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): January 20, 2011

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 January 20, 2011, Parker-Hannifin Corporation issued a press release and presented a Webcast announcing earnings for the quarter ended December 31, 2010. The press release contains references to sales growth excluding the effects of acquisitions and foreign currency exchange rates and the effect of a discretionary pension plan contribution on cash flows from operating activities as a percent of sales. The effects on sales of acquisitions and foreign currency exchange rates and the effect on cash flows from operating activities as a percent of sales of a discretionary pension plan contribution are removed to allow investors and the company to meaningfully evaluate changes in sales and cash flows from operating activities as a percent of 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 January 20, 2011.
99.2	Webcast presentation by Parker-Hannifin Corporation, dated January 20, 2011.

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/    Jon P. Marten
	Jon P. Marten
	Executive Vice President - Finance and Administration and Chief Financial Officer

Date: January 20, 2011

EX-99.1

Exhibit 99.1

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

Record Fiscal 2011 Second Quarter Sales, Net Income, and Earnings per Share Announced by Parker

- Net Income More Than Doubles

- Order Rates Continue to Show Significant Increases

- Company Increases Guidance for Fiscal 2011

CLEVELAND, January 20, 2011 – Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported record results for the fiscal 2011 second quarter ending December 31, 2010. Fiscal 2011 second quarter sales were $2.9 billion, an increase of 21.7 percent from $2.4 billion in the same quarter a year ago. Net income was $231.8 million an increase of 120.9 percent from $105.0 million in the second quarter of fiscal 2010. Earnings per diluted share for the quarter were $1.39 compared with $0.64 in last year’s second quarter. Cash flow from operations for the first six months of fiscal 2011 was $408.2 million, or 7.2 percent of sales, compared with cash flow from operations of $606.3 million, or 13.2 percent of sales in the prior year period. Cash flow from operations in the first six months of fiscal 2011 included a $200 million discretionary contribution to the company’s pension plan. Excluding this discretionary contribution, cash flow from operations as a percent of sales was 10.7 percent for the first six months of fiscal 2011.

“Demand levels remain strong across many markets, resulting in a significant increase in sales for the second quarter and increased order levels relative to the prior year period,” said Chairman, CEO and President Don Washkewicz. “We were able to deliver sales increases in every segment, as total organic sales increased 22 percent. Order rates also increased in all segments and we are particularly pleased to see demand levels recover in our aerospace segment.”

1

“This was another quarter that demonstrated our ability to leverage our strong revenue performance into increased operating margins and earnings. Our total segment operating margin performance was 14.0 percent, led by Industrial North America segment margin of 15.2 percent and Industrial International segment margin of 14.6 percent.”

Segment Results

In the Industrial North America segment, second quarter sales increased 23.4 percent to $1.0 billion, and operating income was $159.4 million compared with $114.4 million in the same period a year ago.

In the Industrial International segment, second quarter sales increased 23.1 percent to $1.1 billion, and operating income was $167.8 million compared with $82.6 million in the same period a year ago.

In the Aerospace segment, second quarter sales increased 14.7 percent to $459.6 million, and operating income was $63.6 million compared with $41.0 million in the same period a year ago.

In the Climate and Industrial Controls segment, second quarter sales increased 22.6 percent to $214.3 million, and operating income was $9.5 million compared with $6.1 million in the same period a year ago.

Orders

Parker reported an increase of 29 percent in total orders for the quarter ending December 31, 2010, compared with the same quarter a year ago. The company reported the following orders by operating segment:

• Orders increased 26 percent in the Industrial North America segment, compared with the same quarter a year ago.

2

• Orders increased 29 percent in the Industrial International segment, compared with the same quarter a year ago.

• Orders increased 37 percent in the Aerospace segment on a rolling 12-month average basis.

• Orders increased 26 percent in the Climate and Industrial Controls segment, compared with the same quarter a year ago.

Outlook

For fiscal 2011, the company has increased guidance for earnings from continuing operations to the range of $5.80 to $6.20 per diluted share.

