SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ..................to.........................
Commission file number 1-4982
A. Full title of the plan and address of the plan, if different from that
of the issuer named below:
COMMERCIAL INTERTECH 401(k) PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
PARKER-HANNIFIN CORPORATION
6035 PARKLAND BOULEVARD
CLEVELAND, OHIO 44124-4141
Commercial Intertech 401(k) Plan
Audited Financial Statements
and Supplemental Schedule
Years ended December 31, 2000 and 1999
Contents
Reports of Independent Auditors..................................... 1
Financial Statements
Statements of Net Assets Available for Benefits..................... 3
Statement of Changes in Net Assets Available for Benefits........... 4
Notes to Financial Statements....................................... 5
Supplemental Schedule
Schedule H, Line 4i-Schedule of Assets (Held at End of Year)........ 11
Exhibits
Consent of Independent Auditors..................................... 13
Report of Independent Auditors
Administrative Committee
Commercial Intertech 401(k) Plan
We have audited the accompanying statement of net assets available for
benefits of the Commercial Intertech 401(k) Plan ("the Plan") as of December 31,
2000, and the related statement of changes in net assets available for benefits
for the year then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The statement of net assets available
for benefits of the Plan as of December 31, 1999 was audited by other auditors
whose report dated June 1, 2000, expressed an unqualified opinion on that
statement.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for benefits of the
Commercial Intertech 401(k) Plan as of December 31, 2000, and the changes in net
assets available for benefits for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in the
accompanying index is presented for the purpose of additional analysis and is
not a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This supplemental schedule is the responsibility of the Plan's
management. The supplemental schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Hausser + Taylor LLP
Beachwood, Ohio
June 25, 2001
1
Report of Independent Auditors
Administrative Committee
Commercial Intertech 401(k) Plan
We have audited the accompanying statement of net assets available for benefits
of the Commercial Intertech 401(k) Plan (the "Plan") as of December 31, 1999.
This financial statement is the responsibility of the Plan's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1999 in conformity with accounting principles generally accepted in
the United States.
/s/ Ernst & Young LLP
Cleveland, Ohio
June 1, 2000
2
Commercial Intertech 401(k) Plan
Statements of Net Assets Available for Benefits
December 31,
2000 1999
------------------------------
Assets
Investments $ 46,691,685 $ 47,891,838
Cash and cash equivalents 81,652 12,696
Interest receivable 9,063 8,431
Employee contributions receivable 265,605 320,991
Due from securities sold 490,976 0
------------ ------------
847,296 342,118
------------ ------------
Net assets available for benefits $ 47,538,981 $ 48,233,956
============ ============
See notes to financial statements.
3
Commercial Intertech 401(k) Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2000
Additions
Employee contributions $ 3,697,941
Interest income 103,378
Dividend income 3,945,242
------------
7,746,561
Deductions
Distributions 4,911,156
------------
4,911,156
Net depreciation in fair value of investments (3,530,380)
------------
Net decrease (694,975)
Net assets available for benefits at beginning of year 48,233,956
------------
Net assets available for benefits at end of year $ 47,538,981
============
See notes to financial statements.
4
Commercial Intertech 401(k) Plan
Notes to Financial Statements
Year ended December 31, 2000
A. Significant Accounting Policies
Basis of Accounting
The accounting records of the Commercial Intertech 401(k) Plan (the "Plan") are
maintained on the accrual basis.
Valuation of Investments
Investments consisting of common shares of Parker Hannifin Corporation (the
"Company") and Commercial Intertech Corp. are carried at the closing market
price on the last business day of the Plan's year. Investments in registered
investment company funds (American Century GNMA, Strategic Allocation:
Conservative, Strategic Allocation: Moderate, Strategic Allocation: Aggressive,
Equity Index, Value, Equity Growth, Ultra, Vista, and International Growth
Funds) and in common/collective trusts (American Century Stable Asset Fund) are
carried at the fair value of their underlying assets as of the last business day
of the Plan's year as determined by their respective Investment Managers.
Participant loans receivable are valued at cost which approximates fair value.
Cash Equivalents
Cash equivalents consist of a money market mutual fund.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the administrator to
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
5
Commercial Intertech 401(k) Plan
Notes to Financial Statements (continued)
B. Description of the Plan
The Plan consists of a pre-tax savings program, under which participants may
elect to contribute up to 18% of their compensation, on a tax-deferred basis,
into the Plan. Prior to September 1, 1997, the Plan consisted of a pre-tax
savings program allowing contributions up to 15% of a participant's compensation
and a post-tax program under which participants could contribute up to an
additional 10% of their compensation. Participant contributions are subject to
IRS limitations.
Effective January 1, 1999, the Plan was amended to allow participation by
eligible employees on and after the first day of the first month following the
date the employee reaches age 18 and completes six months of eligibility
service. This amendment did not have a significant impact on the net assets
available for benefits. Prior to January 1, 1999, the Plan allowed participation
by eligible employees on and after the first day of the first month following
the date the employee completed the earlier of (1) six months and 500 hours of
eligible service or (2) one year of eligible service.
