0000076334-22-000034 | 10-K | XBRL Viewer

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Cover Page - USD ($)	12 Months Ended
Cover Page - USD ($)	Jun. 30, 2022	Jul. 31, 2022	Dec. 31, 2021
Cover [Abstract]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Jun. 30, 2022
Current Fiscal Year End Date	--06-30
Document Transition Report	false
Entity File Number	1-4982
Entity Registrant Name	PARKER-HANNIFIN CORPORATION
Entity Incorporation, State or Country Code	OH
Entity Tax Identification Number	34-0451060
Entity Address, Address Line One	6035 Parkland Boulevard,
Entity Address, City or Town	Cleveland,
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	44124-4141
City Area Code	216
Local Phone Number	896-3000
Title of 12(b) Security	Common Shares, $.50 par value
Trading Symbol	PH
Security Exchange Name	NYSE
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	true
Entity Shell Company	false
Entity Public Float			$ 40,873,444,310
Entity Common Stock, Shares Outstanding		128,402,997
Documents Incorporated by Reference	Portions of the Definitive Proxy Statement for the Company’s 2022 Annual Meeting of Shareholders, to be held on October 26, 2022, are incorporated by reference into Part III of this Annual Report on Form 10-K.
Entity Central Index Key	0000076334
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	FY
Amendment Flag	false

Audit Information	12 Months Ended
Audit Information	Jun. 30, 2022
Audit Information [Abstract]
Auditor Name	DELOITTE & TOUCHE LLP
Auditor Location	Cleveland, Ohio
Auditor Firm ID	34

Consolidated Statement of Income - USD ($) $ in Thousands	12 Months Ended
Consolidated Statement of Income - USD ($) $ in Thousands	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2020
Income Statement [Abstract]
Net Sales	$ 15,861,608	$ 14,347,640	$ 13,695,520
Cost of sales	11,387,267	10,449,680	10,292,291
Selling, general and administrative expenses	1,627,116	1,527,302	1,656,553
Interest expense	255,252	250,036	308,161
Other expense (income), net	984,868	(17,003)	(67,112)
Gain on disposal of assets	(7,121)	(109,332)	(1,227)
Income before income taxes	1,614,226	2,246,957	1,506,854
Income taxes	298,040	500,096	304,522
Net Income	1,316,186	1,746,861	1,202,332
Less: Noncontrolling interest in subsidiaries' earnings	581	761	362
Net Income Attributable to Common Shareholders	$ 1,315,605	$ 1,746,100	$ 1,201,970
Earnings per Share Attributable to Common Shareholders
Basic earnings per share (in USD per share)	$ 10.24	$ 13.54	$ 9.36
Diluted earnings per share (in USD per share)	$ 10.09	$ 13.35	$ 9.26

Consolidated Statement of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2020
Statement of Comprehensive Income [Abstract]
Net Income	$ 1,316,186	$ 1,746,861	$ 1,202,332
Less: Noncontrolling interest in subsidiaries' earnings	581	761	362
Net Income Attributable to Common Shareholders	1,315,605	1,746,100	1,201,970
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment and other (net of tax of $(3,236), $(3,664) and $4,820 in 2022, 2021 and 2020)	(284,732)	328,792	(182,957)
Retirement benefits plan activity (net of tax of $(95,574), $(205,845) and $97,477 in 2022, 2021 and 2020)	306,735	664,076	(317,546)
Other comprehensive income (loss)	22,003	992,868	(500,503)
Less: Other comprehensive (loss) income for noncontrolling interests	(1,526)	720	(676)
Other comprehensive income (loss) attributable to common shareholders	23,529	992,148	(499,827)
Total Comprehensive Income Attributable to Common Shareholders	$ 1,339,134	$ 2,738,248	$ 702,143

Consolidated Statement of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2020
Statement of Comprehensive Income [Abstract]
Foreign currency translation and other, tax (expense) benefit	$ (3,236)	$ (3,664)	$ 4,820
Retirement benefits plan activity, tax (expense) benefit	$ (95,574)	$ (205,845)	$ 97,477

Consolidated Balance Sheet - USD ($) $ in Thousands	Jun. 30, 2022	Jun. 30, 2021
Current Assets
Cash and cash equivalents	$ 535,799	$ 733,117
Marketable securities and other investments	27,862	39,116
Trade accounts receivable, net	2,341,504	2,183,594
Non-trade and notes receivable	543,757	326,315
Inventories	2,214,553	2,090,642
Prepaid expenses and other	6,383,169	243,966
Total Current Assets	12,046,644	5,616,750
Property, plant and equipment	5,897,955	6,040,220
Less: Accumulated depreciation	3,775,197	3,773,744
Property, plant and equipment, net	2,122,758	2,266,476
Deferred income taxes	110,585	104,251
Investments and other assets	788,057	774,239
Intangible assets, net	3,135,817	3,519,797
Goodwill	7,740,082	8,059,687
Total Assets	25,943,943	20,341,200
Current Liabilities
Notes payable and long-term debt payable within one year	1,724,310	2,824
Accounts payable, trade	1,731,925	1,667,878
Accrued payrolls and other compensation	470,132	507,027
Accrued domestic and foreign taxes	250,292	236,384
Other accrued liabilities	1,682,659	682,390
Total Current Liabilities	5,859,318	3,096,503
Long-term debt	9,755,825	6,582,053
Pensions and other postretirement benefits	639,939	1,055,638
Deferred income taxes	307,044	553,981
Other liabilities	521,897	639,355
Total Liabilities	17,084,023	11,927,530
Shareholders' Equity
Serial preferred stock, $.50 par value, authorized 3,000,000 shares; none issued	0	0
Common stock, $.50 par value, authorized 600,000,000 shares; issued 181,046,128 shares in 2022 and 2021	90,523	90,523
Additional capital	327,307	329,619
Retained earnings	15,661,808	14,915,497
Accumulated other comprehensive (loss)	(1,543,198)	(1,566,727)
Treasury shares at cost: 52,594,956 in 2022 and 51,900,460 in 2021	(5,688,429)	(5,370,605)
Total Shareholders' Equity	8,848,011	8,398,307
Noncontrolling interests	11,909	15,363
Total Equity	8,859,920	8,413,670
Total Liabilities and Equity	$ 25,943,943	$ 20,341,200

Consolidated Balance Sheet (Parenthetical) - $ / shares	Jun. 30, 2022	Jun. 30, 2021
Statement of Financial Position [Abstract]
Serial preferred stock, par value (in USD per share)	$ 0.50	$ 0.50
Serial preferred stock, authorized (in shares)	3,000,000	3,000,000
Serial preferred stock, issued (in shares)	0	0
Common stock, par value (in USD per share)	$ 0.50	$ 0.50
Common stock, authorized (in shares)	600,000,000	600,000,000
Common stock, issued (in shares)	181,046,128	181,046,128
Treasury shares (in shares)	52,594,956	51,900,460

