8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): August 1, 2007

PARKER-HANNIFIN CORPORATION

(Exact Name of Registrant as Specified in Charter)

Ohio	1-4982	34-0451060
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

6035 Parkland Blvd. Cleveland, Ohio	44124-4141
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (216) 896-3000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

Item 7.01 Regulation FD Disclosure

The following information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition” and Item 7.01, “Regulation FD Disclosure”

On August 1, 2007, Parker-Hannifin Corporation issued a press release and presented a Webcast announcing earnings for the quarter ended June 30, 2007. A copy of the press release is furnished as Exhibit 99.1 to this report. The press release contains references to sales growth excluding the effects of acquisitions and foreign currency exchange rates. The effects of acquisitions and foreign currency exchange rates are removed to allow investors and the company to meaningfully evaluate changes in sales on a comparable basis from period to period. A copy of the Webcast presentation is furnished as Exhibit 99.2 to this report.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits:

99.1	Press release issued by Parker-Hannifin Corporation, dated August 1, 2007.
99.2	Webcast presentation by Parker-Hannifin Corporation, dated August 1, 2007.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

PARKER-HANNIFIN CORPORATION
By:	/s/ Timothy K. Pistell
	Timothy K. Pistell
	Executive Vice President - Finance and Administration and Chief Financial Officer

Date: August 1, 2007

EX-99.1

Exhibit 99.1

For Release:	Immediately
Contact:	Media –
	Christopher M. Farage - Vice President, Corp. Communications	216/896-2750
	cfarage@parker.com
	Financial Analysts –
	Pamela Huggins, Vice President - Treasurer	216/896-2240
	phuggins@parker.com

Stock Symbol: PH – NYSE

Parker Surpasses $10 Billion in Revenue in Another Record Year of Sales, Earnings and Cash Flow From Operating Activities

— Reports 18.7 Percent Increase in Fourth Quarter EPS to $1.84

— Company guidance projects another record year in fiscal 2008

CLEVELAND, August 1, 2007 — Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported record results for the year and the fourth quarter. These results mark the fourth year in a row Parker has reported records in sales, earnings and cash flow from operating activities.

For the 2007 fiscal year, the company surpassed $10 billion in sales for the first time in its 89 year history. Sales reached a record $10.7 billion, an increase of 14.2 percent from $9.4 billion in the previous year. Income from continuing operations increased 30 percent to $830.0 million compared to $638.3 million a year ago, and earnings per diluted share from continuing operations increased 32.8 percent to $7.01 compared to $5.28 a year ago. Cash flow from operating activities reached a record $955.0 million, or 8.9 percent of sales.

For the fourth quarter of fiscal 2007, sales increased 9.8 percent to $2.9 billion, compared to $2.6 billion in the same period last year. Fourth quarter income from continuing operations increased 15.6 percent to $217.2 million compared to $187.9 million a year ago, and fourth quarter earnings per diluted share from continuing operations increased 18.7 percent to $1.84 from $1.55 a year ago.

1

“I want to thank our employees for their continued commitment to premier customer service, profitable growth and financial performance,” said Chairman, CEO and President Don Washkewicz. “These three pillars of Parker’s Win Strategy enabled us to deliver record quarterly and annual results for our shareholders.”

“In surpassing the $10 billion sales milestone, we continue to demonstrate our propensity to grow. Our compound annual growth rate over the last 35 years is in excess of 11 percent. This year, we grew by more than 14 percent, or more than three times GDP. This exceeded our Win Strategy goal to grow both organically and through disciplined acquisitions at a 10 percent compound annual rate. Of the 14 percent growth, 5 percent was organic, 6 percent was from strategic acquisitions, and the remainder was from the effects of foreign currency exchange rates. We’re especially pleased with gains we’ve made in our Industrial International segment, where revenues grew by 34 percent and operating income grew by 51 percent. Margins in this segment also reached an all time high and continue to approach those in our North American segment. Overall, our revenues and profits are more balanced regionally than ever before, which speaks to the growing demand around the world for our motion and control technologies. By executing our Win Strategy, we delivered record earnings per share in the quarter and for the year. Total shareholder return for the year was 28 percent, or 35 percent higher than the S&P 500, and our return on invested capital remains at the top quartile among our peers.”

