Parker Hannifin Corporation

Quarterly Earnings Release

2nd Quarter FY 2007

January 17, 2007

Exhibit

99.2

*

*

*

*

Slide 2

Forward-Looking Statements

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 future performance and earnings

projections of the company and individual segments may differ materially from current expectations,

depending on economic conditions within both its industrial and aerospace markets, and the company's

ability to maintain and achieve anticipated benefits associated with announced realignment activities,

strategic initiatives to improve operating margins, and growth and innovation initiatives. A change in

economic conditions in individual markets may have a particularly volatile effect on segment results.

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

or

significant changes in financial condition; uncertainties surrounding timing, successful completion or

integration

of

acquisitions;

threats

associated

with

and

efforts

to

combat

terrorism;

competitive

market

conditions

and

resulting

effects

on

sales

and

pricing;

increases

in

raw-material

costs

that

cannot

be

recovered in product pricing; the company’s ability to manage costs related to employee retirement and

health

care

benefits

and

insurance;

and

global

economic

factors,

including

manufacturing

activity,

air

travel trends, currency exchange rates, difficulties entering new markets and general economic conditions

such as inflation and interest rates. The company makes these statements as of the date of this

disclosure, and undertakes no obligation to update them.

Slide 3

Non-GAAP Financial Measure

This presentation reconciles sales amounts reported in accordance with

U.S. GAAP to sales amounts adjusted to remove the effects of acquisitions

made

within the prior four quarters as well as the effects

of

currency

exchange

rates

on

sales.

The

effects

of

acquisitions

and

currency exchange rates are removed to allow investors and the company

to meaningfully evaluate changes in sales on a comparable basis from

period to period.

Slide 4

Discussion Agenda

CEO 2

nd

quarter highlights

Key performance measures & outlook

Questions & answers

CEO closing comments

Slide 5

Second Quarter Highlights

Sales increased 16% to $2.5 billion for the

quarter

6% organic growth

Segment operating income margins

improved from 11.8% last year to 13.2%,

including the effects of acquisitions

Repurchased 2.4 million shares making it

5.0 million shares year to date

Slide 6

Financial Highlights

EPS from Continuing Operations

2

nd

Quarter and 1

st

Half

$2.27

$3.39

$1.64

$1.07

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

Q2 FY07

Q2 FY06

1st Half FY07

1st

Half FY06

Slide 7

Influences on Earnings

Increased volume

Win Strategy

Repurchased shares

Lower “Other”

