SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
[ X ]ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1998
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ......................to ......................
Commission file number 1-4982
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
PARKER RETIREMENT SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
PARKER-HANNIFIN CORPORATION
6035 PARKLAND BOULEVARD
CLEVELAND, OHIO 44124-4141
<PAGE>
PARKER RETIREMENT SAVINGS PLAN
INDEX OF FINANCIAL STATEMENTS
PAGE
Independent Auditors' Report 1
Financial Statements:
Statements of Net Assets Available for Benefits
at December 31, 1998 and 1997 2
Statements of Changes in Net Assets Available for Benefits
for the years ended December 31, 1998 and 1997 2
Notes to Financial Statements 3
Supplemental Schedules:
Item 27a - Schedule of Assets Held for Investment
Purposes for the year ended December 31, 1998 13
Item 27d - Schedule of Reportable Transactions for
the year ended December 31, 1998 19
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
of Parker-Hannifin Corporation
We have audited the accompanying statements of net assets available for
benefits of the Parker Retirement Savings Plan as of December 31, 1998 and
1997, and the related statements of changes in net assets available for
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects the net assets available for benefits of the Parker
Retirement Savings Plan as of December 31, 1998 and 1997, and the changes in
net assets available for benefits for the years then ended in conformity
with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in
the accompanying index are presented for the purpose of additional analysis
and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of
the Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, are fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
Ciuni & Panichi, Inc.
Cleveland, Ohio
June 22, 1999
- 1 -
<PAGE>
PARKER RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1998 AND 1997
(000's omitted)
1998 1997
_________ _________
[S] [C] [C]
ASSETS
Investments at fair value:
Cash and cash equivalents (Notes 1 & 4) $ 18,592 $ 10,351
Parker-Hannifin Corporation common
shares (Notes 1 & 4) 370,760 475,169
Investment contracts (Notes 1 & 5) 131,277 140,116
Other investments (Notes 1 & 4) 409,195 312,301
Participant loans 41,174 37,306
_________ _________
Total investments 970,998 975,243
_________ _________
Accrued interest and dividends 1,152 1,187
Other 2,811 32
_________ _________
Total assets 974,961 976,462
_________ _________
LIABILITIES
Dividends payable to participants (Note 3) 4,605 4,220
Other 4,319 2,669
_________ _________
Total liabilities 8,924 6,889
_________ _________
Net Assets Available for Benefits $ 966,037 $ 969,573
========= =========
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
(000's omitted)
1998 1997
_________ _________
[S] [C] [C]
ADDITIONS
Contributions (Notes 1 & 2):
Participant payroll deductions $ 62,408 $ 51,549
Employer contributions 24,597 22,313
_________ _________
Total contributions 87,005 73,862
Interest income - net 21,949 18,155
Dividend income 1,896 1,438
Net (depreciation) appreciation in the
fair value of investments (Notes 1 & 4) (72,144) 248,406
_________ _________
Total additions 38,706 341,861
_________ _________
DEDUCTIONS
Withdrawals and terminations 40,635 40,356
Trustee fees and expenses 1,607 1,528
_________ _________
Total deductions 42,242 41,884
_________ _________
Net (decrease) increase in Assets
Available for Benefits (3,536) 299,977
Net Assets Available - Beginning of year 969,573 669,596
_________ _________
Net Assets Available - End of year $ 966,037 $ 969,573
========= =========
The accompanying notes are an integral part of the financial statements.
- 2 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION
The investments in Parker-Hannifin Corporation (the Company) common
shares, non-convertible corporate bonds, U.S. Government bonds, Key Trust
Employee Benefits Value Equity Fund, Key Trust Employee Benefits Fixed
Income Fund, AIM Constellation Fund, Capital Guardian International
Equity Fund and the Seven Seas S&P 500 Index Fund are valued as of the
last reported trade price on the last business day of the period. The
Parker Retirement Savings Plan (the Plan) presents in the Statement of
Changes in Net Assets Available for Benefits the net appreciation
(depreciation) in the fair value of its investments which consists of the
realized gains or losses from the sale of investments and the unrealized
appreciation (depreciation) on investments held by the Plan.
Investments in the Key Trust Employee Benefits Money Market Fund are
valued at market, which approximates cost. Refer to Note 5 for
information relating to the Contract Income Fund.
Management believes that the Plan's investments are well diversified and
do not create a significant concentration of credit risk. Participants
assume all risk in connection with any decrease in the market price of
any securities in all the Funds. Although the annual rates of return
with respect to the contracts held in the Contract Income Fund are
guaranteed by major insurance and bank companies, the Company does not
make any representations as to the financial capability of such companies
or their ability to make payments under the contracts.
CONTRIBUTIONS
Participants may make contributions on a before tax and/or after tax
basis. Contributions from employees and the Company are recorded in the
period that payroll deductions are made from Plan participants.
Company contributions are invested solely in a non-participant directed
ESOP Fund, which holds primarily Company stock.
OTHER
Purchases and sales of securities are reflected on a trade-date basis.
Dividend income is recorded on the ex-dividend date. Interest and other
income are recorded as earned on the accrual basis.
Costs incident to the purchase and sale of securities, such as brokerage
commissions and stock transfer taxes, as well as investment advisory
fees, are charged to the funds to which they relate and are netted against
interest income. Certain costs and expenses incurred in administering
the Plan are paid out of the Plan's assets and the Company pays the
remainder.
The preparation of financial statements in conformity with generally
accepted accounting principles 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.
Benefits are recorded when paid.
2. DESCRIPTION OF PLAN
GENERAL
The following description of the Plan provides only general information.
Participants should refer to the Plan document or summary plan description
for a more complete description of the Plan's provisions.
The Plan is a defined contribution plan which is available to all regular
and part-time non-union employees who have 90 days of service for the
Company's fiscal year ending June 30, 1998 and prior. Effective July 1,
1998, employees are able to enroll in the Plan the first day of the month
following the date of hire. The Plan
- 3 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS, continued
2. DESCRIPTION OF PLAN, Continued
is subject to Section 401(k) of the Internal Revenue Code and the
provisions of the Employee Retirement Income Security Act (ERISA) of 1974,
as amended. The Plan was amended and restated effective January 1, 1998
to reflect certain operational and administrative changes and to comply
with tax legislative changes.
CONTRIBUTIONS AND TRANSFERS
Participants may elect to contribute, through payroll deductions, not
less than 1% nor more than 15% of their total compensation for a Plan year
and may change such percentage upon request. The amount which a highly
compensated employee may contribute may be limited in order to comply
with Internal Revenue Code Sections 401(k) and 401(m). Participants may
suspend their contributions at any time and may designate one or more of
several available funds in which their contributions are to be invested
and their investment elections at any time. Available funds are:
(a) Company Stock Fund - Invested primarily in common shares of the
Company purchased on the open market. A participant's contribution
is limited to 50% invested in this fund.
