What changed in this filing

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Item 1. Financial Statements

2022-08-09 compared with 2022-05-04 · 347 added, 226 removed, 535 unchanged (52% of the section changed)

3 unchanged sentences

& SUBSIDIARIES

Three and six months ended March 31, 2021 and 2022

Three and nine months ended June 30, 2021 and 2022

(Dollars in millions, except per share amounts;

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2021 2022 2021 2022

3 unchanged sentences

Gain on subordinated interest — — — ( 453 )

Gain on sale of business — ( 483 ) — ( 483 )

Other deductions, net 88 283 243 374

Interest expense (net of interest income of $ 3 , $ 11 , $ 9 , and $ 18 , respectively)

37 50 115 140

Earnings before income taxes 784 1,195 2,084 3,181

13 unchanged sentences

& SUBSIDIARIES

Three and six months ended March 31, 2021 and 2022

Three and nine months ended June 30, 2021 and 2022

(Dollars in millions;

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

2021 2022 2021 2022

13 unchanged sentences

(Dollars and shares in millions, except per share amounts;

Sept 30, 2021 Mar 31, 2022

Sept 30, 2021 June 30, 2022

Current assets

35 unchanged sentences

& SUBSIDIARIES

Three and six months ended March 31, 2021 and 2022

Three and nine months ended June 30, 2021 and 2022

(Dollars in millions;

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

2021 2022 2021 2022

3 unchanged sentences

Stock plans 7 13 48 70

AspenTech acquisition — ( 550 ) — ( 550 )

Ending balance 518 42 518 42

22 unchanged sentences

Net earnings 6 31 20 31

Stock plans — 15 — 15

Other comprehensive income 1 ( 1 ) — ( 2 )

Dividends paid ( 9 ) ( 2 ) ( 14 ) ( 2 )

AspenTech acquisition — 5,890 — 5,890

Ending balance 48 5,972 48 5,972

4 unchanged sentences

& SUBSIDIARIES

Six Months Ended March 31, 2021 and 2022

Nine Months Ended June 30, 2021 and 2022

(Dollars in millions;

Six Months Ended

Nine Months Ended

Operating activities

6 unchanged sentences

Gain on subordinated interest — ( 453 )

Gain on sale of business — ( 428 )

Other, net ( 113 ) ( 61 )

3 unchanged sentences

Purchases of businesses, net of cash and equivalents acquired ( 1,611 ) ( 5,615 )

Divestitures of businesses — 578

Proceeds from subordinated interest — 438

Other, net 53 ( 41 )

Cash provided by (used in) investing activities ( 1,772 ) 159

Cash used in investing activities ( 1,908 ) ( 4,975 )

Financing activities

1 unchanged sentence

Proceeds from short-term borrowings greater than three months 71 1,162

Payments of short-term borrowings greater than three months — ( 445 )

Proceeds from long-term debt — 2,975

26 unchanged sentences

For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2021.

Effective October 1, 2021, the Company adopted three accounting standard updates which had no impact or an immaterial impact on the Company's financial statements as of and for the six months ended March 31, 2022.

Certain prior year amounts have been reclassified to conform to the current year presentation to reflect the business combination with AspenTech (see Note 4), which is reported as a new segment and includes the historical results of Open Systems International, Inc.

and the Geological Simulation Software business.

These businesses were previously reported in the Automation Solutions segment (see Note 13).

Effective October 1, 2021, the Company adopted three accounting standard updates which had an immaterial or no impact on the Company's financial statements as of and for the nine months ended June 30, 2022.

These included:

8 unchanged sentences

See Note 13 for additional information about the Company's revenues.

The following table summarizes the balances of the Company's unbilled receivables (contract assets), which are reported in Other current assets, and its customer advances (contract liabilities), which are reported in Accrued expenses.

Sept 30, 2021 Mar 31, 2022

The following table summarizes the balances of the Company's unbilled receivables (contract assets), which are reported in Other assets (current and noncurrent), and its customer advances (contract liabilities), which are reported in Accrued expenses and Other liabilities.

Sept 30, 2021 June 30, 2022

Unbilled receivables (contract assets) $ 528 1,323

Customer advances (contract liabilities) ( 730 ) ( 917 )

Net contract liabilities $ ( 202 ) ( 344 )

The majority of the Company's contract balances relate to arrangements where revenue is recognized over time and payments from customers are made according to a contractual billing schedule.

The increase in net contract liabilities was due to customer billings which exceeded revenue recognized for performance completed during the period.

Revenue recognized for the three and six months ended March 31, 2022 included $ 108 and $ 456 that was included in the beginning contract liability balance.

Net contract assets (liabilities) $ ( 202 ) 406

The majority of the Company's contract balances relate to (1) arrangements where revenue is recognized over time and payments from customers are made according to a contractual billing schedule, and (2) revenue from term software lice nse arrangements sold by AspenTech where the license revenue is recognized upfront upon delivery.

The change in the net contract balance was due to the AspenTech acquisition, which added net contract assets of approximately $ 700 , partially offset by an increase in net contract liabilities for the Company's existing businesses due to customer billings exceeding revenue recognized for performance completed during the period.

Revenue recognized for the three and nine months ended June 30, 2022 included $ 63 and $ 519 that was included in the beginning contract liability balance.

Other factors that impacted the change in net contract liabilities were immaterial.

Revenue recognized for the three and six months ended March 31, 2022 for performance obligations that were satisfied in previous periods, including cumulative catchup adjustments on the Company's long-term contracts, was not material.

As of March 31, 2022, the Company's backlog relating to unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was approximately $ 7.8 billion.

The Company expects to recognize approximately 85 percent of its remaining performance obligations as revenue over the next 12 months, with the remainder substantially over the subsequent two years thereafter.

Revenue recognized for the three and nine months ended June 30, 2022 for performance obligations that were satisfied in previous periods, including cumulative catchup adjustments on the Company's long-term contracts, was not material.

As of June 30, 2022, the Company's backlog relating to unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was approximately $ 8.5 billion, which includes approximately $ 700 related to the AspenTech acquisition.

AspenTech's remaining perform ance obligations primarily relate to software maintenance in long-term contracts for unspecified future software updates provided on a when-and-if available basis.

The Company expects to recognize approximately 80 percent of its remaining performance obligations as revenue over the next 12 months, with the remainder substantially over the following two years.

(3) COMMON SHARES AND SHARE-BASED COMPENSATION

2 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2021 2022 2021 2022

5 unchanged sentences

The terms of the performance share awards issued in fiscal 2020 and 2021 are unchanged and will therefore continue to be accounted for as liability awards and marked-to-market each period based on changes in the stock price.

As discussed in Note 4, Emerson completed the acquisition of AspenTech in the third quarter of fiscal 2022.

New AspenTech, as defined in Note 4, operates as a separate publicly traded company and has various stock-based compensation plans, including stock options and restricted stock units, which are settled in their own common stock and are accounted for as equity awards.

Stock compensation expense for New AspenTech was $ 15 for the three and nine months ended June 30, 2022.

(4) ACQUISITIONS AND DIVESTITURES

On March 3, 2022 the Company announced an agreement to sell its Therm-O-Disc sensing and protection technologies business, which is reported in the Climate Technologies segment, to an affiliate of One Rock Capital Partners, LLC.

Assets and liabilities for this business are reported as held-for-sale as of March 31, 2022 and included in other current assets, accrued expenses, other assets and other liabilities in the consolidated balance sheet.

The transaction is expected to close in the third quarter subject to regulatory approvals and other customary closing conditions.

On October 11, 2021, the Company announced that it entered into a definitive agreement with Aspen Technology, Inc.

Aspen Technology

On May 16, 2022, the Company completed the transactions contemplated by its definitive agreement with Aspen Technology, Inc.

("AspenTech") to contribute two of Emerson's stand-alone industrial software businesses, Open Systems International, Inc.

and the Geological Simulation Software business, along with approximately $ 6.0 billion in cash to AspenTech stockholders, to create "new AspenTech", a diversified, high-performance industrial software leader with greater scale, capabilities and technologies.

Upon closing of the transaction, the Company will own 55 percent of new AspenTech and its results and financial position will be consolidated in Emerson's financial statements .

and the Geological Simulation Software business ( collectively, the “Emerson Industrial Software Business”) , along with approximately $ 6.0 billion in cash to AspenTech stockholders, to create "New AspenTech", a diversified, high-performance industrial software leader with greater scale, capabilities and technologies.

Upon closing of the transaction, Emerson beneficially owned 55 percent of the outstanding shares of New AspenTech common stock (on a fully diluted basis) and former AspenTech stockholders owned the remaining outstanding shares of New AspenTech common stock.

