UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission File number 1-4982
PARKER-HANNIFIN CORPORATION
(Exact name of registrant as specified in its charter)
OHIO 34-0451060
(State or other (IRS Employer
jurisdiction of Identification No.)
incorporation)
6035 Parkland Blvd., Cleveland, Ohio 44124-4141
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 896-3000
Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X . No.
Number of Common Shares outstanding at September 30, 1997 111,622,055
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PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PARKER-HANNIFIN CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended
September 30,
_________________________
1997 1996
___________ ___________
<S> <C> <C>
Net sales $ 1,083,169 $ 959,328
Cost of sales 827,139 754,498
___________ ___________
Gross profit 256,030 204,830
Selling, general and
administrative expenses 125,275 114,444
___________ ___________
Income from operations 130,755 90,386
Other income (deductions):
Interest expense (10,437) (12,314)
Interest and other income, net 1,017 1,780
___________ ___________
(9,420) (10,534)
___________ ___________
Income before income taxes 121,335 79,852
Income taxes 43,074 28,747
___________ ___________
Net income $ 78,261 $ 51,105
=========== ===========
Earnings per share $ .70 $ .46
Cash dividends per common share $ .15 $ .12
See accompanying notes to consolidated financial statements.
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<TABLE>
<CAPTION>
PARKER-HANNIFIN CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
(Unaudited)
September 30, June 30,
1997 1997
___________ ___________
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 39,456 $ 68,997
Accounts receivable, net 629,476 601,724
Inventories:
Finished products 369,661 317,494
Work in process 298,015 304,743
Raw materials 110,051 105,610
___________ ___________
777,727 727,847
Prepaid expenses 16,353 17,366
Deferred income taxes 86,035 83,627
___________ ___________
Total current assets 1,549,047 1,499,561
Plant and equipment 2,209,249 2,138,591
Less accumulated depreciation 1,149,384 1,117,848
___________ ___________
1,059,865 1,020,743
Other assets 588,789 478,642
___________ ___________
Total assets $ 3,197,701 $ 2,998,946
=========== ===========
LIABILITIES
Current liabilities:
Notes payable $ 188,756 $ 69,738
Accounts payable, trade 256,804 266,848
Accrued liabilities 313,011 328,051
Accrued domestic and foreign taxes 85,640 51,374
___________ ___________
Total current liabilities 844,211 716,011
Long-term debt 433,302 432,885
Pensions and other postretirement benefits 257,911 252,709
Deferred income taxes 29,151 26,007
Other liabilities 37,556 24,033
___________ ___________
Total liabilities 1,602,131 1,451,645
SHAREHOLDERS' EQUITY
Serial preferred stock, $.50 par value;
authorized 3,000,000 shares; none issued -- --
Common stock, $.50 par value; authorized
300,000,000 shares; issued 111,812,025 shares at
September 30 and 111,809,085 shares at June 30 55,906 55,905
Additional capital 138,751 150,702
Retained earnings 1,439,782 1,378,297
Currency translation adjustment (31,200) (27,345)
___________ ___________
1,603,239 1,557,559
Less treasury shares, at cost:
189,970 shares at September 30
and 282,915 shares at June 30 (7,669) (10,258)
___________ ___________
Total shareholders' equity 1,595,570 1,547,301
___________ ___________
Total liabilities and shareholders' equity $ 3,197,701 $ 2,998,946
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
PARKER-HANNIFIN CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Three Months Ended
September 30,
_____________________
1997 1996
_________ _________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 78,261 $ 51,105
Adjustments to reconcile net income to
net cash provided by operations:
Depreciation 39,518 37,882
Amortization 6,110 6,043
Deferred income taxes (2,611) (4,606)
Foreign currency transaction loss 1,108 45
(Gain) loss on sale of plant and equipment (864) 263
Changes in assets and liabilities:
Accounts receivable (13,458) 18,426
Inventories (30,074) 4,466
Prepaid expenses 993 875
Other assets (22,844) (2,780)
Accounts payable, trade (16,766) (36,909)
Accrued payrolls and other compensation (18,545) (18,245)
Accrued domestic and foreign taxes 33,859 26,201
Other accrued liabilities 9,065 12,349
Pensions and other postretirement benefits 5,094 3,582
Other liabilities 4,450 1,838
_________ _________
Net cash provided by operating activities 73,296 100,535
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions (143,603) (17,224)
Capital expenditures (60,424) (42,962)
Proceeds from sale of plant and equipment 4,427 1,288
Other 4,384 (3,187)
_________ _________
Net cash used in investing activities (195,216) (62,085)
CASH FLOWS FROM FINANCING ACTIVITIES
Net payments for common share purchases (10,337) (3,197)
Proceeds from (payments of) notes payable, net 120,726 (14,400)
Proceeds from long-term borrowings 2,277 163
Payments of long-term borrowings (2,507) (3,952)
Dividends (16,745) (13,384)
_________ _________
Net cash provided by (used in)
financing activities 93,414 (34,770)
Effect of exchange rate changes on cash (1,035) (510)
_________ _________
Net (decrease) increase in cash and
cash equivalents (29,541) 3,170
Cash and cash equivalents at beginning of year 68,997 63,953
_________ _________
Cash and cash equivalents at end of period $ 39,456 $ 67,123
========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
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PARKER-HANNIFIN CORPORATION
BUSINESS SEGMENT INFORMATION BY INDUSTRY
(Dollars in thousands)
(Unaudited)
Parker operates in two industry segments: Industrial and Aerospace. The
Industrial Segment is the largest and includes a significant portion of
International operations.
Industrial - This segment produces a broad range of motion-control and
fluid systems and components used in all kinds of manufacturing, packaging,
processing, transportation, mobile construction, and agricultural and
military machinery and equipment. Sales are direct to major original
equipment manufacturers (OEMs) and through a broad distribution network to
smaller OEMs and the aftermarket.
Aerospace - This segment designs and manufactures products and provides
aftermarket support for commercial, military and general-aviation aircraft,
missile and spacecraft markets. The Aerospace Segment provides a full range
of systems and components for hydraulic, pneumatic and fuel applications.
<TABLE>
<CAPTION>
Results by Business Segment:
Three Months Ended
September 30,
_________________________
1997 1996
___________ ___________
<S> <C> <C>
Net sales, including intersegment sales
Industrial:
North America $ 585,499 $ 503,750
International 264,398 259,760
Aerospace 233,554 195,936
Intersegment sales (282) (118)
___________ ___________
Total $ 1,083,169 $ 959,328
=========== ===========
Income from operations before corporate
general and administrative expenses
Industrial:
North America $ 89,682 $ 68,603
International 20,151 12,929
Aerospace 36,916 20,924
___________ ___________
Total 146,749 102,456
Corporate general and administrative
expenses 15,994 12,070
___________ ___________
Income from operations $ 130,755 $ 90,386
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
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PARKER-HANNIFIN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollars in thousands, except per share amounts
1. Management Representation
In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position as
of September 30, 1997, the results of operations for the three months
ended September 30, 1997 and 1996 and cash flows for the three months
then ended.
2. Earnings per share
Primary earnings per share are computed using the weighted average number
of shares of common stock and common stock equivalents outstanding during
the period. Fully diluted earnings per share are not presented because
such dilution is not material.
3. Stock repurchase program
The Board of Directors has approved a program to repurchase the Company's
common stock on the open market, at prevailing prices. The repurchase
will be funded from operating cash flows and the shares will initially be
held as treasury stock. During the three-month period ended September 30,
1997 the Company purchased 263,645 shares of its common stock at an
average price of $43.497 per share.
4. Acquisitions
In September 1997 the Company acquired the assets of the Skinner and
Lucifer solenoid valve divisions of Honeywell. Skinner, headquartered in
New Britain, Connecticut and Lucifer, headquartered in Geneva,
Switzerland, had prior-year annual sales of approximately $94 million.
In August 1997 the Company acquired the assets of EWAL Manufacturing of
Belleville, New Jersey, a leading producer of precision fittings and
valves. EWAL, with annual sales of $33 million, serves ultra-high-purity
markets for the semiconductor, analytical, laboratory and specialty gas
industries.
Total purchase price for these businesses was approximately $140.2
million in cash. Both acquisitions are being accounted for by the
purchase method.
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PARKER-HANNIFIN CORPORATION
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997
AND COMPARABLE PERIOD ENDED SEPTEMBER 30, 1996
CONSOLIDATED STATEMENT OF INCOME
Net sales exceeded $1 billion for the first quarter of fiscal 1998,
increasing 12.9 percent to $1,083.2 million. Prior-year first quarter sales
were $959.3 million. Acquisitions within the past twelve months caused less
than 1 percent of the current-year increase.
Income from operations for the quarter increased 44.7 percent to $130.8
million. As a percent of sales the current-quarter operating income increased
to 12.1 percent from 9.4 percent the prior year. Cost of sales, as a percent
of sales, decreased to 76.4 percent from 78.6 percent. Selling, general and
administrative expenses, as a percent of sales, decreased to 11.6 percent
from 11.9 percent. Volume increases are improving capacity utilization and
benefiting operating margins. In addition, previous years' acquisitions are
now achieving higher margins as integration is being completed and synergies
are improving operating efficiencies.