Washkewicz added, “Our performance in the first half of this year has been very strong and puts us ahead of where we expected to be. Therefore, we are increasing our full year guidance for earnings per share in fiscal 2011. By executing the Win Strategy, our employees will continue to build from a position of great strength and we remain bullish about our prospects for growth and profitability in the coming years.”

NOTICE OF CONFERENCE CALL: Parker Hannifin’s conference call and slide presentation to discuss its fiscal 2011 second quarter 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.

3

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, including its 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 performance. Among 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 costs savings from business realignment activities; 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.

###

4

PARKER HANNIFIN CORPORATION - DECEMBER 31, 2010

CONSOLIDATED STATEMENT OF INCOME

(Unaudited)

	Three Months Ended December 31,					Six Months Ended December 31,
(Dollars in thousands except per share amounts)	2010			2009		2010			2009
Net sales	$	2,866,664		$	2,354,708	$	5,695,937		$	4,591,873
Cost of sales		2,195,728			1,869,481		4,333,602			3,670,426
Gross profit		670,936			485,227		1,362,335			921,447
Selling, general and administrative expenses		345,679			309,840		679,263			611,683
Interest expense		25,631			25,029		50,264			50,752
Other (income) expense, net		(6,624	)		8,123		(9,806	)		2,748
Income before income taxes		306,250			142,235		642,614			256,264
Income taxes		74,432			37,272		161,766			77,331
Net income		231,818			104,963		480,848			178,933
Less: Noncontrolling interests		1,638			417		3,497			894
Net income attributable to common shareholders	$	230,180		$	104,546	$	477,351		$	178,039
Earnings per share attributable to common shareholders:
Basic earnings per share	$	1.42		$	.65	$	2.96		$	1.11
Diluted earnings per share	$	1.39		$	.64	$	2.90		$	1.10
Average shares outstanding during period - Basic		161,701,219			160,767,790		161,486,878			160,698,541
Average shares outstanding during period - Diluted		166,101,535			162,744,788		164,790,789			162,378,082
Cash dividends per common share	$	.29		$	.25	$	.56		$	.50
BUSINESS SEGMENT INFORMATION BY INDUSTRY (Unaudited)
	Three Months Ended December 31,					Six Months Ended December 31,
(Dollars in thousands)	2010			2009		2010			2009
Net sales
Industrial:
North America	$	1,045,469		$	847,208	$	2,110,384		$	1,630,293
International		1,147,231			932,057		2,240,212			1,782,307
Aerospace		459,630			400,551		896,310			817,407
Climate & Industrial Controls		214,334			174,892		449,031			361,866
Total	$	2,866,664		$	2,354,708	$	5,695,937		$	4,591,873
Segment operating income
Industrial:
North America	$	159,429		$	114,435	$	348,791		$	190,606
International		167,776			82,636		351,576			144,459
Aerospace		63,644			41,026		107,420			94,172
Climate & Industrial Controls		9,501			6,144		31,053			16,641
Total segment operating income		400,350			244,241		838,840			445,878
Corporate general and administrative expenses		37,593			31,472		70,947			57,774
Income from operations before interest expense and other		362,757			212,769		767,893			388,104
Interest expense		25,631			25,029		50,264			50,752
Other expense		30,876			45,505		75,015			81,088
Income before income taxes	$	306,250		$	142,235	$	642,614		$	256,264

PARKER HANNIFIN CORPORATION - DECEMBER 31, 2010

CONSOLIDATED BALANCE SHEET

(Unaudited)