Consolidated Statement of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2020
Cash Flows From Operating Activities
Net Income	$ 1,316,186	$ 1,746,861	$ 1,202,332
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	257,314	269,943	252,899
Amortization	314,450	325,447	284,632
Stock incentive plan compensation	137,093	121,483	111,375
Deferred income taxes	(351,201)	(51,500)	12,290
Foreign currency transaction gain	(39,987)	(10,948)	(10,018)
Gain on sale of property, plant and equipment	(5,727)	(109,332)	(1,850)
Gain on sale of businesses	(1,394)	0	0
Gain on investments	(3,972)	(12,616)	(2,084)
Loss (gain) on marketable securities	5,131	(11,570)	(587)
Other	70,443	14,424	17,984
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable	(179,126)	(298,511)	578,853
Inventories	(212,134)	(85,597)	206,937
Prepaid expenses and other	37,630	(25,508)	(9,312)
Other assets	(11,167)	(8,779)	(23,547)
Accounts payable, trade	131,384	526,781	(370,765)
Accrued payrolls and other compensation	(15,524)	72,412	(62,715)
Accrued domestic and foreign taxes	32,514	36,552	30,918
Other accrued liabilities	999,831	11,397	(148,531)
Pensions and other postretirement benefits	1,822	17,875	55,522
Other liabilities	(41,836)	46,187	(53,384)
Net cash provided by operating activities	2,441,730	2,575,001	2,070,949
Cash Flows From Investing Activities
Acquisitions (net of cash acquired of $82,192 in 2020)	0	0	(5,076,064)
Capital expenditures	(230,044)	(209,957)	(232,591)
Proceeds from sale of property, plant and equipment	39,353	140,590	26,345
Proceeds from sale of businesses	3,366	0	0
Purchase of marketable securities and other investments	(27,895)	(34,809)	(194,742)
Maturities and sales of marketable securities and other investments	31,809	79,419	275,483
Other	(235,426)	24,744	177,576
Net cash used in investing activities	(418,837)	(13)	(5,023,993)
Cash Flows From Financing Activities
Proceeds from exercise of stock options	2,831	4,684	2,623
Payments for common shares	(460,056)	(218,818)	(216,049)
Acquisition of noncontrolling interests	0	0	(1,200)
Proceeds from (payments of) notes payable, net	1,422,026	(723,496)	136,744
Proceeds from long-term borrowings	3,598,056	1,213	1,721,211
Payments for long-term borrowings	(18,737)	(1,211,748)	(740,181)
Financing fees paid	(58,629)	0	0
Dividends paid	(569,855)	(475,174)	(453,838)
Net cash provided by (used in) financing activities	3,915,636	(2,623,339)	449,310
Effect of exchange rate changes on cash	(23,770)	95,954	(30,519)
Net increase (decrease) in cash and cash equivalents and restricted cash	5,914,759	47,603	(2,534,253)
Cash, cash equivalents and restricted cash at beginning of year	733,117	685,514	3,219,767
Cash, cash equivalents and restricted cash at end of year	6,647,876	733,117	685,514
Cash paid during the year for:
Interest	240,313	236,979	308,199
Income taxes	$ 549,223	$ 485,885	$ 307,959

Consolidated Statement of Cash Flows (Parenthetical) $ in Thousands	12 Months Ended
	Jun. 30, 2020 USD ($)
Statement of Cash Flows [Abstract]
Acquisitions, cash acquired	$ 82,192

Consolidated Statement of Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Capital	Retained Earnings	Accumulated Other Comprehensive (Loss)	Treasury Shares	Noncontrolling Interests
Beginning balance at Jun. 30, 2019	$ 6,085,764	$ 90,523	$ 462,086	$ 12,895,150	$ (2,059,048)	$ (5,309,130)	$ 6,183
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	1,202,332			1,201,970			362
Other comprehensive income (loss)	(500,503)				(499,827)		(676)
Dividends paid	(453,838)			(453,213)			(625)
Stock incentive plan activity	44,716		(46,265)			90,981
Acquisition activity	10,066		764				9,302
Shares purchased at cost	(146,767)					(146,767)
Ending balance at Jun. 30, 2020	6,241,770	90,523	416,585	13,643,907	(2,558,875)	(5,364,916)	14,546
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	1,746,861			1,746,100			761
Other comprehensive income (loss)	992,868				992,148		720
Dividends paid	(475,174)			(474,510)			(664)
Stock incentive plan activity	7,345		(86,966)			94,311
Shares purchased at cost	(100,000)					(100,000)
Ending balance at Jun. 30, 2021	8,413,670	90,523	329,619	14,915,497	(1,566,727)	(5,370,605)	15,363
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	1,316,186			1,315,605			581
Other comprehensive income (loss)	22,003				23,529		(1,526)
Dividends paid	(569,855)			(569,294)			(561)
Stock incentive plan activity	60,198		(2,312)			62,510
Liquidation activity	(1,948)						(1,948)
Shares purchased at cost	(380,334)					(380,334)
Ending balance at Jun. 30, 2022	$ 8,859,920	$ 90,523	$ 327,307	$ 15,661,808	$ (1,543,198)	$ (5,688,429)	$ 11,909

- Definition

Amount after tax and reclassification adjustments of other comprehensive income (loss).

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The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

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+ Details

- Definition

Amount of stockholders' equity (deficit), net of receivables from officers, directors, owners, and affiliates of the entity, attributable to both the parent and noncontrolling interests. Amount excludes temporary equity. Alternate caption for the concept is permanent equity.

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+ Details

Consolidated Statement of Equity (Parenthetical) - $ / shares	12 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2020
Statement of Stockholders' Equity [Abstract]
Dividends paid (in USD per share)	$ 4.42	$ 3.67	$ 3.52

Significant Accounting Policies

12 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Significant Accounting Policies

The term "year" and references to specific years refer to the applicable fiscal years.Significant Accounting Policies

The significant accounting policies followed in the preparation of the accompanying consolidated financial statements are summarized below.

Nature of Operations - The Company is a leading worldwide diversified manufacturer of motion and control technologies and systems, providing precision engineered solutions for a wide variety of mobile, industrial and aerospace markets. We evaluate performance based on segment operating income before corporate administrative expenses, interest expense and income taxes.

There are no individual customers to whom sales are more than two percent of the Company's consolidated sales. Due to our diverse group of customers throughout the world, we do not consider ourself exposed to any concentration of credit risks.

The Company manufactures and markets its products throughout the world. Although certain risks and uncertainties exist, the diversity and breadth of our products and geographic operations mitigate the risk that adverse changes with respect to any particular product and geographic operation would materially affect our operating results.

Use of Estimates - The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Basis of Consolidation - The consolidated financial statements include the accounts of all majority-owned domestic and foreign subsidiaries. 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. Control is transferred when the customer has the ability to direct the use of and obtain the benefits from the goods or services. When revenue is recognized at a point in time, control generally transfers at time of shipment. Revenues are recognized over time if the customer simultaneously receives control as the Company performs work under a contract, if the customer controls the asset as it is being produced, or if the product produced for the customer has no alternative use and the Company has a contractual right to payment.

