What changed in Parker Hannifin's 10-K — 2024 vs 2025
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Paragraph-level year-over-year comparison of Parker Hannifin's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.
+308 added−297 removedSource: 10-K (2025-08-22) vs 10-K (2024-08-22)
Top changes in Parker Hannifin's 2025 10-K
308 paragraphs added · 297 removed · 222 edited across 1 sections
- Item 1C. Cybersecurity+308 / −297 · 222 edited
Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
222 edited+86 added−75 removed135 unchanged
Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
222 edited+86 added−75 removed135 unchanged
2024 filing
2025 filing
Biggest changeHow the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the Company’s revenue from product shipments included the following, among others: • We tested the operating effectiveness of internal controls over the recognition of revenue from product shipments, including controls over the quantity and price of products shipped and timing of revenue recognition. • We performed detail transaction testing for revenue from product shipments by making a sample of transactions and comparing the transactions selected to source documents such as purchase orders and shipping records. • We tested the completeness of revenue from product shipments by making a sample from a listing of sales orders and comparing the sample transactions to source documentation such as shipping records to determine whether the transactions selected were appropriately included in revenue from product shipments. • We tested the timing of revenue recognition by making a sample from a list of products shipped prior to and subsequent to year end and used source documentation such as shipping records to determine whether the transactions selected were appropriately recorded in the correct period. • We performed substantive analytical procedures for certain revenue transactions by developing independent expectations of revenue based on data derived from the results of our detail revenue testing and comparing these expectations to the revenue recorded by management. /s/ DELOITTE & TOUCHE LLP Cleveland, Ohio August 22, 2024 We have served as the Company's auditor since 2008. 33 Table of Contents CONSOLIDATED STATEMENT OF INCOME For the years ended June 30, (Dollars in thousands, except per share amounts) 2024 2023 2022 Net Sales $ 19,929,606 $ 19,065,194 $ 15,861,608 Cost of sales 12,801,816 12,635,892 10,550,309 Selling, general and administrative expenses 3,315,177 3,354,103 2,504,061 Interest expense 506,495 573,894 255,252 Other (income) expense, net (276,888) 184,167 944,881 Gain on sale of businesses and assets, net (11,597) (362,526) (7,121) Income before income taxes 3,594,603 2,679,664 1,614,226 Income taxes 749,667 596,128 298,040 Net Income 2,844,936 2,083,536 1,316,186 Less: Noncontrolling interest in subsidiaries' earnings 721 600 581 Net Income Attributable to Common Shareholders $ 2,844,215 $ 2,082,936 $ 1,315,605 Earnings per Share Attributable to Common Shareholders Basic earnings per share $ 22.13 $ 16.23 $ 10.24 Diluted earnings per share $ 21.84 $ 16.04 $ 10.09 The accompanying notes are an integral part of the consolidated financial statements. 34 Table of Contents CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the years ended June 30, (Dollars in thousands) 2024 2023 2022 Net Income $ 2,844,936 $ 2,083,536 $ 1,316,186 Less: Noncontrolling interests in subsidiaries' earnings 721 600 581 Net income attributable to common shareholders 2,844,215 2,082,936 1,315,605 Other comprehensive (loss) income, net of tax Foreign currency translation adjustment and other (net of tax of $(15,443), $(38,322) and $(3,236) in 2024, 2023 and 2022, respectively) (167,784) 186,721 (284,732) Retirement benefits plan activity (net of tax of $(8,071), $(26,019) and $(95,574) in 2024, 2023 and 2022, respectively) 22,813 63,299 306,735 Other comprehensive (loss) income (144,971) 250,020 22,003 Less: Other comprehensive income (loss) for noncontrolling interests 169 (306) (1,526) Other comprehensive (loss) income attributable to common shareholders (145,140) 250,326 23,529 Total Comprehensive Income Attributable to Common Shareholders $ 2,699,075 $ 2,333,262 $ 1,339,134 The accompanying notes are an integral part of the consolidated financial statements. 35 Table of Contents CONSOLIDATED BALANCE SHEET (Dollars in thousands) June 30, 2024 2023 Assets Current Assets Cash and cash equivalents $ 422,027 $ 475,182 Trade accounts receivable, net 2,865,546 2,827,297 Non-trade and notes receivable 331,429 309,167 Inventories 2,786,800 2,907,879 Prepaid expenses and other 392,822 314,704 Total Current Assets 6,798,624 6,834,229 Property, plant and equipment 7,074,574 6,865,545 Less: Accumulated depreciation 4,198,906 4,000,515 Property, plant and equipment, net 2,875,668 2,865,030 Deferred income taxes 92,704 81,429 Investments and other assets 1,207,232 1,104,576 Intangible assets, net 7,816,181 8,450,614 Goodwill 10,507,433 10,628,594 Total Assets $ 29,297,842 $ 29,964,472 Liabilities and Equity Current Liabilities Notes payable and long-term debt payable within one year $ 3,403,065 $ 3,763,175 Accounts payable, trade 1,991,639 2,050,934 Accrued payrolls and other compensation 581,251 651,319 Accrued domestic and foreign taxes 354,659 374,571 Other accrued liabilities 982,695 895,371 Total Current Liabilities 7,313,309 7,735,370 Long-term debt 7,157,034 8,796,284 Pensions and other postretirement benefits 437,490 551,510 Deferred income taxes 1,583,923 1,649,674 Other liabilities 725,193 893,355 Total Liabilities 17,216,949 19,626,193 Equity Shareholders' Equity Serial preferred stock, $.50 par value, authorized 3,000,000 shares; none issued — — Common stock, $.50 par value, authorized 600,000,000 shares; issued 181,046,128 shares in 2024 and 2023 90,523 90,523 Additional paid-in capital 264,508 305,522 Retained earnings 19,104,599 17,041,502 Accumulated other comprehensive (loss) (1,438,012) (1,292,872) Treasury shares at cost: 52,442,162 in 2024 and 52,613,046 in 2023 (5,949,646) (5,817,787) Total Shareholders' Equity 12,071,972 10,326,888 Noncontrolling interests 8,921 11,391 Total Equity 12,080,893 10,338,279 Total Liabilities and Equity $ 29,297,842 $ 29,964,472 The accompanying notes are an integral part of the consolidated financial statements. 36 Table of Contents CONSOLIDATED STATEMENT OF CASH FLOWS For the years ended June 30, (Dollars in thousands) 2024 2023 2022 Cash Flows From Operating Activities Net income $ 2,844,936 $ 2,083,536 $ 1,316,186 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 349,136 317,416 257,314 Amortization 577,995 500,713 314,450 Stock incentive plan compensation 155,175 142,720 137,093 Deferred income taxes 32,476 91,865 (351,201) Foreign currency transaction (gain) loss (38,480) 45,647 (39,987) Loss (gain) on disposal of property, plant and equipment 12,382 3,819 (5,727) Gain on sale of businesses (23,979) (366,345) (1,394) (Gain) loss on marketable securities and other investments (5,708) (6,176) 1,159 Other, net 25,385 25,524 70,443 Changes in assets and liabilities, net of effects from acquisitions and divestitures: Accounts receivable, net (85,091) (16,675) (179,126) Inventories 101,385 53,124 (212,134) Prepaid expenses and other (63,512) 1,550 37,630 Other assets (117,009) (109,032) (11,167) Accounts payable, trade (44,429) 91,551 131,384 Accrued payrolls and other compensation (63,893) 87,375 (15,524) Accrued domestic and foreign taxes 26,597 102,476 32,514 Other accrued liabilities (72,596) 112,822 999,831 Pensions and other postretirement benefits (79,919) (109,481) 1,822 Other liabilities (146,522) (72,499) (41,836) Net cash provided by operating activities 3,384,329 2,979,930 2,441,730 Cash Flows From Investing Activities Acquisitions (net of cash acquired of $89,704 in 2023) — (7,146,110) — Capital expenditures (400,112) (380,747) (230,044) Proceeds from sale of property, plant and equipment 9,065 13,244 39,353 Proceeds from sale of businesses 77,666 473,207 3,366 Purchase of marketable securities and other investments (17,186) (37,791) (27,895) Maturities and sales of marketable securities and other investments 24,292 56,786 31,809 Payments of deal-contingent forward contracts — (1,405,418) — Other, net 7,687 250,017 (235,426) Net cash used in investing activities (298,588) (8,176,812) (418,837) Cash Flows From Financing Activities Proceeds from exercise of stock options 3,606 3,476 2,831 Payments for common shares (332,055) (297,323) (460,056) Acquisition of noncontrolling interests (2,883) — — Proceeds from notes payable, net 359,275 357,636 1,422,026 Proceeds from long-term borrowings 24,011 2,023,400 3,598,056 Payments for long-term borrowings (2,384,805) (2,340,566) (18,737) Financing fees paid — (13,605) (58,629) Dividends paid (782,048) (704,054) (569,855) Net cash (used in) provided by financing activities (3,114,899) (971,036) 3,915,636 Effect of exchange rate changes on cash (23,997) (4,776) (23,770) Net (decrease) increase in cash and cash equivalents and restricted cash (53,155) (6,172,694) 5,914,759 Cash, cash equivalents and restricted cash at beginning of year 475,182 6,647,876 733,117 Cash, cash equivalents and restricted cash at end of year $ 422,027 $ 475,182 $ 6,647,876 Supplemental Data: Cash paid during the year for: Interest $ 491,423 $ 464,701 $ 240,313 Income taxes and related interest, penalties and purchased credits, net of refunds 851,899 411,440 549,223 The accompanying notes are an integral part of the consolidated financial statements. 37 Table of Contents CONSOLIDATED STATEMENT OF EQUITY (Dollars in thousands) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive (Loss) Treasury Shares Noncontrolling Interests Total Balance June 30, 2021 $ 90,523 $ 329,619 $ 14,915,497 $ (1,566,727) $ (5,370,605) $ 15,363 $ 8,413,670 Net income 1,315,605 581 1,316,186 Other comprehensive income (loss) 23,529 (1,526) 22,003 Dividends paid ($4.42 per share) (569,294) (561) (569,855) Stock incentive plan activity (2,312) 62,510 60,198 Liquidation Activity (1,948) (1,948) Shares purchased at cost (380,334) (380,334) Balance June 30, 2022 $ 90,523 $ 327,307 $ 15,661,808 $ (1,543,198) $ (5,688,429) $ 11,909 $ 8,859,920 Net income 2,082,936 600 2,083,536 Other comprehensive income (loss) 250,326 (306) 250,020 Dividends paid ($5.47 per share) (703,242) (812) (704,054) Stock incentive plan activity (21,785) 70,641 48,856 Shares purchased at cost (199,999) (199,999) Balance June 30, 2023 $ 90,523 $ 305,522 $ 17,041,502 $ (1,292,872) $ (5,817,787) $ 11,391 $ 10,338,279 Net income 2,844,215 721 2,844,936 Other comprehensive (loss) income (145,140) 169 (144,971) Dividends paid ($6.07 per share) (781,118) (930) (782,048) Stock incentive plan activity (41,429) 68,141 26,712 Acquisition activity 415 (2,430) (2,015) Shares purchased at cost (200,000) (200,000) Balance June 30, 2024 $ 90,523 $ 264,508 $ 19,104,599 $ (1,438,012) $ (5,949,646) $ 8,921 $ 12,080,893 The accompanying notes are an integral part of the consolidated financial statements. 38 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts or as otherwise noted) The term "year" and references to specific years refer to the applicable fiscal years. 1.
Biggest changeHow the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the Company’s revenue from product shipments included the following, among others: • We tested the operating effectiveness of internal controls over the recognition of revenue from product shipments, including controls over the quantity and price of products shipped and timing of revenue recognition. • We performed detail transaction testing for revenue from product shipments by making a sample of transactions and comparing the transactions selected to source documents such as purchase orders and shipping records. • We tested the completeness of revenue from product shipments by making a sample from a listing of sales orders and comparing the sample transactions to source documentation such as shipping records to determine whether the transactions selected were appropriately included in revenue from product shipments. • We tested the timing of revenue recognition by making a sample from a list of products shipped prior to and subsequent to year end and used source documentation such as shipping records to determine whether the transactions selected were appropriately recorded in the correct period. • We performed substantive analytical procedures for certain revenue transactions by developing independent expectations of revenue based on data derived from the results of our detail revenue testing and comparing these expectations to the revenue recorded by management. /s/ DELOITTE & TOUCHE LLP Cleveland, Ohio August 22, 2025 We have served as the Company's auditor since 2008. 32 Table of Contents CONSOLIDATED STATEMENT OF INCOME For the years ended June 30, (In millions, except per share data) 2025 2024 2023 Net Sales $ 19,850 $ 19,930 $ 19,065 Cost of sales 12,535 12,802 12,636 Selling, general and administrative expenses 3,255 3,315 3,354 Interest expense 409 506 574 Other (income) expense, net (183) (276) 184 Gain on sale of businesses and assets, net (273) (12) (363) Income before income taxes 4,107 3,595 2,680 Income taxes 575 750 596 Net Income 3,532 2,845 2,084 Less: Noncontrolling interest in subsidiaries' earnings 1 1 1 Net Income Attributable to Common Shareholders $ 3,531 $ 2,844 $ 2,083 Earnings per Share Attributable to Common Shareholders: Basic $ 27.52 $ 22.13 $ 16.23 Diluted $ 27.12 $ 21.84 $ 16.04 The accompanying notes are an integral part of the consolidated financial statements. 33 Table of Contents CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the years ended June 30, (In millions) 2025 2024 2023 Net Income $ 3,532 $ 2,845 $ 2,084 Less: Noncontrolling interests in subsidiaries' earnings 1 1 1 Net income attributable to common shareholders 3,531 2,844 2,083 Other comprehensive income (loss), net of tax Foreign currency translation adjustment and other 413 (168) 187 Retirement benefits plan activity 142 23 63 Other comprehensive income (loss) attributable to common shareholders 555 (145) 250 Total Comprehensive Income Attributable to Common Shareholders $ 4,086 $ 2,699 $ 2,333 The accompanying notes are an integral part of the consolidated financial statements. 34 Table of Contents CONSOLIDATED BALANCE SHEET June 30, (In millions, except par value) 2025 2024 Assets Current Assets Cash and cash equivalents $ 467 $ 422 Trade accounts receivable, net 2,910 2,866 Non-trade and notes receivable 318 331 Inventories 2,839 2,787 Prepaid expenses 263 253 Other current assets 153 140 Total Current Assets 6,950 6,799 Property, plant and equipment 7,417 7,075 Less: Accumulated depreciation 4,480 4,199 Property, plant and equipment, net 2,937 2,876 Deferred income taxes 270 93 Other assets 1,269 1,207 Intangible assets, net 7,374 7,816 Goodwill 10,694 10,507 Total Assets $ 29,494 $ 29,298 Liabilities and Equity Current Liabilities Notes payable and long-term debt payable within one year $ 1,791 $ 3,403 Accounts payable, trade 2,126 1,992 Accrued payrolls and other compensation 587 581 Accrued domestic and foreign taxes 382 355 Other accrued liabilities 933 982 Total Current Liabilities 5,819 7,313 Long-term debt 7,494 7,157 Pensions and other postretirement benefits 267 437 Deferred income taxes 1,490 1,584 Other liabilities 733 726 Total Liabilities 15,803 17,217 Equity Shareholders' Equity Serial preferred stock, $.50 par value, authorized 3.0 shares; none issued — — Common stock, $.50 par value, authorized 600.0 shares; issued 181.0 shares in 2025 and 2024 91 91 Additional paid-in capital 194 264 Retained earnings 21,775 19,105 Accumulated other comprehensive loss (883) (1,438) Treasury shares at cost: 54.4 shares in 2025 and 52.4 shares in 2024 (7,495) (5,950) Total Shareholders' Equity 13,682 12,072 Noncontrolling interests 9 9 Total Equity 13,691 12,081 Total Liabilities and Equity $ 29,494 $ 29,298 The accompanying notes are an integral part of the consolidated financial statements. 