What changed in Parker Hannifin's 2024 10-K compared to 2023?

Across the narrative sections we track, Parker Hannifin (PH) added 321 paragraphs, removed 368, and edited 252 between the 2023 and 2024 10-K filings. The biggest movers are Item 1C. Cybersecurity (+321/−368).

Did Parker Hannifin update its Cybersecurity disclosure (Item 1C) in 2024?

Item 1C Cybersecurity has 321 paragraph-level changes between the 2023 and 2024 filings.

Where does this PH 10-K diff come from?

The source filings are Parker Hannifin's official 2023 and 2024 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

What changed in Parker Hannifin's 10-K — 2023 vs 2024

Paragraph-level year-over-year comparison of Parker Hannifin's 2023 and 2024 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 2024 report.

+321 added−368 removedSource: 10-K (2024-08-22) vs 10-K (2023-08-24)

Top changes in Parker Hannifin's 2024 10-K

321 paragraphs added · 368 removed · 252 edited across 1 sections

Item 1C. Cybersecurity+321 / −368 · 252 edited

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

252 edited+69 added−116 removed111 unchanged

2023 filing

2024 filing

Biggest changeThe accompanying notes are an integral part of the consolidated financial statements. 40 Table of Contents CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the years ended June 30, (Dollars in thousands) 2023 2022 2021 Net Income $ 2,083,536 $ 1,316,186 $ 1,746,861 Less: Noncontrolling interests in subsidiaries' earnings 600 581 761 Net income attributable to common shareholders 2,082,936 1,315,605 1,746,100 Other comprehensive income (loss), net of tax Foreign currency translation adjustment and other (net of tax of $(38,322), $(3,236) and $(3,664) in 2023, 2022 and 2021, respectively) 186,721 (284,732) 328,792 Retirement benefits plan activity (net of tax of $(26,019), $(95,574) and $(205,845) in 2023, 2022 and 2021, respectively) 63,299 306,735 664,076 Other comprehensive income (loss) 250,020 22,003 992,868 Less: Other comprehensive (loss) income for noncontrolling interests (306) (1,526) 720 Other comprehensive income (loss) attributable to common shareholders 250,326 23,529 992,148 Total Comprehensive Income Attributable to Common Shareholders $ 2,333,262 $ 1,339,134 $ 2,738,248 The accompanying notes are an integral part of the consolidated financial statements. 41 Table of Contents CONSOLIDATED BALANCE SHEET (Dollars in thousands) June 30, 2023 2022 Assets Current Assets Cash and cash equivalents $ 475,182 $ 535,799 Marketable securities and other investments 8,390 27,862 Trade accounts receivable, net 2,827,297 2,341,504 Non-trade and notes receivable 309,167 543,757 Inventories 2,907,879 2,214,553 Prepaid expenses and other 306,314 6,383,169 Total Current Assets 6,834,229 12,046,644 Property, plant and equipment 6,865,545 5,897,955 Less: Accumulated depreciation 4,000,515 3,775,197 Property, plant and equipment, net 2,865,030 2,122,758 Deferred income taxes 81,429 110,585 Investments and other assets 1,104,576 788,057 Intangible assets, net 8,450,614 3,135,817 Goodwill 10,628,594 7,740,082 Total Assets $ 29,964,472 $ 25,943,943 Liabilities and Equity Current Liabilities Notes payable and long-term debt payable within one year $ 3,763,175 $ 1,724,310 Accounts payable, trade 2,050,934 1,731,925 Accrued payrolls and other compensation 651,319 470,132 Accrued domestic and foreign taxes 374,571 250,292 Other accrued liabilities 895,371 1,682,659 Total Current Liabilities 7,735,370 5,859,318 Long-term debt 8,796,284 9,755,825 Pensions and other postretirement benefits 551,510 639,939 Deferred income taxes 1,649,674 307,044 Other liabilities 893,355 521,897 Total Liabilities 19,626,193 17,084,023 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 2023 and 2022 90,523 90,523 Additional capital 305,522 327,307 Retained earnings 17,041,502 15,661,808 Accumulated other comprehensive (loss) (1,292,872) (1,543,198) Treasury shares at cost: 52,613,046 in 2023 and 52,594,956 in 2022 (5,817,787) (5,688,429) Total Shareholders' Equity 10,326,888 8,848,011 Noncontrolling interests 11,391 11,909 Total Equity 10,338,279 8,859,920 Total Liabilities and Equity $ 29,964,472 $ 25,943,943 The accompanying notes are an integral part of the consolidated financial statements. 