ph-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File number 1-4982

PARKER-HANNIFIN CORPORATION

(Exact name of registrant as specified in its charter)


Ohio			34-0451060
(State or other jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

6035 Parkland Boulevard,	Cleveland,	Ohio	44124-4141
(Address of Principal Executive Offices)			(Zip Code)

Registrant’s telephone number, including area code: (216) 896-3000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on which Registered

Common Shares, $.50 par value

New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Number of Common Shares outstanding at September 30, 2024: 128,720,433

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PARKER-HANNIFIN CORPORATION

CONSOLIDATED STATEMENT OF INCOME

(Dollars in thousands, except per share amounts)

(Unaudited)


	Three Months Ended
	September 30,
	2024		2023
Net sales	$	4,903,984	$	4,847,488
Cost of sales	3,097,719		3,097,349
Selling, general and administrative expenses	848,789		873,691

Interest expense	113,091		134,468
Other income, net	(30,801)		(78,455)
Income before income taxes	875,186		820,435
Income taxes	176,658		169,363
Net income	698,528		651,072
Less: Noncontrolling interest in subsidiaries' earnings	108		245
Net income attributable to common shareholders	$	698,420	$	650,827

Earnings per share attributable to common shareholders:
Basic	$	5.43	$	5.07
Diluted	$	5.34	$	4.99

See accompanying notes to consolidated financial statements.

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PARKER-HANNIFIN CORPORATION

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)


	Three Months Ended
	September 30,
	2024		2023
Net income	$	698,528	$	651,072
Less: Noncontrolling interests in subsidiaries' earnings	108		245
Net income attributable to common shareholders	698,420		650,827

Other comprehensive income (loss), net of tax
Foreign currency translation adjustment	344,546		(222,532)
Retirement benefits plan activity	3,451		818
Other comprehensive income (loss)	347,997		(221,714)
Less: Other comprehensive income for noncontrolling interests	420		361
Other comprehensive income (loss) attributable to common shareholders	347,577		(222,075)
Total comprehensive income attributable to common shareholders	$	1,045,997	$	428,752

See accompanying notes to consolidated financial statements.

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PARKER-HANNIFIN CORPORATION

CONSOLIDATED BALANCE SHEET

(Dollars in thousands)

(Unaudited)



	September 30, 2024		June 30, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	371,068	$	422,027
Trade accounts receivable, net	2,712,656		2,865,546
Non-trade and notes receivable	317,381		331,429
Inventories	2,872,250		2,786,800
Prepaid expenses	249,148		252,618
Other current assets	511,198		140,204
Total current assets	7,033,701		6,798,624
Property, plant and equipment	7,111,027		7,074,574
Less: Accumulated depreciation	4,271,485		4,198,906
Property, plant and equipment, net	2,839,542		2,875,668
Deferred income taxes	91,882		92,704
Investments and other assets	1,263,190		1,207,232
Intangible assets, net	7,747,233		7,816,181
Goodwill	10,625,287		10,507,433
Total assets	$	29,600,835	$	29,297,842
LIABILITIES
Current liabilities:
Notes payable and long-term debt payable within one year	$	3,515,613	$	3,403,065
Accounts payable, trade	1,953,477		1,991,639
Accrued payrolls and other compensation	407,106		581,251
Accrued domestic and foreign taxes	457,761		354,659
Other accrued liabilities	1,004,073		982,695
Total current liabilities	7,338,030		7,313,309
Long-term debt	6,673,303		7,157,034
Pensions and other postretirement benefits	427,702		437,490
Deferred income taxes	1,544,503		1,583,923
Other liabilities	715,948		725,193
Total liabilities	16,699,486		17,216,949
EQUITY
Shareholders’ equity:
Serial preferred stock, $.50 par value; authorized 3,000,000 shares; none issued	—		—
Common stock, $.50 par value; authorized 600,000,000 shares; issued 181,046,128 shares at September 30 and June 30	90,523		90,523
Additional paid-in capital	275,019		264,508
Retained earnings	19,593,082		19,104,599
Accumulated other comprehensive (loss)	(1,090,435)		(1,438,012)
Treasury shares, at cost; 52,325,695 shares at September 30 and 52,442,162 shares at June 30	(5,976,289)		(5,949,646)
Total shareholders’ equity	12,891,900		12,071,972
Noncontrolling interests	9,449		8,921
Total equity	12,901,349		12,080,893
Total liabilities and equity	$	29,600,835	$	29,297,842

See accompanying notes to consolidated financial statements.