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 these costs and efforts expended requires judgment on the part of management due to the duration of the contractual agreements as well as the technical nature of the products involved. We make adjustments to these estimates on a consistent basis and establish a contract reserve when the estimated costs to complete a contract exceed the expected contract revenues.

A contract’s transaction price is allocated to each distinct performance obligation. When there are multiple performance obligations within a contract, the transaction price is allocated to each performance obligation based on its standalone selling price. The primary method used to estimate a standalone selling price is the price observed in standalone sales to customers of the same product or service. 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 assesses variable consideration that may affect the total transaction price. Variable consideration primarily includes prompt pay discounts, rebates and volume discounts and is included in the estimated transaction price when there is a basis to reasonably estimate the amount, including whether the estimate should be constrained in order to avoid a significant reversal of revenue in a future period. These estimates are based on historical experience, anticipated performance under the terms of the contract and our best judgment at the time.

Payment terms vary by customer and the geographic location of the customer. The time between when revenue is recognized and payment is due is not significant. Our contracts with customers generally do not include significant financing components or noncash consideration.

Taxes collected from customers and remitted to governmental authorities are excluded from revenue. Shipping and handling costs are treated as fulfillment costs and are included in cost of sales. The costs to obtain a contract where the amortization period for the related asset is one year or less are expensed as incurred.

There is generally no unilateral right to return products. The Company primarily offers an assurance-type standard warranty that the product will conform to certain specifications for a defined period of time or usage after delivery. This type of warranty does not represent a separate performance obligation.

Cash - Cash equivalents consist of short-term, highly liquid investments with a maturity of three months or less. These investments are carried at cost plus accrued interest and are readily convertible into cash.

Marketable Securities and Other Investments - Consist of short-term, highly liquid investments with stated maturities of greater than three months from the date of purchase, which are carried at cost plus accrued interest. Marketable securities and other investments also include investments in equity securities which are carried at fair value. Changes in fair value related to equity securities are recorded in net income. We have the ability to liquidate these investments after giving appropriate notice to the issuer.

Trade Accounts Receivable, Net - Trade accounts receivable are initially recorded at their net collectible amount and are generally recorded at the time the revenue from the sales transaction is recorded. 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 $10 million and $12 million at June 30, 2022 and 2021, respectively.

Non-Trade and Notes Receivable - The non-trade and notes receivable caption in the Consolidated Balance Sheet is comprised of the following components:


June 30,	2022		2021
Notes receivable	$	103,558	$	144,441

Cash collateral receivable(a)	250,000		—
Accounts receivable, other	190,199		181,874
Total	$	543,757	$	326,315

(a) The cash collateral receivable relates to the deal-contingent forward contracts. Refer to Note 16 for further discussion.

Property, Plant and Equipment and Depreciation - Property, plant and equipment are recorded at cost and are depreciated principally using the straight-line method for financial reporting purposes. 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. We review property, plant and equipment for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. When property, plant and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the appropriate accounts and any gain or loss is included in current income.

The property, plant and equipment caption in the Consolidated Balance Sheet is comprised of the following components:


June 30,	2022		2021
Land and land improvements	$	322,024	$	342,950
Buildings and building equipment	1,783,805		1,848,141
Machinery and equipment	3,588,106		3,653,566
Construction in progress	204,020		195,563
Total	$	5,897,955	$	6,040,220

Investments and Other Assets - Investments in joint-venture companies in which ownership is 50 percent or less and in which the Company does not have operating control are stated at cost plus the Company's equity in undistributed earnings and amounted to $314 million and $292 million at June 30, 2022 and 2021, respectively. A significant portion of the underlying net assets of the joint ventures are related to goodwill. The Company's share of earnings from investments in joint-venture companies were $76 million, $41 million and $75 million in 2022, 2021 and 2020, respectively.

Intangible Assets - Intangible assets primarily include patents and technology, trademarks and customer lists and contracts and are recorded at cost and amortized on a straight-line method. Patents and technology are amortized over the shorter of their remaining useful or legal life. Trademarks and customer contracts are amortized over the estimated time period over which an economic benefit is expected to be received. Customer lists are amortized over a period based on anticipated customer attrition rates. The Company reviews intangible assets for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable.

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. Taxes related to Global Intangible Low-Taxed Income ("GILTI") are treated as a current period expense when incurred. Tax credits and similar tax incentives are applied to reduce the provision for income taxes in the year in which the credits arise. We recognize accrued interest related to unrecognized tax benefits in income tax expense. Penalties, if incurred, are recognized in income tax expense. Deferred income taxes arise from temporary differences in the recognition of income and expense for tax purposes. Income tax effects resulting from adjusting temporary differences recorded in accumulated other comprehensive (loss) are released when the circumstances on which they are based cease to exist.

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). Such adjustments will affect net income only upon sale or liquidation of the underlying foreign investments. Exchange (gains) losses from transactions in a currency other than the local currency of the entity involved are included within the cost of sales caption in the Consolidated Statement of Income and were $(40) million, $(11) million and $(10) million, in 2022, 2021 and 2020, respectively.

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, 2022. In July 2022, we issued $504 million of commercial paper and deposited this amount into the escrow account to finance a portion of the purchase of Meggitt. Additionally, in July 2022, we deposited a total of $250 million into escrow that was previously posted as collateral and recorded within non-trade and notes receivables at June 30, 2022. Refer to Note 16 for further discussion. In July 2022, after consideration of the escrow balance and funds available under the delayed-draw Term Loan Facility, we reduced the aggregate committed principal amount of the bridge credit agreement (the "Bridge Credit Agreement") to zero.

Recent Accounting Pronouncements - In November 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-10, "Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance", which requires entities to provide disclosures on material government assistance transactions for annual reporting periods. The disclosures include information around the nature of the assistance, the related accounting policies used to account for government assistance, the effect of government assistance on the entity’s financial statements, and any significant terms and conditions of the agreements, including commitments and contingencies. The new guidance is effective for all entities for annual reporting periods beginning after December 15, 2021; however, early adoption is permitted. The guidance may be applied either prospectively to all in-scope transactions that are reflected in the financial statements at the date of initial application and to new transactions that are entered into after the date of initial application, or retrospectively. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and does not expect it to be material.

In October 2021, the FASB issued ASU 2021-08, "Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers." ASU 2021-08 requires contract assets and contract liabilities acquired in a business combination to be recognized in accordance with Accounting Standards Codification (“ASC”) Topic 606 as if the acquirer had originated the contracts. The standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company elected to early adopt this standard in the second quarter of fiscal 2022. The impact of the new standard on our consolidated financial statements and related disclosures will depend on the magnitude of future acquisitions.

