PHParker Hannifin

We note that you test goodwill for impairment at the reporting unit level, which is equivalent to your operating segments. Please revise future disclosures to address the following: • Identify the number of reporting units, or operating segments, where goodwill is allocated and tested for impairment; • Indicate whether fair value substantially exceeds book value for all reporting units, and; • If the fair value of

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any reporting unit does not substantially exceed book please identify the reporting unit and quantify the goodwill associated with that reporting unit.

The Company performed its fiscal 2019 annual goodwill impairment test for each of its six reporting units, which are equivalent to its operating segments. The results of the fiscal 2019 annual goodwill impairment test indicated that the fair value substantially exceeded book value for all reporting units.

The Company confirms that it will, in future filings, identify the number of reporting units where goodwill is allocated and tested for impairment.

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Additionally, it will indicate whether the fair value substantially exceeds net book value for all reporting units and, if the fair value of any reporting unit does not substantially exceed net book value, it will identify the reporting unit and quantify the goodwill associated with that reporting unit.

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We note your presentation of non-GAAP diluted adjustments to calculate the non-GAAP measure, Adjusted Earnings per Diluted Share, on a prospective (2020) and historical (2019) basis. However, adding back adjustments net of tax is inconsistent with Question 102.11 in the updated Compliance and Disclosure Interpretations (April 4, 2018).

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Please revise future presentations accordingly to comply with this comment in your non-GAAP presentations in Item 2.02 of your Form 8-K.

The Company acknowledges the Staff's comment and confirms that, in future filings, it will present prospective and historical non-GAAP diluted adjustments on a pre-tax basis and will separately present the tax effects of the adjustments. For illustrative purposes, the Company has revised its presentation of historical and prospective non-GAAP diluted adjustments included in Exhibit 99.1 to its Form 8-K filed on August 1, 2019 in the tables below.

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The Company intends to utilize this presentation in future filings.

RECONCILIATION OF EARNINGS PER DILUTED SHARE TO ADJUSTED EARNINGS PER DILUTED SHARE

(Unaudited) Three Months Ended June 30, Twelve Months Ended June 30,

(Amounts in dollars) 2019 2018 2019 2018

Earnings per diluted share $ 3.17 $ 2.62 $ 11.48 $ 7.83

Adjustments:

Business realignment charges 0.05 0.13 0.12 0.34

Clarcor costs to achieve 0.01 0.06 0.10 0.27

LORD acquisition and integration costs 0.13 — 0.13 —

Loss on sale and writedown of assets, net — 0.20 — 0.24

Tax effect of adjustments1

(0.05) 0.14 (0.09) 0.02

U.S. Tax Reform one-time impact, net — 0.07 0.11 1.72

Adjusted earnings per diluted share $ 3.31 $ 3.22 $ 11.85 $ 10.42

1This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table. We estimate the tax effect of each adjustment item by applying our overall effective tax rate for continuing operations to the pre-tax amount, unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment. The three and twelve months ended June 30, 2018 amounts include a taxable gain resulting from the Facet filtration business divestiture.

PARKER HANNIFIN CORPORATION - JUNE 30, 2019

RECONCILIATION OF FORECASTED EARNINGS PER DILUTED SHARE TO ADJUSTED FORECASTED EARNINGS PER DILUTED SHARE

(Unaudited)

(Amounts in dollars) Fiscal Year 2020

Forecasted earnings per diluted share $11.38 - $12.18

Business realignment charges 0.15

(0.03)

Adjusted forecasted earnings per diluted share $11.50 - $12.30

1This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items of the table. We estimate the tax effect of each adjustment item by applying our overall effective tax rate for continuing operations to the pre-tax amount, unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment.

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In future filings please reconcile EBITDA to Net Income as presented on the face of the income statement. Please refer to Question 103.02 in the updated Compliance and Disclosure Interpretations.

The Company acknowledges the Staff's comment and confirms that, in future filings, it will reconcile EBITDA to Net Income as presented on the face of the income statement. For illustrative purposes, the Company has revised its presentation of its EBITDA reconciliation included in Exhibit 99.1 to its Form 8-K filed on August 1, 2019 in the table below.

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The Company intends to utilize this presentation in future filings.

RECONCILIATION OF EBITDA

(Dollars in thousands) 2019 2018 2019 2018

Net income $ 413,738 $ 353,328 $ 1,512,931 $ 1,061,315

Income taxes 99,610 144,599 420,494 640,962

Depreciation and amortization 105,388 114,769 436,189 466,085

Interest expense 50,072 53,040 190,138 213,873

EBITDA $ 668,808 $ 665,736 $ 2,559,752 $ 2,382,235

If you have any further questions, please call me at (216) 896-3000.

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A catalogue for Parker Olaer Accumulator, Accessories and Spares posted on your website provides a regulations table which includes Syria and Sudan. Also, a November 2015 Service Information brochure for Denison Hydraulics Premier Series Open Pump Circuits posted on your website lists Syria under International Distributors.

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Syria and Sudan are designated by the State Department as state sponsors of terrorism and are subject to U.S. economic sanctions and/or export controls. Your Form 10-K does not provide disclosure about those countries. Please describe to us the nature and extent of any past, current, and anticipated contacts with Syria and Sudan, whether through subsidiaries, affiliates, partners, or other direct or indirect arrangements. For instance, a recent news article reports that you have an agreement with Emirates Airline to provide maintenance for certain of its aircraft and engines throughout its worldwide network of repair facilities. Emirates Airline’s website lists flights to Khartoum, Sudan. You should describe any products, components, technology or services you have provided to Syria or Sudan, directly or indirectly, and any agreements, commercial arrangements or other contacts with the governments of those countries or entities they control.

