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 3, 2010

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 3, 2010, Parker-Hannifin Corporation issued a press release and presented a Webcast announcing earnings for the quarter ended June 30, 2010. 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 press release is filed as Exhibit 99.1 to this report. A copy of the Webcast presentation is filed 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 3, 2010.
99.2	Webcast presentation by Parker-Hannifin Corporation, dated August 3, 2010.

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 3, 2010

EX-99.1

Exhibit 99.1

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

Stock Symbol: PH – NYSE

Parker Reports Strong Fiscal 2010 Fourth Quarter and Issues Guidance for Increased Earnings in Fiscal 2011

• Fourth Quarter Sales Increase 26 Percent

• Full Year Cash Flow Strong at 12.2 Percent of Sales

• Fourth Quarter Orders Increase 35 Percent

CLEVELAND, August 3, 2010 – Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the fiscal 2010 fourth quarter and year ending June 30, 2010. Fiscal 2010 fourth quarter sales were $2.8 billion, an increase of 26.0 percent from $2.2 billion in the same quarter a year ago. Net income for the fourth quarter was $222.2 million, compared with $49.5 million in the fourth quarter of fiscal 2009. Earnings per diluted share for the quarter were $1.35, compared with $0.31 in last year’s fourth quarter. Cash flow from operations in the quarter was $377.4 million, or 13.5 percent of sales, compared with $413.1 million, or 18.7 percent of sales in the fourth quarter of fiscal 2009.

“Order levels continued to increase this quarter and showed broad-based improvements across segments and regions both sequentially and year over year,” said Chairman, CEO and President Don Washkewicz. “These contributed to the 27 percent increase in organic sales for the quarter, while foreign currency translation negatively impacted sales by 1 percent. Our total segment operating margin performance was particularly strong at 13.9 percent. Additionally, our Industrial North America segment margins reached 15.7 percent reflecting ongoing success in executing our Win Strategy.”

1

Fiscal 2010 sales were $10.0 billion, a decline of 3.1 percent from $10.3 billion in the previous year. Fiscal 2010 net income increased 9.0 percent to $554.1 million from $508.5 million in fiscal 2009. Earnings per diluted share increased 8.6 percent to $3.40, compared with $3.13 in the previous year. Cash flow from operations for fiscal 2010 increased to $1.2 billion, or 12.2 percent of sales, compared with $1.1 billion, or 11.0 percent of sales in the prior year.

Reflecting on the year, Washkewicz added, “In fiscal year 2010, Parker employees responded decisively to the conditions in our global markets. Our actions allowed us to deliver on what we committed to our shareholders, which was to produce much improved performance late in the year as order levels improved. Throughout fiscal year 2010, economic circumstances focused our priorities on managing our business for cash, while maintaining balance sheet strength and targeting 10 percent total segment operating margins. We were successful across all of these measures. Fiscal 2010 highlighted how our Win Strategy allowed us to withstand the worst economic downturn in 60 years and still deliver much higher operating margin levels than at the lowest point in past recessions. Despite being slightly down on revenues, we generated increased operating margins, increased diluted earnings per share and increased cash flow from operations.”

Segment Results

In the Industrial North America segment, fourth-quarter sales increased 33.1 percent to $1.0 billion, and operating income was $162.9 million, compared with $53.7 million in the same period a year ago. For the full year, Industrial North America sales declined 3.0 percent to $3.6 billion, and operating income increased 23.3 percent to $487.1 million, compared with fiscal 2009.

In the Industrial International segment, fourth-quarter sales increased 30.4 percent to $1.0 billion, and operating income was $140.3 million, compared with a loss of $5.7 million in the same period a year ago. For the full year, Industrial International sales declined 2.2 percent to $3.8 billion, and operating income increased 12.4 percent to $394.1 million, compared with fiscal 2009.

