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 December 31, 1998
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 December 31, 1998 108,473,704
<PAGE>
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PARKER-HANNIFIN CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
______________________ _______________________
1998 1997 1998 1997
__________ __________ __________ __________
<S> <C> <C> <C> <C>
Net sales $1,199,021 $1,114,948 $2,417,745 $2,198,117
Cost of sales 943,167 862,209 1,890,474 1,689,348
_________ __________ __________ _________
Gross profit 255,854 252,739 527,271 508,769
Selling, general and
administrative expenses 141,370 132,961 275,528 258,236
__________ __________ __________ _________
Income from operations 114,484 119,778 251,743 250,533
Other income (deductions):
Interest expense (17,341) (13,082) (33,416) (23,519)
Interest and other income,
net (333) 3,868 (406) 4,885
__________ _________ _________ _________
(17,674) (9,214) (33,822) (18,634)
__________ _________ _________ _________
Income before income taxes 96,810 110,564 217,921 231,899
Income taxes 33,278 39,250 76,272 82,324
__________ _________ _________ _________
Net income $ 63,532 $ 71,314 $ 141,649 $ 149,575
========== ========== ========== =========
Earnings per share - Basic $ .59 $ .64 $ 1.30 $ 1.34
Earnings per share - Diluted $ .58 $ .63 $ 1.29 $ 1.33
Cash dividends per
common share $ .15 $ .15 $ .30 $ .30
See accompanying notes to consolidated financial statements.
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
PARKER-HANNIFIN CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
(Unaudited)
December 31, June 30,
1998 1998
__________ __________
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 39,940 $ 30,488
Accounts receivable, net 661,261 699,179
Inventories:
Finished products 506,290 416,034
Work in process 361,907 392,880
Raw materials 143,526 135,357
__________ __________
1,011,723 944,271
Prepaid expenses 20,628 22,035
Deferred income taxes 87,567 84,102
__________ __________
Total current assets 1,821,119 1,780,075
Plant and equipment 2,487,666 2,345,109
Less accumulated depreciation 1,296,372 1,209,884
__________ __________
1,191,294 1,135,225
Other assets 708,939 609,521
__________ __________
Total assets $3,721,352 $3,524,821
========== ==========
LIABILITIES
Current liabilities:
Notes payable $ 350,604 $ 265,485
Accounts payable, trade 282,166 338,249
Accrued liabilities 290,818 350,662
Accrued domestic and foreign taxes 26,266 34,374
__________ __________
Total current liabilities 949,854 988,770
Long-term debt 634,203 512,943
Pensions and other postretirement benefits 280,415 265,675
Deferred income taxes 38,055 29,739
Other liabilities 49,078 44,244
__________ __________
Total liabilities 1,951,605 1,841,371
SHAREHOLDERS' EQUITY
Serial preferred stock, $.50 par value;
authorized 3,000,000 shares; none issued - -
Common stock, $.50 par value; authorized
600,000,000 shares; issued 111,812,025
shares at December 31 and June 30 55,906 55,906
Additional capital 137,102 139,726
Retained earnings 1,740,265 1,631,316
Accumulated other comprehensive income (35,335) (60,026)
__________ __________
1,897,938 1,766,922
Common stock in treasury at cost;
3,338,321 shares at December 31 and
1,938,762 shares at June 30 (128,191) (83,472)
__________ __________
Total shareholders' equity 1,769,747 1,683,450
__________ __________
Total liabilities and shareholders' equity $3,721,352 $3,524,821
========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
PARKER-HANNIFIN CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Six Months Ended
December 31,
_____________________
1998 1997
________ ________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $141,649 $149,575
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation 85,636 79,906
Amortization 19,146 13,079
Deferred income taxes (4,454) (16,111)
Foreign currency transaction (gain) loss (3,752) 1,171
Loss (gain) on sale of plant and equipment 794 (766)
Changes in assets and liabilities:
Accounts receivable, net 68,054 30,376
Inventories (39,916) (84,278)
Prepaid expenses 5,430 2,008
Other assets (15,381) (20,674)
Accounts payable, trade (69,408) (20,106)