New AspenTech and its subsidiaries now operate under AspenTech’s previous name “Aspen Technology, Inc.” and New AspenTech common stock is traded on NASDAQ under AspenTech’s previous stock ticker symbol “AZPN.”

The business combination has been accounted for using the acquisition method of accounting with Emerson considered the accounting acquirer of AspenTech.

The net assets of AspenTech were recorded at their estimated fair value and the Emerson Industrial Software Business continues at its historical basis.

The Company recorded a noncontrolling interest of $ 5.9 billion for the 45 percent ownership interest of former AspenTech stockholders in New AspenTech.

The noncontrolling interest associated with the AspenTech acquired net assets was recorded at fair value determined using the closing market price per share of AspenTech as of May 16, 2022, while the portion attributable

to the Emerson Industrial Software business was recorded at its historical carrying amount.

The impact of recognizing the noncontrolling interest in the Emerson Industrial Software Business resulted in a decrease to additional paid-in-capital of $ 550 .

The following table summarizes the components of the purchase consideration reflected in the acquisition accounting using AspenTech's shares outstanding and closing market price per share as of May 16, 2022 (in millions except share and per share data):

AspenTech shares outstanding 66,662,482

AspenTech share price $ 166.30

Purchase price $ 11,086

Value of stock-based compensation awards attributable to pre-combination service 102

Total purchase consideration $ 11,188

The total purchase consideration for AspenTech was preliminarily allocated to assets and liabilities as follows.

Valuations of acquired assets and liabilities are in-process and subject to refinement.

Cash and equivalents $ 274

Receivables 61

Other current assets 262

Property, plant equipment 4

Goodwill ($ 34 expected to be tax-deductible)

Other intangible assets 4,390

Other assets 511

Total assets 12,725

Short-term borrowings 27

Accounts payable 8

Accrued expenses 113

Long-term debt 253

Deferred taxes and other liabilities 1,136

Total purchase consideration $ 11,188

Emerson's cash contribution of approximately $ 6.0 billion was paid out at approximately $ 87.69 per share (on a fully diluted basis) to holders of issued and outstanding shares of AspenTech common stock as of the closing of the transactions, with $ 168 of cash remaining on New AspenTech's balance sheet as of the closing which is not included in the allocation of purchase consideration above.

The estimated intangible assets attributable to the transaction are comprised of the following (in millions) :

Amount Estimated Weighted Average Life (Years)

Developed technology $ 1,350 10

Customer relationships 2,300 15

Trade names 430 Indefinite-lived

Backlog 310 3

Total $ 4,390

Results of operations for the third quarter of 2022 attributable to the AspenTech acquisition include sales of $ 173 while the impact to GAAP net earnings was not material.

Pro Forma Financial Information

The following unaudited proforma consolidated condensed financial results of operations are presented as if the acquisition of AspenTech occurred on Oct ober 1, 2020.

The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the acquisition occurred as of that time ($ in millions, except per share amounts).

Three Months Ended June 30, Nine Months Ended June 30,

2021 2022 2021 2022

Net Sales $ 4,895 5,060 13,884 14,683

Net earnings common stockholders $ 614 964 1,480 2,517

Diluted earnings per share $ 1.02 1.62 2.46 4.21

The pro forma results for the nine months ended June 30, 2021 include $ 159 of transaction costs which were assumed to be incurred in the first fiscal quarter of 2021.

Of these transaction costs, $ 61 and $ 91 were included in the Company's reported results for the three and nine months ended June 30, 2022, respectively, but have been excluded from the fiscal 2022 pro forma results above.

In addition, AspenTech incurred $ 68 of transaction costs prior to the completion of the acquisition that were not included in Emerson's reported results.

The pro forma results for the three and nine months ended June 30, 2021 include estimated interest expense of $ 37 and $ 110 , respectively, related to the issuance of $ 3 billion of term debt and increased commercial paper borrowings to fund the acquisition, while results for the nine months ended June 30, 2022 include additional interest expense of $ 56 to reflect the increased borrowings as if they were outstanding for the entire fiscal year.

Other Transactions

On August 8, 2022 the Company announced an agreement to sell its InSinkErator business, which manufactures food waste disposers and is reported in the Tools & Home Products segment, to Whirlpool Corporation for $ 3.0 billion.

This business had sales and pretax earnings of $ 565 and $ 143 in fiscal 2021 and $ 480 and $ 117 for the nine months ended June 30, 2022.

The assets and liabilities of InSinkErator were classified as held-for-sale as of June 30, 2022 and are included in other current assets, other assets, accrued expenses and other liabilities in the consolidated balance sheet.

The transaction is expected to close in fiscal 2023, subject to regulatory approvals and other customary closing conditions.

On July 27, 2022, New AspenTech entered into an agreement to acquire Micromine, a global leader in design and operational solutions for the mining industry, for AU$ 900 (approximately $ 623 USD).

The transaction is expected to close by the end of calendar 2022, subject to various regulatory approvals.

On May 31, 2022 the Company completed the divestiture of its Therm-O-Disc sensing and protection technologies business, which was reported in the Climate Technologies segment, to an affiliate of One Rock Capital Partners, LLC.

The Company recognized a pretax gain of $ 483 ($ 428 after-tax, $ 0.72 per share).

On May 4, 2022, Emerson announced its intention to exit business operations in Russia and divest Metran, its Russia-based manufacturing subsidiary.

Emerson's historical net sales in Russia were principally in the Automation Solutions segment and in total, represented approximately 1.5 percent of consolidated annual sales.

In the third quarter of fiscal 2022, the Company recognized a pretax loss of $ 162 ($ 174 after-tax, in total $ 0.29 per share) related to its exit of business operations in Russia.

This charge, which included a loss of $ 32 in operations and $ 130 reported in Other deductions ($ 9 of which is reported in restructuring costs), is primarily non-cash.

Emerson is committed to an orderly transfer of these assets and will support its employees through this process.

On October 1, 2020, the Company completed the acquisition of Open Systems International, Inc.

("OSI"), a leading operations technology software provider in the global power industry, for approximately $ 1.6 billion, net of cash acquired.

This business, which had net sales of $ 191 in fiscal 2021 and is reported in the Automation Solutions segment, expands the Company's offerings in the power industry to include the digitization and modernization of the electric grid.

The Company recognized goodwill of $ 967 ( none of which is expected to be tax deductible), identifiable intangible assets of $ 783 , primarily intellectual property and customer relationships with a weighted-average useful life of approximately 11 years, and deferred tax liabilities of approximately $ 193 .

Results of operations for the three months ended March 31, 2021 included first year pre-tax acquisition accounting charges related to backlog amortization and deferred revenue of $ 6 and $ 4 , respectively, while year-to-date results included $ 17 and $ 8 , respectively.

This business, which had net sales of $ 191 in fiscal 2021 and is now reported in the AspenTech segment, expanded the Company's offerings in the power industry to include the digitization and modernization of the electric grid.

of approximately 11 years, and deferred tax liabilities of approximately $ 193 .

Results of operations for the three months ended June 30, 2021 included first year pre-tax acquisition accounting charges related to backlog amortization and deferred revenue of $ 7 and $ 3 , respectively, while year-to-date results included $ 24 and $ 11 , respectively.

As previously disclosed, the Company sold its network power systems business (rebranded as Vertiv, now a publicly traded company, symbol VRT) in 2017 and retained a subordinated interest contingent upon the equity holders first receiving a threshold cash return on their initial investment.

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Based on the terms of the agreement and the current calculation, the Company could receive additional distributions of approximately $ 75 which are expected to be received over the next two -to- three years.

However, the distributions are contingent on the timing and price at

which Vertiv shares are sold by the equity holders and therefore, there can be no assurance as to the amount or timing of the remaining distributions to the Company.

However, the distributions are contingent on the timing and price at which Vertiv shares are sold by the equity holders and therefore, there can be no assurance as to the amount or timing of the remaining distributions to the Company.

(5) PENSION & POSTRETIREMENT PLANS

Total periodic pension and postretirement (income) expense is summarized below:

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

2021 2022 2021 2022

8 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2021 2022 2021 2022

Amortization of intangibles (intellectual property and customer relationships) $ 74 62 152 125

Amortization of intangibles (intellectual property and

customer relationships) $ 71 98 223 223

Restructuring costs 28 31 111 50

Acquisition/divestiture costs 2 61 11 97

Foreign currency transaction (gains) losses 1 ( 13 ) 7 ( 41 )

Investment-related gains & gains from sales of capital

— — ( 69 ) ( 15 )

Russia business exit — 121 — 121

Other ( 14 ) ( 15 ) ( 40 ) ( 61 )

Total $ 88 283 243 374

In the second quarter of fiscal 2022, the decrease in intangibles amortization for the three and six months ended March 31, 2022 was largely due to backlog amortization of $ 6 and $ 17 , respectively, in the prior year related to the OSI acquisition.