2

In the Aerospace segment, fourth-quarter sales increased 5.9 percent to $477.6 million, and operating income increased 9.5 percent to $64.1 million, compared with the same period a year ago. For the full year, Aerospace sales declined 7.4 percent to $1.7 billion, and operating income declined 20.6 percent to $208.0 million, compared with fiscal 2009.

In the Climate & Industrial Controls segment, fourth-quarter sales increased 27.0 percent to $240.3 million, and segment operating income was $20.5 million compared with an operating profit of $0.9 million in the same period a year ago. For the full year, Climate & Industrial Controls sales increased 2.4 percent to $814.0 million, and the segment reported an operating profit of $53.5 million, compared with an operating loss of $3.7 million in fiscal 2009.

Orders

Parker reported an increase of 35 percent in total orders for the quarter ending June 30, 2010, compared with the same quarter a year ago. The company reported the following orders by operating segment:

• Orders increased 46 percent in the Industrial North America segment, compared with the same quarter a year ago.

• Orders increased 46 percent in the Industrial International segment, compared with the same quarter a year ago.

• Orders declined 3 percent in the Aerospace segment on a rolling 12-month average basis.

• Orders increased 35 percent in the Climate and Industrial Controls segment, compared with the same quarter a year ago.

Outlook

For fiscal 2011, the company has issued guidance for earnings from continuing operations in the range of $3.60 to $4.40 per diluted share.

3

Washkewicz added, “We are in a very strong position for the year ahead. Parker has clearly demonstrated its ability to generate strong incremental returns on increased revenues. Our focus will continue to be on executing the Win Strategy, and given our financial flexibility, we anticipate ongoing investments in research and development, international expansion, acquisitions and distribution to grow our business.”

NOTICE OF CONFERENCE CALL: Parker Hannifin’s conference call and slide presentation to discuss its fiscal 2010 fourth quarter and full year results are available to all interested parties via live webcast today at 10:00 a.m. ET, on the company’s investor information web site at 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. A replay of the conference call will also be available at www.phstock.com for one year after the call.

With annual sales of $10 billion in fiscal year 2010, 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 mobile, industrial and aerospace markets. The company employs approximately 55,000 people in 46 countries around the world. Parker has increased its annual dividends paid to shareholders for 54 consecutive fiscal 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 www.parker.com, or its investor information web site at 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 for 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 its mobile, 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, actions taken to combat the effects of the current economic

4

environment, 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, suppliers or distributors, including delays or cancellations in shipments, disputes regarding contract terms or significant changes in financial condition, and changes in contract cost and revenue estimates for new development programs; uncertainties surrounding timing, successful completion or integration of acquisitions; ability to realize anticipated cost savings from business realignment actions; threats associated with and efforts to combat terrorism; uncertainties surrounding the ultimate resolution of outstanding legal proceedings, including the outcome of any appeals; 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 insurance and employee retirement and health care benefits; and global economic factors, including manufacturing activity, air travel trends, currency exchange rates, difficulties entering new markets and general economic conditions such as inflation, deflation, interest rates and credit availability. The company makes these statements as of the date of this disclosure, and undertakes no obligation to update them unless otherwise required by law.