Interest expense for the current-year quarter decreased $1.9 million due to
lower average debt outstanding for the quarter. Funds from the additional
Notes payable as of September 30, 1997 were borrowed late in the quarter.
Net Income for the quarter increased 53.1 percent to $78.3 million and
increased to 7.2 percent of sales compared to 5.3 percent the prior-year
quarter.
Backlog increased to $1.54 billion at September 30, 1997 compared to $1.36
billion the prior year and $1.49 billion at June 30, 1997.
RESULTS BY BUSINESS SEGMENT
INDUSTRIAL - Net sales of the Industrial Segment increased 11.3 percent to
$849.9 million compared to $763.5 million the prior year. Industrial North
American sales increased 16.2 percent while Industrial International sales
increased 1.8 percent. Without the significant impact of currency-rate
changes International sales volume increased more than 16 percent. A key
factor for the quarter was the strength of nearly all of the industrial
markets in North America and a continuing recovery in industrial markets
overseas. Favorable economic conditions in Latin America also contributed to
the volume growth.
Operating income for the Industrial Segment increased 34.7 percent to $109.8
million. Industrial North America increased 30.7 percent and Industrial
International increased 55.9 percent. North American operating income, as a
percent of sales, increased to 15.3 percent from 13.6 percent while
International increased to 7.6 percent from 5.0 percent. These increases
reflect better capacity utilization as market demand improved, especially
within the heavy duty truck, semiconductor fabrication and factory automation
product markets, resulting in increased volume and a more profitable product
mix.
Industrial Segment backlog increased 12.9 percent compared to a year ago, and
2.4 percent since June 30, 1997. Business conditions appear favorable for the
remainder of the fiscal year for both the North American and International
operations.
AEROSPACE - Net sales of the Aerospace Segment were up 19.2 percent for the
quarter primarily due to the continuing strong upswing of the commercial
aviation business.
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Income from operations increased 76.4 percent year to year, resulting in
Income from operations as a percent of sales increasing to 15.8 percent from
10.7 percent. The current quarter benefited from a more favorable product mix
as commercial aftermarket sales were especially strong. Increased volume
throughout Aerospace has improved capacity utilization and has also
contributed to the higher margins. Fiscal 1997 margins had been negatively
impacted by the integration of the Abex acquisition.
Backlog for the Aerospace Segment increased 14.3 percent compared to a year
ago and increased 4.6 percent since June 30, 1997. As backlog for the
commercial aviation business continues to increase, management anticipates
continuing growth for the Aerospace Segment. A change in product mix in the
future, to heavier OEM volume, could result in lower margins than were
achieved in the first quarter.
Corporate general and administrative expenses increased to $16.0 million for
fiscal 1998 compared to $12.1 million the prior year. The increase is
primarily due to the current classification of certain staff as Corporate
rather than segment operating staff as in prior years.
BALANCE SHEET
Working capital decreased to $704.8 million at September 30, 1997 from $783.6
million at June 30, 1997, with the ratio of current assets to current
liabilities decreasing to 1.8 to 1. The decrease in working capital was
primarily due to increased Notes payable as a result of recent acquisitions.
Accounts receivable and Inventories increased since June 30, 1997, as a
result of acquisitions within the Industrial segment and volume increases
throughout both the Industrial and Aerospace operations. Days sales
outstanding and months supply increased slightly during the quarter.
Other assets increased $110.1 million since June 30, 1997, primarily due to
an increase in goodwill from acquisitions.
The increase in Accrued domestic and foreign taxes to $85.6 million at
September 30, 1997 from $51.4 million at June 30, 1997 is essentially due to
the timing of the quarterly income tax payments.
Other liabilities increased $13.5 million to $37.6 million at September 30,
1997 primarily due to a reclassification from current Accrued liabilities
resulting from participants electing to defer certain incentive compensation
benefits.
The debt to debt-equity ratio increased to 28.1 percent at September 30, 1997
compared to 24.5 percent as of June 30, 1997 primarily due to an increase in
Notes payable.
STATEMENT OF CASH FLOWS
Net cash provided by operating activities was $73.3 million in fiscal 1998
compared to $100.5 million for the three months ended September 30, 1996. The
reduction in cash provided was primarily due to $43.5 million in cash used
for increases in Accounts receivable and Inventories in the current year,
compared to $22.9 million cash provided by decreases in fiscal 1997. Also,
increases in long-term investments in the current year resulted in an
incremental use of $20.0 million cash within Other assets. These uses were
partially offset by the $27.2 million increase in Net income and a $20.1
million reduction in the cash used for Accounts payable during the quarter.
Net cash used in investing activities increased to $195.2 million for fiscal
1998 compared to $62.1 million for fiscal 1997 primarily due to an additional
$126.4 million used for acquisitions. Capital expenditures also increased to
$60.4 million in fiscal 1998 compared to $43.0 million in fiscal 1997.
Financing activities provided net cash of $93.4 million in fiscal 1998 as
opposed to using cash of $34.8 million for the three months ended September
30, 1996. The change resulted primarily from Notes payable providing cash of
$120.7 million in fiscal 1998 compared to using cash of $14.4 million the
prior year.
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PARKER-HANNIFIN CORPORATION
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Annual Meeting of the Shareholders of the Registrant
was held on October 22, 1997.
(b) Not applicable.
(c) (i) The Shareholders elected five directors to the three-
year class whose term of office will expire in 2000,
as follows:
Votes For Votes Withheld
Duane E. Collins 60,750,922 2,773,037
Allen H. Ford 60,739,512 2,784,447
Allan L. Rayfield 60,757,197 2,766,762
Paul G. Schloemer 60,659,383 2,864,576
Michael A. Treschow 60,753,804 2,770,155
No Shareholders abstained.
(ii) The Shareholders approved an amendment to the
Corporation's Amended Articles of Incorporation to
increase the authorized number of Common Shares
from 300,000,000 to 600,000,000, as follows:
For 56,548,234
Against 6,634,028
Abstain 341,697
(iii) The Shareholders approved an amendment to the
Corporation's Amended Articles of Incorporation to
change the principal place of business of the
Corporation in Ohio from the City of Cleveland to
the City of Mayfield Heights, as follows:
For 63,010,844
Against 163,280
Abstain 349,835
(iv) The Shareholders approved an amendment to the
Corporation's 1993 Stock Incentive Program to
limit to 500,000 the number of stock options
which may be granted to any employee in any
three-year period, as follows:
For 60,270,363
Against 2,898,486
Abstain 355,110
(v) The Shareholders approved the appointment of Coopers
& Lybrand L.L.P. as auditors of the Corporation for
the fiscal year ending June 30, 1998, as follows:
For 63,169,652
Against 86,747
Abstain 267,560
(d) Not applicable.
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Item 6. Exhibits and Reports on Form 8-K.
(a) The following documents are furnished as exhibits and
numbered pursuant to Item 601 of Regulation S-K:
Exhibit 3 - Amended Articles of Incorporation, as
amended on October 22, 1997
Exhibit 10 - 1993 Stock Incentive Program, as
amended on October 22, 1997
Exhibit 11 - Statement regarding computation of per share
earnings.
Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8-K have been filed during the quarter
for which this Report is filed.
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 thereunto duly authorized.
PARKER-HANNIFIN CORPORATION
(Registrant)
Michael J. Hiemstra
Michael J. Hiemstra
Vice President - Finance and
Administration and Chief
Financial Officer
Date: November 14, 1997
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EXHIBIT INDEX
Exhibit No. Description of Exhibit
3 Amended Articles of Incorporation, as
amended on October 22, 1997
10 1993 Stock Incentive Program, as amended
on October 22, 1997
11 Computation of Earnings
Per Common Share
27 Financial Data Schedule
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EXHIBIT 3
PARKER-HANNIFIN CORPORATION
FORM 10-Q
FOR FISCAL QUARTER ENDED
SEPTEMBER 30, 1997
AMENDED ARTICLES OF INCORPORATION
<PAGE>
AMENDED ARTICLES OF INCORPORATION OF PARKER-HANNIFIN CORPORATION
FIRST. The name of this Corporation is Parker-Hannifin Corporation.
SECOND. The place in the State of Ohio where its principal office is
located is the City of Mayfield Heights, in Cuyahoga County.
THIRD. The purpose or purposes for which it is formed are:
1. To buy or otherwise acquire, produce, manufacture, assemble, repair,
or otherwise process, and to sell, lease, or otherwise dispose of, and
generally to deal in machinery, equipment, pipe fittings, valves,
mechanical appliances, and parts therefor of every kind and description.
2. To manufacture, compound, refine, fabricate, prepare, process,
convert, or otherwise turn substances of every kind and description into
compounds, combinations, forms, and products of any kind which can be
developed or made therefrom.