Revenue Recognition

12 Months Ended

Jun. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue recognition

Revenue is derived primarily from the sale of products in a variety of mobile, industrial and aerospace markets. A majority of the Company’s revenues are recognized at a point in time. However, a portion of the Company’s revenues are recognized over time.

Disaggregation of revenue

Revenue from contracts with customers is disaggregated by technology platforms for the Diversified Industrial Segment, by product platforms for the Aerospace Systems Segment and by geographic location for the total Company.

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. Blanket purchase orders are often associated with individual purchase orders and have terms and conditions which are subject to a master supply or distributor agreement. Individual production contracts, some of which may include multiple performance obligations, are typically for products manufactured to the customer's specifications. Revenue in the Diversified Industrial Segment is typically recognized at the time of product shipment, but a portion of revenue may be recognized over time for installation services or in situations where the product has no alternative use and we have an enforceable right to payment.

Diversified Industrial Segment revenues by technology platform:


	2022		2021
Motion Systems	$	3,489,431	$	3,081,366
Flow and Process Control	4,616,270		4,108,080
Filtration and Engineered Materials	5,236,345		4,770,713
Total	$	13,342,046	$	11,960,159

The Aerospace Systems Segment produces hydraulic, fuel, pneumatic and electro-mechanical systems and components, which are utilized on virtually every domestic commercial, military and general aviation aircraft. Aerospace Systems Segment products also perform a vital role in naval vessels and land-based weapon systems. Contracts generally consist of blanket purchase orders and individual long-term production contracts. Blanket purchase orders, which have terms and conditions subject to long-term supply agreements, are typically associated with individual purchase orders. Revenue in the Aerospace Systems Segment is typically recognized at the time of product shipment, but a portion of revenue may be recognized over time in situations where the customer controls the asset as it is produced or the product has no alternative use and we have an enforceable right to payment.

Aerospace Systems Segment revenues by product platform:


	2022		2021
Flight Control Actuation	$	761,215	$	698,877
Fuel and Inerting	535,292		509,687
Hydraulics	306,279		308,835
Engines	591,513		575,804
Fluid Conveyance	219,543		196,348
Other	105,720		97,930
Total	$	2,519,562	$	2,387,481

Total revenues by geographic region based on the Company's selling operation's location:


	2022		2021
North America	$	10,216,292	$	9,046,162
Europe	3,156,024		2,919,025
Asia Pacific	2,290,557		2,215,686
Latin America	198,735		166,767
Total	$	15,861,608	$	14,347,640

The majority of revenues from the Aerospace Systems Segment is generated from sales to customers within North America.

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.

Total contract assets and contract liabilities are as follows:


	2022		2021
Contract assets, current (included within Prepaid expenses and other)	$	28,546	$	34,190
Contract assets, noncurrent (included within Investments and other assets)	794		1,884
Total contract assets	29,340		36,074
Contract liabilities, current (included within Other accrued liabilities)	(60,472)		(51,211)
Contract liabilities, noncurrent (included within Other liabilities)	(2,225)		(3,080)
Total contract liabilities	(62,697)		(54,291)
Net contract liabilities	$	(33,357)	$	(18,217)

Net contract liabilities at June 30, 2022 increased from the prior year amount due to both an increase in contract liabilities related to the receipt of advance payments and a decrease in contract assets resulting from customer billings. During 2022, approximately $44 million of revenue was recognized that was included in the contract liabilities at June 30, 2021.

Remaining performance obligations

Our backlog represents 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 has been agreed to with the customer. We believe our backlog represents our unsatisfied or partially unsatisfied performance obligations. Backlog at June 30, 2022 was $7,850 million, of which approximately 88 percent is expected to be recognized as revenue within the next 12 months and the balance thereafter.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

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+ Details

Acquisitions

12 Months Ended

Jun. 30, 2022

Business Combination and Asset Acquisition [Abstract]

Acquisitions

Proposed Acquisition

On August 2, 2021, the Company announced that it reached an agreement on the terms of a recommended cash acquisition of the entire issued and to be issued ordinary share capital of Meggitt plc ("Meggitt") for 800 pence per share (the "Acquisition"), which is approximately £6,263 million based on issued share capital at July 31, 2022.

Meggitt is a leader in design, manufacturing and aftermarket support of technologically differentiated systems and equipment in aerospace, defense and selected energy markets with annual sales of approximately $2.1 billion for the year ended December 31, 2021. We intend to fund the proposed Acquisition with cash resources, borrowings under debt facilities and net proceeds of debt securities. Refer to Note 10 for further discussion. The proposed Acquisition received the European Commission's clearance on April 11, 2022, conditional on full compliance with commitments offered by the Company, including a commitment to divest its aircraft wheel and brake business within the Aerospace Systems Segment. The proposed Acquisition remains subject to customary closing conditions, including regulatory clearance. Acquisition-related transaction costs totaled $44 million in 2022. These costs are included in selling, general and administrative expenses in the Consolidated Statement of Income.

On May 23, 2022, the Company signed an agreement to divest its aircraft wheel and brake business, within the Aerospace Systems Segment. The aggregate carrying amount of the assets held for sale as of June 30, 2022 was $66 million. These assets primarily include goodwill and inventory and are recorded within prepaid expenses and other assets in the Consolidated Balance Sheet. Closing of this divestiture is subject to customary closing conditions, including regulatory clearance.

Restricted Cash

During 2022 we deposited funds, comprised of cash on hand and net proceeds from the issuance of commercial paper and the Senior Notes, into an escrow account. The escrow account is restricted to payments for the proposed Acquisition. At June 30, 2022, the balance was $6,112 million, which was recorded within prepaid expenses and other in the Consolidated Balance Sheet.

Acquisitions

On October 29, 2019, we completed the acquisition of a 100 percent equity interest in LORD Corporation ("Lord") for approximately $3,455 million in cash, including the assumption of debt. On September 16, 2019, we completed the acquisition of a 100 percent equity interest in EMFCO Holdings Incorporated, parent company of Exotic Metals Forming Company LLC ("Exotic") for approximately $1,706 million in cash.

Lord is a diversified technology and manufacturing company developing highly reliable adhesives and coatings, as well as vibration and motion control technologies, that significantly reduce risk and improve product performance. Lord’s products are used in mission-critical applications in the aerospace, automotive and industrial markets. Lord had annual sales of approximately $1,025 million for its fiscal 2018. For segment reporting purposes, approximately 95 percent of Lord's sales are included in the Diversified Industrial Segment, while the remaining five percent are included in the Aerospace Systems Segment. Lord’s unique and proprietary products, solutions and technologies for mission-critical applications are expected to increase the Company's overall engineered materials product and solutions offerings to enable a stronger value proposition for customers.

Exotic designs and manufactures innovative and technically demanding, high temperature, high pressure air and exhaust management solutions for aircraft and engines. Exotic had annual sales of approximately $409 million for its fiscal 2019.