###

5

PARKER HANNIFIN CORPORATION – JUNE 30, 2010

CONSOLIDATED STATEMENT OF INCOME

	Three Months Ended June 30,					Twelve Months Ended June 30,
(Dollars in thousands except per share amounts)	2010		2009			2010		2009
Net sales	$	2,786,470	$	2,210,958		$	9,993,166	$	10,309,015
Cost of sales		2,114,190		1,814,069			7,847,067		8,181,348
Gross profit		672,280		396,889			2,146,099		2,127,667
Selling, general and administrative expenses		349,328		302,521			1,277,080		1,290,379
Interest expense		26,896		25,275			103,599		112,071
Other expense, net		3,896		5,899			10,603		42,134
Income before income taxes		292,160		63,194			754,817		683,083
Income taxes		69,108		14,801			198,452		172,939
Net income		223,052		48,393			556,365		510,144
Less: Noncontrolling interests		889		(1,123	)		2,300		1,629
Net income attributable to common shareholders	$	222,163	$	49,516		$	554,065	$	508,515
Earnings per share attributable to common shareholders:
Basic earnings per share	$	1.38	$	.31		$	3.44	$	3.15
Diluted earnings per share	$	1.35	$	.31		$	3.40	$	3.13
Average shares outstanding during period – Basic		161,310,414		160,472,872			160,909,655		161,564,111
Average shares outstanding during period – Diluted		163,997,297		161,548,615			162,901,717		162,719,148
Cash dividends per common share	$	.26	$	.25		$	1.01	$	1.00
BUSINESS SEGMENT INFORMATION BY INDUSTRY
	Three Months Ended June 30,					Twelve Months Ended June 30,
(Dollars in thousands)	2010		2009			2010		2009
Net sales
Industrial:
North America	$	1,034,573	$	777,464		$	3,623,460	$	3,734,613
International		1,033,971		793,163			3,811,464		3,895,874
Aerospace		477,629		451,109			1,744,283		1,883,273
Climate & Industrial Controls		240,297		189,222			813,959		795,255
Total	$	2,786,470	$	2,210,958		$	9,993,166	$	10,309,015
Segment operating income
Industrial:
North America	$	162,933	$	53,733		$	487,137	$	394,923
International		140,295		(5,693	)		394,089		350,662
Aerospace		64,052		58,483			208,002		261,953
Climate & Industrial Controls		20,513		947			53,452		(3,737	)
Total segment operating income		387,793		107,470			1,142,680		1,003,801
Corporate general and administrative expenses		54,911		29,006			153,965		152,118
Income from operations before interest expense and other expense		332,882		78,464			988,715		851,683
Interest expense		26,896		25,275			103,599		112,071
Other expense (income)		13,826		(10,005	)		130,299		56,529
Income before income taxes	$	292,160	$	63,194		$	754,817	$	683,083

PARKER HANNIFIN CORPORATION – JUNE 30, 2010

CONSOLIDATED BALANCE SHEET

	June 30,
(Dollars in thousands)	2010			2009
Assets
Current assets:
Cash and cash equivalents	$	575,526		$	187,611
Accounts receivable, net		1,599,941			1,417,305
Inventories		1,171,655			1,254,550
Prepaid expenses		111,545			142,335
Deferred income taxes		130,129			121,980
Total current assets		3,588,796			3,123,781
Plant and equipment, net		1,697,881			1,880,554
Goodwill		2,786,334			2,903,077
Intangible assets, net		1,150,051			1,273,862
Other assets		687,320			674,628
Total assets	$	9,910,382		$	9,855,902
Liabilities and equity
Current liabilities:
Notes payable	$	363,272		$	481,467
Accounts payable		888,743			649,718
Accrued liabilities		776,527			761,462
Accrued domestic and foreign taxes		176,349			113,107
Total current liabilities		2,204,891			2,005,754
Long-term debt		1,413,634			1,839,705
Pensions and other postretirement benefits		1,500,928			1,233,271
Deferred income taxes		135,321			183,457
Other liabilities		196,208			243,275
Shareholders’ equity		4,367,965			4,268,199
Noncontrolling interests		91,435			82,241
Total liabilities and equity	$	9,910,382		$	9,855,902
CONSOLIDATED STATEMENT OF CASH FLOWS
	Twelve Months Ended June 30,
(Dollars in thousands)	2010			2009
Cash flows from operating activities:
Net income	$	556,365		$	510,144
Depreciation and amortization		362,509			357,737
Share incentive plan compensation		59,318			47,215
Net change in receivables, inventories, and trade payables		92,949			511,797
Net change in other assets and liabilities		155,991			(286,103	)
Other, net		(8,310	)		(11,598	)
Net cash provided by operating activities		1,218,822			1,129,192
Cash flows from investing activities:
Acquisitions (net of cash of $24,203 in 2009)		(5,451	)		(722,635	)
Capital expenditures		(129,222	)		(270,733	)
Proceeds from sale of plant and equipment		11,929			28,986
Other, net		(23,429	)		3,551
Net cash (used in) investing activities		(146,173	)		(960,831	)
Cash flows from financing activities:
Net (payments for) common share activity		(994	)		(440,551	)
Net (payments for) proceeds from debt		(486,263	)		327,778
Dividends		(162,739	)		(161,575	)
Net cash (used in) financing activities		(649,996	)		(274,348	)
Effect of exchange rate changes on cash		(34,738	)		(32,450	)
Net increase (decrease) in cash and cash equivalents		387,915			(138,437	)
Cash and cash equivalents at beginning of period		187,611			326,048
Cash and cash equivalents at end of period	$	575,526		$	187,611