“We also generated close to $1 billion in annual cash flow from operating activities, which allowed us to both maintain our strong balance sheet and use cash wisely to invest in our company. We continued to invest in strategic acquisitions this year, purchasing eleven companies that added nearly $260 million in annualized revenues. We spent $433 million to repurchase 5.4 million shares, and we made discretionary contributions of $161 million to our pension funds. In fiscal 2007, we increased dividends 13 percent, paying out approximately $121 million to shareholders, maintaining our dividend increase record that spans 51 years.”

2

Segment Results

In the Industrial North America segment, fourth-quarter sales decreased 1.6 percent to $1.1 billion, and operating income decreased 0.4 percent from the prior year to $164.6 million. For the full year, Industrial North America sales increased 1.8 percent to $4.1 billion, and operating income increased 0.2 percent from the prior year to $598.4 million.

In the Industrial International segment, fourth-quarter sales increased 30.3 percent to $1.1 billion, and operating income increased 34.9 percent from the prior year to $143.4 million. For the full year, Industrial International sales increased 34.4 percent to $3.9 billion, and operating income increased 50.7 percent from the prior year to $533.1 million.

In the Aerospace segment, fourth-quarter sales increased 5.9 percent to $444.6 million, and operating income increased 4.5 percent from the prior year to $67.3 million. For the full year, Aerospace sales increased 12.0 percent to $1.7 billion, and operating income increased 22.1 percent from the prior year to $269.9 million.

In the Climate & Industrial Controls segment, fourth-quarter sales decreased 0.7 percent to $291.9 million, and operating income decreased 18.3 percent from the prior year to $25.3 million. For the full year, Climate & Industrial Controls sales increased 8.4 percent to $1.1 billion, and operating income decreased 1.1 percent from the prior year to $82.3 million.

Orders

In addition to financial results, Parker also reported an increase of 3 percent in total orders for the quarter ending June 30 compared to the same quarter a year ago. Parker reported the following orders by operating segment:

• Orders decreased 3 percent in the Industrial North America segment versus the same quarter a year ago.

• Orders increased 14 percent in the Industrial International segment versus the same quarter a year ago.

• Orders increased 8 percent in the Aerospace segment on a rolling 12 month average basis.

• Orders decreased 6 percent in the Climate and Industrial Controls segment versus the same quarter a year ago.

3

Outlook

For fiscal year 2008, the company issued guidance for earnings from continuing operations in the range of $7.20 to $7.60 per diluted share.

“Our employees have embraced The Parker Win Strategy as a proven roadmap to operational success and profitable growth,” added Washkewicz. “We remain uniquely positioned to meet the needs of both the OEM and MRO segments of the many diversified global motion and control markets we serve. Going forward, we expect to continue providing solid, dependable performance.”

NOTICE OF CONFERENCE CALL: Parker Hannifin’s conference call and slide presentation to discuss its fiscal fourth-quarter results is available to all interested parties via live webcast today at 10:00 a.m. ET, on the company’s investor information web site, http://www.phstock.com. To access the call, click on the “Live Webcast” link. From this link, users also may complete a pre-call system test and register for e-mail notification of future events and information available from Parker.

With annual sales exceeding $10 billion, Parker Hannifin is the world’s leading diversified manufacturer of motion and control technologies and systems, providing precision-engineered solutions for a wide variety of commercial, mobile, industrial and aerospace markets. The company employs more than 57,000 people in 43 countries around the world. Parker has increased its annual dividends paid to shareholders for 51 consecutive years, among the top five longest-running dividend-increase records in the S&P 500 index. For more information, visit the company’s web site at http://www.parker.com, or its investor information site at http://www.phstock.com.

Notes on Orders

Orders provide near-term perspective on the company’s outlook, particularly when viewed in the context of prior and future quarterly order rates. However, orders are not in themselves an indication of future performance. All comparisons are at constant currency exchange rates, with the prior year restated to the current-year rates. All exclude acquisitions until they can be reflected in both the numerator and denominator. Aerospace comparisons are rolling 12-month average

4

computations. The Total Parker orders number is derived from a weighted average of the year-over-year quarterly percent change in orders for the Industrial North America, Industrial International, and Climate and Industrial Controls segments, and the year-over-year 12-month rolling average of orders in the Aerospace segment.