42 Table of Contents CONSOLIDATED STATEMENT OF CASH FLOWS For the years ended June 30, (Dollars in thousands) 2023 2022 2021 Cash Flows From Operating Activities Net income $ 2,083,536 $ 1,316,186 $ 1,746,861 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 317,416 257,314 269,943 Amortization 500,713 314,450 325,447 Stock incentive plan compensation 142,720 137,093 121,483 Deferred income taxes 91,865 (351,201) (51,500) Foreign currency transaction loss (gain) 45,647 (39,987) (10,948) Loss (gain) on disposal of property, plant and equipment 3,819 (5,727) (109,332) Gain on sale of businesses (366,345) (1,394) — Gain on investments (4,690) (3,972) (12,616) (Gain) loss on marketable securities (1,486) 5,131 (11,570) Other 25,524 70,443 14,424 Changes in assets and liabilities, net of effects from acquisitions and divestitures: Accounts receivable, net (16,675) (179,126) (298,511) Inventories 53,124 (212,134) (85,597) Prepaid expenses and other 1,550 37,630 (25,508) Other assets (109,032) (11,167) (8,779) Accounts payable, trade 91,551 131,384 526,781 Accrued payrolls and other compensation 87,375 (15,524) 72,412 Accrued domestic and foreign taxes 102,476 32,514 36,552 Other accrued liabilities 112,822 999,831 11,397 Pensions and other postretirement benefits (109,481) 1,822 17,875 Other liabilities (72,499) (41,836) 46,187 Net cash provided by operating activities 2,979,930 2,441,730 2,575,001 Cash Flows From Investing Activities Acquisitions (net of cash acquired of $89,704 in 2023) (7,146,110) — — Capital expenditures (380,747) (230,044) (209,957) Proceeds from sale of property, plant and equipment 13,244 39,353 140,590 Proceeds from sale of businesses 473,207 3,366 — Purchase of marketable securities and other investments (37,791) (27,895) (34,809) Maturities and sales of marketable securities and other investments 56,786 31,809 79,419 Payments of deal-contingent forward contracts (1,405,418) — — Other 250,017 (235,426) 24,744 Net cash used in investing activities (8,176,812) (418,837) (13) Cash Flows From Financing Activities Proceeds from exercise of stock options 3,476 2,831 4,684 Payments for common shares (297,323) (460,056) (218,818) Proceeds from (payments of) notes payable, net 357,636 1,422,026 (723,496) Proceeds from long-term borrowings 2,023,400 3,598,056 1,213 Payments for long-term borrowings (2,340,566) (18,737) (1,211,748) Financing fees paid (13,605) (58,629) — Dividends paid (704,054) (569,855) (475,174) Net cash (used in) provided by financing activities (971,036) 3,915,636 (2,623,339) Effect of exchange rate changes on cash (4,776) (23,770) 95,954 Net (decrease) increase in cash and cash equivalents and restricted cash (6,172,694) 5,914,759 47,603 Cash, cash equivalents and restricted cash at beginning of year 6,647,876 733,117 685,514 Cash, cash equivalents and restricted cash at end of year $ 475,182 $ 6,647,876 $ 733,117 Supplemental Data: Cash paid during the year for: Interest $ 464,701 $ 240,313 $ 236,979 Income taxes 411,440 549,223 485,885 The accompanying notes are an integral part of the consolidated financial statements. 43 Table of Contents CONSOLIDATED STATEMENT OF EQUITY (Dollars in thousands) Common Stock Additional Capital Retained Earnings Accumulated Other Comprehensive (Loss) Treasury Shares Noncontrolling Interests Total Balance June 30, 2020 $ 90,523 $ 416,585 $ 13,643,907 $ (2,558,875) $ (5,364,916) $ 14,546 $ 6,241,770 Net income 1,746,100 761 1,746,861 Other comprehensive income 992,148 720 992,868 Dividends paid ($3.67 per share) (474,510) (664) (475,174) Stock incentive plan activity (86,966) 94,311 7,345 Shares purchased at cost (100,000) (100,000) 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 The accompanying notes are an integral part of the consolidated financial statements. 44 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, 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.

Backlog consists of written firm orders from a customer to deliver products and, in the case of blanket purchase orders, only includes the portion of the order for which a schedule or release date has been agreed to with the customer.

The dollar value of backlog is equal to the amount that is expected to be billed to the customer and reported as a sale.

