SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of earliest event reported: April 14, 1994
PARKER-HANNIFIN CORPORATION
(Exact name of registrant as specified in its charter)
OHIO 1-4982 34-0451060
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
17325 Euclid Avenue, Cleveland, Ohio 44112
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 531-3000
The Exhibit Index appears on sequential page 5.
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PARKER-HANNIFIN CORPORATION
FORM 8-K
Item 5. Other Events.
On April 14, 1994 Parker-Hannifin Corporation announced that it will record
a charge of $52.7 million or $1.08 per share in the third quarter, ended
March 31, 1994, to reduce the value of certain long-term assets and to
recognize downsizing and relocation activities.
At the beginning of this fiscal year the Parker management team embarked upon
an extensive review of strategic goals and challenges. Two challenges became
immediately clear: the need to adjust the business to the structural changes
that have occurred in the aerospace industry, and to deal with the impact of
the continuing economic problems in Europe and South America.
Management has measured the effect of these changes on certain Parker units
and has concluded that there has been an impairment of the value of certain
long-lived assets, requiring the following specific accounting adjustments.
Charges affecting the Aerospace segment total $38.8 million or $.80 per
share. The largest charge of $27.8 million or $.57 per share relates to
goodwill and permanently impaired assets of the continuing operations of the
aerospace heat-transfer components product line. The completion of major
contracts and the decline of aerospace markets has caused management to
anticipate future cash flows to be less than the value of the assets related
to that line. The goodwill was incurred with the purchase of this line in
1987, during a period of heavy defense spending, and has been determined to
be without value in the current environment. These charges will have no
cash impact.
In addition, downsizing activities over the past several years have caused
aerospace manufacturing operations to be consolidated, leaving several idle
facilities in weak real estate markets such as southern California.
Management has made the decision to sell these facilities. Careful analysis
of the current recoverable value of these properties has resulted in a charge
for their impairment of $7.7 million or $.16 per share. This charge has no
negative cash impact and the sale of these properties will provide cash
proceeds.
On March 31, 1994 the Company sold its Metal Bellows operations, which
manufactured welded and formed bellows, accumulators and other fabricated
assemblies, principally for the aerospace market. The sale of this product
line resulted in proceeds of $14 million, and a loss on disposition of
$.8 million or $.02 per share.
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Aerospace management will be implementing further reductions in employment
and relocation of facilities over the next twelve months which will result
in a charge of $2.5 million or $.05 per share. The completion of this
downsizing will position Parker to maintain its leadership role in its core
flight control and fuel systems businesses.
Charges affecting the Industrial segment total $11.4 million or $.23 per
share. A charge of $5.2 million or $.11 per share was taken to recognize
permanently impaired assets for continuing industrial product lines in
Germany and Brazil and a small joint venture in Asia. These operations have
been producing losses and anticipated future cash flow is not expected to
fully recover the value of the related long-lived assets or investments.
This charge has no cash impact.
The recession in Europe, particularly in Germany, is causing the Company to
further downsize operations. This will result in charges of $1.6 million or
$.03 per share in this quarter.
North American Industrial consolidations have caused certain buildings and
equipment to be idled and become impaired, causing a $1.4 million or $.03 per
share write-down to current market value. Further Industrial North America
downsizing and relocation charges total $3.2 million or $.06 per share.
A charge of $2.5 million or $.05 per share has also been recorded for various
investment impairment and litigation matters.
The effect on cash of these restructuring actions is estimated to be
$3.8 million in the fourth quarter and $8.7 million during fiscal 1995;
however, it will be more than offset by the proceeds of the divestiture and
facility sales. Anticipated savings from these actions are expected to be
approximately $.10 per share in fiscal 1995 and $.15 per share in fiscal 1996.
As a result of these significant charges, Parker will be recording a net loss
for the third quarter. However, with the strong operating profits in the
third quarter, which are anticipated to continue through the fourth quarter,
Parker expects to report positive net income for the nine months ended
March 31, 1994, and the fiscal year ending June 30, 1994."
Item 7. Financial Statements and Exhibits.
Exhibit 99 - Parker-Hannifin Press Release dated April 14, 1994
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PARKER-HANNIFIN CORPORATION
(Registrant)
Michael J. Hiemstra
Michael J. Hiemstra
Vice President - Finance and Administration
Date: April 15, 1994
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EXHIBIT INDEX
Sequential
Exhibit No. Description of Exhibit Page
99 Parker-Hannifin Press Release
dated April 14, 1994 6
<PAGE>
Exhibit 99 to Report
on Form 8-K
Current Report
by Parker-Hannifin Corporation
Cleveland, Ohio, April 14, 1994 -- Parker Hannifin Corporation (PH-NYSE)
announced today that it will record a charge of $52.7 million or $1.08 per
share in the third quarter, ended March 31, 1994, to reduce the book value of
certain long-term assets and to recognize downsizing and relocation activities.
President and Chief Executive Officer Duane E. Collins said, "At the beginning
of this fiscal year the Parker management team embarked upon an extensive
review of strategic goals and challenges. Two challenges became immediately
clear: the need to adjust the business to the structural changes that have
occurred in the aerospace industry, and to deal with the impact of the
continuing economic problems in Europe and South America.
"Management has measured the effect of these changes on certain Parker units
and has concluded that there has been an impairment of the value of certain
long-lived assets, requiring the following specific accounting adjustments.
"Charges affecting the Aerospace segment total $38.8 million or $.80 per
share. The largest charge of $27.8 million or $.57 per share relates to
goodwill and permanently impaired assets of the continuing operations of the
aerospace heat-transfer components product line. The goodwill was incurred
with the purchase of this line in 1987, during a period of heavy defense
spending, and has been determined to be without value in the current
environment. These charges will have no cash impact.
"In addition, Aerospace management continues to downsize and relocate
facilities in response to the changed business climate. This has resulted
in charges totaling $10.2 million or $.21 per share to write assets down to
recoverable values and provide for the reduction of employees and relocation
of facilities. Further, the Company divested its Metal Bellows operation,
resulting in a loss of $.8 million or $.02 per share. The completion of
this restructuring will position Parker to maintain its leadership role in
its core flight control and fuel systems businesses.
"Charges affecting the Industrial segment total $11.4 million or $.23 per
share. A charge of $5.2 million or $.11 per share was taken to recognize
permanently impaired assets for continuing industrial product lines in
Germany and Brazil and a small joint venture in Asia. This charge has no
cash impact. Other charges for Industrial downsizing and asset impairment
total $6.2 million or $.12 per share.
"A charge of $2.5 million or $.05 per share has also been recorded for
various investment impairment and litigation matters.
<PAGE>
"The effect on cash of these restructuring actions is estimated to be
$3.8 million in the fourth quarter and $8.7 million during fiscal 1995;
however, it will be more than offset by the proceeds of the divestiture and
facility sales. Anticipated savings from these actions are expected to be
approximately $.10 per share in fiscal 1995 and $.15 per share in fiscal 1996.
"As a result of these significant charges, Parker will be recording a net
loss for the third quarter. However, with the strong operating profits in
the third quarter, which are anticipated to continue through the fourth
quarter, Parker expects to report positive net income for the nine months
ended March 31, 1994 and the fiscal year ending June 30, 1994."
Parker Hannifin is a $2.49 billion worldwide producer of motion-control
components and systems for a wide range of industrial and aerospace markets.