Accrued payrolls and other compensation (58,234) (21,347)
Accrued domestic and foreign taxes (5,990) (6,135)
Other accrued liabilities (15,494) 8,220
Pensions and other postretirement benefits 10,116 5,418
Other liabilities 4,649 6,602
________ ________
Net cash provided by operating activities 122,845 126,938
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions (excluding cash of $2,609 in 1998) (89,865) (143,546)
Capital expenditures (114,650) (112,000)
Proceeds from sale of plant and equipment 2,364 2,983
Other 1,045 (3,053)
________ ________
Net cash used in investing activities (201,106) (255,616)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments for common share activity (47,863) (44,732)
Proceeds from notes payable, net 75,569 132,021
Proceeds from long-term borrowings 206,621 50,086
Payments of long-term borrowings (115,895) (6,213)
Dividends (32,700) (33,407)
________ ________
Net cash provided by financing activities 85,732 97,755
Effect of exchange rate changes on cash 1,981 (1,393)
________ ________
Net increase (decrease) in cash and cash equivalents 9,452 (32,316)
Cash and cash equivalents at beginning of year 30,488 68,997
________ ________
Cash and cash equivalents at end of period $ 39,940 $ 36,681
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
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 made directly 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.
Results by Business Segment:
Three Months Ended Six Months Ended
December 31, December 31,
_______________________ ______________________
1998 1997 1998 1997
__________ __________ _________ __________
<S> <C> <C> <C> <C>
Net sales, including
intersegment sales
Industrial:
North America $ 609,074 $ 595,442 $1,235,963 $1,180,941
International 312,144 280,926 622,514 545,324
Aerospace 278,232 239,071 560,210 472,625
Intersegment sales (429) (491) (942) (773)
__________ __________ _________ __________
Total $1,199,021 $1,114,948 $2,417,745 $2,198,117
========== ========== ========== ==========
Income from operations before
corporate general and
administrative expenses
Industrial:
North America $ 65,310 $ 82,781 $ 144,898 $ 172,463
International 22,178 18,691 47,935 38,842
Aerospace 41,822 35,405 86,185 72,321
__________ __________ _________ __________
Total 129,310 136,877 279,018 283,626
Corporate general and
administrative expenses 14,826 17,099 27,275 33,093
__________ __________ _________ __________
Income from operations $ 114,484 $ 119,778 $ 251,743 $ 250,533
========== ========== ========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
-5-
<PAGE>
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 December 31, 1998, the results
of operations for the three and six months ended December 31, 1998
and 1997 and cash flows for the six months then ended.
2. Earnings per share
The following table presents a reconciliation of the numerator and
denominator of basic and diluted earnings per share for the three
and six months ended December 31, 1998 and 1997.
Three Months Ended Six Months Ended
December 31, December 31,
_______________________ ________________________
1998 1997 1998 1997
__________ ___________ ___________ __________
Numerator:
Net income applicable
to common shares $ 63,532 $71,314 $ 141,649 $149,575
Denominator:
Basic - weighted average
common shares 108,541,603 111,128,438 108,953,828 111,365,904
Increase in weighted
average from dilutive
effect of exercise of
stock options 880,609 1,052,499 821,286 952,230
__________ ___________ ___________ __________
Diluted - weighted average
common shares, assuming
exercise of stock
options 109,422,212 112,180,937 109,775,114 112,318,134
=========== =========== =========== ===========
Basic earnings per share $ .59 $ .64 $ 1.30 $ 1.34
Diluted earnings per share $ .58 $ .63 $ 1.29 $ 1.33
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 primarily be funded from operating cash flows
and the shares will initially be held as treasury stock. During the
three-month period ended December 31, 1998 the Company purchased
540,000 shares of its common stock at an average price of $35.155
per share. Year-to-date the Company has purchased 1,500,000 shares
at an average price of $32.459 per share.