35 Table of Contents CONSOLIDATED STATEMENT OF CASH FLOWS For the years ended June 30, (In millions) 2025 2024 2023 Cash Flows From Operating Activities Net income $ 3,532 $ 2,845 $ 2,084 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 354 349 317 Amortization 553 578 501 Stock incentive plan compensation 159 155 143 Deferred income taxes (304) 32 92 Foreign currency transaction loss (gain) 46 (38) 46 (Gain) loss on disposal of property, plant and equipment (20) 12 4 Gain on sale of businesses (253) (24) (366) Other, net 14 20 18 Changes in assets and liabilities, net of effects from acquisitions and divestitures: Accounts receivable, net 6 (85) (17) Inventories (94) 101 53 Prepaid expenses (9) (49) 32 Other current assets (11) (15) (30) Other assets (63) (117) (109) Accounts payable, trade 119 (44) 92 Accrued payrolls and other compensation 2 (64) 87 Accrued domestic and foreign taxes (18) 27 102 Other accrued liabilities (173) (73) 113 Pensions and other postretirement benefits (21) (80) (109) Other liabilities (43) (146) (73) Net cash provided by operating activities 3,776 3,384 2,980 Cash Flows From Investing Activities Acquisitions, net of cash acquired — — (7,146) Capital expenditures (435) (400) (381) Proceeds from sale of property, plant and equipment 32 9 13 Proceeds from sale of businesses 623 78 473 Payments of deal-contingent forward contracts — — (1,405) Other, net 4 15 269 Net cash provided by (used in) investing activities 224 (298) (8,177) Cash Flows From Financing Activities Proceeds from exercise of stock options 4 4 3 Payments for common shares (1,766) (332) (297) Acquisition of noncontrolling interests — (3) — Proceeds from notes payable, net (364) 359 358 Proceeds from long-term borrowings 751 24 2,023 Payments for long-term borrowings (1,741) (2,385) (2,341) Financing fees paid — — (13) Dividends paid (861) (782) (704) Net cash used in financing activities (3,977) (3,115) (971) Effect of exchange rate changes on cash 22 (24) (5) Net increase (decrease) in cash and cash equivalents and restricted cash 45 (53) (6,173) Cash, cash equivalents and restricted cash at beginning of year 422 475 6,648 Cash, cash equivalents and restricted cash at end of year $ 467 $ 422 $ 475 Supplemental Data: Cash paid during the year for: Interest $ 384 $ 491 $ 465 Income taxes and related interest, penalties and purchased credits, net of refunds 927 852 411 The accompanying notes are an integral part of the consolidated financial statements. 36 Table of Contents CONSOLIDATED STATEMENT OF EQUITY (In millions, except per share data) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Shares Noncontrolling Interests Total Balance June 30, 2022 $ 91 $ 327 $ 15,662 $ (1,543) $ (5,688) $ 11 $ 8,860 Net income — — 2,083 — — 1 2,084 Other comprehensive income — — — 250 — — 250 Dividends paid ($5.47 per share) — — (703) — — (1) (704) Stock incentive plan activity — (22) — — 70 — 48 Shares purchased at cost — — — — (200) — (200) Balance June 30, 2023 $ 91 $ 305 $ 17,042 $ (1,293) $ (5,818) $ 11 $ 10,338 Net income — — 2,844 — — 1 2,845 Other comprehensive loss — — — (145) — — (145) Dividends paid ($6.07 per share) — — (781) — — (1) (782) Stock incentive plan activity — (41) — — 68 — 27 Other — — — — — (2) (2) Shares purchased at cost — — — — (200) — (200) Balance June 30, 2024 $ 91 $ 264 $ 19,105 $ (1,438) $ (5,950) $ 9 $ 12,081 Net income — — 3,531 — — 1 3,532 Other comprehensive income — — — 555 — — 555 Dividends paid ($6.69 per share) — — (861) — — — (861) Stock incentive plan activity — (70) — — 68 — (2) Other — — — — — (1) (1) Shares purchased at cost, including excise tax — — — — (1,613) — (1,613) Balance June 30, 2025 $ 91 $ 194 $ 21,775 $ (883) $ (7,495) $ 9 $ 13,691 The accompanying notes are an integral part of the consolidated financial statements. 37 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millions, except per share amounts or as otherwise noted) The term "year" and references to specific years refer to the applicable fiscal years. 1.
Over the long term, the extent to which our business and results of operations will be impacted by economic and political uncertainty, geopolitical risks and public health crises depends on future developments that remain uncertain. We will continue to monitor the global environment and manage our business with the goal to minimize unfavorable impacts on operations and financial results.
Over the long term, the extent to which our business and results of operations will be impacted by global economic and political uncertainty, geopolitical risks and public health crises depends on future developments that remain uncertain. We will continue to monitor the global environment and manage our business with the goal to minimize unfavorable impacts on operations and financial results.
The dollar value of backlog is equal to the amount that is expected to be billed to the customer and reported as a sale.
The dollar value of backlog is equal to the amount that is expected to be billed to the customer and reported as a sale.
The acquisition method of accounting also requires us to refine these estimates over a measurement period not to exceed one year to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date.
The acquisition method of accounting also requires us to refine these estimates over a measurement period not to exceed one year to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date.
Supply Chain Financing We have supply chain financing ("SCF") programs with financial intermediaries, which provide certain suppliers the option to be paid by the financial intermediaries earlier than the due date on the applicable invoice. We are not a party to the agreements between the participating financial intermediaries and the suppliers in connection with the programs.
Supply Chain Financing We have SCF programs with financial intermediaries, which provide certain suppliers the option to be paid by the financial intermediaries earlier than the due date on the applicable invoice. We are not a party to the agreements between the participating financial intermediaries and the suppliers in connection with the programs.
SARs - Upon exercise, SARs entitle the participant to receive shares of common stock equal to the increase in value of the award between the grant date and the exercise date.
Upon exercise, SARs entitle the participant to receive shares of common stock equal to the increase in value of the award between the grant date and the exercise date.
LTIP - The Company's Long Term Incentive Plans ("LTIP") provide for the issuance of unrestricted stock to certain officers and key employees based on the attainment of certain goals relating to our revenue growth, earnings per share growth and return on invested capital during the three-year performance period.