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PARKER-HANNIFIN CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


	Three Months Ended
	September 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	698,528	$	651,072
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	88,925		84,867
Amortization	140,121		155,520

Stock incentive plan compensation	75,842		77,894
Deferred income taxes	(27,255)		(56,027)
Foreign currency transaction loss (gain)	36,670		(2,011)
(Gain) loss on property, plant and equipment and intangible assets	(8,422)		1,333
Gain on sale of businesses	(313)		(13,260)

Other, net	3,894		5,542
Changes in assets and liabilities, net of effect of acquisitions and divestitures:
Accounts receivable, net	137,555		63,947
Inventories	(135,649)		(137,995)
Prepaid expenses	3,975		5,501
Other current assets	(12,985)		11,414
Other assets	(51,009)		(38,589)
Accounts payable, trade	(42,336)		4,768
Accrued payrolls and other compensation	(172,048)		(220,336)
Accrued domestic and foreign taxes	92,558		136,916
Other accrued liabilities	(46,384)		51,443
Pensions and other postretirement benefits	(8,064)		(53,086)
Other liabilities	(29,628)		(78,954)
Net cash provided by operating activities	743,975		649,959
CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures	(95,302)		(97,746)
Proceeds from sale of property, plant and equipment	13,271		710
Proceeds from sale of businesses	884		36,691


Other, net	(5,461)		4,351
Net cash used in investing activities	(86,608)		(55,994)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options	1,697		1,182
Payments for common shares	(93,786)		(79,330)
Acquisition of noncontrolling interests	—		(2,883)
Payments for notes payable, net	(367,434)		(169,785)

Payments for long-term borrowings	(41,495)		(176,626)

Dividends paid	(209,937)		(190,420)
Net cash used in financing activities	(710,955)		(617,862)
Effect of exchange rate changes on cash	2,629		(2,359)
Net decrease in cash and cash equivalents	(50,959)		(26,256)
Cash and cash equivalents at beginning of year	422,027		475,182
Cash and cash equivalents at end of period	$	371,068	$	448,926

See accompanying notes to consolidated financial statements.

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PARKER-HANNIFIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts or as otherwise noted)

As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, the terms "Company", "Parker", "we" or "us" refer to Parker-Hannifin Corporation and its subsidiaries.

1. Management representation

In the opinion of the management of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company's financial position as of September 30, 2024, the results of operations for the three months ended September 30, 2024 and 2023 and cash flows for the three months then ended. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s 2024 Annual Report on Form 10-K.

Subsequent Events

The Company has evaluated subsequent events that occurred through the date these financial statements were issued. On November 1, 2024, Parker completed two divestitures. The composites and fuel containment ("CFC") business, which was acquired in the acquisition of Meggitt plc ("Meggitt"), was sold for proceeds of $560 million. Refer to Note 4 for further discussion. Additionally, we divested a non-core filtration business within the North America businesses of the Diversified Industrial Segment for proceeds of $66 million.

2. New accounting pronouncements

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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. Early adoption is permitted. The amendment should be applied on a prospective basis. Retrospective application is permitted. The Company is currently evaluating the impact this guidance will have on the Company's disclosures.

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures," which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. The amendments should be applied retrospectively to all prior periods presented in the financial statements. We plan to adopt the standard beginning with our fiscal 2025 Form 10-K. We expect this ASU to result in expanded disclosure of segment financial information with no impact on our financial position and results of operations.

In September 2022, the FASB issued ASU 2022-04, "Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations," which requires a buyer in a supplier finance program to disclose information about the program’s nature, activity during the period, changes from period to period, and potential magnitude. To achieve that objective, the buyer should disclose qualitative and quantitative information about its supplier finance programs, including the outstanding amount under the program, the balance sheet presentation of the outstanding amount, and a rollforward of the obligations in the program. This ASU should be adopted retrospectively for each balance sheet period presented; however, the rollforward information should be provided prospectively. The Company adopted the guidance on July 1, 2023, except for the annual rollforward requirement, which was adopted on July 1, 2024, and will be presented in the Company's Annual Report on Form 10-K for fiscal 2025. The adoption did not have a material impact on the Company's condensed consolidated financial statements. Refer to Note 10 for further discussion.

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3. Revenue recognition

Revenue is derived primarily from the sale of products in the aerospace and defense, in-plant and industrial equipment, transportation, off-highway, energy, and HVAC and 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.