Forward-Looking Statements:

Forward-looking statements contained in this and other written and oral reports are made based on known events and circumstances at the time of release, and as such, are subject in the future to unforeseen uncertainties and risks. All statements regarding future performance, earnings projections, events or developments are forward-looking statements. It is possible that the future performance and earnings projections of the company and individual segments may differ materially from current expectations, depending on economic conditions within both its industrial and aerospace markets, and the company’s ability to achieve anticipated benefits associated with announced realignment activities, strategic initiatives to improve operating margins, and growth and innovation initiatives. A change in economic conditions in individual markets may have a particularly volatile effect on segment results. Among the other factors which may affect future performance are: changes in business relationships with and purchases by or from major customers or suppliers, including delays or cancellations in shipments; uncertainties surrounding timing, successful completion or integration of acquisitions; threats associated with and efforts to combat terrorism; competitive market conditions and resulting effects on sales and pricing; increases in raw- material costs that cannot be recovered in product pricing; the company’s ability to manage costs related to employee retirement and health care benefits and insurance; and global economic factors, including manufacturing activity, air travel trends, currency exchange rates, difficulties entering new markets and general economic conditions such as inflation and interest rates. The company makes these statements as of the date of this disclosure, and undertakes no obligation to update them.

# # #

5

PARKER HANNIFIN CORPORATION - JUNE 30, 2007

CONSOLIDATED STATEMENT OF INCOME

	Three Months Ended June 30,					Year Ended June 30,
(Dollars in thousands except per share amounts)	2007			2006		2007			2006
Net sales	$	2,874,365		$	2,616,732	$	10,718,059		$	9,385,888
Cost of sales		2,223,756			2,053,991		8,272,949			7,367,618
Gross profit		650,609			562,741		2,445,110			2,018,270
Selling, general and administrative expenses		333,434			277,087		1,226,861			1,036,646
Income from operations		317,175			285,654		1,218,249			981,624
Interest expense		21,535			18,667		83,414			75,763
Other (income) expense, net		(2,294	)		1,661		(24,447	)		5,903
Income from continuing operations before income taxes		297,934			265,326		1,159,282			899,958
Income taxes		80,748			77,445		329,236			261,682
Income from continuing operations		217,186			187,881		830,046			638,276
Discontinued operations					6,007					34,891
Net income	$	217,186		$	193,888	$	830,046		$	673,167
Earnings per share:
Basic earnings per share from continuing operations	$	1.88		$	1.57	$	7.13		$	5.35
Discontinued operations					.05					.30
Basic earnings per share	$	1.88		$	1.62	$	7.13		$	5.65
Diluted earnings per share from continuing operations	$	1.84		$	1.55	$	7.01		$	5.28
Discontinued operations					.04					.29
Diluted earnings per share	$	1.84		$	1.59	$	7.01		$	5.57
Average shares outstanding during period - Basic		115,652,989			119,687,216		116,428,885			119,211,192
Average shares outstanding during period - Diluted		117,896,867			121,572,305		118,329,927			120,884,182
Cash dividends per common share	$	.26		$	.23	$	1.04		$	.92
BUSINESS SEGMENT INFORMATION BY INDUSTRY
	Three Months Ended June 30,					Year Ended June 30,
(Dollars in thousands)	2007			2006		2007			2006
Net sales
Industrial:
North America	$	1,054,987		$	1,071,719	$	4,063,889		$	3,993,370
International		1,082,960			831,200		3,900,628			2,902,508
Aerospace		444,558			419,875		1,685,431			1,504,922
Climate & Industrial Controls		291,860			293,938		1,068,111			985,088
Total	$	2,874,365		$	2,616,732	$	10,718,059		$	9,385,888
Segment operating income
Industrial:
North America	$	164,583		$	165,185	$	598,405		$	597,204
International		143,380			106,318		533,136			353,760
Aerospace		67,309			64,430		269,931			221,005
Climate & Industrial Controls		25,297			30,974		82,316			83,256
Total segment operating income	$	400,569		$	366,907	$	1,483,788		$	1,255,225
Corporate general and administrative expenses		57,909			40,220		179,077			133,695
Income from continuing operations before interest expense and other		342,660			326,687		1,304,711			1,121,530
Interest expense		21,535			18,667		83,414			75,763
Other expense		23,191			42,694		62,015			145,809
Income from continuing operations before income taxes	$	297,934		$	265,326	$	1,159,282		$	899,958