EX-99.2

Parker Hannifin Corporation

Quarterly Earnings Release

4th Quarter & Total Year FY2010

August 3, 2010

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

its

mobile,

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,

actions

taken

to

combat

the

effects

of

the

current

economic

environment,

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,

suppliers

or

distributors,

including

delays

or

cancellations

in

shipments,

disputes

regarding

contract

terms

or

significant

changes

in

financial

condition,

and

changes

in

contract

cost

and

revenue

estimates

for

new

development

programs;

uncertainties

surrounding

timing,

successful

completion

or

integration

of

acquisitions;

ability

to

realize

anticipated

cost

savings

from

business

realignment

actions;

threats

associated

with

and

efforts

to

combat

terrorism;

uncertainties

surrounding

the

ultimate

resolution

of

outstanding

legal

proceedings,

including

the

outcome

of

any

appeals;

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

insurance

and

employee

retirement

and

health

care

benefits;

and

global

economic

factors,

including

manufacturing

activity,

air

travel

trends,

currency

exchange

rates,

difficulties

entering

new

markets

and

general

economic

conditions

such

as

inflation,

deflation,

interest

rates

and

credit

availability.

The

company

makes

these

statements

as

of

the

date

of

this

disclosure,

and

undertakes

no

obligation

to

update

them

unless

otherwise

required

by

law.

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 & Total Year

FY10 Highlights

End

Market

Improvement:

Orders

Improved

Year-over-Year

and

Sequentially

From

Q3

FY10

Revenues

Rebounding:

Q4

Revenues

Increased

26%

Year-over-

Year

Operating

Margin

Improvement:

Sequential

Quarter

Improvement

to

13.9%

from

11.8%

in

Q3

FY10;

Full

Year

Improvement

to

11.4%

from

9.7%

in

FY10

Continued

Cost

Control:

Impressive

Incremental

Marginal

Return

on

Sales

of

48.7%

for

Q4

FY10

Continued

Inventory

Reduction:

$25M

in

Q4

FY10;

$83M

Total

Year

FY10

Continued

Debt

Reduction:

$126M

in

Q4

FY10;

$544M

Total

Year

FY10

Continued

Reduction

in

Leverage:

Debt

to

Total

Capital

Ratio

Reduced

to

28.9%

(gross)

or

21.6%

(net

of

cash)

Continued

Strong

Cash

Flow:

FY10

Operating

Cash

Flow/Revenue

of

12.2%

including

$100M

Discretionary

Pension

Contribution

Slide 6

Financial Highlights

Diluted Earnings per Share

4

th

Quarter and Total Year

$1.35

$.31

$3.40

$3.13

$.00

$.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

Q4 FY10

Q4 FY09

FY10

FY09

Slide 7

Influences on 4

th

Quarter Earnings

Diluted Earnings Per Share Increase of $1.04 Year-

over-Year Primarily Driven By:

Increased Revenues of 26%

Significantly Improved Operating Margins to 13.9% from

4.9% Year-over-Year ($1.30 EPS Impact)

Offset by:

Increased Corporate G&A Primarily Due To Market-driven

Benefits ($.12 EPS Impact)

Increased Other Expense due to Pension, Inventory

Adjustments and Asset Writedown

($.11 EPS Impact)

Slide 8

Financial Highlights

Sales –

4

th

Quarter and Total Year

Dollars in millions

FY2010

%

Change

FY2009

FY2010

%

Change

FY2009

Sales

As reported

2,786

$

26.0 %

2,211

$   

9,993

$  

(3.1)%

10,309

$     

Acquisitions

1

(0.0)%

85

0.8 %

Currency

(14)

(0.6)%

125

1.2 %

Adjusted Sales

2,799

$

26.6 %

9,783

$  

(5.1)%

4th Quarter

Total Year

Slide 9

Segment Reporting

Industrial North America

Dollars in millions

FY2010

%

Change

FY2009

FY2010

%

Change

FY2009

Sales

As reported

1,034

$

33.1 %

778

$     

3,624

$ 

(3.0)%

3,735

$     

Acquisitions

-

--

%

24

0.6 %

Currency

7

0.9 %

19

0.5 %

Adjusted Sales

1,027

$

32.2 %

3,581

$ 

(4.1)%

Operating Margin

As reported

163

$  

54

$       

487

$    

395

$        

% of Sales

15.7 %

6.9 %

13.4 %

10.6 %

4th Quarter

Total Year

Slide 10

Segment Reporting

Industrial International

Dollars in millions

FY2010

%

Change

FY2009

FY2010

%

Change

FY2009

Sales

As reported

1,034

$

30.4 %

793

$      

3,811

$  

(2.2)%

3,896

$      

Acquisitions

-

-- %

59

1.5 %

Currency

(20)

(2.5)%

100

2.6 %

Adjusted Sales

1,054

$

32.9 %

3,652

$  

(6.3)%

Operating Margin

As reported

140

$   

(6)

$         

394

$     

351

$         

  % of Sales

13.6 %

(0.7)%

10.3 %

9.0 %

4th Quarter

Total Year

Slide 11

Segment Reporting

Aerospace

Dollars in millions

FY2010

%

Change

FY2009

FY2010

%

Change

FY2009

Sales

As reported

478

$   

5.9 %

451

$      

1,744

$  

(7.4)%

1,883

$      

Acquisitions

1

0.3 %

2

0.1 %

Currency

(1)

(0.3)%

1

0.1 %

Adjusted Sales

478

$   

5.9 %

1,741

$  

(7.6)%

Operating Margin

As reported

64

$     

58

$        

208

$     

262

$         

  % of Sales

13.4 %

13.0 %

11.9 %

13.9 %

4th Quarter

Total Year

Slide 12

Segment Reporting

Climate & Industrial Controls

Dollars in millions

FY2010

%

Change

FY2009

FY2010

%

Change

FY2009

Sales

As reported

240

$  

27.0 %

189

$     

814

$    

2.4 %

795

$        

Acquisitions

-

--

%

Currency

-

--

%

5

0.7 %

Adjusted Sales

240

$  

27.0 %

809

$    

1.7 %

Operating Margin

As reported

21

$    

1

$         

53

$      

(4)