Diversified Industrial Segment revenues by technology platform:


	Three Months Ended
	September 30,
	2024		2023
Motion Systems	$	848,549	$	942,314
Flow and Process Control	1,125,634		1,181,461
Filtration and Engineered Materials	1,481,975		1,494,753
Total	$	3,456,158	$	3,618,528

Aerospace Systems Segment revenues by market segment:


	Three Months Ended
	September 30,
	2024		2023
Commercial original equipment manufacturer ("OEM")	$	433,235	$	418,616
Commercial aftermarket	520,829		391,206
Defense OEM	262,291		263,065
Defense aftermarket	231,471		156,073
Total	$	1,447,826	$	1,228,960

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


	Three Months Ended
	September 30,
	2024		2023
North America	$	3,333,660	$	3,293,091
Europe	934,580		941,715
Asia Pacific	579,911		554,405
Latin America	55,833		58,277
Total	$	4,903,984	$	4,847,488

The majority of revenues from the Aerospace Systems Segment are 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.

- 7 -

Total contract assets and contract liabilities are as follows:


	September 30, 2024		June 30, 2024
Contract assets, current (included within Other current assets)	$	150,052	$	136,814
Contract assets, noncurrent (included within Investments and other assets)	19,353		21,063
Total contract assets	169,405		157,877
Contract liabilities, current (included within Other accrued liabilities)	(179,333)		(183,868)
Contract liabilities, noncurrent (included within Other liabilities)	(89,633)		(77,957)
Total contract liabilities	(268,966)		(261,825)
Net contract liabilities	$	(99,561)	$	(103,948)

Net contract liabilities at September 30, 2024 decreased from the June 30, 2024 amount primarily due to timing differences between when revenue was recognized and the receipt of advance payments. During the three months ended September 30, 2024, approximately $81 million of revenue was recognized that was included in the contract liabilities at June 30, 2024.

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 September 30, 2024 was $11.0 billion, of which approximately 73 percent is expected to be recognized as revenue within the next 12 months and the balance thereafter.

4. Divestitures

On July 28, 2024, the Company signed an agreement to divest its CFC business from within the North America businesses of the Diversified Industrial Segment. This divestiture closed on November 1, 2024. As of September 30, 2024, the aggregate carrying amount of the assets and liabilities held for sale was $356 million and $65 million, respectively.

Assets held for sale are recorded within other current assets in the Consolidated Balance Sheet. These assets primarily consist of $85 million of inventory, $76 million of property, plant and equipment, net, $67 million of goodwill and $65 million of trade accounts receivable, net.

Liabilities held for sale are recorded within other accrued liabilities in the Consolidated Balance Sheet. These liabilities primarily include $21 million of account payable, trade, $12 million of other accrued liabilities, $11 million of deferred income taxes and $11 million of other liabilities.

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 income, net in the Consolidated Statement of Income. The operating results and net assets of the MicroStrain sensing systems business were immaterial to the Company's consolidated results of operations and financial position.

5. Earnings per share

The following table presents a reconciliation of the numerator and denominator of basic and diluted earnings per share for the three months ended September 30, 2024 and 2023.


	Three Months Ended
	September 30,
	2024		2023
Numerator:
Net income attributable to common shareholders	$	698,420	$	650,827
Denominator:
Basic - weighted average common shares	128,663,088		128,472,550
Increase in weighted average common shares from dilutive effect of equity-based awards	2,017,154		1,890,891
Diluted - weighted average common shares, assuming exercise of equity-based awards	130,680,242		130,363,441

Basic earnings per share	$	5.43	$	5.07
Diluted earnings per share	$	5.34	$	4.99

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For the three months ended September 30, 2024 and 2023, 181,051 and 172,255 common shares subject to equity-based awards, respectively, were excluded from the computation of diluted earnings per share because the effect of their exercise would be anti-dilutive.

6. Share repurchase program

The Company has a program to repurchase its common shares. On October 22, 2014, the Board of Directors of the Company approved an increase in the overall number of shares authorized for repurchase under the program so that, beginning on such date, the aggregate number of shares authorized for repurchase was 35 million. There is no limitation on the number of shares that can be repurchased in a fiscal year. There is no expiration date for this program. Repurchases may be funded primarily from operating cash flows and commercial paper borrowings and the shares are initially held as treasury shares. During the three months ended September 30, 2024, we repurchased 88,821 shares at an average price, including commissions, of $562.92 per share.