	December 31,		December 31,		June 30,
(Dollars in thousands)	2010		2009		2010
Assets
Current assets:
Cash and cash equivalents	$	808,736	$	233,899	$	575,526
Accounts receivable, net		1,636,905		1,368,449		1,599,941
Inventories		1,361,457		1,232,979		1,171,655
Prepaid expenses		106,416		98,989		111,545
Deferred income taxes		130,426		124,182		130,129
Total current assets		4,043,940		3,058,498		3,588,796
Plant and equipment, net		1,764,558		1,842,750		1,697,881
Goodwill		2,910,729		2,948,304		2,786,334
Intangible assets, net		1,178,912		1,254,982		1,150,051
Other assets		720,705		689,655		687,320
Total assets	$	10,618,844	$	9,794,189	$	9,910,382
Liabilities and equity
Current liabilities:
Notes payable	$	101,293	$	389,715	$	363,272
Accounts payable		960,567		692,721		888,743
Accrued liabilities		730,011		680,450		776,527
Accrued domestic and foreign taxes		148,997		153,152		176,349
Total current liabilities		1,940,868		1,916,038		2,204,891
Long-term debt		1,742,464		1,554,088		1,413,634
Pensions and other postretirement benefits		1,328,893		1,258,258		1,500,928
Deferred income taxes		150,069		186,493		135,321
Other liabilities		241,957		241,526		196,208
Shareholders’ equity		5,113,261		4,552,027		4,367,965
Noncontrolling interests		101,332		85,759		91,435
Total liabilities and equity	$	10,618,844	$	9,794,189	$	9,910,382

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

	Six Months Ended December 31,
(Dollars in thousands)	2010			2009
Cash flows from operating activities:
Net income	$	480,848		$	178,933
Depreciation and amortization		170,293			189,937
Share incentive plan compensation		41,331			37,060
Net change in receivables, inventories, and trade payables		(62,540	)		155,231
Net change in other assets and liabilities		(257,071	)		79,808
Other, net		35,296			(34,719	)
Net cash provided by operating activities		408,157			606,250
Cash flows from investing activities:
Acquisitions (net of cash of $1 in 2010)		(43,359	)		—
Capital expenditures		(109,795	)		(61,232	)
Proceeds from sale of plant and equipment		17,243			5,665
Other, net		(9,369	)		(14,310	)
Net cash (used in) investing activities		(145,280	)		(69,877	)
Cash flows from financing activities:
Net proceeds from (payments for) common share activity		4,863			(3,973	)
Net proceeds from (payments for) debt		19,673			(399,933	)
Dividends		(90,907	)		(80,363	)
Net cash (used in) financing activities		(66,371	)		(484,269	)
Effect of exchange rate changes on cash		36,704			(5,816	)
Net increase in cash and cash equivalents		233,210			46,288
Cash and cash equivalents at beginning of period		575,526			187,611
Cash and cash equivalents at end of period	$	808,736		$	233,899

EX-99.2

Parker Hannifin Corporation

Quarterly Earnings Release

2

nd

Quarter FY2011

January 20, 2011

****************

****************

****************

****************

****************

****************

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, including its 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

performance. Among 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 activities;

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 Measures

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

and

the

effects

of

currency exchange rates on sales.  This presentation also reconciles

cash flow from operating activities as a percent of sales in accordance

with U.S. GAAP to cash flow from operating activities as a percent of

sales without the effect of a discretionary pension plan contribution.

The effects of acquisitions, currency exchange rates and the

discretionary pension plan contribution are removed to allow investors

and the company to meaningfully evaluate changes in sales and cash

flow from operating activities as a percent of sales on a comparable

basis from period to period.

Slide 4

Discussion Agenda

CEO 2

nd

Quarter Highlights

Key Performance Measures & Outlook

Questions & Answers

CEO Closing Comments

Slide 5

Second Quarter FY11 Highlights

End

Market

Improvement:

Orders

Improved

Year-over-Year

and

Sequentially for all Segments

Revenues

Rebounding:

Q2

Revenues

Increased

21.7%

Year-over-

Year

Operating

Margins:

Margins

Improved

Year-over-Year

for

all

Segments

Achieved All-time Record Margins across Q2 for:

–

NA Industrial, Total Industrial and Total Parker Operating Margins

Net

Income:

Q2

Net

Income

More

than

Doubled

Year-over-Year

Continued

Reduction

in

Leverage:

Gross

Debt

to

Total

Capital

Ratio Decreased to 26.5%

Continued

Strong

Cash

Flow:

Q2

FY11

Operating

Cash

Flow/Revenue of 10.0%

Acquisitions:

Completed

Acquisition

of

Gulf

Coast

Seal

Slide 6

Financial Highlights

Diluted Earnings per Share

2

nd

Quarter

$1.39

$.64

$2.90

$1.10

$.00

$.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

Q2 FY11

Q2 FY10

FY11

FY10

Slide 7

Influences on 2

nd

Quarter Earnings

Diluted Earnings Per Share Increase of $.75 Year-

over-Year Primarily Driven By:

Increased Revenues of 21.7%

Improved Operating Income ($.71 EPS Impact)

Margins Improved to 14.0% from 10.4% Year-over-

Year

Lower Other Expense ($.07 EPS Impact)

Offset by:

Increased Corporate G&A Primarily Due To Incentives

($.03 EPS Impact)

Slide 8

Financial Highlights

Sales –

2

nd

Quarter

Dollars in millions

FY2011

%

Change

FY2010

FY2011

%

Change

FY2010

Sales

As reported

2,867

$

21.7 %

2,355

$  

5,696

$ 

24.0 %

4,592

$     

Acquisitions

10

0.4 %

14

0.3 %

Currency

(21)

(0.9)%

(47)

(1.0)%

Adjusted Sales

2,878

$

22.2 %

5,729

$ 

24.7 %

2nd Quarter

Total Year

Slide 9

Segment Reporting

Industrial North America

Dollars in millions

FY2011

%

Change

FY2010

FY2011

%

Change

FY2010

Sales

As reported

1,046

$

23.4 %

847

$     

2,110

$ 

29.4 %

1,630

$     

Acquisitions

4

0.5 %

4

0.2 %

Currency

5

0.5 %

8

0.5 %

Adjusted Sales

1,037

$

22.4 %

2,098

$ 

28.7 %

Operating Margin

As reported

159

$  

114

$     

349

$    

191

$        

% of Sales

15.2 %

13.5 %

16.5 %

11.7 %

2nd Quarter

Total Year

Slide 10

Segment Reporting

Industrial International

Dollars in millions

FY2011

%

Change

FY2010

FY2011

%

Change

FY2010

Sales

As reported

1,147

$

23.1 %

932

$     

2,240

$ 

25.7 %

1,782

$     

Acquisitions

1

0.1 %

1

0.1 %

Currency

(25)

(2.6)%

(52)

(2.9)%

Adjusted Sales

1,171

$

25.6 %

2,291

$ 

28.5 %

Operating Margin

As reported

168

$  

83

$       

352

$    

144

$        

% of Sales

14.6 %

8.9 %

15.7 %

8.1 %

2nd Quarter

Total Year

Slide 11

Segment Reporting

Aerospace

Dollars in millions

FY2011

%

Change

FY2010

FY2011

%

Change

FY2010

Sales

As reported

460

$  

14.7 %

401

$     

897

$    

9.7 %

818

$        

Acquisitions

1

0.2 %

3

0.4 %

Currency

(1)

(0.2)%

(2)

(0.2)%

Adjusted Sales

460

$  

14.7 %

896

$    

9.5 %

Operating Margin

As reported

64

$    

41

$       

107

$    

94

$          

% of Sales

13.8 %

10.2 %

12.0 %

11.5 %

2nd Quarter

Total Year

Slide 12

Segment Reporting

Climate & Industrial Controls

Dollars in millions

FY2011

%

Change

FY2010

FY2011

%

Change

FY2010

Sales

As reported

214

$  

22.6 %

175

$     

449

$    

24.1 %

362

$        

Acquisitions

4

2.2 %

6

1.3 %

Currency

0

(0.0)%

(1)

