Parker-Hannifin (PH) 10-K risk factor changes: FY2020 vs FY2019

Among the economic factors which may have such an effect are manufacturing and other end-market activity, [added: global pandemics,] currency exchange rates, air travel trends, difficulties entering new markets, tariffs and governmental trade and monetary policies, and general economic conditions such as inflation, deflation, interest rates and credit availability.

Our net sales derived from customers outside the United States were approximately [removed: 39%] [added: 37 percent] in [removed: 2019, 41%] [added: 2020, 39 percent] in [removed: 2018] [added: 2019] and [removed: 40%] [added: 41 percent] in [removed: 2017.][added: 2018.]

We are subject to risks relating to acquisitions and joint ventures, and risks relating to the integration of acquired companies, including risks related to the integration of CLARCOR Inc. [removed: ("Clarcor") and the proposed acquisitions of] [added: ("Clarcor"),] Lord [added: Corporation ("Lord")] and [removed: Exotic.][added: Exotic Metals Forming Company ("Exotic").]

For example, we have devoted significant management attention and resources to integrating the business and operations of [removed: Clarcor.][added: Clarcor, Lord and Exotic.]

We may [removed: encounter] [added: encounter,] or have [removed: encountered] [added: encountered,] the following difficulties during the integration [removed: process of Clarcor:][added: process:]

| • | the consequences of a change in tax treatment, including the cost of integration and compliance and the possibility that the full benefits anticipated to result from the [removed: Clarcor acquisition] [added: acquisitions] may not be realized; |

| • | challenges of integrating complex systems, technologies, networks, and other assets of [removed: Clarcor] [added: the acquired companies] in a manner that minimizes any adverse impact or disruptions to customers, suppliers, employees, and other constituencies; and |

Our results may be adversely affected if expanded operations from the acquisition of [removed: Clarcor or the proposed acquisitions of] [added: Clarcor,] Lord and Exotic are not effectively managed.

Our [removed: acquisition of Clarcor] [added: recent acquisitions have] greatly expanded the size and complexity of our business.

There can be no assurance of successful management of these matters or that we will realize the expected benefits of the [removed: acquisition of Clarcor or the proposed acquisitions of Lord and Exotic.][added: acquisitions.]

If these systems, or any part of the systems, are damaged, intruded upon, attacked, shutdown or cease to function properly (whether by planned upgrades, force majeure, telecommunications failures, hardware or software break-ins or viruses, or other cybersecurity incidents) and we suffer any resulting interruption in our ability to manage and operate our business or if our products are [removed: effected,] [added: affected,] our results of operations and financial condition [removed: could be materially adversely affected.]

Demand for and supply of our products [added: has been and] may be adversely affected by numerous factors, some of which we cannot predict or control.

| • | changes in business relationships with and purchases by or from major customers, suppliers or distributors, including delays or cancellations in shipments, disputes regarding contract terms or significant changes in financial condition, and changes in contract cost and revenue estimates for new development [removed: programs;] [added: programs, including changes as a result of the COVID-19 pandemic;] |

| • | declines in the general level of industrial [removed: production;] [added: production, including as a result of the COVID-19 pandemic;] |

| • | weakness in the end-markets we [removed: serve;] [added: serve, including as a result of the COVID-19 pandemic;] |

Furthermore, [removed: recently implemented] changes to United States and other countries' tariff and import/export regulations [added: have in the past and] may [added: in the future] have a negative impact on the availability and pricing of raw materials.

[removed: Parker is] [added: We are] subject to income taxes in the U.S. and various non-U.S. jurisdictions.

Our intellectual property may be [removed: challenged] [added: challenged, stolen] or [added: otherwise] infringed upon by third parties or we may be unable to maintain, renew or enter into new license agreements with third-party owners of intellectual property on reasonable terms.

In addition, the global nature of our business increases the risk that our intellectual property may be subject to [removed: infringement] [added: infringement, theft] or other unauthorized use or disclosure by others.

Unauthorized use or disclosure of our intellectual property rights or our inability to [added: protect intellectual property and] preserve [removed: existing] [added: associated] intellectual property rights could [added: lead to reputational harm and/or] adversely impact our competitive position and results of operations.

We have incurred significant indebtedness, and may incur additional debt for acquisitions, operations, research and development and capital [removed: expenditures.][added: expenditures, or for other reasons related to our overall capital deployment strategy.]

The novel coronavirus ("COVID-19") pandemic has disrupted our operations and could have a material adverse effect on our business and financial condition.

The COVID-19 pandemic, along with the response to the pandemic by governmental and other actors, has disrupted our operations and is expected to continue to negatively impact our operations in the future, which impact may be material.

We have experienced, and may continue to experience, mandatory and voluntary facility closures in certain jurisdictions in which we operate.

Furthermore, several of our customers temporarily suspended their operations and we have experienced less demand for our products.

Disruptions to our customers in the aerospace industry, which is facing the consequences of travel

restrictions and severely diminished demand, have been and are expected to continue to be especially challenging.

Additionally, the COVID-19 outbreak has, and could further, disrupt our supply chain.

Facility closures or other restrictions, as well as supply chain disruptions, could materially adversely affect our ability to adequately staff, supply or otherwise maintain our operations.

Moreover, because certain of our employees have transitioned to working from home, we may be subject to increased vulnerability to cyber and other information technology risks.

We have modified, and may further modify, our business practices in response to the risks and negative impacts associated with the COVID-19 pandemic.

However, there can be no assurance that these measures will be temporary or successful.

The impact of the COVID-19 pandemic continues to evolve and its ultimate duration, severity and disruption to our business, customers and supply chain, and the related financial impact to us, cannot be accurately forecasted at this time.

Should such disruption continue for an extended period, the adverse effect on our business, results of operations and financial condition could be more severe than previously anticipated.

Additionally, continued weak economic conditions generally could result in impairment in value of our tangible or intangible assets.

Furthermore, future public health crises are possible and could involve some or all of the risks discussed above.

| • | public health crises, including pandemics; |

could be materially adversely affected.

As a result of the COVID-19 pandemic, certain of our employees have transitioned to working from home, which may increase our vulnerability to cyber and other information technology risks.

| | |

| --- | --- |

For example, although we expect to realize certain benefits as a result of our proposed acquisitions of Lord and Exotic, there is the possibility that we may not complete these proposed acquisitions or that following our acquisitions of Lord and Exotic we may be unable to successfully integrate those businesses in order to realize the anticipated benefits of the acquisitions or to do so within the intended timeframe.

Uncertainties associated with our proposed acquisitions of Lord and Exotic may also cause a loss of management personnel and other key employees, which could adversely affect our future business, operations and financial results.

The risks and uncertainties of our proposed acquisitions of Lord and Exotic include, among others:

| • | the occurrence of any event, change or other circumstances that could delay the closing of the proposed transactions; |

| • | the possibility of non-consummation of the proposed transactions and termination of the acquisition agreements; |

| • | the failure to satisfy any of the conditions to the proposed transactions set forth in the acquisition agreements; the possibility that a governmental entity may prohibit the consummation of the proposed transactions or may delay or refuse to grant a necessary regulatory approval in connection with the proposed transactions or that in order for the parties to obtain any such regulatory approvals, conditions are imposed that adversely affect the anticipated benefits from the proposed transactions or cause the parties to abandon the proposed transactions; |

| • | adverse effects on our common stock or other securities because of the failure to complete the proposed transactions; |

| • | business disruptions due to transaction-related uncertainty or other factors making it more difficult to maintain relationships with employees, business partners or governmental entities; |

| • | the possibility that the expected synergies and value creation from the proposed transactions will not be realized or will not be realized within the expected time period; |

| • | the parties being unable to successfully implement integration strategies; and |

| • | and significant transaction costs related to the proposed transactions. |

The proposed acquisitions of Lord and Exotic would further expand the size and complexity of our business.

| • | global economic and political factors, including [added: the impact of the global outbreak of COVID-19 and governmental and other actions taken in response,] manufacturing activity, air travel trends, currency exchange rates and monetary policy, trade policy and tariffs, difficulties entering new markets and general economic conditions such as inflation, deflation, interest rates and credit [removed: availability;] [added: availability, as well as uncertainties associated with the timing and conditions surrounding the return to service of the Boeing 737 MAX;] |

| • | our ability to identify acceptable strategic acquisition targets; uncertainties surrounding timing, successful completion or integration of acquisitions and similar transactions, including the [removed: integration of CLARCOR Inc. ("Clarcor") and the proposed acquisitions] [added: integrations] of [removed: LORD Corporation ("Lord")] [added: Clarcor, Lord] and EMFCO Holdings Incorporated, parent company of [removed: Exotic Metals Forming Company LLC ("Exotic");] [added: Exotic; and our] ability to successfully divest businesses planned for divestiture and realize the anticipated benefits of such divestitures; |

| • | our ability to effectively manage expanded operations from the [removed: acquisition of Clarcor or the proposed] acquisitions of [added: Clarcor,] Lord and Exotic; |

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, [removed: 2019,] [added: 2020,] and undertakes no obligation to update them unless otherwise required by law.

| | June 30, [removed: 2019] [added: 2020] | | | March 31, [removed: 2019] [added: 2020] | | | June 30, [removed: 2018] [added: 2019] | |

| United States | [removed: 50.6] [added: 52.6] | | | [removed: 55.3] [added: 49.1] | | | [removed: 60.2] [added: 50.6] | |

| Eurozone countries | [removed: 47.6] [added: 47.4] | | | [removed: 47.5] [added: 44.5] | | | [removed: 54.9] [added: 47.6] | |

Global aircraft miles flown [removed: increased] [added: decreased] by approximately [removed: four] [added: 45] percent and global revenue passenger miles [removed: increased] [added: decreased by] approximately [removed: five] [added: 52] percent from their comparable [removed: 2018] [added: 2019] levels.

The Company anticipates that U.S. Department of Defense spending with [removed: regards] [added: regard] to appropriations and operations and maintenance for the U.S. Government's fiscal year [removed: 2019] [added: 2020] will increase by approximately [removed: four] [added: two] percent from its fiscal [removed: 2018] [added: 2019] level.

Housing starts in June [removed: 2019] [added: 2020] were [removed: 10] [added: approximately two] percent [removed: higher] [added: lower] than housing starts in March [removed: 2019] [added: 2020] and [removed: six] [added: approximately four] percent [removed: higher] [added: lower] than housing starts in June [removed: 2018.][added: 2019.]

[removed: We] [added: In the long-term, we] believe many opportunities for profitable growth are available.

[removed: In addition, we will] [added: We] continue to assess our existing businesses and [added: may] initiate efforts to divest businesses that are not considered to be a good long-term strategic fit for the Company.

Discussion of the [removed: 2017] [added: 2018] financial statements is included in Part II, Item 7 of the Company's [removed: 2018] [added: 2019] Annual Report on Form 10-K.

