10-KPeriod: FY2004

Parker-Hannifin Corp Annual Report, Year Ended Jun 30, 2004

Filed September 3, 2004For Securities:PH

Summary

Parker-Hannifin Corporation's 2004 10-K filing highlights a robust fiscal year ending June 30, 2004, marked by significant growth in net sales, reaching $7.11 billion. The company demonstrated strong performance across its diversified segments, with the Industrial segment being the primary revenue driver, accounting for 72% of net sales. A substantial increase in backlog to $2.2 billion indicates strong demand and provides good visibility for future revenue. The company also actively managed its capital structure through share repurchases, reflecting a commitment to returning value to shareholders. The filing also underscores Parker-Hannifin's strategic focus on innovation, with considerable investment in research and development. The company's extensive global manufacturing and distribution network, coupled with its broad customer base across numerous industries, positions it well for continued growth. While facing a competitive landscape, Parker-Hannifin's market leadership in key segments, driven by product quality, technological capabilities, and customer service, suggests a resilient business model.

Key Highlights

  • 1Net sales reached $7.107 billion for the fiscal year ended June 30, 2004, showing substantial revenue generation.
  • 2The company's backlog increased significantly to $2.204 billion, indicating strong future demand and revenue visibility.
  • 3The Industrial segment was the largest contributor to net sales, representing 72% of total revenue.
  • 4Parker-Hannifin actively repurchased its common stock throughout the period, with 179,100 shares bought back between April and June 2004.
  • 5Research and development costs increased to $143.1 million in FY2004, reflecting a commitment to innovation and product improvement.
  • 6The company operates a vast global network with facilities in 37 states and 46 foreign countries, serving approximately 390,000 customers.
  • 7No single customer accounted for more than 4% of total net sales, demonstrating significant customer diversification.

Frequently Asked Questions

Parker-Hannifin operates through four main business segments: Industrial, Aerospace, Climate & Industrial Controls, and Other. The Industrial segment is the largest revenue generator, accounting for 72% of net sales in fiscal year 2004. The Aerospace segment contributed 16%, Climate & Industrial Controls 9%, and the Other segment 3%.

The company's backlog at the end of fiscal year 2004 was $2.204 billion, a significant increase from the previous year. Approximately 82.2% of this backlog is scheduled for delivery within the next twelve months, suggesting strong revenue visibility and a positive outlook for the upcoming year.

Parker-Hannifin uses forward exchange contracts and costless collar contracts to mitigate exposure to foreign currency fluctuations, and the company stated these were not material. For interest rate risk, the company aims to maintain a mix of 60% fixed-rate and 40% variable-rate debt. A hypothetical 100 basis point increase in interest rates was estimated to increase annual interest expense by approximately $400,000.

Parker-Hannifin invests significantly in research and development to drive innovation and improve existing products. R&D costs for fiscal year 2004 were $143.1 million, an increase from the previous two years. This investment is supported by a dedicated staff of engineers and scientists and includes customer-sponsored research.