For segment reporting purposes, Exotic is included in the Aerospace Systems Segment. We believe Exotic's products and proprietary manufacturing capabilities are complementary to our portfolio of flight control, fuel and inerting, hydraulics, fluid conveyance and engine components.

Assets acquired and liabilities assumed are recognized at their respective fair values as of the acquisition date. The process of estimating the fair values of certain tangible assets, identifiable intangible assets and assumed liabilities requires the use of judgment in determining the appropriate assumptions and estimates. The following presents the estimated fair values of Lord's and Exotic's assets acquired and liabilities assumed on the respective acquisition dates. These estimates are based on available information and are revised during the measurement period, not to exceed 12 months from the acquisition date, as third-party valuations are finalized, additional information becomes available and as additional analysis is performed. All measurement period adjustments were completed within a year from the acquisition date, and such adjustments did not have a material impact on the Company's results of operations and financial position.

The final purchase price allocations for acquisitions in 2020 is as follows:


	Lord		Exotic
	October 29, 2019		September 16, 2019
Assets:
Cash and cash equivalents	$	74,013	$	8,179
Accounts receivable	153,765		81,336
Inventories	248,600		114,661
Prepaid expenses	24,230		1,343
Property, plant and equipment	409,163		178,393
Deferred income taxes	—		2,057
Other assets	41,335		1,226
Intangible assets	1,446,660		874,470
Goodwill	1,970,603		503,725
Total assets acquired	4,368,369		1,765,390
Liabilities:
Notes payable and long-term debt payable within one year	156		—
Accounts payable, trade	56,186		23,176
Accrued payrolls and other compensation	57,571		8,863
Accrued domestic and foreign taxes	2,898		2,123
Other accrued liabilities	88,394		25,662
Long-term debt	221,161		—
Pensions and other postretirement benefits	115,017		—
Deferred income taxes	304,445		—
Other liabilities	55,832		—
Noncontrolling interests	11,266		—
Total liabilities and noncontrolling interests assumed	912,926		59,824
Net assets acquired	$	3,455,443	$	1,705,566

Goodwill is calculated as the excess of the purchase price over the net assets acquired. With respect to the Lord and Exotic acquisitions, goodwill represents cost synergies and enhancements to our existing technologies. For tax purposes, Lord's goodwill is not deductible, and Exotic's goodwill is deductible. Based upon an acquisition valuation, intangibles acquired as part of the Exotic acquisition include $502 million of customer-related intangible assets, $281 million of patents and technology and $91 million of trademarks, with weighted average estimated useful lives of 18, 20 and 20 years, respectively. Similarly, the Lord acquisition includes $869 million of customer-related intangible assets, $458 million of patents and technology and $119 million of trademarks, with weighted average estimated useful lives of 13, 21 and 20 years, respectively. These intangible assets were valued using the income approach, which includes significant assumptions around future revenue growth and discount rates. Such assumptions are classified as level 3 inputs within the fair value hierarchy.

Our consolidated financial statements for 2020 include the results of operations of Lord and Exotic from their respective acquisition dates through June 30, 2020. Net sales and segment operating income attributable to these acquisitions during this period and included in our consolidated financial statements totaled $949 million and $22 million, respectively.

Acquisition-related transaction and integration costs totaled $119 million in 2020. These costs are included in selling, general, and administrative expenses in the Consolidated Statement of Income.

Business Realignment and Acquisition Integration Charges

12 Months Ended

Jun. 30, 2022

Restructuring and Related Activities [Abstract]

Business Realignment and Acquisition Integration Charges

The Company incurred business realignment and acquisition integration charges in 2022, 2021 and 2020. During 2021, business realignment charges primarily consisted of actions taken to address the impact of COVID-19 on our business. Such charges were also incurred in 2020, especially within the Aerospace Systems Segment. In 2022, 2021, and 2020 business realignment charges included severance costs related to actions taken under the Company's simplification initiative aimed at reducing organizational and process complexity as well as plant closures. In 2022 and 2021, a majority of the business realignment charges were incurred in Europe. In 2020, a majority of the business realignment charges were incurred in North America. We believe the realignment actions will positively impact future results of operations but will not have a material effect on liquidity and sources and uses of capital.

Business realignment charges by business segment are as follows:


	2022		2021		2020
Diversified Industrial	$	13,787	$	38,557	$	52,288
Aerospace Systems	967		6,680		22,101
Corporate administration	—		1,399		1,175
Other expense	3		1,226		50

Workforce reductions in connection with such business realignment charges by business segment are as follows:


	2022	2021	2020
Diversified Industrial	300	820	2,394
Aerospace Systems	10	327	1,254
Corporate administration	—	20	31

The business realignment charges are presented in the Consolidated Statement of Income as follows:


	2022		2021		2020
Cost of sales	$	7,821	$	33,746	$	58,791
Selling, general and administrative expenses	6,933		12,890		16,773
Loss on disposal of assets	3		1,226		50

During 2022, approximately $21 million in payments were made relating to business realignment charges. Remaining payments related to current-year and prior-year business realignment actions of approximately $8 million, a majority of which are expected to be paid by March 31, 2023, are primarily reflected within the other accrued liabilities caption in the Consolidated Balance Sheet. 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. These charges primarily consist of write-downs of inventory and other working capital items and $8 million of foreign currency translation expense reclassified from accumulated other comprehensive income. Within the business segment information in Note 18, $7 million of expense was recorded in the other expense (income) caption, while the remainder of the charge was split evenly between the Aerospace Systems Segment and the Diversified Industrial International businesses.

We also incurred the following acquisition integration charges related to the Lord, Exotic and proposed Meggitt acquisitions:




	2022		2021		2020
Diversified Industrial	$	3,589	$	11,222	$	20,669
Aerospace Systems	1,177		719		1,908

In 2022, acquisition integration planning charges within the Aerospace Systems segment relate to the proposed Meggitt acquisition. In both 2021 and 2020, acquisition integration charges relate to the acquisitions of Lord and Exotic. These charges were primarily included in selling, general and administrative expenses within the Consolidated Statement of Income.

