Page Number in Form 10-K Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34) 32 Financial Statements Consolidated Statements of Income 34 Consolidated Statements of Comprehensive Income 35 Consolidated Balance Sheets 36 Consolidated Statements of Cash Flows 37 Consolidated Statements of Equity 38 Notes to Consolidated Financial Statements 39 31 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Parker-Hannifin Corporation Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Parker-Hannifin Corporation and subsidiaries (the “Company”) as of June 30, 2026 and 2025, the related consolidated statements of income, comprehensive income, cash flows, and equity, for each of the three years in the period ended June 30, 2026, and the related notes (collectively referred to as the “financial statements”). We also have audited the Company’s internal control over financial reporting as of June 30, 2026, based on criteria established in Internal Control — Integrated Framework (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, 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2026, 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, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Curtis Instruments, Inc. (“Curtis”), which was acquired on September 18, 2025, and whose financial statements constitute approximately 4% of total assets and 1% of net sales of the consolidated financial statement amounts as of and for the year ended June 30, 2026. Accordingly, our audit did not include the internal control over financial reporting at Curtis. Basis for Opinions The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report On Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable 32 Table of Contents assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue — Refer to Notes 1 and 2 to the financial statements Critical Audit Matter Description The Company recognizes revenue from the sale of products to customers primarily in aerospace & defense, in-plant & industrial equipment, transportation, off-highway, energy, and HVAC & refrigeration markets around the world. The Company’s business activities are carried out by a large number of individual business units collectively offering hundreds of thousands of individual products in over forty countries globally. We identified revenue from product shipments as a critical audit matter due to the geographic dispersion of the Company’s operations and business units generating revenue. Extensive audit effort is required due to the volume of the underlying transactions and number of individual business units. High levels of auditor judgment were necessary to determine the nature, timing, and extent of audit procedures performed to audit revenue from product shipments. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the Company’s revenue from product shipments included the following, among others: •We tested the operating effectiveness of internal controls over the recognition of revenue from product shipments, including controls over the quantity and price of products shipped and timing of revenue recognition. •We performed detail transaction testing for revenue from product shipments by making a sample of transactions and comparing the transactions selected to source documents such as purchase orders and shipping records. •We tested the completeness of revenue from product shipments by making a sample from a listing of sales orders and comparing the sample transactions to source documentation such as shipping records to determine whether the transactions selected were appropriately included in revenue from product shipments. •We tested the timing of revenue recognition by making a sample from a list of products shipped prior to and subsequent to year end and used source documentation such as shipping records to determine whether the transactions selected were appropriately recorded in the correct period. •We performed substantive analytical procedures for certain revenue transactions by developing independent expectations of revenue based on data derived from the results of our detail revenue testing and comparing these expectations to the revenue recorded by management. /s/ DELOITTE & TOUCHE LLP Cleveland, Ohio August 21, 2026 We have served as the Company's auditor since 2008. 33 Table of Contents Consolidated Statements of Income (In millions, except per share data) For the years ended June 30, 2026 2025 2024 Net sales $ 21,499 $ 19,850 $ 19,930 Cost of sales 13,397 12,535 12,802 Selling, general and administrative expenses 3,468 3,255 3,315 Interest expense 401 409 506 Other expense (income), net (330) (456) (288) Income before income taxes 4,563 4,107 3,595 Income taxes 914 575 750 Net income 3,649 3,532 2,845 Less: Noncontrolling interest in subsidiaries' earnings 1 1 1 Net income attributable to common shareholders $ 3,648 $ 3,531 $ 2,844 Earnings per share attributable to common shareholders: Basic $ 28.89 $ 27.52 $ 22.13 Diluted $ 28.48 $ 27.12 $ 21.84 The accompanying notes are an integral part of the consolidated financial statements. 34 Table of Contents Consolidated Statements of Comprehensive Income (In millions) For the years ended June 30, 2026 2025 2024 Net income $ 3,649 $ 3,532 $ 2,845 Less: Noncontrolling interests in subsidiaries' earnings 1 1 1 Net income attributable to common shareholders 3,648 3,531 2,844 Other comprehensive income (loss), net of tax Foreign currency translation adjustment and other (76) 413 (168) Retirement benefits plan activity 156 142 23 Other comprehensive income (loss) attributable to common shareholders 80 555 (145) Total comprehensive income attributable to common shareholders $ 3,728 $ 4,086 $ 2,699 The accompanying notes are an integral part of the consolidated financial statements. 35 Table of Contents Consolidated Balance Sheets (In millions, except par value) June 30, 2026 2025 Assets Current assets: Cash and cash equivalents $ 501 $ 467 Trade accounts receivable, net of allowances of $7 and $10 3,170 2,910 Non-trade and notes receivable 303 318 Inventories 3,166 2,839 Prepaid expenses 355 263 Other current assets 200 153 Total current assets 7,695 6,950 Property, plant and equipment, net of accumulated depreciation of $4,625 and $4,480 3,020 2,937 Deferred income taxes 238 270 Other long-term assets 1,535 1,269 Intangible assets, net 7,280 7,374 Goodwill 11,109 10,694 Total assets $ 30,877 $ 29,494 Liabilities and equity Current liabilities: Notes payable and long-term debt payable within one year $ 1,754 $ 1,791 Accounts payable, trade 2,439 2,126 Accrued payrolls and other compensation 658 587 Other current liabilities 1,245 1,315 Total current liabilities 6,096 5,819 Long-term debt 6,766 7,494 Pensions and other postretirement benefits 224 267 Deferred income taxes 1,630 1,490 Other long-term liabilities 748 733 Total liabilities 15,464 15,803 Equity Shareholders' equity: Serial preferred stock, $.50 par value, authorized 3.0 shares; none issued — — Common stock, $.50 par value, authorized 600.0 shares; issued 181.0 shares 91 91 Additional paid-in capital 818 194 Retained earnings 24,487 21,775 Accumulated other comprehensive loss (803) (883) Treasury shares at cost: 55.0 shares and 54.4 shares (9,189) (7,495) Total shareholders' equity 15,404 13,682 Noncontrolling interests 9 9 Total equity 15,413 13,691 Total liabilities and equity $ 30,877 $ 29,494 The accompanying notes are an integral part of the consolidated financial statements. 36 Table of Contents Consolidated Statements of Cash Flows (In millions) For the years ended June 30, 2026 2025 2024 Cash flows from operating activities Net income $ 3,649 $ 3,532 $ 2,845 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 353 354 349 Amortization 584 553 578 Stock-based compensation expense 179 159 155 Deferred income taxes (4) (304) 32 Pensions and other postretirement benefits, net (68) (152) (180) Gain on sale of businesses (9) (253) (24) Other, net (24) 40 (6) Changes in assets and liabilities, net of effects from acquisitions and divestitures: Accounts receivable, net (114) 6 (85) Inventories (272) (94) 101 Other assets (71) 15 (64) Accounts payable, trade 290 119 (44) Other liabilities 10 (134) (133) Income taxes (139) (65) (140) Net cash provided by operating activities 4,364 3,776 3,384 Cash flows from investing activities Acquisitions, net of cash acquired (1,014) — — Capital expenditures (459) (435) (400) Proceeds from sale of property, plant and equipment 40 32 9 Proceeds from sale of businesses 16 623 78 Other, net 27 4 15 Net cash provided by (used in) investing activities (1,390) 224 (298) Cash flows from financing activities Payments for common shares (1,262) (1,766) (332) Proceeds from (payments for) notes payable, net (736) (364) 359 Proceeds from long-term borrowings 23 751 24 Payments for long-term borrowings (24) (1,741) (2,385) Dividends paid (936) (861) (782) Other, net 1 4 1 Net cash used in financing activities (2,934) (3,977) (3,115) Effect of exchange rate changes on cash (6) 22 (24) Net increase (decrease) in cash and cash equivalents 34 45 (53) Cash and cash equivalents at beginning of year 467 422 475 Cash and cash equivalents at end of year $ 501 $ 467 $ 422 Supplemental cash flow data: Cash paid during the year for: Interest $ 385 $ 384 $ 491 Income taxes and related interest, penalties and purchased credits, net of refunds 1,064 927 852 The accompanying notes are an integral part of the consolidated financial statements. 37 Table of Contents Consolidated Statements of Equity (In millions, except per-share data) Parker-Hannifin Corporation Shareholders' Equity Number of Common Shares Outstanding Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Shares Non-controlling Interests Total Balance June 30, 2023 128.4 $ 91 $ 305 $ 17,042 $ (1,293) $ (5,818) $ 11 $ 10,338 Net income — — — 2,844 — — 1 2,845 Other comprehensive loss — — — — (145) — — (145) Dividends paid ($6.07 per share) — — — (781) — — (1) (782) Stock incentive plan activity 0.6 — (41) — — 68 — 27 Other — — — — — — (2) (2) Shares purchased at cost (0.4) — — — — (200) — (200) Balance June 30, 2024 128.6 $ 91 $ 264 $ 19,105 $ (1,438) $ (5,950) $ 9 $ 12,081 Net income — — — 3,531 — — 1 3,532 Other comprehensive income — — — — 555 — — 555 Dividends paid ($6.69 per share) — — — (861) — — — (861) Stock incentive plan activity 0.6 — (70) — — 68 — (2) Other — — — — — — (1) (1) Shares purchased at cost, including excise tax (2.5) — — — — (1,613) — (1,613) Balance June 30, 2025 126.7 $ 91 $ 194 $ 21,775 $ (883) $ (7,495) $ 9 $ 13,691 Net income — — — 3,648 — — 1 3,649 Other comprehensive income — — — — 80 — — 80 Dividends paid ($7.40 per share) — — — (936) — — — (936) Stock incentive plan activity1 0.6 — 624 — — (689) — (65) Other — — — — — — (1) (1) Shares purchased at cost, including excise tax (1.2) — — — — (1,005) — (1,005) Balance June 30, 2026 126.1 $ 91 $ 818 $ 24,487 $ (803) $ (9,189) $ 9 $ 15,413 (1) In 2026, the Company recorded a $578 million reclassification between Treasury Shares and Additional Paid-in Capital to correct the historical accounting for shares withheld for taxes related to equity compensation issuances. The Company concluded the out-of-period adjustment was not material to the current period or any prior periods. The accompanying notes are an integral part of the consolidated financial statements. 