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): July 31, 2008

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 July 31, 2008, Parker-Hannifin Corporation issued a press release and presented a Webcast announcing earnings for the quarter ended June 30, 2008. The press release contains references to sales growth excluding the effects of acquisitions and foreign currency exchange rates and references to earnings per share amounts excluding the effect of a contingency reserve. The effects of acquisitions and foreign currency exchange rates are removed from the change in sales amounts and the effect of a contingency reserve is removed from earnings per share amounts to allow investors and the company to meaningfully evaluate performance on a comparable basis with the prior period. A copy of the press release is furnished as Exhibit 99.1 to this report. 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 July 31, 2008.
99.2	Webcast presentation by Parker-Hannifin Corporation, dated July 31, 2008.

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: July 31, 2008

EX-99.1

Exhibit 99.1

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

Parker Surpasses $12 Billion in Sales and Delivers All-Time Records for Sales, Earnings and Operating Cash Flow

— Company Outlook Anticipates Another Record Year in Fiscal 2009

CLEVELAND, July 31, 2008 - Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the fourth quarter and for the fiscal year ended June 30, 2008. These results mark all-time records for Parker in annual sales, earnings and cash flow from operating activities.

For the 2008 fiscal year, the company surpassed $12 billion in sales for the first time in its 90 year history. Sales reached a record $12.1 billion, an increase of 13.3 percent from the previous year, including 4.8 percent organic growth. Net Income increased 14.4 percent to $949.5 million, compared to $830.0 million a year ago, and earnings per diluted share increased 18.2 percent to $5.53, compared to $4.68 a year ago. Excluding a non-operating charge of 8 cents per diluted share, as a result of establishing a contingency reserve with respect to previously disclosed litigation, fiscal 2008 earnings per diluted share were $5.61, representing a 19.9 percent increase compared to the prior year.

For the fourth quarter of fiscal 2008, sales increased 16.4 percent to $3.3 billion, compared to $2.9 billion in the same period last year, including 6.4 percent organic growth. Fourth quarter net income increased 16.3 percent to $252.6 million, compared to $217.2 million a year ago, and fourth quarter earnings per diluted share increased 19.5 percent to $1.47 from $1.23 a year ago. Excluding the non-operating charge of 8 cents per diluted share, fiscal 2008 fourth quarter earnings per diluted share were $1.55, an increase of 26.0 percent compared to the prior year period.

1

“We are pleased that we have completed another record year of financial performance thanks to the dedication of Parker employees around the world,” said Chairman, CEO and President Don Washkewicz. “Perhaps even more gratifying, as a company focused on long-term performance, we have been able to deliver strong performance year in and year out. Despite challenging economic conditions, our continued focus on the core goals of the Win Strategy has enabled us to consistently deliver record results for our shareholders.

“Once again this year we achieved sales growth that exceeded our 10 percent annual goal, and reported record sales of more than $12 billion. Of the 13 percent growth this fiscal year, 5 percent was organic, 3 percent was from strategic acquisitions, and the remainder was from the effects of foreign currency exchange rates. Our sales growth also demonstrates the significant progress we have made in international operations, which helps mitigate the effects of regional economic cycles. In our Industrial International segment, fiscal 2008 revenues grew by 28 percent and operating income grew by 48 percent. Significantly, Industrial International operating margins exceeded margins in our Industrial North America segment and completed the year as our most profitable operating segment. This is primarily a result of executing our Win Strategy European initiatives when operating margins in the Industrial International segment were in the single digits.

“We also generated record annual cash flow from operating activities at more than $1.3 billion, or 10.8 percent of sales, which gives us the flexibility to invest for growth while simultaneously maintaining a strong balance sheet. Acquisitions continued to play a role in our growth strategy, as we strengthened our portfolio by adding 10 companies in fiscal 2008 with nearly $546 million in annualized revenues. We also invested $584 million to repurchase 7.9 million Parker common shares and we increased our dividend 21 percent, paying out approximately $142 million to shareholders, and extending our dividend increase record to 52 consecutive years, among the top five longest-running dividend-increase records in the S&P 500 Index.”