PARKER HANNIFIN CORPORATION - JUNE 30, 2007

CONSOLIDATED BALANCE SHEET

	June 30,
(Dollars in thousands)	2007			2006
Assets
Current assets:
Cash and cash equivalents	$	172,706		$	171,553
Accounts receivable, net		1,737,748			1,592,323
Inventories		1,265,802			1,182,878
Prepaid expenses		69,655			64,238
Deferred income taxes		140,264			127,986
Total current assets		3,386,175			3,138,978
Plant and equipment, net		1,736,372			1,693,794
Goodwill		2,254,069			2,010,458
Intangible assets, net		595,607			471,095
Other assets		469,190			859,107
Total assets	$	8,441,413		$	8,173,432
Liabilities and shareholders’ equity
Current liabilities:
Notes payable	$	195,384		$	72,039
Accounts payable		788,560			770,665
Accrued liabilities		788,562			698,014
Accrued domestic and foreign taxes		152,739			140,387
Total current liabilities		1,925,245			1,681,105
Long-term debt		1,089,916			1,059,461
Pensions and other postretirement benefits		354,398			811,479
Deferred income taxes		114,219			118,544
Other liabilities		245,970			261,640
Shareholders’ equity		4,711,665			4,241,203
Total liabilities and shareholders’ equity	$	8,441,413		$	8,173,432
CONSOLIDATED STATEMENT OF CASH FLOWS
	Year Ended June 30,
(Dollars in thousands)	2007			2006
Cash flows from operating activities:
Net income	$	830,046		$	673,167
Net (income) from discontinued operations					(34,891	)
Depreciation and amortization		294,566			280,971
Stock-based compensation		33,203			33,448
Net change in receivables, inventories, and trade payables		(86,663	)		(36,278	)
Net change in other assets and liabilities		(51,585	)		68,517
Other, net		(64,560	)		(27,036	)
Discontinued operations					(3,259	)
Net cash provided by operating activities		955,007			954,639
Cash flows from investing activities:
Acquisitions (net of cash of $15,591 in 2007 and $42,429 in 2006)		(378,639	)		(835,981	)
Capital expenditures		(237,827	)		(198,113	)
Proceeds from sale of businesses					92,715
Other, net		36,705			20,236
Discontinued operations					(100	)
Net cash (used in) investing activities		(579,761	)		(921,243	)
Cash flows from financing activities:
Net (payments for) proceeds from common share activity		(364,339	)		16,931
Net proceeds from (payments of) debt		107,073			(101,480	)
Dividends		(121,263	)		(109,643	)
Net cash (used in) financing activities		(378,529	)		(194,192	)
Effect of exchange rate changes on cash		4,436			(3,731	)
Net increase (decrease) in cash and cash equivalents		1,153			(164,527	)
Cash and cash equivalents at beginning of period		171,553			336,080
Cash and cash equivalents at end of period	$	172,706		$	171,553

EX-99.2

Parker Hannifin Corporation

Quarterly Earnings Release

4th Quarter FY 2007

August 1, 2007

Exhibit 99.2

*

*

*

*

*

Slide 2

Forward-Looking Statements

Forward-Looking Statements:

Forward-looking statements contained in this and other written and oral reports are made based on known

events and circumstances at the time of release, and as such, are subject in the future to unforeseen

uncertainties and risks. All statements regarding future performance, earnings projections, events or

developments are forward-looking statements. It is possible that the future performance and earnings

projections of the company and individual segments may differ materially from current expectations,

depending on economic conditions within both its industrial and aerospace markets, and the company's

ability to maintain and achieve anticipated benefits associated with announced realignment activities,

strategic initiatives to improve operating margins, and growth and innovation initiatives. A change in

economic conditions in individual markets may have a particularly volatile effect on segment results.

Among

the

other

factors

which

may

affect

future

performance

are:

changes

in

business

relationships

with

and

purchases

by

or

from

major

customers

or

suppliers,

including

delays

or

cancellations

in

shipments

or

significant changes in financial condition; uncertainties surrounding timing, successful completion or

integration

of

acquisitions;

threats

associated

with

and

efforts

to

combat

terrorism;

competitive

market

conditions

and

resulting

effects

on

sales

and

pricing;

increases

in

raw-material

costs

that

cannot

be

recovered in product pricing; the company’s ability to manage costs related to employee retirement and

health

care

benefits

and

insurance;

and

global

economic

factors,

including

manufacturing

activity,

air

travel trends, currency exchange rates, difficulties entering new markets and general economic conditions

such as inflation and interest rates. The company makes these statements as of the date of this

disclosure, and undertakes no obligation to update them.

Slide 3

Non-GAAP Financial Measure

This presentation reconciles sales amounts reported in accordance with

U.S. GAAP to sales amounts adjusted to remove the effects of acquisitions

made within the prior four quarters as well as the effects of currency

exchange rates on sales. The effects of acquisitions and currency

exchange rates are removed to allow investors and the company to

meaningfully evaluate changes in sales on a comparable basis from period

to period.