Employee contributions are accrued as additions to the Plan on a monthly basis.
The Company contributes, into the Commercial Intertech Employee Stock Ownership
Plan (the "ESOP", which is a separate plan), 50% (currently invested in common
shares of Parker Hannifin Corporation) of the first 6% of eligible compensation
that a participant contributes into the Plan on a tax-deferred basis.
The Company is obligated to make contributions in cash to the ESOP which, when
aggregated with the ESOP's dividends on shares and interest earnings, equal the
amount necessary to enable the ESOP to make its regularly scheduled payments of
principal and interest due on its ESOP notes. This contribution enables the ESOP
to allocate an appropriate number of shares to participants (see above). Should
the value of shares allocated be less than the required matching contribution,
the Company will make additional contributions to the ESOP in the form of common
stock or cash. Should the value of shares allocated be more than the required
matching contributions, any excess value of shares released over the required
amount will be allocated proportionately to each participant's account in the
ESOP based upon the ratio of the participant's current Company matching
contribution to the ESOP for the Plan year to the aggregate Company matching
contributions to the ESOP for all participants for the Plan year.
6
Commercial Intertech 401(k) Plan
Notes to Financial Statements (continued)
B. Description of the Plan (continued)
The Plan is subject to the applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and provides for separate
investment options in one or more funds as directed by the participants.
Participants may change investment options at any time. Effective April 11,
2000, the Commercial Intertech Common Stock Fund was replaced by the Parker
Hannifin Common Stock Fund due to the merger of the two companies.
At December 31, 2000, 474 individuals participated in the Parker Hannifin Common
Stock Fund, 413 individuals participated in the Stable Asset Fund, 159
individuals participated in the GNMA Fund, 122 individuals participated in the
Strategic Allocation: Conservative Fund, 246 individuals participated in the
Strategic Allocation: Moderate Fund, 291 individuals participated in the
Strategic Allocation: Aggressive Fund, 444 individuals participated in the
Equity Index Fund, 299 individuals participated in the Value Fund, 617
individuals participated in the Equity Growth Fund, 834 individuals participated
in the Ultra Fund, 355 individuals participated in the Vista Fund, and 501
individuals participated in the International Growth Fund.
At December 31, 1999, 502 individuals participated in the Commercial Intertech
Common Stock Fund, 486 individuals participated in the Stable Asset Fund, 177
individuals participated in the GNMA Fund, 134 individuals participated in the
Strategic Allocation: Conservative Fund, 257 individuals participated in the
Strategic Allocation: Moderate Fund, 279 individuals participated in the
Strategic Allocation: Aggressive Fund, 475 individuals participated in the
Equity Index Fund, 331 individuals participated in the Value Fund, 627
individuals participated in the Equity Growth Fund, 818 individuals participated
in the Ultra Fund, 250 individuals participated in the Vista Fund, and 483
individuals participated in the International Growth Fund.
All investment account dollars that result from employee contributions and
related investment results are immediately vested. There were no non-vested
assets in the Plan attributable to terminated employees at December 31, 2000.
The Plan also provides for withdrawal: (1) in cases of financial hardship, (2)
upon attainment of age 59-1/2, and (3) of the post-tax savings program
contributions. Participating employees may borrow up to the lesser of 50% of
their account balance attributable to employee contributions or $50,000. The
amount borrowed is repaid to the participant's account via payroll deductions
and carries an interest charge at the prime rate of interest at the date of the
loan plus 1%.
7
Commercial Intertech 401(k) Plan
Notes to Financial Statements (continued)
B. Description of the Plan (continued)
The Plan administrator is the Company. The trust department of UMB Bank, an
independent third-party bank, is the Plan's trustee. The Company has the sole
right to appoint the trustee, and to terminate the Plan, subject to the
provisions of ERISA. The Company pays all significant administrative expenses.
Upon termination of the Plan, amounts credited to each participant's account
shall be 100% vested and nonforfeitable. Additionally, the interest of each
participant in the trust fund will be distributed to such participant or his or
her beneficiary at the time prescribed by the Plan terms and the Code.
The foregoing description of the Plan provides only general information.
Additional information about the Plan may be obtained from the Plan agreement,
which provides a more complete description of the Plan's provisions.
C. Income Tax Status
The Internal Revenue Service has ruled that the Plan qualifies under Section
401(a) of the Internal Revenue Code (IRC) and is, therefore, not subject to tax
under present income tax laws. The Plan is amended periodically to conform with
current income tax laws. The Company believes that the Plan is designed and is
currently operating in compliance with the applicable requirements of the IRC.