38 Table of Contents Notes to Consolidated Financial Statements (Dollars in millions, except per share amounts or as otherwise noted) The term "year" and references to specific years refer to the applicable fiscal years. Note 1. 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 global leader in motion and control technologies. Leveraging a unique combination of interconnected technologies, we design, manufacture, and provide aftermarket support for highly engineered solutions that create value for customers primarily in aerospace & defense, in-plant & industrial equipment, transportation, off-highway, energy, and HVAC & refrigeration markets around the world. We evaluate performance based on segment operating income before corporate administrative expenses, interest expense and income taxes. Due to our diverse group of customers throughout the world, we do not consider ourselves 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. Certain prior year amounts have been reclassified to conform to the current year presentation. 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 assess variable consideration that may affect the total transaction price. Variable consideration primarily includes prompt pay discounts, rebates and 39 Table of Contents 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 and Cash Equivalents 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. 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. Refer to the Consolidated Balance Sheets for more information. Non-Trade and Notes Receivable The non-trade and notes receivable caption in the Consolidated Balance Sheets is comprised of the following components: June 30, 2026 2025 Notes receivable $ 60 $ 84 Accounts receivable, other 243 234 Total $ 303 $ 318 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. 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. 40 Table of Contents The property, plant and equipment, net caption in the Consolidated Balance Sheets is comprised of the following components: June 30, 2026 2025 Land and land improvements $ 424 $ 411 Buildings and building equipment 2,254 2,241 Machinery and equipment 4,582 4,432 Construction in progress 385 333 Total property, plant and equipment 7,645 7,417 Less accumulated depreciation 4,625 4,480 Property, plant and equipment, net $ 3,020 $ 2,937 Investments in Joint Ventures Investments in joint venture companies in which ownership is 50% or less and in which the Company does not have operating control are accounted for under the equity method of accounting and are included in other long-term assets on the Consolidated Balance Sheets. Equity method investments amounted to $282 million and $280 million at June 30, 2026 and 2025, respectively. A significant portion of the underlying net assets of the joint ventures are related to goodwill. Refer to Note 19 for further discussion. Intangible Assets Intangible assets primarily include patents and technology, trade names and customer relationships 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. Trade names are amortized over the estimated time period over which an economic benefit is expected to be received. Customer relationships are amortized over a period based on anticipated customer attrition rates or contractual lives. 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. Fair Value Measurements Assets and liabilities measured at fair value are classified according to the following hierarchy, which is determined by the observability of the inputs used in the valuation as of the measurement date. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are inputs other than quoted prices included within Level 1 that are directly or indirectly observable. Level 3 inputs are unobservable inputs that are significant to the fair value measurement. Foreign Currency Translation Assets and liabilities of foreign subsidiaries are translated at current exchange rates, and income and expenses are translated using weighted-average exchange rates. The effects of these translation adjustments, as well as gains and losses from certain hedging and intercompany transactions, are reported in accumulated other comprehensive loss. 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 41 Table of Contents included within other expense (income), net in the Consolidated Statements of Income. Refer to Note 19 for further discussion. Business Combinations From time to time, we may enter into business combinations. Business acquisitions are accounted for using the acquisition method of accounting, which allocates the fair value of the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. The acquisition method of accounting also requires us to refine these estimates over a measurement period not to exceed one year to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. Transaction costs associated with these acquisitions are expensed as incurred. Recent Accounting Pronouncements In December 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-10, "Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities," which adds guidance on the recognition, measurement, and presentation of government grants. The amendments are effective for fiscal years beginning after December 15, 2028, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures and consolidated financial statements. In November 2025, the FASB issued ASU 2025-09, “Derivatives and Hedging (Topic 815): Hedge Accounting Improvements," which includes amendments intended to more closely align hedge accounting with the underlying economics of the Company’s risk management activities. The amendments are effective for fiscal years beginning after December 15, 2026 and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures and consolidated financial statements. In September 2025, the FASB issued ASU 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software," which modernizes the accounting for costs related to internal-use software by removing all references to prescriptive and sequential software development stages. The amendments are effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures and consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires expanded interim and annual disclosures of expense information, including the amounts of inventory purchases, employee compensation, depreciation, amortization and depletion within commonly presented expense captions during the period. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures. In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," which enhances the disclosure requirements for income taxes primarily related to the rate reconciliation and income taxes paid information. The amendments are effective for fiscal years beginning after December 15, 2024. The Company adopted the standard on a prospective basis for the fiscal year ended June 30, 2026. The required disclosures are included in Note 5. Note 2. Revenue Recognition Revenue is derived primarily from the sale of products in the aerospace & defense, in-plant & industrial equipment, transportation, off-highway, energy, and HVAC & refrigeration 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. 42 Table of Contents Disaggregation of Revenue Revenue from contracts with customers is disaggregated by technology platform for the Diversified Industrial Segment, by market segment 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 a broad range of motion-control systems and components for builders and users of various types of manufacturing, packaging, processing, transportation, agricultural, construction, and military vehicles and equipment. Contracts consist of individual purchase orders for standard product, blanket purchase orders and production contracts. 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: For the years ended June 30, 2026 2025 2024 Motion Systems $ 3,580 $ 3,341 $ 3,706 Flow and Process Control 4,810 4,518 4,673 Filtration and Engineered Materials 6,048 5,806 6,079 Total $ 14,438 $ 13,665 $ 14,458 The Aerospace Systems Segment produces engine and airframe components and systems, which are utilized on virtually every major commercial and military aircraft. 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 market segment: For the years ended June 30, 2026 2025 2024 Commercial OEM $ 2,330 $ 1,915 $ 1,779 Commercial aftermarket 2,523 2,214 1,814 Defense OEM 1,271 1,138 1,125 Defense aftermarket 937 918 754 Total $ 7,061 $ 6,185 $ 5,472 Total revenues by geographic region based on the Company's selling operation's location: For the years ended June 30, 2026 2025 2024 North America $ 14,386 $ 13,406 $ 13,512 EMEA 4,178 3,862 3,916 Asia Pacific 2,711 2,364 2,278 Latin America 224 218 224 Total $ 21,499 $ 19,850 $ 19,930 The majority of revenues from the Aerospace Systems Segment is generated from sales 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. 43 Table of Contents Total contract assets and contract liabilities are as follows: June 30, 2026 2025 Contract assets, current (included within other current assets) $ 196 $ 149 Contract assets, noncurrent (included within other long-term assets) 15 16 Total contract assets 211 165 Contract liabilities, current (included within other current liabilities) (192) (211) Contract liabilities, noncurrent (included within other long-term liabilities) (95) (71) Total contract liabilities (287) (282) Net contract liabilities $ (76) $ (117) Net contract liabilities at June 30, 2026 decreased from the prior year amount due to timing differences between when revenue was recognized and the receipt of advance payments. During 2026, approximately $167 million of revenue was recognized that was included in the contract liabilities at June 30, 2025. 