(b) Fixed Income Fund - Invested primarily in securities which have a
fixed rate of return such as government and high-quality corporate
bills, notes, bonds, and other similar investments of issuers other
than the Company.
(c) Equity Fund - Invested primarily in common stock of high-quality
medium and large capitalization companies other than the Company.
(d) Contract Income Fund - Invested primarily in high-quality fixed
income investments such as contracts issued by insurance companies
and banks which provide a return guaranteed by the issuer, and debt
securities such as notes and bonds issued by Federal agencies or
mortgage backed securities, with each of these investments typically
providing a stable rate of return for a specific period of time.
Refer to Note 5 for a further description of this fund.
(e) Balanced Fund - Invested primarily in securities which have a fixed
rate of return such as government and high-quality corporate bills,
notes, bonds, and/or invested in bonds, convertible securities, money
market investments, and common stocks of high-quality medium and large
capitalization companies other than the Company.
(f) Small Capitalization Fund - Invested primarily in equity securities
of small and medium-sized companies that have demonstrated or have
the potential for above-average capital growth.
(g) International Fund - Invested primarily in common stocks, preferred
stocks, warrants and rights to subscribe to common stocks on non-U.S.
issuers.
(h) S&P 500 Index Fund - Invested in stocks which comprise the S&P 500
Index, most of which are listed on the New York Stock Exchange.
As a result of an acquisition in 1998, $2,742,681 was transferred into
the Plan from the account balances of the CTC Savings Plan and is recorded
within contributions.
PARKER-HANNIFIN CORPORATION CONTRIBUTIONS
The Company contributes an amount equal to 100% of the first 3% of the
monthly before-tax contributions and an amount equal to 25% of the 4th
percent and 5th percent of the contribution. The Company may also match
after-tax contributions, but matches only the 4th percent and 5th percent
of after-tax contributions at 25%. Company contributions match the
before-tax contributions prior to the after-tax contributions. Company
contributions are invested solely in the ESOP Fund. A participant
age 55 or older, with 10 or more years of participation in the Plan, may
transfer a portion of the shares of stock in the ESOP Fund to any of the
investment funds within the Plan.
- 4 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS, continued
2. DESCRIPTION OF PLAN, Continued
PARTICIPANT LOANS
The Plan has a loan provision which allows active participants to
borrow a minimum of $500 and up to a maximum of a) 50% of their account
balance or b) $50,000 less the largest outstanding loan balance they had
in the last 12 months, whichever is less. The loan must be repaid, with
interest equal to the prime rate at the time the loan is entered into
plus 1%, over a period from 1 year to 4 1/2 years for a general purpose
loan and up to ten years for a residential loan. Participant loans are
valued at cost, which approximates fair value.
PARTICIPANT ACCOUNTS
The Plan utilizes the unit value method for allocating Plan earnings for
all funds. The Company Stock and ESOP Funds were converted to the unit
value method from share accounting as of April 1, 1997. Unit values are
determined on a daily basis and are presented excluding contributions
receivable and benefits payable. The total number of units and unit
values as of December 31, 1998 and 1997 by fund are as follows:
<TABLE>
<CAPTION>
1998 1997
____________________________ ____________________________
Total Net Asset Total Net Asset
Investment Options Number of Units Unit Value Number of Units Unit Value
_________________________ _______________ __________ _______________ __________
<S> <C> <C> <C> <C>
ESOP Fund 22,351,997.04 $12.00 21,639,556.79 $16.21
Company Stock Fund 9,480,070.34 $12.03 7,778,762.78 $16.23
Fixed Income Fund 3,216,479.57 $12.39 2,629,499.16 $11.34
Equity Fund 9,568,080.92 $19.55 9,945,404.96 $15.34
Contract Income Fund 12,162,384.65 $11.91 13,091,421.82 $11.20
Balanced Fund 4,494,641.74 $16.48 4,126,273.55 $13.78
Small Capitalization Fund 902,729.26 $30.30 844,330.36 $26.38
International Fund 656,795.59 $21.92 676,171.69 $19.74
S&P 500 Index Fund 2,931,818.33 $22.06 1,926,160.05 $19.66
</TABLE>
3. VESTING, WITHDRAWALS AND DISTRIBUTIONS
Participant interests in the Plan attributable to their own contributions
and Company contributions are fully vested at all times. Participants may
withdraw in cash a portion of their before and/or after tax contributions,
subject to certain limitations and restrictions.
After a participant terminates employment for any reason, all amounts are
distributable to the participant or, to the participant's designated
beneficiary, if deceased. The distribution may be deferred until the age
of 70 1/2 if the participant's interest exceeds $5,000 ($3,500 in 1997).
Distribution is in cash either in a single payment, quarterly installments
or, by purchase of an annuity, except that amounts held in the Company
Stock Fund and ESOP Fund may be distributed in the form of common shares
or cash, as the participant elects.
Dividends received by the ESOP Fund with respect to allocated Company
shares are paid to participants at the end of each Plan year.
- 5 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS, continued
4. INVESTMENTS
<TABLE>
<CAPTION>
The Plan investments at December 31, were as follows:
(000's omitted except on number of shares or units)
Number of
Shares or
1998 Units Fair Value Cost
____ ___________ _________ _________
<S> <C> <C> <C>
Cash and cash equivalents
Employee Benefits Money Market Fund 18,592,213 $ 18,592 $ 18,592
_________ _________
Common Shares
Parker Hannifin Corporation - Allocated 11,320,907 370,760 208,832
_________ _________
Investment Contracts - estimated 131,276,578 131,277 131,277
_________ _________
Other Investments
AIM Constellation Fund 902,729 27,551 24,233
Capital Guardian International Equity Fund 656,796 14,765 13,156
Seven Seas S&P 500 Index Fund 2,931,821 64,735 55,635
Employee Benefits Fixed Income Fund 289,488 28,376 23,771
Employee Benefits Value Equity Fund 441,383 233,571 110,907
U.S. Government Securities 25,957,832 27,270 27,270
Corporate Debt Instruments 12,544,304 12,927 12,768
_________ _________
409,195 267,740
_________ _________
Participant Loans - estimated 41,174,124 41,174 41,174
_________ _________
Total Assets Held for Investment $ 970,998 $ 667,615
========= =========
1997
____
Cash and cash equivalents
Employee Benefits Money Market Fund 10,351,068 $ 10,351 $ 10,351
_________ _________
Common Shares
Parker Hannifin Corporation - Allocated 10,357,909 475,169 162,976
_________ _________
Investment Contracts - estimated 140,116,435 140,116 140,116
_________ _________
Other Investments
AIM Constellation Fund 844,330 22,273 22,281
Capital Guardian International Equity Fund 676,172 13,348 12,673
Seven Seas S&P 500 Index Fund 1,926,160 37,868 32,942
Employee Benefits Fixed Income Fund 257,380 23,235 20,083
Employee Benefits Value Equity Fund 451,757 186,358 92,875
U.S. Government Securities 13,376,799 13,778 13,640
Corporate Debt Instruments 14,901,498 15,441 15,257
_________ _________
312,301 209,751
_________ _________
Participant Loans - estimated 37,306,280 37,306 37,306
_________ _________
Total Assets Held for Investment $ 975,243 $ 560,500
========= =========
</TABLE>
- 6 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS, continued
5. CONTRACT INCOME FUND
Reported in the aggregate for the Contract Income Fund (including cash
and cash equivalents) at December 31:
1998 1997
_____________ _____________
Contract Value of Assets $ 144,470,984 $ 146,626,466
Fair Value of Assets $ 147,596,065 $ 146,981,405
Average Yield of Assets 6.18% 6.39%
Return on assets for the
12 months ended December 31 6.34% 6.55%
Duration 2.32 years 2.49 years
The above information is provided in compliance with the AICPA Statement
of Position 94-4 (SOP 94-4). SOP 94-4 requires that fair value be based
upon the standard discounted cash flow methodology as referred to in the
Statement of Financial Accounting Standards No. 107. To arrive at the
above aggregate fair value, comparable duration Wall Street Journal
Guaranteed Investment Contract (GIC) Index rates were used as the
discount factor within the discounted cash flow formula. A standard
present value calculation has been employed to arrive at a current value
for each cash flow within a contract. The sum of the present values for
each contract's cash flows is the estimated total fair value for that
contract. All of the contract fair values are then added together to
arrive at the above aggregate fair value for the portfolio.