The Consolidated Statement of Income summarizes the Company's operating [removed: performance over the last three years.][added: performance.]

The discussion below compares the operating performance in [removed: 2019] [added: 2020] and [removed: 2018.][added: 2019.]

| (dollars in millions) | | [removed: 2019] [added: 2020] | | | | [removed: 2018] [added: 2019] | | |

| Net sales | | $ | [removed: 14,320] [added: 13,696] | | | $ | [removed: 14,302] [added: 14,320] | |

| Gross profit margin | | [removed: 25.3] [added: 24.9] | | % | | [removed: 24.9] [added: 25.3] | | % |

| Selling, general and administrative expenses | | $ | [removed: 1,544] [added: 1,657] | | | $ | [removed: 1,640] [added: 1,544] | |

| Selling, general and administrative expenses, as a percent of sales | | [removed: 10.8] [added: 12.1] | | % | | [removed: 11.5] [added: 10.8] | | % |

| Interest expense | | $ | [removed: 190] [added: 308] | | | $ | [removed: 214] [added: 190] | |

| Other (income) expense, net | | [removed: (61] [added: (67] | | ) | | [removed: 13] [added: (61] | | [added: )] |

| [removed: Loss (gain)] [added: (Gain) loss] on disposal of assets | | [removed: 11] [added: (1] | | [added: )] | | [removed: (4] [added: 11] | | [removed: )] |

| Effective tax rate | | [removed: 21.7] [added: 20.2] | | % | | [removed: 37.7] [added: 21.7] | | % |

| Net income attributable to common shareholders | | $ | [removed: 1,512] [added: 1,206] | | | $ | [removed: 1,061] [added: 1,512] | |

The effect of currency rate changes decreased net sales in [removed: 2019] [added: 2020] by approximately [removed: $305] [added: $167] million, of which [removed: $285] [added: $152] million was attributable to the Diversified Industrial International operations.

[removed: Included in cost of sales in 2019 and 2018 were] [added: SG&A also included] business realignment [added: and acquisition integration] charges of [removed: $14.7] [added: $38] million and [removed: $44.9 million,] [added: $13 million in 2020 and 2019,] respectively.

These [removed: benefits] [added: expenses] were partially offset by [removed: an increase in acquisition-related expenses and higher] [added: a] net [removed: expense] [added: benefit] associated with the Company's deferred compensation [removed: program] [added: plan] and related investments.

| Expense (income) | | [removed: 2019] [added: 2020] | | | | [removed: 2018] [added: 2019] | | |

| Income related to equity method investments | | $ | [removed: (93] [added: (75] | ) | | $ | [removed: (50] [added: (93] | ) |

| Non-service components of retirement benefit cost | | [removed: 40] [added: 49] | | | | [removed: 42] [added: 40] | | |

| Interest income | | [removed: (18] [added: (31] | | ) | | [removed: (15] [added: (18] | | ) |

| Other items, net | | [removed: 10] [added: (10] | | [added: )] | | [removed: (5] [added: 10] | | [removed: )] |

Effective tax rate in [removed: 2019] [added: 2020] was lower than [removed: 2018] [added: 2019] primarily due to [removed: the net impact of] [added: favorable] one-time adjustments that were recorded in the [removed: prior] [added: current] year as a result of [removed: the U.S. Tax Cuts and Jobs Act ("TCJ Act") and the reduced U.S. income tax rate in the current year resulting from enactment of the TCJ Act.][added: a favorable foreign audit settlement.]

The Business Segment information presents [removed: sales,] [added: sales and] operating income [removed: and assets] on a basis that is consistent with the manner in which the Company's various businesses are managed for internal review and decision-making.

| North America | | $ | [removed: 6,809] [added: 6,456] | | | $ | [removed: 6,727] [added: 6,809] | |

| International | | [removed: 5,001] [added: 4,505] | | | | [removed: 5,260] [added: 5,001] | | |

| North America | | [removed: 1,139] [added: 986] | | | | [removed: 1,076] [added: 1,139] | | |

| International | | [removed: 805] [added: 675] | | | | [removed: 765] [added: 805] | | |

| North America | | [removed: 16.7] [added: 15.3] | | % | | [removed: 16.0] [added: 16.7] | | % |

| China | 51.2 | | | 50.1 | | | 49.4 | |

| Brazil | 51.6 | | | 48.4 | | | 51.0 | |

During 2020, the World Health Organization declared the recent outbreak COVID-19 a pandemic.

Given the unpredictable nature of COVID-19's impact on the global economy, the statistics included above may not be reflective of recent or future activity.

We are actively monitoring the impact of the COVID-19 outbreak, which has negatively impacted, and we expect will continue to negatively impact, our business and results of operations.

Disruption within the aerospace industry, which is facing the consequences of travel restrictions and considerably lower demand, was significant and is expected to continue.

The ultimate extent to which our business and results of operations will be impacted by the outbreak will depend largely on future developments, which are highly uncertain and cannot be accurately predicted at this time, including new information which may emerge concerning the severity of the outbreak and actions by government authorities to contain the outbreak or mitigate its economic, public health and other impacts.

We took immediate and aggressive action to minimize the spread of COVID-19 in our workplaces and are taking measures to preserve cash and reduce costs, including but not limited to, global salary reductions, reduced work schedules, elimination of discretionary spending, targeted restructuring and limiting capital expenditures to safety-related issues and strategic investments.

At the same time, we are appropriately addressing the ongoing needs of our business so that we may continue to serve our customers.

During 2020, the Company completed the Lord and Exotic acquisitions, which are further discussed in Note 3 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Net sales in 2020 decreased from the 2019 amount due to lower volume in all segments, partially offset by an increase in sales from acquisitions made within the last 12 months of $949 million.

Gross profit margin (calculated as net sales less cost of sales, divided by net sales) decreased slightly in 2020.

Lower volume and current-year acquisition-related expenses of $69 million were partially offset by lower operating costs resulting from current and prior-year business realignment, acquisition integration and simplification activities, lower raw material costs and favorable product mix.

Additionally, cost of sales included business realignment and acquisition integration charges of $60 million in 2020 compared to $15 million in 2019.

Gross profit margin in 2020 benefited from a foreign currency transaction gain of $10 million compared to a loss of $6 million in 2019.

Selling, general and administrative expenses ("SG&A") increased seven percent in 2020 primarily due to acquisition-related transaction costs of $119 million in the current year compared to $17 million in 2019 and higher intangible asset amortization expense related to the Lord and Exotic acquisitions.

Additionally, SG&A benefited from lower discretionary spending and wage and salary expense as a result of actions taken in response to the current business conditions resulting from the COVID-19 outbreak.

Interest expense in 2020 increased due to a higher average interest rate and higher average debt outstanding.

| | | $ | (67 | ) | | $ | (61 | ) |

(Gain) loss on disposal of assets in 2020 and 2019 includes gains on the sale of real estate of $12 million and $11 million, respectively, with the remainder relating to net losses on divestitures and asset sales and writedowns.

| (dollars in millions) | | 2020 | | | | 2019 | | |

| | | 2020 | |

| Acquisitions | | 6.0 | % |

| Currency | | (0.2 | )% |

| Acquisitions | | 4.1 | % |

| Currency | | (3.1 | )% |

| Acquisitions | | 5.2 | % |

| Currency | | (1.4 | )% |

This decrease was partially offset by an increase in end-user demand in the life sciences market.

Acquisitions increased sales by approximately $203 million in 2020.

Excluding acquisitions and the effect of currency rate changes, sales in 2020 for the Diversified Industrial International operations decreased 10.9 percent from 2019 levels primarily due to lower demand from distributors and end users in both the mobile and industrial markets.

During 2020, Europe, the Asia Pacific region, and Latin America accounted for approximately 68 percent, 28 percent, and four percent, respectively, of the decrease in sales.

Within the Asia Pacific region, the decrease in sales was primarily due to lower demand from distributors as well as end users in the construction equipment, railroad equipment, telecommunications and machine tool markets.

This decrease was partially offset by an increase in end-user demand in the semiconductor, mining and engine markets.

These costs were partially offset by lower discretionary spending, lower wage and salary expense, favorable product mix, lower raw material costs, benefits from current-year and prior-year business realignment and simplification actions, and prior-year pricing actions.

| (dollars in millions) | | 2020 | | | | 2019 | | |

Current-year acquisition integration charges relate to the Lord acquisition.

Prior-year acquisition integration charges relate to the 2017 acquisition of Clarcor.

During 2020, business realignment charges also include permanent workforce reductions to address the impact of COVID-19 on our business.

However, continually changing business conditions could impact the ultimate costs we incur.

| China | 49.4 | | | 50.8 | | | 51.0 | |

| Brazil | 51.0 | | | 52.8 | | | 49.8 | |

Net sales in 2019 increased slightly from the 2018 amount.

This change was a result of an increase in volume, primarily in the Aerospace Systems Segment, partially offset by the effect of currency rate changes.

Gross profit margin (calculated as net sales less cost of sales, divided by net sales) increased in 2019 primarily due to higher margins in the Aerospace Systems Segment driven by increased aftermarket and original equipment manufacturer ("OEM") volume and profitability and lower engineering development costs.

Lower operating costs in the Diversified Industrial Segment resulting from prior-year business realignment and acquisition integration activities and the Company's simplification initiative also contributed to higher margins in 2019.

Foreign currency transaction loss included in cost of sales for 2019 and 2018 was $5.9 million and $7.3 million, respectively.

Selling, general and administrative expenses decreased 5.9 percent in 2019 primarily due to the benefits from prior-year business realignment and acquisition integration activities and the Company's simplification initiative, lower amortization expense and lower incentive compensation.

Included in selling, general and administrative expenses in 2019 and 2018 were business realignment charges of $13.2 million and $36.8 million, respectively.

Interest expense in 2019 decreased primarily due to lower weighted-average interest rates, partially offset by higher weighted-average borrowings.

| Sale and writedown of investments | | — | | | | 41 | | |

| | | $ | (61 | ) | | $ | 13 | |

Loss (gain) on disposal of assets in 2018 includes a loss of $20 million on the sale of a business and a gain of $28 million on the sale of real estate.

| | | 2019 | |

| Divestitures | | (0.3 | )% |

| Currency | | (0.3 | )% |

| Divestitures | | (0.6 | )% |

| Currency | | (5.4 | )% |

| Divestitures | | (0.5 | )% |

| Currency | | (2.5 | )% |

Divestitures contributed approximately $31 million to the decrease in sales in 2019.

Excluding divestitures and the effect of currency rate changes, sales in 2019 for the Diversified Industrial International operations increased 1.1 percent from 2018 levels due to slightly higher volume in the Asia Pacific and Latin America regions, partially offset by a decrease in sales in Europe.

Within Latin America, distributors and end users in the farm and agricultural equipment and heavy-duty truck markets contributed to the increase in sales, partially offset by lower end-user demand in the power generation market.