Income Taxes

12 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income before income taxes was derived from the following sources:


	2022		2021		2020
United States	$	646,364	$	1,273,037	$	828,160
Foreign	967,862		973,920		678,694
	$	1,614,226	$	2,246,957	$	1,506,854

Income taxes include the following:


	2022		2021		2020
Federal
Current	$	297,672	$	247,094	$	105,796
Deferred	(253,123)		(52,960)		24,905
Foreign
Current	303,089		269,607		167,680
Deferred	(45,977)		8,851		(14,247)
State and local
Current	48,479		34,895		18,756
Deferred	(52,100)		(7,391)		1,632
	$	298,040	$	500,096	$	304,522

A reconciliation of the effective income tax rate to the statutory federal rate follows:


	2022		2021		2020
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%
State and local income taxes	(0.2)		1.0		1.4

Tax related to international activities	2.7		3.6		1.8
Transition tax related to the TCJ Act	—		—		(0.7)
Cash surrender value of life insurance	0.5		(0.6)		(0.3)
Foreign derived intangible income deduction	(3.7)		(1.0)		(1.5)
Research tax credit	(0.8)		(0.4)		(0.6)
Share-based compensation	(1.3)		(1.6)		(1.5)
Other	0.3		0.3		0.6
Effective income tax rate	18.5	%	22.3	%	20.2	%

Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of assets and liabilities. The differences comprising the net deferred taxes shown on the Consolidated Balance Sheet at June 30 were as follows:


	2022		2021
Retirement benefits	$	207,147	$	322,931
Other liabilities and reserves	180,624		136,710
Long-term contracts	8,739		5,562
Stock-based compensation	31,490		30,165
Loss carryforwards	888,552		861,013
Unrealized currency exchange gains and losses	254,334		18,841
Inventory	14,649		(11,753)
Tax credit carryforwards	17,326		19,709
Undistributed foreign earnings	(21,822)		(21,722)
Depreciation and amortization	(875,623)		(945,422)
Valuation allowance	(901,875)		(865,764)
Net deferred tax (liability)	$	(196,459)	$	(449,730)

Change in net deferred tax (liability):
Provision for deferred tax	$	351,201	$	51,500
Items of other comprehensive (loss) income	(98,810)		(209,509)
Acquisitions and other	880		291
Total change in net deferred tax	$	253,271	$	(157,718)

As of June 30, 2022, we recorded deferred tax assets of $889 million resulting from $3,566 million in loss carryforwards. A valuation allowance of $876 million related to the loss carryforwards has been established due to the uncertainty of their realization. Of this valuation allowance, $853 million relates to non-operating entities whose loss carryforward utilization is considered to be remote. Some of the loss carryforwards can be carried forward indefinitely; others can be carried forward from three to 20 years. In addition, a valuation allowance of $26 million related to other future deductible items has been established due to the uncertainty of their realization.

Although future distributions of foreign earnings to the United States should not be subject to U.S. federal income taxes, other U.S. or foreign taxes may be imposed on such earnings. We have analyzed existing factors and determined we will no longer permanently reinvest certain foreign earnings. On these undistributed foreign earnings of approximately $678 million that are no longer permanently reinvested outside of the United States, we have recorded a deferred tax liability of $13 million. The remaining undistributed foreign earnings of approximately $1,630 million remain permanently reinvested outside the United States at June 30, 2022. Of these undistributed earnings, we have recorded a deferred tax liability of $8 million where certain foreign holding companies are not permanently reinvested in their subsidiaries. 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.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


	2022		2021		2020
Balance July 1	$	100,759	$	86,277	$	140,662
Additions for tax positions related to current year	7,039		10,145		4,955
Additions for tax positions of prior years	1,415		10,320		798
Additions for acquisitions	—		2,376		43,532
Reductions for tax positions of prior years	(140)		(1,996)		(41,726)
Reductions for settlements	(3,127)		(7,165)		(53,520)
Reductions for expiration of statute of limitations	(6,647)		(2,252)		(3,820)
Effect of foreign currency translation	(8,630)		3,054		(4,604)
Balance June 30	$	90,669	$	100,759	$	86,277

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $91 million, $101 million and $86 million as of June 30, 2022, 2021 and 2020, respectively. The accrued interest related to the gross unrecognized tax benefits, excluded from the amounts above, was $18 million, $18 million and $14 million as of June 30, 2022, 2021 and 2020, respectively.

It is reasonably possible that, within the next 12 months, the amount of gross unrecognized tax benefits could be reduced by up to approximately $30 million as a result of the revaluation of existing uncertain tax positions arising from developments in the examination process or the closure of tax statutes. Any increase in the amount of unrecognized tax benefits within the next 12 months is expected to be insignificant.

We file income tax returns in the United States and in various foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world. We are open to assessment of our U.S. federal income tax returns by the Internal Revenue Service for years after 2013, and our state and local income tax returns for years after 2016. We are open to assessment for significant foreign jurisdictions for years after 2011.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Earnings Per Share

12 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Earnings Per Share

Basic earnings per share are computed using the weighted-average number of common shares outstanding during the year. Diluted earnings per share are computed using the weighted-average number of common shares and common share equivalents outstanding during the year. Common share equivalents represent the dilutive effect of outstanding equity-based awards. The reconciliation of the numerator and denominator of basic and diluted earnings per share was as follows:


	2022		2021		2020
Numerator:
Net income attributable to common shareholders	$	1,315,605	$	1,746,100	$	1,201,970
Denominator:
Basic - weighted-average common shares	128,539,387		128,999,879		128,418,495
Increase in weighted-average common shares from dilutive effect of equity-based awards	1,816,556		1,834,599		1,386,539
Diluted - weighted-average common shares, assuming exercise of equity-based awards	130,355,943		130,834,478		129,805,034
Basic earnings per share	$	10.24	$	13.54	$	9.36
Diluted earnings per share	$	10.09	$	13.35	$	9.26

For 2022, 2021 and 2020, 0.4 million, 0.4 million and 0.6 million common shares, respectively, subject to equity-based awards were excluded from the computation of diluted earnings per share because the effect of their exercise would be anti-dilutive.

Inventories

12 Months Ended

Jun. 30, 2022

Inventory Disclosure [Abstract]

Inventories

Inventories are stated at the lower of cost or net realizable value using the first-in, first-out ("FIFO") method.

The inventories caption in the Consolidated Balance Sheet is comprised of the following components:


June 30,	2022		2021
Finished products	$	811,702	$	733,744
Work in process	1,128,501		1,089,976
Raw materials	274,350		266,922
Total	$	2,214,553	$	2,090,642

Goodwill and Intangible Assets

12 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

The changes in the carrying amount of goodwill are as follows:


	Diversified Industrial Segment		Aerospace Systems Segment		Total
Balance June 30, 2020	$	7,267,573	$	602,362	$	7,869,935
Acquisitions	3,738		—		3,738


Foreign currency translation	185,998		16		186,014
Balance June 30, 2021	$	7,457,309	$	602,378	$	8,059,687

Divestitures	(164)		—		(164)

Goodwill reclassified to held for sale	—		(48,242)		(48,242)
Foreign currency translation	(271,164)		(35)		(271,199)
Balance June 30, 2022	$	7,185,981	$	554,101	$	7,740,082

Acquisitions represent the goodwill allocation during the measurement period subsequent to the applicable acquisition dates. Refer to Note 3 for further discussion.

Divestitures represent goodwill associated with the sale of a business during 2022.

Goodwill reclassified to held for sale, which was allocated using the relative fair value method, relates to the aircraft wheel and brake business. Refer to Note 3 for further discussion.

We test goodwill for impairment at the reporting unit 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. Our annual impairment tests performed in 2022, 2021 and 2020 resulted in no impairment loss being recognized.