Other is composed of several items, including acquisition/divestiture costs, foreign currency transaction gains and losses, pension expense a nd other items.

For the three and six months ended March 31, 2022, the change in other included acquisition/divestiture costs of $ 13 and $ 36 , respectively, and a favorable impact from foreign currency transactions of $ 9 and $ 35 , respectively.

In the first quarter of fiscal 2022, other also included gains from the sales of capital assets of $ 15 .

Comparisons were also impacted by prior year investment-related gains, including $ 21 from an investment sale and $ 17 from the acquisition of full ownership of an equity investment in the first quarter of fiscal 2021, and a gain of $ 31 from the sale of an equity investment in the second quarter of fiscal 2021.

In the third quarter of fiscal 2022, intangibles amortization for the three and nine months ended June 30, 2022 included $ 32 related to the AspenTech acquisition, while the prior year included backlog amortization related to the OSI acquisition of $ 7 and $ 24 , respectively.

Other is composed of several items, including pension expense, litigation costs, provision for bad debt and other items, none of which is individually significant.

(7) RESTRUCTURING COSTS

Restructuring expense reflects costs associated with the Company’s ongoing efforts to improve operational efficiency and deploy assets globally in order to remain competitive on a worldwide basis.

Costs incurred in the first six months of fiscal 2022 relate to the Company's initiatives that began in the third quarter of fiscal 2019 to improve operating margins and were subsequently increased in response to the effects of the COVID-19 pandemic on demand for the Company's products.

Expenses incurred in the first six months of fiscal 2022 included costs related to workforce reductions of approximately 200 employees.

The Company expects fiscal 2022 restructuring expense and related costs to be approximately $ 150 , including costs to complete actions initiated in the first six months of the year.

Expenses incurred in the first nine months of fiscal 2022 included costs related to workforce reductions of approximately 1,400 employees.

The Company expects fiscal 2022 restructuring expense and related costs to be approximately $ 150 , including costs to complete actions initiated in the first nine months of the year.

Restructuring expense by business segment follows:

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2021 2022 2021 2022

Automation Solutions $ 20 20 92 33

AspenTech ( 2 ) 1 2 1

Climate Technologies 4 2 8 5

3 unchanged sentences

Total $ 28 31 111 50

Details of the change in the liability for restructuring costs during the six months ended March 31, 2022 follow:

Sept 30, 2021 Expense Utilized/Paid Mar 31, 2022

Details of the change in the liability for restructuring costs during the nine months ended June 30, 2022 follow:

Sept 30, 2021 Expense Utilized/Paid June 30, 2022

Severance and benefits $ 172 20 52 140

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Total $ 176 50 81 145

The tables above do not include $ 4 and $ 5 of costs related to restructuring actions incurred for the three months ended March 31, 2021 and 2022, respectively, that are required to be reported in cost of sales and selling, general and administrative expenses;

The tables above do not include $ 4 and $ 12 of costs related to restructuring actions incurred for the three months ended June 30, 2021 and 2022, respectively, that are required to be reported in cost of sales and selling, general and administrative expenses;

year-to-date amounts are $ 11 and $ 26 , respectively.

Income taxes were $ 136 in the second quarter of fiscal 2022 and $ 169 in 2021, resulting in effective tax rates of 17 percent and 23 percent, respectively.

The current year rate included a 6 percentage point benefit related to the completion of tax examinations, while both years included unfavorable discrete items which increased the rates 1 percentage point.

Income taxes were $ 416 for the first six months of 2022 and $ 280 for 2021, resulting in effective tax rates of 21 percent and 22 percent, respectively.

The current year rate included a 3 percentage point benefit related to the completion of tax examinations, partially offset by portfolio restructuring activities which negatively impacted the rate by 2 percentage points.

Income taxes were $ 243 in the third quarter of fiscal 2022 and $ 151 in 2021, resulting in effective tax rates of 20 percent and 19 percent, respectively.

Favorable net discrete tax items decreased the tax rates by 2 and 3 percentage points, respectively.

Income taxes were $ 659 for the first nine months of 2022 and $ 431 for 2021, resulting in effective tax rates of 21 percent and 21 percent, respectively.

The current year rate included a 2 percentage point benefit related to the completion of tax examinations, partially offset by portfolio restructuring activities which negatively impacted the rate by 1 percentage points, while the prior year had favorable net discrete items which reduced the rate 1 percentage point.

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic, and among other things, provides tax relief to businesses.

2 unchanged sentences

(9) OTHER FINANCIAL INFORMATION

Sept 30, 2021 Mar 31, 2022

Sept 30, 2021 June 30, 2022

Finished products $ 616 681

1 unchanged sentence

Total $ 2,050 2,319

Sept 30, 2021 Mar 31, 2022

Property, plant and equipment, net

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Automation Solutions $ 5,508 5,378

AspenTech 1,044 8,266

Climate Technologies 753 719

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Net carrying amount $ 2,877 6,930

Other intangible assets include customer relationships, net, of $ 1,495 and $ 1,401 as of September 30, 2021 and March 31, 2022, respectively.

Three Months Ended March 31, Six Months Ended March 31,

Other intangible assets include customer relationships, net, of $ 1,495 and $ 3,614 as of September 30, 2021 and June 30, 2022, respectively.

The increase in goodwill and intangibles was primarily due to the AspenTech acquisition.

Three Months Ended June 30, Nine Months Ended June 30,

2021 2022 2021 2022

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Total $ 237 270 720 722

Amortization of intangibles included backlog amortization of $ 6 and $ 17 related to the OSI acquisition for the three and six months ended March 31, 2021, respectively.

Sept 30, 2021 Mar 31, 2022

Amortization of intangibles included $ 49 related to the AspenTech acquisition for the three and nine months ended June 30, 2021, while the prior year included backlog amortization of $ 7 and $ 24 related to the OSI acquisition for the three and nine months ended June 30, 2021, respectively.

For the three and nine months ended June 30, 2022, $ 5 of amortization of intangibles included in the table above is reported as a restructuring related cost.

Sept 30, 2021 June 30, 2022

Other assets include the following:

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Operating lease right-of-use assets 558 531

Unbilled receivables (contract assets) — 475

Deferred income taxes 115 98

5 unchanged sentences

Product warranty 146 119

Sept 30, 2021 Mar 31, 2022

Other liabilities include the following:

3 unchanged sentences

Asbestos litigation 256 230

The increases in Unbilled receivables and Deferred income taxes were primarily due to the AspenTech acquisition.

See Notes 2 and 4.

In December 2021, the Company issued $ 1 billion of 2.0 % notes due December 2028, $ 1 billion of 2.2 % notes due December 2031, and $ 1 billion of 2.8 % notes due December 2051.

The Company expects to use the net proceeds from the sale of the notes to pay a portion of its contribution of approximately $ 6.0 billion to existing stockholders of AspenTech as part of the transaction discussed further in Note 4.

If the transaction with AspenTech is not completed or is terminated, the Company will be required to redeem the notes at a redemption price equal to 101 % of the principal amount plus accrued and unpaid interest.

In the second quarter of fiscal 2022, the Company increased its commercial paper borrowings by approximately $ 2.2 billion to generate additional cash to fund the AspenTech transaction.

The Company's commercial paper borrowings also increased by approximat ely $ 2.4 billion c ompared to September 30, 2021.

The Company used the net proceeds from the sale of the notes and the increased commercial paper borrowings to fund the majority of its contribution of approximately $ 6.0 billion to existing stockholders of AspenTech as part of the transaction discussed further in Note 4.

In the first quarter of fiscal 2022, the Company repaid $ 500 of 2.625 % notes that matured.

In the third quarter of fiscal 2022, the acquisition of AspenTech increased the Company's long-term debt by approximately $ 250 .

(11) FINANCIAL INSTRUMENTS

Hedging Activities – As of March 31, 2022, the notional amount of foreign currency hedge positions was approximately $ 2.6 billion, and commodity hedge contracts totaled approximately $ 120 (primarily 32 million pounds of copper and aluminum).

Hedging Activities – As of June 30, 2022, the notional amount of foreign currency hedge positions was approximately $ 2.1 billion, and commodity hedge contracts totaled approximately $ 170 (primarily 45 million pounds of copper and aluminum).

All derivatives receiving hedge accounting are cash flow hedges.

The majority of hedging gains and losses deferred as of March 31, 2022 are expected to be recognized over the next 12 months as the underlying forecasted transactions occur.

The majority of hedging gains and losses deferred as of June 30, 2022 are expected to be recognized over the next 12 months as the underlying forecasted transactions occur.