3. To undertake, conduct, assist, promote, and participate in every kind
of chemical, industrial, manufacturing, mercantile, or mining
enterprise, business, undertaking, venture, or operation in any state,
territory, dependency, or colony of the United States, or its insular
possessions, or in the District of Columbia, or in any foreign country.
4. To acquire by purchase or otherwise and to own, hold, improve,
develop, maintain, use, lease, sell, convey, transfer, mortgage,
guarantee, pledge, exchange, or otherwise deal in or dispose of real and
personal property, tangible or intangible, including minerals of all
kinds, of any character whatsoever, including, but not by way of
limitation, letters patent, patent rights, copyrights, licenses, and
franchises, and any or all interests of rights therein.
5. To purchase, apply for, register, obtain, or otherwise acquire, and
to hold, own, use, operate, develop, and introduce, and to sell, lease,
assign, pledge, or in any manner dispose of, and in any manner to deal
with and contract with reference to applications for letters patent,
patents, patent rights, patented processes, designs, and similar rights,
copyrights, trademarks, trade names, and similar rights granted by the
United States or any other government or country, or any interest
therein, or any inventions, and to acquire, own, use, or in any manner
dispose of any and all inventions, improvements, and processes, labels,
designs, marks, brands, or other rights, and to work, operate, or
develop the same.
6. To acquire by purchase, subscription, or otherwise, and to own, hold,
invest in, sell, negotiate, assign, exchange, dispose of, transfer,
pledge, hypothecate, mortgage, guarantee, deal in, lend, or borrow money
upon all forms and kinds of securities, shares of stock, scrip, bonds,
coupons, debentures, mortgages, notes, commercial paper, trust
certificates, land trust certificates, certificates of interest,
certificates of deposit, certificates of indebtedness, bills receivable,
accounts receivable, contracts, obligations, investments, warrants,
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and interim receipts and certificates issued or created by, or claims
against, any person, firm, corporation, joint stock company, trust, or
association, public or private, wherever or however organized or
created, or any nation, state, municipality, or political subdivision
thereof, and to issue in exchange therefor, in any manner permitted by
law, shares of the capital stock, bonds, or other obligations of this
Corporation; and, while the holder or owner of any such securities or
property, to possess and exercise in respect thereof any and all rights,
powers, and privileges of ownership, including all voting, consenting,
or other rights in or in respect thereof.
7. To promote, carry on, or participate with others in the organization,
merger, consolidation, financing, liquidation, realization, or
reorganization of corporations, partnerships, or associations engaged in
any lawful business enterprise; to become interested in or participate
with others in any subscription, underwriting, or syndicate; and to
enter into contracts, whether alone or with others, for the purchase,
issuance, and sale of any securities, property, or rights.
8. To make, enter into, perform and carry out any arrangements,
contracts, and/or agreements of every kind, for any lawful purpose,
without limit as to amount or otherwise, with any corporation,
association, partnership, firm, trustee, syndicate, individual, and/or
any political or governmental division or subdivision, domestic or
foreign; to obtain therefrom or otherwise to acquire by purchase, lease,
assignment, or otherwise any powers, rights, privileges, immunities,
franchises, guaranties, grants, and concessions; to hold, own, exercise,
exploit, dispose of, and realize upon the same; and to undertake,
conduct, operate, or participate in any business dependent thereon.
9. To borrow or acquire, in any manner permitted by law, money for any
of the purposes of this Corporation, with or without security, and to
mortgage, pledge, hypothecate, encumber in any manner, and/or place in
the hands of trustees, as security for the payment of money borrowed or
in fulfillment of any obligation of this Corporation, any or all
property and assets which this Corporation may own or acquire; to draw,
make, accept, endorse, discount and have discounted, execute, issue, and
deal in every lawful manner in promissory notes, bills of exchange,
debentures, bonds, warrants, scrip, drafts, and other negotiable or non-
negotiable instruments and evidences of indebtedness, and to secure the
payment of any thereof, together with interest thereon, by pledge,
mortgage, conveyance, or assignment of the whole or any part of the
property and assets of this Corporation, whether at the time owned or
thereafter acquired.
10. To lend money on time or call and with or without collateral
security, and to give credit to individuals, firms, corporations,
associations, or co-partnerships, and to municipalities, states, nations
or any political subdivisions thereof, and to realize upon any property
taken by the Corporation as collateral security for any loans.
11. To cause or allow the legal title and/or estate, right, or interest
in any property, whether real, personal, or mixed, owned, acquired,
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controlled, or operated by the Corporation, to remain or to be vested or
registered in the name of or operated by any person, firm, association,
or corporation, domestic or foreign, formed or to be formed, either upon
trust for or as agents or nominees of this Corporation or upon any other
proper terms or conditions which the Board of Directors may consider for
the benefit of the Corporation.
12. To purchase its own shares in accordance with the provisions of the
Ohio General Corporation Law, by action of its Board of Directors, and
without action by its shareholders, such purchases to be made either in
the open market or at public or private sale, in such manner and
amounts, from such holder or holders of outstanding shares of the
Corporation, and at such prices as the Board of Directors shall from
time to time determine.
13. To have one or more offices or plants, to carry on and conduct all
or any part of its operations and business, without restriction or
limitation as to amount, both within and without the State of Ohio; and
this Corporation may qualify under the laws of, be domiciled in, and
conduct any or all of its business in any city, state, commonwealth,
district, territory, or colony of the United States, and in any or all
foreign countries.
14. To do any one or more of the acts and things expressed in this
Article THIRD either as principal or as agent or representative for any
other person, firm, association, corporation, municipality, county,
state, body politic, government, or dependency thereof.
15. In general to do any and all things herein set forth and, in
addition, such other acts and things as are incident or conducive to the
attainment of the purposes of this Corporation, or any of them, to the
same extent that natural persons lawfully might or could do in any part
of the world, insofar as such acts and things are not inconsistent with
the provisions of the laws of the State of Ohio.
The objects and purposes specified in the foregoing clauses of this
Article THIRD shall be construed both as objects and powers, and shall,
except where otherwise expressed, be in no wise limited or restricted by
reference to, or inference from, the terms of any other clause in this
Article THIRD or elsewhere in these Amended Articles of Incorporation,
but the objects and purposes specified in each of the foregoing clauses
of this Article THIRD shall be regarded as independent objects and
purposes and shall not be held to limit or restrict in any way the
general powers of the Corporation to do any act permitted by the laws of
the State of Ohio.
FOURTH. The authorized number of shares of the Corporation is
603,000,000 consisting of 3,000,000 shares of Serial Preferred Stock of
the par value of $.50 per share (hereinafter called "Serial Preferred
Stock") and 600,000,000 Common Shares of the par value of $.50 per share
(hereinafter called "Common Shares").
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<PAGE>
The shares of each class shall have the following express terms:
DIVISION A
EXPRESS TERMS OF THE SERIAL PREFERRED STOCK
1. The Serial Preferred Stock may be issued from time to time in series.
All shares of Serial Preferred Stock of any one series shall be
identical with each other in all respects, except as to the date from
which dividends thereon shall be cumulative. All shares of Serial
Preferred Stock shall rank equally and shall be identical, except in
respect of the matters that may be fixed by the Board of Directors as
hereinafter provided. Subject to the provisions of sections 2 to 8, both
inclusive, of this Division A, which provisions shall apply to all
shares of Serial Preferred Stock, the Board of Directors is hereby
authorized to cause such shares of Serial Preferred Stock to be issued
in one or more series and with respect to each such series prior to the
issuance thereof to fix:
(a) The designation of the series, which may be by distinguishing
number, letter or title.
(b) The number of shares of the series, which number the Board of
Directors may increase or decrease, except where otherwise provided in
the creation of the series.
(c) The dividend rate of the series.
(d) The dates at which dividends, if declared, shall be payable, and the
dates from which dividends shall be cumulative.
(e) The liquidation price of the series.
(f) The redemption rights and price or prices, if any, for shares of the
series.
(g) The terms and amount of any sinking fund provided for the purchase
or redemption of shares of the series.
(h) Whether the shares of the series shall be convertible into Common
Shares, and, if so, the conversion price or prices and the adjustments
thereof, if any, and all other terms and conditions upon which such
conversion may be made.
(i) Restrictions (in addition to those set forth in sections 6 (b) and
6 (c) of this Division A) on the issuance of shares of the same series
or of any other class or series.
The Board of Directors is authorized to adopt from time to time
amendments to the Articles of Incorporation of the Corporation fixing,
with respect to each such series, the matters specified in clauses
(a) to (i) both inclusive of this section 1.
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2. The holders of Serial Preferred Stock of each series, in preference
to the holders of Common Shares and any other class of shares ranking
junior to the Serial Preferred Stock, shall be entitled to receive out
of any funds legally available and when and as declared by the Board of
Directors cash dividends at the rate (and no more) for such series fixed
in accordance with the provisions of section 1 of this Division A,
payable quarterly on the dates fixed for such series. Such dividends
shall be cumulative, in the case of shares of each particular series,
from and after the date or dates fixed with respect to such series. No
dividends may be paid upon or declared and set apart for any of the
Serial Preferred Stock for any quarterly dividend period unless at the
same time a like proportionate dividend for the same quarterly dividend
period, ratably in proportion to the respective annual dividend rates
fixed therefor, shall be paid upon or declared or set apart for all
Serial Preferred Stock of all series then outstanding and entitled to
receive such dividend.
