                              5.4%
         International                 2.9%                              4.5%
    Aerospace                         13.0%                             13.4%
    Other                              4.2%                              5.0%
    Total segment operating
     income                            5.8%                              6.6%
    Corporate administration           1.4%                              1.4%
    Income before interest
     expense and other                 4.5%                              5.2%
      Interest expense                 1.2%                              1.2%
      Other                            3.2%                              0.2%
    Income before income taxes         0.1%                              3.8%
    Income taxes                       0.8%                              1.4%
    Income (loss) before
     extraordinary item               -0.7%                              2.4%
    Extraordinary item                 0.0%                              0.0%
    Net income (loss)                 -0.7%                              2.4%

    Explanation of "Other items" under Fourth Quarter FY 2001 - Amounts
    include certain asset impairments and other corporate accruals.


    PARKER HANNIFIN CORPORATION
    SEGMENT RESULTS FOURTH QUARTER 2002
    RECONCILIATION OF REPORTED RESULTS TO RESULTS EXCLUDING BUSINESS
    REALIGNMENT CHARGE, ASSET IMPAIRMENTS, GOODWILL AMORTIZATION AND OTHER
    ITEMS
    (amounts in thousands, except percentages)

                                          FOURTH QUARTER FY 2001
                                                                     Segment
                                                                     results
                                                                    excluding
                                                                     business
                                                                  realignment,
                                                            Other    goodwill
                                                            items amortization
                               Segment   Business  Goodwill (see        and
                             results as realignment  amort- detail     other
                               reported  charges    ization below)     items

    Net Sales
    Industrial:
         North America        $691,119                               $691,119
         International         311,117                                311,117
    Aerospace                  323,365                                323,365
    Other                      159,195                                159,195
    Total Parker Hannifin    1,484,796                              1,484,796

    Segment Operating
     Income:
    Industrial:
         North America          37,990  $11,296   $8,982               58,268
         International          14,755    3,521    3,270               21,546
    Aerospace                   60,988             1,951               62,939
    Other                       10,988    1,050    1,095               13,133
    Total segment operating
     income                    124,721  (15,867) (15,298)             155,886
    Corporate administration    29,970                     $11,418     18,552
    Income before interest
     expense and other          94,751  (15,867) (15,298)  (11,418)   137,334
      Interest expense          19,344                                 19,344
      Other expense (income)    (1,117)              536       723     (2,376)
    Income before income
     taxes                      76,524  (15,867) (15,834)  (12,141)   120,366
    Income taxes                27,166    5,981    2,226     4,550     39,923
    Income (loss) before
     extraordinary item         49,358   (9,886) (13,608)   (7,591)    80,443
    Extraordinary item
    Net income (loss)           49,358   (9,886) (13,608)   (7,591)    80,443

    Diluted earnings per
     share                       $0.42    $0.09    $0.12     $0.06      $0.69

      Percent of Sales

    Segment Operating
     Income:
    Industrial:
         North America            5.5%                                   8.4%
         International            4.7%                                   6.9%
    Aerospace                    18.9%                                  19.5%
    Other                         6.9%                                   8.2%
    Total segment operating
     income                       8.4%                                  10.5%
    Corporate administration      2.0%                                   1.2%
    Income before interest
     expense and other            6.4%                                   9.2%
      Interest expense            1.3%                                   1.3%
      Other                      -0.2%                                  -0.2%
    Income before income
     taxes                        5.2%                                   8.1%
    Income taxes                  1.8%                                   2.7%
    Income (loss) before
     extraordinary item           3.3%                                   5.4%
    Extraordinary item            0.0%                                   0.0%
    Net income (loss)             3.3%                                   5.4%


    PARKER HANNIFIN CORPORATION
    SEGMENT RESULTS TOTAL FISCAL YEAR 2002
    RECONCILIATION OF REPORTED RESULTS TO RESULTS EXCLUDING BUSINESS
    REALIGNMENT CHARGE, ASSET IMPAIRMENTS, GOODWILL AMORTIZATION AND OTHER
    ITEMS
    (amounts in thousands, except percentages)

                                            TOTAL FISCAL YEAR 2002
                                                                     Segment
                                                                     results
                                                                     excluding
                                                                     business
                                    Segment                        realignment
                                    results   Business     Asset       and
                                      at     realignment impairment   asset
                                   reported   charges     charges  impairments

    Net Sales
    Industrial:
         North America             $2,792,315                      $2,792,315
         International              1,278,694                       1,278,694
    Aerospace                       1,172,608                       1,172,608
    Other                             905,505                         905,505
    Total Parker Hannifin           6,149,122                       6,149,122