Gains and losses on foreign currency derivatives reported in Other deductions, net reflect hedges of balance sheet exposures that do not receive hedge accounting.

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Foreign currency gains or losses associated with the euro-denominated debt are deferred in accumulated other comprehensive income (loss) and will remain until the hedged investment is sold or substantially liquidated.

The following gains and losses are included in earnings and other comprehensive income (OCI) for the three and six months ended March 31, 2021 and 2022:

The following gains and losses are included in earnings and other comprehensive income (OCI) for the three and nine months ended June 30, 2021 and 2022:

Into Earnings Into OCI

2nd Quarter Six Months 2nd Quarter Six Months

3rd Quarter Nine Months 3rd Quarter Nine Months

Gains (Losses) Location 2021 2022 2021 2022 2021 2022 2021 2022

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Fair Value Measurement – Valuations for all derivatives and the Company's long-term debt fall within Level 2 of the GAAP valuation hierarch y.

As of March 31, 2022, the fair value of long-term debt was $ 8.5 billion, which exceeded the carrying value by $ 230 .

As of June 30, 2022, the fair value of long-term debt was $ 8.1 billion, which was lower than the carrying value by $ 816 .

The fair values of commodity and foreign currency contracts were reported in Other current assets and Accrued expenses and did not materially change since September 30, 2021.

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The Company also can demand full collateralization of derivatives in net asset positions should any counterparty credit ratings fall below certain thresholds.

No collateral was posted with counterparties and none was held by the Company as of March 31, 2022.

No collateral was posted with counterparties and none was held by the Company as of June 30, 2022.

(12) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Activity in Accumulated other comprehensive income (loss) for the three and six months ended March 31, 2021 and 2022 is shown below, net of income taxes:

Three Months Ended March 31, Six Months Ended March 31,

Activity in Accumulated other comprehensive income (loss) for the three and nine months ended June 30, 2021 and 2022 is shown below, net of income taxes:

Three Months Ended June 30, Nine Months Ended June 30,

2021 2022 2021 2022

11 unchanged sentences

Gains deferred during the period, net of taxes of $( 2 ), $ 5 , $( 15 ) and $( 4 ), respectively

7 ( 15 ) 50 14

Reclassification of realized (gains) losses to sales and cost of sales, net of tax of $ 3 , $ 4 , $ 7 and $ 10 , respectively

3 unchanged sentences

(13) BUSINESS SEGMENTS

As a result of the AspenTech acquisition, the Company identified one additional segment in the third quarter of fiscal 2022.

The new segment, referred to as "AspenTech," reflects the combined results of AspenTech and the Emerson Industrial Software Business (see Note 4 for further details).

The results for this new segment include the historical results of the Emerson Industrial Software Business (which were previously reported in the Automation Solutions segment), while results related to the AspenTech business only include periods subsequent to the close of the transaction.

Prior year amounts for the Automation Solutions segment have been reclassified to conform to the current year presentation.

Summarized information about the Company's results of operations by business segment follows:

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

Sales Earnings Sales Earnings

1 unchanged sentence

Automation Solutions $ 2,865 2,872 519 530 8,193 8,451 1,354 1,618

AspenTech 82 239 2 57 239 405 ( 1 ) 51

Climate Technologies 1,268 1,380 274 300 3,459 3,884 731 754

7 unchanged sentences

Gain on subordinated interest — — — 453

Gain on sale of business — 483 — 483

Eliminations/Interest ( 7 ) ( 8 ) ( 37 ) ( 50 ) ( 21 ) ( 17 ) ( 115 ) ( 140 )

Total $ 4,697 5,005 784 1,195 13,289 14,269 2,084 3,181

Corporate and other for the three and nine months ended June 30, 2022 includes a loss of $ 162 related to the Company's exit of business operations in Russia and acquisition/divestiture costs of $ 61 and $ 97 , respectively.

Automation Solutions sales by major product offering are summarized below.

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

2021 2022 2021 2022

5 unchanged sentences

Depreciation and amortization (includes intellectual property, customer relationships and capitalized software) by business segment are summarized below:

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

2021 2022 2021 2022

Automation Solutions $ 128 127 393 383

AspenTech 24 73 71 119

Climate Technologies 48 43 144 136

4 unchanged sentences

Sales by geographic destination are summarized below:

Three Months Ended March 31,

Automation Solutions Commercial & Residential Solutions Total Automation Solutions Commercial & Residential Solutions Total

Three Months Ended June 30,

Automation Solutions Aspen Tech Commercial & Residential Solutions Total Automation Solutions Aspen Tech Commercial & Residential Solutions Total

Americas $ 1,269 52 1,190 2,511 1,418 131 1,362 2,911

2 unchanged sentences

Total $ 2,865 82 1,757 4,704 2,872 239 1,902 5,013

Six Months Ended March 31,

Automation Solutions Commercial & Residential Solutions Total Automation Solutions Commercial & Residential Solutions Total

Nine Months Ended June 30,

Automation Solutions Aspen Tech Commercial & Residential Solutions Total Automation Solutions Aspen Tech Commercial & Residential Solutions Total

Americas $ 3,561 150 3,290 7,001 3,942 234 3,789 7,965

2 unchanged sentences

Total $ 8,193 239 4,878 13,310 8,451 405 5,430 14,286

(14) SUBSEQUENT EVENTS

On May 4, 2022, Emerson announced its intention to exit business operations in Russia and is exploring strategic options to divest Metran, its Russia-based manufacturing subsidiary.

Emerson is committed to an orderly transfer of these assets and will support its employees through this process.

Emerson's historical net sales in Russia were principally in the Automation Solutions segment and in total, represent approximately 1.5 percent of consolidated annual sales.

As of March 31, 2022, Emerson's Russian operations had net assets of approximately $ 50 and accumulated foreign currency translation losses of approximately $ 145 (which will be recognized as a non-cash charge when the exit is completed).

The Company is currently unable to estimate the full financial consequences of the exit due to uncertainty regarding the commercial terms of the exit and related tax impacts.

Items 2 and 3.

1 unchanged sentence

(Dollars are in millions, except per share amounts or where noted)

For the second quarter of fiscal 2022, net sales were $4.8 billion, up 8 percent compared with the prior year.

For the third quarter of fiscal 2022, net sales were $5.0 billion, up 7 percent compared with the prior year.

Underlying sales, which exclude foreign currency translation, acquisitions and divestitures, were up 7 percent.

Foreign currency translation had a 2 percent unfavorable impact.

Sales growth continued to be strong in the quarter with favorable results across both business platforms and all geographies.

The AspenTech acquisition added 4 percent and divestitures deducted 1 percent, while foreign currency translation had a 3 percent unfavorable impact.

Sales growth continued to be strong in the quarter, benefiting from strong results in North America, despite headwinds due to the impact of lockdowns in China and supply chain and logistics constraints.

Net earnings common stockholders were $921, up 47 percent, and diluted earnings per share were $1.54, up 48 percent compared with $1.04 in the prior year.

Adjusted diluted earnings per share were $1.29 compared with $1.07 in the prior year, reflecting strong operating results and a lower effective tax rate in the quarter.

Adjusted diluted earnings per share were $1.38 compared with $1.19 in the prior year, reflecting strong operating results and a $0.08 benefit related to the AspenTech acquisition.

The table below presents the Company's diluted earnings per share on an adjusted basis to facilitate period-to-period comparisons and provide additional insight into the underlying, ongoing operating performance of the Company.

Adjusted diluted earnings per share excludes intangibles amortization expense, restructuring expense, first year purchase accounting related items and transaction and AspenTech pre-closing costs, and certain gains, losses or impairments.

Three Months Ended Mar 31 2021 2022

Three Months Ended June 30 2021 2022

Diluted earnings per share $ 1.04 1.54

1 unchanged sentence

Amortization of intangibles 0.10 0.13

Acquisition/divestiture costs and interest on AspenTech debt — 0.04

Gain on sale of business — (0.72)

Russia business exit — 0.29

Acquisition/divestiture costs and pre-acquisition interest on AspenTech debt — 0.09

OSI first year acquisition accounting charges 0.01 —

3 unchanged sentences

Three Months Ended

Adjusted diluted earnings per share - Mar 31, 2021

Adjusted diluted earnings per share - June 30, 2021

Operations 0.09

AspenTech acquisition 0.08

Corporate and other (0.03)

Stock compensation 0.08

Pensions 0.01

Gain on sale of investment - prior year (0.04)

Foreign currency (0.02)

Lower effective tax rate 0.08

Higher effective tax rate (0.03)

Share repurchases 0.02

Adjusted diluted earnings per share - Mar 31, 2022

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31

Following is an analysis of the Company’s operating results for the second quarter ended March 31, 2021, compared with the second quarter ended March 31, 2022.

