Parker Reports Year End Results with All-Time Record Sales, Net Income and Earnings per Share

- Fiscal 2011 Full Year Sales Reach All-Time Record of $12.3 billion

- Fiscal 2011 Full Year Diluted Earnings Per Share Reaches a Record $6.37

- Company Maintains Strong Cash Flow and Balance Sheet

- Issues Guidance for Record Earnings in Fiscal 2012

Aug 02, 2011, 07:30 ET from Parker Hannifin Corporation

CLEVELAND, Aug. 2, 2011 /PRNewswire/ -- Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported all-time record results for the fiscal 2011 fourth quarter and year ended June 30, 2011.  Fiscal 2011 sales were $12.3 billion, an increase of 23.5 percent from $10.0 billion in the prior year and surpassing the previous record achieved in fiscal 2008. Net income for the year was a record $1.1 billion, an increase of 90.0 percent compared with $556.4 million in fiscal 2010.  Fiscal 2011 earnings per diluted share were a record at $6.37 compared with $3.40 in the previous year.  Cash flow from operations for fiscal 2011 was $1.2 billion, or 9.5 percent of sales, compared with cash flow from operations of $1.2 billion, or 12.2 percent of sales in the prior year period.   Cash flow from operations included discretionary contributions to the company's pension plan of $400 million in fiscal 2011 and $100 million in fiscal 2010.  Excluding these discretionary contributions, cash flow as a percent of sales in fiscal 2011 and fiscal 2010, was 12.7 percent and 13.2 percent, respectively.

(Logo: http://photos.prnewswire.com/prnh/19990816/PHLOGO )

Fiscal 2011 fourth quarter sales were a record $3.4 billion, an increase of 22.4 percent from $2.8 billion in the same quarter a year ago.  Net income for the fourth quarter was also a record at $294.7 million, a 32.1 percent increase compared with $223.1 million in the fourth quarter of fiscal 2010.  Earnings per diluted share for the quarter were a record $1.79, compared with $1.35 in last year's fourth quarter.   Cash flow from operations for fiscal 2011 fourth quarter was $367 million, or 10.8 percent of sales, compared with cash flow from operations of $377 million, or 13.5 percent of sales in the prior year period.   Fiscal 2011 fourth quarter cash flow from operations included a $200 million discretionary contribution to the company's pension plan. Excluding this discretionary contribution, cash flow as a percent of sales was 16.6 percent for the fiscal 2011 fourth quarter.

"Achieving record performance this year is a remarkable accomplishment," said Chairman, CEO and President, Don Washkewicz. "I am especially proud of our global team that delivered this performance. We will continue the focus on executing Parker's Win Strategy and build on this success."

Parker also achieved all-time record sales and earnings per share in the fourth quarter and strong segment operating margin performance. Total sales for the quarter increased 22 percent as organic sales increased 15 percent, acquisitions contributed 1 percent and foreign currency translation was a positive 6 percent.  Profitability in the quarter was strongest in the Industrial segment. Industrial North America segment operating margin reached 16.9 percent and Industrial International segment operating margin was 14.7 percent.  

Segment Results

In the Industrial North America segment, fourth quarter sales increased 18.6 percent to $1.2 billion, and operating income was $207.3 million compared with $162.9 million in the same period a year ago.  

In the Industrial International segment, fourth quarter sales increased 33.8 percent to $1.4 billion, and operating income was $202.8 million compared with $140.3 million in the same period a year ago.  

In the Aerospace segment, fourth quarter sales increased 9.3 percent to $521.9 million, and operating income was $70.7 million compared with $64.1 million in the same period a year ago.

In the Climate and Industrial Controls segment, fourth quarter sales increased 15.2 percent to $276.8 million, and operating income was $22.5 million compared with $20.5 million in the same period a year ago.    

Orders

Parker reported an increase of 15 percent in orders for the quarter ending June 30, 2011, compared with the same quarter a year ago.  The company reported the following orders by operating segment:  

  • Orders increased 11 percent in the Industrial North America segment, compared with the same quarter a year ago.
  • Orders increased 18 percent in the Industrial International segment, compared with the same quarter a year ago.
  • Orders increased 27 percent in the Aerospace segment on a rolling 12-month average basis.
  • Orders increased 1 percent in the Climate and Industrial Controls segment, compared with the same quarter a year ago.