For contracts where revenue is recognized over time, we use the cost-to-cost or units of delivery method depending on the nature of the contract, including length of production time. The estimation of costs and efforts expended requires management's judgment due to the duration of the contractual agreements as well as the technical nature of the products involved.

For contracts where revenue is recognized over time, we use the cost-to-cost, efforts expended or units of delivery method depending on the nature of the contract, including length of production time. The estimation of costs and efforts expended requires management's judgment due to the duration of the contractual agreements as well as the technical nature of the products involved.

Depreciation rates are based on estimated useful lives of the assets, generally 40 years for buildings, 15 years for land improvements and building equipment, seven to 10 years for machinery and equipment, and three to eight years for vehicles and office equipment. Improvements, which extend the useful life of property, are capitalized, and maintenance and repairs are expensed.

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.

For segment reporting purposes, approximately 82 percent of Meggitt's sales are included in the Aerospace Systems Segment, while the remaining 18 percent are included in the Diversified Industrial Segment. Assets acquired and liabilities assumed are recognized at their respective fair values as of the date of the Acquisition.

To reflect the occurrence of the Acquisition on July 1, 2021, the unaudited pro forma information includes adjustments for the amortization of the step-up inventory to fair value and incremental depreciation and amortization expense resulting from the fair value adjustments to property, plant and equipment and intangible assets. These adjustments were based upon a preliminary purchase price allocation.

To reflect the occurrence of the Acquisition on July 1, 2021, the unaudited pro forma information includes adjustments for the amortization of the step-up of inventory to fair value and incremental depreciation and amortization expense resulting from the fair value adjustments to property, plant and equipment and intangible assets. These adjustments were based upon a preliminary purchase price allocation.

Business Segment Information The Company operates in two reportable business segments: Diversified Industrial and Aerospace Systems. Both segments utilize eight core technologies, including hydraulics, pneumatics, electromechanical, filtration, fluid and gas handling, process control, engineered materials and climate control, to drive superior customer problem solving and value creation.

Business Segment Information The Company operates in two reportable business segments: Diversified Industrial and Aerospace Systems. Both segments utilize eight core technologies, including hydraulics, pneumatics, electromechanical, filtration, fluid & gas handling, process control, engineered materials, and climate control, to drive superior customer problem solving and value creation.

Refer to Note 9 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further discussion. We primarily utilize unsecured medium-term notes and senior notes to meet our financing needs and we expect to continue to borrow funds at reasonable rates over the long term.

Refer to Note 10 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further discussion. We primarily utilize unsecured medium-term notes and senior notes to meet our financing needs and we expect to continue to borrow funds at reasonable rates over the long term.

Additional charges may be recognized in future periods related to the business realignment and acquisition integration actions described above, the timing and amount of which are not known at this time. In addition to the business realignment charges discussed above, in 2022, we also incurred $20 million of expense as a result of our exit of business operations in Russia.

Additional charges may be recognized in future periods related to the business realignment and acquisition integration actions described above, the timing and amount of which are not known at this time. In addition to the business realignment charges discussed above, in 2022, we incurred $20 million of expense as a result of our exit of business operations in Russia.

We currently 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 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.

Foreign Currency Translation - Assets and liabilities of foreign subsidiaries are translated at current exchange rates, and income and expenses are translated using weighted-average exchange rates. The effects of these translation adjustments, as well as gains and losses from certain intercompany transactions, are reported in accumulated other comprehensive (loss).

Foreign Currency Translation - Assets and liabilities of foreign subsidiaries are translated at current exchange rates, and income and expenses are translated using weighted-average exchange rates. The effects of these translation adjustments, as well as gains and losses from certain hedging and intercompany transactions, are reported in accumulated other comprehensive (loss).

Any actuarial gains experienced in future years will help offset the effect of the net actuarial loss amortization. Further information on pensions is provided in Note 12 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K. Business Combinations - From time to time, we may enter into business combinations.

Any actuarial gains experienced in future years will help offset the effect of the net actuarial loss amortization. Further information on pensions is provided in Note 13 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K. Business Combinations - From time to time, we may enter into business combinations.

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. 34 Table of Contents ITEM 7A .

Further information on the fair value of these contracts is provided in Note 16 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K. Derivatives that are not designated as hedges are adjusted to fair value by recording gains and losses through the Consolidated Statement of Income.

Further information on the fair value of these contracts is provided in Note 17 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K. Derivatives that are not designated as hedges are adjusted to fair value by recording gains and losses through the Consolidated Statement of Income.