2

Segment Results

In the Industrial North America segment, fourth-quarter sales increased 10.5 percent to $1.2 billion, and operating income decreased 1.0 percent from the prior year to $162.9 million. For the full year, Industrial North America sales increased 4.6 percent to $4.2 billion, and operating income increased 1.6 percent from the prior year to $607.8 million.

In the Industrial International segment, fourth-quarter sales increased 27.6 percent to $1.4 billion, and operating income increased 48.6 percent from the prior year to $213.0 million. For the full year, Industrial International sales increased 28.3 percent to $5.0 billion, and operating income increased 48.0 percent from the prior year to $788.9 million.

In the Aerospace segment, fourth-quarter sales increased 14.7 percent to $509.8 million, and operating income increased 8.2 percent from the prior year to $72.8 million. For the full year, Aerospace sales increased 9.0 percent to $1.8 billion, and operating income declined 7.2 percent from the prior year to $250.5 million.

In the Climate & Industrial Controls segment, fourth-quarter sales decreased 0.8 percent to $289.5 million, and operating income decreased 19.8 percent from the prior year to $20.3 million. For the full year, Climate & Industrial Controls sales decreased 1.6 percent to $1.1 billion, and operating income decreased 27.7 percent from the prior year to $59.5 million.

Orders

In addition to financial results, Parker also reported an increase of 8 percent in total orders for the quarter ended June 30, 2008 compared to the same quarter a year ago. Parker reported the following orders by operating segment:

• Orders increased 4 percent in the Industrial North America segment versus the same quarter a year ago.

3

• Orders increased 8 percent in the Industrial International segment versus the same quarter a year ago.

• Orders increased 23 percent in the Aerospace segment based upon a rolling 12-month average.

• Orders decreased 7 percent in the Climate and Industrial Controls segment versus the same quarter a year ago.

Outlook

For fiscal 2009, the company issued guidance for earnings from continuing operations in the range of $5.65 to $6.05 per diluted share.

“We remain uniquely positioned to meet the needs of both the OEM and MRO segments in the markets we serve and expect to deliver another record year in fiscal 2009,” added Washkewicz. “Our employees will continue to implement the Win Strategy to sustain our performance well into the future.

“Longer term, we are excited about the prospects for continued growth in our ever-expanding markets. The demand for infrastructure improvement in developing nations globally, combined with new approaches to harnessing the earth’s natural resources in the search for alternative energy, are just a couple of examples of how demand in our markets is growing. Parker technologies are playing an important role in these areas as we advance the science of motion and control systems to serve our customers.”

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.

4

With annual sales exceeding $12 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 61,000 people in 48 countries around the world. Parker has increased its annual dividends paid to shareholders for 52 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 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 maintain and achieve anticipated benefits associated with announced realignment activities, strategic initiatives to improve operating margins, and growth, innovation and global diversification 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; uncertainties surrounding the ultimate resolution of outstanding litigation; 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, interest rates and credit availability. 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, 2008

CONSOLIDATED STATEMENT OF INCOME

	Three Months Ended June 30,					Year Ended June 30,
(Dollars in thousands except per share amounts)	2008		2007			2008		2007
Net sales	$	3,346,752	$	2,874,365		$	12,145,605	$	10,718,059
Cost of sales		2,575,422		2,223,756			9,339,072		8,272,949
Gross profit		771,330		650,609			2,806,533		2,445,110
Selling, general and administrative expenses		373,138		333,434			1,364,082		1,226,861
Interest expense		25,019		21,535			98,996		83,414
Other expense (income), net		18,355		(2,294	)		16,931		(24,447	)
Income before income taxes		354,818		297,934			1,326,524		1,159,282
Income taxes		102,253		80,748			377,058		329,236
Net income	$	252,565	$	217,186		$	949,466	$	830,046
Earnings per share:
Basic earnings per share	$	1.51	$	1.25		$	5.64	$	4.75
Diluted earnings per share	$	1.47	$	1.23		$	5.53	$	4.68
Average shares outstanding during period - Basic		167,545,162		173,479,484			168,285,487		174,643,327
Average shares outstanding during period - Diluted		171,441,236		176,845,301			171,643,835		177,494,890
Cash dividends per common share	$	.21	$	.173		$	.84	$	.692
BUSINESS SEGMENT INFORMATION BY INDUSTRY
	Three Months Ended June 30,					Year Ended June 30,
(Dollars in thousands)	2008		2007			2008		2007
Net sales
Industrial:
North America	$	1,165,685	$	1,054,987		$	4,249,918	$	4,063,889
International		1,381,824		1,082,960			5,006,310		3,900,628
Aerospace		509,791		444,558			1,837,888		1,685,431
Climate & Industrial Controls		289,452		291,860			1,051,489		1,068,111
Total	$	3,346,752	$	2,874,365		$	12,145,605	$	10,718,059
Segment operating income
Industrial:
North America	$	162,940	$	164,583		$	607,821	$	598,405
International		213,022		143,380			788,925		533,136
Aerospace		72,847		67,309			250,523		269,931
Climate & Industrial Controls		20,285		25,297			59,494		82,316
Total segment operating income	$	469,094	$	400,569		$	1,706,763	$	1,483,788
Corporate general and administrative expenses		59,461		57,909			192,966		179,077
Income from operations before interest expense and other		409,633		342,660			1,513,797		1,304,711
Interest expense		25,019		21,535			98,996		83,414
Other expense		29,796		23,191			88,277		62,015
Income before income taxes	$	354,818	$	297,934		$	1,326,524	$	1,159,282