The Contract Income Fund contains a managed synthetic GIC. This is a
portfolio of securities owned by the Fund with a benefit-responsive,
book-value "wrap" contract associated with the portfolio. The wrap
contract assures that book-value, benefit-responsive payments can be made
for participant withdrawals. The managed synthetic GIC (which exceeded 5%
of the Plan's net assets) included in the above amounts at December 31,
1998 and 1997 had a contract value of $51,178,844 and $48,093,253, while
the fair value was $53,296,465 and $49,116,395, respectively.
At December 31, 1998 and 1997 the Contract Income Fund contained a non-
benefit responsive contract. SOP 94-4 recommends that this contract be
carried at a fair value. However, the Fund's non-benefit responsive
contract was not material to the Contract Income Fund. Therefore, this
contract has been reported at contract value in the financial statements.
Certain employer initiated events (e.g., layoffs, bankruptcy, plant
closings, plan termination, mergers, early retirement incentives) are not
eligible for book value disbursements even from fully benefit responsive
contracts. These events may cause liquidation of all or a portion of a
contract at a market value adjustment.
6. TAX STATUS
The Internal Revenue Service has determined and informed the Company by
letter dated July 24, 1995, that the Plan and related trust are designed
in accordance with applicable sections of the Internal Revenue Code
(IRC). Since receiving the determination letter the Plan has been amended
to provide for various administrative changes including adding additional
investment funds and furnishing daily valuations. The Plan administrator
and the Plan's tax counsel believe that the Plan continues to be designed
and operated in compliance with the applicable provisions of the IRC.
Contributions matched by the Company and all earnings are not taxable
until distributed to the participants.
7. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company, by action
of its Board of Directors, without further approval by the shareholders,
has the right to amend, modify, suspend, or terminate the Plan in its
entirety, or as to any subsidiary or operating location. No amendment,
modification, suspension, or termination shall provide that assets held
in trust by the Trustee may be used for or diverted to purposes other
than for the exclusive benefit of participants or their beneficiaries.
If the Plan is terminated, the Company contributions credited to each
affected participant shall continue to be fully vested.
- 7 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS, continued
8. RECONCILIATION WITH FORM 5500
The Department of Labor requires that amounts owed to withdrawing but
unpaid former participants be classified as a plan liability on Form
5500, while these amounts are not reported as a liability in the
Statements of Net Assets Available for Benefits. As a result, the
following reconciliations were prepared:
1998 1997
_____________ _____________
Net assets per Form 5500 $ 966,037,834 $ 969,417,579
Distributions payable that are allocated
but unpaid to former participants - 156,485
_____________ _____________
Plan Equity per financial statements $ 966,037,834 $ 969,574,064
============= =============
Distributions to former participants
per Form 5500 $ 40,477,790 $ 40,425,753
Distributions payable that are allocated
but unpaid to former participants - (156,485)
Prior year distributions payable that
were paid to former participants in
the current year 156,485 87,212
_____________ _____________
Distributions to former participants
per financial statements $ 40,634,275 $ 40,356,480
============= =============
9. YEAR 2000 CONSIDERATIONS
The Company is taking actions to assure that its computer systems are
capable of processing periods for the year 2000 and beyond. The Company
is also determining whether third party service providers have reasonable
plans in place to become year 2000 compliant. This project has been
substantially completed and the Company does not expect this project to
have a significant effect on Plan operations.
10. PARTY-IN-INTEREST
Certain plan investments are units of common/collective trusts managed by
Key Bank. Key Bank is the trustee as defined by the Plan and therefore,
these transactions qualify as party-in-interest.
11. SUBSEQUENT EVENT
In March 1999, the Trust issued and sold $112 million aggregate principal
amount of its 6.34% Amortizing Notes due 2008, the proceeds of which were
used to purchase 3,055,413 shares of the Company's stock held in treasury.
The Notes were guaranteed by the Company and call for payment of principal
and interest semiannually from July 15, 1999 through July 15,2008.
Repayments of the loan will be made from Company matching contributions
and dividends received on unallocated shares of Company stock held in the
ESOP Fund. The shares will be held in suspense in the ESOP fund, to be
released and allocated to participant's accounts periodically in full or
partial satisfaction of the Company's matching contribution obligations.
12. ASSET ALLOCATION
As described in Note 2, the participants may elect to invest their
contributions in eight investment funds and Company contributions are
invested in the ESOP Fund. The allocation of assets and liabilities, and
the additions and deductions among the investment funds as well as the
ESOP and Loan Funds follows on pages 9 through 12.