Outlook

For fiscal 2012, the company has issued guidance for earnings from continuing operations in the range of $6.70 to $7.50 per diluted share.

Washkewicz added, "Our earnings range for fiscal 2012 anticipates another record year for Parker.  We will continue in fiscal 2012 with a strong focus on the fundamentals defined by the Win Strategy.  We will continue to invest in profitable growth through new product and systems innovation, strategic acquisitions, and expansion of our distribution network."

NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal 2011 fourth quarter and full year results are available to all interested parties via live webcast today at 10:00 a.m. ET, on the company's investor information web site at www.phstock.com. To access the call, click on the "Live Webcast" link. From this link, users also may complete a pre-call system test and register for e-mail notification of future events and information available from Parker.  A replay of the conference call will also be available at www.phstock.com for one year after the call.

With annual sales exceeding $12 billion in fiscal year 2011, 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 mobile, industrial and aerospace markets. The company employs approximately 58,000 people in 47 countries around the world. Parker has increased its annual dividends paid to shareholders for 55 consecutive fiscal years, among the top five longest-running dividend-increase records in the S&P 500 index. For more information, visit the company's web site at www.parker.com, or its investor information web site at www.phstock.com.

Notes on Orders

Orders provide near-term perspective on the company's outlook, particularly when viewed in the context of prior and future quarterly order rates. However, orders are not in themselves an indication of future performance. All comparisons are at constant currency exchange rates, with the prior year restated to the current-year rates. All exclude acquisitions until they can be reflected in both the numerator and denominator. Aerospace comparisons are rolling 12-month average computations. The total Parker orders number is derived from a weighted average of the year-over-year quarterly percent change in orders for the Industrial North America, Industrial International, and Climate and Industrial Controls segments, and the year-over-year 12-month rolling average of orders for the Aerospace segment.

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, including its individual segments, may differ materially from current expectations, depending on economic conditions within its mobile, 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, actions taken to combat the effects of the current economic environment, and growth, innovation and global diversification initiatives. A change in economic conditions in individual markets may have a particularly volatile effect on segment performance. Among other factors which may affect future performance are: changes in business relationships with and purchases by or from major customers, suppliers or distributors, including delays or cancellations in shipments, disputes regarding contract terms or significant changes in financial condition, changes in contract cost and revenue estimates for new development programs and changes in product mix; uncertainties surrounding timing, successful completion or integration of acquisitions; ability to realize anticipated costs savings from business realignment activities; threats associated with and efforts to combat terrorism; uncertainties surrounding the ultimate resolution of outstanding legal proceedings, including the outcome of any appeals; 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 insurance and employee retirement and health care benefits; and global economic factors, including manufacturing activity, air travel trends, currency exchange rates, difficulties entering new markets and general economic conditions such as inflation, deflation, interest rates and credit availability. The company makes these statements as of the date of this disclosure, and undertakes no obligation to update them unless otherwise required by law.

PARKER HANNIFIN CORPORATION - JUNE 30, 2011

CONSOLIDATED STATEMENT OF INCOME

Three Months Ended June 30,

Twelve Months Ended June 30,

(Dollars in thousands except per share amounts)

2011

2010

2011

2010

Net sales

$        3,409,830

$             2,786,470

$     12,345,870

$       9,993,166

Cost of sales

2,590,772

2,114,190

9,387,457

7,847,067

Gross profit

819,058

672,280

2,958,413

2,146,099

Selling, general and administrative expenses

413,441

349,328

1,467,773

1,277,080

Interest expense

24,821

26,896

99,704

103,599

Other (income) expense, net

(594)

3,896

(22,785)

10,603

Income before income taxes

381,390

292,160

1,413,721

754,817

Income taxes

86,736

69,108

356,571

198,452

Net income

294,654

223,052

1,057,150

556,365

Less:  Noncontrolling interests

2,464

889

8,020

2,300

Net income attributable to common shareholders

$           292,190

$                222,163

$       1,049,130

$          554,065

Earnings per share attributable to common shareholders:

