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Parker Hannifin Outlines Growth Strategy

Parker Hannifin President and COO Nickolas Vande Steeg commented on the company's long-term growth strategy at the Lehman Brothers Industrial Select Conference in Miami, FL, last week. During a presentation, Vande Steeg detailed the company's plan to reach $10 billion in sales with a 20-percent share of the $50-billion global motion and control market. Today, Parker has $7 billion in annual sales and a 14-percent market share in the global motion and control markets.

"Our profitable growth plan includes 10-percent compounded annual revenue growth, with five percent coming from acquisitions and five percent organically through global expansion, innovation and increased sales in total Parker systems," said Vande Steeg. In his presentation, Vande Steeg highlighted key growth drivers:

· Strategic Acquisitions: "Our acquisition focus is on higher return, less-cyclical businesses that bring Parker smart or expanded technologies, global presence, near-term synergies, and after-market content. He commented that Parker's recent acquisition of Sporlan, a market leader in refrigeration and air conditioning components and systems, provides an excellent example of the company's acquisition strategy because refrigeration is a growing market with very low cyclicality. Vande Steeg also commented on future acquisitions. "We've identified potential acquisitions in Europe, Asia Pacific and North America that are available to us and would be a good use of our cash."

· Innovation: Vande Steeg said the company is placing a strong emphasis on innovation. "We've assigned a Technology & Innovation Vice President to each of our eight operating groups exclusively dedicated to advancing Parker innovations. We are forming market-focused business units such as life sciences and fuel cells that are uniquely positioned to serve those markets with Parker-engineered customer solutions. We're providing corporate funding for breakthrough projects and we're collaborating with government and academia groups so that Parker is at the forefront of some of the world's most innovative technologies."

· Total Parker System Solutions: Vande Steeg defined systems with an example of Parker technologies onboard the Airbus A-380. "It means we provide the fuel systems, galley cooling systems, and ground-service connectors onboard for a total of $1 million of Parker components per plane and there's more to come. We like to have all of the hydraulic, pneumatic and fuel systems on an airplane."

· Globalization: Vande Steeg said Parker continues to capture global market share with a #1 market position in Latin America; #1 or #2 market position in Eastern Europe; and #3 market position in Asia Pacific. He said, "We're really focused on Asia Pacific, primarily China and India, as well as Japan."

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