The Company's Long Term Incentive Plans ("LTIP") provide for the issuance of unrestricted stock to certain officers and key employees based on the attainment of certain goals relating to our revenue growth, earnings per share growth and return on invested capital during a three-year performance period.
Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments.
Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
Refer to Note 5 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for a reconciliation of the U.S. federal statutory tax rate to our effective tax rate.
Refer to Note 5 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for a further reconciliation of the U.S. federal statutory tax rate to our effective tax rate.
Stock Incentive Plans The Company's 2023 Omnibus Stock Incentive Plan ("2023 SIP") provides for the granting of share-based incentive awards in the form of nonqualified stock options, stock appreciation rights ("SARs"), restricted stock units ("RSUs") and restricted and unrestricted stock to officers and key employees of the Company.
Stock Incentive Plans The Company's 2023 Omnibus Stock Incentive Plan ("2023 SIP") provides for the granting of stock-based incentive awards in the form of nonqualified stock options, stock appreciation rights ("SARs"), restricted stock units ("RSUs") and restricted and unrestricted stock to officers and key employees of the Company.
Among other factors that may affect future performance are: • changes in business relationships with and orders by or from major customers, suppliers or distributors, including delays or cancellations in shipments; • disputes regarding contract terms, changes in contract costs and revenue estimates for new development programs; • changes in product mix; • ability to identify acceptable strategic acquisition targets; • uncertainties surrounding timing, successful completion or integration of acquisitions and similar transactions; • ability to successfully divest businesses planned for divestiture and realize the anticipated benefits of such divestitures; • the determination and ability to successfully undertake business realignment activities and the expected costs, including cost savings, thereof; • ability to implement successfully business and operating initiatives, including the timing, price and execution of share repurchases and other capital initiatives; • availability, cost increases of or other limitations on our access to raw materials, component products and/or commodities if associated costs cannot be recovered in product pricing; • ability to manage costs related to insurance and employee retirement and health care benefits; • legal and regulatory developments and other government actions, including related to environmental protection, and associated compliance costs; supply chain and labor disruptions, including as a result of labor shortages; • threats associated with international conflicts and cybersecurity risks and risks associated with protecting our intellectual property; • uncertainties surrounding the ultimate resolution of outstanding legal proceedings, including the outcome of any appeals; • effects on market conditions, including sales and pricing, resulting from global reactions to U.S. trade policies; • manufacturing activity, air travel trends, currency exchange rates, difficulties entering new markets and economic conditions such as inflation, deflation, interest rates and credit availability; inability to obtain, or meet conditions imposed for, required governmental and regulatory approvals; • changes in the tax laws in the United States and foreign jurisdictions and judicial or regulatory interpretations thereof; and • large scale disasters, such as floods, earthquakes, hurricanes, industrial accidents and pandemics.
Among other factors which may affect future performance are: • changes in business relationships with and orders by or from major customers, suppliers or distributors, including delays or cancellations in shipments; • disputes regarding contract terms, changes in contract costs and revenue estimates for new development programs; • changes in product mix; • ability to identify acceptable strategic acquisition targets; • uncertainties surrounding timing, successful completion or integration of acquisitions and similar transactions, including the acquisition of Curtis Instruments, Inc.; • ability to successfully divest businesses planned for divestiture and realize the anticipated benefits of such divestitures; • the determination and ability to successfully undertake business realignment activities and the expected costs, including cost savings, thereof; • ability to implement successfully business and operating initiatives, including the timing, price and execution of share repurchases and other capital initiatives; • availability, cost increases of or other limitations on our access to raw materials, component products and/or commodities if associated costs cannot be recovered in product pricing; • ability to manage costs related to insurance and employee retirement and health care benefits; • legal and regulatory developments and other government actions, including related to environmental protection, and associated compliance costs; supply chain and labor disruptions, including as a result of tariffs and labor shortages; • threats associated with international conflicts and cybersecurity risks and risks associated with protecting our intellectual property; • uncertainties surrounding the ultimate resolution of outstanding legal proceedings, including the outcome of any appeals; • effects on market conditions, including sales and pricing, resulting from global reactions to U.S. trade policies; • manufacturing activity, air travel trends, currency exchange rates, difficulties entering new markets and economic conditions such as inflation, deflation, interest rates and credit availability; inability to obtain, or meet conditions imposed for, required governmental and regulatory approvals; • changes in the tax laws in the United States and foreign jurisdictions and judicial or regulatory interpretations thereof; and • large scale disasters, such as floods, earthquakes, hurricanes, industrial accidents and pandemics.
Parker’s cybersecurity program is led by our Digital & IT VP – Infrastructure and Security, who functions as our chief information security officer (CISO) and has over 23 years of experience in cybersecurity operations, cybersecurity governance and compliance, risk management, operational technology (OT) and connected products (IoT) with global Fortune 200 and Fortune 500 companies across diverse industries, such as retail, consumer goods, entertainment and manufacturing.
Parker’s cybersecurity program is led by our Digital & IT VP – Infrastructure and Security, who functions as our chief information security officer ("CISO") and has over 25 years of experience in cybersecurity operations, cybersecurity governance and compliance, risk management, operational technology ("OT") and connected products ("IoT") with global Fortune 200 and Fortune 500 companies across diverse industries, such as retail, consumer goods, entertainment and manufacturing.
Goodwill - The Company conducts a formal impairment test of goodwill on an annual basis and between annual tests if an event occurs or circumstances change that would, more likely than not, reduce the fair value of a reporting unit below its carrying value. 40 Table of Contents Income Taxes - Income taxes are provided based upon income for financial reporting purposes.
Goodwill - The Company conducts a formal impairment test of goodwill on an annual basis and between annual tests if an event occurs or circumstances change that would, more likely than not, reduce the fair value of a reporting unit below its carrying value. 39 Table of Contents Income Taxes - Income taxes are provided based upon income for financial reporting purposes.
The Company makes these statements as of the date of the filing of this Annual Report on Form 10-K for the year ended June 30, 2024 and undertakes no obligation to update them unless otherwise required by law. 18 Table of Contents Overview The Company is a global leader in motion and control technologies.
The Company makes these statements as of the date of the filing of this Annual Report on Form 10-K for the year ended June 30, 2025 and undertakes no obligation to update them unless otherwise required by law. 18 Table of Contents Overview The Company is a global leader in motion and control technologies.
We anticipate that cost savings realized from the workforce reduction measures taken during 2024 will increase operating income in 2025 by approximately two percent for both the International and North America businesses. We expect to continue to take actions necessary to integrate acquisitions and appropriately structure the operations of the Diversified Industrial Segment.
We anticipate that cost savings realized from the workforce reduction measures taken during 2025 will increase operating income in 2026 by approximately two percent for both the International and North America businesses. We expect to continue to take actions necessary to integrate acquisitions and appropriately structure the operations of the Diversified Industrial Segment.
We review these loss accruals periodically and make adjustments to reflect the most recent facts and circumstances. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Recently issued accounting pronouncements are described in Note 1 to the Consolidated Financial Statements, included in Part II, Item 8 of this Annual Report on Form 10-K. 29 Table of Contents ITEM 7A .
We review these loss accruals periodically and make adjustments to reflect the most recent facts and circumstances. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Recently issued accounting pronouncements are described in Note 1 to the Consolidated Financial Statements, included in Part II, Item 8 of this Annual Report on Form 10-K. 28 Table of Contents ITEM 7A .