  Basic earnings per share

$                 1.83

$                      1.38

$                6.51

$                3.44

  Diluted earnings per share

$                 1.79

$                      1.35

$                6.37

$                3.40

Average shares outstanding during period - Basic

159,369,296

161,310,414

161,125,869

160,909,655

Average shares outstanding during period - Diluted

163,688,610

163,997,297

164,798,221

162,901,717

Cash dividends per common share

$                   .37

$                        .26

$                1.25

$                1.01

BUSINESS SEGMENT INFORMATION BY INDUSTRY

Three Months Ended June 30,

Twelve Months Ended June 30,

(Dollars in thousands)

2011

2010

2011

2010

Net sales

   Industrial:

      North America

$        1,227,412

$             1,034,573

$       4,516,510

$       3,623,460

      International

1,383,748

1,033,971

4,917,007

3,811,464

   Aerospace

521,868

477,629

1,921,984

1,744,283

   Climate & Industrial Controls

276,802

240,297

990,369

813,959

Total

$        3,409,830

$             2,786,470

$     12,345,870

$       9,993,166

Segment operating income

   Industrial:

      North America

$           207,290

$                162,933

$          745,544

$          487,137

      International

202,848

140,295

754,222

394,089

   Aerospace

70,722

64,052

247,126

208,002

  Climate & Industrial Controls

22,504

20,513

76,134

53,452

Total segment operating income

503,364

387,793

1,823,026

1,142,680

Corporate general and administrative expenses

51,187

54,911

163,868

153,965

Income from operations before interest

 expense and other

452,177

332,882

1,659,158

988,715

Interest expense

24,821

26,896

99,704

103,599

Other expense

45,966

13,826

145,733

130,299

Income before income taxes

$           381,390

$                292,160

$       1,413,721

$          754,817

CONSOLIDATED BALANCE SHEET

(Dollars in thousands)

June 30,

2011

2010

Assets

Current assets:

Cash and cash equivalents

$           657,466

$                575,526

Accounts receivable, net

1,977,856

1,599,941

Inventories

1,412,153

1,171,655

Prepaid expenses

111,934

111,545

Deferred income taxes

145,847

130,129

Total current assets

4,305,256

3,588,796

Plant and equipment, net

1,797,179

1,697,881

Goodwill

3,009,116

2,786,334

Intangible assets, net

1,177,722

1,150,051

Other assets

597,532

687,320

Total assets

$      10,886,805

$             9,910,382

Liabilities and equity

Current liabilities:

Notes payable

$             75,271

$                363,272

Accounts payable

1,173,851

888,743

Accrued liabilities

909,147

776,527

Accrued domestic and foreign taxes

232,774

176,349

Total current liabilities

2,391,043

2,204,891

Long-term debt

1,691,086

1,413,634

Pensions and other postretirement benefits

862,938

1,500,928

Deferred income taxes

160,035

135,321

Other liabilities

293,367

196,208

Shareholders' equity

5,383,854

4,367,965

Noncontrolling interests

104,482

91,435

Total liabilities and equity

$      10,886,805

$             9,910,382

CONSOLIDATED STATEMENT OF CASH FLOWS

Twelve Months Ended June 30,

(Dollars in thousands)

2011

2010

Cash flows from operating activities:

Net income

$        1,057,150

$                556,365

Depreciation and amortization

339,800

362,509

Stock incentive plan compensation

73,238

59,318

Net change in receivables, inventories, and trade payables

(170,650)

92,949

Net change in other assets and liabilities

(156,080)

155,991

Other, net

23,475

(8,310)

Net cash provided by operating activities

1,166,933

1,218,822

Cash flows from investing activities:

Acquisitions (net of cash of $385 in 2011)

(60,227)

(5,451)

Capital expenditures

(207,294)

(129,222)

Proceeds from sale of plant and equipment

32,289

11,929

Other, net

(9,706)

(23,429)

Net cash (used in) investing activities

(244,938)

(146,173)

Cash flows from financing activities:

Net (payments for) common stock activity

(624,411)

(994)

Net (payments for) debt

(85,283)

(486,263)

Dividends

(206,084)

(162,739)

Net cash (used in) financing activities

(915,778)

(649,996)

Effect of exchange rate changes on cash

75,723

(34,738)

Net increase in cash and cash equivalents

81,940

387,915

Cash and cash equivalents at beginning of period

575,526

187,611

Cash and cash equivalents at end of period

$           657,466

$                575,526

SOURCE Parker Hannifin Corporation



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