    Segment Operating Income:
    Industrial:
         North America                141,314     $8,892              150,206
         International                 55,749      9,722    4,973      70,444
    Aerospace                         189,353      4,667              194,020
    Other                              54,643      4,683               59,326
    Total segment operating income    441,059    (27,964)  (4,973)    473,996
    Corporate administration           73,335                          73,335
    Income before interest expense
     and other                        367,724    (27,964)  (4,973)    400,661
      Interest expense                 82,484                          82,484
      Other expense (income)           67,204              48,904      18,300
    Income before income taxes        218,036    (27,964) (53,877)    299,877
    Income taxes                       87,886      9,635    5,630     103,151
    Income before extraordinary item  130,150    (18,329) (48,247)    196,726
    Extraordinary item
    Net income                        130,150    (18,329) (48,247)    196,726

    Diluted earnings per share          $1.12      $0.16    $0.41       $1.69

      Percent of Sales

    Segment Operating Income:
    Industrial:
         North America                   5.1%                            5.4%
         International                   4.4%                            5.5%
    Aerospace                           16.1%                           16.5%
    Other                                6.0%                            6.6%
    Total segment operating income       7.2%                            7.7%
    Corporate administration             1.2%                            1.2%
    Income before interest expense
     and other                           6.0%                            6.5%
      Interest expense                   1.3%                            1.3%
      Other                              1.1%                            0.3%
    Income before income taxes           3.5%                            4.9%
    Income taxes                         1.4%                            1.2%
    Income before extraordinary item     2.1%                            3.2%
    Extraordinary item                   0.0%                            0.0%
    Net income                           2.1%                            3.2%

    Explanation of "Other items" under Total Fiscal Year 2001 - Amounts
    include gain on sale of real property, certain non-operating asset
    impairments and other corporate accruals.


    PARKER HANNIFIN CORPORATION
    SEGMENT RESULTS TOTAL FISCAL YEAR 2002
    RECONCILIATION OF REPORTED RESULTS TO RESULTS EXCLUDING BUSINESS
    REALIGNMENT CHARGE, ASSET IMPAIRMENTS, GOODWILL AMORTIZATION AND OTHER
    ITEMS
    (amounts in thousands, except percentages)

                                          TOTAL FISCAL YEAR 2001
                                                                     Segment
                                                                     results
                                                                    excluding
                                                                     business
                                                                  realignment,
                                                           Other     goodwill
                                                           items  amortization
                            Segment    Business  Goodwill  (see        and
                          results as  realignment  amort-  detail     other
                            reported   charges    ization  below)     items

    Net Sales
    Industrial:
         North America     $2,941,697                              $2,941,697
         International      1,275,516                               1,275,516
    Aerospace               1,205,624                               1,205,624
    Other                     556,767                                 556,767
    Total Parker Hannifin   5,979,604                               5,979,604

    Segment Operating
     Income:
    Industrial:
         North America        322,786  $13,182  $31,056               367,024
         International         92,561    5,875   12,369               110,805
    Aerospace                 218,851             7,800               226,651
    Other                      41,451    1,250    4,347                47,048
    Total segment
     operating income         675,649  (20,307) (55,572)              751,528
    Corporate
     administration            85,738                      11,418      74,320
    Income before interest
     expense and other        589,911  (20,307) (55,572)  (11,418)    677,208
      Interest expense         90,362                                  90,362
      Other expense
       (income)               (34,047)            4,010   (47,131)      9,074
    Income before income
     taxes                    533,596  (20,307) (59,582)   35,713     577,772
    Income taxes              189,426    7,649    8,376   (13,992)    191,459
    Income before
     extraordinary item       344,170  (12,658) (51,206)   21,721     386,313
    Extraordinary item         (3,378)                                 (3,378)
    Net income                340,792  (12,658) (51,206)   21,721     382,935

    Diluted earnings per
     share                      $2.96    $0.14    $0.44    $(0.19)      $3.35

      Percent of Sales

    Segment Operating
     Income:
    Industrial:
         North America          11.0%                                   12.5%
         International           7.3%                                    8.7%
    Aerospace                   18.2%                                   18.8%
    Other                        7.4%                                    8.5%
    Total segment
     operating income           11.3%                                   12.6%
    Corporate
     administration              1.4%                                    1.2%
    Income before interest
     expense and other           9.9%                                   11.3%
      Interest expense           1.5%                                    1.5%
      Other                     -0.7%                                    0.2%
    Income before income
     taxes                       8.9%                                    9.7%
    Income taxes                 3.2%                                    3.2%
    Income before
     extraordinary item          5.8%                                    6.5%
    Extraordinary item          -0.1%                                   -0.1%
    Net income                   5.7%                                    6.4%

    Explanation of "Other items" under Total Fiscal Year 2001 - Amounts
    include gain on sale of real property, certain non-operating asset
    impairments and other corporate accruals.

SOURCE Parker Hannifin Corporation

CONTACT: Media, Lorrie Paul Crum, VP - Corp. Communications, +1-216-896-2750, or After hours, +1-330-666-4196, or lcrum@parker.com; or Financial Analysts, Timothy K. Pistell, Treasurer, +1-216-896-2130, or tpistell@parker.com

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