Intangible assets are evaluated for impairment whenever events or circumstances indicate that the undiscounted net cash flows to be generated by their use over their expected useful lives and eventual disposition may be less than their net carrying value. No material intangible asset impairments occurred in 2024, 2023 or 2022. 10.
Intangible assets are evaluated for impairment whenever events or circumstances indicate that the undiscounted net cash flows to be generated by their use over their expected useful lives and eventual disposition may be less than their net carrying value. No material intangible asset impairments occurred in 2025, 2024 or 2023. 10.
Refer to Note 3 for further discussion. Divestitures represent goodwill associated with the sale of businesses during 2024 and 2023. Goodwill is tested for impairment at the reporting unit level annually and between annual tests whenever events or circumstances indicate that the carrying value of a reporting unit may exceed its fair value.
Refer to Note 3 for further discussion. Divestitures represent goodwill associated with the sale of businesses during 2025 and 2024. Goodwill is tested for impairment at the reporting unit level annually and between annual tests whenever events or circumstances indicate that the carrying value of a reporting unit may exceed its fair value.
Often but not always, these statements may be identified from the use of forward-looking terminology such as "anticipates," "believes," "may," "should," "could," "expects," "targets," "is likely," "will," or the negative of these terms and similar expressions, and may also include statements regarding future performance, orders, earnings projections, events or developments.
Often but not always, these statements may be identified from the use of forward-looking terminology such as "anticipates," "believes," "may," "should," "could," "expects," "targets," "is likely," "will," or the negative of these terms and similar expressions, and include all statements regarding future performance, orders, earnings projections, events or developments.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2024, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2025, in conformity with accounting principles generally accepted in the United States of America.
It is reasonably possible that, within the next 12 months, the amount of gross unrecognized tax benefits could be reduced by up to approximately $40 million as a result of the revaluation of existing uncertain tax positions arising from developments in the examination process or the closure of tax statutes.
It is reasonably possible that, within the next 12 months, the amount of gross unrecognized tax benefits could be reduced by up to approximately $60 million as a result of the revaluation of existing uncertain tax positions arising from developments in the examination process or the closure of tax statutes.
Assets held in the U.S. and U.K. defined benefit plans account for 63 percent and 24 percent, respectively, of our total defined benefit plan assets. The overall investment strategy with respect to our U.S. defined benefit plan is to use a funding strategy more heavily weighted toward liability-hedging assets as the funded status improves.
Assets held in the U.S. and U.K. defined benefit plans account for 61 percent and 24 percent, respectively, of our total defined benefit plan assets. The overall investment strategy with respect to our U.S. defined benefit plan is to use a funding strategy more heavily weighted toward liability-hedging assets as the funded status improves.
The long-term nature of these assets requires the estimation of their cash inflows and outflows several years into the future and only takes into consideration technological advances known at the time of the impairment test. During 2024, the Company did not record any material impairments related to long-lived assets.
The long-term nature of these assets requires the estimation of their cash inflows and outflows several years into the future and only takes into consideration technological advances known at the time of the impairment test. During 2025, the Company did not record any material impairments related to long-lived assets.
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, 32 Table of Contents and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a 31 Table of Contents whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Some of the loss carryforwards can be carried forward indefinitely; others can be carried forward from three years to 20 years. In addition, a valuation allowance of $30 million related to other future deductible items has been established due to the uncertainty of their realization.
Some of the loss carryforwards can be carried forward indefinitely; others can be carried forward from three years to 20 years. In addition, a valuation allowance of $35 million related to other future deductible items has been established due to the uncertainty of their realization.
Acquisitions and Divestitures Acquisitions On September 12, 2022, we completed the Acquisition of all the outstanding ordinary shares of Meggitt for 800 pence per share, resulting in an aggregate cash purchase price of $7.2 billion, including the assumption of debt.
Acquisitions On September 12, 2022, we completed the acquisition of all the outstanding ordinary shares of Meggitt for 800 pence per share, resulting in an aggregate cash purchase price of $7.2 billion, including the assumption of debt.
We also have audited the Company’s internal control over financial reporting as of June 30, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
We also have audited the Company’s internal control over financial reporting as of June 30, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
“Risk Factors—Business and Operational Risks” of this Form 10-K, cybersecurity threats remain a risk to our business operations. Cybersecurity Governance Management is responsible for assessing and managing material risks from cybersecurity threats with leadership from the Company’s Vice President – Chief Digital and Information Officer (CDIO), who is responsible for the Company’s global Digital, Information Technology and Cyber Security organization.
“Risk Factors—Business and Operational Risks” of this Form 10-K, cybersecurity threats remain a risk to our business operations. 15 Table of Contents Cybersecurity Governance Management is responsible for assessing and managing material risks from cybersecurity threats with leadership from the Company’s Vice President – Chief Digital and Information Officer ("CDIO"), who is responsible for the Company’s global Digital, Information Technology and Cyber Security organization.
Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
The facilities are situated in 36 states within the United States and in 42 other countries. We own the majority of our manufacturing plants. Our leased properties consist of sales and administrative offices and distribution centers as well as manufacturing plants.
The facilities are situated in 35 states within the United States and in 42 other countries. We own the majority of our manufacturing plants. Our leased properties consist of sales and administrative offices and distribution centers as well as manufacturing plants.
Pensions - The annual net periodic expense and benefit obligations related to the Company's defined benefit plans are determined on an actuarial basis. This determination requires critical assumptions regarding the discount rate, long-term rate of 28 Table of Contents return on plan assets, increases in compensation levels and amortization periods for actuarial gains and losses.
Pensions - The annual net periodic expense and benefit obligations related to the Company's defined benefit plans are determined on an actuarial basis. This determination requires critical assumptions regarding the discount rate, long-term rate of return on plan assets, increases in compensation levels and amortization periods for actuarial gains and losses.
We will report such matters that exceed, or that we reasonably believe may exceed, $1.0 million or more in monetary sanctions. ITEM 4 . Mine Safety Disclosures . Not applicable. PART II ITEM 5 . Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . (a) Market for the Registrant’s Common Equity .
We will report such matters that exceed, or that we reasonably believe may exceed, $1.0 million or more in monetary sanctions. ITEM 4 . Mine Safety Disclosures Not applicable. 16 Table of Contents PART II ITEM 5 . Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities (a) Market for the Registrant’s Common Equity .
Baa1 Standard & Poor's BBB+ Supply Chain Financing We continue to identify opportunities to improve our liquidity and working capital efficiency, which includes the extension of payment terms with our suppliers.
A3 Standard & Poor's BBB+ Supply Chain Financing We continue to identify opportunities to improve our liquidity and working capital efficiency, which includes the extension of payment terms with our suppliers.
Our contracts with customers generally do not include significant financing components or noncash consideration. Taxes collected from customers and remitted to governmental authorities are excluded from revenue. Shipping and handling costs are treated as fulfillment costs and are included in cost of sales.
Our contracts with customers generally do not include significant financing components or noncash consideration. 38 Table of Contents Taxes collected from customers and remitted to governmental authorities are excluded from revenue. Shipping and handling costs are treated as fulfillment costs and are included in cost of sales.
The liabilities are based on outcomes of litigation and estimates of the level and timing of remediation costs, including the period of operating and monitoring activities required. 44 Table of Contents Our consolidated financial statements for 2023 include the results of operations of Meggitt from the date of acquisition through June 30, 2023.
