Parker Reports Fiscal 2014 Second Quarter Sales, Net Income and Earnings per Share

 Parker Reports Fiscal 2014 Second Quarter Sales, Net Income and Earnings per
                                    Share

- Orders increase 5 percent, sales increase 1.3 percent, 3.1 percent
organically

- Earnings per diluted share reach $1.66, or $1.24 excluding non-recurring
items

- Non-recurring items consist of a joint venture gain of $1.68 per diluted
share and asset write downs of $1.26 per diluted share

- Company maintains full year adjusted earnings guidance at midpoint of $6.40
per diluted share

PR Newswire

CLEVELAND, Jan. 22, 2014

CLEVELAND, Jan. 22, 2014 /PRNewswire/ -- Parker Hannifin Corporation (NYSE:
PH), the global leader in motion and control technologies, today reported
results for the fiscal 2014 second quarter ended December 31, 2013. Fiscal
2014 second quarter sales increased 1.3 percentto $3.11 billion, compared
with $3.07 billion in the prior year quarter. Organic growth was 3.1 percent,
which excludes an increase of 0.3 percent from acquisitions, a decrease of 0.7
percent from foreign currency translation, and a decrease of 1.4 percent from
a joint venture agreement with GE Aviation. Fiscal 2014 second quarter as
reported net income was $253.4 million, or $1.66 earnings per diluted share
compared with $181.1 million or $1.19 earnings per diluted share in the prior
year quarter. Adjusted net income for the fiscal 2014 second quarter was
$189.9 million, or $1.24 earnings per diluted share. Fiscal 2014 second
quarter adjusted net income and earnings per diluted share exclude asset write
downs and a previously announced gain associated with a joint venture
agreement between Parker Aerospace and GE Aviation. A reconciliation of as
reported net income and earnings per diluted share to adjusted net income and
earnings per diluted share is included with the financial tables attached to
this news release.

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

Cash flow from operations was $540.1 million or 8.5 percent of sales for the
first six months of fiscal 2014 compared with $347.3 million or 5.5 percent of
sales in the prior year period. Excluding a discretionary contribution to the
company's pension plan of $75 million for the first six months of fiscal 2014
cash flow from operations was 9.7 percent of sales.

"Earnings on an adjusted basis were ahead of what we expected for this quarter
as we continue to perform well operationally," said Chairman, CEO and
President, Don Washkewicz. "With continued positive order growth and modestly
improved macro-economic trends, we remain optimistic about stronger operating
performance in the second half of fiscal year 2014."

Segment Results

Diversified Industrial Segment: North American second quarter sales increased
0.6 percent to $1.33 billion, and operating income was $200.6 million compared
with $190.4 million in the same period a year ago. International second
quarter sales increased 4.7 percent to $1.28 billion, and operating income was
$134.2 million compared with $125.0 million in the same period a year ago.

Aerospace Systems Segment: Second quarter sales decreased 4.7 percent to
$503.8 million, reflecting the impact of the previously announced joint
venture between Parker Aerospace and GE Aviation, and operating income was
$45.0 million compared with $52.2 million in the same period a year ago.

Orders

Parker reported an increase of 5 percent in orders for the quarter ending
December 31, 2013, compared with the same quarter a year ago. The company
reported the following orders by business:

  oOrders increased 3 percent in the Diversified Industrial North America
    businesses compared with the same quarter a year ago.
  oOrders increased 6 percent in the Diversified Industrial International
    businesses compared with the same quarter a year ago.
  oOrders increased 7 percent in the Aerospace Systems segment on a rolling
    12-month average basis.

Outlook

For the fiscal year ending June 30, 2014, the company has provided guidance
for adjusted earnings per diluted share in the range of $6.20 to $6.60. Fiscal
2014 adjusted earnings guidance includes previously announced restructuring
expenses of approximately $0.47 per diluted share, but does not include the
following non-recurring items: a gain of $1.68 per diluted share associated
with the previously announced joint venture agreement between Parker Aerospace
and GE Aviation and asset write downs of $1.26 earnings per diluted share
recorded in the quarter ended December 31, 2013. Restructuring expenses were
$0.07 per diluted share in the second quarter of fiscal 2014 and $0.13 per
diluted share year-to-date.

Washkewicz added, "Operationally, our outlook is essentially unchanged. We are
optimistic that modestly improved macro-economic trends will continue and
anticipate that we will deliver another strong year."

NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide
presentation to discuss its fiscal 2014 second quarter results are available
to all interested parties via live webcast today at 11:00 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 of $13 billion in fiscal year 2013, 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 49 countries around the world. Parker has increased its
annual dividends paid to shareholders for 57 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.