- 8 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS, continued
12). ASSET ALLOCATION, continued
<TABLE>
<CAPTION>
PARKER RETIREMENT SAVINGS PLAN
ALLOCATION OF NET ASSETS AVAILABLE FOR BENEFITS - INVESTMENT PROGRAMS
DECEMBER 31, 1998
(000's omitted)
Company Fixed Contract
ESOP Stock Income Equity Income Balanced
Fund Fund Fund Fund Fund Fund
_________ _________ ________ _________ _________ ________
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Cash and cash equivalents $ 3,820 $ 748 $ 850 $ 44 $ 13,130 $ -
Parker-Hannifin Corporation
common shares 259,664 111,096 - - - -
Investment contracts - - - - 131,277 -
Other investments - - 40,197 187,668 - 74,279
Participant loans - - - - - -
_________ _________ ________ _________ _________ ________
Total investments 263,484 111,844 41,047 187,712 144,407 74,279
_________ _________ ________ _________ _________ ________
Accrued interest and dividends 19 2 397 - 732 2
Other 465 414 1,647 - 285 -
_________ _________ ________ _________ _________ ________
Total assets 263,968 112,260 43,091 187,712 145,424 74,281
_________ _________ ________ _________ _________ ________
LIABILITIES
Dividends payable to participants 4,605 - - - - -
Other 51 48 3,492 - 728 -
_________ _________ ________ _________ _________ ________
Total liabilities 4,656 48 3,492 - 728 -
_________ _________ ________ _________ _________ ________
Net Assets Available for
Benefits $ 259,312 $ 112,212 $ 39,599 $ 187,712 $ 144,696 $ 74,281
========= ========= ======== ========= ========= ========
(Table continued)
Small
Capitali- Inter- S&P 500
zation national Index Loan
Fund Fund Fund Fund Total
________ ________ ________ ________ _________
<C> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Cash and cash equivalents $ - $ - $ - $ - $ 18,592
Parker-Hannifin Corporation
common shares - - - - 370,760
Investment contracts - - - - 131,277
Other investments 27,551 14,765 64,735 - 409,195
Participant loans - - - 41,174 41,174
________ ________ ________ ________ _________
Total investments 27,551 14,765 64,735 41,174 970,998
________ ________ ________ ________ _________
Accrued interest and dividends - - - - 1,152
Other - - - - 2,811
________ ________ ________ ________ _________
Total assets 27,551 14,765 64,735 41,174 974,961
________ ________ ________ ________ _________
LIABILITIES
Dividends payable to participants - - - - 4,605
Other - - - - 4,319
________ ________ ________ ________ _________
Total liabilities - - - - 8,924
________ ________ ________ ________ _________
Net Assets Available for
Benefits $ 27,551 $ 14,765 $ 64,735 $ 41,174 $ 966,037
======== ======== ======== ======== =========
</TABLE>
- 9 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS, continued
12). ASSET ALLOCATION, continued
<TABLE>
<CAPTION>
PARKER RETIREMENT SAVINGS PLAN
ALLOCATION OF NET ASSETS AVAILABLE FOR BENEFITS - INVESTMENT PROGRAMS
DECEMBER 31, 1997
(000's omitted)
Company Fixed Contract
ESOP Stock Income Equity Income Balanced
Fund Fund Fund Fund Fund Fund
_________ _________ ________ _________ _________ ________
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Cash and cash equivalents $ 3,416 $ 214 $ 202 $ 42 $ 6,477 $ -
Parker-Hannifin Corporation
common shares 347,955 127,214 - - - -
Investment contracts - - - - 140,116 -
Other investments - - 29,219 152,594 - 56,999
Participant loans - - - - - -
_________ _________ ________ _________ _________ ________
Total investments 351,371 127,428 29,421 152,636 146,593 56,999
_________ _________ ________ _________ _________ ________
Accrued interest and dividends 20 7 385 - 775 -
Other - - 32 - - -
_________ _________ ________ _________ _________ ________
Total assets 351,391 127,435 29,838 152,636 147,368 56,999
_________ _________ ________ _________ _________ ________
LIABILITIES
Dividends payable to participants 4,220 - - - - -
Other 600 1,266 14 - 789 -
_________ _________ ________ _________ _________ ________
Total liabilities 4,820 1,266 14 - 789 -
_________ _________ ________ _________ _________ ________
Net Assets Available for
Benefits $ 346,571 $ 126,169 $ 29,824 $ 152,636 $ 146,579 $ 56,999
========= ========= ======== ========= ========= ========
(Table continued)
Small
Capitali- Inter- S&P 500
zation national Index Loan
Fund Fund Fund Fund Total
________ ________ ________ ________ _________
<C> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Cash and cash equivalents $ - $ - $ - $ - $ 10,351
Parker-Hannifin Corporation
common shares - - - - 475,169
Investment contracts - - - - 140,116
Other investments 22,273 13,348 37,868 - 312,301
Participant loans - - - 37,306 37,306
________ ________ ________ ________ _________
Total investments 22,273 13,348 37,868 37,306 975,243
________ ________ ________ ________ _________
Accrued interest and dividends - - - - 1,187
Other - - - - 32
________ ________ ________ ________ _________
Total assets 22,273 13,348 37,868 37,306 976,462
________ ________ ________ ________ _________
LIABILITIES
Dividends payable to participants - - - - 4,220
Other - - - - 2,669
________ ________ ________ ________ _________
Total liabilities - - - - 6,889
________ ________ ________ ________ _________
Net Assets Available for
Benefits $ 22,273 $ 13,348 $ 37,868 $ 37,306 $ 969,573
======== ======== ======== ======== =========
</TABLE>
- 10 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS, continued
12) ASSET ALLOCATION, continued
<TABLE>
<CAPTION>
PARKER RETIREMENT SAVINGS PLAN
ALLOCATION OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS - INVESTMENT PROGRAMS
FOR THE YEAR ENDED DECEMBER 31, 1998
(000's omitted)
Company Fixed Contract
ESOP Stock Income Equity Income Balanced
Fund Fund Fund Fund Fund Fund
_________ _________ ________ _________ _________ ________
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS
Contributions:
Participant payroll deductions $ - $ 10,849 $ 3,808 $ 16,450 $ 10,173 $ 7,198
Employer contributions 24,597 - - - - -
_________ _________ ________ _________ _________ ________
Total contributions 24,597 10,849 3,808 16,450 10,173 7,198
_________ _________ ________ _________ _________ ________
Net transfers (2,378) 15,996 4,690 (15,602) (10,731) 1,475
Interest income - net 186 210 2,155 8 8,640 5
Dividend income - 1,896 - - - -
Net (depreciation) appreciation in
the fair value of investments (99,729) (38,542) 630 41,776 - 12,263
_________ _________ ________ _________ _________ ________
Total additions (77,324) (9,591) 11,283 42,632 8,082 20,941
_________ _________ ________ _________ _________ ________
DEDUCTIONS
Withdrawals and terminations 9,935 4,366 1,406 6,772 9,638 3,351
Trustee fees and expenses - - 102 784 327 308
_________ _________ ________ _________ _________ ________
Total deductions 9,935 4,366 1,508 7,556 9,965 3,659
_________ _________ ________ _________ _________ ________
Net increase (decrease) in Assets
Available for Benefits (87,259) (13,957) 9,775 35,076 (1,883) 17,282
Net Assets Available - Beginning of year 346,571 126,169 29,824 152,636 146,579 56,999
_________ _________ ________ _________ _________ ________
Net Assets Available - End of year $ 259,312 $ 112,212 $ 39,599 $ 187,712 $ 144,696 $ 74,281
========= ========= ======== ========= ========= ========
(Table continued)
Small
Capitali- Inter- S&P 500
zation national Index Loan
Fund Fund Fund Fund Total
________ ________ ________ ________ _________
<C> <C> <C> <C> <C>
ADDITIONS
Contributions:
Participant payroll deductions $ 4,224 $ 2,272 $ 7,434 $ - $ 62,408
Employer contributions - - - - 24,597
________ ________ ________ ________ _________
Total contributions 4,224 2,272 7,434 - 87,005
________ ________ ________ ________ _________
Net transfers (2,096) (2,200) 8,746 2,100 -
Interest income -net 683 1 6,663 3,398 21,949
Dividend income - - - - 1,896
Net (depreciation) appreciation in
the fair value of investments 3,674 1,791 5,993 - (72,144)
________ ________ ________ ________ _________
Total additions 6,485 1,864 28,836 5,498 38,706
________ ________ ________ ________ _________
DEDUCTIONS
Withdrawals and terminations 1,185 434 1,918 1,630 40,635
Trustee fees and expenses 22 13 51 - 1,607
________ ________ ________ ________ _________
Total deductions 1,207 447 1,969 1,630 42,242
________ ________ ________ ________ _________
Net increase (decrease) in Assets
Available for Benefits 5,278 1,417 26,867 3,868 (3,536)
Net Assets Available - Beginning of year 22,273 13,348 37,868 37,306 969,573
________ ________ ________ ________ _________
Net Assets Available - End of year $ 27,551 $ 14,765 $ 64,735 $ 41,174 $ 966,037
======== ======== ======== ======== =========
</TABLE>
- 11 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS, continued
12). ASSET ALLOCATION, continued
<TABLE>
<CAPTION>
PARKER RETIREMENT SAVINGS PLAN
ALLOCATION OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS - INVESTMENT PROGRAMS
FOR THE YEAR ENDED DECEMBER 31, 1997
(000's omitted)
Company Fixed Contract
ESOP Stock Income Equity Income Balanced
Fund Fund Fund Fund Fund Fund
_________ _________ ________ _________ _________ ________
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS
Contributions:
Participant payroll deductions $ - $ 8,413 $ 3,699 $ 14,512 $ 9,632 $ 6,050
Employer contributions 22,313 - - - - -
_________ _________ ________ _________ _________ ________
Total contributions 22,313 8,413 3,699 14,512 9,632 6,050
_________ _________ ________ _________ _________ ________
Net transfers (2,092) 6,311 (1,277) (11,617) (14,834) 1,266
Interest income - net 205 137 1,824 62 9,877 -
Dividend income - 1,438 - - - -
Net appreciation in the fair
value of investments 147,306 49,467 485 35,310 - 9,590
_________ _________ ________ _________ _________ ________
Total additions 167,732 65,766 4,731 38,267 4,675 16,906
_________ _________ ________ _________ _________ ________
DEDUCTIONS
Withdrawals and terminations 9,695 3,975 2,263 5,890 13,613 2,500
Trustee fees and expenses - - 109 678 375 305
_________ _________ ________ _________ _________ ________
Total deductions 9,695 3,975 2,372 6,568 13,988 2,805
_________ _________ ________ _________ _________ ________
Net increase (decrease) in Assets
Available for Benefits 158,037 61,791 2,359 31,699 (9,313) 14,101
Net Assets Available - Beginning of year 188,534 64,378 27,465 120,937 155,892 42,898
_________ _________ ________ _________ _________ ________
Net Assets Available - End of year $ 346,571 $ 126,169 $ 29,824 $ 152,636 $ 146,579 $ 56,999
========= ========= ======== ========= ========= ========
(Table continued)
Small
Capitali- Inter- S&P 500
zation national Index Loan
Fund Fund Fund Fund Total
________ ________ ________ ________ _________
<C> <C> <C> <C> <C>
ADDITIONS
Contributions:
Participant payroll deductions $ 3,376 $ 2,037 $ 3,830 $ - $ 51,549
Employer contributions - - - - 22,313
________ ________ ________ ________ _________
Total contributions 3,376 2,037 3,830 - 73,862
________ ________ ________ ________ _________
Net transfers 2,158 1,939 12,300 5,846 -
Interest income - net 1,653 1 1,648 2,748 18,155
Dividend income - - - - 1,438
Net appreciation in the fair
value of investments 389 811 5,048 - 248,406
________ ________ ________ ________ _________
Total additions 7,576 4,788 22,826 8,594 341,861
________ ________ ________ ________ _________
DEDUCTIONS
Withdrawals and terminations 608 440 496 876 40,356
Trustee fees and expenses 22 12 27 - 1,528
________ ________ ________ ________ _________
Total deductions 630 452 523 876 41,884
________ ________ ________ ________ _________
Net increase (decrease) in Assets