3. So long as any Serial Preferred Stock is outstanding, no dividend,
except a dividend payable in Common Shares or any other shares of the
Corporation ranking junior to the Serial Preferred Stock, shall be paid
or declared or any distribution be made except as aforesaid on the
Common Shares or any other shares of the Corporation ranking junior to
the Serial Preferred Stock, nor shall any Common Shares or any other
shares of the Corporation ranking junior to the Serial Preferred Stock
be purchased, retired or otherwise acquired by the Corporation (except
out of the proceeds of the sale of Common Shares or any other shares of
the Corporation ranking junior to the Serial Preferred Stock received by
the Corporation subsequent to June 30, 1967):
(a) Unless all accrued and unpaid dividends on the Serial Preferred
Stock, including the full dividends for the current quarterly dividend
period, shall have been declared and paid or a sum sufficient for
payment thereof set apart; and
(b) Unless there shall be no default with respect to the redemption of
Serial Preferred Stock of any series from, and no default with respect
to any required payment into, any sinking fund provided for shares of
such series in accordance with the provisions of section 1 of this
Division A.
4. (a) Subject to the express terms of each series and to the provisions
of section 6(b) (iii) of this Division A, the Corporation (i) may from
time to time redeem all or any part of the Serial Preferred Stock of any
series at the time outstanding at the option of the Board of Directors
at the applicable redemption price for such series fixed in accordance
with the provisions of section 1 of this Division A, or (ii) shall from
time to time make such redemptions of the Serial Preferred Stock as may
be required to fulfill the requirements of any sinking fund
provided for shares of such series at the applicable sinking fund
redemption price fixed in accordance with the provisions of section 1 of
this Division A, together in each case with accrued and unpaid dividends
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to the redemption date.
(b) Notice of every such redemption shall be mailed, by first class
mail, postage prepaid, to the holders of record of the Serial Preferred
Stock to be redeemed at their respective addresses then appearing on the
books of the Corporation, not less than 30 nor more than 60 days prior
to the date fixed for such redemption. At any time before or after
notice has been given as above provided, the Corporation may deposit the
aggregate redemption price of the shares of Serial Preferred Stock to be
redeemed, together with accrued and unpaid dividends thereon to the
redemption date, with any bank or trust company in Cleveland, Ohio, or
New York, New York, having capital and surplus of more than $5,000,000,
named in such notice, directed to be paid to the respective holders of
the shares of Serial Preferred Stock so to be redeemed, in amounts equal
to the redemption price of all shares of Serial Preferred Stock so to be
redeemed, together with accrued and unpaid dividends thereon to the
redemption date, on surrender of the stock certificate or certificates
held by such holders, and upon the giving of such notice and the making
of such deposit such holders shall cease to be shareholders with respect
to such shares, and after such notice shall have been given and such
deposit shall have been made such holders shall have no interest in or
claim against the Corporation with respect to such shares except only to
receive such money from such bank or trust company without interest or
the right to exercise, before the redemption date, any unexpired rights
of conversion. In case less than all of the outstanding shares of Serial
Preferred Stock are to be redeemed, the Corporation shall select by
lot the shares so to be redeemed in such manner as shall be prescribed
by its Board of Directors.
If the holders of shares of Serial Preferred Stock which shall have been
called for redemption shall not, within six years after such deposit,
claim the amount deposited for the redemption thereof, any such bank or
trust company shall, upon demand, pay over to the Corporation such
unclaimed amounts and thereupon such bank or trust company and the
Corporation shall be relieved of all responsibility in respect thereof
and to such holders.
(c) Any shares of Serial Preferred Stock which are redeemed by the
Corporation pursuant to the provisions of this section 4 of this
Division A and any shares of Serial Preferred Stock which are purchased
and delivered in satisfaction of any sinking fund requirements provided
for shares of such series and any shares of Serial Preferred Stock which
are converted in accordance with their express terms shall be cancelled
and not reissued. Any shares of Serial Preferred Stock otherwise
acquired by the Corporation shall be restored to the status of
authorized and unissued shares of Serial Preferred Stock without serial
designation.
5. (a) The holders of Serial Preferred Stock of any series shall, in
case of liquidation, dissolution or winding up of the Corporation, be
entitled to receive in full out of the assets of the Corporation,
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<PAGE>
including its capital, before any amount shall be paid or distributed
among the holders of Common Shares or any other shares ranking junior
to the Serial Preferred Stock, the amounts fixed with respect to shares
of such series in accordance with Section 1 of this Division A, plus in
any such event an amount equal to all dividends accrued and unpaid
thereon to the date of payment of the amount due pursuant to such
liquidation, dissolution or winding up of the Corporation. In case
the net assets of the Corporation legally available therefor are
insufficient to permit the payment upon all outstanding shares of Serial
Preferred Stock of the full preferential amount to which they are
respectively entitled, then such net assets shall be distributed ratably
upon outstanding shares of Serial Preferred Stock in proportion to the
full preferential amount to which each such share is entitled.
After payment to holders of Serial Preferred Stock of the full
preferential amounts as aforesaid, holders of Serial Preferred Stock as
such shall have no right or claim to any of the remaining assets of the
Corporation.
(b) The merger or consolidation of the Corporation into or with any
other corporation, or the merger of any other corporation into it, or
the sale, lease, or conveyance of all or substantially all of the
property or business of the Corporation, shall not be deemed to be a
dissolution, liquidation or winding up of the Corporation for the
purposes of this Section 5 of this Division A.
6. (a) The holders of Serial Preferred Stock shall be entitled to one
vote for each share of such stock upon all matters presented to
shareholders; and, except as otherwise provided herein or required by
law, the holders of Serial Preferred Stock and the holders of Common
Shares shall vote together as one class on all matters.
If, and so often as, the Corporation shall be in default in the payment
of the equivalent of six quarterly dividends (whether or not
consecutive) on any series of Serial Preferred Stock at the time
outstanding, whether or not earned or declared, the holders of Serial
Preferred Stock of all series voting separately as a class and in
addition to all other rights to vote for Directors shall be entitled to
elect, as herein provided, two members of the Board of Directors of the
Corporation; provided, however, that the holders of shares of Serial
Preferred Stock shall not have or exercise such special class voting
rights except at meetings of the shareholders for the election of
Directors at which the holders of not less than a majority of the
outstanding shares of Serial Preferred Stock of all series are present
in person or by proxy; and provided further that the special class
voting rights provided for herein when the same shall have become vested
shall remain so vested until all accrued and unpaid dividends on
the Serial Preferred Stock of all series then outstanding shall have
been paid, whereupon the holders of Serial Preferred Stock shall be
divested of their special class voting rights in respect of subsequent
elections of Directors, subject to the revesting of such special class
voting rights in the event herein above specified in this section 6 (a).
In the event of default entitling the holders of Serial Preferred Stock
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to elect two Directors as above specified, a special meeting of the
shareholders for the purpose of electing such Directors shall be called
by the Secretary of the Corporation upon written request of, or may be
called by, the holders of record of at least 10% of the shares of Serial
Preferred Stock of all series at the time outstanding, and notice
thereof shall be given in the same manner as that required for the
annual meeting of shareholders; provided, however, that the Corporation
shall not be required to call such special meeting if the annual meeting
of shareholders shall be held within 90 days after the date of receipt
of the foregoing written request from the holders of Serial Preferred
Stock. At any meeting at which the holders of Serial Preferred Stock
shall be entitled to elect Directors, the holders of not less than a
majority of the outstanding shares of Serial Preferred Stock of all
series, present in person or by proxy, shall be sufficient to constitute
a quorum, and the vote of the holders of a majority of such shares so
present at any such meeting at which there shall be a quorum shall be
sufficient to elect the members of the Board of Directors which the
holders of Serial Preferred Stock are entitled to elect as herein before
provided.
The two Directors who may be elected by the holders of Serial Preferred
Stock pursuant to the foregoing provision shall be in addition to any
other Directors then in office or proposed to be elected otherwise than
pursuant to such provisions, and nothing in such provisions shall
prevent any change otherwise permitted in the total number of Directors
of the Corporation or require the resignation of any Director elected
otherwise than pursuant to such provisions.