- 6 -
<PAGE>
4. Comprehensive income
On July 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income". SFAS No. 130 establishes new standards for
reporting comprehensive income and its components. The Company's
only item of other comprehensive income is foreign currency
translation adjustments recorded in shareholders' equity.
Comprehensive income for the three and six months ended December 31,
1998 and 1997 is as follows:
Three Months Ended Six Months Ended
December 31, December 31,
__________________ _____________________
1998 1997 1998 1997
________ ________ _________ _________
Net income $ 65,532 $ 71,314 $ 141,649 $ 149,575
Foreign currency
Translation adjustments (508) (18,981) 24,691 (22,836)
________ ________ _________ _________
Comprehensive income $ 65,024 $ 52,333 $ 166,340 $ 126,739
======== ======== ========= =========
5. Acquisitions
In July 1998 the Company acquired the stock of B.A.G. Acquisition
Ltd., the parent company of Veriflo Corporation, located in
Richmond, California and Carson City, Nevada. Veriflo, with
calendar year 1997 revenues of $65 million, manufactures high-purity
regulators and valves for precision gas delivery.
In August 1998 the Company acquired Fluid Power Systems of
Lincolnshire, Illinois, a manufacturer of hydraulic valves and
electrohydrualic systems and controls. Fluid Power Systems, with
estimated calendar year 1998 revenues of $42 million, serves the
construction, aerial reach and agricultural markets.
Total purchase price for these businesses was approximately $85.2
million in cash. Both acquisitions are being accounted for by the
purchase method.
- 7 -
<PAGE>
PARKER-HANNIFIN CORPORATION
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 1998
AND COMPARABLE PERIODS ENDED DECEMBER 31, 1997
CONSOLIDATED STATEMENT OF INCOME
Net sales increased 7.5 percent for the second quarter of fiscal 1999 and
10.0 percent for the six-month period ended December 31, 1998. Without
acquisitions, the increases would have been 4.0 percent and 5.5 percent,
respectively. Excluding acquisitions, these increases primarily result
from the continuing strength of the Aerospace operations.
Income from operations was $114.5 million for the current second quarter and
$251.7 million for the current six months, a decrease of 4.4 percent for the
quarter and an increase of .5 percent for the six months. As a percent of
sales, Income from operations declined to 9.5 percent from 10.7 percent for
the quarter and to 10.4 percent from 11.4 percent for the six months. Cost
of sales as a percent of sales increased to 78.7 percent from 77.3 percent
for the quarter and to 78.2 percent from 76.9 percent for the six months.
The declining margins are the result of lower volume and a change in product
mix in the Industrial North American operations. Selling, general and
administrative expenses, as a percent of sales, declined slightly, improving
to 11.8 percent of sales from 11.9 percent for the quarter and to 11.4
percent from 11.7 percent for the six months. The slight improvement in
selling, general and administrative expenses is the result of lower
incentive compensation.
Interest expense increased $4.3 million for the quarter ended December 31,
1998, from the same period ended December 31, 1997, due to increased
borrowings related to acquisitions completed in the last 12 months.
Interest expense for the current six months increased $9.9 million compared
to the same period in the prior year.
Interest and other income for both the prior-year quarter and six months
included $3.3 million in income related to the relocation of the corporate
headquarters.
Net income declined 10.9 percent for the quarter, and 5.3 percent for the
half, as compared to the prior year. As a percent of sales, Net income
declined to 5.3 percent from 6.4 percent for the quarter and to 5.9 percent
from 6.8 percent for the six months.
Backlog was $1.61 billion at December 31, 1998 compared to $1.64 billion
in the prior year and at June 30, 1998. The flat level of backlog reflects
the slowing of orders as many customers adjust to the current economic
environment.