Higher manufacturing and materials support costs also impacted the Diversified Industrial North American operating margins.

The Company anticipates Diversified Industrial North American sales for 2020 will range between a decrease of 2.8 percent and an increase of 0.2 percent from the 2019 level and Diversified Industrial International sales for 2020 will decrease between 6.2 percent and 3.2 percent from the 2019 level.

Diversified Industrial North American operating margins in 2020 are expected to range from 16.8 percent to 17.2 percent and Diversified Industrial International margins are expected to range from 15.4 percent to 15.9 percent.

The higher margin in 2019 was primarily due to a favorable product mix resulting from higher aftermarket and OEM volume and profitability, higher joint venture earnings, lower engineering development and the absence of business realignment expenses in the current year.

For 2020, sales are expected to increase between 3.0 percent and 5.6 percent from the 2019 level and operating margins are expected to range from 20.4 percent to 21.0 percent.

A higher concentration of commercial OEM volume in future product mix and higher than expected new product development costs could result in lower margins.

Corporate general and administrative expenses were $195 million in 2019 compared to $201 million in 2018.

The lower expense in 2019 is primarily due to lower incentive compensation, partially offset by higher net expense associated with the Company's deferred compensation program and related investments.

| Sale and writedown of investments | — | | | | 41 | | |

| | $ | 113 | | | $ | 122 | |

Divestitures and asset sales and writedowns in 2018 includes a net gain on the sale of assets, partially offset by a loss on the sale of the global Facet filtration business.

The acquisition expenses incurred in 2019 primarily relate to the proposed acquisition of Lord.

As a result of the TCJ Act, the prior worldwide tax system was replaced by a territorial tax system, which generally allows companies to repatriate future foreign source earnings without incurring additional U.S. federal taxes.

However, other U.S. or foreign taxes may be incurred should cash be distributed between the Company's subsidiaries.

Within the Diversified Industrial Segment, an increase in inventories in the North American operations was partially offset by a decrease in the International operations.

Cash flows from investing activities includes net (purchases) maturities of marketable securities and other investments of $(107) million and $3 million in 2019 and 2018, respectively.

It also includes $195 million and $248 million of capital expenditures in 2019 and 2018, respectively.

The derivative financial instrument contracts are with major investment grade financial institutions and [removed: the Company does] [added: we do] not anticipate any material non-performance by any of the counterparties.

[removed: Gains or losses on derivatives] [added: Derivatives] that are not designated as hedges are adjusted to fair value [added: by recording gains and losses] through the Consolidated Statement of Income.

[removed: Gains or losses on derivatives] [added: Derivatives] that are designated as hedges are adjusted to fair value [added: by recording gains and losses] through accumulated other comprehensive income (loss) in the Consolidated Balance Sheet until the hedged item is recognized in earnings.

A 100 basis point increase in near-term interest rates would increase annual interest expense on variable rate debt existing at June 30, [removed: 2019] [added: 2020] by approximately [removed: $9] [added: $24] million.

For cross-currency swaps measured using the spot method, the periodic interest settlements are recognized directly in earnings through interest expense.

As discussed elsewhere in this report, the recent outbreak of COVID-19 has negatively impacted and we expect it to continue to negatively impact our business and results of operations.

As we cannot predict the ultimate duration or scope of the COVID-19 pandemic, the ultimate negative financial impact to our results cannot be reasonably estimated, but could be material.

For the fiscal year ended June 30, [removed: 2019][added: 2020]

Indicate by check mark whether the Registrant has submitted electronically [removed: and posted on its corporate website, if any,] every Interactive Data File required to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit [removed: and post] such files).

The aggregate market value of the outstanding common stock held by non-affiliates of the Registrant as of December 31, [removed: 2018: $19,209,620,506.][added: 2019: $26,292,325,769.]

The number of Common Shares outstanding on July 31, [removed: 2019] [added: 2020] was [removed: 128,441,799.][added: 128,561,616.]

Portions of the Definitive Proxy Statement for the Company’s [removed: 2019] [added: 2020] Annual Meeting of Shareholders, to be held on October [removed: 23, 2019,] [added: 28, 2020,] are incorporated by reference into Part III of this Annual Report on Form 10-K.

| Item 1. | [removed: [Business](#s2F8FA03E88A0531F87DE1EBF1CBE2C12)] [added: [Business](#sB162EE18A30C564694DE9D845D091624)] | [removed: [2](#s2F8FA03E88A0531F87DE1EBF1CBE2C12)] [added: [2](#sB162EE18A30C564694DE9D845D091624)] |

| Item 1A. | [Risk [removed: Factors](#s3A71F06307FF5E80BFBB8AE6EBE2BE09)] [added: Factors](#sEF4658E74CEB5CC58F4688B241B1107B)] | [removed: [8](#s3A71F06307FF5E80BFBB8AE6EBE2BE09)] [added: [8](#sEF4658E74CEB5CC58F4688B241B1107B)] |

| Item 1B. | [Unresolved Staff [removed: Comments](#sB18BFE36A3A756ED84F58B06E5E1EE7F)] [added: Comments](#s0D8D5E5DA1B25C8E837E96E1A0CBB441)] | [removed: [14](#sB18BFE36A3A756ED84F58B06E5E1EE7F)] [added: [14](#s0D8D5E5DA1B25C8E837E96E1A0CBB441)] |

| Item 1C. | [Information about our Executive [removed: Officers](#s7CA2779FB33552A28B6141BE766E3F46)] [added: Officers](#s0958F24A59C757B69870A9D72748D7D8)] | [removed: [15](#s7CA2779FB33552A28B6141BE766E3F46)] [added: [14](#s0958F24A59C757B69870A9D72748D7D8)] |

| Item 2. | [removed: [Properties](#s311BF277ECC255B3B0E23DD26D4DB6D5)] [added: [Properties](#s57F1A71E443D502E9320EB0654769EBC)] | [removed: [16](#s311BF277ECC255B3B0E23DD26D4DB6D5)] [added: [15](#s57F1A71E443D502E9320EB0654769EBC)] |

| Item 3. | [Legal [removed: Proceedings](#s0A955FDBFCFD59D5825C88A63AA85946)] [added: Proceedings](#s6660AD97CC585B7080A84EEF9488F0BB)] | [removed: [16](#s0A955FDBFCFD59D5825C88A63AA85946)] [added: [15](#s6660AD97CC585B7080A84EEF9488F0BB)] |

| Item 4. | [Mine Safety [removed: Disclosures](#sC6CF8E9E666C566BA02E7EEA195D9C21)] [added: Disclosures](#s120016EEF5C152BE9DD26603F43C9EE2)] | [removed: [16](#sC6CF8E9E666C566BA02E7EEA195D9C21)] [added: [16](#s120016EEF5C152BE9DD26603F43C9EE2)] |

| Item 5. | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sE2D272F1802E5389AB282F9089CA1B1F)] [added: Securities](#s83ECA4C8FAED505BB6E08B0A9CCC5415)] | [removed: [17](#sE2D272F1802E5389AB282F9089CA1B1F)] [added: [16](#s83ECA4C8FAED505BB6E08B0A9CCC5415)] |

| Item 6. | [Selected Financial [removed: Data](#s2EF0AFAD197755C0BBE2074F0C5BF96E)] [added: Data](#s44412437658C5385B9E1266CF1D9B03F)] | [removed: [17](#s2EF0AFAD197755C0BBE2074F0C5BF96E)] [added: [16](#s44412437658C5385B9E1266CF1D9B03F)] |

| Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s4798C2B7BD825E20B4313CDD25298119)] [added: Operations](#s33A9BCE5303A5F45A39391EC6BCA27D8)] | [removed: [18](#s4798C2B7BD825E20B4313CDD25298119)] [added: [17](#s33A9BCE5303A5F45A39391EC6BCA27D8)] |

| Item 7A. | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s0F59AC17C36C59C0B8F69E16CED3DD10)] [added: Risk](#sA72E592F5DED5CD58951BFD55D3E2483)] | [removed: [28](#s0F59AC17C36C59C0B8F69E16CED3DD10)] [added: [28](#sA72E592F5DED5CD58951BFD55D3E2483)] |

| Item 8. | [Financial Statements and Supplementary [removed: Data](#sC83AC28AC9045FBA89FABCAAECE5D38E)] [added: Data](#s7C39BE43558055A2818FB4D9B2FA2BE6)] | [removed: [29](#sC83AC28AC9045FBA89FABCAAECE5D38E)] [added: [29](#s7C39BE43558055A2818FB4D9B2FA2BE6)] |

| Item 9. | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s9B46C083D1135ABAABC4CEDA7E6DCE0B)] [added: Disclosure](#s5EFE0D1B560454EFAAFCBE600E565C28)] | [removed: [68](#s9B46C083D1135ABAABC4CEDA7E6DCE0B)] [added: [66](#s5EFE0D1B560454EFAAFCBE600E565C28)] |

| Item 9A. | [Controls and [removed: Procedures](#s197CC980AEE85EFF9DAF36EBF6B4F37B)] [added: Procedures](#s384E1A0CE42F5813876F5F9686A131FA)] | [removed: [68](#s197CC980AEE85EFF9DAF36EBF6B4F37B)] [added: [66](#s384E1A0CE42F5813876F5F9686A131FA)] |

| Item 9B. | [Other [removed: Information](#s35445D9EC8335610B3D4C53A7AB9862F)] [added: Information](#s78387DC988455279950017A32E23A56D)] | [removed: [68](#s35445D9EC8335610B3D4C53A7AB9862F)] [added: [66](#s78387DC988455279950017A32E23A56D)] |

| Item 10. | [Directors, Executive Officers and Corporate [removed: Governance](#sA60F61AFDCE1569F8BE19EFB3377C4FA)] [added: Governance](#s3A58F2FEBDA5564FA72E1790D991C4C7)] | [removed: [68](#sA60F61AFDCE1569F8BE19EFB3377C4FA)] [added: [66](#s3A58F2FEBDA5564FA72E1790D991C4C7)] |

| Item 11. | [Executive [removed: Compensation](#s97A81E1512C55FD0B8261CFD6E057E9E)] [added: Compensation](#sFCF35D1BF61551DEB519CB02E0F96186)] | [removed: [68](#s97A81E1512C55FD0B8261CFD6E057E9E)] [added: [67](#sFCF35D1BF61551DEB519CB02E0F96186)] |

| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s4416D2E7F0705EC0ACB0F98B5D95AD07)] [added: Matters](#s6CD2A5EDCA115F9BAAC82299FE081757)] | [removed: [69](#s4416D2E7F0705EC0ACB0F98B5D95AD07)] [added: [67](#s6CD2A5EDCA115F9BAAC82299FE081757)] |

| Item 13. | [Certain Relationships and Related Transactions, and Director [removed: Independence](#sEA2D34DDC3135FD0B3E08981113C52DD)] [added: Independence](#s5C3051678FA6559FB3BCE2F93FF169E3)] | [removed: [69](#sEA2D34DDC3135FD0B3E08981113C52DD)] [added: [67](#s5C3051678FA6559FB3BCE2F93FF169E3)] |

| Item 14. | [Principal Accountant Fees and [removed: Services](#sA4C87FC59FC95303A1BBBB24D9B6638A)] [added: Services](#sCC29B418E2E4544A83F71476C939B58C)] | [removed: [69](#sA4C87FC59FC95303A1BBBB24D9B6638A)] [added: [67](#sCC29B418E2E4544A83F71476C939B58C)] |

| Item 15. | [Exhibits and Financial Statement [removed: Schedules](#s42D3942F5E8B565C80D45A89C031984D)] [added: Schedules](#s68C7E0E6EFBD5AC299C7B5961A33A27C)] | [removed: [70](#s42D3942F5E8B565C80D45A89C031984D)] [added: [68](#s68C7E0E6EFBD5AC299C7B5961A33A27C)] |

Fiscal Year Ended June 30, [removed: 2019][added: 2020]

Our manufacturing, service, sales, distribution and administrative facilities are located in [removed: 37] [added: 38] states within the United States and in [removed: 49] [added: 48] other countries.