Note 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 Diversified Industrial North America and Diversified Industrial
International, and the year-over-year 12-month rolling average of orders for
the Aerospace Systems segment.

Note on Non-GAAP Numbers

This press release contains references to (a) sales growth excluding the
effects of acquisitions, divestitures and currency exchange rates, (b) net
income without the effect of a gain associated with a joint venture agreement
and asset write downs, (c) actual and forecasted earnings per diluted share
without the effect of a gain associated with a joint venture agreement and
asset write downs, and (d) cash flow excluding discretionary contributions to
the company's pension plan. The effects of acquisitions, divestitures,
currency exchange rates, gain associated with a joint venture agreement, asset
write downs, and pension plan contributions are removed to allow investors and
the company to meaningfully evaluate changes in sales, net income, earnings
per diluted share, and cash flow on a comparable basis from period to period.

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 the 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; ability to identify acceptable strategic
acquisition targets; uncertainties surrounding timing, successful completion
or integration of acquisitions and similar transactions; the ability to
successfully divest businesses planned for divestiture and realize the
anticipated benefits of such divestitures; the determination to undertake
business realignment activities and the expected costs thereof and, if
undertaken, the ability to complete such activities and realize the
anticipated cost savings from such activities; the ability to realize
anticipated benefits of the consolidation of the Climate and Industrial
Controls Group; 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 - DECEMBER 31, 2013
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)             Three Months Ended December  Six Months Ended December
                        31,                          31,
(Dollars in thousands
except per share        2013           2012          2013          2012
amounts)
Net sales               $ 3,106,006    $ 3,065,495   $ 6,332,150   $ 6,280,430
Cost of sales           2,419,971      2,421,972     4,896,380     4,899,419
Gross profit            686,035        643,523       1,435,770     1,381,011
Selling, general and
administrative          398,636        381,100       805,566       762,222
expenses
Goodwill and
intangible asset        188,870        -             188,870       -
impairment
Interest expense        20,851         24,216        41,809        47,725
Other (income), net     (417,638)      (24,422)      (419,881)     (27,623)
Income before income    495,316        262,629       819,406       598,687
taxes
Income taxes            241,912        81,515        321,682       177,625
Net income              253,404        181,114       497,724       421,062
Less: Noncontrolling    116            152           120           359
interests
Net income attributable $ 253,288      $ 180,962     $ 497,604     $ 420,703
to common shareholders
Earnings per share
attributable to common
shareholders:
Basic earnings per      $ 1.70         $ 1.21        $ 3.34        $ 2.82
share
Diluted earnings per    $ 1.66         $ 1.19        $ 3.28        $ 2.77
share
Average shares
outstanding during      149,153,599    149,001,273   149,195,452   149,143,561
period - Basic
Average shares
outstanding during      152,151,024    152,198,704   151,743,389   152,018,025
period - Diluted
Cash dividends per      $ .45          $ .41         $ .90         $ .82
common share
RECONCILIATION OF NET INCOME AND EARNINGS PER DILUTED SHARE TO ADJUSTED NET
INCOME AND EARNINGS PER DILUTED SHARE
Net income              $ 253,404      $ 181,114     $ 497,724     $ 421,062
Adjustments:
Asset writedowns        192,188        -             192,188       -
Gain related to joint   (255,652)      -             (255,652)     -
venture agreement
Adjusted net income     $ 189,940      $ 181,114     $ 434,260     $ 421,062
Earnings per diluted    $ 1.66         $ 1.19        $ 3.28        $ 2.77
share
Adjustments:
Asset writedowns        1.26           -             1.26          -
Gain related to joint   (1.68)         -             (1.68)        -
venture agreement
Adjusted earnings per   $ 1.24         $ 1.19        $ 2.86        $ 2.77
diluted share
BUSINESS SEGMENT
INFORMATION BY INDUSTRY
(Unaudited)             Three Months Ended December  Six Months Ended December
                        31,                          31,
(Dollars in             2013           2012          2013          2012
thousands)
Net sales
Diversified
Industrial:
North America           $ 1,325,402    $ 1,317,380   $ 2,713,277   $ 2,742,659
International           1,276,851      1,219,459     2,547,646     2,468,032
Aerospace Systems       503,753        528,656       1,071,227     1,069,739
Total                   $ 3,106,006    $ 3,065,495   $ 6,332,150   $ 6,280,430
Segment operating
income
Diversified
Industrial:
North America           $ 200,628      $ 190,431     $ 434,826     $ 434,506
International           134,198        125,047       307,608       281,645
Aerospace Systems       45,034         52,172        102,332       114,070
Total segment           379,860        367,650       844,766       830,221
operating income
Corporate general and
administrative          46,819         45,401        94,029        85,168
expenses
Income before           333,041        322,249       750,737       745,053
interest and other
Interest expense        20,851         24,216        41,809        47,725
Other (income)          (183,126)      35,404        (110,478)     98,641
expense
Income before income    $ 495,316      $ 262,629     $ 819,406     $ 598,687
taxes
CONSOLIDATED BALANCE
SHEET
(Unaudited)             December 31,   June 30,      December 31,
(Dollars in             2013           2013          2012
thousands)
Assets
Current assets:
Cash and cash           $ 2,139,522    $ 1,781,412   $ 497,635
equivalents
Accounts receivable,    1,861,849      2,062,745     1,802,405
net
Inventories             1,448,628      1,377,405     1,515,325
Prepaid expenses        169,262        182,669       152,477
Deferred income taxes   125,612        126,955       127,905
Total current assets    5,744,873      5,531,186     4,095,747
Plant and equipment,    1,820,312      1,808,240     1,844,643
net
Goodwill                3,161,699      3,223,515     3,295,141
Intangible assets,      1,220,547      1,290,499     1,367,978
net
Other assets            916,505        687,458       857,852
Total assets            $ 12,863,936   $ 12,540,898  $ 11,461,361
Liabilities and
equity
Current liabilities:
Notes payable           $ 1,217,292    $ 1,333,826   $ 510,006
Accounts payable        1,074,512      1,156,002     1,073,233
Accrued liabilities     839,095        894,296       810,546
Accrued domestic and    172,204        136,079       94,475
foreign taxes
Total current           3,303,103      3,520,203     2,488,260
liabilities
Long-term debt          1,507,019      1,495,960     1,509,238
Pensions and other
postretirement          1,303,527      1,372,437     1,704,349
benefits
Deferred income taxes   112,561        102,920       128,892
Other liabilities       339,440        307,897       301,633
Shareholders' equity    6,295,226      5,738,426     5,325,717
Noncontrolling          3,060          3,055         3,272
interests
Total liabilities and   $ 12,863,936   $ 12,540,898  $ 11,461,361
equity
CONSOLIDATED STATEMENT
OF CASH FLOWS
(Unaudited)             Six Months Ended December
                        31,
(Dollars in             2013           2012
thousands)
Cash flows from
operating activities:
Net income              $ 497,724      $ 421,062
Depreciation and        170,090        163,827
amortization
Stock incentive plan    75,370         46,527
compensation
Goodwill and
intangible asset        188,870        -
impairment
Gain on
deconsolidation of      (412,612)      -
subsidiary
Gain on sale of         -              (12,708)
businesses
Net change in
receivables,            53,841         102,612
inventories, and trade
payables
Net change in other     (80,362)       (408,895)
assets and liabilities
Other, net              47,188         34,913
Net cash provided by    540,109        347,338
operating activities
Cash flows from
investing activities:
Acquisitions (net of
cash of $33,160 in      728            (621,716)
2012)
Capital expenditures    (111,847)      (140,221)
Proceeds from sale of   8,790          14,173
plant and equipment
Proceeds from sale of   -              68,569
businesses
Proceeds from
deconsolidation of      202,498        -
subsidiary
Other, net              (728)          (7,765)
Net cash provided by
(used in) investing     99,441         (686,960)
activities
Cash flows from
financing activities:
Net payments for        (81,784)       (101,160)
common stock activity
Acquisition of
noncontrolling          -              (1,072)
interests
Net (payments for)      (116,834)      168,712
proceeds from debt
Dividends               (134,718)      (123,328)
Net cash (used in)      (333,336)      (56,848)
financing activities
Effect of exchange      51,896         55,788
rate changes on cash
Net increase
(decrease) in cash and  358,110        (340,682)
cash equivalents
Cash and cash
equivalents at          1,781,412      838,317
beginning of period
Cash and cash
equivalents at end of   $ 2,139,522    $ 497,635
period
RECONCILIATION OF FORECASTED EARNINGS PER DILUTED SHARE TO
ADJUSTED FORECASTED EARNINGS PER DILUTED SHARE
(Unaudited)
(Amounts in dollars)
                        Fiscal Year
                        2014
Forecasted earnings     $6.62 to
per diluted share       $7.02
Adjustments:
Asset writedowns        $1.26
Gain related to joint   $(1.68)
venture agreement
Adjusted forecasted     $6.20 to
earnings per diluted    $6.60
share

SOURCE Parker Hannifin Corporation

Website: http://www.phstock.com
Contact: Media - Aidan Gormley, Director, Corporate Communications
216/896-3258, aidan.gormley@parker.com, Financial Analysts - Pamela Huggins,
Vice President - Treasurer 216/896-2240, phuggins@parker.com