-8-
<PAGE>
RESULTS BY BUSINESS SEGMENT
INDUSTRIAL - The Industrial Segment operations achieved the following Net
sales increases in the current year when compared to the equivalent prior-
year period:
Period ending December 31,
Three Months Six Months
Industrial North America 2.3 % 4.7 %
Industrial International 11.1 % 14.2 %
Total Industrial 5.1 % 7.7 %
Without the effect of currency-rate changes, International sales would have
increased 10.4 percent for the quarter, but the increase remains at 14.2
percent for the six months.
Without the effect of acquisitions completed within the past 12 months, the
changes in Net sales would have been:
Period ending December 31,
Three Months Six Months
Industrial North America (.9) % .8 %
Industrial International 3.7 % 4.7 %
Total Industrial .6 % 2.0 %
Operating income for the Industrial segment was down 13.8 percent for the
quarter and 8.7 percent for the six months. Industrial North America
Operating income decreased 21.1 percent for the quarter and 16.0 percent for
the six months while Industrial International results increased 18.7 percent
for the quarter and 23.4 percent for the six months. Without acquisitions,
total Industrial Segment Operating income would have decreased 12.8 percent
for the quarter and 8.9 percent for the six months. As a percent of sales,
Industrial North American Operating income decreased to 10.7 percent from
13.9 percent for the quarter and to 11.7 percent from 14.6 percent for the
six months. Industrial International Operating income increased to 7.1
percent from 6.7 percent for the quarter and to 7.7 percent from 7.1 percent
for the six months.
Order demand has been declining for many of the North American Industrial
operations, especially those supporting the agricultural equipment,
semiconductor manufacturing, factory automation and construction equipment
industries. Margins for the second quarter and first six months of fiscal
1999 were adversely affected by lower volume (resulting in the under-
absorption of fixed costs), a change in product mix (with a greater
percentage of sales being made in lower margin businesses) and the
operating impact of integrating recent acquisitions. Higher volume
in Europe provided the revenue growth in the Industrial International
operations and, along with a more favorable product mix, helped improve
profitability.
Total Industrial Segment backlog increased 1.5 percent compared to December
31, 1997 and decreased .1 percent since June 30, 1998. Without acquisitions,
backlog would have decreased 1.8 percent compared to December 31, 1997 and
3.9 percent since June 30, 1998. The decline in backlog is due to declining
order rates being experienced in most of the Industrial Segment markets.
Management anticipates most Industrial North American markets to remain soft
for the balance of the fiscal year resulting in slight revenue growth and
increased pressure on margins due to the underabsorption of fixed costs. For
the second half of the year, business conditions for the European operations
are expected to be consistent with the conditions experienced in the first
half but uncertainty surrounds the second half business conditions in Latin
America, especially Brazil.
AEROSPACE - Aerospace Net sales were up 16.4 percent for the quarter and 18.5
percent for the six months. Continuing strong commercial aircraft activity
accounted for much of the sales growth.
-9-
<PAGE>
Operating income for the Aerospace Segment increased 18.1 percent for the
quarter and 19.2 percent for the six-month period. As a percent of sales,
Operating income increased to 15.0 percent from 14.8 percent for the
quarter and to 15.4 percent from 15.3 percent for the six-month period.
The increase in the margins was the result of the sales growth.
Backlog for the Aerospace Segment decreased 2.9 percent from December 31,
1997 and 3.0 percent since June 30, 1998. The decline in backlog reflects a
slowdown in order rates. A change to heavier OEM volume in future product
mix could also result in lower margins.
BALANCE SHEET
Working capital increased to $871.3 million at December 31, 1998 from $791.3
million at June 30, 1998 with the ratio of current assets to current
liabilities increasing to 1.9 to 1. The increase was primarily due to an
increase in Inventories and decreases in Accounts payable, trade and Accrued
liabilities, partially offset by a decrease in Accounts receivable and an
increase in Notes payable.
Accounts receivable were lower on December 31, 1998 than on June 30, 1998
primarily due to the holiday induced lower level of sales in the month of
December. Days sales outstanding have increased to 49 days at December 31,
1998 from 46 days at June 30, 1998.