(b) Net sales are attributed to countries based on the location of the selling unit. North America includes the United States, Canada and Mexico. No country other than the United States represents greater than 10 percent of consolidated sales. Long-lived assets are comprised of property, plant and equipment based on physical location. 74 Table of Contents ITEM 9 .

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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2023, 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, 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.

We also reconcile the estimated aggregate fair value of our reporting units resulting from these procedures to our overall market capitalization. At December 31, 2022, 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. 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.

Net sales and segment operating income attributable to Meggitt during 2023 was $2.1 billion and $23 million, respectively. Segment operating income attributable to Meggitt includes estimated amortization and depreciation expense associated with the preliminary fair value estimates of intangible assets, plant and equipment, inventory, as well as acquisition integration charges.

Net sales and segment operating income attributable to Meggitt during 2023 were $2.1 billion and $23 million, respectively. Segment operating income attributable to Meggitt includes estimated amortization and depreciation expense associated with the preliminary fair value estimates of intangible assets, plant and equipment, inventory, as well as acquisition integration charges.

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 2023, 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 2024, the Company did not record any material impairments related to long-lived assets.

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] 20 Table of Contents ITEM 7 . Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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.

Debt assumed includes $900 million aggregate principal amount of private placement notes with fixed interest rates ranging from 2.78 percent to 3.60 percent, and maturity dates ranging from July 2023 to July 2026. The private placement notes were recorded at fair value at acquisition.

Debt assumed included $900 million aggregate principal amount of private placement notes with fixed interest rates ranging from 2.78 percent to 3.60 percent, and maturity dates ranging from July 2023 to July 2026. The private placement notes were recorded at fair value at acquisition.

Transaction costs associated with these acquisitions are expensed as incurred. Subsequent Events - We evaluated subsequent events that have occurred through the date of filing of this Annual Report on Form 10-K for the year ended June 30, 2023.

At June 30, 2023, $0.4 million of expense with respect to nonvested RSU awards granted to the Board of Directors has yet to be recognized and will be amortized into expense over a weighted-average period of approximately three months.

At June 30, 2024, $0.4 million of expense with respect to nonvested RSU awards granted to the Board of Directors has yet to be recognized and will be amortized into expense over a weighted-average period of approximately three months.

Business Realignment and Acquisition Integration Charges The Company incurred business realignment and acquisition integration charges in 2023, 2022 and 2021. Business realignment charges in 2023, 2022, and 2021 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 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.

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 13, or through the issuance of previously unissued common stock.

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.

Stock Incentive Plans The Company's 2016 Omnibus Stock Incentive Plan ("2016 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 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.

The range of payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the programs. We do not reimburse suppliers for any costs they incur for participation in the programs and their participation is completely voluntary.

The range of payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the SCF programs. We do not reimburse suppliers for any costs they incur for participation in the SCF programs and their participation is voluntary.

We also have audited the Company’s internal control over financial reporting as of June 30, 2023, 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, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2023, 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, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

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. 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. 40 Table of Contents Income Taxes - Income taxes are provided based upon income for financial reporting purposes.

The policies discussed below are considered by management to be more critical than other policies because their application places the most significant demands on management's judgment. 32 Table of Contents Revenue Recognition - Revenues are recognized when control of performance obligations, which are distinct goods or services within the contract, is transferred to the customer.

The policies discussed below are considered by management to be more critical than other policies because their application places the most significant demands on management's judgment. Revenue Recognition - Revenues are recognized when control of performance obligations, which are distinct goods or services within the contract, is transferred to the customer.

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.

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.

At June 30, 2023, 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, 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.

We evaluate the collectibility of our receivables based on historical experience and current and forecasted economic conditions based on management's judgment. Additionally, receivables are written off to bad debt when management makes a final determination of uncollectibility. Allowance for credit losses was $32 million and $10 million at June 30, 2023 and 2022, respectively.

We evaluate the collectibility of our receivables based on historical experience and current and forecasted economic conditions based on management's judgment. Additionally, receivables are written off to bad debt when management makes a final determination of uncollectibility. Allowance for credit losses was $21 million and $32 million at June 30, 2024 and 2023, respectively.

U.S. based companies include Parker stock with a fair value of $519 million and $327 million as of June 30, 2023 and 2022, respectively. Fixed income securities are valued using both market observable inputs for similar assets that are traded on an active market and the closing price on the active market on which the individual securities are traded.