Adjusted diluted earnings per share - June 30, 2022

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30

Following is an analysis of the Company’s operating results for the third quarter ended June 30, 2021, compared with the third quarter ended June 30, 2022.

2021 2022 Change

(dollars in millions, except per share amounts)

Net sales $ 4,697 5,005 7 %

Gross profit $ 1,982 2,097 6 %

Percent of sales 42.0 % 40.7 %

Percent of sales 42.2 % 41.9 % (0.3) pts

SG&A $ 1,073 1,052 (2) %

Percent of sales 23.8 % 21.9 %

Percent of sales 22.9 % 21.0 % (1.9) pts

Gain on sale of business $ — (483)

Other deductions, net $ 88 283

3 unchanged sentences

Earnings before income taxes $ 784 1,195 52 %

Percent of sales 16.6 % 16.9 %

Percent of sales 16.7 % 23.9 % 7.2 pts

Net earnings common stockholders $ 627 921 47 %

Percent of sales 12.7 % 14.1 %

Percent of sales 13.3 % 18.4 % 5.1 pts

Diluted earnings per share $ 1.04 1.54 48 %

Net sales for the second quarter of fiscal 2022 were $4.8 billion, up 8 percent compared with 2021.

Automation Solutions sales were up 5 percent and Commercial & Residential Solutions sales were up 13 percent.

Net sales for the third quarter of fiscal 2022 were $5.0 billion, up 7 percent compared with 2021.

Automation Solutions sales were flat, Commercial & Residential Solutions sales were up 8 percent and AspenTech sales were up 189 percent.

Underlying sales were up 7 percent on 1 percent higher volume and 6 percent higher price, while f or eign currency translation had a 3 percent negative impact.

The AspenTech acquisition added 4 percent, while divestitures deducted 1 percent.

Underlying sales were up 15 percent in the U.S.

and up 1 percent internationally.

The Americas was up 14 percent, Europe was up 2 percent and Asia, Middle East & Africa was up 7 percent (China up 11 percent).

Cost of sales for the second quarter of fiscal 2022 were $2,839, an increase of $270 compared with 2021, due to higher sales volume and higher materials costs.

Gross margin of 40.7 percent decreased 1.3 percentage points compared with the prior year as price increases were largely offset by higher material costs, and other inflation negatively impacted margins.

Selling, general and administrative (SG&A) expenses of $1,049 decreased $5 and SG&A as a percent of sales decreased 1.9 percentage points to 21.9 percent compared with the prior year, reflecting leverage on higher sales, lower stock compensation expense of $11 and savings from the Company's cost reset actions, partially offset by wage and other inflation.

Other deductions, net were $40 in 2022, an increase of $7 compared with the prior year, reflecting acquisition/divestiture costs of $13, a decline in restructuring costs of $7 and a favorable impact from foreign currency transactions of $9.

Intangibles amortization was lower by $12, partially due to backlog amortization of $6 in the prior year related to the OSI acquisition.

The prior year also included a gain on the sale of an equity investment of $31.

The Americas was up 14 percent, Europe was flat and Asia, Middle East & Africa was down 1 percent (China down 6 percent due to the impact of lockdowns).

Cost of sales for the third quarter of fiscal 2022 were $2,908, an increase of $193 compared with 2021, due to higher sales volume and higher materials costs.

Gross margin of 41.9 percent decreased 0.3 percentage points, as freight and other inflation negatively impacted margins, while price less net material inflation was favorable but had a dilutive impact on margins.

The AspenTech acquisition benefited gross margin by 1.6 percentage points, while the Russia business exit negatively impacted gross margin by 0.6 percentage points.

Selling, general and administrative (SG&A) expenses of $1,052 decreased $21 and SG&A as a percent of sales decreased 1.9 percentage points to 21.0 percent compared with the prior year, reflecting leverage on higher sales and lower stock compensation expense of $50, partially offset by higher wage and other inflation.

On May 31, 2022, the Company completed the sale of its Therm-O-Disc sensing and protection technologies business to an affiliate of One Rock Capital Partners, LLC.

The Company recognized a pretax gain o f $483 ($428 after-tax, $0.72 per share).

Other deductions, net were $283 in 2022, an increase of $195 compared with the prior year, reflecting a charge of $130 related to the Company exiting its business in Russia ($9 of which is reported in restructuring costs).

Ac quisition/divestiture costs of $61 and a favorable impact from foreign currency transactions of $14 also impacted comparisons.

Intangibles amortization was higher by $27, as the current year included $32 related to the AspenTech acquisition, while the prior year included backlog amortization of $7 related to the OSI acquisition.

See Notes 6 and 7.

Pretax earnings of $1,195 increased $411, up 52 percent compared with the prior year.

Earnings increased $85 in Automation Solutions and increased $8 in Commercial & Residential Solutions, while costs reported at Corporate increased $5.

Earnings increased $11 in Automation Solutions, $55 in AspenTech and $32 in Commercial & Residential Solutions, while costs reported at Corporate increased $157 largely due to the Russia business exit loss.

See the Business Segments discussion that follows and Note 13.

Income taxes were $136 in the second quarter of fiscal 2022 and $169 in 2021, resulting in effective tax rates of 17 percent and 23 percent, respectively.

Net earnings common stockholders in the second quarter of fiscal 2022 were $674, up 20 percent, compared with $561 in the prior year, and earnings per share were $1.13, up 22 percent, compared with $0.93 in the prior year.

Income taxes were $243 in the third quarter of fiscal 2022 and $151 in 2021, resulting in effective tax rates of 20 percent and 19 percent, respectively.

Favorable net discrete tax items decreased the tax rates by 2 and 3 percentage points, respectively.

Net earnings common stockholders in the third quarter of fiscal 2022 were $921, up 47 percent, compared with $627 in the prior year, and earnings per share were $1.54, up 48 percent, compared with $1.04 in the prior year.

See discussion in the Overview above and the analysis below of adjusted earnings per share for further details.

2 unchanged sentences

Adjusted EBITA and adjusted EBITA margin are measures used by management and may be useful for investors to evaluate the Company's operational performance.

Three Months Ended Mar 31 2021 2022 Change

Three Months Ended June 30 2021 2022 Change

Earnings before income taxes $ 784 1,195 52 %

Percent of sales 16.6 % 16.9 %

Percent of sales 16.7 % 23.9 % 7.2 pts

Interest expense, net 37 50

1 unchanged sentence

Amortization of intangibles 79 124

Gain on sale of business — (483)

Russia business exit — 162

Acquisition/divestiture costs — 61

1 unchanged sentence

Adjusted EBITA $ 942 1,143 21 %

Percent of sales 20.0 % 20.2 %

Percent of sales 20.1 % 22.8 % 2.7 pts

Business Segments

Following is an analysis of operating results for the Company’s business segments for the second quarter ended March 31, 2021, compared with the second quarter ended March 31, 2022.

Following is an analysis of operating results for the Company’s business segments for the third quarter ended June 30, 2021, compared with the third quarter ended June 30, 2022.

The Company defines segment earnings as earnings before interest and taxes.

1 unchanged sentence

AUTOMATION SOLUTIONS

Three Months Ended Mar 31 2021 2022 Change

Three Months Ended June 30 2021 2022 Change

Sales $ 2,865 2,872 — %

Earnings $ 519 530 2 %

Margin 16.8 % 18.9 %

Margin 18.1 % 18.5 % 0.4 pts

Restructuring and related costs $ 20 31

1 unchanged sentence

Adjusted EBITA $ 583 602 3%

Adjusted EBITA Margin 19.8 % 21.5 %

Adjusted EBITA Margin 20.3 % 21.0 % 0.7 pts

Sales by Major Product Offering

4 unchanged sentences

Total $ 2,865 2,872 — %

Automation Solutions sales were $2.9 billion in the second quarter, an increase of $144 or 5 percent.

Automation Solutions sales were $2,872 in the third quarter, essentially flat compared with the prior year.

Foreign currency translation had a 4 percent unfavorable impact.

Underlying sales increased 7 percent on 5 percent higher volume and 2 percent higher price, reflecting strength in North America and China and favorable results in all major end markets.

Supply chain and logistics constraints continued to unfavorably impact sales in the second quarter.

Underlying sales

increased 13 percent in the Americas (U.S.

up 14 percent), as process end markets continue to recover, while Europe was down 3 percent, and Asia, Middle East & Africa increased 6 percent (China up 17 percent).

Sales for Measurement & Analytical Instrumentation increased $35, or 5 percent as market conditions continued to improve for North American process industries.

Measurement & Analytical sales were strong in North America and Asia, Middle East & Africa, with China up over 25 percent, while Europe was down over 10 percent due to supply chain issues and lower project activity.