The liabilities are based on outcomes of litigation and estimates of the level and timing of remediation costs, including the period of operating and monitoring activities required. Our consolidated financial statements for 2023 include the results of operations of Meggitt from the date of acquisition through June 30, 2023.
Our CDIO has served in various roles in information technology and information security for over 18 years with Fortune 500 companies. Our CDIO holds Bachelor of Science and Master of Science degrees in Computer Engineering. He has also completed other advanced leadership training and coursework regarding cybersecurity risk management. Our CDIO reports directly to the Chief Executive Officer.
Our CDIO has served in various roles in information technology and information security for approximately 20 years with Fortune 500 companies. Our CDIO holds Bachelor of Science and Master of Science degrees in Computer Engineering. He has also completed other advanced leadership training and coursework regarding cybersecurity risk management. Our CDIO reports directly to the Chief Executive Officer.
Refer to Notes 1 and 3 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further discussion. 27 Table of Contents CRITICAL ACCOUNTING POLICIES & ESTIMATES The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
Refer to Note 3 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further discussion. 26 Table of Contents CRITICAL ACCOUNTING POLICIES & ESTIMATES The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
In both 2024 and 2023, acquisition integration charges relate to the acquisition of Meggitt. Business realignment and acquisition integration charges within the International businesses were primarily incurred in Europe.
In both 2025 and 2024, acquisition integration charges relate to the acquisition of Meggitt. Business realignment and acquisition integration charges within the International businesses were primarily incurred in Europe.
Foreign currency exposures arise from translation of foreign-denominated assets and liabilities into U.S. dollars and from transactions denominated in a currency other than the subsidiary’s functional currency. We continue to manage the associated foreign currency transaction and translation risk.
Foreign currency exposures arise from translation of foreign currency-denominated assets and liabilities into U.S. dollars and from transactions denominated in a currency other than the subsidiary’s functional currency. We continue to manage the associated foreign currency transaction and translation risk using existing processes.
We are open to assessment of our U.S. federal income tax returns by the Internal Revenue Service for years after 2013, and our state and local income tax returns for years after 2016. We are open to assessment for significant foreign jurisdictions for years after 2011. 6.
We are open to assessment of our U.S. federal income tax returns by the Internal Revenue Service for years after 2013, and our state and local income tax returns for years after 2018. We are open to assessment for significant foreign jurisdictions for years after 2013. 6.
Remaining payments related to current-year and prior-year business realignment actions of approximately $14 million, a majority of which are expected to be paid by December 31, 2024, are primarily reflected within the accrued payrolls and other compensation and other accrued liabilities captions in the Consolidated Balance Sheet.
Remaining payments related to current-year and prior-year business realignment actions of approximately $26 million, a majority of which are expected to be paid by December 31, 2025, are primarily reflected within the accrued payrolls and other compensation and other accrued liabilities captions in the Consolidated Balance Sheet.
Our Board receives an in-depth report from our CDIO, at least annually, on the overall cybersecurity program, and updates throughout the year from our CDIO and CISO regarding such topics as cyber-risk management and the status of projects to strengthen cybersecurity effectiveness. 16 Table of Contents ITEM 2 . Properties .
Our Board receives an in-depth report from our CDIO, at least annually, on the overall cybersecurity program, and updates throughout the year from our CDIO and CISO regarding such topics as cyber-risk management and the status of projects to strengthen cybersecurity effectiveness. ITEM 2 .
There is no limitation on the amount of shares that can be repurchased in a fiscal year. There is no expiration date for this program. ITEM 6 . [Reserved] 17 Table of Contents ITEM 7 . Management’s Discussion and Analysis of Financial Condition and Results of Operations.
There is no limitation on the number of shares that can be repurchased in a year and there is no expiration date for the program. ITEM 6 . [Reserved] 17 Table of Contents ITEM 7 . Management’s Discussion and Analysis of Financial Condition and Results of Operations.
There is no limitation on the number of shares that can be repurchased in a year. Repurchases may be funded primarily from operating cash flows and commercial paper borrowings and the shares are initially held as treasury shares.
There is no limitation on the number of shares that can be repurchased in a year and there is no expiration date for the program. Repurchases may be funded primarily from operating cash flows and commercial paper borrowings and the shares are initially held as treasury shares.
Our annual impairment tests performed in 2024, 2023 and 2022 resulted in no impairment loss being recognized. 50 Table of Contents Intangible assets are amortized on a straight-line method over their legal or estimated useful lives.
Our annual impairment tests performed in 2025, 2024 and 2023 resulted in no impairment loss being recognized. 49 Table of Contents Intangible assets are amortized on a straight-line method over their legal or estimated useful lives.
Our corporate headquarters is located in Cleveland, Ohio, and, at June 30, 2024, the Company maintained approximately 335 manufacturing plants. We also maintain various sales and administrative offices and distribution centers throughout the world. None of these manufacturing plants, administrative offices or distribution centers are individually material to our operations.
Properties Our corporate headquarters is located in Cleveland, Ohio, and, at June 30, 2025, the Company maintained approximately 322 manufacturing plants. We also maintain various sales and administrative offices and distribution centers throughout the world. None of these manufacturing plants, administrative offices or distribution centers are individually material to our operations.
For the Company's domestic qualified defined benefit plan, our largest plan, a 50 basis point change in the assumed long-term rate of return on plan assets is estimated to have an $18 million effect on annual pension expense and a 50 basis point decrease in the discount rate is estimated to decrease annual pension expense by $6 million.
For the Company's domestic qualified defined benefit plan, our largest plan, a 50 basis point change in the assumed long-term rate of return on plan assets is estimated to have an $17 million effect on annual pension expense and a 50 basis point decrease in the discount rate is estimated to increase annual pension expense by $3 million.
Refer to Note 4 for further discussion of acquisition integration charges. Acquisition-related transaction costs totaled $115 million in 2023. These costs are included in SG&A in the Consolidated Statement of Income. The following table presents unaudited pro forma information for 2023 and 2022 as if the Acquisition had occurred on July 1, 2021.
Refer to Note 4 for further discussion of acquisition integration charges. Acquisition-related transaction costs totaled $115 million in 2023. These costs are included in selling, general and administrative expenses in the Consolidated Statement of Income. The following table presents unaudited pro forma information for 2023 and 2022 as if the acquisition had occurred on July 1, 2021.
Based on the Company’s rating level at June 30, 2024, the most restrictive financial covenant provides that the ratio of debt to debt-shareholders' equity cannot exceed 0.65 to 1.0. At June 30, 2024, the Company's debt to debt-shareholders' equity ratio was 0.47 to 1.0.
Based on the Company’s rating level at June 30, 2025, the most restrictive financial covenant provides that the ratio of debt to debt-shareholders' equity cannot exceed 0.65 to 1.0. At June 30, 2025, the Company's debt to debt-shareholders' equity ratio was 0.41 to 1.0.
At June 30, 2024, the long-term credit ratings assigned to the Company's senior debt securities by the credit rating agencies engaged by the Company were as follows: Fitch Ratings BBB+ Moody's Investor Services, Inc.
At June 30, 2025, the long-term credit ratings assigned to the Company's senior debt securities by the credit rating agencies engaged by the Company were as follows: Fitch Ratings A- Moody's Investor Services, Inc.
The fair value of liabilities assumed includes $116 million and $90 million of operating and finance lease liabilities, respectively, of which, $18 million and $1 million of operating and finance lease liabilities, respectively, are current liabilities.