Intangible assets are amortized on a straight-line method over their legal or estimated useful lives. The gross carrying value and accumulated amortization for each major category of intangible asset at June 30 are as follows:


	2022				2021
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Patents and technology	$	990,775	$	259,587	$	999,952	$	216,314
Trademarks	727,820		339,244		762,130		331,905
Customer lists and other	3,735,042		1,718,989		3,869,772		1,563,838
Total	$	5,453,637	$	2,317,820	$	5,631,854	$	2,112,057

Total intangible asset amortization expense in 2022, 2021 and 2020 was $314 million, $325 million and $285 million, respectively. Estimated intangible asset amortization expense for the five years ending June 30, 2023 through 2027 is $300 million, $285 million, $278 million, $273 million and $267 million, respectively.

Intangible assets are evaluated for impairment whenever events or circumstances indicate that the undiscounted net cash flows to be generated by their use over their expected useful lives and eventual disposition may be less than their net carrying value. No material intangible asset impairments occurred in 2022, 2021 or 2020.

Financing Arrangements	12 Months Ended
Financing Arrangements	Jun. 30, 2022
Financing Arrangements [Abstract]
Financing Arrangements	Financing Arrangements During 2022, the Company amended its existing multi-currency credit agreement, increasing its capacity to $3,000 million, by exercising the accordion feature. As of June 30, 2022, $1,578 million was available for borrowing under the credit agreement. The credit agreement expires in September 2024; however, the Company has the right to request a one-year extension of the expiration date on an annual basis, which request may result in changes to the current terms and conditions of the credit agreement. Advances from the credit agreement can be used for general corporate purposes, including acquisitions, and for the refinancing of existing indebtedness. The credit agreement supports our commercial paper program, and issuances of commercial paper reduce the amount of credit available under the agreement. The credit agreement requires the payment of an annual facility fee, the amount of which may increase in the event our credit ratings are lowered. Although a lowering of our credit ratings would likely increase the cost of future debt, it would not limit our ability to use the credit agreement nor would it accelerate the repayment of any outstanding borrowings. The Company is currently authorized to sell up to $3,000 million of short-term commercial paper notes. There were $1,422 million commercial paper notes outstanding at June 30, 2022 and none were outstanding at June 30, 2021. The Company had no outstanding borrowings from foreign banks at June 30, 2022 and 2021. The weighted-average interest rate on notes payable during 2022 and 2021 was 0.7 percent and 0.2 percent, respectively. In the ordinary course of business, some of our locations may enter into financial guarantees through financial institutions which enable customers to be reimbursed in the event of nonperformance by the Company. The Company's credit agreements and indentures governing certain debt agreements contain various covenants, the violation of which would limit or preclude the use of the applicable agreements for future borrowings, or might accelerate the maturity of the related outstanding borrowings covered by the applicable agreements. Based on our rating level at June 30, 2022, 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, 2022, our debt to debt-shareholders' equity ratio was 0.57 to 1.0. We are in compliance with all covenants.

Debt

12 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Debt


June 30,	2022		2021
Domestic:
Fixed rate medium-term notes, 3.30% to 6.25%, due 2023 - 2045	$	2,125,000	$	2,125,000
Senior Notes, 2.70% to 4.50%, due 2024 - 2049	7,275,000		3,675,000

Foreign:
Euro Senior Notes, 1.125%, due 2025	733,950		830,060

Other long-term debt	11,127		15,968
Deferred debt issuance costs	(86,972)		(61,156)
Total long-term debt	10,058,105		6,584,872
Less: Long-term debt payable within one year	302,280		2,819
Long-term debt, net	$	9,755,825	$	6,582,053

During 2022, the Company issued $1,400 million aggregate principal amount of 3.65 percent Senior Notes due June 15, 2024, $1,200 million aggregate principal amount of 4.25 percent Senior Notes due September 15, 2027, and $1,000 million aggregate principal amount of 4.50 percent Senior Notes due September 15, 2029 (collectively, the "Senior Notes"). Interest payments are due semi-annually. We intend to use the proceeds of the Senior Notes to finance a portion of the purchase of the proposed Acquisition. If the Company does not consummate its proposed acquisition of Meggitt on or prior to April 3, 2023 or, if prior to such date, the Company notifies the trustee in writing that the cooperation agreement between Parker and Meggitt is terminated, the Senior Notes will be subject to a special mandatory redemption at a price equal to 101 percent of the aggregate principal amount of such Senior Notes, plus accrued and unpaid interest on the Senior Notes to, but not including, the special mandatory redemption date. Debt issuance costs, including discounts, related to the Senior Notes totaled $33 million and will be amortized over the respective debt terms.

In connection with the proposed acquisition, the Company entered into a Bridge Credit Agreement on August 2, 2021. Under the Bridge Credit Agreement, lenders committed to provide senior, unsecured financing in the aggregate principal amount of £6,524 million at August 2, 2021. As permanent financing for the proposed Acquisition was secured, the principal amount of the Bridge Credit Agreement was reduced. At June 30, 2022, the available aggregate principal amount was £591 million. Any borrowings made under the Bridge Credit Agreement would mature 364 days from the initial funding date. The commitments are intended to be drawn to finance the proposed acquisition of Meggitt only to the extent that we do not arrange for alternative financing prior to closing. In 2022, we incurred $52 million in financing fees related to the Bridge Credit Agreement, all of which was included in other expense (income), net within the Consolidated Statement of Income.

Additionally, we entered into a senior, unsecured delayed-draw Term Loan Facility in an aggregate principal amount of $2,000 million on August 27, 2021. The proceeds of the Term Loan Facility, if drawn, will be used solely by the Company to finance a portion of the purchase of its proposed Acquisition.

Principal amounts of long-term debt payable in the five years ending June 30, 2023 through 2027 are $302 million, $1,976 million, $1,234 million, $0.4 million and $700 million, respectively. The principal amounts of long-term debt payable exclude the amortization of debt issuance costs.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI https://asc.fasb.org/topic&trid=2208564

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (h)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (g)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1E
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

+ Details

Leases

12 Months Ended

Jun. 30, 2022

Leases [Abstract]

Leases

We primarily enter into lease agreements for office space, distribution centers, certain manufacturing facilities and equipment. The majority of our leases are operating leases. Finance leases are immaterial to our financial statements. In addition, leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheet. Certain leases contain options that provide us with the ability to extend the lease term. Such options are included in the lease term when it is reasonably certain that the option will be exercised. When accounting for leases, we combine payments for leased assets, related services and other components of a lease. Payments within certain lease agreements are adjusted periodically for changes in an index or rate.

The discount rate implicit within our leases is generally not determinable, and therefore we determine the discount rate based on our incremental borrowing rate. The incremental borrowing rate for our leases is determined based on lease term and the currency in which lease payments are made.