6

PARKER HANNIFIN CORPORATION - JUNE 30, 2008

CONSOLIDATED BALANCE SHEET

	June 30,
(Dollars in thousands)	2008			2007
Assets
Current assets:
Cash and cash equivalents	$	326,048		$	172,706
Accounts receivable, net		2,046,726			1,737,748
Inventories		1,494,694			1,265,802
Prepaid expenses		82,326			69,655
Deferred income taxes		145,831			140,264
Total current assets		4,095,625			3,386,175
Plant and equipment, net		1,926,522			1,736,372
Goodwill		2,798,092			2,254,069
Intangible assets, net		1,020,609			595,607
Other assets		546,006			469,190
Total assets	$	10,386,854		$	8,441,413
Liabilities and shareholders’ equity
Current liabilities:
Notes payable	$	118,864		$	195,384
Accounts payable		961,886			788,560
Accrued liabilities		919,370			788,562
Accrued domestic and foreign taxes		183,136			152,739
Total current liabilities		2,183,256			1,925,245
Long-term debt		1,952,452			1,089,916
Pensions and other postretirement benefits		491,935			354,398
Deferred income taxes		162,678			114,219
Other liabilities		337,562			245,970
Shareholders’ equity		5,258,971			4,711,665
Total liabilities and shareholders’ equity	$	10,386,854		$	8,441,413
CONSOLIDATED STATEMENT OF CASH FLOWS
	Year Ended June 30,
(Dollars in thousands)	2008			2007
Cash flows from operating activities:
Net income	$	949,466		$	830,046
Depreciation and amortization		326,724			294,566
Stock-based compensation		44,947			33,203
Net change in receivables, inventories, and trade payables		(93,136	)		(86,663	)
Net change in other assets and liabilities		132,231			(49,687	)
Other, net		(43,622	)		(64,560	)
Net cash provided by operating activities		1,316,610			956,905
Cash flows from investing activities:
Acquisitions (net of cash of $21,276 in 2008 and $15,591 in 2007)		(921,014	)		(378,639	)
Capital expenditures		(280,327	)		(237,827	)
Proceeds from sale of plant and equipment		29,997			45,826
Other, net		544			(9,121	)
Net cash (used in) investing activities		(1,170,800	)		(579,761	)
Cash flows from financing activities:
Net (payments for) common share activity		(523,557	)		(366,237	)
Net proceeds from debt		667,039			107,073
Dividends		(142,260	)		(121,263	)
Net cash provided by (used in) financing activities		1,222			(380,427	)
Effect of exchange rate changes on cash		6,310			4,436
Net increase in cash and cash equivalents		153,342			1,153
Cash and cash equivalents at beginning of period		172,706			171,553
Cash and cash equivalents at end of period	$	326,048		$	172,706

7

EX-99.2

Parker Hannifin Corporation

Quarterly Earnings Release

4th Quarter FY 2008

July 31, 2008

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, innovation and global diversification

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; uncertainties surrounding the ultimate resolution of outstanding litigation; 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, interest rates and credit availability. 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.

