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## To Our Shareholders 

With literally thousands of markets and as many ways to serve their demand, let’s cover what Parker really does best: 

We contribute value by helping the world work in new and better ways — all kinds of activities, with each one in a constant state of renewal — propelling technology, industry and services ever forward. Name any sector, and Parker is there; doing real work, for the real economy. 

What’s most exciting about this time we’re working in is that there isn’t a customer among the 400,000 we serve who isn’t looking for a better way to do something. We are the doers. 

## And that’s why you should own this stock. 

In the real economy, sustainable enterprises always require new equipment, services and solutions, even in the most trying times. After a decade of relatively uninterrupted expansion, American industry was dealt a major setback this year. We were among the first to call this abrupt and widespread falloff a “manufacturing recession,” when our domestic industrial orders fell off precipitously. 

In the latter half of the year, when customers deferred and then cancelled shipments, we heeded the caution signal for the year ahead and responded by reducing inventory, cutting spending in all areas, consolidating facilities, and realigning production and workforce levels with demand. We closed and relocated plants for greater efficiencies. These were painful and costly steps to take, but they were necessary to keep us competitive now, and generate even greater returns as demand improves. 

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Although it’s tougher to do in a downturn, we remained focused on expanding operating margins. We launched aggressive initiatives to rationalize our supplier base and leverage our global spend with long-term procurement contracts. This touches everything from raw materials to temporary services. 