(b) The vote or consent of the holders of at least two-thirds of the
then outstanding shares of Serial Preferred Stock, given in person or by
proxy, either in writing or at a meeting called for the purpose at which
the holders of Serial Preferred Stock shall vote separately as a class,
shall be necessary to effect any one or more of the following (but so
far as the holders of Serial Preferred Stock are concerned, such action
may be effected with such vote or consent):
(i) Any amendment, alteration or repeal of any of the provisions of the
Articles of Incorporation or of the Code of Regulations of the
Corporation which affects adversely the voting powers, rights or
preferences of the holders of Serial Preferred Stock; provided, however,
that for the purpose of this clause (i) only, neither the amendment of
the Articles of Incorporation of the Corporation to authorize, or to
increase the authorized or outstanding number of shares of, Serial
Preferred Stock or of any shares of any class ranking on a parity
with or junior to the Serial Preferred Stock, nor the increase by the
shareholders pursuant to the Code of Regulations of the number of
Directors of the Corporation shall be deemed to affect adversely the
voting powers, rights or preferences of the holders of Serial Preferred
Stock; and provided further, that if such amendment, alteration or
repeal affects adversely the rights or preferences of one or more but
not all then outstanding series of Serial Preferred Stock, only the vote
or consent of the holders of at least two-thirds of the number of the
then outstanding shares of the series so affected shall be required;
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<PAGE>
(ii) The authorization of, or the increase in the authorized number of,
any shares of any class ranking prior to the Serial Preferred Stock; or
(iii) The purchase or redemption (whether for sinking fund purposes or
otherwise) of less than all the then outstanding shares of Serial
Preferred Stock except in accordance with a purchase offer made to all
holders of record of Serial Preferred Stock, unless all dividends on all
Serial Preferred Stock then outstanding for all previous quarterly
dividend periods shall have been declared and paid or funds therefor
set apart and all accrued sinking fund obligations applicable to all
Serial Preferred Stock shall have been complied with.
(c) The vote or consent of the holders of at least a majority of the
then outstanding shares of Serial Preferred Stock, given in person or by
proxy, either in writing or at a meeting called for the purpose at which
the holders of Serial Preferred Stock shall vote separately as a class,
shall be necessary (but so far as the holders of Serial Preferred Stock
are concerned such action may be effected with such vote or consent) to
authorize any shares ranking on a parity with the Serial Preferred Stock
or an increase in the authorized number of shares of Serial Preferred
Stock.
7. No holder of Serial Preferred Stock of any series shall be entitled
as such as a matter of right to subscribe for or purchase any part of
any issue of shares of the Corporation, of any class whatsoever, or any
part of any issue of securities convertible into shares of the
Corporation, of any class whatsoever, and whether issued for cash,
property, services, or otherwise.
8. For the purposes of this Division A:
(a) Whenever reference is made to shares "ranking prior to the Serial
Preferred Stock", such reference shall mean and include all shares of
the Corporation in respect of which the rights of the holders thereof as
to the payment of dividends or as to distributions in the event of a
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation are given preference over the rights of the holders of
Serial Preferred Stock.
(b) Whenever reference is made to shares "on a parity with the Serial
Preferred Stock", such reference shall mean and include all shares of
the Corporation in respect of which the rights of the holders thereof as
to the payment of dividends or as to distributions in the event of a
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation on an equality with the rights of the holders of Serial
Preferred Stock.
(c) Whenever reference is made to shares "ranking junior to the Serial
Preferred Stock", such reference shall mean and include all shares of
the Corporation in respect of which the rights of the holders thereof as
to the payment of dividends and as to distributions in the event of a
voluntary or involuntary liquidation, dissolution or winding up of the
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<PAGE>
Corporation are junior or subordinate to the rights of the holders of
Serial Preferred Stock.
DIVISION B
EXPRESS TERMS OF COMMON SHARES
1. The Common Shares shall be subject to the express terms of the Serial
Preferred Stock and any series thereof. Each Common Share shall be
equal to every other Common Share. The holders of Common Shares shall
be entitled to one vote for each share held by them upon all matters
presented to the shareholders.
2. No holder of Common Shares shall be entitled as such as a matter of
right to subscribe for or purchase any part of any issue of shares of
the Corporation, of any class whatsoever, or any part of any issue of
securities convertible into shares of the Corporation, of any class
whatsoever, and whether issued for cash, property, services or
otherwise.
FIFTH.
A. A Business Combination (as hereinafter defined) shall be authorized
and approved by the affirmative vote of the holders of not less than
eighty percent (80%) of the outstanding shares of the Corporation
entitled to vote generally in elections of Directors; provided, however,
that the eighty percent (80%) voting requirement shall not be applicable
if:
1. The Board of Directors of the Corporation by affirmative vote, which
shall include not less than a majority of the entire number of
Continuing Directors (as hereinafter defined), (a) has approved in
advance the acquisition of those outstanding shares of the Corporation
which caused the Interested Party (as hereinafter defined) to become
an Interested Party or (b) has approved the Business Combination; or
2. The Business Combination is a merger or consolidation and the cash or
Fair Market Value of other consideration to be received per share by
holders of the Common Shares and, if outstanding, the Serial Preferred
Stock of the Corporation in said merger or consolidation is not less
than an amount equal to (a) the highest of (i) the highest per share
price, including commissions, paid by the Interested Party for any
shares of the same class or series during the two-year period ending on
the date of the most recent purchase by the Interested Party of any such
shares, (ii) the highest sales price reported for shares of the same class or
series traded on a national securities exchange or in the over-the-
counter market during the two-year period preceding the first public
announcement of the proposed Business Combination, or (iii) in the case
of the Serial Preferred Stock, the amount of the per share liquidation
preference, plus (b) interest compounded annually from the date on which
the Interested Party became an Interested Party through the date of the
Business Combination (the "Interest Period") at the average discount
interest rate on six-month U.S. Treasury Bills, as published each week,
less (c) the aggregate amount of any cash dividends paid on the shares
of the same class or series during the Interest Period, in an amount up
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to but not exceeding the amount of interest so payable per share under
clause (b) hereof.
B. For purposes of this Article Fifth:
1. The term "Business Combination" shall mean (a) any merger or
consolidation of the Corporation or a subsidiary of the Corporation with
or into an Interested Party, (b) any merger or consolidation of an
Interested Party with or into the Corporation or a subsidiary, (c) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition
(in one transaction or a series of transactions) in which an Interested
Party is involved, of any of the assets either of the Corporation
(including without limitation any voting securities of a subsidiary) or
of a subsidiary having a Fair Market Value in excess of $20,000,000,
(d) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of any
Interested Party, (e) the issuance or transfer (in one transaction or a
series of transactions) by the Corporation or a subsidiary of the
Corporation to an Interested Party of any securities of the Corporation
or such subsidiary, which securities have a Fair Market Value of
$20,000,000 or more, or (f) any recapitalization, reclassification,
merger or consolidation involving the Corporation or a subsidiary of the
Corporation that would have the effect of increasing, directly or
indirectly, the Interested Party's voting power in the Corporation or
such subsidiary.
2. The term "Interested Party" shall mean and include (a) any
individual, corporation, partnership, trust or other person or entity
which, together with its "affiliates" and "associates" (as those terms
are defined in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on September 24, 1984)
is or, with respect to a Business Combination, was within two years
prior thereto a beneficial owner of shares aggregating twenty percent
(20%) or more of the aggregate voting power of any class of capital
stock of the Corporation entitled to vote generally in the election of
Directors, and (b) any affiliate or associate of any such individual,
corporation, partnership, trust or other person or entity. For the
purposes of determining whether a person is an Interested Party, the
number of shares deemed to be outstanding shall include shares which the
Interested Party or any of its affiliates or associates has the right to
acquire (whether immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants, or options, or otherwise, but
shall not include any other shares which may be issuable to any other
person.
3. The term "Continuing Director" shall mean a director who is not an
affiliate of an Interested Party and who was a member of the Board of
Directors of the Corporation immediately prior to the time that the
Interested Party involved in a Business Combination became an Interested
Party, and any successor to a Continuing Director who is not such an
affiliate and who is nominated to succeed a Continuing Director by a
majority of the Continuing Directors in office at the time of such
nomination.
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<PAGE>
4. "Fair Market Value" shall mean the fair market value of the property
in question as determined by a majority of the Continuing Directors in
good faith.
C. The provisions of this Article Fifth shall be construed liberally to
the end that the consideration paid to holders whose shares are acquired
by an Interested Party in connection with a merger or consolidation
shall not be less favorable than that paid to holders of such shares
prior to such merger or consolidation. Nothing contained in this
Article Fifth shall be construed to relieve any Interested Party from
any fiduciary duties or obligations imposed by law.
D. Notwithstanding any other provision of the Amended Articles of
Incorporation or the Regulations of the Corporation and notwithstanding
the fact that a lesser percentage may be specified by law, these Amended
Articles or the Regulations of the Corporation, the affirmative vote of
the holders of not less than eighty percent (80%) of the then
outstanding shares shall be required to amend, alter, change or repeal,
or adopt any provisions inconsistent with, this Article Fifth; provided,
however, that this paragraph D shall not apply to, and the eighty
percent (80%) vote shall not be required for, any amendment, alteration,
change or repeal recommended to the shareholders by the Board of
Directors of the Corporation if the recommendation has been approved by
at least two-thirds of the Continuing Directors.