This presentation contains references to earnings per share amounts

excluding a contingency reserve. The removal of the contingency reserve

allows investors and the company to meaningfully evaluate performance

on a comparable basis with the prior period, which was not impacted by

the contingency reserve.

Slide 4

Discussion Agenda

4

th

quarter highlights

Key performance measures & outlook

Questions & answers

Closing comments

Slide 5

Fourth Quarter and Total Year Highlights

Another record year

Record Quarterly Sales, Earnings, and Cash Flow

International strength offsetting challenging North

American environment

Q4 Sales growth 16.4% -

6.4% organic

Excluding the establishment of a contingency

reserve, Earnings per diluted share up 26% in Q4,

20%-Total Year

Total Parker Orders up 8% in Q4

Slide 6

Financial Highlights

Diluted Earnings per Share

4

th

Quarter and Total Year 

%

%

FY2008

FY2007

Increase

FY2008

FY2007

Increase

Earnings per share

1.47

$  

1.23

$  

20%

5.53

$  

4.68

$  

18%

Contingency reserve

.08

.08

Adjusted Earnings per share

1.55

$  

1.23

$  

26%

5.61

$  

4.68

$  

20%

4th Quarter

Total Year

Slide 7

Influences on 4

th

Quarter Earnings

Diluted Earnings per Share increased as a result of:

Increased Sales of 16.4% -

6.4% organic

-

Up from 4.3% organic growth last quarter

Gross margin improvement of 40 bps

S,G&A as percent of Sales decrease of 50 bps

Fewer shares outstanding

-

5.4 million fewer diluted shares in FY2008

Offset by:

Lower Industrial North America and CIC Operating

Income

Higher Interest expense

Establishment

of Contingency Reserve classified in

“Other expense”