Valves, Actuators & Regulators increased $47, or 6 percent, reflecting strength in power and chemical end markets.

Demand was favorable in the Americas (up mid-teens) and China (up over 20 percent), while sales increased modestly in the rest of Asia, Middle East & Africa and were down mid-single digits in Europe.

Industrial Solutions sales were up $47, or 8 percent, on continued strength in discrete end markets.

Systems & Software increased $15, or 2 percent, reflecting strength in process end markets in North America and China, partially offset by weakness in Europe, while power end markets were strong in North America.

Earnings were $556, an increase of $85, or 18 percent, and margin increased 2.1 percentage points to 18.9 percent, reflecting leverage on higher volume, favorable mix, savings from cost reduction actions and a 0.3 percentage point benefit from foreign currency transactions.

Price-cost was neutral while freight and other inflation was slightly negative.

Underlying sales increased 4 percent on 1 percent higher volume and 3 percent higher price, reflecting strength in North America partially offset by softness in Asia, Middle East & Africa.

Overall, demand remained steady during the quarter, but lockdowns in China, electronic component shortages, and other supply chain and logistics constraints unfavorably impacted sales.

Underlying sales increased 12 percent in the Americas (U.S.

up 14 percent), as process end markets remained strong, while Europe, which was negatively impacted by the business exit from Russia, was down 2 percent, and Asia, Middle East & Africa decreased 3 percent (China down 2 percent).

Sales for Measurement & Analytical Instrumentation increased $4, or 1 percent as market conditions remained strong for North American process industries, offset by weakness in Asia, Middle East & Africa due to component shortages and other supply chain constraints.

Valves, Actuators & Regulators increased $25, or 3 percent, reflecting strength in chemical end markets, partially offset by the impact of lockdowns in China.

Industrial Solutions sales were down $18, or 3 percent, reflecting unfavorable currency translation and the impact of lockdowns in China, partially offset by strength in North America.

Systems & Software decreased $4, or 1 percent, reflecting unfavorable currency translation and the impact of component shortages.

Results were strong in North America, offset by weakness in Europe.

Earnings were $530, an increase of $11, or 2 percent, and margin increased 0.4 percentage points to 18.5 percent, reflecting leverage on higher volume, favorable mix and savings from cost reduction actions.

Price less net material inflation was slightly favorable, while freight and other inflation negatively impacted margin.

Three Months Ended June 30 2021 2022 Change

Sales $ 82 239 189 %

Earnings $ 2 57 2,950 %

Margin 2.2 % 23.7 % 21.5 pts

Restructuring and related costs $ (2) 1

Amortization of intangibles $ 22 71

Adjusted EBITA $ 22 129 483%

Adjusted EBITA Margin 26.7 % 53.8 % 27.1 pts

As a result of the AspenTech acquisition, the Company identified one additional segment in the third quarter of fiscal 2022.

The new segment, referred to as "AspenTech," reflects the combined results of AspenTech and the Emerson Industrial Software Business (see Note 4 for further details).

The results for this new segment include the historical results of the Emerson Industrial Software Business (which were previously reported in the Automation Solutions segment), while results related to the AspenTech business include only periods subsequent to the close of the transaction on May 16, 2022.

AspenTech sales were $239 in the third quarter, an increase of $157 or 189% due to the acquisition of AspenTech.

Earnings were $57, an increase of $55, and margin improved to 23.7 percent, reflecting the impact of the AspenTech acquisition.

Results for the third quarter of fiscal 2022 included intangibles amortization of $49 related to the AspenTech acquisition ($17 of which was reported in Cost of sales).

COMMERCIAL & RESIDENTIAL SOLUTIONS

Three Months Ended Mar 31 2021 2022 Change

Three Months Ended June 30 2021 2022 Change

Climate Technologies $ 1,268 1,380 9 %

4 unchanged sentences

Total $ 375 407 8 %

Margin 21.7 % 19.7 %

Margin 21.3 % 21.4 % 0.1 pts

Restructuring and related costs $ 7 1

1 unchanged sentence

Adjusted EBITA $ 395 420 6 %

Adjusted EBITA Margin 22.8 % 20.5 %

Commercial & Residential Solutions sales were $1.9 billion in the second quarter, up $212, or 13 percent compared to the prior year.

Foreign currency translation had a 1 percent unfavorable impact.

Underlying sales increased 14 percent on 5 percent higher volume and 9 percent higher price, reflecting growth across nearly all businesses and geographies, with strength in commercial and industrial end markets.

Adjusted EBITA Margin 22.5 % 22.0 % (0.5) pts

Commercial & Residential Solutions sales were $1.9 billion in the third quarter, up $145, or 8 percent compared to the prior year.

Foreign currency translation had a 2 percent unfavorable impact and divestitures deducted 3 percent.

Underlying sales increased 13 percent on 1 percent higher volume and 12 percent higher price.

Overall, underlying sales increased 16 percent in the Americas (U.S.

up 16 percent), 6 percent in Europe and 5 percent in Asia, Middle East & Africa (China down 18 percent).

Climate Technologies sales were $1.3 billion in the second quarter, an increase of $181, or 16 percent.

Air conditioning, heating and refrigeration sales were strong, reflecting global demand across all end markets.

Tools & Home Products sales were $516 in the second quarter, an increase of $31, or 6 percent.

Sales of food waste disposers and professional tools were both up approximately 10 percent, while wet/dry vacuums sales decreased 9 percent.

Earnings were $365, up 2 percent compared with the prior year driven by slightly favorable price-cost due to higher prices.

Margin decreased 2.0 percentage points to 19.7 percent, as the benefit from higher prices was mostly offset by higher materials costs.

Freight and other inflation also negatively impact margin, partially offset by leverage on higher sales volume and savings from cost reduction actions.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31

Following is an analysis of the Company’s operating results for the six months ended March 31, 2021, compared with the six months ended March 31, 2022.

Climate Technologies sales were $1.4 billion in the third quarter, an increase of $112, or 9 percent.

Air conditioning, heating and refrigeration sales were strong across all end markets except for China which was negatively impacted by lockdowns.

Tools & Home Products sales were $522 in the third quarter, an increase of $33, or 7 percent.

Sales of food waste disposers and professional tools were strong while wet/dry vacuums sales decreased modestly due to difficult comparisons.

Earnings were $407, up 8 percent compared with the prior year, and margin increased 0.1 percentage points to 21.4 percent, as favorable price less net material inflation and savings from cost reduction actions were mostly offset by freight and other inflation and unfavorable mix.

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED JUNE 30

Following is an analysis of the Company’s operating results for the nine months ended June 30, 2021, compared with the nine months ended June 30, 2022.

2021 2022 Change

1 unchanged sentence

Gross profit $ 5,567 5,871 5 %

Percent of sales 41.7 % 40.7 %

Percent of sales 41.9 % 41.1 % (0.8) pts

SG&A $ 3,125 3,112 — %

Percent of sales 23.9 % 22.2 %

Percent of sales 23.5 % 21.8 % (1.7) pts

Gain on subordinated interest $ — (453)

Gain on sale of business $ — (483)

Other deductions, net $ 243 374

3 unchanged sentences

Earnings before income taxes $ 2,084 3,181 53 %

Percent of sales 15.1 % 21.4 %

Percent of sales 15.7 % 22.3 % 6.6 pts

Net earnings common stockholders $ 1,633 2,491 53 %

Percent of sales 11.7 % 16.9 %

Percent of sales 12.3 % 17.5 % 5.2 pts

Diluted earnings per share $ 2.71 4.17 54 %

Net sales for the first six months of 2022 were $9.3 billion, up 8 percent compared with 2021.

Automation Solutions sales were up 5 percent while Commercial & Residential Solutions sales were up 13 percent.

Net sales for the first nine months of 2022 were $14.3 billion, up 7 percent compared with 2021.

Automation Solutions sales were up 3 percent, Commercial & Residential Solutions sales were up 11 percent and AspenTech sales were up 69 percent.

Underlying sales were up 9 percent on 5 percent higher volume and 4 percent higher price, and foreign currency translation subtracted 2 percent.

3 unchanged sentences

Cost of sales for 2022 were $8,398, an increase of $676 versus $7,722 in 2021, primarily due to higher sales volume and higher materials costs.

Gross margin of 40.7 percent decreased 1.0 percentage point compared to the prior year, reflecting unfavorable price-cost in Commercial & Residential Solutions, partially offset by leverage on higher sales volume and favorable mix.

SG&A expenses of $2,060 increased $8 compared with the prior year on increased sales volume, partially offset by lower stock compensation expense of $34.

SG&A as a percent of sales decreased 1.7 percentage points to 22.2 percent, reflecting leverage on higher sales, lower stock compensation expense, and savings from the Company's restructuring and cost reset actions.