U.S. based companies include Parker stock with a fair value of $672 million and $519 million as of June 30, 2024 and 2023, respectively. Fixed income securities are valued using both market observable inputs for similar assets that are traded on an active market and the closing price on the active market on which the individual securities are traded.

The Company’s common stock is listed for trading on the New York Stock Exchange ("NYSE") under the symbol "PH". As of July 31, 2023, the number of shareholders of record of the Company was 3,114. (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, 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 .

We recognized an income tax benefit of $2 million, $4 million and $1 million relating to the issuance of common stock for RSU awards that vested during 2023, 2022 and 2021, respectively. Additionally, we granted RSUs with a one-year vesting period to non-employee members of the Board of Directors.

We recognized an income tax benefit of $3 million, $2 million and $4 million relating to the issuance of common stock for RSU awards that vested during 2024, 2023 and 2022, respectively. Additionally, we granted RSUs with a one-year vesting period to non-employee members of the Board of Directors.

The Company's objective is to maintain a 60/40 mix between fixed rate and variable rate debt thereby limiting its exposure to changes in near-term interest rates. At June 30, 2023, our debt portfolio included $875 million of variable rate debt, exclusive of commercial paper borrowings.

The Company's objective is to maintain a 60/40 mix between fixed rate and variable rate debt thereby limiting its exposure to changes in near-term interest rates. At June 30, 2024, our debt portfolio included $490 million of variable rate debt, exclusive of commercial paper borrowings.

The actual costs we will incur are dependent on final determination of contamination and required remedial action, negotiations with governmental authorities with respect to cleanup levels, changes in regulatory requirements, innovations in investigatory and remedial technologies, effectiveness of remedial technologies employed, the ability of other responsible parties to pay, outcomes of litigation, and any insurance or other third-party recoveries. 72 Table of Contents 18.

Revenue is recognized when control of the individual performance obligations is transferred to the customer. 45 Table of Contents We consider the contractual consideration payable by the customer and assess variable consideration that may affect the total transaction price.

Revenue is recognized when control of the individual performance obligations is transferred to the customer. We consider the contractual consideration payable by the customer and assess variable consideration that may affect the total transaction price.

As of June 30, 2023, $342 million of past years' net actuarial losses related to the Company's domestic qualified defined benefit plan are subject to amortization in the future. These losses will generally be amortized over approximately seven years and will negatively affect earnings in the future.

As of June 30, 2024, $331 million of past years' net actuarial losses related to the Company's domestic qualified defined benefit plan are subject to amortization in the future. These losses will generally be amortized over approximately seven years and will negatively affect earnings in the future.

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 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. 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.

In 2023, 2022 and 2021, we recognized stock-based compensation expense of $1.9 million, $1.8 million and $1.5 million, respectively, relating to these awards. During 2023, 2022 and 2021, we recognized an income tax (cost) benefit of $(0.02) million, $0.2 million and $2.1 million, respectively, related to the vesting of Board of Directors RSU awards.

In 2024, 2023 and 2022, we recognized stock-based compensation expense of $1.7 million, $1.9 million and $1.8 million, respectively, relating to these awards. During 2024, 2023 and 2022, we recognized an income tax benefit (cost) of $0.1 million, $(0.02) million and $0.2 million, respectively, related to the vesting of Board of Directors RSU awards.

There were no accrued penalties related to the gross unrecognized tax benefits as of June 30, 2022 and 2021.

There were no accrued penalties related to the gross unrecognized tax benefits as of June 30, 2022.

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. CRITICAL ACCOUNTING POLICIES 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 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.

We are in compliance, and expect to remain in compliance, with all covenants set forth in the credit agreement and indentures. 31 Table of Contents Our goal is to maintain an investment-grade credit profile. The rating agencies periodically update our credit ratings as events occur.

We are in compliance, and expect to remain in compliance, with all covenants set forth in the credit agreement and indentures. Our goal is to maintain an investment-grade credit profile. The rating agencies periodically update our credit ratings as events occur.

For each nonvested RSU, recipients are entitled to receive a dividend equivalent, payable in cash or common shares, equal to the cash dividend per share paid to common shareholders. 68 Table of Contents The fair value of each RSU award granted in 2023, 2022 and 2021 was based on the fair market value of our common stock on the date of grant.

For each nonvested RSU, recipients are entitled to receive a dividend equivalent, payable in cash or common shares, equal to the cash dividend per share paid to common shareholders. The fair value of each RSU award granted in 2024, 2023 and 2022 was based on the fair market value of our common stock on the date of grant.