As of the acquisition date, the fair value of liabilities assumed includes $116 million and $90 million of operating and finance lease liabilities, respectively, of which, $18 million and $1 million of operating and finance lease liabilities, respectively, are current liabilities.
The Company’s common stock is listed for trading on the New York Stock Exchange ("NYSE") under the symbol "PH". As of July 31, 2024, the number of shareholders of record of the Company was 3,003. (b) Use of Proceeds . Not Applicable. (c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers .
The Company’s common stock is listed for trading on the New York Stock Exchange ("NYSE") under the symbol "PH". As of July 31, 2025, the number of shareholders of record of the Company was 2,898. (b) Use of Proceeds . Not Applicable. (c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers .
The discussion below is structured to separately discuss the Consolidated Statement of Income, Business Segments, and Liquidity and Capital Resources. The term "year" and references to specific years refer to the applicable fiscal year. Dollars are presented in millions, except per share amounts or as otherwise noted, and totals may not sum due to rounding.
The discussion below is structured to separately discuss the Consolidated Statement of Income, Business Segments, and Liquidity and Capital Resources. The term "year" and references to specific years refer to the applicable fiscal year. Dollars are presented in millions, except per share amounts or as otherwise noted.
Retirement Benefits Pensions - The Company has noncontributory defined benefit pension plans covering eligible employees, including certain employees in foreign countries. Our largest plans are generally closed to new participants. Plans for most salaried employees provide pay-related benefits based on years of service. Plans for hourly employees generally provide benefits based on flat-dollar amounts and years of service.
Retirement Benefits Pensions and Other Postretirement Benefits The Company has noncontributory defined benefit pension plans covering eligible employees, including certain employees in foreign countries. Our largest plans are generally closed to new participants. Plans for most salaried employees provide pay-related benefits based on years of service.
Based on our rating level at June 30, 2024, the most restrictive financial covenant provides that the ratio of debt to debt-shareholders' equity cannot exceed 0.65 to 1.0. As of June 30, 2024, our debt to debt-shareholders' equity ratio was 0.47 to 1.0. We are in compliance with all covenants. 51 Table of Contents 11.
Based on our rating level at June 30, 2025, the most restrictive financial covenant provides that the ratio of debt to debt-shareholders' equity cannot exceed 0.65 to 1.0. As of June 30, 2025, our debt to debt-shareholders' equity ratio was 0.41 to 1.0. We are in compliance with all covenants. 50 Table of Contents 11.
In September 2022, the FASB issued ASU 2022-04, "Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations," which requires a buyer in a supplier finance program to disclose information about the program’s nature, activity during the period, changes from period to period, and potential magnitude.
Refer to Note 19 for further discussion. In September 2022, the FASB issued ASU 2022-04, "Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations," which requires a buyer in a supplier finance program to disclose information about the program’s nature, activity during the period, changes from period to period, and potential magnitude.
Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. Payments from customers are received based on the terms established in the contract with the customer.
Contract balances Contract assets and contract liabilities are reported on a contract-by-contract basis. Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. Payments from customers are received based on the terms established in the contract with the customer.
A valuation allowance of $1,039 million related to the loss carryforwards has been established due to the uncertainty of their realization. Of this valuation allowance, $1,021 million relates to non-operating entities whose loss carryforward utilization is considered to be remote.
A valuation allowance of $106 million related to the loss carryforwards has been established due to the uncertainty of their realization. Of this valuation allowance, $92 million relates to non-operating entities whose loss carryforward utilization is considered to be remote.
Excluding the effects of the Acquisition, changes in the currency exchange rates and divestiture activity, sales in 2024 decreased $196 million from prior-year levels reflecting lower demand within the HVAC and refrigeration, transportation, off-highway and in-plant and industrial equipment markets. The decrease in sales was partially offset by an increase in demand within the aerospace and defense and energy markets.
Excluding the effects of changes in the currency exchange rates and divestiture activity, sales in 2025 decreased $329 million from prior-year levels reflecting lower demand within the off-highway, transportation, in-plant and industrial equipment and energy markets, partially offset by an increase in demand in the HVAC and refrigeration and aerospace and defense markets.
Refer to Notes 11, 12, and 13 respectively, of Part II, Item 8 of this Annual Report on Form 10-K for further discussion. Dividends Cash dividends have been paid for 296 consecutive quarters, including a yearly increase in dividends for the last 68 years. The current annual dividend rate is $6.52 per common share.
Refer to Notes 11, 12, and 13 respectively, of Part II, Item 8 of this Annual Report on Form 10-K for further discussion. Dividends Cash dividends have been paid for 300 consecutive quarters, including a yearly increase in dividends for the last 69 years. The current annual dividend rate is $7.20 per common share.
The accrued interest related to the gross unrecognized tax benefits, excluded from the amounts above, was $27 million, $21 million, and $18 million as of June 30, 2024, 2023 and 2022, respectively. The accrued penalties related to the gross unrecognized tax benefits, excluded from the amounts above, was $2 million as of both June 30, 2024 and 2023.
The accrued interest related to the gross unrecognized tax benefits, excluded from the amounts above, was $28 million, $27 million, and $21 million as of June 30, 2025, 2024 and 2023, respectively. The accrued penalties related to the gross unrecognized tax benefits, excluded from the amounts above, was $2 million as of June 30, 2025, 2024, and 2023.
We satisfy share-based incentive award obligations by issuing shares of common stock out of treasury, which have been repurchased pursuant to our share repurchase program described in Note 14, or through the issuance of previously unissued common stock.
Activity under this plan is not material. We satisfy stock-based incentive award obligations by issuing shares of common stock out of treasury, which have been repurchased pursuant to our share repurchase program described in Note 14, or through the issuance of previously unissued common stock.
The effect of currency exchange rates decreased sales by approximately $54 million, reflecting the strengthening of the U.S. dollar primarily against currencies in Turkey, China and Japan, partially offset by the weakening of the U.S. dollar primarily against currencies in the Eurozone countries and United Kingdom.
The effect of currency exchange rates decreased sales by approximately $20 million, reflecting the strengthening of the U.S. dollar primarily against currencies in Mexico, Brazil and China, partially offset by the weakening of the U.S. dollar primarily against currencies in the United Kingdom and the Eurozone countries.
The resulting pre-tax gain of $13 million is included in gain on sale of businesses and assets, net in the Consolidated Statement of Income. The operating results and net assets of the MicroStrain sensing systems business were immaterial to the Company's consolidated results of operations and financial position.
The resulting pre-tax gain of $241 million is included in gain on sale of businesses and assets, net in the Consolidated Statement of Income. The operating results and net assets of this business were immaterial to the Company's consolidated results of operations and financial position.
Page Number in Form 10-K Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34) 32 Financial Statements Consolidated Statement of Income 34 Consolidated Statement of Comprehensive Income 35 Consolidated Balance Sheet 36 Consolidated Statement of Cash Flows 37 Consolidated Statement of Equity 38 Notes to Consolidated Financial Statements 39 31 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Parker-Hannifin Corporation Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Parker-Hannifin Corporation and subsidiaries (the "Company") as of June 30, 2024 and 2023, the related consolidated statements of income, comprehensive income, cash flows, and equity, for each of the three years in the period ended June 30, 2024, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").