Gross margin of 41.1 percent decreased 0.8 percentage points compared to the prior year, as price less net material inflation was slightly favorable but had a dilutive impact on margins and higher freight and other inflation also negatively impacted margins, partially offset by favorable mix.

The AspenTech acquisition benefited gross margin by 0.6 percentage points, while the Russia business exit negatively impacted gross margin by 0.2 percentage points.

SG&A expenses of $3,112 decreased $13 compared with the prior year, reflecting lower stock compensation expense of $84, partially offset by the impact of higher sales.

SG&A as a percent of sales decreased 1.7 percentage points to 21.8 percent, reflecting leverage on higher sales and lower stock compensation expense .

2 unchanged sentences

Other deductions, net were $91 in 2022, a decrease of $64 compared with the prior year, reflecting a decline in restructuring costs of $64, a favorable impact from foreign currency transactions of $35 due to losses in the prior year and gains in the current year, and gains from the sales of capital assets of $15 in the first quarter of fiscal 2022, partially offset by acquisition/divestiture costs of $36.

Intangibles amortization decreased $27 largely due to backlog

amortization in the prior year of $17 related to the OSI acquisition.

On May 31, 2022, the Company completed the sale of its Therm-O-Disc sensing and protection technologies business to an affiliate of One Rock Capital Partners, LLC.

The Company recognized a pretax gain o f $483 ($428 after-tax, $0.72 per share).

Other deductions, net were $374 in 2022, an increase of $131 compared with the prior year, reflecting a charge of $130 related to the Company exiting its business in Russia ($9 of which is reported in restructuring costs) and ac quisition/divestiture costs of $97.

These items were partially offset by a favorable impact from foreign currency transactions of $48 and gains from the sales of capital assets of $15 in the first quarter of fiscal 2022.

The prior year also included investment-related gains, including a gain of $21 from an investment sale, a $17 gain from the acquisition of full ownership of an equity investment and a gain of $31 on the sale of an equity investment.

Intangibles amortization was flat a s the current year included $32 related to the AspenTech acquisition, while the prior year included backlog amortization of $24 related to the OSI acquisition.

See Notes 6 and 7.

Pretax earnings of $3,181 increased $1,097, or 53 percent.

Earnings increased $250 in Automation Solutions and decreased $3 in Commercial & Residential Solutions, while costs reported at Corporate increased $2.

Earnings increased $264 in Automation Solutions, $52 in AspenTech and $29 in Commercial & Residential Solutions, while costs reported at Corporate increased $159 largely due to the Russia business exit loss.

See the Business Segments discussion that follows and Note 13.

Income taxes were $416 for 2022 and $280 for 2021, resulting in effective tax rates of 21 percent and 22 percent, respectively.

Income taxes were $659 for the first nine months of 2022 and $431 for 2021, resulting in effective tax rates of 21 percent and 21 percent, respecti vely.

The current year rate included a 2 percentage point benefit related to the completion of tax examinations, partially offset by portfolio restructuring activities which negatively impacted the rate by 1 percentage points, while the prior year had favora ble net discrete items which reduced the rate 1 percentage point.

Net earnings common stockholders in 2022 were $2,491, up 53 percent compared with the prior year, and earnings per share were $4.17, up 54 percent compared with $2.71 in 2021.

Results reflected strong operating results and included a pretax gain of $453 ($358 after-tax, $0.60 per share) related to the Company's subordinated interest in Vertiv.

Results reflected strong operating results and included a pretax gain of $453 ($358 after-tax, $0.60 per share) related to the Company's subordinated interest in Vertiv and a pretax gain of $483 ($428 after-tax, $0.72 per share) related to the Therm-O-Disc divestiture.

See the analysis below of adjusted earnings per share for further details.

The table below, which shows results on an adjusted EBITA basis, is intended to supplement the Company's discussion of its results of operations herein.

Six Months Ended Mar 31 2021 2022 Change

Nine Months Ended June 30 2021 2022 Change

Earnings before income taxes $ 2,084 3,181 53 %

Percent of sales 15.1 % 21.4 %

Percent of sales 15.7 % 22.3 % 6.6 pts

Interest expense, net 115 140

2 unchanged sentences

Gain on subordinated interest — (453)

Gain on sale of business — (483)

Russia business exit — 162

Acquisition/divestiture costs — 97

2 unchanged sentences

Adjusted EBITA $ 2,587 2,988 16 %

Percent of sales 19.2 % 19.9 %

Percent of sales 19.5 % 20.9 % 1.4 pts

Six Months Ended Mar 31 2021 2022

Nine Months Ended June 30 2021 2022

Diluted earnings per share $ 2.71 4.17

2 unchanged sentences

Gain on subordinated interest — (0.60)

Acquisition/divestiture costs and interest on AspenTech debt — 0.07

Gain on sale of business — (0.72)

Russia business exit — 0.29

Acquisition/divestiture costs and pre-acquisition interest on AspenTech debt — 0.16

Gain on acquisition of full ownership of equity investment (0.03) —

3 unchanged sentences

The items identified below are discussed throughout MD&A, see further discussion above and in the Business Segments and Financial Position sections below.

Six Months Ended

Adjusted diluted earnings per share - Mar 31, 2021

Nine Months Ended

Adjusted diluted earnings per share - June 30, 2021

Operations 0.30

AspenTech acquisition 0.08

Corporate and other (0.03)

Stock compensation 0.13

2 unchanged sentences

Gains on sales of capital assets - current year 0.02

Foreign currency 0.03

Lower effective tax rate 0.02

Share repurchases 0.05

Adjusted diluted earnings per share - Mar 31, 2022

Share repurchases/other 0.06

Adjusted diluted earnings per share - June 30, 2022

Business Segments

Following is an analysis of operating results for the Company’s business segments for the six months ended March 31, 2021, compared with the six months ended March 31, 2022.

Following is an analysis of operating results for the Company’s business segments for the nine months ended June 30, 2021, compared with the nine months ended June 30, 2022.

The Company defines segment earnings as earnings before interest and taxes.

AUTOMATION SOLUTIONS

Six Months Ended Mar 31 2021 2022 Change

Nine Months Ended June 30 2021 2022 Change

Sales $ 8,193 8,451 3 %

Earnings $ 1,354 1,618 19 %

Margin 15.2 % 18.8 %

Margin 16.5 % 19.1 % 2.6 pts

Restructuring and related costs $ 94 54

1 unchanged sentence

Adjusted EBITA $ 1,584 1,797 14 %

Adjusted EBITA Margin 19.1 % 21.5 %

Adjusted EBITA Margin 19.3 % 21.3 % 2.0 pts

Sales by Major Product Offering

4 unchanged sentences

Total $ 8,193 8,451 3 %

Automation Solutions sales were $5.7 billion in the first six months of 2022, an increase of $257, or 5 percent.

Automation Solutions sales were $8.5 billion in the first nine months of 2022, an increase of $258, or 3 percent.

Foreign currency translation had a 2 percent unfavorable impact.

Underlying sales increased 6 percent on 5 percent higher volume and 1 percent higher price, reflecting continued recovery in most end markets and world areas despite supply chain and logistics constraints which unfavorably impacted sales.

Underlying sales increased 10 percent in the Americas, while Europe decreased 2 percent and Asia, Middle East & Africa was up 6 percent (China up 17 percent).

Underlying sales increased 5 percent on 3 percent higher volume and 2 percent higher price, reflecting strength in process end markets and sustained demand in discrete and hybrid end markets, despite supply chain and logistics constraints and the impact of lockdowns in China which unfavorably impacted sales.

Underlying sales increased 11 percent in the Americas, while Europe, which was negatively impacted by the business exit from Russia, decreased 2 percent and Asia, Middle East & Africa was up 3 percent (China up 10 percent).

Sales for Measurement & Analytical Instrumentation increased $76, or 3 percent.

Sales were strong in Asia, Middle East & Africa and up moderately in North America on continued improvement for North American process industries, while sales were down moderately in Europe due to supply chain constraints.

Val ves, Actuators & Regulators increased $57, or 3 percent, reflecting strong demand in the Americas and China, partially offset by softness in the rest of Asia, Middle East & Africa and Europe.

Industrial Solutions sales increased $105, or 10 percent, reflecting strong global demand in discrete end markets.

Systems & Software increased $23, or 2 percent, reflecting strength in process end markets in North America and China, partially offset by weakness in Europe, while power end markets were strong in Asia, Middle East & Africa and up modestly in North America.

Earnings were $1,082, an increase of $250, or 30 percent, and margin increased 3.6 percentage points to 18.8 percent, reflecting leverage on higher volume, lower restructuring expense which benefited margins 1.0 percentage point, savings from cost reduction actions and favorable mix, partially offset by higher inflation.