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, 2026 was $12.8 billion, of which approximately 70% is expected to be recognized as revenue within the next 12 months and the balance thereafter. Note 3. Acquisitions and Divestitures Acquisitions CIRCOR Aerospace On May 21, 2026, the Company announced that it entered into a definitive agreement to acquire CIRCOR Aerospace for approximately $2.55 billion in cash. CIRCOR Aerospace designs, manufactures and supports highly engineered and proprietary flight-critical motion and flow control products for commercial aircraft and defense applications and is complementary to Parker’s existing aerospace and defense product lines. The transaction is subject to customary closing conditions, including receipt of applicable regulatory approvals, and is expected to close in the second half of calendar year 2026. Filtration Group Corporation On November 11, 2025, the Company announced that it entered into a definitive agreement to acquire FGC from Madison Industries for the cash purchase price of $9.25 billion. FGC is a global provider of proprietary and complementary filtration technologies for critical applications across the life sciences, HVAC and refrigeration, and in-plant and industrial market verticals. We completed the acquisition of FGC on August 13, 2026. Refer to Note 20 for additional information. Curtis Instruments, Inc. On September 18, 2025, we acquired all outstanding stock of Curtis from Rehlko, for approximately $1.0 billion, net of cash acquired. Curtis designs and manufactures motor speed controllers, instrumentation, power conversion and input devices that complement Parker’s capabilities in electric and hybrid vehicle motors and controls, as well as hydraulic and pneumatic technologies for the mobile machinery market. For segment reporting purposes, Curtis is included within the Diversified Industrial Segment. The acquisition of Curtis has been accounted for using the acquisition method of accounting, which requires the assets acquired and liabilities assumed to be recognized at their respective fair values as of the acquisition date. The following table presents the preliminary estimated fair values of Curtis's assets acquired and liabilities assumed on the acquisition date. These preliminary estimates are subject to revision during the measurement period, not to exceed 12 months from the date of the acquisition, as third-party valuations are finalized, additional information becomes available and as additional analysis is performed. Such revisions may have a material impact on the preliminary purchase price allocation. 44 Table of Contents September 18, 2025 (previously reported) Measurement Period Adjustments September 18, 2025 (revised) Cash and cash equivalents $ 53 $ — $ 53 Accounts receivable 38 — 38 Inventories 82 (8) 74 Prepaid expenses 5 (1) 4 Intangible assets 551 — 551 Property, plant and equipment 54 (1) 53 Other long-term assets 20 3 23 Accounts payable, trade (32) — (32) Other current liabilities (19) (3) (22) Deferred income taxes (139) — (139) Other long-term liabilities (20) (4) (24) Net assets acquired 593 (14) 579 Goodwill 472 14 486 Total purchase price $ 1,065 $ — $ 1,065 Goodwill is calculated as the excess of the purchase price over the net assets acquired and represents cost synergies and enhancements to our existing technologies. For tax purposes, Curtis's goodwill is not deductible. The intangible assets primarily include $275 million of customer relationships, $220 million of patents and technology and $56 million of trademarks, with weighted-average estimated useful lives of 18, 10 and 13 years, respectively. These intangible assets were valued using the income approach, which includes significant assumptions around future revenue growth, earnings before interest, taxes, depreciation and amortization, royalty rates and discount rates. Such assumptions are classified as level 3 inputs within the fair value hierarchy. Our Consolidated Statements of Income for 2026 include the results of operations of Curtis from the date of acquisition. Net sales attributable to Curtis during this period were $237 million and segment operating results were immaterial. Unaudited pro forma financial information is not provided, as the impact of the acquisition did not have a material effect on the Company's consolidated financial statements. Acquisition-related Costs Acquisition-related costs totaled $41 million in 2026, of which $11 million represented amortization expense related to the step-up in inventory to fair value resulting from the Curtis acquisition. These costs are included in selling, general and administrative expenses and cost of sales, respectively, in the Consolidated Statements of Income. Divestitures We continually assess our existing businesses and may divest those that are not considered to be a good long-term strategic fit for the Company. There were no significant divestitures completed during 2026. During November 2024, we divested our CFC business within the North America businesses of the Diversified Industrial Segment, which was acquired in the acquisition of Meggitt, for net proceeds of $555 million. The resulting pre-tax gain of $241 million is included in other expense (income), net in the Consolidated Statements of Income. The operating results and net assets of this business were immaterial to the Company's consolidated results of operations and financial position. During November 2024, we divested a non-core filtration business within the North America businesses of the Diversified Industrial Segment for proceeds of $66 million. The resulting pre-tax gain of $11 million is included in other expense (income), net in the Consolidated Statements of Income. The operating results and net assets of this business were immaterial to the Company's consolidated results of operations and financial position. During December 2023, we divested our Filter Resources business, which was part of the Diversified Industrial Segment, for proceeds of $37 million. The resulting pre-tax gain of $12 million is included in other expense (income), net in the Consolidated Statements of Income. The operating results and net assets of the Filter Resources business were immaterial to the Company's consolidated results of operations and financial position. 45 Table of Contents During September 2023, we divested the MicroStrain sensing systems business, which was part of the Diversified Industrial Segment, for proceeds of $37 million. The resulting pre-tax gain of $13 million is included in other expense (income), net in the Consolidated Statements of Income. The operating results and net assets of the MicroStrain sensing systems business were immaterial to the Company's consolidated results of operations and financial position. Note 4. Business Realignment The Company incurred business realignment charges in 2026, 2025 and 2024. 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 2026, 2025 and 2024, a majority of the business realignment charges were incurred in EMEA. 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: For the years ended June 30, 2026 2025 2024 Diversified Industrial $ 71 $ 53 $ 51 Aerospace Systems 1 — — Corporate general and administrative expenses — 1 — Other expense (income), net — 2 2 The business realignment charges are presented in the Consolidated Statements of Income as follows: For the years ended June 30, 2026 2025 2024 Cost of sales $ 43 $ 31 $ 30 Selling, general and administrative expenses 29 23 21 Other expense (income), net — 2 2 During 2026, approximately $66 million in payments were made relating to business realignment charges. Remaining payments related to current-year and prior-year business realignment actions of approximately $32 million, a majority of which are expected to be paid by March 31, 2027, are primarily reflected within the accrued payrolls and other compensation and other current liabilities captions in the Consolidated Balance Sheets. Additional charges may be recognized in future periods related to the business realignment actions described above, the timing and amount of which are not known at this time. Note 5. Income Taxes Provision for Income Taxes Income before income taxes was derived from the following sources: For the years ended June 30, 2026 2025 2024 United States $ 2,891 $ 2,514 $ 2,120 Foreign 1,672 1,593 1,475 Total $ 4,563 $ 4,107 $ 3,595 46 Table of Contents Income tax expense (benefit) consisted of the following: For the years ended June 30, 2026 2025 2024 Current: Federal $ 415 $ 424 $ 328 State and local 76 81 34 Foreign 427 374 356 Total 918 879 718 Deferred: Federal 26 (98) 11 State and local (11) (52) 6 Foreign (19) (154) 15 Total (4) (304) 32 Total expense (benefit) $ 914 $ 575 $ 750 Effective Tax Rate Reconciliation of the statutory federal income tax rate to the effective income tax rate after the adoption of ASU 2023-09 follows: 2026 For the year ended June 30, Amount Percent Statutory federal income tax $ 958 21.0 % State and local income taxes net of federal benefit (1) 51 1.1 Foreign tax effects 48 1.0 Effect of cross-border tax laws: Foreign derived intangible income deduction (50) (1.1) Other (2) 0.0 Tax credits (39) (0.9) Changes in valuation allowances (1) 0.0 Nontaxable or nondeductible items: Share-based compensation (72) (1.6) Other 7 0.2 Worldwide changes in unrecognized tax benefits 6 0.1 Other reconciling items 8 0.2 Total expense (benefit) and effective rate $ 914 20.0 % (1) State taxes in California, Connecticut, Illinois, and Minnesota comprised greater than 50% of the tax effect in this category. Reconciliation of the statutory federal income tax rate to the effective income tax rate prior to the adoption of ASU 2023-09 follows: For the years ended June 30, 2025 2024 Statutory federal income tax rate 21.0 % 21.0 % State and local income taxes 0.6 0.9 Tax related to international activities (2.8) 2.3 Cash surrender value of life insurance (0.1) (0.1) Foreign derived intangible income deduction (1.3) (1.5) Research tax credit (0.4) (0.6) Share-based compensation (1.2) (1.2) Other (1.8) 0.1 Effective income tax rate 14.0 % 20.9 % 47 Table of Contents Deferred Income Taxes 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 Sheets were as follows: June 30, 2026 2025 Deferred Tax Assets Capitalized research and development $ 124 $ 172 Inventory 78 70 Long-term contracts 48 41 Loss carryforwards 108 114 Other liabilities and reserves 184 189 Retirement benefits — 27 Stock-based compensation 43 38 Tax credit carryforwards 45 45 Unrealized currency exchange gains and losses 3 5 Total deferred tax assets 