Exchange (gains) losses from transactions in a currency other than the local currency of the entity involved are included within the other expense (income), net caption in the Consolidated Statement of Income and were $46 million, $(40) million and $(11) million, in 2023, 2022 and 2021, respectively. Business Combinations - From time to time, we may enter into business combinations.

Exchange (gains) losses from transactions in a currency other than the local currency of the entity involved are included within other (income) expense, net in the Consolidated Statement of Income and were $(38) million, $46 million and $(40) million, in 2024, 2023 and 2022, respectively. Business Combinations - From time to time, we may enter into business combinations.

We continue to manage the impact of the inflationary cost environment through a variety of cost and pricing measures, including continuous improvement and lean initiatives. Additionally, we strategically manage our workforce and discretionary spending. At the same time, we are appropriately addressing the ongoing needs of our business so that we continue to serve our customers.

We are monitoring inflation and manage its impact through a variety of cost and pricing measures, including continuous improvement and lean initiatives. Additionally, we strategically manage our workforce and discretionary spending. At the same time, we are appropriately addressing the ongoing needs of our business so that we continue to serve our customers.

Pre-production expense incurred in connection with development contracts amounted to $73 million in 2023, $74 million in 2022 and $54 million in 2021. 16. Financial Instruments The Company’s financial instruments consist primarily of cash and cash equivalents, marketable securities and other investments, accounts receivable and long-term investments, as well as obligations under accounts payable, trade, notes payable and long-term debt.

Pre-production expense incurred in connection with development contracts amounted to $45 million in 2024, $73 million in 2023 and $74 million in 2022. 17. Financial Instruments The Company’s financial instruments consist primarily of cash and cash equivalents, marketable securities and other investments, accounts receivable and long-term investments, as well as obligations under accounts payable, trade, notes payable and long-term debt.

Based on the Company’s rating level at June 30, 2023, 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, 2023, the Company's debt to debt-shareholders' equity ratio was 0.55 to 1.0.

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.

The accrued interest related to the gross unrecognized tax benefits, excluded from the amounts above, was $21 million, $18 million, and $18 million as of June 30, 2023, 2022 and 2021, respectively. The accrued penalties related to the gross unrecognized tax benefits, excluded from the amounts above, was $2 million as of June 30, 2023.

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.

Refer to Note 16 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further discussion. Gain on disposal of assets in 2023 includes a gain on the sale of the aircraft wheel and brake business within the Aerospace Systems Segment of $374 million.

Refer to Note 17 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further discussion. Gain on sale of businesses and assets, net includes a gain on the sale of the aircraft wheel and brake business within the Aerospace Systems Segment of approximately $374 million in 2023.

For tax purposes, Meggitt's goodwill is not deductible. Based upon a preliminary acquisition valuation, we acquired $4.3 billion of customer-related intangible assets, $1.1 billion of technology and $304 million of trade names, each with weighted average estimated useful lives of 22, 21 and 18 years, respectively.

For tax purposes, Meggitt's goodwill is not deductible. Based upon a final acquisition valuation, we acquired $4.2 billion of customer-related intangible assets, $1.1 billion of technology and $303 million of trade names, each with weighted-average estimated useful lives of 21, 22 and 18 years, respectively.

Loss on deal-contingent forward contracts includes losses on the deal-contingent forward contracts related to the Acquisition. Refer to Note 16 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further discussion.

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. 24 Table of Contents Loss on deal-contingent forward contracts includes losses on the deal-contingent forward contracts related to the Acquisition.

Business Realignment Within the Aerospace Systems Segment, we incurred acquisition integration and business realignment charges of $90 million in 2023. We expect to incur approximately $27 million in business realignment and acquisition integration charges in 2024. However, continually changing business conditions could impact the ultimate costs we incur.

Business Realignment Within the Aerospace Systems Segment, we incurred acquisition integration and business realignment charges of $35 million and $90 million in 2024 and 2023, respectively. We expect to incur approximately $12 million in acquisition integration charges in 2025. However, continually changing business conditions could impact the ultimate costs we incur.

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 2023, by approximately $25 million. 35 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, including weighted-average commercial paper borrowings during 2024, by approximately $18 million. 30 Table of Contents ITEM 8 . Financial Statements and Supplementary Data .

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.

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.

The Company recognized $63 million, $57 million and $42 million in expense related to the RIA in 2023, 2022 and 2021, respectively. In September 2023, we acquired several defined contribution plans, relating to the Meggitt acquisition, which are comprised of similar company matching contributions and RIA features as our legacy plan.