The components of lease expense are as follows:


	2022		2021
Operating lease expense	$	46,026	$	48,171
Short-term lease cost	7,041		7,674
Variable lease cost	5,849		5,835
Total lease cost	$	58,916	$	61,680

Supplemental cash flow information related to operating leases is as follows:


	2022		2021
Cash paid for amounts included in the measurement of operating lease liabilities	$	45,371	$	47,080
Right-of-use assets obtained in exchange for operating lease obligations	50,925		41,637

Supplemental balance sheet information related to operating leases is as follows:


	2022			2021
Operating lease right-of-use assets (included within Investments and other assets)	$	133,412		$	131,880

Current operating lease liabilities (included within Other accrued liabilities)	$	36,023		$	40,193
Long-term operating lease liabilities (included within Other liabilities)	100,337			93,904
Total operating lease liabilities	$	136,360		$	134,097

Weighted average remaining lease term	5.6 years			5.5 years
Weighted average discount rate	1.6		%	1.8		%

Maturities of lease liabilities at June 30, 2022 are as follows:


	Operating Leases
2023	$	37,876
2024	28,584
2025	23,299
2026	17,721
2027	10,633
Thereafter	25,483
Total operating lease payments	$	143,596
Less imputed interest	7,236
Total operating lease liabilities	$	136,360

Retirement Benefits

12 Months Ended

Jun. 30, 2022

Retirement Benefits [Abstract]

Retirement Benefits

Pensions - The Company has noncontributory defined benefit pension plans covering eligible employees, including certain employees in foreign countries. Plans for most salaried employees provide pay-related benefits based on years of service. Plans for hourly employees generally provide benefits based on flat-dollar amounts and years of service. We also have arrangements for certain key employees, which provide for supplemental retirement benefits. In general, the Company's policy is to fund these plans based on legal requirements, tax considerations, local practices and investment opportunities. We also sponsor defined contribution plans and participate in government-sponsored programs in certain foreign countries.

A summary of the Company's defined benefit pension plans follows:


	2022		2021		2020
Benefit cost
Service cost	$	76,638	$	84,188	$	82,743
Interest cost	110,250		102,475		142,479


Expected return on plan assets	(267,888)		(267,579)		(266,674)
Amortization of prior service cost	4,103		5,325		5,633
Amortization of unrecognized actuarial loss	157,288		207,897		165,815
Amortization of transition obligation	8		18		18
Net periodic benefit cost	$	80,399	$	132,324	$	130,014

Components of net pension benefit cost, other than service cost, are included in other expense (income), net in the Consolidated Statement of Income.


	2022		2021
Change in benefit obligation
Benefit obligation at beginning of year	$	6,323,003	$	6,405,623
Service cost	76,638		84,188
Interest cost	110,250		102,475


Plan amendments	(5,691)		2,311

Actuarial gain	(1,097,053)		(91,719)
Benefits paid	(256,868)		(264,062)
Foreign currency translation and other	(190,960)		84,187
Benefit obligation at end of year	$	4,959,319	$	6,323,003

Change in plan assets
Fair value of plan assets at beginning of year	$	5,305,577	$	4,594,106
Actual (loss) gain on plan assets	(605,642)		831,762


Employer contributions	96,717		76,936
Benefits paid	(256,868)		(264,062)
Foreign currency translation and other	(177,631)		66,835
Fair value of plan assets at end of year	$	4,362,153	$	5,305,577
Funded status	$	(597,166)	$	(1,017,426)


Amounts recognized on the Consolidated Balance Sheet
Other accrued liabilities	$	(19,307)	$	(4,944)
Pensions and other postretirement benefits	(577,859)		(1,012,482)
Net amount recognized	$	(597,166)	$	(1,017,426)

Amounts recognized in Accumulated Other Comprehensive (Loss)
Net actuarial loss	$	672,775	$	1,090,343
Prior service cost	4,901		15,006
Transition obligation	—		8
Net amount recognized	$	677,676	$	1,105,357

The presentation of the amounts recognized on the Consolidated Balance Sheet and in accumulated other comprehensive (loss) is on a debit (credit) basis and excludes the effect of income taxes.

At June 30, 2022, the benefit obligation decreased primarily due to significantly higher discount rates. At June 30, 2021, the benefit obligation decreased primarily due to slightly higher discount rates, partially offset by updated census data and assumptions.

Investment (losses) gains are the primary contributing factor for the (decrease) increase in plan assets' fair value during 2022 and 2021, respectively.

The accumulated benefit obligation for all defined benefit plans was $4,785 million and $6,069 million at June 30, 2022 and 2021, respectively.

Information for pension plans with accumulated benefit obligations in excess of plan assets:


	2022		2021
Accumulated benefit obligation	$	4,284,601	$	5,358,817
Fair value of plan assets	3,742,513		4,546,301

Information for pension plans with projected benefit obligations in excess of plan assets:


	2022		2021
Projected benefit obligation	$	4,483,486	$	5,620,693
Fair value of plan assets	3,782,688		4,568,113

We expect to make cash contributions of approximately $76 million to our defined benefit pension plans in 2023, the majority of which relates to our non-U.S. plans. Estimated future benefit payments in the five years ending June 30, 2023 through 2027 are $282 million, $319 million, $292 million, $294 million and $333 million, respectively, and $1,566 million in the aggregate for the five years ending June 30, 2028 through June 30, 2032.

The assumptions used to measure net periodic benefit cost for the Company's significant defined benefit plans are:


	2022		2021		2020
U.S. defined benefit plan
Discount rate	2.55	%	2.36	%	3.28	%
Average increase in compensation	3.05	%	2.98	%	3.60	%
Expected return on plan assets	6.50	%	6.75	%	7.00	%
Non-U.S. defined benefit plans
Discount rate	0.25 to 2.95%		0.2 to 3.03%		0.2 to 2.96%
Average increase in compensation	1.75 to 4.50%		1.75 to 4.50%		1.75 to 3.90%
Expected return on plan assets	1.0 to 4.50%		1.0 to 5.40%		1.0 to 5.75%

The assumptions used to measure the benefit obligation for the Company's significant defined benefit plans are:


	2022		2021
U.S. defined benefit plan
Discount rate	4.36	%	2.55	%
Average increase in compensation	3.81	%	3.05	%
Non-U.S. defined benefit plans
Discount rate	0.60 to 5.06%		0.25 to 2.95%
Average increase in compensation	1.75 to 4.00%		1.75 to 4.50%

The discount rate assumption is based on current rates of high-quality, long-term corporate bonds over the same estimated time period that benefit payments will be required to be made. The expected return on plan assets assumption is based on the weighted-average expected return of the various asset classes in the plans' portfolio. The asset class return is developed using historical asset return performance as well as current market conditions such as inflation, interest rates and equity market performance.

The weighted-average allocation of the majority of the assets related to defined benefit plans is as follows:


	2022		2021
Equity securities	31	%	38	%
Debt securities	43	%	41	%

Other investments	26	%	21	%