(0.0)%

Adjusted Sales

210

$  

20.4 %

444

$    

22.8 %

Operating Margin

As reported

10

$    

6

$         

31

$      

17

$          

% of Sales

4.4 %

3.5 %

6.9 %

4.6 %

2nd 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

DEC '10

SEPT '10

DEC '09

SEPT '09

Total Parker

29 %

+

29 %

+

7 %

-

25 %

-

Industrial North America

26 %

+

31 %

+

3 %

-

27 %

-

Industrial International

29 %

+

34 %

+

0 %

+   

25 %

-

Aerospace

37 %

+

16 %

+

27 %

-

23 %

-

Climate & Industrial Controls

26 %

+

23 %

+

6 %

+   

17 %

-

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

2

nd

Quarter

FY11 Cash from Operating Activities

As

reported

$408

M

Pension

plan

contribution

200

M

Adjusted

$608

M

FY11 Cash from Operating Activities As  A % of

Sales

As

reported

7.2%

Pension

plan

contribution

3.5%

Adjusted

10.7%

Slide 16

Financial Leverage

26.5%

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

FY11

Debt to Debt Equity

26.5% 

Debt to Debt Equity

Slide 17

FY 2011  Earnings Outlook Assumptions

Segment Sales & Operating Margins

  FY 2011 Sales change versus FY 2010

  Industrial North America

19.8 %

  -- 

21.8 %

  Industrial International

18.6 %

  -- 

20.6 %

  Aerospace

6.7 %

  -- 

8.7 %

  Climate & Industrial Controls

14.6 %

  -- 

15.6 %

  FY 2011 Operating margin percentages

  Industrial North America

16.2 %

  -- 

16.8 %

  Industrial International

15.1 %

  -- 

15.7 %

  Aerospace

13.6 %

  -- 

13.9 %

  Climate & Industrial Controls

8.3 %

  -- 

8.8 %

Slide 18

FY 2011 Earnings Outlook Assumptions

below Operating Margin (+/-

1.0%)

Corporate Admin

$157M

Interest Expense

$  98M

Other Expense (Inc.) 

$133M

Total

$388M

Tax Rate

27%

Slide 19

Earnings Outlook –

FY11

Low

High

Diluted earnings per share

5.80

$  

6.20

$

Slide 20

Questions & Answers...

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Appendix

Income Statement

2

nd

Quarter FY2011

1

st

Half FY2011

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Slide 22

Income Statement –

2

nd

Quarter

Dollars in millions

% of Sales

% of Sales

Net Sales

2,866.6

$ 

100.0 %

2,354.7

$ 

100.0 %

Cost of sales

2,195.7

76.6 %

1,869.5

79.4 %

Gross profit

670.9

23.4 %

485.2

20.6 %

S, G & A

345.7

12.1 %

309.8

13.2 %

Interest expense

25.6

.9 %

25.0

1.1 %

Other (income) expense, net

(6.6)

(.3)%

8.1

.3 %

Income before taxes

306.2

10.7 %

142.3

6.0 %

Income taxes

74.4

2.6 %

37.3

1.6 %

Net income

231.8

$    

8.1 %

105.0

$    

4.4 %

Less:

Noncontrolling

interests

1.6

$        

.1 %

.4

$         

.0 %

Net income attributable to common

shareholders

230.2

$    

8.0 %

104.6

$    

4.4 %

FY 2011

FY 2010

Slide 23

Income Statement –

1

st

Half

Dollars in millions

% of Sales

% of Sales

Net Sales

5,695.9

$ 

100.0 %

4,591.9

100.0 %

Cost of sales

4,333.6

76.1 %

3,670.4

79.9 %

Gross profit

1,362.3

23.9 %

921.5

20.1 %

S, G & A

679.2

11.9 %

611.7

13.3 %

Interest expense

50.3

.9 %

50.8

1.1 %

Other (income) expense, net

(9.8)

(.2)%

2.7

.1 %

Income before taxes

642.6

11.3 %

256.3

5.6 %

Income taxes

161.8

2.8 %

77.3

1.7 %

Net income

480.9

$    

8.5 %

179.0

$    

3.9 %

Less: Noncontrolling

interests

3.5

$        

.1 %

.9

$         

.0 %

Net income attribituable

to common

shares

477.3

$    

8.4 %

178.1

$    

3.9 %

FY 2011

FY 2010

$