The Company recognized $77 million, $63 million and $57 million in expense related to the RIA in 2024, 2023 and 2022, respectively. In September 2022, we acquired several defined contribution plans relating to the Meggitt acquisition, which were comprised of similar company matching contributions and RIA features as our legacy plan.

The Company makes these statements as of the date of the filing of its Annual Report on Form 10-K for the year ended June 30, 2023, and undertakes no obligation to update them unless otherwise required by law. 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, 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 Diversified Industrial Segment is an aggregation of several business units, which manufacture motion-control and fluid power system components for builders and users of various types of manufacturing, packaging, processing, transportation, agricultural, construction, and military vehicles and equipment. Contracts consist of individual purchase orders for standard product, blanket purchase orders and production contracts.

The Diversified Industrial Segment is an aggregation of several business units, which manufacture a broad range of motion-control systems and components for builders and users of various types of manufacturing, packaging, processing, transportation, agricultural, construction, and military vehicles and equipment. Contracts consist of individual purchase orders for standard product, blanket purchase orders and production contracts.

Page Number in Form 10-K Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34) 37 Financial Statements Consolidated Statement of Income 40 Consolidated Statement of Comprehensive Income 41 Consolidated Balance Sheet 42 Consolidated Statement of Cash Flows 43 Consolidated Statement of Equity 44 Notes to Consolidated Financial Statements 45 36 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, 2023 and 2022, the related consolidated statements of income, comprehensive income, cash flows, and equity, for each of the three years in the period ended June 30, 2023, 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) 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").

Limited Partnerships' interest in venture capital investments are measured at fair value based on net asset value as determined by the respective fund investment. A certain limited partnership investment, for which the lock-up period expired June 30, 2022, is restricted to a maximum redemption of 20 percent of its account balance every six months upon a 90-day notification period.

Limited Partnerships' interest in venture capital investments are measured at fair value based on net asset value as determined by the respective fund investment. A certain limited partnership investment is restricted to a maximum redemption of 20 percent of its account balance every six months upon a 90-day notification period.

Refer to the Cash Flows section above and Note 16 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further discussion.

Refer to the Cash flows from financing activities section above and Note 11 of the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for further discussion.

At June 30, 2023, $18 million of expense with respect to nonvested RSU awards has yet to be recognized and will be amortized into expense over a weighted-average period of approximately 21 months. The total fair value of RSU awards vested during 2023, 2022 and 2021 was $30 million, $26 million and $21 million, respectively.

At June 30, 2024, $19 million of expense with respect to nonvested RSU awards has yet to be recognized and will be amortized into expense over a weighted-average period of approximately 23 months. The total fair value of RSU awards vested during 2024, 2023 and 2022 was $28 million, $30 million and $26 million, respectively.

Effective January 1, 2022, the Company matching contributions were increased, up to a maximum of five percent of eligible compensation from the previous maximum of four percent of eligible compensation. These contributions are recorded as compensation expense.

The ESOP is available to eligible domestic employees. Effective January 1, 2022, the Company matching contributions were increased, up to a maximum of five percent of eligible compensation from the previous maximum of four percent of eligible compensation. These contributions are recorded as compensation expense.

Extensive audit effort is performed due to the volume of the underlying transactions and number of individual business units. High levels of auditor judgment were necessary to determine the nature, timing, and extent of audit procedures performed to audit revenue recorded as a result of product shipments.

Extensive audit effort is required due to the volume of the underlying transactions and number of individual business units. High levels of auditor judgment were necessary to determine the nature, timing, and extent of audit procedures performed to audit revenue from product shipments.

Most of our manufacturing facilities remain capable of handling volume increases. 19 Table of Contents ITEM 3 . Legal Proceedings . None.

Most of our manufacturing facilities remain capable of handling volume increases. ITEM 3 . Legal Proceedings . None.

All intercompany transactions and profits have been eliminated in the consolidated financial statements. The Company does not have off-balance sheet arrangements. Within the business segment information, inter-segment and inter-area sales have been eliminated. Revenue Recognition - Revenues are recognized when control of performance obligations, which are distinct goods or services within the contract, is transferred to the customer.

The Company does not have off-balance sheet arrangements. Within the business segment information, inter-segment and inter-area sales have been eliminated. Revenue Recognition - Revenues are recognized when control of performance obligations, which are distinct goods or services within the contract, is transferred to the customer.