Available for Benefits 6,946 4,336 22,303 7,718 299,977
Net Assets Available - Beginning of year 15,327 9,012 15,565 29,588 669,596
________ ________ ________ ________ _________
Net Assets Available - End of year $ 22,273 $ 13,348 $ 37,868 $ 37,306 $ 969,573
======== ======== ======== ======== =========
</TABLE>
- 12 -
<PAGE>
<TABLE>
<CAPTION>
PARKER RETIREMENT SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
FOR THE YEAR ENDED DECEMBER 31, 1998
EIN 34-0451060
PLAN 075
(a) (b) (c) (d) (e)
Description of investment including
Identity of issue, borrower, lessor, maturity date, rate of interest, Current
or similar party collateral, par, or maturity value Cost value
_____________________________________ ________________________________________ _____________ _____________
<S> <C> <C> <C> <C>
* Employee Benefits Money Market
Fund Cash and cash equivalents $ 18,592,213 $ 18,592,213
* Parker Hannifin Corporation 11,320,907 Common Shares 208,832,169 370,759,704
AIM 902,729 units of AIM Constellation Fund 24,233,198 27,551,297
Capital Guardian 656,796 units of Capital Guardian Intl
Equity Fund 13,156,072 14,764,765
Seven Seas 2,931,821 units of Seven Seas S&P 500
Index Fund 55,635,364 64,734,607
* Key Bank 289,488 units of Employee Benefits
Fixed Income Fund 23,771,325 28,376,422
* Key Bank 441,383 units of Employee Benefits
Value Equity Fund 110,906,815 233,570,637
Participant Loans Participant loans - 8.75% - 9.25% 41,174,124 41,174,124
U.S. Government Securities:
___________________________
Freddie Mac Gold 7.5% due 12-01-2017 114,604 114,569
Freddie Mac Gold 7.0% due 04-01-2026 49,168 49,153
Freddie Mac Gold 7.0% due 09-01-2025 101,422 101,391
Freddie Mac Gold 7.0% due 04-01-2026 9,284 9,281
Freddie Mac Gold 7.0% due 04-01-2026 36,730 36,719
Freddie Mac Gold 6.0% due 12-01-2013 178,111 178,723
Freddie Mac Gold 6.0% due 12-01-2013 99,062 99,340
Federal Home Ln Mtg Corp Gold 7.5% due 04-01-2027 98,274 98,124
Freddie Mac Gold 7.5% due 02-01-2027 65,167 65,127
Freddie Mac Gold 7.5% due 11-01-2027 407,838 408,395
Freddie Mac Gold 6.5% due 11-01-2028 377,642 377,552
Freddie Mac Gold 8.5% due 06-01-2012 40,694 40,368
Freddie Mac 8.5% due 07-01-2021 109,329 108,627
Freddie Mac Gold 7.0% due 03-01-2028 32,014 32,191
Freddie Mac Gold 7.0% due 06-01-2028 229,510 229,369
Freddie Mac Gold 7.0% due 07-01-2028 69,580 69,537
Freddie Mac Gold 7.0% due 09-01-2028 17,762 17,751
Freddie Mac Gold 7.0% due 11-01-2028 500,750 499,828
Freddie Mac Gold 6.5% due 01-01-2029 988,025 982,671
Freddie Mac Gold 7.0% due 07-01-2028 25,651 25,635
Freddie Mac Gold 7.0% due 07-01-2028 15,154 15,144
Freddie Mac Gold 7.0% due 07-01-2028 24,331 24,323
Freddie Mac Gold 7.0% due 08-01-2028 31,506 31,486
Freddie Mac Gold 7.0% due 09-01-2028 9,989 9,983
Freddie Mac Gold 7.0% due 09-01-2028 32,561 32,541
Freddie Mac Gold 7.0% due 09-01-2028 32,533 32,513
Freddie Mac Gold 7.0% due 09-01-2028 29,249 29,231
Freddie Mac Gold 7.0% due 09-01-2028 11,190 11,183
Freddie Mac Gold 7.0% due 09-01-2028 5,046 5,043
Freddie Mac Gold 7.0% due 10-01-2028 79,957 79,810
Continued on next page
- 13 -
<PAGE>
PARKER RETIREMENT SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES, continued
FOR THE YEAR ENDED DECEMBER 31, 1998
EIN 34-0451060
PLAN 075
(a) (b) (c) (d) (e)
Description of investment including
Identity of issue, borrower, lessor, maturity date, rate of interest, Current
or similar party collateral, par, or maturity value Cost value
_____________________________________ ________________________________________ _____________ _____________
<S> <C> <C> <C> <C>
Freddie Mac Gold 7.5% due 09-01-2028 97,554 97,494
Freddie Mac Gold 6.0% due 04-01-2013 99,143 99,421
Freddie Mac Gold 6.0% due 06-01-2013 98,702 98,979
Federal Home Loan Banks 5.125% due 09-15-2003 655,677 649,799
Freddie Mac 6.25% due 05-15-2027 297,931 301,887
Freddie Mac Gold 7.5% due 09-01-2017 114,443 114,407
Fannie Mae 6.55% due 09-12-2005 624,882 648,106
Fannie Mae 4.625% due 10-15-2001 269,247 268,142
Fannie Mae 4.75% due 11-14-2003 595,818 592,314
Fannie Mae 10.0% due 06-17-2027 738,299 724,333
Fannie Mae 6.5% due 12-18-2025 235,551 237,202
Fannie Mae 6.0% due 06-18-2025 382,315 389,805
Fannie Mae 6.25% due 12-18-2022 294,666 297,673
Fannie Mae 6.5% due 04-01-2011 48,913 48,879
Fannie Mae 7.5% due 11-01-2026 5,665 5,669
Fannie Mae 7.5% due 12-01-2026 14,116 14,127
Fannie Mae 7.5% due 06-01-2027 55,312 55,295
Fannie Mae 7.0% due 06-01-2012 2,181 2,181
Fannie Mae 7.0% due 10-01-2012 2,273 2,273
Fannie Mae 7.0% due 02-01-2013 4,321 4,312
Fannie Mae 7.5% due 06-01-2028 14,134 14,141
Fannie Mae 7.5% due 08-01-2028 33,611 33,626
Fannie Mae 8.0% due 07-01-2028 63,567 63,394
Fannie Mae 7.5% due 10-01-2028 43,893 43,913
Fannie Mae 6.5% due 12-01-2028 92,484 93,207
Fannie Mae 6.5% due 01-01-2012 276,905 276,819
Fannie Mae 7.5% due 09-01-2027 18,725 18,733
Fannie Mae 7.0% due 10-01-2012 389,209 390,104
Fannie Mae 7.0% due 01-01-2028 77,021 77,395
Fannie Mae 7.0% due 01-01-2013 698 698
Fannie Mae 8.0% due 06-01-2028 154,441 154,301
Fannie Mae 6.5% due 02-01-2011 32,125 32,102
Fannie Mae 6.5% due 02-01-2011 49,626 49,591
Fannie Mae 7.5% due 12-01-2025 91,142 91,141
Fannie Mae 7.5% due 08-01-2026 11,915 11,924
Fannie Mae 7.5% due 09-01-2026 12,295 12,304
Fannie Mae 7.5% due 08-01-2027 4,094 4,096
Fannie Mae 6.5% due 01-01-2028 140,214 141,933
Fannie Mae 8.5% due 05-01-2012 49,564 49,283
Fannie Mae 6.5% due 01-01-2028 36,886 37,236
Fannie Mae 7.5% due 10-01-2025 7,358 7,370
Fannie Mae 6.5% due 02-01-2028 23,482 23,770
Fannie Mae 6.0% due 02-01-2013 147,054 149,028
Continued on next page
- 14 -
<PAGE>
PARKER RETIREMENT SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES, continued
FOR THE YEAR ENDED DECEMBER 31, 1998
EIN 34-0451060
PLAN 075
(a) (b) (c) (d) (e)