633 701 Valuation allowance (139) (141) Net deferred tax assets 494 560 Deferred Tax Liabilities Depreciation and amortization (1,827) (1,748) Retirement benefits (18) — Undistributed foreign earnings (41) (32) Total deferred tax (liabilities) (1,886) (1,780) Net deferred tax (liability) $ (1,392) $ (1,220) 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 $592 million that are no longer permanently reinvested outside of the United States, we have recorded a deferred tax liability of $23 million. The remaining undistributed foreign earnings of approximately $1,170 million remain permanently reinvested outside the United States at June 30, 2026. Of these undistributed earnings, we have recorded a deferred tax liability of $18 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, which might be payable on the potential distribution of such permanently reinvested foreign earnings. As of June 30, 2026, we have the following net operating losses, capital losses, tax credits, other loss carryforwards and related valuation allowances: Tax loss and credit carryforwards Deferred Assets Valuation Allowance Expiration Federal net operating losses $ 1 $ 1 2028-2029 Federal credits 40 12 2029-2036 State net operating losses 2 — 2027-2042 State credits 5 — 2027-Unlimited Foreign net operating losses 22 18 2027-Unlimited Foreign capital and other losses 83 83 Unlimited Total $ 153 $ 114 Included in the table above are valuation allowances of $99 million that relate to non-operating entities whose loss carryforward utilization is considered to be remote. An additional valuation allowance, not included in the table 48 Table of Contents above, of $25 million, is related to other deferred tax assets and has been established due to the uncertainty of their realization. The following schedule presents the changes in deferred tax asset valuation allowance as follows: Beginning Balance (Reductions)/Additions Charged to Income Statement Other(Reductions)/Additions(1) Ending Balance Year ended June 30, 2024 $ 1,078 $ (10) $ 2 $ 1,070 Year ended June 30, 2025 1,070 (929) — 141 Year ended June 30, 2026 $ 141 $ (2) $ — $ 139 (1) The balance primarily represents adjustments due to acquisitions. During the year ended June 30, 2025, we completed an initiative that simplified our foreign legal entity structure. The initiative impacted our evaluation of certain foreign tax loss carryforwards whose realizability was previously considered to be remote. This led to a valuation allowance release and the recording of a $180 million discrete tax benefit. Additionally, as a result of the initiative, $784 million in deferred tax assets for certain other foreign tax loss carryforwards whose realizability was previously considered to be remote, and the associated valuation allowances, were also written off. Income Taxes Paid Income taxes paid (net of refunds received) including related interest, penalties, and purchased credits, consisted of the following: For the year ended June 30, 2026 Federal $ 469 State and local 67 Foreign: China 86 Switzerland 70 United Kingdom 101 Other 271 Total foreign 528 Net income tax, related interest, penalties, and purchased credits $ 1,064 Uncertain Tax Positions A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: 2026 2025 2024 Balance at July 1 $ 104 $ 102 $ 114 Additions for tax positions related to current year 4 6 6 Additions for tax positions of prior years 18 19 — Additions for acquisitions 3 — 4 Reductions for tax positions of prior years (5) — (5) Reductions for settlements (17) — — Reductions for expiration of statute of limitations (5) (27) (15) Effect of foreign currency translation (3) 4 (2) Balance at June 30 $ 99 $ 104 $ 102 The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $78 million, $104 million and $102 million as of June 30, 2026, 2025 and 2024, respectively. The accrued interest related to the gross unrecognized tax benefits, excluded from the amounts above, was $22 million, $28 million, and $27 million as of June 30, 2026, 2025 and 2024, respectively. The accrued penalties related to the gross unrecognized tax benefits, excluded from the amounts above, was $2 million as of June 30, 2026, 2025, and 2024. 49 Table of Contents 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 2018. We are open to assessment for significant foreign jurisdictions for years after 2014. Note 6. 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 (shares in millions): For the years ended June 30, 2026 2025 2024 Numerator Net income attributable to common shareholders $ 3,648 $ 3,531 $ 2,844 Denominator Basic - weighted-average common shares 126.3 128.3 128.5 Dilutive effect of equity-based awards 1.8 1.9 1.7 Diluted - weighted-average common shares 128.1 130.2 130.2 Basic earnings per share(1) $ 28.89 $ 27.52 $ 22.13 Diluted earnings per share(1) $ 28.48 $ 27.12 $ 21.84 (1) Figures in the table may not recalculate exactly due to rounding. Earnings per share is computed using unrounded numbers. For 2026, 2025 and 2024, 0.3 million, 0.3 million and 0.4 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. Note 7. Inventories Inventories are stated at the lower of cost or net realizable value using the first-in, first-out ("FIFO") method. Cost components include raw materials, purchased components, labor and overhead. The inventories caption in the Consolidated Balance Sheets is comprised of the following components: June 30, 2026 2025 Finished products $ 849 $ 778 Work in process 1,678 1,485 Raw materials 639 576 Total $ 3,166 $ 2,839 Note 8. Supply Chain Financing We have SCF programs with financial intermediaries, which provide certain suppliers the option to be paid by the financial intermediaries earlier than the due date on the applicable invoice. We are not a party to the agreements between the participating financial intermediaries and the suppliers in connection with the programs. The range of payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the SCF programs. We do not reimburse suppliers for any costs they incur for participation in the SCF programs and their participation is voluntary. 50 Table of Contents The following table summarizes the changes in amounts due to our suppliers that elected to participate in the SCF programs. These amounts are included in accounts payable, trade on the Consolidated Balance Sheets, and payments made under the SCF programs are included within operating activities on the Consolidated Statements of Cash Flows. 2026 2025 Beginning balance $ 175 $ 116 Invoices confirmed during the year 740 500 Invoices settled during the year (651) (446) Foreign currency translation adjustments (2) 5 Ending balance $ 262 $ 175 Note 9. 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, 2024 $ 7,607 $ 2,900 $ 10,507 Divestitures (90) — (90) Foreign currency translation 211 66 277 Balance June 30, 2025 $ 7,728 $ 2,966 $ 10,694 Acquisition 486 — 486 Divestitures (1) — (1) Foreign currency translation (51) (19) (70) Balance June 30, 2026 $ 8,162 $ 2,947 $ 11,109 Goodwill is tested for impairment at the reporting unit level annually and between annual tests whenever events or circumstances indicate that the carrying value of a reporting unit may exceed its fair value. Our annual impairment tests performed in 2026, 2025 and 2024 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 are as follows: 2026 2025 June 30, Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Patents and technology $ 2,338 $ 666 $ 2,134 $ 556 Trade names 1,085 550 1,037 499 Customer relationships and other 8,404 3,331 8,194 2,936 Total $ 11,827 $ 4,547 $ 11,365 $ 3,991 Total intangible asset amortization expense in 2026, 2025 and 2024 was $584 million, $553 million and $578 million, respectively. The estimated future amortization expense for intangible assets over the next five years is as follows: For the years ended June 30, 2027 2028 2029 2030 2031 Estimated annual amortization $ 578 $ 570 $ 549 $ 523 $ 482 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 2026, 2025 or 2024. The increase in goodwill and intangible assets in 2026 relates to the acquisition of Curtis. The decrease in goodwill in 2025 relates to the divestitures of CFC and a non-core filtration business. Refer to Note 3 for more information. 51 Table of Contents Note 10. Debt The following table summarizes the components of long-term debt: June 30, 2026 2025 Domestic: 4.20% Fixed-rate medium term notes, due 2035 $ 500 $ 500 6.25% Fixed-rate medium term notes, due 2038 325 325 4.45% Fixed-rate medium term notes, due 2045 500 500 3.25% Senior Notes, due 2027 700 700 4.25% Senior Notes, due 2028 1,200 1,200 3.25% Senior Notes, due 2029 1,000 1,000 4.50% Senior Notes, due 2030 1,000 1,000 4.10% Senior Notes, due 2047 600 600 4.00% Senior Notes, due 2049 800 800 Foreign: 2.90% Euro Senior Notes, due 2030 800 821 Other long-term debt (includes finance leases) 92 109 Deferred debt issuance costs (45) (54) Total 7,472 7,501 Less: Long-term debt payable within one year 706 7 Long-term debt $ 6,766 $ 7,494 Credit Facilities During 2026, the Company entered into a 364-Day Term Loan Agreement and a Three-Year Term Loan Agreement, which provide for senior unsecured delayed draw term loan facilities in aggregate principal amounts of $5.25 billion and $2.50 billion, respectively. The Credit Facilities mature 364 days and three years, respectively, following August 13, 2026. Borrowings under the Credit Facilities are expected to bear interest at a secured overnight financing rate plus an applicable margin, and we were obligated to pay certain fees on the undrawn portion of the commitments until the closing of the FGC acquisition. As of June 30, 2026, the Company had not borrowed any funds under the Credit Facilities. Subsequent to June 30, 2026, to finance the FGC acquisition, the Company borrowed the full $7.75 billion aggregate amount available under the Credit Facilities. The Company intends to repay a portion of these borrowings with cash on hand and refinance the remaining borrowings with long-term debt. Revolving Credit Agreement and Commercial Paper To fund short-term liquidity needs, we utilize a commercial paper program that is supported by our revolving credit agreement. During 2026, we amended our revolving credit agreement to increase the total line of credit by $750 million to $3.75 billion, and authorized a corresponding increase in the commercial paper program size to $3.75 billion. The revolving credit agreement expires in June 2028; however, we have the right to request a one-year extension of the expiration date. Advances from the revolving credit agreement can be used for general corporate purposes, including acquisitions, and for the refinancing of existing indebtedness. Issuances of commercial paper reduce the amount of credit available under the revolving credit agreement. As of June 30, 2026, there were no borrowings outstanding under the revolving credit agreement. Notes payable and long-term debt payable within one year on the Consolidated Balance Sheets includes commercial paper notes outstanding of $1.0 billion and $1.8 billion as of June 30, 2026 and 2025, respectively, with a weighted-average interest rate of 3.9% and 4.6%. Covenants 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, 2026, 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, 2026, our debt to debt-shareholders' equity ratio was 0.36 to 1.0. We are in compliance with all covenants. 