Slide 4

Discussion Agenda

CEO 4

th

quarter highlights

Key performance measures & outlook

Questions & answers

CEO closing comments

Slide 5

Fourth Quarter and Total Year Highlights

Record Sales, Earnings, Cash Flow and

Segment Operating Margins

Earnings

per

share

from

continuing

operations

up

19%

for

the

quarter

and

33%

for

the

year

Inventory down to 11.8% of Sales

5% organic growth for the year

Globally balanced in Sales and margins as

evidenced by an all-time record in segment

operating margin of 13.8%

Slide 6

Financial Highlights

EPS from Continuing Operations

4

th

Quarter and Total Year

$1.55

$1.84

$7.01

$5.28

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

Q4 FY07

Q4 FY06

FY07

FY06

Slide 7

Influences on Earnings

4

th

Quarter and Total Year

Sales increased 10% for the quarter and 14% for

the year

Gross profit improved 16% for the quarter and

21% for the year

Higher Other income

Reduction in shares outstanding

3.9 million net reduction for the year

Offset by:

Higher SG&A expense

Higher Interest expense

Higher income taxes

Lower quarterly and annual rate

Slide 8

Financial Highlights

Sales –

4

th

Quarter and Total Year

Dollars in millions

FY2007

%

Change

FY2006

FY2007

%

Change

FY2006

Sales

As reported

2,874

$

9.8 %

2,617

$

10,718

$

14.2 %

9,386

$

Acquisitions

120

4.6 %

585

6.2 %

Currency

59

2.2 %

241

2.6 %

Adjusted Sales

2,695

$

3.0 %

9,892

$  

5.4 %

4th Quarter

YTD

Slide 9

Influences on Sales

Continued Industrial end market strength

International

–

Asia Pacific

–

Latin America

–

Europe –

particularly

Germany

Distribution

Aerospace

Acquisitions

Emerging markets

Slide 10

Segment Reporting

Industrial North America

Dollars in millions

FY2007

%

Change

FY2006

FY2007

%

Change

FY2006

Sales

As reported

1,055

$

(1.6)%

1,072

$

4,064

$  

1.8 %

3,993

$

Acquisitions

21

2.0 %

98

2.5 %

Currency

2

0.2 %

4

0.1 %

Adjusted Sales

1,032

$

(3.8)%

3,962

$  

(0.8)%

Operating Margin

As reported

165

$   

165

$   

598

$      

597

$   

  % of Sales

15.6 %

15.4 %

14.7 %

15.0 %

YTD

4th Quarter

Slide 11

Segment Reporting

Industrial International

Dollars in millions

FY2007

%

Change

FY2006

FY2007

%

Change

FY2006

Sales

As reported

1,083

$

30.3 %

831

$   

3,901

$  

34.4 %

2,903

$

Acquisitions

90

10.8 %

415

14.3 %

Currency

54

6.5 %

222

7.6 %

Adjusted Sales

939

$   

13.0 %

3,264

$  

12.5 %

Operating Margin

As reported

143

$   

106

$   

533

$      

354

$   

  % of Sales

13.2 %

12.8 %

13.7 %

12.2 %

4th Quarter

YTD

Slide 12

Segment Reporting

Aerospace

Dollars in millions

FY2007

%

Change

FY2006

FY2007

%

Change

FY2006

Sales

As reported

445

$   

5.9 %

420

$   

1,685

$  

12.0 %

1,505

$

Acquisitions

3

0.6 %

15

1.0 %

Currency

3

0.7 %

12

0.8 %

Adjusted Sales

439

$   

4.6 %

1,658

$  

10.2 %

Operating Margin

As reported

67

$      

64

$      

270

$      

221

$   

  % of Sales

15.1 %

15.3 %

16.0 %

14.7 %

4th Quarter

YTD

Slide 13

Segment Reporting

Climate & Industrial Controls

Dollars in millions

FY2007

%

Change

FY2006

FY2007

%

Change

FY2006

Sales

As reported

292

$   

(0.7)%

294

$   

1,068

$  

8.4 %

985

$   

Acquisitions

6

2.1 %

56

5.7 %

Currency

--

-- %

4

0.3 %

Adjusted Sales

286

$   

(2.8)%

1,008

$  

2.4 %

Operating Margin

As reported

25

$      

31

$      

82

$        