SIXTH. These Amended Articles of Incorporation supersede the existing Articles
of Incorporation of the Corporation
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EXHIBIT 10
PARKER-HANNIFIN CORPORATION
FORM 10-Q
FOR FISCAL QUARTER ENDED
SEPTEMBER 30, 1997
1993 STOCK INCENTIVE PROGRAM
<PAGE>
Parker-Hannifin Corporation 1993 Stock Incentive Program
Effective: April 22, 1993
Amended: August 15, 1996
Amended: October 22, 1997
1. Purpose.
The 1993 Stock Incentive Program is intended to help maintain and develop
strong management through ownership of shares of the Corporation by key
employees of the Corporation and its Subsidiaries and for recognition of
efforts and accomplishments which contribute materially to the success of the
Corporation's business interests.
2. Definitions.
In this Program, except where the context otherwise indicates, the
following definitions apply:
(a) "Award" means a stock option, stock appreciation right ("SAR"),
restricted stock, incentive share, dividend equivalent right ("DER"), or other
award under this Program.
(b) "Board" means the Board of Directors of the Corporation.
(c) "Change in Control" means the occurrence of one of the following
events:
(i) any "person" (as such term is defined in Section 3(a)(9) of the
Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the
Exchange Act) is or becomes a "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of
the Corporation representing 20% or more of the combined voting power of
the Corporation's then outstanding securities eligible to vote for the
election of the Board (the "Corporation's Voting Securities"); provided,
however, that the event described in this paragraph shall not be deemed
to be a Change in Control by virtue of any of the following situations:
(A) an acquisition by the Corporation or any Subsidiary; (B) an
acquisition by any employee benefit plan sponsored or maintained by the
Corporation or any Subsidiary; (C) an acquisition by any underwriter
temporarily holding securities pursuant to an offering of such
securities; (D) a Non-Control Transaction (as defined in paragraph
(iii)); (E) as pertains to an individual Grantee, any acquisition by the
Grantee or any group of persons (within the meaning of Sections 13(d)(3)
and 14(d)(2) of the Exchange Act) including the Grantee (or any entity in
which the Grantee or a group of persons including the Grantee, directly
or indirectly, holds a majority of the voting power of such entity's
outstanding voting interests); or (F) the acquisition of Corporation
Voting Securities from the Corporation, if a majority of the Board
approves a resolution providing expressly that the acquisition pursuant
to this clause (F) does not constitute a Change in Control under this
paragraph (i);
(ii) individuals who, at the beginning of any period of twenty-
four (24) consecutive months, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a majority thereof;
provided, that (A) any person becoming a director subsequent to the
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<PAGE>
beginning of such twenty-four (24) month period, whose election, or
nomination for election, by the Corporation's shareholders was approved
by a vote of at least two-thirds of the directors comprising the
Incumbent Board who are then on the Board (either by a specific vote or
by approval of the proxy statement of the Corporation in which such
person is named as a nominee for director, without objection to such
nomination) shall be, for purposes of this paragraph (ii), considered as
though such person were a member of the Incumbent Board; provided,
however, that no individual initially elected or nominated as a director
of the Corporation as a result of an actual or threatened election
contest with respect to directors or any other actual or threatened
solicitation of proxies or consents by or on behalf of any person other
than the Board shall be deemed to be a member of the Incumbent Board;
(iii) the consummation of a merger, consolidation, share exchange
or similar form of corporate reorganization of the Corporation or any
Subsidiary that requires the approval of the Corporation's stockholders,
whether for such transaction or the issuance of securities in connection
with the transaction or otherwise (a "Business Combination"), unless (A)
immediately following such Business Combination: (1) more than 50% of the
total voting power of the corporation resulting from such Business
Combination (the "Surviving Corporation") or, if applicable, the ultimate
parent corporation which directly or indirectly has beneficial ownership
of 100% of the voting securities eligible to elect directors of the
Surviving Corporation (the "Parent Corporation"), is represented by
Corporation Voting Securities that were outstanding immediately prior to
the Business Combination (or, if applicable, shares into which such
Corporation Voting Securities were converted pursuant to such Business
Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of such Corporation
Voting Securities among the holders thereof immediately prior to the
Business Combination, (2) no person (other than any employee benefit plan
sponsored or maintained by the Surviving Corporation or the Parent
Corporation) is or becomes the beneficial owner, directly or indirectly,
of 20% or more of the total voting power of the outstanding voting
securities eligible to elect directors of the Parent Corporation (or, if
there is no Parent Corporation, the Surviving Corporation), and (3) at
least a majority of the members of the board of directors of the Parent
Corporation (or, if there is no Parent Corporation, the Surviving
Corporation), following the Business Combination, were members of the
Incumbent Board at the time of the Board's approval of the execution of
the initial agreement providing for such Business Combination (a "Non-
Control Transaction") or (B) the Business Combination is effected by
means of the acquisition of Corporation Voting Securities from the
Corporation, and a majority of the Board approves a resolution providing
expressly that such Business Combination does not constitute a Change in
Control under this paragraph (iii); or
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<PAGE>
(iv) the stockholders of the Corporation approve a plan of
complete liquidation or dissolution of the Corporation or the sale or
other disposition of all or substantially all of the assets of the
Corporation and its Subsidiaries.
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any person acquires beneficial ownership of more than 20%
of the Corporation Voting Securities as a result of the acquisition of
Corporation Voting Securities by the Corporation which, by reducing the number
of Corporation Voting Securities outstanding, increases the percentage of
shares beneficially owned by such person; provided, that if a Change in
Control would occur as a result of such an acquisition by the Corporation (if
not for the operation of this sentence), and after the Corporation's
acquisition such person becomes the beneficial owner of additional Corporation
Voting Securities that increases the percentage of outstanding Corporation
Voting Securities beneficially owned by such person, a Change in Control shall
then occur.
Notwithstanding anything in this Program to the contrary, if a Grantee's
employment is terminated prior to a Change in Control, and the Grantee
reasonably demonstrates that such termination was at the request of a third
party who has indicated an intention or taken steps reasonably calculated to
effect a Change in Control, (a "Third Party"), then for all purposes of this
Program, the date immediately prior to the date of such termination of
employment shall be deemed to be the date of a Change in Control for such
Grantee.
(d) "Code" means the Internal Revenue Code, as in effect from time to
time.
(e) "Compensation and Management Development Committee" or "Committee"
means the committee of the Board so designated. The Committee will be
constituted in a manner that satisfies all applicable legal requirements,
including satisfying the disinterested administration standard set forth in
Rule 16b-3.
(f) "Corporation" means Parker-Hannifin Corporation, an Ohio
corporation, and its Subsidiaries.
(g) "Designated beneficiary" means the person designated by the grantee
of an award hereunder to be entitled, on the death of the grantee, to any
remaining rights arising out of such award. Such designation must be made in
writing and in accordance with such regulations as the Committee may
establish.
(h) "Detrimental activity" means activity that is determined in
individual cases, by the Committee or its express delegate, to be detrimental
to the interests of the Corporation or a Subsidiary, including without
limitation (i) the rendering of services for an organization, or engaging in a
business, that is, in the judgment of the Committee or its express delegate,
in competition with the Corporation; (ii) the disclosure to any one outside of
the Corporation, or the use for any purpose other than the Corporation's
business, of confidential information or material related to the Corporation,
whether acquired by the employee during or after employment with the
Corporation; or (iii) fraud, embezzlement, theft-in-office or other illegal
activity.
- 3 -
<PAGE>
(i) "Dividend equivalent right," herein sometimes called a "DER," means
the right of the holder thereof to receive, pursuant to the terms of the DER,
credits based on the cash dividends that would be paid on the shares specified
in the DER if such shares were held by the grantee, as more particularly set
forth in Section 12(a) below.
(j) "Eligible employee" means an employee who is an officer, or in a
managerial, executive, technical, professional, or other key position as
determined by the Committee.
(k) "Employee" means a regular employee of the Corporation or one of its
Subsidiaries.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
(m) "Fair market value" in relation to a share as of any specific time
shall mean such value as reported for New York Stock Exchange--Composite
Transactions on such date, or if no shares are traded on that date, the next
preceding date on which trading occurred.
(n) "Grantee" means a recipient of an award under this Program.
(o) "Incentive share" means an award of shares granted pursuant to
Section 11 below.
(p) "Incentive stock option," herein sometimes called an "ISO," means a
stock option meeting the requirements of Section 422 of the Code or any
successor provision.
(q) "Insider" means a person subject to the reporting requirements of
Section 16(a) of the Exchange Act with respect to equity securities of the
Corporation.
(r) "Restricted stock" means any share issued with the restriction that
the holder may not sell, transfer, pledge, or assign such share and such other
restrictions (which may include, but are not limited to, restrictions on the
right to vote or receive dividends) which may expire separately or in
combination, at one time or in installments, all as specified by the grant.
(s) "Rule 16b-3" means Rule 16b-3 (or any successor thereto) under the
Exchange Act that exempts from Section 16(b) of the Exchange Act transactions
under employee benefit plans, as in effect from time to time with respect to
this Program.