The fair value of liabilities assumed includes $118 million and $90 million of operating and finance lease liabilities, respectively, of which, $19 million and $1 million of operating and finance lease liabilities, respectively, are current liabilities.

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 forward exchange and costless collar contracts, as well as the cross-currency swap contracts acquired as part of the Acquisition, are adjusted to fair value by recording gains and losses through the cost of sales caption in the Consolidated Statement of Income.

The forward exchange, costless collar, and deal-contingent forward contracts, as well as the cross-currency swap contracts acquired as part of the Acquisition, are adjusted to fair value by recording gains and losses through the other (income) expense, net caption in the Consolidated Statement of Income.

Assets held in the U.S. defined benefit plan account for approximately 65 percent 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 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.

During 2023, approximately $47 million of revenue was recognized that was included in the contract liabilities at June 30, 2022.

During 2024, approximately $178 million of revenue was recognized that was included in the contract liabilities at June 30, 2023.

During 2021, the U.S. defined benefit plan implemented a new liability-hedging initiative that requires the plan to maintain a certain cash balance. At June 30, 2023, this required cash balance totaled approximately $49 million. Equity securities are valued at the closing price reported on the active market on which the individual securities are traded.

The U.S. defined benefit plan uses a liability-hedging initiative that requires the plan to maintain a certain cash balance. At June 30, 2024, this required cash balance totaled approximately $51 million. Equity securities are valued at the closing price reported on the active market on which the individual securities are traded.

It is not practicable to estimate the additional taxes, including applicable foreign withholding taxes, that might be payable on the potential distribution of such permanently reinvested foreign earnings. 54 Table of Contents A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: 2023 2022 2021 Balance July 1 $ 90,669 $ 100,759 $ 86,277 Additions for tax positions related to current year 9,389 7,039 10,145 Additions for tax positions of prior years 6,171 1,415 10,320 Additions for acquisitions 25,957 — 2,376 Reductions for tax positions of prior years (3,063) (140) (1,996) Reductions for settlements (6,923) (3,127) (7,165) Reductions for expiration of statute of limitations (11,199) (6,647) (2,252) Effect of foreign currency translation 2,502 (8,630) 3,054 Balance June 30 $ 113,503 $ 90,669 $ 100,759 The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $114 million, $91 million and $101 million as of June 30, 2023, 2022 and 2021, respectively.

It is not practicable to estimate the additional taxes, including applicable foreign withholding taxes, that might be payable on the potential distribution of such permanently reinvested foreign earnings. 48 Table of Contents A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: 2024 2023 2022 Balance July 1 $ 113,503 $ 90,669 $ 100,759 Additions for tax positions related to current year 6,479 9,389 7,039 Additions for tax positions of prior years — 6,171 1,415 Additions for acquisitions 4,195 25,957 — Reductions for tax positions of prior years (4,869) (3,063) (140) Reductions for settlements — (6,923) (3,127) Reductions for expiration of statute of limitations (15,019) (11,199) (6,647) Effect of foreign currency translation (2,185) 2,502 (8,630) Balance June 30 $ 102,104 $ 113,503 $ 90,669 The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $102 million, $114 million and $91 million as of June 30, 2024, 2023 and 2022, respectively.

Repurchases may be funded primarily from operating cash flows and commercial paper borrowings and the shares are initially held as treasury shares. The number of common shares repurchased at the average purchase price follows: 2023 2022 2021 Shares repurchased 663,599 1,281,818 331,259 Average price per share, including commissions $ 301.39 $ 296.71 $ 301.88 14.

Repurchases may be funded primarily from operating cash flows and commercial paper borrowings and the shares are initially held as treasury shares. The number of common shares repurchased at the average purchase price follows: 2024 2023 2022 Shares repurchased 438,229 663,599 1,281,818 Average price per share, including commissions $ 456.38 $ 301.39 $ 296.71 15.

Based on our rating level at June 30, 2023, 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, 2023, our debt to debt-shareholders' equity ratio was 0.55 to 1.0. We are in compliance with all covenants. 10.

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.

During 2023, 2022 and 2021, we recognized an income tax benefit of $4 million, $5 million and $2 million, respectively, relating to the LTIP. 15. Research and Development Independent research and development costs amounted to $258 million in 2023, $191 million in 2022 and $205 million in 2021.

During 2024, 2023 and 2022, we recognized an income tax benefit of $5 million, $4 million and $5 million, respectively, relating to the LTIP. 16. Research and Development Independent research and development costs amounted to $253 million in 2024, $258 million in 2023 and $191 million in 2022.

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