52 Table of Contents Maturities of Long-Term Debt Principal amounts of long-term debt payable, excluding the amortization of debt issuance costs, in the next five years as of June 30, 2026 are as follows: 2027 $ 706 2028 1,205 2029 1,005 2030 1,806 2031 4 Note 11. Leases We primarily enter into lease agreements for office space, distribution centers, certain manufacturing facilities and equipment. 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. In addition, leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets. 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: For the years ended June 30, 2026 2025 2024 Operating lease expense $ 65 $ 64 $ 68 Finance lease cost: Amortization of lease assets 8 8 7 Interest on lease liabilities 5 5 5 Short-term lease cost 17 13 9 Variable lease cost 7 6 6 Total lease cost $ 102 $ 96 $ 95 Supplemental cash flow information related to leases is as follows: For the years ended June 30, 2026 2025 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows - payments on operating leases $ 65 $ 64 $ 65 Operating cash outflows - interest payments on finance leases 5 5 5 Financing cash outflows - payments on finance lease obligations 6 5 5 Right-of-use assets obtained in exchange for operating lease obligations 46 18 42 Right-of-use assets obtained in exchange for finance lease obligations 4 2 4 53 Table of Contents Supplemental balance sheet information related to operating leases is as follows: June 30, 2026 2025 Operating leases Operating lease right-of-use assets (included within other long-term assets) $ 201 $ 192 Current operating lease liabilities (included within other current liabilities) $ 49 $ 47 Long-term operating lease liabilities (included within other long-term liabilities) 164 154 Total operating lease liabilities $ 213 $ 201 Finance leases Property, plant and equipment $ 113 $ 127 Accumulated depreciation (28) (25) Property, plant and equipment, net $ 85 $ 102 Notes payable and long-term debt payable within one year $ 6 $ 6 Long-term debt 86 102 Total finance lease liabilities $ 92 $ 108 Weighted-average remaining lease term Operating leases 6.3 years 6.3 years Finance leases 18.1 years 18.8 years Weighted-average discount rate Operating leases 4.4 % 4.3 % Finance leases 5.2 % 5.2 % Maturities of lease liabilities at June 30, 2026 are as follows: Operating Leases Finance Leases 2027 $ 57 $ 11 2028 46 10 2029 34 9 2030 26 9 2031 20 8 Thereafter 65 97 Total lease payments $ 248 $ 144 Less imputed interest 35 52 Total lease liabilities $ 213 $ 92 Note 12. Retirement Benefits Pensions and Other Postretirement Benefits The Company has noncontributory defined benefit pension plans covering eligible employees, including certain employees in foreign countries. Our largest plans are generally closed to new participants. Plans for most salaried employees provide pay-related benefits based on years of service. 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. The Company provides postretirement medical and life insurance benefits to certain retirees and eligible dependents through an unfunded plan. The plan is contributory, with retiree contributions adjusted annually, and pays stated percentages of covered medically necessary expenses incurred by retirees after subtracting payments 54 Table of Contents by Medicare or other providers and after stated deductibles have been met. The Company has established cost maximums to more effectively control future health care costs. We have reserved the right to change this benefit plan. Components of Net Periodic Benefit Cost (Credit) U.S. Pension Benefits Non-U.S. Pension Benefits Other Postretirement Benefits For the years ended June 30, 2026 2025 2024 2026 2025 2024 2026 2025 2024 Service cost $ 25 $ 28 $ 29 $ 22 $ 22 $ 22 $ — $ — $ — Interest cost 167 184 190 72 76 80 3 4 4 Expected return on plan assets (232) (245) (258) (89) (87) (95) — — — Amortization of prior service cost 3 3 1 — — — — — — Amortization of net actuarial loss (gain) 5 7 2 6 7 6 (2) (2) (2) Settlements — 3 — 3 — — — — — Net periodic benefit cost (credit) $ (32) $ (20) $ (36) $ 14 $ 18 $ 13 $ 1 $ 2 $ 2 Components of net periodic benefit cost (credit), other than service cost, are included in other expense (income), net in the Consolidated Statements of Income. Benefit Obligations and Funded Status The following tables present the funded status of the Company's pension and other postretirement benefit plans and related balance sheet amounts: U.S. Pension Benefits Non-U.S. Pension Benefits Other Postretirement Benefits 2026 2025 2026 2025 2026 2025 Change in benefit obligation Benefit obligation at beginning of year $ 3,615 $ 3,723 $ 1,885 $ 1,817 $ 63 $ 71 Service cost 25 28 22 22 — — Interest cost 167 184 72 76 3 4 Acquisition — — 14 — — — Actuarial gain(1) (102) (12) (31) (104) (10) (6) Benefits paid (260) (254) (86) (88) (5) (6) Settlements — (55) (24) (6) — — Plan amendments — 1 — — — — Foreign currency translation and other (6) — (75) 168 (1) — Benefit obligation at end of year $ 3,439 $ 3,615 $ 1,777 $ 1,885 $ 50 $ 63 Change in plan assets Fair value of plan assets at beginning of year $ 3,463 $ 3,363 $ 2,183 $ 2,003 $ — $ — Actual return on plan assets 282 347 81 — — — Acquisition — — 14 — — — Employer contributions 9 62 36 87 5 6 Benefits paid (260) (254) (86) (88) (5) (6) Settlements — (55) (24) (6) — — Foreign currency translation and other — — (76) 187 — — Fair value of plan assets at end of year $ 3,494 $ 3,463 $ 2,128 $ 2,183 $ — $ — Funded status $ 55 $ (152) $ 351 $ 298 $ (50) $ (63) (1) The actuarial gain for the U.S. pension plans in 2026 was primarily driven by higher discount rates and favorable demographic experience. The actuarial gain for the Non-U.S. pension plans in 2026 was primarily driven by higher discount rates, partially offset by unfavorable demographic experience. In 2025, the actuarial gain for the Non-U.S. pension plans was driven by higher discount rates and favorable demographic experience. 55 Table of Contents U.S. Pension Benefits Non-U.S. Pension Benefits Other Postretirement Benefits June 30, 2026 2025 2026 2025 2026 2025 Amounts recognized on the Consolidated Balance Sheets Other long-term assets $ 176 $ — $ 379 $ 346 $ — $ — Other current liabilities (10) (11) — (1) (5) (6) Pensions and other postretirement benefits (111) (141) (28) (47) (45) (57) Net amount recognized $ 55 $ (152) $ 351 $ 298 $ (50) $ (63) Pre-tax amounts recognized in Accumulated Other Comprehensive Loss Net actuarial loss (gain) $ 34 $ 191 $ 193 $ 230 $ (33) $ (25) Prior service cost 15 18 1 2 — — Net amount recognized $ 49 $ 209 $ 194 $ 232 $ (33) $ (25) In addition to the pension and other postretirement benefit obligations presented in the tables above, the amounts reported on the Consolidated Balance Sheets include other immaterial defined benefit pension liabilities. The accumulated benefit obligation for all defined benefit plans was $5.1 billion and $5.4 billion at June 30, 2026 and 2025, respectively. Information for pension plans with accumulated benefit obligations in excess of plan assets: June 30, 2026 2025 Accumulated benefit obligation $ 212 $ 316 Fair value of plan assets 87 171 Information for pension plans with projected benefit obligations in excess of plan assets: June 30, 2026 2025 Projected benefit obligation $ 301 $ 3,865 Fair value of plan assets 102 3,665 Expected Contributions and Benefit Payments We expect to make cash contributions of approximately $52 million to our defined benefit pension and other postretirement benefit plans in 2027, of which $37 million relates to the non-U.S. plans. The following estimated benefit payments are expected to be paid during each respective year: U.S. Pension Benefits Non-U.S. Pension Benefits Other Postretirement Benefits 2027 $ 270 $ 100 $ 5 2028 274 106 5 2029 282 108 5 2030 295 114 5 2031 274 117 5 2032 - 2036 1,334 597 20 56 Table of Contents Assumptions The weighted-average actuarial assumptions used to measure the net periodic benefit credit and benefit obligations are: U.S. Pension Benefits Non-U.S. Pension Benefits Other Postretirement Benefits 2026 2025 2024 2026 2025 2024 2026 2025 2024 Net Periodic Benefit Credit Discount rate 5.27 % 5.27 % 4.88 % 4.36 % 4.19 % 4.24 % 5.18 % 5.23 % 4.86 % Average increase in compensation 3.79 % 3.81 % 3.81 % 2.65 % 2.73 % 2.76 % NA NA NA Expected return on plan assets 7.00 % 7.00 % 7.00 % 4.47 % 4.47 % 5.22 % NA NA NA Benefit Obligation Discount rate 5.49 % 5.27 % 5.27 % 4.49 % 4.36 % 4.19 % 5.39 % 5.18 % 5.23 % Average increase in compensation 3.67 % 3.79 % 3.76 % 2.61 % 2.65 % 2.73 % NA NA NA 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 health care cost trend rate assumptions used to measure the postretirement benefit obligations are: 2026 2025 Health care cost trend rate assumed for next year 7.50 % 9.73 % Ultimate health care cost trend rate 4.50 % 4.50 % Year that the ultimate rate is reached 2038 2035 Plan Assets The weighted-average allocation of the majority of the assets related to the defined benefit plans is as follows: June 30, 2026 2025 Equities 15 % 20 % Fixed income 53 % 46 % Other investments 32 % 34 % 100 % 100 % The weighted-average target asset allocation as of June 30, 2026 is 20% equities, 53% fixed income and 27% other investments. The investment strategy for the Company's worldwide defined benefit pension plan assets focuses on achieving prudent actuarial funding ratios while maintaining acceptable levels of risk in order to provide adequate liquidity to meet immediate and future benefit requirements. This strategy requires investment portfolios that are broadly diversified across various asset classes and external investment managers. Assets held in the U.S. and U.K. defined benefit plans account for 62% and 23%, respectively, of our total defined benefit plan assets. The overall investment strategy with respect to our U.S. defined benefit plan is to use a funding strategy more heavily weighted toward liability-hedging assets as the funded status improves. Over time, we will increase the allocation to long duration fixed income investments and reduce exposure to return seeking assets such as equities and alternatives. The strategy utilizes fixed income investments aligned with the duration and cash flow profile of the plan's liabilities to hedge the impact of interest rate and inflation changes. For the U.K. defined benefit plans, the overall investment strategy primarily focuses on utilizing fixed income investments to achieve a rate of return that is at least commensurate with the changes in the cost of providing fixed and index-linked annuities. 