Inventories increased since June 30, 1998 primarily as a result of
acquisitions within the Industrial segment.
Accounts payable, trade decreased $56.1 million since June 30, 1998 with the
reduction occurring consistently throughout the operations. A portion of the
decrease was the result of lower production in the month of December.
Accrued liabilities decreased $59.8 million since June 30, 1998 primarily as
a result of lower incentive compensation accruals occurring throughout most
of the operations.
The debt to debt-equity ratio increased to 35.8 percent at December 31, 1998
from 31.6 percent at June 30, 1998 as a result of increases in Notes payable
and Long-term debt, both of which were utilized to finance recent
acquisitions.
STATEMENT OF CASH FLOWS
Net cash provided by operating activities was $122.8 million for the six
months ended December 31, 1998, as compared to $126.9 million for the same
six months of 1997. Net income for fiscal 1999 included non-cash
Depreciation and Amortization expenses of $104.8 million as compared to
$93.0 million in fiscal 1998. Net income also included a net foreign
currency transaction gain of $3.8 million in fiscal 1999 as compared to a
net loss of $1.2 million in fiscal 1998.
Activity within the working capital items - Accounts receivable,
Inventories, Accounts payable, Accrued payrolls and Prepaid expenses - used
cash of $94.1 million in fiscal 1999 compared to using cash of $93.3
million in fiscal 1998. Other accrued liabilities used cash of $15.5
million in the current year compared to providing cash of $8.2 million in
the prior year and deferred income taxes used cash of $4.5 million in fiscal
1999 versus using cash of $16.1 million in fiscal 1998.
Net cash used in investing activities declined to $201.1 million for fiscal
1999 compared to $255.6 million for fiscal 1998 primarily due to a
reduction in the amount spent on acquisitions.
Financing activities provided cash of $85.7 million for the six months
ended December 31, 1998 compared to providing cash of $97.8 million for the
same period in 1997. The change resulted primarily from net debt
borrowings providing cash of $166.3 million in fiscal 1999 compared to
$175.9 million in the prior year.
-10-
<PAGE>
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company enters into forward exchange contracts and cross-currency swap
agreements to reduce its exposure to fluctuations in related foreign
currencies. These contracts are with major financial institutions and the
risk of loss is considered remote. The Company does not hold or issue
derivative financial instruments for trading purposes. In addition, the
Company's foreign locations, in the ordinary course of business, enter into
financial guarantees through financial institutions which enable customers
to be reimbursed in the event of nonperformance by the Company. The total
value of open contracts and any risk to the Company as a result of these
arrangements is not material to the Company's financial position, liquidity
or results of operations.
YEAR 2000 CONSIDERATONS
The Company has taken action to assure that its computerized products and
systems and all external interfaces are Year 2000 compliant. These actions
are part of a formal information technology initiative which the Company
began several years ago. As a result, none of the Company's significant
information technology projects have been delayed due to the year 2000
issue. The Company expects to have all internal standard application
systems, including all information systems plus any equipment or embedded
systems which may be impacted, compliant by July 1999 by modifying present
systems, installing new systems and monitoring third-party interfaces. The
cost for these actions is not material to the Company's results of
operations. The Company will continue to reassess the need for alternative
actions based on its progress towards being year 2000 compliant by July
1999 but at this time anticipates that no such actions will be required.
In addition, the Company contacted its key suppliers, customers,
distributors and financial service providers regarding their Year 2000
status. Follow-up inquiries and audits with such key third parties will be
conducted as warranted. The Company expects assurance that key third
parties are year 2000 compliant by July 1999. If it is determined that any
key third party may not be year 2000 compliant on a timely basis, the
Company will execute a contingency plan that has been developed to ensure
its operations are not affected by such key third party's year 2000
noncompliance.
While management does not expect that the consequences of any failure of
the Company or any key third party to be fully compliant by 2000 would
significantly affect the financial position, liquidity, or results of
operations of the Company, there can be no assurance that any such failure
to be fully compliant by 2000 would not have an adverse impact on the
Company.