We supply products to approximately [removed: 459,000] [added: 464,000] customers in virtually every significant manufacturing, transportation and processing industry.

During [removed: 2019,] [added: 2020,] our technologies and systems were used in the products of these two reporting segments.

For [removed: 2019,] [added: 2020,] the Company's net sales were [removed: $14.3] [added: $13.7] billion.

Diversified Industrial Segment products accounted for [removed: 82%] [added: 80 percent] and Aerospace Systems Segment products accounted for [removed: 18%] [added: 20 percent] of those net sales.

The approximately [removed: 459,000] [added: 464,000] customers who purchase Parker products are found in almost every significant manufacturing, transportation and processing industry.

No single customer accounted for more than [removed: 3%] [added: three percent] of our total net sales for the year ended June 30, [removed: 2019.][added: 2020.]

| Engineered Materials Group: | • Aerospace • Agriculture • Chemical processing • Construction • [added: Defense •] Information technology • Life sciences [removed: • Microelectronics] | • [removed: Military] [added: Microelectronics] • Oil & gas • Power generation • Renewable energy • Telecommunications • Transportation • Truck & bus |

| Fluid Connectors Group: | • Aerial lift • Agriculture • Bulk chemical handling • Construction • Food & beverage • Fuel & gas delivery • Industrial machinery | • Life sciences • Marine • Mining • Mobile • [removed: Oil & gas] [added: Refrigeration and air conditioning] • Renewable energy • Transportation |

| Instrumentation Group: | • Air conditioning • Alternative fuels • Analytical • Chemical • Diesel engine • Food & beverage [removed: • Industrial machinery] | • Life sciences • Microelectronics • Oil & gas • Refining • Refrigeration • Transportation |

| • Aftermarket services • Commercial [removed: transports] [added: transport aircraft] • Engines • General & business aviation • Helicopters | • Military aircraft • Missiles • Power generation [added: (industrial gas turbines)] • Regional [removed: transports] [added: transport aircraft] • Unmanned aerial vehicles |

We offer hundreds of thousands of individual products, and no single product contributed more than [removed: 1%] [added: one percent] to our total net sales for the year ended June 30, [removed: 2019.][added: 2020.]

| • [added: Active vibration control systems • Bearings & dampers • Coatings •] Dynamic seals • Elastomeric [added: mounts & isolators • Elastomeric] o-rings • Electromagnetic interference shielding • Extrusion & fabricated seals • High-temperature metal seals | • Homogeneous & inserted elastomeric shapes • Medical products fabrication & assembly • Metal & plastic composite bonded seals • Precision-cut seals • [added: Rubber-to-substrate adhesives • Specialty chemicals • Structural adhesives •] Thermal management [added: • Wireless sensing systems] |

Indicate by check mark whether the Registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

| [Signatures](#s2F239D1857765C58AD3D3D8135DD9246) | | [73](#s2F239D1857765C58AD3D3D8135DD9246) |

Engineered Materials Group: sealing, shielding, thermal products and systems, adhesives, coatings and noise vibration and harshness solutions, including:

| (Do not check if a smaller reporting company) | | | |

| | | |

| --- | --- | --- |

| [Signatures](#sE1A95CDE4C8757DB81728FC37DDC09F0) | | [75](#sE1A95CDE4C8757DB81728FC37DDC09F0) |

Engineered Materials Group: static and dynamic sealing devices, including:

The Company made no material acquisitions in 2019.

During 2019, we entered into a definitive agreement under which we expect to acquire LORD Corporation ("Lord").

On July 29, 2019, the Company announced that it had entered into a definitive agreement to acquire EMFCO Holdings Incorporated, parent company of Exotic Metals Forming Company LLC ("Exotic").

The proposed Exotic acquisition is discussed in Note 1 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K and is incorporated herein by reference.

Our executive officers as of August 15, [removed: 2019,] [added: 2020,] were as follows:

| Name | | Position | | Officer [removed: Since(1)] [added: Since(1)] | | Age as of [removed: 8/15/2019] [added: 8/15/2020] | |

| Thomas L. Williams | | Chairman of the Board, Chief Executive Officer and Director | | 2005 | | [removed: 60] [added: 61] | |

| Lee C. Banks | | President, Chief Operating Officer and Director | | 2001 | | [removed: 56] [added: 57] | |

| Catherine A. Suever | | Executive Vice President – Finance & Administration and Chief Financial Officer | | 2010 | | [removed: 60] [added: 61] | |

| Mark J. Hart | | Executive Vice President – Human Resources & External Affairs | | 2016 | | [removed: 54] [added: 55] | |

| William R. "Skip" Bowman | | Vice President and President - Instrumentation Group | | 2016 | | [removed: 61] [added: 62] | |

| Thomas C. Gentile | | Vice President – Global Supply Chain | | 2017 | | [removed: 47] [added: 48] | |

| Todd M. Leombruno | | Vice President and Controller | | 2017 | | [removed: 49] [added: 50] | |

| Joseph R. Leonti | | Vice President, General Counsel and Secretary | | 2014 | | [removed: 47] [added: 48] | |

| Robert W. Malone | | Vice President and President – Filtration Group | | 2014 | | [removed: 55] [added: 56] | |

| M. Craig Maxwell | | Vice President – Chief Technology and Innovation Officer | | 2003 | | [removed: 61] [added: 62] | |

| Dinu J. Parel | | Vice President and Chief Information Officer | | 2018 | | [removed: 39] [added: 40] | |

| Jennifer A. Parmentier | | Vice President and President – Motion Systems Group | | 2015 | | [removed: 52] [added: 53] | |

| Andrew D. Ross | | Vice President and President – Fluid Connectors Group | | 2012 | | [removed: 52] [added: 53] | |

| Roger S. Sherrard | | Vice President and President – Aerospace Group | | 2003 | | [removed: 53] [added: 54] | |

| Andrew M. Weeks | | Vice President and President – Engineered Materials Group | | 2015 | | [removed: 56] [added: 57] | |

[added: Williams, Banks,] Leonti, [removed: Maxwell,] [added: Malone, Maxwell] and Sherrard have served in the executive capacities indicated above during each of the past five years.

He is also a Director of [added: The] Goodyear Tire & Rubber Company.

Our corporate headquarters is located in Cleveland, Ohio, and, at June 30, [removed: 2019,] [added: 2020,] the Company maintained approximately [removed: 290] [added: 320] manufacturing plants.

None of these [added: manufacturing] plants, administrative offices or distribution centers are individually material to our operations.

The facilities are situated in [removed: 37] [added: 38] states within the United States and in [removed: 49] [added: 48] other countries.

Mr. Maxwell has been Vice President - Chief Technology and Innovation Officer since July 2003.

Mr. Sherrard has been Vice President and President of the Aerospace Group since July 2012.

He was President of the Automation Group from March 2005 to July 2012.

Prior to that he was President of the Instrumentation Group and has been a Corporate Vice President since November 2003.

| (a) | Market for the Registrant’s Common Equity. The Company’s common stock is listed for trading on the New York Stock Exchange ("NYSE") under the symbol "PH". As of July 31, [removed: 2019,] [added: 2020,] the number of shareholders of record of the Company was [removed: 3,464.] [added: 3,383.] |

| Period | | (a) Total Number of Shares Purchased | | | (b) Average Price Paid Per Share | | | | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or [removed: Programs (1)] [added: Programs (1)] | | | (d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | |

| (1) | On October 22, 2014, the Company publicly announced that the Board of Directors increased the overall maximum number of shares authorized for repurchase under this program so that, beginning on such date, the aggregate number of shares authorized for repurchase was 35 million shares. There is no limitation on the amount of shares that can be repurchased in a year. There is no expiration date for this program. [added: In March 2020, the Company suspended the share repurchase program in response to business uncertainty resulting from the COVID-19 pandemic.] |

| April 1, 2020 through April 30, 2020 | | — | | | $ | — | | | — | | | 10,028,239 | |

| May 1, 2020 through May 31, 2020 | | — | | | $ | — | | | — | | | 10,028,239 | |

| June 1, 2020 through June 30, 2020 | | — | | | $ | — | | | — | | | 10,028,239 | |

| Total | | — | | | | | | | — | | | | |

ITEM 6. Selected Financial Data. This selected financial data should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and our Consolidated Financial Statements and accompanying notes included in Part II, Item 7 and Part II, Item 8, respectively, of this Annual Report on Form 10-K.