7. Trade accounts receivable, net

Trade accounts receivable are initially recorded at their net collectible amount and are generally recorded at the time the revenue from the sales transaction is recorded. We evaluate the collectibility of our receivables based on historical experience and current and forecasted economic conditions based on management's judgment. Additionally, receivables are written off to bad debt when management makes a final determination of uncollectibility. Allowance for credit losses was $14 million and $21 million at September 30, 2024 and June 30, 2024, respectively.

8. Non-trade and notes receivable

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


	September 30, 2024		June 30, 2024
Notes receivable	$	89,709	$	93,114


Accounts receivable, other	227,672		238,315
Total	$	317,381	$	331,429

9. Inventories

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


	September 30, 2024		June 30, 2024
Finished products	$	796,446	$	777,775
Work in process	1,494,512		1,421,104
Raw materials	581,292		587,921
Total	$	2,872,250	$	2,786,800

10. Supply chain financing

We have supply chain financing ("SCF") programs with financial intermediaries, which provide certain suppliers the option to be paid by the financial intermediaries earlier than the due date on the applicable invoice. We are not a party to the agreements between the participating financial intermediaries and the suppliers in connection with the programs. 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.

Amounts due to our suppliers that elected to participate in the SCF programs are included in accounts payable, trade on the Consolidated Balance Sheet and payments made under the SCF programs are included within operating activities on the Consolidated Statement of Cash Flows. Accounts payable, trade included approximately $125 million and $116 million payable to suppliers who have elected to participate in the SCF programs as of September 30, 2024 and June 30, 2024, respectively. The amounts settled through the SCF programs and paid to the participating financial intermediaries totaled $107 million and $72 million during the first three months of fiscal 2025 and 2024, respectively.

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11. Business realignment and acquisition integration charges

We incurred business realignment and acquisition integration charges in the first three months of fiscal 2025 and 2024, which 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 both fiscal 2025 and 2024, a majority of the business realignment charges were incurred in Europe. 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:


	Three Months Ended
	September 30,
	2024		2023
Diversified Industrial	$	8,900	$	12,639
Aerospace Systems	8		453

Other expense, net	598		—

Reductions to our workforce made in connection with such business realignment charges by business segment are as follows:


	Three Months Ended
	September 30,
	2024	2023
Diversified Industrial	327	325
Aerospace Systems	—	2

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


	Three Months Ended
	September 30,
	2024		2023
Cost of sales	$	5,440	$	6,984
Selling, general and administrative expenses	3,468		6,108
Other income, net	598		—

During the first three months of fiscal 2025, approximately $9 million in payments were made relating to business realignment charges. Remaining payments related to business realignment actions of approximately $15 million, a majority of which are expected to be paid by March 31, 2025, are primarily reflected within the accrued payrolls and other compensation and other accrued liabilities captions in the Consolidated Balance Sheet. 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.

We also incurred the following acquisition integration charges:


	Three Months Ended
	September 30,
	2024		2023
Diversified Industrial	$	778	$	1,139
Aerospace Systems	5,633		5,267

Charges incurred in fiscal 2025 and 2024 relate to the acquisition of Meggitt. In both fiscal 2025 and 2024, these charges were primarily included in selling, general and administrative expenses ("SG&A") within the Consolidated Statement of Income.

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12. Equity

Changes in equity for the three months ended September 30, 2024 and 2023 are as follows:


	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss)		Treasury Shares		Noncontrolling Interests		Total Equity
Balance at June 30, 2024	$	90,523	$	264,508	$	19,104,599	$	(1,438,012)	$	(5,949,646)	$	8,921	$	12,080,893
Net income					698,420						108		698,528

Other comprehensive income							347,577				420		347,997
Dividends paid ($1.63 per share)					(209,937)								(209,937)
Stock incentive plan activity			10,511						23,357				33,868

Shares purchased at cost									(50,000)				(50,000)
Balance at September 30, 2024	$	90,523	$	275,019	$	19,593,082	$	(1,090,435)	$	(5,976,289)	$	9,449	$	12,901,349


	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss)		Treasury Shares		Noncontrolling Interests		Total Equity
Balance at June 30, 2023	$	90,523	$	305,522	$	17,041,502	$	(1,292,872)	$	(5,817,787)	$	11,391	$	10,338,279
Net income					650,827						245		651,072
Other comprehensive (loss) income							(222,075)				361		(221,714)
Dividends paid ($1.48 per share)					(190,420)								(190,420)
Stock incentive plan activity			31,225						18,522				49,747
Acquisition activity			415								(2,429)		(2,014)
Shares purchased at cost									(50,000)				(50,000)
Balance at September 30, 2023	$	90,523	$	337,162	$	17,501,909	$	(1,514,947)	$	(5,849,265)	$	9,568	$	10,574,950