(t) "Share" means a common share, par value $.50, of the Corporation
issued and reacquired by the Corporation or previously authorized but
unissued.
(u) "Shareholder-approved plan" means any of the plans constituting
parts of any of the incentive programs previously or hereafter approved by
shareholders of the Corporation.
(v) "Stock appreciation right," herein sometimes called an "SAR," means
the right of the holder thereof to receive, pursuant to the terms of the SAR,
a number of shares or cash or a combination of shares and cash, based on the
increase in the value of the number of shares specified in the SAR, as more
particularly set forth in Section 9 below.
(w) "Subsidiary" means any corporation, partnership, or other entity in
which the Corporation, directly or indirectly, owns a 50 percent or greater
equity interest.
(x) "Terminate" means cease to be an employee, except by death, but a
change of employment from the Corporation or one Subsidiary to another
Subsidiary or to the Corporation shall not be considered a termination.
- 4 -
<PAGE>
(y) "Terminate normally" for an employee participating in this Program
means terminate
(i) as a result of retirement under the applicable
retirement plan or policy of the Corporation or a Subsidiary,
(ii) as a result of that employee becoming eligible for
disability income under the Corporation's long-term disability program,
or
(iii) with written approval of the Committee given in the
context of recognition that all or a specified portion of the
outstanding awards to that employee will not expire or be
forfeited or annulled because of such termination and, in each
such case, without being terminated for cause.
(z) "Year" means fiscal year.
3. Eligibility.
The selection of eligible employees to receive awards will be within the
discretion of the Committee. More than one award may be granted to the same
eligible employee. Members of the Committee are not eligible for the grant of
awards.
4. Administration.
(a) The Committee shall administer this Program. The Committee will,
subject to the terms of the Program, have the authority to (i) select the
eligible employees who will receive awards; (ii) grant awards; (iii) determine
the number and types of awards to be granted to employees; (iv) determine the
terms, conditions, vesting periods and restrictions applicable to awards;
(v) adopt, alter and repeal administrative rules and practices governing this
Program; (vi) interpret the terms and provisions of this Program and any
awards granted under this Program; (vii) prescribe the forms of any notices of
awards or other instruments relating to awards; and (viii) otherwise supervise
the administration of this Program. All decisions by the Committee will be
made with the approval of not less than a majority of its members.
(b) All determinations and interpretations pursuant to the provisions of
this Program shall be binding and conclusive upon the individual employees
involved and all persons claiming under them.
(c) With respect to Insiders, transactions under this Program are
intended to comply with all applicable conditions of Rule 16b-3. To the
extent any provision of this Program or any action by the Committee under this
Program fails to so comply, such provision or action shall, without further
action by any person, be deemed to be automatically amended to the extent
necessary to effect compliance with Rule 16b-3, provided that if such
provision or action cannot be amended to effect such compliance, such
provision or action shall be deemed null and void, to the extent permitted by
law and deemed advisable by the appropriate authority. Each award to an
Insider under this Program shall be deemed issued subject to the foregoing
qualification.
(d) An award under this Program is not transferable except, as provided
in the award, by will, pursuant to the laws of descent and distribution, or
pursuant to a qualified domestic relations order, and is not subject, in whole
or in part, to attachment, execution, or levy of any kind. The designation by
a grantee of a designated beneficiary shall not constitute a transfer.
Notwithstanding the foregoing, an employee may transfer any nonqualified stock
option granted under this Plan to members of his immediate family (defined as
- 5 -
<PAGE>
his children, grandchildren and spouse) or to one or more trusts for the
benefit of such family members or partnerships in which such family members
are the only partners if the instrument evidencing such stock option expressly
so provides (or is amended to so provide) and the employee does not receive
any consideration for the transfer; provided that any such transferred stock
option shall continue to be subject to the same terms and conditions that
are applicable to such stock option immediately prior to its transfer (except
that such transferred stock option shall not be further transferable by the
transferee inter vivos).
(e) Any rights with respect to an award granted under this Program
existing after the grantee dies are exercisable by the grantee's designated
beneficiary or, if there is no such designated beneficiary who may, and does,
lawfully do so, by the grantee's personal representative.
(f) Except as otherwise provided herein, a particular form of award may
be granted to an eligible employee either alone or in addition to other awards
hereunder. The provisions of particular forms of award need not be the same
with respect to each recipient.
(g) The Committee may delegate any of its authority to any other person
or persons that it deems appropriate, provided the delegation does not cause
the Program or any awards granted under this Program to fail to qualify for
the exemption provided by Rule 16b-3.
(h) This Program and all action taken under it shall be governed by the
laws of the State of Ohio without giving effect to the principles of conflict
of laws thereof.
5. Term.
This Program will continue in effect until terminated by the Board.
6. Awards That May Be Granted.
The aggregate number of shares that may be subject to awards granted
under this Program in any fiscal year, subject to adjustment as provided in
Section 7 below, will be equal to the sum of (a) one and one-half percent
(1.5%) of the number of shares outstanding on the last day of the previous
fiscal year; plus (b) the number of shares that were available for the grant
of awards in previous fiscal years; provided, that, in no event will the
number of shares available for the grant of awards in any fiscal year exceed
two and one-half percent (2.5%) of the shares outstanding on the last day of
the previous fiscal year. The aggregate number of shares that may be issued
upon exercise of ISOs is 1,000,000. When an unexercised award lapses, expires,
terminates or is forfeited, the related shares may be available for
distribution in connection with future awards but will continue to be subject
to the 2.5% maximum described above. The assumption of awards granted by an
organization acquired by the Corporation, or the grant of awards under this
Program in substitution for any such awards, will not reduce the number of
shares available in any fiscal year for the grant of awards under this
Program.
7. Adjustments.
In the event that the Committee shall determine that any stock dividend,
extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination, exchange of shares, warrants
or rights offering to purchase common stock of the Corporation at a price
- 6 -
<PAGE>
substantially below fair market value, or other similar corporate event
affects the common stock of the Corporation such that an adjustment is
required in order to preserve the benefits or potential benefits intended to
be made available under this Program, then the Committee shall, in its sole
discretion, and in such manner as the Committee may deem equitable, adjust any
or all of (a) the number and kind of shares which thereafter may be the
subject of Awards under this Program, (b) the number and kind of shares
subject to outstanding Awards, and (c) the exercise price with respect to any
of the foregoing.
8. Stock Options.
One or more stock options can be granted to any eligible employee. No
employee may be granted stock options for more than 500,000 shares of common
stock in any three-year period. Each stock option so granted shall be subject
to such terms and conditions as the Committee shall impose. The exercise
price per share shall be specified by the grant, but shall in no instance be
less than 100 percent of fair market value at the time of grant. Payment of
the exercise price shall be made in cash, shares, or other consideration, or
any combination thereof, in accordance with the terms of this Program and any
applicable regulations of the Committee in effect at the time and valued at
fair market value on the date of exercise of the stock option. Stock options
granted hereunder may be designated as ISOs (except to the extent otherwise
specified in this Section 8) or nonqualified stock options. To the extent
that the aggregate fair market value of shares with respect to which stock
options designated as ISOs are exercisable for the first time by any grantee
during any year (under all plans of the Corporation and any Subsidiary
thereof) exceeds $100,000, such stock options shall be treated as not being
ISOs. ISOs must comply with requirements of Section 422 of the Code.
9. Stock Appreciation Rights.
(a) An SAR may be granted to an eligible employee as a separate award
hereunder. Any such SAR shall be subject to such terms and conditions as the
Committee shall impose, which shall include provisions that (i) such SAR shall
entitle the holder thereof, upon exercise thereof in accordance with such SAR
and the regulations of the Committee, to receive from the Corporation that
number of shares having an aggregate value equal to the excess of the fair
market value, at the time of exercise of such SAR, of one share over the
exercise price per share specified by the grant of such SAR (which shall in no
instance be less than 100 percent of fair market value at the time of grant)
times the number of shares specified in such SAR, or portion thereof, which is
so exercised.
(b) Any stock option granted under this Program may include an SAR,
either at the time of grant or by amendment. An SAR included in a stock
option shall be subject to such terms and conditions as the Committee shall
impose, which shall include provisions that
(i) such SAR shall be exercisable to the extent, and only to the
extent, the stock option is exercisable; and
(ii) such SAR shall entitle the optionee to surrender to the
Corporation unexercised the stock option in which the SAR is included,
or any portion thereof, and to receive from the Corporation in exchange
therefor that number of shares having an aggregate value equal to the
- 7 -
<PAGE>
excess of the fair market value, at the time of exercise of such SAR, of
one share over the exercise price specified in such stock option times
the number of shares specified in such stock option, or portion thereof,
which is so surrendered.
(c) In lieu of the right to receive all or any specified portion of such
shares, an SAR may entitle the holder thereof to receive the cash equivalent
thereof as specified by the grant.
(d) An SAR may provide that such SAR shall be deemed to have been
exercised at the close of business on the business day preceding the
expiration of such SAR or the related stock option, if any, if at such time
such SAR has positive value and would have expired.