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | |

| (Amounts in thousands, except per share information) | | 2020 | | | | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | |

| Net sales | | $ | 13,695,520 | | | $ | 14,320,324 | | | $ | 14,302,392 | | | $ | 12,029,312 | | | $ | 11,360,753 | |

| Net income attributable to common shareholders | | 1,206,341 | | | | 1,512,364 | | | | 1,060,801 | | | | 983,412 | | | | 806,840 | | |

| Basic earnings per share | | 9.39 | | | | 11.63 | | | | 7.98 | | | | 7.37 | | | | 5.96 | | |

| Diluted earnings per share | | 9.29 | | | | 11.48 | | | | 7.83 | | | | 7.25 | | | | 5.89 | | |

| Cash dividends per share | | 3.52 | | | | 3.16 | | | | 2.74 | | | | 2.58 | | | | 2.52 | | |

| Total assets | | 19,738,189 | | | | 17,576,690 | | | | 15,320,087 | | | | 15,489,904 | | | | 12,034,142 | | |

| Long-term debt | | 7,652,256 | | | | 6,520,831 | | | | 4,318,559 | | | | 4,861,895 | | | | 2,652,457 | | |

| April 1, 2019 through April 30, 2019 | | 91,600 | | | $ | 182.97 | | | 91,600 | | | 11,046,103 | |

| May 1, 2019 through May 31, 2019 | | 103,000 | | | $ | 168.89 | | | 103,000 | | | 10,943,103 | |

| June 1, 2019 through June 30, 2019 | | 96,283 | | | $ | 164.50 | | | 96,283 | | | 10,846,820 | |

| Total | | 290,883 | | | | | | | 290,883 | | | | |

| | [Consolidated Statement of [removed: Income](#s296F44876DA958C9A414C96367A3F27B)] [added: Income](#s503B9DC9FD965653B64001429BA4CA88)] | [removed: [32](#s296F44876DA958C9A414C96367A3F27B)] [added: [32](#s503B9DC9FD965653B64001429BA4CA88)] |

| | [Consolidated Statement of Comprehensive [removed: Income](#s962683E77E6B523192B02AE38D28ECF2)] [added: Income](#sBDC5B3A138655B15A9CD61947DC6ED47)] | [removed: [33](#s962683E77E6B523192B02AE38D28ECF2)] [added: [33](#sBDC5B3A138655B15A9CD61947DC6ED47)] |

| | [Business Segment [removed: Information](#sBE2DC72502D153238BD35CEECE081ACC)] [added: Information](#s7137B11F169554A5AF226C305A59C4BE)] | [removed: [34](#sBE2DC72502D153238BD35CEECE081ACC)] [added: [34](#s7137B11F169554A5AF226C305A59C4BE)] |

| | [Consolidated Balance [removed: Sheet](#s4FD9C7CF1F065E70ACF6A9676A2CB0E4)] [added: Sheet](#sCB857DDC4D985DA182101E27F154F616)] | [removed: [36](#s4FD9C7CF1F065E70ACF6A9676A2CB0E4)] [added: [36](#sCB857DDC4D985DA182101E27F154F616)] |

| | [Consolidated Statement of Cash [removed: Flows](#sA3CB83507EF55F01A63A4E4CBDE19714)] [added: Flows](#s90C779AF42D65AEC88010CE931301AE9)] | [removed: [37](#sA3CB83507EF55F01A63A4E4CBDE19714)] [added: [37](#s90C779AF42D65AEC88010CE931301AE9)] |

| | [Consolidated Statement of [removed: Equity](#s69F5AED2031C5CC48389A0678F0F05D0)] [added: Equity](#s752CC16CFFB95C11AB673FAE2903705F)] | [removed: [38](#s69F5AED2031C5CC48389A0678F0F05D0)] [added: [38](#s752CC16CFFB95C11AB673FAE2903705F)] |

| | [Notes to Consolidated Financial [removed: Statements](#sAC0D1E0DBD4F501292939B6F3B6F6D76)] [added: Statements](#s354457172FA15D5D8F13F8CC334C4970)] | [removed: [39](#sAC0D1E0DBD4F501292939B6F3B6F6D76)] [added: [39](#s354457172FA15D5D8F13F8CC334C4970)] |

To the Board of Directors and Shareholders of [added: Parker-Hannifin Corporation]

We have audited the accompanying consolidated balance sheets of Parker-Hannifin Corporation and subsidiaries (the "Company") as of June 30, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] the related consolidated statements of income, comprehensive income, equity, and cash flows, for each of the three years in the period ended June 30, [removed: 2019,] [added: 2020,] and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the [removed: “financial statements”).][added: "financial statements").]

We also have audited the [removed: Company's] [added: Company’s] internal control over financial reporting as of June 30, [removed: 2019,] [added: 2020,] based on criteria established in [removed: *Internal] [added: Internal] Control - Integrated Framework [removed: (2013)*] [added: (2013)] issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the results of its operations and its cash flows for each of the three years in the period ended June 30, [removed: 2019,] [added: 2020,] in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, [removed: 2019,] [added: 2020,] based on criteria established in [removed: *Internal] [added: Internal] Control - Integrated Framework [removed: (2013)*] [added: (2013)] issued by COSO.

[removed: Critical] [added: *Critical] Audit Matter [removed: Description][added: Description*]

[removed: The Company tests] [added: We test] goodwill for [removed: impairment,] [added: impairment] at the reporting unit [removed: level,] [added: level] on an annual basis and between annual tests whenever events or circumstances indicate that the carrying value of a reporting unit may exceed its fair value.

[removed: | How] [added: *How] the Critical Audit Matter Was Addressed in the [removed: Audit |][added: Audit*]

Our audit procedures related to the [removed: determination] [added: revenue growth rates and the selection] of [removed: reporting units] [added: the assumptions] for [removed: goodwill] [added: the intangible assets acquired] included the following, among others:

| (Dollars in thousands, except per share amounts) | | [removed: 2019] [added: 2020] | | | | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | |

| Net Sales | | $ | [removed: 14,320,324] [added: 13,695,520] | | | $ | [removed: 14,302,392] [added: 14,320,324] | | | $ | [removed: 12,029,312] [added: 14,302,392] | |

| Cost of sales | | [removed: 10,703,484] [added: 10,286,518] | | | | [removed: 10,737,745] [added: 10,703,484] | | | | [removed: 9,119,029] [added: 10,737,745] | | |

| Selling, general and administrative expenses | | [removed: 1,543,939] [added: 1,656,553] | | | | [removed: 1,639,989] [added: 1,543,939] | | | | [removed: 1,412,820] [added: 1,639,989] | | |

| Interest expense | | [removed: 190,138] [added: 308,161] | | | | [removed: 213,873] [added: 190,138] | | | | [removed: 162,436] [added: 213,873] | | |

| Other (income) expense, net | | [removed: (61,247] [added: (67,112] | | ) | | [removed: 12,991] [added: (61,247] | | [added: )] | | [removed: 49,647] [added: 12,991] | | |

| [removed: Loss (gain)] [added: (Gain) loss] on disposal of assets (Note 3) | | [removed: 10,585] [added: (1,227] | | [added: )] | | [removed: (4,483] [added: 10,585] | | [removed: )] | | [removed: (43,261] [added: (4,483] | | ) |

| Income before income taxes | | [removed: 1,933,425] [added: 1,512,627] | | | | [removed: 1,702,277] [added: 1,933,425] | | | | [removed: 1,328,641] [added: 1,702,277] | | |

| Income taxes (Note 5) | | [removed: 420,494] [added: 305,924] | | | | [removed: 640,962] [added: 420,494] | | | | [removed: 344,797] [added: 640,962] | | |

| Net Income | | [removed: 1,512,931] [added: 1,206,703] | | | | [removed: 1,061,315] [added: 1,512,931] | | | | [removed: 983,844] [added: 1,061,315] | | |

| Less: Noncontrolling interest in subsidiaries' earnings | | [removed: 567] [added: 362] | | | | [removed: 514] [added: 567] | | | | [removed: 432] [added: 514] | | |

| Net Income Attributable to Common Shareholders | | $ | [removed: 1,512,364] [added: 1,206,341] | | | $ | [removed: 1,060,801] [added: 1,512,364] | | | $ | [removed: 983,412] [added: 1,060,801] | |

| Basic earnings per share | | $ | [removed: 11.63] [added: 9.39] | | | $ | [removed: 7.98] [added: 11.63] | | | $ | [removed: 7.37] [added: 7.98] | |

| Diluted earnings per share | | $ | [removed: 11.48] [added: 9.29] | | | $ | [removed: 7.83] [added: 11.48] | | | $ | [removed: 7.25] [added: 7.83] | |

| (Dollars in thousands) | | [removed: 2019] [added: 2020] | | | | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | |

| Net Income | | $ | [removed: 1,512,931] [added: 1,206,703] | | | $ | [removed: 1,061,315] [added: 1,512,931] | | | $ | [removed: 983,844] [added: 1,061,315] | |

| Less: Noncontrolling interests in subsidiaries' earnings | | [removed: 567] [added: 362] | | | | [removed: 514] [added: 567] | | | | [removed: 432] [added: 514] | | |

| Net income attributable to common shareholders | | [removed: 1,512,364] [added: 1,206,341] | | | | [removed: 1,060,801] [added: 1,512,364] | | | | [removed: 983,412] [added: 1,060,801] | | |

| Foreign currency translation adjustment and other (net of tax of [removed: $709, $16,964] [added: $4,820, $709] and [removed: $40,935] [added: $16,964] in [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017)] [added: 2018)] | | [removed: (66,392] [added: (182,957] | | ) | | [removed: (18,575] [added: (66,392] | | ) | | [removed: (80,865] [added: (18,575] | | ) |

| Retirement benefits plan activity (net of tax of [removed: $71,821, $(82,506)] [added: $97,477, $71,821] and [removed: $(218,590)] [added: $(82,506)] in [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017)] [added: 2018)] | | [removed: (227,783] [added: (317,546] | | ) | | [removed: 179,253] [added: (227,783] | | [added: )] | | [removed: 384,784] [added: 179,253] | | |

| Other comprehensive (loss) income | | [removed: (294,175] [added: (500,503] | | ) | | [removed: 160,678] [added: (294,175] | | [added: )] | | [removed: 303,919] [added: 160,678] | | |

| Less: Other comprehensive [removed: income] (loss) [added: income] for noncontrolling interests | | [removed: 53] [added: (676] | | [added: )] | | [removed: (440] [added: 53] | | [removed: )] | | [removed: 358] [added: (440] | | [added: )] |

| Other comprehensive (loss) income attributable to common shareholders | | [removed: (294,228] [added: (499,827] | | ) | | [removed: 161,118] [added: (294,228] | | [added: )] | | [removed: 303,561] [added: 161,118] | | |

| Total Comprehensive Income Attributable to Common Shareholders | | $ | [removed: 1,218,136] [added: 706,514] | | | $ | [removed: 1,221,919] [added: 1,218,136] | | | $ | [removed: 1,286,973] [added: 1,221,919] | |

As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at two entities which were acquired within the fiscal year, and whose financial statements constitute approximately 28% of total assets and 7% of net sales for the year ended June 30, 2020.

Accordingly, our audit did not include the internal control over financial reporting over these acquired entities.

Acquisitions - Valuation of intangible assets acquired via the acquisition of Exotic Metals Forming Co. & LORD Corporation - Refer to Note 3 to the financial statements

The Company completed the acquisitions of Exotic Metals Forming Company for $1.706 billion on September 16, 2019 and LORD Corporation for $3.455 billion on October 29, 2019.

The Company accounted for the acquisitions under the acquisition method of accounting for business combinations.

Accordingly, the purchase price was primarily allocated to the assets acquired and liabilities assumed based on their respective fair values, including customer-related and technology intangible assets.

Management estimated the fair value of these intangible assets utilizing an income approach.

The fair value determination of the customer-related and technology intangible assets required management to make significant assumptions related to the forecasted revenue growth rates and the selection of the discount rates.