Changes in accumulated other comprehensive (loss) in shareholders' equity by component for the three months ended September 30, 2024 and 2023 are as follows:


	Foreign Currency Translation Adjustment		Retirement Benefit Plans		Total
Balance at June 30, 2024	$	(1,129,997)	$	(308,015)	$	(1,438,012)
Other comprehensive income before reclassifications	344,126		—		344,126
Amounts reclassified from accumulated other comprehensive (loss)	—		3,451		3,451
Balance at September 30, 2024	$	(785,871)	$	(304,564)	$	(1,090,435)


	Foreign Currency Translation Adjustment		Retirement Benefit Plans		Total
Balance at June 30, 2023	$	(962,044)	$	(330,828)	$	(1,292,872)

Other comprehensive (loss) before reclassifications	(222,893)		—		(222,893)
Amounts reclassified from accumulated other comprehensive (loss)	—		818		818
Balance at September 30, 2023	$	(1,184,937)	$	(330,010)	$	(1,514,947)

Significant reclassifications out of accumulated other comprehensive (loss) in shareholders' equity for the three months ended September 30, 2024 and 2023 are as follows:

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Details about Accumulated Other Comprehensive (Loss) Components

Income (Expense) Reclassified from Accumulated Other Comprehensive (Loss)

Consolidated Statement of Income Classification

Three Months Ended

September 30, 2024

Retirement benefit plans

Amortization of prior service cost and initial net obligation

(827)

Other income, net

Recognized actuarial loss

(3,804)

Other income, net

Total before tax

(4,631)

Tax benefit

1,180

Net of tax

(3,451)

Details about Accumulated Other Comprehensive (Loss) Components

Income (Expense) Reclassified from Accumulated Other Comprehensive (Loss)

Consolidated Statement of Income Classification

Three Months Ended

September 30, 2023

Retirement benefit plans

Amortization of prior service cost and initial net obligation

(302)

Other income, net

Recognized actuarial loss

(792)

Other income, net

Total before tax

(1,094)

Tax benefit

276

Net of tax

(818)

13. Goodwill and intangible assets

The changes in the carrying amount of goodwill for the three months ended September 30, 2024 are as follows:


	Diversified Industrial Segment		Aerospace Systems Segment		Total
Balance at June 30, 2024	$	7,607,429	$	2,900,004	$	10,507,433


Goodwill reclassified to held for sale	(66,504)		—		(66,504)

Foreign currency translation	147,908		36,450		184,358
Balance at September 30, 2024	$	7,688,833	$	2,936,454	$	10,625,287

Goodwill reclassified to held for sale relates to the CFC business. Refer to Note 4 for further discussion.

Intangible assets are amortized using the straight-line method over their legal or estimated useful lives. The following summarizes the gross carrying value and accumulated amortization for each major category of intangible assets:


	September 30, 2024				June 30, 2024
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Patents and technology	$	2,119,691	$	479,655	$	2,116,999	$	451,908
Trade names	1,036,737		459,978		1,041,633		441,382
Customer relationships and other	8,162,707		2,632,269		8,044,208		2,493,369
Total	$	11,319,135	$	3,571,902	$	11,202,840	$	3,386,659

Total intangible asset amortization expense for the three months ended September 30, 2024 and 2023 was $140 million and $156 million, respectively. The estimated amortization expense for the five years ending June 30, 2025 through 2029 is $550 million, $550 million, $547 million, $540 million and $511 million, respectively.

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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 during the three months ended September 30, 2024 and 2023.

14. Retirement benefits

Net pension (benefit) expense recognized included the following components:


	U.S. Pension Benefits				Non-U.S. Pension Benefits
	Three Months Ended				Three Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Service cost	$	6,973	$	7,904	$	5,641	$	5,623
Interest cost	46,013		47,026		19,202		19,855

Expected return on plan assets	(61,243)		(64,382)		(21,929)		(23,866)
Amortization of prior service cost	763		211		64		91
Amortization of net actuarial loss (gain)	2,577		(404)		1,672		1,586

Net pension (benefit) expense	$	(4,917)	$	(9,645)	$	4,650

SEC Form 10-Q filed by Parker-Hannifin Corporation