57 Table of Contents Certain investments that are measured at their fair value using the Net Asset Value ("NAV") per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy. The fair values of pension plan assets by asset class are as follows: 2026 2025 June 30, Total Level 1 Level 2 Level 3 NAV Total Level 1 Level 2 Level 3 NAV Cash and cash equivalents $ 549 $ 523 $ 26 $ — $ — $ 540 $ 459 $ 76 $ — $ 5 Equities: U.S. equity securities 2 2 — — — 7 7 — — — Non-U.S. equity securities 39 39 — — — 57 57 — — — Commingled equity funds 793 — 61 — 732 1,059 — 106 — 953 Fixed income: Corporate bonds 1,059 23 1,036 — — 801 4 797 — — Government issued securities 477 422 55 — — 552 521 31 Commingled fixed income funds 1,527 — 446 — 1,081 1,293 — 350 — 943 Alternatives(1) 708 — — — 708 778 — — 778 Other(2) 580 35 4 541 — 648 66 (1) 583 — $ 5,734 $ 1,044 $ 1,628 $ 541 $ 2,521 $ 5,735 $ 1,114 $ 1,359 $ 583 $ 2,679 (Payables) receivables, net (112) (89) Total $ 5,622 $ 5,646 (1) Alternatives includes investments in real estate, hedge funds and private debt. (2) Other investments primarily includes insurance contracts held under our non-U.S. plans. The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed during 2026 and 2025 due to the following: 2026 2025 Balance at beginning of year $ 583 $ — Actual return on plan assets still held at year-end 2 12 Purchases, sales, settlements - net (26) 203 Transfers into (out of) Level 3 (2) 325 Changes due to exchange rates (16) 43 Balance at end of year $ 541 $ 583 Cash and cash equivalents consist of direct cash holdings and short-term investment vehicles. Cash is valued at cost, which approximates fair value. Short-term investments are primarily valued at quoted prices in active markets and are classified within Level 1. The U.S. defined benefit plan uses a liability-hedging initiative that requires the plan to maintain a certain cash balance. Equity securities are valued at the closing price reported on the active market on which the individual securities are traded. Substantially all equity securities are classified within Level 1. Corporate bonds and fixed income securities categorized as Level 2 are valued using observable inputs for similar assets that are traded on an active market. The fair value of government issued securities categorized in Level 1 are primarily based on observable quoted prices on the active markets on which the security trades. Commingled equity and fixed income funds consist of common/collective trusts or other investment vehicles. Most of these funds are valued using the NAV provided by the fund administrator and are based on the fair value of the underlying assets. Commingled funds classified within Level 1 are valued using the closing market price reported on the active market. When quoted market prices for funds are not available in an active market, they are classified as Level 2. Most of these funds have no redemption restrictions or lock-up periods and can be liquidated within 90 days. Alternatives include investments in real estate, hedge funds, and private debt, which are valued using the fund's NAV based on the fair value of the underlying investments. Funds within this asset class may be subject to redemption restrictions, and valuations for certain real estate and private debt funds may be lagged up to 6 months. For these funds, the NAV is adjusted for cash flows through year end. Other investments primarily include insurance contracts within the Non-U.S. pension plans' asset portfolio. 58 Table of Contents Insurance contracts, which are categorized as Level 3, are valued as reported by the insurer which include adjustments for changes in the underlying assets, or are valued using other pricing sources which use unobservable inputs. Other investments also includes derivative instruments which are generally associated with our liability hedging strategies and are valued based on the closing prices of contracts or market observable inputs. Defined Contribution Plans We sponsor various defined contribution plans both in the U.S. and internationally, including in the United Kingdom, Germany, Sweden, Canada and South Korea. Under our primary U.S. 401(k) plan, the Company matches employee contributions up to a maximum of 5% of eligible compensation. Participants may direct the matching contributions among various investment choices, including our common stock held within an employee stock ownership plan ("ESOP"). In addition to shares within the ESOP, employees may elect to invest in our common stock through a company stock fund offered within the primary U.S. 401(k) plan. As of June 30, 2026 and 2025, the plan held 3.5 million and 4.0 million shares of our common stock. The Company also maintains a retirement income account ("RIA") within the primary U.S. 401(k) plan. We make annual cash contributions to each eligible participant's RIA, with most participants receiving a flat 3% contribution of eligible compensation. Some grandfathered participants receive contributions calculated at a higher percentage, but no participant receives less than the flat 3%. Participants do not contribute to the RIA. Matching and other contributions under all defined contribution plans are expensed as incurred. Expense recognized under the U.S. plans was $194 million, $187 million, and $194 million in 2026, 2025 and 2024, respectively. Expense recognized under the international plans was $36 million, $33 million and $31 million in 2026, 2025 and 2024, respectively. Other The Company has established unfunded nonqualified deferred compensation programs that allow officers, directors and certain management employees to annually elect to defer a portion of their compensation on a pre-tax basis until retirement. The retirement benefit to be provided is based on the amount of compensation deferred, company matching contributions and earnings on the deferrals. The Company has invested in corporate-owned life insurance policies to assist in meeting the obligations under these programs. The policies are held in a rabbi trust and are considered general corporate assets. Net gains and losses related to these assets and liabilities are reflected in selling, general and administrative expenses on the Consolidated Statements of Income and are immaterial in total. As of June 30, 2026 and 2025, the cash surrender values of the corporate-owned life insurance policies were $294 million and $260 million, and the balances of the deferred compensation liabilities were $196 million and $171 million, respectively. These amounts are included in other long-term assets and other long-term liabilities on the Consolidated Balance Sheets. 59 Table of Contents Note 13. Equity Changes in accumulated other comprehensive loss within Parker's shareholders' equity by component are as follows: 2026 2025 2024 Foreign Currency Translation Adjustment and Other Beginning balance $ (717) $ (1,130) $ (962) Other comprehensive income (loss) before reclassifications (81) 418 (153) Income tax 5 (5) (15) Other comprehensive income (loss), net of tax (76) 413 (168) Ending balance $ (793) $ (717) $ (1,130) Retirement Benefit Plans Beginning balance $ (166) $ (308) $ (331) Other comprehensive income (loss) before reclassifications 190 163 23 Income tax (45) (34) (6) Reclassified from accumulated other comprehensive loss: Amortization of net actuarial loss and other(1) 15 18 8 Tax benefit (4) (5) (2) Other comprehensive income (loss), net of tax 156 142 23 Ending balance $ (10) $ (166) $ (308) Total accumulated other comprehensive loss ending balance $ (803) $ (883) $ (1,438) (1) The amounts reclassified include the amortization of net actuarial loss, amortization of prior service cost and gains or losses related to settlements. These costs are included in the computation of net periodic benefit cost (credit) which is recorded in other expense (income), net. Refer to Note 12 for additional information. Share Repurchase Program On October 22, 2014, the Board of Directors approved a share repurchase program authorizing the repurchase of up to 35.0 million of the Company's common shares. On August 21, 2025, the Board of Directors approved an update to the number of shares available under the Company's existing share repurchase authorization so that the aggregate number of shares available for repurchase as of such date was 20.0 million. There is no limitation on the number of shares that can be repurchased in a year and there is no expiration date for the program. Repurchases may be funded primarily from operating cash flows and commercial paper borrowings and the shares are initially held as treasury shares. Under our share repurchase programs, we repurchased 1.2 million, 2.5 million, and 0.4 million shares for $1.0 billion, $1.6 billion and $200 million during 2026, 2025 and 2024, respectively. As of June 30, 2026, we had 18.8 million shares available under this repurchase authorization. Note 14. Stock Incentive Plans The Company's 2023 Omnibus Stock Incentive Plan ("2023 SIP") provides for the granting of stock-based incentive awards in the form of nonqualified stock options, stock appreciation rights ("SARs"), restricted stock units ("RSUs") and restricted and unrestricted stock to officers and key employees of the Company. The aggregate number of shares of common stock authorized for issuance under the 2023 SIP is 11.3 million. At June 30, 2026, 6.7 million common stock shares were available for future issuance. The Company also maintains a Global Employee Stock Purchase Plan ("ESPP"), which is offered in a limited number of international countries. The ESPP is intended to provide eligible employees with the opportunity to acquire interest in the Company's common shares for 90% of the fair market value per share. The maximum number of shares that may be issued under the ESPP is 10.0 million shares, of which approximately 9.9 million shares are still available for future issuance. Activity under this plan is not material. We satisfy stock-based incentive award obligations by issuing shares of common stock out of treasury, which have been repurchased pursuant to our share repurchase program described in Note 13, or through the issuance of previously unissued common stock. 