EURO PREPARATIONS
The Company has completed an upgrade of its systems to accommodate the Euro
currency. The cost of this upgrade was immaterial to the Company's
financial results. Although difficult to predict, any competitive
implications and any impact on existing financial instruments are expected
to be immaterial to the Company's results of operations, financial position
or liquidity.
FORWARD-LOOKING STATEMENTS
This Report on Form 10-Q and other written reports and oral statements made
from time to time by the Company may contain "forward-looking statements",
all of which are subject to risks and uncertainties. All statements which
address operating performance, events or developments that the Company
expects or anticipates will occur in the future, including statements
relating to growth, operating margin performance, earnings per share or
statements expressing general opinions about future operating results, are
forward-looking statements.
-11-
<PAGE>
These forward-looking statements rely on a number of assumptions concerning
future events, and are subject to a number of uncertainties and other
factors, many of which are outside the Company's control, that could cause
actual results to differ materially from such statements. Such factors
include:
* continuity of business relationships with and purchases by major customers,
including among others, orders and delivery schedules for aircraft
components,
* ability of suppliers to provide materials as needed,
* uncertainties surrounding timing, successful completion or integration of
acquisitions,
* competitive pressure on sales and pricing,
* increases in material and other production costs which cannot be recovered
in product pricing,
* uncertainties surrounding the year 2000 issues and the new Euro currency,
* difficulties in introducing new products and entering new markets, and
* uncertainties surrounding the global economy and global market conditions,
including among others, the economy of the Asia Pacific and Latin America
regions and the potential devaluation of currencies.
Any forward-looking statements are based on known events and circumstances
at the time. The Company undertakes no obligation to update or publicly
revise these forward-looking statements to reflect events or circumstances
that arise after the date of the filing of this Form 10-Q.
-12-
<PAGE>
PARKER-HANNIFIN CORPORATION
PART II - OTHER INFORMATION
Item 2. Change in Securities and Use of Proceeds.
_______ _________________________________________
During the quarter ended December 31, 1998, in reliance
upon Section 4(2) of the Securities Act of 1933, as
amended, the Registrant issued the following shares of
Common Stock, $.50 par value:
(a) 8,151 shares valued at $35.47 per share to four
Directors of the Registrant in lieu of fees pursuant
to the Registrant's Non-Employee Directors Stock Plan;
and
(b) 4,280 shares valued at $46.76 per share to Dynamic
Valves,Inc. as the final installment of the purchase
price in the acquisition of substantially all of its
assets.
Item 6. Exhibits and Reports on Form 8-K.
______ _________________________________
(a) The following documents are furnished as exhibits and are
numbered pursuant to Item 601 of Regulation S-K:
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: February 12, 1999
- 13 -
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit
___________ ______________________
27 Financial Data Schedule
- 14 -
<PAGE>
<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 DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 39,940
<SECURITIES> 0
<RECEIVABLES> 611,392
<ALLOWANCES> 10,452
<INVENTORY> 1,011,723
<CURRENT-ASSETS> 1,821,119
<PP&E> 2,487,666
<DEPRECIATION> 1,296,372
<TOTAL-ASSETS> 3,721,352
<CURRENT-LIABILITIES> 949,854
<BONDS> 639,838
<COMMON> 55,906
0
0
<OTHER-SE> 1,713,841
<TOTAL-LIABILITY-AND-EQUITY> 3,721,352
<SALES> 2,417,745
<TOTAL-REVENUES> 2,417,745
<CGS> 1,890,474
<TOTAL-COSTS> 1,890,474
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 584
<INTEREST-EXPENSE> 33,416
<INCOME-PRETAX> 217,921
<INCOME-TAX> 76,272
<INCOME-CONTINUING> 141,649
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 141,649
<EPS-PRIMARY> 1.30
<EPS-DILUTED> 1.29
</TABLE>