We identified the customer-related and technology intangible assets for the Exotic and LORD acquisitions as a critical audit matter because of the significant assumptions management makes to fair value these assets.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s assumptions related to the revenue growth rates and the selection of the discount rates utilized to value these intangible assets.

| • | We tested the effectiveness of controls over the valuation of the intangible assets acquired, including management’s controls over the revenue growth rates and selection of the discount rates. |

| • | We assessed the reasonableness of the revenue growth rates by comparing the assumptions used in the projections to external market sources, historical data, and results from other areas of the audit. |

| • | We performed qualitative and quantitative analyses to identify the assumptions that would significantly impact the overall valuation of the intangible assets acquired. The assumptions identified included (1) revenue growth rate and (2) discount rate. |

| • | With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology and (2) discount rates by: |

| – | Testing the source information underlying the determination of the discount rates and testing the mathematical accuracy of the calculation. |

| – | Developing a range of independent estimates and comparing those to the discount rates selected by management. |

| • | We assessed the reasonableness of the revenue growth rates by comparing the assumptions used in the projections to external market sources, historical data, and results from other areas of the audit. |

August 26, 2020

| (Dollars in thousands) | | 2020 | | | | 2019 | | | | 2018 | | |

| Interest expense | | 308,161 | | | | 190,138 | | | | 213,873 | | |

| Amortization: | | | | | | | | | | | | |

| Diversified Industrial | | $ | 243,714 | | | $ | 196,680 | | | $ | 212,742 | |

| Aerospace Systems | | 40,918 | | | | 3,072 | | | | 2,939 | | |

| | | $ | 284,632 | | | $ | 199,752 | | | $ | 215,681 | |

| (Dollars in thousands) | | 2020 | | | | 2019 | | | | 2018 | | |

| | | $ | 13,695,520 | | | $ | 14,320,324 | | | $ | 14,302,392 | |

(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 plant and equipment based on physical location.

| (Dollars in thousands) | | 2020 | | | | 2019 | | | | 2018 | | |

| Other | | 17,984 | | | | — | | | | — | | |

| Acquisition of noncontrolling interests | | (1,200 | | ) | | — | | | | — | | |

| Net income | | | | | | | | | | 1,206,341 | | | | | | | | | | | | 362 | | | | 1,206,703 | | |

| Other comprehensive (loss) | | | | | | | | | | | | | | (499,827 | | ) | | | | | | (676 | | ) | | (500,503 | | ) |

| Dividends paid ($3.52 per share) | | | | | | | | | | (453,213 | | ) | | | | | | | | | | (625 | | ) | | (453,838 | | ) |

| Stock incentive plan activity | | | | | | (46,265 | | ) | | | | | | | | | | 90,981 | | | | | | | | 44,716 | | |

| Acquisition activity | | | | | | 764 | | | | | | | | | | | | | | | | 9,302 | | | | 10,066 | | |

| Balance June 30, 2020 | | $ | 90,523 | | | $ | 416,585 | | | $ | 13,530,666 | | | $ | (2,558,875 | ) | | $ | (5,364,916 | ) | | $ | 14,546 | | | $ | 6,128,529 | |

| June 30, | | 2020 | | | | 2019 | | |

Parker-Hannifin Corporation

| |

| --- |

| Goodwill *\-* Refer to Notes 1 and 8 to the financial statements |

For the year ended June 30, 2019, the Company’s reporting units are the same as its operating segments.

Prior to fiscal year 2019, the Company’s reporting units were one level below the operating segment level.

We identified the determination of reporting units for goodwill as a critical audit matter due to the changes in the composition of reporting units made by the Company during the year ended June 30, 2019 and the significant judgments made by management to conclude that the Company’s reporting units are the same as its operating segments.

This, in turn, required a high degree of auditor judgment and an increased extent of effort to evaluate management’s conclusions regarding the changes to the composition of reporting units.

| | |

| --- | --- |

| • | We tested the effectiveness of the control over management’s determination of goodwill reporting units for goodwill. |

| • | We evaluated the following significant judgments made by management: |

| – | Identification of reporting units including the consideration of discrete financial information that was available and level of review of the operating results for each reporting unit. |

| – | The aggregation of single reporting units based on similar economic characteristics. |

| • | We performed a retrospective review of select reporting units identified at one level below the operating segment level to evaluate the potential existence of any impairment indicators prior to the change in the determination of reporting units at the operating segment level. |

August 23, 2019

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| (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 plant and equipment based on physical location. |

| Balance June 30, 2016 | | $ | 90,523 | | | $ | 628,451 | | | $ | 10,302,866 | | | $ | (2,227,765 | ) | | $ | (4,218,820 | ) | | $ | 3,423 | | | $ | 4,578,678 | |

| Net income | | | | | | | | | | 983,412 | | | | | | | | | | | | 432 | | | | 983,844 | | |

| Other comprehensive income | | | | | | | | | | | | | | 303,561 | | | | | | | | 358 | | | | 303,919 | | |

| Dividends paid ($2.58 per share) | | | | | | | | | | (345,042 | | ) | | | | | | | | | | (338 | | ) | | (345,380 | | ) |

| Stock incentive plan activity | | | | | | (84,572 | | ) | | (10,888 | | ) | | | | | | 104,615 | | | | | | | | 9,155 | | |

| Acquisition activity | | | | | | | | | | | | | | | | | | | | | | 1,822 | | | | 1,822 | | |

Unrealized gains and losses related to available-for-sale debt securities are recorded in accumulated other comprehensive (loss).

Gains and losses on available-for-sale debt securities are calculated based on the first-in, first-out method.

The Company intends to finance the purchase price for the acquisition with new debt.

The acquisition remains subject to certain customary closing conditions.

Recent Accounting Pronouncements - In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-14, "Compensation--Retirement Benefits--Defined Benefit Plans--General." ASU 2018-14 aims to improve disclosure effectiveness by adding, removing or clarifying certain disclosure requirements related to defined benefit pension or other postretirement plans.

ASU 2018-14 is effective for fiscal years ending after December 15, 2020.

Early adoption is permitted.

The Company adopted ASU 2018-14 on June 30, 2019.

In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement." ASU 2018-13 aims to improve disclosure effectiveness by adding, modifying or removing certain disclosure requirements for both recurring and nonrecurring fair value measurements.

ASU 2018-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019.

Early adoption is permitted upon issuance of the ASU for any removed or modified disclosure.

Adoption of additional disclosures may be delayed until their effective dates.

The Company adopted ASU 2018-13 on April 1, 2019.

The adoption of ASU 2018-13 did not materially impact the Company's financial statements or related disclosures.

In February 2018, the FASB issued ASU 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." ASU 2018-02 allows for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the U.S. Tax Cuts and Jobs Act ("TCJ Act") reduction of the U.S. federal corporate income tax rate.

ITEM 9A. Controls and Procedures. The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the Company’s disclosure controls and procedures as of June 30, [removed: 2019.][added: 2020.]

Based on this evaluation, the Company’s principal executive officer and principal financial officer concluded that, as of June 30, [removed: 2019,] [added: 2020,] the Company’s disclosure controls and procedures were effective.

[removed: There was] [added: Except for the Lord and Exotic acquisitions, there were] no [removed: change] [added: changes] in the Company’s internal [removed: control] [added: controls] over financial reporting during the quarter ended June 30, [removed: 2019] [added: 2020] that materially affected, or [removed: is] [added: are] reasonably likely to materially affect, [removed: the Company’s] [added: its] internal [removed: control] [added: controls] over financial reporting.

We assessed the effectiveness of our internal control over financial reporting as of June 30, [removed: 2019.][added: 2020.]

In making this assessment, we used the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission in “Internal Control-Integrated Framework (2013).” We concluded that based on our assessment, the Company's internal control over financial reporting was effective as of June 30, [removed: 2019.][added: 2020.]

Deloitte & Touche LLP, the independent registered public accounting firm that audited the Company's consolidated financial statements, has issued an attestation report on the Company's internal control over financial reporting as of June 30, [removed: 2019,] [added: 2020,] which is included in Part II, Item 8 of this Annual Report on Form 10-K.

In response to the COVID-19 pandemic, many of our team members began working from home during the second half of 2020.

We are continually monitoring and assessing the changing business environment resulting from COVID-19 on our internal controls to minimize the impact on their design and operating effectiveness.

Management has taken measures to ensure that our disclosure controls and procedures and internal controls over financial reporting remained effective and were not materially affected during this period.

The Company acquired Lord and Exotic during October 2019 and September 2019, respectively, and is currently integrating their processes and internal controls.

We have excluded Lord and Exotic from our evaluation of internal control over financial reporting as of June 30, 2020 because these entities were acquired in business combinations during the year.

On a combined basis, these entities represented approximately 28 percent of total assets at June 30, 2020 and approximately seven percent of net sales for the year then ended.

ITEM 10. Directors, Executive Officers and Corporate Governance. Information required with respect to the Directors of the Company is set forth under the caption "Item I – Election of Directors" in the definitive Proxy Statement for the Company’s [removed: 2019] [added: 2020] Annual Meeting of Shareholders, to be held October [removed: 23, 2019] [added: 28, 2020] (the [removed: "2019] [added: "2020] Proxy Statement"), and is incorporated herein by reference.

Information with respect to the executive officers of the Company is included in Part I, Item 1C of this Annual Report on Form 10-K under the caption [removed: "Executive Officers of the Registrant."][added: "Information about our Executive Officers."]

The information set forth under the caption "Delinquent Section [removed: 16(A)] [added: 16(a)] Reports" in the [removed: 2019] [added: 2020] Proxy Statement is incorporated herein by reference.

The information set forth under the captions "Committees of [removed: Our] [added: our] Board of Directors - The Audit Committee" and [removed: "Report] [added: "Committees] of [removed: the Audit Committee"] [added: Our Board of Directors - Board Committees; Committee Charters"] in the [removed: 2019] [added: 2020] Proxy Statement is incorporated herein by reference.

ITEM 11. Executive Compensation. The information set forth under the captions "Compensation Discussion and Analysis," "Compensation Committee Report," and "Compensation Tables" in the [removed: 2019] [added: 2020] Proxy Statement is incorporated herein by reference.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information set forth under the captions "Principal Shareholders" in the [removed: 2019] [added: 2020] Proxy Statement is incorporated herein by reference.

The following table sets forth certain information regarding the Company's equity compensation plans as of June 30, [removed: 2019,] [added: 2020,] unless otherwise indicated.

(1)Includes the maximum future payouts of common stock that may be issued under the calendar year [removed: 2017-18-19, 2018-19-20 and] [added: 2018-19-20,] 2019-20-21 [added: and 2020-21-22] long term incentive performance awards ("LTIP awards").