Description of investment including
Identity of issue, borrower, lessor, maturity date, rate of interest, Current
or similar party collateral, par, or maturity value Cost value
_____________________________________ ________________________________________ _____________ _____________
<S> <C> <C> <C> <C>
Fannie Mae 6.5% due 08-01-2028 39,369 39,814
Fannie Mae 6.0% due 04-01-2028 40,877 41,302
Fannie Mae 6.5% due 05-01-2028 190,791 192,584
Fannie Mae 8.5% due 11-01-2017 239,614 238,372
Fannie Mae 6.5% due 07-01-2013 72,118 72,739
Fannie Mae 7.5% due 08-01-2028 24,092 24,077
Fannie Mae 6.5% due 05-01-2013 2,203 2,222
Fannie Mae 7.5% due 08-01-2028 1,676 1,677
Fannie Mae 6.5% due 07-01-2028 53,496 54,101
Fannie Mae 7.5% due 07-01-2028 8,561 8,556
Fannie Mae 7.5% due 07-01-2028 24,346 24,331
Fannie Mae 8.0% due 07-01-2028 87,576 87,338
Fannie Mae 8.0% due 07-01-2028 93,332 93,079
Fannie Mae 6.5% due 08-01-2028 98,187 99,296
Fannie Mae 6.5% due 08-01-2028 51,721 52,207
Fannie Mae 6.5% due 08-01-2028 129,454 130,958
Fannie Mae 6.5% due 08-01-2028 43,777 44,188
Fannie Mae 8.0% due 08-01-2028 112,012 111,708
Fannie Mae 6.5% due 08-01-2028 142,570 143,910
Fannie Mae 7.5% due 07-01-2028 29,662 29,644
Fannie Mae 6.0% due 07-01-2013 51 51
Fannie Mae 7.5% due 09-01-2028 24,155 24,166
Fannie Mae 6.5% due 08-01-2028 146,089 147,786
Fannie Mae 6.5% due 08-01-2028 263,768 266,247
Fannie Mae 6.0% due 11-01-2013 40 40
Fannie Mae 6.0% due 11-01-2013 1,351 1,351
Fannie Mae 6.0% due 11-01-2013 101 101
Fannie Mae 6.0% due 10-01-2013 17 17
Fannie Mae 7.5% due 09-01-2028 2,819 2,820
Fannie Mae 6.5% due 09-01-2028 183,639 185,307
Fannie Mae 7.5% due 09-01-2023 3,069 3,071
Fannie Mae 6.0% due 11-01-2013 389 389
Fannie Mae 6.5% due 11-01-2013 62,893 62,811
Fannie Mae 6.5% due 11-01-2013 321,576 321,155
Fannie Mae 6.0% due 12-01-2028 58,069 58,225
Fannie Mae 6.0% due 12-01-2028 149,601 150,004
Fannie Mae 6.0% due 11-01-2013 507 507
Fannie Mae 6.5% due 11-01-2013 268 267
Fannie Mae 6.5% due 12-01-2028 267,665 269,758
Fannie Mae 6.0% due 12-01-2028 72,832 73,028
Fannie Mae 6.0% due 12-01-2028 72,832 73,028
GNMA 7.0% due 01-15-2024 60,278 62,769
GNMA 7.5% due 06-15-2027 49,172 49,261
Continued on next page
- 15 -
<PAGE>
PARKER RETIREMENT SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES, continued
FOR THE YEAR ENDED DECEMBER 31, 1998
EIN 34-0451060
PLAN 075
(a) (b) (c) (d) (e)
Description of investment including
Identity of issue, borrower, lessor, maturity date, rate of interest, Current
or similar party collateral, par, or maturity value Cost value
_____________________________________ ________________________________________ _____________ _____________
<S> <C> <C> <C> <C>
GNMA 7.5% due 11-15-2026 21,464 21,503
GNMA 7.5% due 10-15-2027 6,204 6,215
GNMA 7.0% due 09-15-2028 53,225 53,597
GNMA 7.0% due 08-15-2028 53,654 54,050
GNMA 7.0% due 08-15-2028 62,144 62,603
GNMA 7.0% due 08-15-2028 62,611 63,073
GNMA 7.0% due 08-15-2028 59,401 59,839
GNMA 9.0% due 06-15-2022 301,064 301,501
GNMA 7.0% due 12-15-2023 880,099 885,365
GNMA 7.0% due 11-15-2026 157,487 158,017
GNMA 9.0% due 10-15-2009 511,749 506,264
GNMA 7.5% due 12-15-2023 281,397 281,695
GNMA 7.5% due 12-15-2027 121,711 121,895
GNMA 6.5% due 10-20-2020 405,389 409,050
Tennessee Valley Authority 5.375% due 11-13-2008 268,866 270,718
United States Treasury Bonds 5.50% due 08-15-2028 3,271,471 3,254,252
United States Treasury Bonds 5.25% due 11-15-2028 363,243 356,265
United States Treasury Notes 6.25% due 10-31-2001 221,878 218,728
United States Treasury Notes 6.25% due 05-31-1999 470,320 469,919
United States Treasury Notes 4.5% due 09-30-2000 1,037,257 1,027,076
United States Treasury Notes 4.0% due 10-31-2000 1,178,723 1,177,172
United States Treasury Notes 4.25% due 11-15-2003 865,658 863,791
United States Treasury Notes 4.75% due 11-15-2008 612,547 616,780
United States Treasury Notes 4.625% due 11-30-2000 1,091,239 1,087,674
Fannie Mae 7.0% - 15 year MBS 764,772 763,895
Federal Home Loan Mortgage Corp. 7.5% - 30 year MBS 274,593 274,092
Fannie Mae 6.0% - 15 year MBS 417,040 416,910
_____________ _____________
Total U.S. Govt. Securities 27,271,406 27,270,216
Corporate Debt Instruments:
___________________________
Abbey National Note FL RT% due 06-29-2049 69,698 78,044
American Express ABS 6.40% due 04-15-2005 213,675 216,233
British Columbia Note 5.375% due 10-29-2008 263,790 264,486
Burlington Resources, Inc. Deb 6.875% due 02-15-2026 49,189 49,946
CIT RV Trust ABS 5.92% due 03-15-2007 279,967 282,100
CITICORP Note 5.625% due 02-15-2001 979,100 1,004,290
Comed Transitional Funding ABS 5.44% due 03-25-2007 234,841 234,706
Copelco Capital FDG Corp ABS 6.47% due 04-20-2005 349,921 355,250
Dr Invts Note 7.10% due 05-15-2002 274,843 286,027
Dayton Hudson Corp Bond 6.65% due 08-01-2028 113,339 116,607
Dayton Hudson Corp Bond 5.875% due 11-01-2008 117,123 115,810
EOP Operating LP Note 6.75% due 02-15-2008 301,735 294,990
First Un Corp Senior NT 6.875% due 09-15-2005 170,688 170,458
Continued on next page
- 16 -
<PAGE>
PARKER RETIREMENT SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES, continued
FOR THE YEAR ENDED DECEMBER 31, 1998
EIN 34-0451060
PLAN 075
(a) (b) (c) (d) (e)
Description of investment including
Identity of issue, borrower, lessor, maturity date, rate of interest, Current
or similar party collateral, par, or maturity value Cost value
_____________________________________ ________________________________________ _____________ _____________
<S> <C> <C> <C> <C>
First Union National Bank Note 5.80% due 12-01-2008 159,760 159,659
First USA Credit Card Master Tr ABS 6.42% due 03-17-2005 325,788 329,600
First USA Credit Card Master Tr ABS 5.28% due 09-18-2006 159,836 158,600
Frontier Corp Bond 6.0% due 10-15-2013 249,660 252,713