expense

Litigation

Pensions

Deferred gain on divestiture

Thermoplastics loss in prior year

Slide 8

Financial Highlights

Sales –

2

nd

Quarter and 1

st

Half

Dollars in millions

FY2007

%

Change

FY2006

FY2007

%

Change

FY2006

Sales

Adjusted Sales

2,295

$

6.4 %

4,579

$

7.2 %

Acquisitions

138

6.4 %

366

8.5 %

Currency

78

3.6 %

118

2.8 %

$

As reported

2,511

16.4 %

2,158

$

5,063

$

18.5 %

4,271

$

2nd Quarter

First Half

Slide 9

Influences on Sales

Continued end market strength

Industrial International

Aerospace

Emerging markets

Acquisitions

Slide 10

Segment Reporting

Industrial North America

Dollars in millions

FY2007

%

Change

FY2006

FY2007

%

Change

FY2006

Sales

Adjusted Sales

939

$  

1.0 %

1,896

$

2.0 %

Acquisitions

20

2.2 %

61

3.3 %

Currency

1

0.0 %

3

0.2 %

As reported

960

$  

3.2 %

930

$  

1,960

$

5.5 %

1,859

$

Operating Margin

As reported

134

$  

130

$  

287

$  

267

$  

% of Sales

14.0 %

14.0 %

14.6 %

14.4 %

First Half

2nd Quarter

Slide 11

Segment Reporting

Industrial International

Dollars in millions

FY2007

%

Change

FY2006

FY2007

%

Change

FY2006

Sales

Adjusted Sales

758

$  

12.1 %

1,448

$

11.6 %

Acquisitions

96

14.1 %

252

19.4 %

Currency

68

10.1 %

100

7.7 %

As reported

922

$  

36.3 %

677

$  

1,800

$

38.7 %

1,297

$

Operating Margin

As reported

122

$  

68

$     

249

$  

149

$  

% of Sales

13.2 %

10.1 %

13.9 %

11.4 %

2nd Quarter

First Half

Slide 12

Segment Reporting

Aerospace

Dollars in millions

FY2007

%

Change

FY2006

FY2007

%

Change

FY2006

Sales

Adjusted Sales

394

$  

14.0 %

789

$  

13.7 %

Acquisitions

4

1.2 %

9

1.3 %

Currency

4

1.2 %

6

0.9 %

As reported

402

$  

16.4 %

345

$  

804

$  

15.9 %

694

$  

Operating Margin

As reported

68

$     

47

$     

136

$  

102

$  

% of Sales

16.9 %

13.7 %

17.0 %

14.7 %

2nd Quarter

First Half

Slide 13

Segment Reporting

Climate & Industrial Controls

Dollars in millions

FY2007

%

Change

FY2006

FY2007

%

Change

FY2006

Sales

Adjusted Sales

204

$  

(0.7)%

445

$  

5.8 %

Acquisitions

18

8.7 %

45

10.7 %

Currency

5

2.4 %

8

1.9 %

As reported

227

$  

10.4 %

206

$  

498

$  

18.4 %

421

$  

Operating Margin

As reported

7

$       

10

$     

38

$     

29

$     

% of Sales

3.1 %

4.8 %

7.6 %

6.8 %

2nd Quarter

First Half

Slide 14

Parker New Order rates

Excludes Acquisitions & Currency

Year over year comparisons

Aerospace is calculated using a 12-month moving average

FY07

FY06

FY05

Total Parker

6 %

+   

14 %

+

--

Industrial North America

2 %

-    

13 %

+

4 %

+   

Industrial International

17 %

+

14 %

+

15 %

+

Aerospace

10 %

+

13 %

+

25 %

+

Climate & Industrial Controls

1 %

-    

20 %

+

4 %

+   

December

Slide 15

Balance Sheet Summary

Cash

Working capital

Inventory

Accounts receivable

Slide 16

Strong Cash Flow –

Cash From Operations

FY 07 YTD -

$308

$111 pension contribution

Dollars in millions

459

538

529

631

662

854

558

955

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

4.0%

6.0%

8.0%

10.0%

12.0%

Slide 17

Financial Leverage

Debt to Debt Equity

25.9%

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

28.0%

30.0%

32.0%

34.0%

36.0%

38.0%

FY99

FY00

FY01

FY02

FY03

FY04

FY05

FY06

FY07 YTD

Not to exceed 37% over the cycle

Slide 18

FY

2007

Earnings

Outlook

Assumptions

Segment

Sales

&

Operating

Income

  FY 2007 Sales change versus FY 2006

  Industrial North America

.4 %

  -- 

.8 %

  Industrial International

28.1 %

  -- 

28.5 %

  Aerospace

9.4 %

  -- 

9.8 %

  Climate & Industrial Controls

3.8 %

  -- 

4.2 %

  FY 2007 Operating margin percentages

  Industrial North America

14.8 %

  -- 

15.2 %

  Industrial International

13.3 %

  -- 

13.7 %

  Aerospace

15.2 %

  -- 

15.6 %

  Climate & Industrial Controls

7.1 %

  -- 

7.5 %

Slide 19

FY 2007  Earnings Outlook Assumptions

below Operating Margin

Corporate Admin

+  5 % to + 12 % vs. FY 2006

Interest Expense

+  4 % to + 10 % vs. FY 2006

Other Exp. (Income) 

-

27 % to -

20 % vs. FY 2006

Tax Rate

29 %

Slide 20

Earnings Outlook –

FY07

Low

High

EPS from continuing operations

6.35

$ 

6.75

$ 

Slide 21

Questions & Answers...

Appendix

Income Statements

2

nd

Quarter FY2007

1

st

Half FY2007

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Slide 23

Income Statement –

2

nd

Quarter

Dollars in millions

% of Sales

% of Sales

Net Sales

2,511.2

$

100.0 %

2,157.5

$

100.0 %

Cost of sales

1,938.0

77.2 %

1,705.7

79.1 %

Gross profit

573.2

22.8 %

451.8

20.9 %

S, G & A

292.9

11.7 %

245.8

11.4 %

Interest expense

22.3

.9 %

19.6

.9 %

Other (income) expense

(6.8)

(.3)%

10.9

.5 %

Income from cont'g

operations before taxes

264.8

10.5 %

175.5

8.1 %

Income taxes

71.8

2.8 %

46.5

2.1 %

Income from cont'g

operations

193.0

7.7 %

129.0

6.0 %

Discontinued operations

Net income

193.0

$   

7.7 %

129.0

$  

6.0 %

FY 2007

FY 2006

Slide 24

Income Statement –

1

st

Half

Dollars in millions

% of Sales

% of Sales

Net Sales

5,062.7

$

100.0 %

4,271.1

$

100.0 %

Cost of sales

3,885.4

   

76.7 %

3,361.4

  

78.7 %

Gross profit

1,177.3

   

23.3 %

909.7

      

21.3 %

S, G & A

584.9

      

11.6 %

482.9

      

11.3 %

Interest expense

39.4

        

.8 %

36.0

        

.8 %

Other (income) expense

(13.4)

       

(.3)%

11.2

        

.3 %

Income from cont'g operations before taxes

566.4

      

11.2 %

379.6

      

8.9 %

Income taxes

162.8

      

3.2 %

106.7

      

2.5 %

Income from cont'g operations

403.6

      

8.0 %

272.9

      

6.4 %

  Discontinued operations

28.9

        

.7 %

Net income

403.6

$    

8.0 %

301.8

$   

7.1 %

FY 2007

FY 2006