D. Transactions with Parties-in-Interest
The Plan purchased shares of Commercial Intertech Corp. (CIC) common stock for
$437,456 and sold shares of CIC common stock for $6,645,738 during the year
ended December 31, 2000. The Plan also received dividends of $58,135 on CIC
common stock during the year ended December 31, 2000.
On April 11, 2000, CIC merged with the Company (Parker) in a cash and stock
transaction whereby CIC shareholders received Parker common stock based on an
exchange ratio of .4611 determined by the twenty-day average of Parker's closing
price as determined five days immediately preceding the closing date of the
merger. Alternatively, shareholders could elect to receive $20.00 per share in
cash, subject to a maximum of 49 percent of the value of the total shares
acquired by Parker.
8
Commercial Intertech 401(k) Plan
Notes to Financial Statements (continued)
D. Transactions with Parties-in-Interest (continued)
As of April 11, 2000, the Plan held 327,485 shares of CIC common stock, of which
244,809 were exchanged for $20.00 per share and 102,676 were exchanged for
47,343 common shares of Parker stock, based on the exchange ratio.
The Plan purchased shares of Parker common stock for $6,271,504 and sold shares
of Parker common stock for $1,440,513 during the year ended December 31, 2000.
The Plan also received dividends of $79,252 on Parker common stock during the
year ended December 31, 2000.
E. Investments
The following presents individual investments that represent 5% or more of the
Plan's net assets at fair value as of December 31:
2000 1999
---------------------------
Parker Hannifin Corporation common stock;
157,502 shares $6,949,776 $ 0
Commercial Intertech Corp. Common stock;
422,424 shares 0 5,385,906
American Century Stable Asset Fund 6,767,993 7,591,330
American Century Equity Index Fund 3,832,677 4,833,723
American Century Equity Growth Fund 5,277,166 6,212,078
American Century Ultra Fund 8,240,427 10,324,662
American Century Vista Fund 3,508,588 1,609,426
American Century International Growth Fund 3,144,480 3,242,891
During 2000, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) (depreciated) appreciated in
value as follows:
Registered Investment Companies $(7,150,012)
Common/Collective Trusts (389)
Common Stock 3,620,021
-----------
Net depreciation in aggregate fair value of
investments $(3,530,380)
===========
9
Commercial Intertech 401(k) Plan
Notes to Financial Statements (continued)
F. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of assets available for benefits per the
financial statements to the Form 5500:
December 31,
2000 1999
---------------------------
Net assets available for benefits per the financial
statements $47,538,981 $48,233,956
Amounts allocated to withdrawing participants (24,962) (439,835)
---------------------------
Net assets available for benefits per the
Form 5500 $47,514,019 $47,794,121
===========================
The following is a reconciliation of distributions paid to participants per the
financial statements to the Form 5500 for the year ended December 31, 2000:
Distributions paid to participants per the financial statements $4,911,156
Add amounts allocated to withdrawing participants at
December 31, 2000 24,962
Less amounts allocated to withdrawing participants at
December 31, 1999 (439,835)
----------
Benefits paid to participants per the Form 5500 $4,496,283
==========
10
Commercial Intertech 401(k) Plan
EIN 34-0451060
Plan Number 142
Schedule H, Line 4i--Schedule of Assets
(Held at End of Year)
December 31, 2000
Identity of Issue, Borrower, Current
(a) (b) Lessor or Similar Party (c) Description of Investment (d) Cost (e) Value
- -----------------------------------------------------------------------------------------------------------
* Parker Hannifin Corporation 157,502 common shares
$0.50 par value $ 6,129,281 $ 6,949,776
SEI Trust American Century Stable
Asset Fund 6,767,993 6,767,993
* American Century Investments GNMA Fund 1,355,137 1,354,092
* American Century Investments Strategic Allocation:
Conservative Fund 652,316 634,367
* American Century Investments Strategic Allocation:
Moderate Fund 1,693,139 1,701,152
* American Century Investments Strategic Allocation:
Aggressive Fund 1,829,818 1,882,946
* American Century Investments Equity Index Fund 3,733,958 3,832,677
* American Century Investments Value Fund 2,257,709 2,151,575
* American Century Investments Equity Growth Fund 5,283,015 5,277,166
* American Century Investments Ultra Fund 9,064,989 8,240,427
* American Century Investments Vista Fund 4,461,926 3,508,588
* American Century Investments International Growth Fund 3,128,560 3,144,480
* UMB Bank Scout Prime 1 Mutual Fund 81,652 81,652
* Participant Loans Loans receivable; interest rates
at prime plus 1% and
maturities from 1 to 10 years - 1,246,446
* Indicates party-in-interest to the Plan.
11
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the plan) have duly caused this annual
report to be signed by the undersigned thereunto duly authorized.
Date: June 27, 2001 Commercial Intertech 401(k) Plan
By: /s/ Michael J. Hiemstra
--------------------------------
Michael J. Hiemstra
Vice President-Finance &
Administration & Chief Financial
Officer
Parker-Hannifin Corporation
12