Slide 8

Financial Highlights

Sales –

4

th

Quarter  and Total Year

Dollars in millions

FY2008

%

Change

FY2007

FY2008

%

Change

FY2007

Sales

As reported

3,347

$

16.4 %

2,874

$

12,146

$

13.3 %

10,718

$

Acquisitions

127

4.4 %

373

3.5 %

Currency

161

5.6 %

544

5.0 %

Adjusted Sales

3,059

$

6.4 %

11,229

$

4.8 %

4th Quarter

Total Year

Slide 9

Influences on Sales

Continued

Industrial end market strength

International

–

Asia Pacific

–

Latin America

–

Europe 

Distribution

Aerospace

Acquisitions

Emerging markets

Slide 10

Segment Reporting

Industrial North America

Dollars in millions

FY2008

%

Change

FY2007

FY2008

%

Change

FY2007

Sales

As reported

1,166

$

10.5 %

1,055

$

4,250

$  

4.6 %

4,064

$  

Acquisitions

70

6.7 %

121

3.0 %

Currency

8

0.7 %

26

0.6 %

Adjusted Sales

1,088

$

3.1 %

4,103

$  

1.0 %

Operating Margin

As reported

163

$   

165

$   

608

$      

598

$      

  % of Sales

14.0 %

15.6 %

14.3 %

14.7 %

Total Year

4th Quarter

Slide 11

Segment Reporting

Industrial International

Dollars in millions

FY2008

%

Change

FY2007

FY2008

%

Change

FY2007

Sales

As reported

1,382

$

27.6 %

1,083

$

5,006

$  

28.3 %

3,901

$  

Acquisitions

39

3.6 %

214

5.4 %

Currency

143

13.2 %

476

12.2 %

Adjusted Sales

1,200

$

10.8 %

4,316

$  

10.7 %

Operating Margin

As reported

213

$   

143

$   

789

$      

533

$      

  % of Sales

15.4 %

13.2 %

15.8 %

13.7 %

4th Quarter

Total Year

Slide 12

Segment Reporting

Aerospace

Dollars in millions

FY2008

%

Change

FY2007

FY2008

%

Change

FY2007

Sales

As reported

510

$   

14.7 %

445

$   

1,838

$  

9.0 %

1,685

$  

Acquisitions

17

3.8 %

39

2.3 %

Currency

3

0.7 %

10

0.5 %

Adjusted Sales

490

$   

10.2 %

1,789

$  

6.2 %

Operating Margin

As reported

73

$      

67

$      

251

$      

270

$      

  % of Sales

14.3 %

15.1 %

13.6 %

16.0 %

4th Quarter

Total Year

Slide 13

Segment Reporting

Climate & Industrial Controls

Dollars in millions

FY2008

%

Change

FY2007

FY2008

%

Change

FY2007

Sales

As reported

289

$   

(0.8)%

292

$   

1,051

$  

(1.6)%

1,068

$  

Acquisitions

Currency

8

2.9 %

31

2.9 %

Adjusted Sales

281

$   

(3.7)%

1,020

$  

(4.5)%

Operating Margin

As reported

20

$      

25

$      

59

$        

82

$        

  % of Sales

7.0 %

8.7 %

5.7 %

7.7 %

4th Quarter

Total Year

Slide 14

Parker Order Rates

Excludes Acquisitions & Currency

3-month year-over-year comparisons of total dollars, except Aerospace

Aerospace is calculated using a 12-month moving average

FY08

FY07

Total Parker

8 %

+   

3 %

+   

Industrial North America

4 %

+   

3 %

-    

Industrial International

8 %

+   

14 %

+

Aerospace

23 %

+

8 %

+   

Climate & Industrial Controls

7 %

-    

6 %

-    

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 Operating Activities

Total Year

$957

$1,317

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

FY08

FY07

Slide 17

Financial Leverage

Debt to Debt Equity

28.3%

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

FY08

Goal -

Not to exceed 37% over the cycle

Slide 18

FY 2009  Earnings Outlook Assumptions

Segment Sales & Operating Income

  FY 2009 Sales change versus FY 2008

  Industrial North America

5.1 %

  -- 

5.5 %

  Industrial International

6.5 %

  -- 

6.9 %

  Aerospace

3.7 %

  -- 

4.1 %

  Climate & Industrial Controls

(2.5)%

  -- 

(2.1)%

  FY 2009 Operating margin percentages

  Industrial North America

14.0 %

  -- 

14.6 %

  Industrial International

15.5 %

  -- 

16.1 %

  Aerospace

12.7 %

  -- 

13.3 %

  Climate & Industrial Controls

5.7 %

  -- 

6.3 %

Slide 19

FY 2009 Earnings Outlook Assumptions

below Operating Margin

Corporate Admin

-

1% to  -

3% vs. FY 2008

Interest Expense

+  7% to +  1% vs. FY 2008

Other Expense (Inc.) 

-

24% to -

28% vs. FY 2008

Tax Rate

30 %

Slide 20

Earnings Outlook –

FY09

Low

High

Diluted earnings per share

5.65

$ 

6.05

$  

Slide 21

Questions & Answers...

Slide 22

Appendix

Income Statements

4

th

Quarter

Total Year

Slide 23

Income Statement –

4

th

Quarter

Dollars in millions

% of Sales

% of Sales

Net Sales

3,346.8

$  

100.0 %

2,874.4

$  

100.0 %

Cost of sales

2,575.4

77.0 %

2,223.8

77.4 %

Gross profit

771.4

23.0 %

650.6

22.6 %

S, G & A

373.1

11.1 %

333.4

11.6 %

Interest expense

25.0

.7 %

21.5

.7 %

Other expense (income), net

18.4

.6 %

(2.2)

(.1)%

Income before taxes

354.9

10.6 %

297.9

10.4 %

Income taxes

102.3

3.1 %

80.7

2.8 %

Net income

252.6

$      

7.5 %

217.2

$     

7.6 %

FY 2008

FY 2007

Slide 24

Income Statement –

Total Year

Dollars in millions

% of Sales

% of Sales

Net Sales

12,145.6

$

100.0 %

10,718.1

$

100.0 %

Cost of sales

9,339.1

76.9 %

8,273.0

77.2 %

Gross profit

2,806.5

23.1 %

2,445.1

22.8 %

S, G & A

1,364.1

11.2 %

1,226.9

11.4 %

Interest expense

99.0

.8 %

83.4

.8 %

Other expense (income), net

16.9

.2 %

(24.4)

(.2)%

Income before taxes

1,326.5

10.9 %

1,159.2

10.8 %

Income taxes

377.0

3.1 %

329.2

3.1 %

Net income

949.5

$      

7.8 %

830.0

$     

7.7 %

FY 2008

FY 2007