For these LTIP awards, payouts will be determined based on [removed: our] achieving an average return on average equity of [removed: 4%] [added: four percent] or an average free cash flow margin of [removed: 4%.][added: four percent.]

If these performance measures are achieved, the participants will be eligible to receive the maximum payout of [removed: 200%.][added: 200 percent.]

(2)The maximum number of shares of our common stock that may be issued under the [added: Amended and Restated] 2016 Omnibus Stock Incentive Plan is [removed: 16] [added: 23.8] million shares, of which approximately [removed: 8.7] [added: 13.5] million shares are available for future issuance.

ITEM 13. Certain Relationships and Related Transactions, and Director Independence. The information set forth under the captions "Other Governance Matters - Review and Approval of Transactions with Related Persons" and "Corporate Governance: Board of Directors - Director Independence" in the [removed: 2019] [added: 2020] Proxy Statement is incorporated herein by reference.

ITEM 14. Principal Accountant Fees and Services. The information set forth under the captions "Audit [removed: Fees," "Audit-Related Fees," "Tax Fees," "All] [added: Fees and All] Other Fees" and "Audit Committee Pre-Approval Policies and Procedures" in the [removed: 2019] [added: 2020] Proxy Statement is incorporated herein by reference.

| Equity compensation plans approved by security holders | 6,635,723(1) | $134.29 | 23,486,752(2) |

| Total | 6,635,723 | $134.29 | 23,486,752 |

| Equity compensation plans approved by security holders | 7,347,772(1) | $121.51 | 18,673,701(2) |

| Total | 7,347,772 | $121.51 | 18,673,701 |

| | Consolidated Statement of Income | [removed: [32](#s296F44876DA958C9A414C96367A3F27B)] [added: [32](#s503B9DC9FD965653B64001429BA4CA88)] | |

| | Consolidated Statement of Comprehensive Income | [removed: [33](#s962683E77E6B523192B02AE38D28ECF2)] [added: [33](#sBDC5B3A138655B15A9CD61947DC6ED47)] | |

| | Business Segment Information | [removed: [34](#sBE2DC72502D153238BD35CEECE081ACC)] [added: [34](#s7137B11F169554A5AF226C305A59C4BE)] | |

| | Consolidated Balance Sheet | [removed: [36](#s4FD9C7CF1F065E70ACF6A9676A2CB0E4)] [added: [36](#sCB857DDC4D985DA182101E27F154F616)] | |

| | Consolidated Statement of Cash Flows | [removed: [37](#sA3CB83507EF55F01A63A4E4CBDE19714)] [added: [37](#s90C779AF42D65AEC88010CE931301AE9)] | |

| | Consolidated Statement of Equity | [removed: [38](#s69F5AED2031C5CC48389A0678F0F05D0)] [added: [38](#s752CC16CFFB95C11AB673FAE2903705F)] | |

| | Notes to Consolidated Financial Statements | [removed: [39](#sAC0D1E0DBD4F501292939B6F3B6F6D76)] [added: [39](#s354457172FA15D5D8F13F8CC334C4970)] | |

| | II - Valuation and Qualifying Accounts | [removed: [76](#s31847EAB204F5935AF3F655566F60960)] [added: [74](#sDFEE76C8E5C85964B7D8F27D62A30E9B)] | |

| (2)(a) | | [Agreement and Plan of Merger among Parker-Hannifin Corporation, CLARCOR, Inc. and Parker Eagle Corporation](http://www.sec.gov/Archives/edgar/data/76334/000119312516782477/d295621dex21.htm) dated as of December 1, 2016, incorporated by reference to Exhibit 2.1 of Registrant's Form 8-K filed with the SEC on December 1, 2016 (Commission File No. 1-4982). [removed: +] |

| (2)(b) | | [Agreement and Plan of Merger among Parker-Hannifin Corporation, Erie Merger Sub, Inc., LORD Corporation and Shareholder Representative Services LLC as the shareholders' representative, dated as of April 26, [removed: 2019,] [added: 2019,](http://www.sec.gov/Archives/edgar/data/76334/000095015719000495/ex2-1.htm)] incorporated by reference to Exhibit 2.1 of Registrant's Form 8-K filed with the SEC on April 29, 2019 (Commission File No. [removed: 1-4982).](http://www.sec.gov/Archives/edgar/data/76334/000095015719000495/ex2-1.htm) +] [added: 1-4982).] |

| (2)(c) | | [Share Purchase Agreement, among Parker-Hannifin Corporation, EMFCO Holdings Incorporated, the shareholders of the Company, and Fortis Advisors LLC, as the Sellers' representative, dated as of July 26, [removed: 2019,] [added: 2019](http://www.sec.gov/Archives/edgar/data/76334/000119312519204846/d783419dex21.htm),] incorporated by reference to Exhibit 2.1 of Registrant's Form 8-K filed with the SEC on July 29, 2019 (Commission File No. [removed: 1-4982).](http://www.sec.gov/Archives/edgar/data/76334/000119312519204846/d783419dex21.htm) +] [added: 1-4982).] |

| (3)(b) | | [Regulations, Amended and Restated as of January 24, 2019, incorporated by reference to Exhibit 3(a) to Registrant’s Report on Form 10-Q for the quarterly period ended December 31, [removed: 2018] [added: 2018](http://www.sec.gov/Archives/edgar/data/76334/000007633419000018/ph10q12312018ex3a2.htm)] (Commission File No. [removed: 1-4982).](http://www.sec.gov/Archives/edgar/data/76334/000007633419000018/ph10q12312018ex3a2.htm)] [added: 1-4982).] |

| [removed: (10)(n)] [added: (10)(o)] | | [Parker-Hannifin Corporation 2015 Performance Bonus Plan](http://www.sec.gov/Archives/edgar/data/76334/000119312510216901/ddef14a.htm) incorporated by reference to Appendix B to Registrant’s Definitive Proxy Statement filed with the Commission on September 28, 2015 (Commission File No. 1-4982). |

| [removed: (10)(o)] [added: (10)(p)] | | [Form of 2010 Notice of Stock Options with Tandem Stock Appreciation Rights for Executive Officers](http://www.sec.gov/Archives/edgar/data/76334/000119312509221583/dex10d.htm), incorporated by reference to Exhibit 10(d) to Registrant’s Report on Form 10-Q for the quarterly period ended September 30, 2009 (Commission File No. 1-4982). |

| [removed: (10)(p)] [added: (10)(q)] | | [Form of 2011 Parker-Hannifin Corporation Stock Appreciation Rights Award Agreement for executive officers](http://www.sec.gov/Archives/edgar/data/76334/000119312510191101/dex102.htm), incorporated by reference to Exhibit 10.2 to Registrant’s Report on Form 8-K filed with the SEC on August 17, 2010 (Commission File No. 1-4982). |

| [removed: (10)(q)] [added: (10)(r)] | | [2011 Parker-Hannifin Corporation Stock Appreciation Rights Terms and Conditions for executive officers](http://www.sec.gov/Archives/edgar/data/76334/000119312510191101/dex101.htm), incorporated by reference to Exhibit 10.1 to Registrant’s Report on Form 8-K filed with the SEC on August 17, 2010 (Commission File No. 1-4982). |

| [removed: (10)(r)] [added: (10)(s)] | | [Form of Parker-Hannifin Corporation Stock Appreciation Rights Award Agreement](http://www.sec.gov/Archives/edgar/data/76334/000119312511303648/d231608dex10a.htm) for executive officers, incorporated by reference to Exhibit 10(a) to Registrant’s Report on Form 10-Q for the quarterly period ended September 30, 2011 (Commission File No. 1-4982). |

| [removed: (10)(s)] [added: (10)(t)] | | [Parker-Hannifin Corporation Stock Appreciation Rights Terms and Conditions](http://www.sec.gov/Archives/edgar/data/76334/000119312511303648/d231608dex10b.htm) for executive officers, incorporated by reference to Exhibit 10(b) to Registrant’s Report on Form 10-Q for the quarterly period ended September 30, 2011 (Commission File No. 1-4982). |

| [removed: (10)(t)] [added: (10)(u)] | | [Form of 2018 Parker-Hannifin Corporation Stock Appreciation Rights Award Agreement, incorporated by reference to Exhibit 10(d) to Registrant's Report on Form 10-Q for the quarterly period ended December 31, 2018 (Commission File No. 1-4982).](http://www.sec.gov/Archives/edgar/data/76334/000007633419000018/ph-12312018exhibit10d.htm) |

| [removed: (10)(u)] [added: (10)(v)] | | [2018 Parker-Hannifin Corporation Stock Appreciation Rights Terms and Conditions, incorporated by reference to Exhibit 10(e) to Registrant's Report on Form 10-Q for the quarterly period ended December 31, 2018 (Commission File No. 1-4982)](http://www.sec.gov/Archives/edgar/data/76334/000007633419000018/ph10q12312018exhibit10e.htm) |

| [removed: (10)(v)] [added: (10)(w)] | | [Parker-Hannifin Corporation Target Incentive Plan](http://www.sec.gov/Archives/edgar/data/76334/000119312510251281/dex10d.htm), incorporated by reference to Exhibit 10(d) to Registrant’s Report on Form 10-Q for the quarterly period ended September 30, 2010 (Commission File No. 1-4982). |

| [removed: (10)(w)] [added: (10)(x)] | | [Parker-Hannifin Corporation Target Incentive Plan Subject to Performance Bonus Plan](http://www.sec.gov/Archives/edgar/data/76334/000119312510251281/dex10e.htm), incorporated by reference to Exhibit 10(e) to Registrant’s Report on Form 10-Q for the quarterly period ended September 30, 2010 (Commission File No. 1-4982). |

| [removed: (10)(x)] [added: (10)(y)] | | [Parker-Hannifin Corporation Long-Term Incentive Performance Plan Under the Performance Bonus Plan, as amended and restated,](http://www.sec.gov/Archives/edgar/data/76334/000007633416000196/ph6302016ex10aa.htm) effective January 20, 2016, incorporated by reference to Exhibit 10(aa) to Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 2016 (Commission file No. 1-4982). |

| [removed: (10)(y)] [added: (10)(z)] | | [Form of Notice of Award under the Parker-Hannifin Corporation Long-Term Incentive Performance Plan Under the Performance Bonus Plan (as Amended and Restated), incorporated by reference to Exhibit 10(bb) to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 2016 (Commission file No. 1-4982).](http://www.sec.gov/Archives/edgar/data/76334/000007633416000196/ph6302016ex10bb.htm) |

| [removed: (10)(z)] [added: (10)(aa)] | | [Form of Notice of Award under the Parker-Hannifin Corporation Long-Term Incentive Plan Under the Performance Bonus Plan (as Amended and Restated), effective as of January 23, 2019, incorporated by reference to Exhibit 10(f) to the Registrant's Annual Report on Form 10-Q for the quarterly period ended December 31, 2018 (Commission file No. 1-4982).](http://www.sec.gov/Archives/edgar/data/76334/000007633419000018/ph10q12312018ex10f.htm) |