Page Number in Form 10-K Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34) 31 Financial Statements Consolidated Statement of Income 33 Consolidated Statement of Comprehensive Income 34 Consolidated Balance Sheet 35 Consolidated Statement of Cash Flows 36 Consolidated Statement of Equity 37 Notes to Consolidated Financial Statements 38 30 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Parker-Hannifin Corporation Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Parker-Hannifin Corporation and subsidiaries (the “Company”) as of June 30, 2025 and 2024, the related consolidated statements of income, comprehensive income, cash flows, and equity, for each of the three years in the period ended June 30 2025, and the related notes (collectively referred to as the “financial statements”).
The operating results and net assets of the Filter Resources business were immaterial to the Company's consolidated results of operations and financial position. During September 2023, we divested the MicroStrain sensing systems business, which was part of the Diversified Industrial Segment, for proceeds of $37 million.
The operating results and net assets of this business were immaterial to the Company's consolidated results of operations and financial position. During December 2023, we divested our Filter Resources business, which was part of the Diversified Industrial Segment, for proceeds of $37 million.
Excluding the effects of the Acquisition and changes in the currency exchange rates, sales in 2024 decreased $116 million from prior-year levels primarily due to lower sales in the Asia Pacific region and Europe, partially offset by an increase in sales in Latin America.
Excluding changes in the currency exchange rates, sales in 2025 decreased $106 million from prior-year levels primarily due to lower sales in Europe, partially offset by an increase in sales in the Asia Pacific Region and Latin America.
Business acquisitions are accounted for using the acquisition method of accounting, which allocates the fair value of the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values.
Business Combinations - From time to time, we may enter into business combinations. Business acquisitions are accounted for using the acquisition method of accounting, which allocates the fair value of the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values.
During 2024, approximately $178 million of revenue was recognized that was included in the contract liabilities at June 30, 2023.
During 2025, approximately $165 million of revenue was recognized that was included in the contract liabilities at June 30, 2024.
Sales to and services performed for joint venture companies totaled $74 million, $64 million and $47 million in 2024, 2023 and 2022, respectively. We received cash dividends from joint venture companies of $148 million, $114 million and $82 million in 2024, 2023 and 2022, respectively.
Sales to and services performed for joint venture companies totaled $96 million, $74 million and $64 million in 2025, 2024 and 2023, respectively. We received cash dividends from joint venture companies of $167 million, $148 million and $114 million in 2025, 2024 and 2023, respectively.
We also reconcile the estimated aggregate fair value of our reporting units resulting from these procedures to our overall market capitalization. At December 31, 2023, the Company performed its annual goodwill impairment test for each of its five reporting units. The results of this test indicated the fair value substantially exceeded carrying value for all reporting units.
We also reconcile the estimated aggregate fair value of our reporting units resulting from these procedures to our overall market capitalization. The Company performed its fiscal 2025 annual goodwill impairment test as of January 1 for each of its five reporting units. The results of this test indicated the fair value substantially exceeded carrying value for all reporting units.
In addition, we will continue to assess our existing businesses and initiate efforts to divest businesses that are not considered to be a good long-term strategic fit for the Company. During 2024, we divested two businesses and in 2023, we completed one acquisition and divested two businesses.
In addition, we will continue to assess our existing businesses and initiate efforts to divest businesses that are not considered to be a good long-term strategic fit for the Company. During both 2025 and 2024, we divested two businesses each year.
(Unaudited) 2023 2022 Net sales $ 19,446,524 $ 17,911,409 Net income attributable to common shareholders 1,956,813 1,529,970 The historical consolidated financial information of Parker and Meggitt has been adjusted in the pro forma information in the table above to give effect to events that are directly attributable to the Acquisition and factually supportable.
(Unaudited) 2023 2022 Net sales $ 19,447 $ 17,911 Net income attributable to common shareholders 1,957 1,530 The historical consolidated financial information of Parker and Meggitt has been adjusted in the pro forma information in the table above to give effect to events that are directly attributable to the Acquisition and factually supportable.
Our estimated total liability for environmental matters ranges from a minimum of $85.9 million to a maximum of $259.5 million. The largest range for any one site is approximately $66.5 million.
Our estimated total liability for environmental matters ranges from a minimum of $88 million to a maximum of $290 million. The largest range for any one site is approximately $85 million.
The effects of acquisitions, divestitures and changes in currency exchange rates are removed to allow investors and the Company to meaningfully evaluate the percentage changes in net sales on a comparable basis from period to period. Net Sales Diversified Industrial Segment sales in 2024 decreased $249 million from 2023. The Acquisition increased sales by approximately $115 million.
The effects of divestitures and changes in currency exchange rates are removed to allow investors and the Company to meaningfully evaluate the percentage changes in net sales on a comparable basis from period to period. Net Sales Diversified Industrial Segment sales in 2025 decreased $793 million from 2024. The effect of currency exchange rates decreased sales by approximately $63 million.
A 100 basis point increase in near-term interest rates would increase annual interest expense on variable rate debt, including weighted-average commercial paper borrowings during 2024, by approximately $18 million. 30 Table of Contents ITEM 8 . Financial Statements and Supplementary Data .
A 100 basis point increase in near-term interest rates would increase annual interest expense on variable rate debt, consisting of commercial paper borrowings as of June 30, 2025, by approximately $18 million. 29 Table of Contents ITEM 8 . Financial Statements and Supplementary Data .
For the U.K. defined benefit plans, the overall investment strategy is primarily to utilize growth assets to achieve a return in excess of the risk-free rate and to utilize fixed income investments to achieve a rate of return that is at least commensurate with the changes in the cost of providing fixed and index-linked annuities.
For the overfunded U.K. defined benefit plans, the overall investment strategy primarily focuses on utilizing fixed income investments to achieve a rate of return that is at least commensurate with the changes in the cost of providing fixed and index-linked annuities.
Non-Trade and Notes Receivable - The non-trade and notes receivable caption in the Consolidated Balance Sheet is comprised of the following components: June 30, 2024 2023 Notes receivable $ 93,114 $ 102,288 Accounts receivable, other 238,315 206,879 Total $ 331,429 $ 309,167 Property, Plant and Equipment and Depreciation - Property, plant and equipment are recorded at cost and are depreciated principally using the straight-line method for financial reporting purposes.
Non-Trade and Notes Receivable - The non-trade and notes receivable caption in the Consolidated Balance Sheet is comprised of the following components: June 30, 2025 2024 Notes receivable $ 84 $ 93 Accounts receivable, other 234 238 Total $ 318 $ 331 Property, Plant and Equipment and Depreciation - Property, plant and equipment are recorded at cost and are depreciated principally using the straight-line method for financial reporting purposes.
Divestitures During December 2023, we divested our Filter Resources business, which was part of the Diversified Industrial Segment, for proceeds of $37 million. The resulting pre-tax gain of $12 million is included in gain on sale of businesses and assets, net in the Consolidated Statement of Income.
During September 2023, we divested the MicroStrain sensing systems business, which was part of the Diversified Industrial Segment, for proceeds of $37 million. The resulting pre-tax gain of $13 million is included in gain on sale of businesses and assets, net in the Consolidated Statement of Income.
Business Realignment and Acquisition Integration Charges The Company incurred business realignment and acquisition integration charges in 2024, 2023 and 2022. Business realignment charges included severance costs related to actions taken under the Company's simplification initiative aimed at reducing organizational and process complexity, as well as plant closures.
Business realignment charges included severance costs related to actions taken under the Company's simplification initiative aimed at reducing organizational and process complexity, as well as plant closures. In 2025, 2024 and 2023, a majority of the business realignment charges were incurred in Europe.
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