83

$      

  % of Sales

8.7 %

10.5 %

7.7 %

8.5 %

4th Quarter

YTD

Slide 14

Parker Order Rates

Excludes Acquisitions & Currency

3-month year-over-year comparisons, except Aerospace

Aerospace is calculated using a 12-month moving average

FY07

FY06

Total Parker

3 %

+   

12 %

+

Industrial North America

3 %

-    

8 %

+   

Industrial International

14 %

+

13 %

+

Aerospace

8 %

+   

15 %

+

Climate & Industrial Controls

6 %

-    

22 %

+

Three months ending June

Slide 15

Balance Sheet Summary

Cash

Working capital

Inventory

Accounts

receivable

Pensions –

FAS 158

Slide 16

Strong Cash Flow –

Cash From Operations

459

538

529

631

662

854

955

955

558

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

4.0%

6.0%

8.0%

10.0%

12.0%

FY 07 -

$955

$161 pension contribution; 

$61 incremental to FY06

Dollars in millions

Slide 17

Financial Leverage

Debt to Debt Equity

21.4%

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

28.0%

30.0%

32.0%

34.0%

36.0%

38.0%

FY99

FY00

FY01

FY02

FY03

FY04

FY05

FY06

FY07

Not to exceed 37% over the cycle

Slide 18

FY 2008  Earnings Outlook Assumptions

Segment Sales & Operating Income

  FY 2008 Sales change versus FY 2007

  Industrial North America

.5 %

  -- 

1.5 %

  Industrial International

8.9 %

  -- 

9.9 %

  Aerospace

0.0 %

  -- 

1.0 %

  Climate & Industrial Controls

0.0 %

  -- 

1.0 %

  FY 2008 Operating margin percentages

  Industrial North America

14.5 %

  -- 

14.9 %

  Industrial International

14.0 %

  -- 

14.4 %

  Aerospace

15.7 %

  -- 

16.1 %

  Climate & Industrial Controls

7.8 %

  -- 

8.2 %

Slide 19

FY 2008  Earnings Outlook Assumptions

below Operating Margin

Corporate Admin

-

5% to   -

9% vs. FY 2007

Interest Expense

-

28% to  -

29% vs. FY 2007

Other Exp. (Income) 

+ 45% to + 41% vs. FY 2007

Tax Rate

30 %

Slide 20

Earnings Outlook –

FY08

Low

High

EPS from continuing operations

7.20

$ 

7.60

$  

Slide 21

Questions & Answers...

*

*

Appendix

Income Statements

4

th

Quarter

Total Year

*

*

*

*

*                               *                               

*                                 *

Slide 23

Income Statement –

4

th

Quarter

Dollars in millions

% of Sales

% of Sales

Net Sales

2,874.4

$  

100.0 %

2,616.7

$

100.0 %

Cost of sales

2,223.8

77.4 %

2,054.0

78.5 %

Gross profit

650.6

22.6 %

562.7

21.5 %

S, G & A

333.4

11.6 %

277.1

10.6 %

Interest expense

21.5

.7 %

18.7

.7 %

Other (income) expense

(2.2)

(.1)%

1.7

.1 %

Income from cont'g operations before taxes

297.9

10.4 %

265.2

10.1 %

Income taxes

80.7

2.8 %

77.4

3.0 %

Income from cont'g operations

217.2

7.6 %

187.8

7.2 %

  Discontinued operations

6.0

.2 %

Net income

217.2

$      

7.6 %

193.8

$   

7.4 %

FY 2007

FY 2006

Slide 24

Income Statement –

Total Year

Dollars in millions

% of Sales

% of Sales

Net Sales

10,718.1

$

100.0 %

9,385.9

$

100.0 %

Cost of sales

8,273.0

77.2 %

7,367.6

78.5 %

Gross profit

2,445.1

22.8 %

2,018.3

21.5 %

S, G & A

1,226.9

11.4 %

1,036.6

11.0 %

Interest expense

83.4

.8 %

75.8

.8 %

Other (income) expense

(24.4)

(.2)%

5.9

.1 %

Income from cont'g operations before taxes

1,159.2

10.8 %

900.0

9.6 %

Income taxes

329.2

3.1 %

261.7

2.8 %

Income from cont'g operations

830.0

7.7 %

638.3

6.8 %

  Discontinued operations

34.9

.4 %

Net income

830.0

$      

7.7 %

673.2

$   

7.2 %

FY 2007

FY 2006