| [removed: (10)(aa)] [added: (10)(bb)] | | [Parker-Hannifin Corporation Long-Term Incentive Performance Plan Under the Performance Bonus Plan (as Amended and Restated), effective as of January 23, 2019, incorporated by reference to Exhibit 10(g) to the Registrant's Report on Form 10-Q for the quarterly period ended December 31, 2018 (Commission File No. 1-4982).](http://www.sec.gov/Archives/edgar/data/76334/000007633419000018/phc10q2q12312018ex10g3.htm) |

| [removed: (10)(bb)] [added: (10)(cc)] | | [Parker-Hannifin Corporation Restricted Stock Unit Award Agreement dated August 17, 2016 for Lee C. Banks,](http://www.sec.gov/Archives/edgar/data/76334/000007633416000220/ph9302016ex10a.htm) incorporated by reference to Exhibit 10(a) to Registrant's Report on Form 10-Q for the quarterly period ended September 30, 2014 (Commission File No. 1-4982). |

| [removed: (10)(cc)] [added: (10)(dd)] | | [Parker-Hannifin Corporation Restricted Stock Unit Terms and Conditions for Lee C. Banks,](http://www.sec.gov/Archives/edgar/data/76334/000007633414000136/ph9302014ex10b.htm) incorporated by reference to Exhibit 10(b) to Registrant's Report on Form 10-Q for the quarterly period ended September 30, 2014 (Commission File No. 1-4982). |

| [removed: (10)(dd)] [added: (10)(ee)] | | [Form of Parker-Hannifin Corporation Restricted Stock Unit Award Agreement, incorporated by reference to Exhibit 10(a) to Registrant's Report on Form 10-Q for the quarterly period ended December 31, 2018 (Commission file No. 1-4982).](http://www.sec.gov/Archives/edgar/data/76334/000007633419000018/phc-10qx12312018exhibit10a.htm) |

| [removed: (10)(ee)] [added: (10)(ff)] | | [Form of Parker-Hannifin Corporation Restricted Stock Unit Award Agreement, incorporated by reference to Exhibit 10(b) to Registrant's Report on Form 10-Q for the quarterly period ended December 31, 2018 (Commission File No. 1-4982).](http://www.sec.gov/Archives/edgar/data/76334/000007633419000018/ph10q12312018ex10b.htm) |

| [removed: (10)(ff)] [added: (10)(gg)] | | [Form of Parker-Hannifin Corporation Restricted Stock Unit Terms and Conditions for Awards Granted, incorporated by reference to Exhibit 10(c) to Registrant's Report on Form 10-Q for the quarterly period ended December 31, 2018 (Commission File No. 1-4982).](http://www.sec.gov/Archives/edgar/data/76334/000007633419000018/ph10q12312018ex10c.htm) |

| [removed: (10)(gg)] [added: (10)(hh)] | | [Form of 2018 Parker-Hannifin Corporation Restricted Stock Unit Award Agreement to Certain Executive Officers, incorporated by reference to Exhibit 10(b) to Registrant's Report on Form 10-Q for the quarterly period ended September 30, 2018 (Commission File No. 1-4982).](http://www.sec.gov/Archives/edgar/data/76334/000007633418000119/ph9302018ex10c.htm) |

| [removed: (10)(hh)] [added: (10)(ii)] | | [Parker-Hannifin Corporation 2018 Restricted Stock Unit Terms and Conditions for Certain Executive Officers, incorporated by reference to Exhibit 10(c) to Registrant's Report on Form 10-Q for the quarterly period ended September 30, 2018 (Commission File No. 1-4982).](http://www.sec.gov/Archives/edgar/data/76334/000007633418000119/ph9302018ex10c.htm) |

| [removed: (10)(ii)] [added: (10)(jj)] | | [Parker-Hannifin Corporation Profitable Growth Incentive Plan,](http://www.sec.gov/Archives/edgar/data/76334/000007633414000136/ph9302014ex10c.htm) incorporated by reference to Exhibit 10(c) to Registrant's Report on Form 10-Q for the quarterly period ended September 30, 2014 (Commission File No. 1-4982). |

| [removed: (10)(jj)] [added: (10)(kk)] | | [Form of Notice of RONA Bonus Award Under the Parker-Hannifin Corporation Performance Bonus Plan,](http://www.sec.gov/Archives/edgar/data/76334/000119312509221583/dex10h.htm) incorporated by reference to Exhibit 10(h) to Registrant’s Report on Form 10-Q for the quarterly period ended September 30, 2009 (Commission File No. 1-4982). |

| [removed: (10)(kk)] [added: (10)(ll)] | | [Parker-Hannifin Corporation RONA Plan Subject to Performance Bonus Plan](http://www.sec.gov/Archives/edgar/data/76334/000119312510251281/dex10f.htm), incorporated by reference to Exhibit 10(f) to Registrant’s Report on Form 10-Q for the quarterly period ended September 30, 2010 (Commission File No. 1-4982). |

| [removed: (10)(ll)] [added: (10)(mm)] | | [Parker-Hannifin Corporation Summary of RONA Bonus Awards in Lieu of Certain Executive Perquisites,](http://www.sec.gov/Archives/edgar/data/76334/000119312508227100/dex10h.htm) incorporated by reference to Exhibit 10(h) to Registrant’s Report on Form 10-Q for the quarterly period ended September 30, 2008 (Commission File No. 1-4982). |

| [removed: (10)(mm)] [added: (10)(nn)] | | [Parker-Hannifin Corporation amended and restated Savings Restoration Plan,](http://www.sec.gov/Archives/edgar/data/76334/000119312504151808/dex10t.htm) as of September 1, 2004, incorporated by reference to Exhibit 10(t) to Registrant’s Report on Form 10-K for the fiscal year ended June 30, 2004 (Commission File No. 1-4982). |

| [removed: (10)(nn)] [added: (10)(oo)] | | [Parker-Hannifin Corporation Amended and Restated Savings Restoration Plan, e](http://www.sec.gov/Archives/edgar/data/76334/000007633417000012/ph12312016ex10b.htm)ffective January 1, 2016, incorporated by reference to Exhibit 10(d) to Registrant’s Report on Form 10-Q for the quarterly period ended December 31, 2016 (Commission File No. 1-4982). |

| [removed: (10)(oo)] [added: (10)(pp)] | | [Parker-Hannifin Corporation Amended and Restated Pension Restoration Plan,](http://www.sec.gov/Archives/edgar/data/76334/000007633416000196/ph6302016ex10mm.htm) effective July 1, 2016, incorporated by reference to Exhibit 10(mm) to Registrant's Report on Form 10-K for the fiscal year ended June 30, 2016 (Commission File No. 1-4982). |

| (4)(a) | | [Description of Parker-Hannifin's Securities](http://www.sec.gov/Archives/edgar/data/76334/000007633419000096/phc201910kex4a.htm), incorporated by reference to Exhibit 4(a) to Registrant's Report on Form 10-K for the year ended June 30, 2019 (Commission File No. 1-4982). |

| (10)(n) | | [Parker-Hannifin Corporation Amended and Restated 2016 Omnibus Stock Incentive Plan, effective as of October 23, 2019,](http://www.sec.gov/Archives/edgar/data/0000076334/000095015719001228/form8k.htm) incorporated by reference to Exhibit 10.1 to Registrant's Report on Form 8-K filed with the SEC on October 28, 2019 (Commission File No. 1-4982). |

| (10)(ss) | | [Amendment Two to the Parker-Hannifin Corporation Amended and Restated Executive Deferral Plan (effective September 2, 2015), dated and effective October 14, 2019,](http://www.sec.gov/Archives/edgar/data/76334/000007633420000009/ph123119ex101.htm) incorporated by reference to Exhibit 10.1 to Registrant's Report on Form 10-Q filed with the SEC on February 5, 2020 (Commission File No. 1-4982). |

| (10)(yy) | | [Credit Agreement among Parker-Hannifin Corporation, the lenders party thereto and Key Bank National Association, as Administrative Agent, dated as of September 4, 2019, incorporated by reference to Exhibit 10.1 to Registrant's Report on Form 8-K filed with the SEC on September 6, 2019](http://www.sec.gov/Archives/edgar/data/76334/000119312519240001/d784004dex101.htm) (Commission File No. 1-4982). |

| (10)(zz) | | [First Amendment Agreement among Parker-Hannifin Corporation, the lenders party thereto and Key Bank National Association, as Administrative Agent, dated September 4, 2019, incorporated by reference to Exhibit 10.2 to Registrant's Report on Form 8-K filed with the SEC on September 6, 2019](http://www.sec.gov/Archives/edgar/data/76334/000119312519240001/d784004dex102.htm) (Commission File no. 1-4982). |

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August 26, 2020

| Year ended June 30, 2020 | | $ | 8,874 | | | $ | 4,860 | | | $ | (2,090 | ) | | $ | 11,644 | |

| Year ended June 30, 2020 | | $ | 797,692 | | | $ | (42,217 | ) | | $ | 15,955 | | | $ | 771,430 | |

| (4)(a) | | [Description of Parker-Hannifin's Securities.](https://www.sec.gov/Archives/edgar/data/76334/000007633419000096/phc201910kex4a.htm)* |

\+ Certain schedules have been omitted and the Company agrees to furnish supplementally to the Commission a copy of any omitted exhibits and schedules upon request.

August 23, 2019

| Year ended June 30, 2017 | | $ | 8,010 | | | $ | 3,559 | | | $ | 2,767 | | | $ | 14,336 | |

| Year ended June 30, 2017 | | $ | 332,708 | | | $ | 349,803 | | | $ | 1,568 | | | $ | 684,079 | |

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

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| (Amounts in thousands, except per share information) | | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | |

| Net sales | | $ | 14,320,324 | | | $ | 14,302,392 | | | $ | 12,029,312 | | | $ | 11,360,753 | | | $ | 12,711,744 | |

| Net income attributable to common shareholders | | 1,512,364 | | | | 1,060,801 | | | | 983,412 | | | | 806,840 | | | | 1,012,140 | | |

| Basic earnings per share | | 11.63 | | | | 7.98 | | | | 7.37 | | | | 5.96 | | | | 7.08 | | |

| Diluted earnings per share | | 11.48 | | | | 7.83 | | | | 7.25 | | | | 5.89 | | | | 6.97 | | |

| Cash dividends per share | | 3.16 | | | | 2.74 | | | | 2.58 | | | | 2.52 | | | | 2.37 | | |

| Total assets | | 17,576,690 | | | | 15,320,087 | | | | 15,489,904 | | | | 12,034,142 | | | | 12,254,279 | | |

| Long-term debt | | 6,520,831 | | | | 4,318,559 | | | | 4,861,895 | | | | 2,652,457 | | | | 2,698,957 | | |