60 Table of Contents Total stock-based compensation expense and the related tax benefits were as follows: For the years ended June 30, 2026 2025 2024 Stock-based compensation expense $ 179 $ 159 $ 156 Income tax benefits $ 24 $ 23 $ 20 At June 30, 2026, $164 million of total unrecognized compensation costs related to stock-incentive awards has yet to be recognized and will be amortized into expense over a weighted-average period of approximately 1.7 years. The Company also realized income tax benefits related to the exercise and issuance of awards for $82 million, $54 million and $52 million during 2026, 2025 and 2024, respectively. SARs SARs vest ratably over a three-year service period and expire ten years from the grant date. Upon exercise, SARs entitle the participant to receive shares of common stock equal to the increase in value of the award between the grant date and the exercise date. The fair value of each SAR award granted in 2026, 2025 and 2024 was estimated at the date of grant using a Black-Scholes option pricing model. 2026 2025 2024 Weighted-average grant date fair value $ 275.32 $ 205.79 $ 146.72 Assumptions Risk-free interest rate 3.9 % 3.7 % 4.4 % Expected life of award 5.8 years 5.7 years 5.5 years Expected dividend yield of stock 1.0 % 1.1 % 1.8 % Expected volatility of stock 36.1 % 35.7 % 39.0 % The risk-free interest rate was based on U.S. Treasury yields with a term similar to the expected life of the award. The expected life of the award was derived by referring to actual exercise and post-vesting employment termination experience. The expected dividend yield was based on the annual rate of dividends per share over the market value of the stock on the grant date. The expected volatility of stock was derived by referring to changes in our historical common stock prices over a time-frame similar to the expected life of the award. SAR activity during 2026 is as follows: (Shares in thousands) Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding June 30, 2025 3,088 $ 288.60 Granted 312 $ 742.97 Exercised (769) $ 210.35 Canceled and forfeited (14) $ 614.25 Outstanding June 30, 2026 2,617 $ 364.09 5.8 years $ 1,607 Exercisable June 30, 2026 1,927 $ 275.85 4.9 years $ 1,353 A summary of the status and changes of shares subject to SAR awards and the related average price per share follows: (Shares in thousands) Number of Shares Weighted-Average Grant Date Fair Value Nonvested June 30, 2025 857 $ 159.29 Granted 312 $ 275.32 Vested (466) $ 141.19 Canceled and forfeited (14) $ 228.33 Nonvested June 30, 2026 689 $ 222.72 61 Table of Contents The total fair value of shares vested during 2026, 2025 and 2024 was $66 million, $57 million and $45 million, respectively. The total intrinsic value of SAR awards exercised during 2026, 2025 and 2024 was $505 million, $340 million and $270 million, respectively. RSU and LTIP Awards RSUs constitute an agreement to deliver shares of common stock to the participant at the end of a vesting period. Generally, the RSUs vest ratably over a three-year service period. For each nonvested RSU, recipients are entitled to receive a dividend equivalent, payable in cash or common shares, equal to the cash dividend per share paid to common shareholders. We also granted RSUs with a one-year vesting period to non-employee members of the Board of Directors. Recipients receive a dividend equivalent payable in common shares, equal to the cash dividend per share paid to common shareholders. The Company's Long Term Incentive Plans ("LTIP") provide for the issuance of unrestricted stock to certain officers and key employees based on the attainment of certain goals relating to our revenue growth, earnings per share growth and return on invested capital during a three-year performance period. The number of shares earned at the end of the performance period could vary, based on actual performance, between zero and 200% of the target LTIP awards granted. These nonvested LTIP awards entitle participants to earn dividend equivalent units, payable in common shares, equal to the cash dividend per share paid to common shareholders and are subject to the same performance goals as the initial award granted. A summary of the status and changes of shares subject to RSU and LTIP awards for employees and the related average price per share follows: RSU LTIP Awards (Shares in thousands) Number of Shares Weighted-Average Grant Date Fair Value Number of Shares Weighted-Average Grant Date Fair Value Nonvested June 30, 2025 146 $ 449.11 275 $ 438.35 Granted(1) 53 $ 748.78 143 $ 540.23 Vested (77) $ 404.16 (215) $ 309.58 Canceled (5) $ 599.71 (7) $ 622.75 Nonvested June 30, 2026 117 $ 607.65 196 $ 647.72 (1) LTIP awards granted includes an adjustment for actual performance achieved. The fair value of each RSU and LTIP award granted in 2026, 2025 and 2024 was based on the fair market value of our common stock on the date of grant. A summary of the fair value information for awards vested and granted were as follows: Fair Value of Awards Vested Weighted-Average Grant Date Fair Value For the years ended June 30, 2026 2025 2024 2026 2025 2024 RSU $ 31 $ 30 $ 29 $ 748.78 $ 582.76 $ 401.86 LTIP awards $ 65 $ 64 $ 45 $ 540.23 $ 465.01 $ 380.97 Note 15. Research and Development Independent research and development costs amounted to $267 million in 2026, $240 million in 2025 and $253 million in 2024. Pre-production expense incurred in connection with development contracts amounted to $43 million in 2026, $58 million in 2025 and $45 million in 2024. Note 16. Financial Instruments The Company utilizes derivative and non-derivative financial instruments, including forward exchange contracts, cross-currency swap contracts and certain foreign currency denominated debt, to manage foreign currency transaction and translation risk. The derivative financial instrument contracts are with major investment grade financial institutions, and the Company does not anticipate any material non-performance by any of the counterparties. The Company does not hold or issue derivative financial instruments for trading purposes. 62 Table of Contents Net Investment Hedges The Company uses cross-currency swap contracts and foreign currency denominated debt, a non-derivative financial instrument, to hedge portions of the Company's investments in foreign subsidiaries and manage foreign exchange risk. The effect of translating the debt into U.S. dollars is recorded in foreign currency translation within accumulated other comprehensive loss and remains there until the underlying net investment is sold or substantially liquidated. For the cross-currency swap contracts that are designated as, and qualify as, net investment hedges, we assess the effectiveness using the spot method and the net gains or losses attributable to changes in the spot rate are recorded in foreign currency translation within accumulated other comprehensive loss. Any ineffective portions of the net investment hedges are reclassified from accumulated other comprehensive loss into earnings through interest expense during the period of change. During 2026, 2025, and 2024, the periodic interest settlements related to the cross-currency swaps were not material. As of both June 30, 2026 and 2025, the aggregate notional amounts of cross-currency swap contracts designated as hedging instruments were €69 million, €290 million and ¥2.1 billion. The Company’s €700 million aggregate principal amount of 2.90% Senior Notes due 2030 have been designated as a hedge of the Company’s net investment in certain foreign subsidiaries. Non-designated Derivative Contracts In addition to the net investment hedges, the Company utilizes forward exchange contracts that are not designated as hedging instruments but serve as economic hedges of forecasted transactions. These derivatives are used to mitigate foreign exchange risk. Changes in the fair value of these instruments are recorded in other expense (income), net in the Consolidated Statements of Income. Cash flows related to these instruments are included within operating activities on the Consolidated Statements of Cash Flows. Financial Statement Impact Derivative financial instruments are recognized on the Consolidated Balance Sheets as either assets or liabilities and are measured at fair value. The location and fair value of derivative financial instruments reported on the Consolidated Balance Sheets are as follows: June 30, Balance Sheet Caption 2026 2025 Net investment hedges Cross-currency swap contracts Other long-term assets $ 7 $ 4 Cross-currency swap contracts Other long-term liabilities 17 26 Non-designated derivative contracts Forward exchange contracts Non-trade and notes receivable 22 3 Forward exchange contracts Other current liabilities 5 38 The cross-currency swap and forward exchange contracts are reflected on a gross basis in the Consolidated Balance Sheets. The Company has not entered into any master netting arrangements. Gains (losses) on derivative financial instruments were recorded in the Consolidated Statements of Income as follows: For the years ended June 30, 2026 2025 2024 Forward exchange contracts 74 (63) 11 63 Table of Contents Gains (losses) on derivative and non-derivative financial instruments that were recorded in accumulated other comprehensive loss in the Consolidated Balance Sheets are as follows: For the years ended June 30, 2026 2025 Cross-currency swap contracts $ 9 $ (30) Foreign currency denominated debt 17 (56) Fair Values of Financial Instruments The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, notes payable and long-term debt. The carrying values for cash and cash equivalents, accounts receivable, accounts payable and notes payable approximate fair value due to their short-term nature. The carrying value of long-term debt, including the current portion and excluding the impact of net unamortized debt issuance costs, and the estimated fair value of long-term debt are as follows: June 30, 2026 2025 Carrying