10. Restricted Stock.
(a) An award of restricted stock may be granted hereunder to an eligible
employee, for no cash consideration, for such minimum consideration as may be
required by applicable law, or for such other consideration as may be
specified by the grant. The terms and conditions of restricted stock,
including the vesting period, shall be specified by the Committee, at its sole
discretion, in the grant.
(b) Any restricted stock issued hereunder may be evidenced in such
manner as the Committee in its sole discretion shall deem appropriate,
including, without limitation, book-entry registration or issuance of a stock
certificate or certificates. In the event any stock certificate is issued in
respect of shares of restricted stock awarded hereunder, such certificate
shall bear an appropriate legend with respect to the restrictions applicable
to such award.
11. Incentive Shares.
(a) An incentive award may be granted hereunder in the form of shares.
Incentive shares may be granted to an eligible employee for no cash
consideration, for such minimum consideration as may be required by applicable
law, or for such other consideration as may be specified by the grant. The
terms and conditions of incentive shares shall be specified by the grant.
(b) Incentive shares may be paid to the grantee in a single installment
or in installments and may be paid at the time of grant or deferred to a later
date or dates. Each grant shall specify the time and method of payment as
determined by the Committee.
12. Dividend Equivalent Rights; Interest Equivalents.
(a) A DER may be granted hereunder to an eligible employee, as a
component of another award or as a separate award. The terms and conditions
of DERs shall be specified by the grant. Dividend equivalents credited to the
holder of a DER may be paid currently or may be deemed to be reinvested in
additional shares (which may thereafter accrue additional dividend
equivalents). Any such reinvestment shall be at fair market value at the time
thereof. DERs may be settled in cash or shares or a combination thereof, in a
single installment or installments. A DER granted as a component of another
award may provide that such DER shall be settled upon exercise, settlement, or
payment of, or lapse of restrictions on, such other award, and that such DER
shall expire or be forfeited or annulled under the same conditions as such
other award. A DER granted as a component of another award may also contain
terms and conditions different from such other award.
- 8 -
<PAGE>
(b) Any award under this Program that is settled in whole or in part in
cash on a deferred basis may provide by the grant for interest equivalents to
be credited with respect to such cash payment. Interest equivalents may be
compounded and shall be paid upon such terms and conditions as may be
specified by the grant.
13. Deferral of Payment.
With the approval of the Committee, the delivery of shares, cash or any
combination thereof subject to an award may be deferred, either in the form of
installments or a single future delivery. The Committee may also permit
selected grantees to defer payment of some or all of their awards, as well as
other compensation, in accordance with procedures established by the Committee
to assure that recognition of taxable income is deferred under the Code.
14. Termination of Employment.
If the employment of a grantee terminates for any reason, all
unexercised, deferred and unpaid awards may be exercisable and paid only in
accordance with rules established by the Committee. These rules may provide,
as the Committee deems appropriate, for the expiration, continuation, or
acceleration of the vesting of all or part of the awards.
15. Detrimental Activity.
The Committee may cancel any unexpired, unpaid or deferred awards at any
time if the grantee is not in compliance with all applicable provisions of
this Program or with the terms of any notice of award or if the grantee
engages in detrimental activity. The Committee may, in its discretion and as a
condition to the exercise of an award, require a grantee to acknowledge that
he or she is in compliance with all applicable provisions of the Program and
of any notice of award and has not engaged in any detrimental activity.
16. Change in Control.
The Committee may in its discretion and upon such terms as it deems
appropriate, accelerate the date on which any outstanding option or SAR
becomes exercisable or waive the restrictions or other terms and conditions on
the vesting of any restricted or incentive shares in the event of a proposed
change in control of the Corporation. In addition to the foregoing, the
Corporation may, with the approval of the Committee, purchase stock options
previously granted to any person who is at the time of any such transaction an
employee of the Corporation for a price equal to the difference between the
consideration per share payable pursuant to the terms of the transaction and
the option price.
17. Substitute Awards.
The Committee may grant awards in substitution for, or upon the
assumption of, awards granted by another corporation that is merged into,
consolidated with, or all or a substantial part of the assets or stock of
which is acquired by the Corporation or a Subsidiary. The terms and
provisions of any awards granted under this Section 16 may vary from the terms
and provisions otherwise specified in this Program and may, instead,
correspond to the terms and provisions of the awards granted by the other
corporation.
- 9 -
<PAGE>
18. Amendments to This Program; Amendments of Outstanding Awards.
(a) The Board can from time to time amend or terminate this Program, or
any provision hereof. Approval of the shareholders of the Corporation will be
required only to the extent necessary to comply with Rule 16b-3 or any other
applicable law, regulation, or listing requirement, or to qualify for an
exemption or characterization that is deemed desirable by the Board.
(b) The Committee may, in its discretion, amend the terms of any award,
prospectively or retroactively, but no such amendment may impair the rights of
any grantee without his or her consent. The Committee may, in whole or in
part, waive any restrictions or conditions applicable to, or accelerate the
vesting of, any award.
19. Withholding Taxes.
The Corporation shall have the right to deduct from any cash payment made
under this Program any federal, state or local income or other taxes required
by law to be withheld with respect to such payment. It shall be a condition
to the obligation of the Corporation to deliver shares or securities of the
Corporation upon exercise of a stock option or SAR, upon settlement of a DER,
upon delivery of restricted stock or incentive shares, or upon exercise,
settlement, or payment of any other award under this Program, that the grantee
of such award pay to the Corporation such amount as may be requested by the
Corporation for the purpose of satisfying any liability for such withholding
taxes. Any award under this Program may provide by the grant that the grantee
of such award may elect, in accordance with any applicable regulations of the
granting authority, to pay a portion or all of the amount of such minimum
required or additional permitted withholding taxes in shares. The grantee
shall authorize the Corporation to withhold, or shall agree to surrender back
to the Corporation, on or about the date such withholding tax liability is
determinable, shares previously owned by such grantee or a portion of the
shares that were or otherwise would be distributed to such grantee pursuant to
such award having a fair market value equal to the amount of such required or
permitted withholding taxes to be paid in shares.
20. Grants of Awards to Employees Who are Foreign Nationals.
Without amending this Program, but subject to the limitations specified
in Section 18 above, the Committee can grant, amend, administer, annul, or
terminate awards to eligible employees who are foreign nationals on such terms
and conditions different from those specified in this Program as may in the
judgment of the granting authority be necessary or desirable to foster and
promote achievement of the purposes of this Program.
21. Rights of Employees.
Nothing in this Program will confer upon any grantee the right to
continued employment by the Corporation or limit in any way the Corporation's
right to terminate any grantee's employment at will.
22. Effective Date.
This Program was ratified by the Board and became effective on
April 22, 1993, subject to approval of the shareholders on or before
October 28, 1993. Awards may be granted prior to approval of the Program by
shareholders, but no such award may be exercised until after the Program has
been approved by shareholders. If the shareholders do not approve the Program
on or before October 28, 1993, all awards granted under the Program shall
terminate.
- 10 -
EXHIBIT 11
<TABLE>
<CAPTION>
PARKER-HANNIFIN CORPORATION
FORM 10-Q
COMPUTATION OF EARNINGS PER COMMON SHARE
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended
September 30,
___________________________
1997 1996
____________ ____________
<S> <C> <C>
Net income applicable to common shares $ 78,261 $ 51,105
============ ============
Weighted average common shares outstanding
for the period 111,603,371 111,454,597
Increase in weighted average from dilutive
effect of exercise of stock options 851,962 871,839
____________ ____________
Weighted average common shares, assuming
issuance of the above securities 112,455,333 112,326,436
============ ============
Earnings per common share:
Primary $ .70 $ .46
Fully diluted (A) $ .70 $ .45
<FN>
(A) This calculation is submitted in accordance with Regulation S-K
Item 601(b)(11) although not required for income statement presentation
because it results in dilution of less than 3 percent.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
PARKER-HANNIFIN CORPORATION'S REPORT ON FORM 10-Q FOR ITS QUARTERLY PERIOD
ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 39,456
<SECURITIES> 0
<RECEIVABLES> 586,642
<ALLOWANCES> 6,799
<INVENTORY> 777,727
<CURRENT-ASSETS> 1,549,047
<PP&E> 2,209,249
<DEPRECIATION> 1,149,384
<TOTAL-ASSETS> 3,197,701
<CURRENT-LIABILITIES> 844,211
<BONDS> 443,941
<COMMON> 55,906
0
0
<OTHER-SE> 1,539,664
<TOTAL-LIABILITY-AND-EQUITY> 3,197,701
<SALES> 1,083,169
<TOTAL-REVENUES> 1,083,169
<CGS> 827,139
<TOTAL-COSTS> 827,139
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 974
<INTEREST-EXPENSE> 10,437
<INCOME-PRETAX> 121,335
<INCOME-TAX> 43,074
<INCOME-CONTINUING> 78,261
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 78,261
<EPS-PRIMARY> .70
<EPS-DILUTED> .70
</TABLE>