$           

% of Sales

8.5 %

0.5 %

6.6 %

(0.5)%

4th Quarter

Total Year

--

%

-

Slide 13

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

JUN '10

MAR '10

JUN '09

MAR '09

Total Parker

35 %

+ 

23 %

+ 

38 %

-   

34 %

-   

Industrial North America

46 %

+ 

30 %

+ 

40 %

-   

35 %

-   

Industrial International

46 %

+ 

42 %

+ 

43 %

-   

41 %

-   

Aerospace

3 %

-    

22 %

-  

22 %

-   

12 %

-   

Climate & Industrial Controls

35 %

+ 

38 %

+ 

31 %

-   

36 %

-   

Three Month Rolling at Period End

Slide 14

Balance Sheet Summary

Cash

Working capital

-

Accounts receivable

-

Inventory

-

Accounts payable

Slide 15

Strong Cash Flow

Cash from Operating Activities

Total Year

Slide 16

Financial Leverage

28.9%

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

28.0%

30.0%

32.0%

34.0%

36.0%

38.0%

40.0%

42.0%

FY00

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

Debt to Debt Equity

28.9% 

Debt to Debt Equity

(21.6% net Debt)

Slide 17

FY 2011  Earnings Outlook Assumptions

Segment Sales & Operating Margins

  FY 2011 Sales change versus FY 2010

  Industrial North America

5.7 %

  -- 

9.7 %

  Industrial International

1.6 %

  -- 

4.6 %

  Aerospace

2.5 %

  -- 

5.5 %

  Climate & Industrial Controls

3.7 %

  -- 

7.7 %

  FY 2011 Operating margin percentages

  Industrial North America

14.3 %

  -- 

14.9 %

  Industrial International

11.4 %

  -- 

13.4 %

  Aerospace

11.9 %

  -- 

13.4 %

  Climate & Industrial Controls

8.0 %

  -- 

8.6 %

Slide 18

FY 2011 Earnings Outlook Assumptions

below Operating Margin (+/-

1.0%)

Corporate Admin

$160M

Interest Expense

$100M

Other Expense (Inc.) 

$160M

Total

$420M

Tax Rate

30 %

Slide 19

Earnings Outlook –

FY11

Low

High

Diluted earnings per share

3.60

$  

4.40

$

Slide 20

Questions & Answers...

*

*

*

*

Appendix

Income Statement

4

th

Quarter FY2010

Total Year FY2010

*

*

*

*

*

*

*

*

Slide 22

Income Statement –

4

th

Quarter

Quarter

Dollars in millions

% of Sales

% of Sales

Net Sales

2,786.5

$  

100.0 %

2,211.0

$  

100.0 %

Cost of sales

2,114.2

75.9 %

1,814.1

82.0 %

Gross profit

672.3

24.1 %

396.9

18.0 %

S, G & A

349.3

12.5 %

302.5

13.7 %

Interest expense

26.9

1.0 %

25.3

1.1 %

Other expense, net

3.9

.1 %

5.9

.3 %

Income before taxes

292.2

10.5 %

63.2

2.9 %

Income taxes

69.1

2.5 %

14.8

.7 %

Net income

223.1

$     

8.0 %

48.4

$       

2.2 %

Less: Noncontrolling interests

.9

$           

.0 %

(1.1)

$       

.0 %

Net income attributable to common

shareholders

222.2

$     

8.0 %

49.5

$       

2.2 %

FY 2010

FY 2009

Slide 23

Income Statement –

Total Year

Total Year

Dollars in millions

% of Sales

% of Sales

Net Sales

9,993.2

$  

100.0 %

10,309.0

100.0 %

Cost of sales

7,847.1

78.5 %

8,181.3

79.4 %

Gross profit

2,146.1

21.5 %

2,127.7

20.6 %

S, G & A

1,277.1

12.8 %

1,290.4

12.5 %

Interest expense

103.6

1.0 %

112.1

1.1 %

Other expense, net

10.6

.1 %

42.2

.4 %

Income before taxes

754.8

7.6 %

683.0

6.6 %

Income taxes

198.4

2.0 %

172.9

1.7 %

Net income

556.4

$     

5.6 %

510.1

$     

4.9 %

Less: Noncontrolling interests

2.3

$         

.1 %

1.6

$         

.0 %

Net income attribituable to common

shares

554.1

$     

5.5 %

508.5

$     

4.9 %

FY 2010

FY 2009