value of long-term debt $ 7,517 $ 7,555 Estimated fair value of long-term debt 7,144 7,174 The fair value of long-term debt is classified within level 2 of the fair value hierarchy. A summary of derivative assets and liabilities that were measured at fair value on a recurring basis are as follows: 2026 2025 June 30, Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Derivative assets $ 29 $ — $ 29 $ — $ 7 $ — $ 7 $ — Derivative liabilities 22 — 22 — 64 — 64 — The calculation of fair value for cross-currency swaps and forward contracts utilizes market observable inputs including both spot and forward prices for the same underlying currencies. The calculation of fair value of the cross-currency swap contracts also utilizes a present value cash flow model. Note 17. Contingencies The Company is involved in various litigation matters arising in the normal course of business, including proceedings based on product liability claims, workers' compensation claims, employee claims, class action lawsuits, and alleged violations of various environmental laws. We are self-insured in the United States for health care, workers' compensation, general liability and product liability up to predetermined amounts, above which third-party insurance applies. Management regularly reviews the probable outcome of these proceedings, the expenses expected to be incurred, the availability and limits of the insurance coverage and the established accruals for liabilities. While the outcome of pending proceedings cannot be predicted with certainty, management believes that any liabilities that may result from these proceedings will not have a material adverse effect on our liquidity, financial condition or results of operations. 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. Environmental We are currently responsible for environmental matters primarily relating to known exposures arising from environmental litigation, investigations, and remediation at various manufacturing facilities presently or formerly operated by Parker and for which we have been named as a “potentially responsible party,” along with other companies, at off-site waste disposal facilities and regional sites. As of June 30, 2026, we had an accrual of $82 million for environmental matters, which are probable and reasonably estimable. The accrual is recorded based upon the best estimate of costs to be incurred in light of the progress made in determining the magnitude of remediation costs, the timing and extent of remedial actions required by governmental authorities, the amount of our liability in proportion to other responsible parties, and outcomes of litigation. 64 Table of Contents Our estimated total liability for environmental matters ranges from a minimum of $82 million to a maximum of $292 million. The largest range for any one site is approximately $92 million. The actual costs we will incur are dependent on final determination of contamination and required remedial action, negotiations with governmental authorities with respect to cleanup levels, changes in regulatory requirements, innovations in investigatory and remedial technologies, effectiveness of remedial technologies employed, the ability of other responsible parties to pay, outcomes of litigation, and any insurance or other third-party recoveries. Note 18. Business Segment Information The Company operates in two reportable business segments: Diversified Industrial and Aerospace Systems. Both segments utilize eight core technologies, including hydraulics, pneumatics, electromechanical, filtration, fluid & gas handling, process control, engineered materials, and climate control, to drive superior customer problem solving and value creation. The Diversified Industrial segment is an aggregation of several business units that design, manufacture, and provide aftermarket support for highly engineered solutions that create value for customers primarily in aerospace and defense, in-plant and industrial equipment, transportation, off-highway, energy, and HVAC and refrigeration markets around the world. Diversified Industrial segment products are marketed direct to OEMs and independent distributors through field sales employees. The Diversified Industrial North America businesses have manufacturing plants and distribution networks throughout the United States, Canada and Mexico and primarily service North America. The Diversified Industrial International businesses provide Parker products and services to 41 countries throughout EMEA, Asia Pacific and Latin America. The Aerospace Systems segment designs, manufactures and provides aftermarket support for highly engineered airframe and engine solutions for both OEMs and end users. Our components and systems are utilized across commercial transport, defense fixed wing, business jets, regional transport, helicopter and energy applications. Aerospace Systems segment products are marketed by field sales employees and are sold directly to manufacturers and end users. The accounting policies of the business segments are consistent with those described in Note 1, except that certain items are not allocated to the businesses. The business segment results are prepared on a basis that is consistent with the manner in which the Company’s management disaggregates financial information for internal review and decision-making. The Company’s Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer. The CODM uses segment operating income as a measure to assess performance, drive decisions and allocate human and financial capital to our reportable segments. Annual plan, monthly forecasts and prior year results are continually compared to these measures when evaluating performance. Segment operating income is measured as net sales less other segment items. Other segment items are primarily comprised of cost of sales; selling, general and administrative expenses; and income related to equity method investments. Management further excludes certain costs presented within cost of sales and selling, general and administrative expenses in the Consolidated Statement of Income, including corporate general and administrative expenses, stock-based compensation, and acquisition-related transaction costs, all of which are managed on a consolidated basis. For business segment reporting purposes, corporate general and administrative expenses are presented as a separate reconciling item, and stock-based compensation and acquisition-related transaction costs are reported within other expense (income), net. 65 Table of Contents For the years ended June 30, 2026 2025 2024 Net Sales Diversified Industrial $ 14,438 $ 13,665 $ 14,458 Aerospace Systems 7,061 6,185 5,472 $ 21,499 $ 19,850 $ 19,930 Other Segment Items Diversified Industrial $ 10,998 $ 10,545 $ 11,282 Aerospace Systems 5,228 4,744 4,361 $ 16,226 $ 15,289 $ 15,643 Segment Operating Income: Diversified Industrial $ 3,440 $ 3,120 $ 3,176 Aerospace Systems 1,833 1,441 1,111 Total segment operating income 5,273 4,561 4,287 Corporate general and administrative expenses 205 214 218 Income before interest expense and other expense (income), net 5,068 4,347 4,069 Interest expense 401 409 506 Other expense (income), net 104 (169) (32) Income before income taxes $ 4,563 $ 4,107 $ 3,595 Assets Property Additions 2026 2025 2024 2026 2025 2024 Diversified Industrial $ 17,001 $ 15,953 $ 16,174 $ 319 $ 310 $ 303 Aerospace Systems(1) 12,180 12,218 12,016 110 88 90 Corporate 1,696 1,323 1,108 30 37 7 Total $ 30,877 $ 29,494 $ 29,298 $ 459 $ 435 $ 400 (1) Assets include an investment in a joint venture in which ownership is 50% or less and in which the Company does not have operating control (2026 - $223 million; 2025 - $226 million; 2024 - $218 million). Depreciation Amortization 2026 2025 2024 2026 2025 2024 Diversified Industrial $ 240 $ 228 $ 232 $ 280 $ 253 $ 266 Aerospace Systems 101 114 108 304 300 312 Corporate 12 12 9 — — — Total $ 353 $ 354 $ 349 $ 584 $ 553 $ 578 Geographic Area Net sales are attributed to countries based on the location of the selling unit. No country other than the United States represents greater than 10% of consolidated sales. Long-lived assets are comprised of property, plant and equipment based on physical location. Net Sales Long-Lived Assets 2026 2025 2024 2026 2025 2024 United States $ 13,819 $ 12,853 $ 12,862 $ 1,751 $ 1,702 $ 1,718 Other countries 7,680 6,997 7,068 1,269 1,235 1,158 Total $ 21,499 $ 19,850 $ 19,930 $ 3,020 $ 2,937 $ 2,876 66 Table of Contents Note 19. Other Expense (Income), Net The table below includes the components of other expense (income), net in the Consolidated Statements of Income: For the years ended June 30, 2026 2025 2024 Foreign currency transaction loss (gain) $ (31) $ 46 $ (38) Income related to equity method investments(1) (218) (178) (152) Non-service components of retirement benefit cost(2) (64) (51) (73) Gain on sale of businesses(3) (9) (253) (24) Interest income (14) (11) (15) Insurance-related charges (recoveries) (23) 8 — Other items, net 29 (17) 14 Total other expense (income), net $ (330) $ (456) $ (288) (1) Equity method investments consist of investments in joint venture companies in which ownership is 50% or less and in which the Company does not have operating control. Sales to and services performed for joint venture companies totaled $112 million, $96 million and $74 million in 2026, 2025 and 2024, respectively. We received cash dividends from joint venture companies of $216 million, $167 million and $148 million in 2026, 2025 and 2024, respectively. (2) For further discussion of the non-service components of retirement benefit cost refer to Note 12. (3) For further discussion of the gain on sale of businesses refer to Note 3. Note 20. Subsequent Event On August 13, 2026, the Company completed the FGC acquisition. FGC is a global provider of proprietary and complementary filtration technologies for critical applications across the life sciences, HVAC and refrigeration, and in-plant and industrial market verticals. The cash purchase price of $9.25 billion was funded with cash primarily through borrowings under the Credit Facilities and the commercial paper program. The Company is in the process of evaluating the purchase price allocation for the FGC acquisition and expects to provide the initial purchase price allocation in its Form 10-Q for the quarter ending September 30, 2026. FGC will be included in our consolidated financial statements beginning on the date of acquisition and reported as part of the Diversified Industrial segment. 67 Table of Contents