We note your response to comment 4 of our letter dated January 26, 2018. In particular, you state that the company had an overall goal of 21.4% return on net assets on a consolidated basis, with a target multiple of 5% on each “share.” The General RONA Bonus Targets were then converted into a number of “shares” calculated by dividing the General RONA Bonus Target by the product of salary times the 5% multiple. Please help us understand how the 5% target multiple used to determine the number of “shares” for each NEO relates to the 21.4% return on net assets goal.

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Please also give the actual return on net assets, as determined for purposes of determining compensation, in order to help illustrate how the 5% multiple and ultimate payout was determined.

The Company’s RONA plan is a broad-based incentive compensation plan in which the majority of our global workforce participates (i.e., it is not a plan that applies solely or primarily to executive officers). As disclosed on page 35 of the Company’s 2017 Proxy Statement, once the applicable return on net assets is calculated, the applicable multiple is calculated as follows:

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For that portion of the applicable return on net assets which is less than or equal to 35%, the multiple is 1% for every 5.6% of return on net assets.

For that portion of the applicable return on net assets in excess of 35%, the multiple is 1% for every 11.2% of the excess.

Internally, the Company allows its divisions to consider the benefit of intercompany sales. To compensate for this additional benefit, the Company requires an actual return on net assets of 28% for a payout multiple at the 5% target (i.e., 28.0% / 5.6%). In other words, the 28% internal goal represents the Company’s estimate of division-level return on net assets performance (which would include intercompany sales) needed to achieve 21.4% return on net assets on a consolidated basis (after excluding intercompany sales).

In fiscal year 2017, the return on average net assets for all divisions in the Filtration Group was 26.97% (which translated to the 4.82% multiple (i.e., 26.97% / 5.6%) for

Mr. Malone prior to applying his PG RONA Multiplier), and the return on average net assets for all divisions was 35.11% (which translated to the 6.26% multiple (i.e., (35.00% / 5.6%) + (0.11% / 11.2%)) for each of our other Named Executive Officers).

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Please discuss the materiality of any contacts with Syria or Sudan you describe in response to the comment above, and whether those contacts constitute a material investment risk for your security holders. You should address materiality in quantitative terms, including the approximate dollar amounts of any associated revenues, assets, and liabilities for the last three fiscal years and the subsequent interim period.

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Also, address materiality in terms of qualitative factors that a reasonable investor would deem important in making an investment decision, including the potential impact of corporate activities upon a company’s reputation and share value. Various state and municipal governments, universities, and other investors have proposed or adopted divestment or similar initiatives regarding investment in companies that do business with U.S.- designated state sponsors of terrorism. You should address the potential impact of the investor sentiment evidenced by such actions directed toward companies that have operations associated with Sudan and Syria.

We note your response to comment 5 of our letter dated January 26, 2018. Please confirm that in future filings you will disclose the CAGR and multiplier used to determine the amount of any adjustment to the RONA bonus paid to any NEO.

The Company confirms that it will, in future filings, disclosure the CAGR and multiplier used to determine the amount of any adjustment to the RONA bonus paid to any NEO.

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Please tell us whether any contacts with Syria and Sudan you describe in response to the comments above involve dual use products and, if so, the nature of the dual uses.

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It is unclear how the target payout amounts for the RONA bonuses and Converted RONA Bonuses resulted in the amounts actually paid as disclosed in the Summary Compensation Table footnotes. Elements of this calculation, such as the annual goal for return on net assets and mechanism for converting the Bonus Target Payout Amounts shown on page 36 into “RONA shares” are not disclosed.

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Similarly, because return on net assets used to determine the awards is not disclosed, the multiples applied to the RONA shares and salary to determine the amount of the bonuses are not clear. In your supplemental response, please elaborate on how the amounts disclosed in the Summary Compensation Table footnotes was determined, and in future filings, please disclose the goal for return on net assets, the RONA shares and multiples used and any other information necessary to understand how the final bonus amounts were determined.

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To the extent that the PGI Plan is used to adjust General RONA Bonuses for named executive officers, please disclose the PG RONA Multiplier that you used, explain how it was determined with reference to the relevant three – year CAGR, and disclose the CAGR that was used in this determination.

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We note your response to comment 4 of our letter dated January 26, 2018. In particular, you state that the company had an overall goal of 21.4% return on net assets on a consolidated basis, with a target multiple of 5% on each “share.” The General RONA Bonus Targets were then converted into a number of “shares” calculated by dividing the General RONA Bonus Target by the product of salary times the 5% multiple.

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Please help us understand how the 5% target multiple used to determine the number of “shares” for each NEO relates to the 21.4% return on net assets goal. Please also give the actual return on net assets, as determined for purposes of determining compensation, in order to help illustrate how the 5% multiple and ultimate payout was determined.

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We note your response to comment 5 of our letter dated January 26, 2018. Please confirm that in future filings you will disclose the CAGR and multiplier used to determine the amount of any adjustment to the RONA bonus paid to any NEO.

No reply letter found.