GTE Corp Deb 6.94% due 04-15-2028 364,174 380,118
General Motors Accept Corp Note 5.35% due 12-07-2001 160,000 159,643
Liberty Mutual Ins Co Note 8.20% due 05-04-2007 103,754 108,868
Loews Corp Note 6.75% due 12-15-2006 116,067 116,758
Lumbermens Mutual Casualty Co Note 8.30% due 12-01-2037 48,730 46,925
MBNA Master Credit Card Trust ABS 5.80% due 12-15-2005 249,448 252,500
Monsanto Co Deb 6.60% due 12-01-2028 139,496 139,741
Motorola Inc Deb 7.50% due 05-15-2025 127,257 130,823
Motorola Inc Note 5.80% due 10-15-2008 254,658 260,850
Motorola Inc Deb 6.50% due 11-15-2028 114,522 116,176
Nabisco Inc Notes 6.0% due 02-15-2011 199,950 197,624
Nationsbank Corp Notes 6.375% due 02-15-2008 77,479 77,870
Nationsbank Cr Card Master Trust ABS 6.45% due 04-15-2003 182,120 183,092
Owens Corning Note 7.50% due 05-01-2005 114,370 112,885
J C Penney Inc Deb 7.625% due 03-01-2097 169,435 170,637
Philip Morris Cos Inc Note 7.0% due 07-15-2005 200,936 202,044
Premier Auto Tr ABS 6.35% due 04-06-2002 349,560 355,138
Premier Auto Tr ABS 5.07% due 07-08-2002 359,999 358,312
Proctor & Gamble Co Note 5.25% due 09-15-2003 499,580 500,470
Railcar Tr ABS ABS 7.75% due 06-01-2004 298,557 305,570
Residential Accredit Loans Inc Remic 6.75% due 07-25-2028 368,902 359,940
Residential Accredit Loans Inc Remic 6.50% due 11-25-2013 370,727 364,967
J Seagram & Sons Bond 7.50% due 12-15-2018 114,800 115,680
TCI Communications Inc Deb 7.875% due 02-15-2026 736,173 763,641
Tele Communications Inc Note 8.25% due 01-15-2003 105,844 109,740
360 Communications Co Note 7.50% due 03-01-2006 148,011 153,958
Time Warner Inc Note 7.75% due 06-15-2005 516,840 519,839
Time Warner Inc Bond 6.625% due 05-15-2029 214,337 218,754
Toyota Auto Rec GR TR ABS 6.45% due 04-15-2002 70,860 71,303
USX Marathon Group Note 7.20% due 02-15-2004 803,880 824,224
USA Waste Services Inc Senior NT 7.0% due 07-15-2028 187,670 196,238
Unocal Corporation Deb 7.0% due 05-01-2028 138,013 133,438
Williams Cos Inc Bond 6.20% due 08-01-2002 189,700 189,975
Worldcom Inc Senior NT 6.95% due 08-15-2028 116,317 123,469
Natexis Banque Note FL RT% due 12-29-2049 99,685 91,500
Associates Corp Note 6.875% due 06-20-2002 143,261 144,463
_____________ _____________
Total Corporate Debt Instruments 12,768,065 12,926,692
Continued on next page
- 17 -
<PAGE>
PARKER RETIREMENT SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES, continued
FOR THE YEAR ENDED DECEMBER 31, 1998
EIN 34-0451060
PLAN 075
(a) (b) (c) (d) (e)
Description of investment including
Identity of issue, borrower, lessor, maturity date, rate of interest, Current
or similar party collateral, par, or maturity value Cost value
_____________________________________ ________________________________________ _____________ _____________
<S> <C> <C> <C> <C>
Investment Contracts:
_____________________
Bankers TR Basic Contract 7.74% due 04-07-1999 2,027,850 2,027,850
Metropolitan Life 6.75% due 11-14-2000 2,718,414 2,718,414
UBS AG 6.64% due 08-15-1999 3,931,724 3,931,724
UBS AG 5.9271% due 03-25-2000 6,031,785 6,031,785
Capital Holding Corp 5.91% due 07-15-2000 1,835,037 1,835,037
New York Life Insurance Company 5.80% due 11-15-1999 6,601,644 6,601,644
Commonwealth Ins Co 5.511% due 10-25-2004 3,135,164 3,135,164
Principal Mutual Life Ins Co 5.45% due 06-15-1999 5,216,222 5,216,222
Caisse Des Depots Et Consignatio 5.44% due 12-26-2000 3,555,347 3,555,347
Business Mens Assurance Co Amer 6.90% due 10-01-2001 3,051,438 3,051,438
Ohio National Life 7.12% due 06-15-2002 3,433,986 3,433,986
Caisse Des Depots Et Consignatio 6.51% due 01-15-2002 4,053,575 4,053,575
Protective Life Insurance Co 6.89% due 09-15-2002 4,079,643 4,079,643
Safeco Life Insurance Co 7.04% due 12-15-2002 3,647,840 3,647,840
Safeco Life Insurance Co 6.49% due 11-15-2002 2,540,451 2,540,451
Jackson National Life Ins Co 5.54% due 03-31-2003 3,011,561 3,011,561
Jackson National Life Ins Co 5.96% due 08-15-2001 6,124,026 6,124,026
Transamerica 5.13% due 12-06-2001 5,077,152 5,077,152
GE Life and Annuity Assurance Co 5.63% due 08-15-2002 3,014,440 3,014,440
Ohio National Life Insurance Co 5.33% due 01-29-1999 4,008,545 4,008,545
Bankers Trust Synthetic GIC FL RT% - No maturity 51,178,844 51,178,844
Transamerica Synthetic GIC FL RT% due 06-15-2000 3,001,891 3,001,891
_____________ _____________
Total Investment Contracts 131,276,579 131,276,579
_____________ _____________
Total Assets Held for Investment $ 667,617,330 $ 970,997,256
============= =============
* Denotes Party-in-Interest
</TABLE>
- 18 -
<PAGE>
<TABLE>
<CAPTION>
THE PARKER RETIREMENT SAVINGS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
EIN 34-0451060
PLAN 075
The following schedule represents Plan transactions or series of transactions
in excess of 5% of current value of Plan assets for the year ended
December 31, 1998.
# of Purchase Cost of
Description Transactions Price Proceeds Asset Gain
___________________________ ____________ _____________ _____________ _____________ ___________
<S> <C> <C> <C> <C> <C>
Key Trust Employee
Benefits Money Market 540 $ 208,037,488
Key Trust Employee
Benefits Money Market 481 $ 199,796,343 $ 199,796,343
Parker Hannifin Corp Common 59 59,498,547
Parker Hannifin Corp Common 25 22,596,408 11,001,480 $11,594,928
Employee Benefit Value
Equity Fund 255 40,579,229
Employee Benefit Value
Equity Fund 248 45,230,754 22,548,693 22,682,061
NOTE: There is no separate determination of expenses related to the above
transactions.
</TABLE>
- 19 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrator of the Plan has duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
PARKER RETIREMENT SAVINGS PLAN
BY: /s/Michael J. Hiemstra
Michael J. Hiemstra
Vice President-Finance & Administration
& Chief Financial Officer
Parker-Hannifin Corporation
June 23, 1999