Foreign currency transactions also benefited margins by 0.4 percentage points.

Sales were strong in China and North America, while sales were down moderately in Europe due to supply chain constraints.

Valves, Actuators & Regulators increased $82, or 3 percent , reflecting strong demand in the Americas and China, partially offset by softness in the rest of Asia, Middle East & Africa.

Ind ustrial Solutions sales increased $87, or 5 percent, reflecting strong demand in North America and Europe.

Systems & Software increased $13, or 1 percent , reflecting strength in process end markets in North America and China, partially offset by weakness in Europe, while power end markets were solid in North America.

Earnings were $1,618, an increase of $264, or 19 percent, and margin increased 2.6 percentage points to 19.1 percent, reflecting leverage on higher volume, favorable mix, lower restructuring expense which benefited margins 0.4 percentage points, and savings from cost reduction actions, partially offset by higher inflation.

Price less net material inflation was slightly favorable and foreign currency transactions benefited margins by 0.3 percentage points.

Nine Months Ended June 30 2021 2022 Change

Sales $ 239 405 69 %

Earnings $ (1) 51 (3,687) %

Margin (0.6) % 12.5 % 13.1 pts

Restructuring and related costs $ 2 1

Amortization of intangibles $ 67 116

Adjusted EBITA $ 68 168 149 %

Adjusted EBITA Margin 28.0 % 41.2 % 13.2 pts

AspenTech sales were $405 in the first nine months of 2022, an increase of $166, or 69 percent due to the acquisition of AspenTec h.

Earnings were $51 , an increase of $52 , and margin improved to 12.5 percent , reflecting the impact of the AspenTech acquisition.

Resul ts for fiscal 2022 included intangibles amortization of $49 related to the AspenTech acquisition ($17 of which was reported in Cost of sales).

COMMERCIAL & RESIDENTIAL SOLUTIONS

Six Months Ended Mar 31 2021 2022 Change

Nine Months Ended June 30 2021 2022 Change

Climate Technologies $ 3,459 3,884 12 %

4 unchanged sentences

Total $ 1,042 1,071 3 %

Margin 21.4 % 18.8 %

Margin 21.4 % 19.7 % (1.7) pts

Restructuring and related costs $ 15 8

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Adjusted EBITA $ 1,096 1,115 2 %

Adjusted EBITA Margin 22.4 % 19.7 %

Commercial & Residential Solutions sales were $3.5 billion in the first six months of 2022, an increase of $407, or 13 percent compared to the prior year.

Underlying sales were up 14 percent on 6 percent higher volume and 8 percent higher price, while foreign currency translation subtracted 1 percent .

Adjusted EBITA Margin 22.5 % 20.5 % (2.0) pts

Commercial & Residential Solutions sales were $5.4 billion in the first nine months of 2022, an increase of $552, or 11 percent compared to the prior year.

Foreign currency translation had a 1 percent unfavorable impact and divestitures deducted 2 percent .

Underlying sales were up 14 percent on 6 percent higher volume and 8 percent higher price.

Overall, underlying sales increased 16 percent in the Americas, 11 percent in Europe and 7 percent in Asia, Middle East & Africa (China down 7 percent).

Climate Technologies sales were $2.5 billion in the first six months of 2022, an increase of $313, or 14 percent.

Climate Technologies sales were $3.9 billion in the first nine months of 2022, an increase of $425, or 12 percent.

Air conditioning, heating and refrigeration sales were strong, reflecting global demand across all end markets.

Tools & Home Products sales were $1.0 billion in the first six months of 2022, up $94, or 10 percent.

Sales of professional tools were up nearly 15 percent and food waste disposers were up 10 percent, while wet/dry vacuums were up slightly .

Earnings were $664, flat compared to the prior year, and margin decreased 2.6 percentage points, due to unfavorable price-cost reflecting steel prices, partially offset by leverage on higher volume and savings from cost reduction actions.

Tools & Home Products sales were $1.5 billion in the first nine months of 2022, up $127, or 9 percent.

Sales of professional tools and food waste disposers were both up low teens, while wet/dry vacuums were flat due to difficult comparisons .

Earnings were $1,071, up 3 percent, and margin decreased 1.7 percentage points, as price less net material inflation was favorable but had a dilutive impact on margins and higher freight and other inflation also negatively impacted margins, partially offset by leverage on higher sales and savings from cost reduction actions.

FINANCIAL CONDITION

Key elements of the Company's financial condition for the six months ended March 31, 2022 as compared to the year ended September 30, 2021 and the six months ended March 31, 2021 follow.

Mar 31, 2021 Sept 30, 2021 Mar 31, 2022

Key elements of the Company's financial condition for the nine months ended June 30, 2022 as compared to the year ended September 30, 2021 and the nine months ended June 30, 2021 follow.

June 30, 2021 Sept 30, 2021 June 30, 2022

Operating working capital $ 714 $ 704 $ 1,261

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The Company's operating working capit al increase d co mpared to the same quarter last year and compared to September 30, 2021 due to higher inventory levels to support sales growth and reflecting ongoing supply chain and logistics constraints.

The increase in the current ratio reflects increased cash from the Company's $3 billion of debt issued in the first quarter of fiscal 2022 to support the AspenTech transaction and cash received in the first quarter related to the Vertiv subordinated interest of $438.

The i nterest coverage ratio (earnings before income taxes plus interest expense, divided by interest expense) of 21.5X for the first six months of fiscal 2022 compares to 16.6X for the six months ended March 31, 2021.

The increase reflects higher pretax earnings in the current year, including the Vertiv subordinated interest gain of $453 .

Excluding the gain, the interest coverage ratio was 16.8X.

In December 2021, the Company issued $1 billion of 2.00% notes due 2028, $1 billion of 2.20% notes due 2031 and $1 billion of 2.80% notes due 2051.

The net proceeds from the sale of the notes will be used to pay a portion of the Company's contribution of approximately $6.0 billion to existing stockholders of Aspen Technology, Inc.

(“AspenTech”) as part of the AspenTech transaction.

In the second quarter of fiscal 2022, the Company increased its commercial paper borrowings by approximately $2.2 billion to generate additional cash to fund the AspenTech transaction.

The Company expects to finance the remainder of the contribution through existing sources, including cash on hand, short-term debt capacity, and cash from operations.

In addition, the AspenTech acquisition increased operating working capital by approximately $250.

As of June 30, 2022, Emerson's cash and equivalents totaled $2,529, which included $450 attributable to New AspenTech.

The cash held by New AspenTech is intended to be used for its own purposes and is not a readily available source of liquidity for other Emerson general business purposes or to return to Emerson shareholders.

The decrease in the current ratio reflects the increase in commercial paper borrowings discussed below.

The i nterest coverage ratio (earnings before income taxes plus interest expense, divided by interest expense) of 21.1X for the first nine months of fiscal 2022 compares to 17.8X for the nine months ended June 30, 2021.

The increase reflects higher pretax earnings in the current year, which included the Vertiv subordinated interest gain of $453, the gain on the Therm-O-Disc divestiture of $483, and the Russia business exit loss of $162.

Excluding these items, the interest coverage ratio was 16.2X, reflecting higher interest expense due to the increased long-term debt and commercial paper borrowings to fund the AspenTech acquisition.

In December 2021, the Company issued $1 billion of 2.0% notes due December 2028, $1 billion of 2.2% notes due December 2031, and $1 billion of 2.8% notes due December 2051.

The Company's commercial paper borrowings also increased by approximate ly $2.4 billion compare d to September 30, 2021.

The Company used the net proceeds from the sale of the notes and the increased commercial paper borrowings to fund the majority of its contribution of approximately $6.0 billion to existing stockholders of AspenTech as part of the transaction.

See Note 4 and Note 10.

Operating cash flow for the first six months of fiscal 2022 was $965, a decrease of $650 compared with $1,615 in the prior year due to higher inventory levels to support sales growth and reflecting ongoing supply chain and logistics constraints .

Operating cash flow was also negatively impacted by approximately $45 of taxes paid in the second quarter of fiscal 2022 on the Vertiv subordinated interest gain.

Operating cash flow for the first nine months of fiscal 2022 was $1,705, a decrease of $1,015 compared with $2,720 in the prior year, reflecting higher working capital due to increased sales and continued supply chain constraints.

Operating cash flow was also negatively impacted by approximately $68 of taxes paid on the Vertiv subordinated interest gain.

The remaining taxes owed on the gain are approximately $27 and are expected to be paid by the end of fiscal 2022.

Free cash flow of $740 in the first six months of fiscal 2022 (operating cash flow of $965 less capital expenditures of $225) decreased $653 compared to free cash flow of $1,393 in 2021 (operating cash flow of $1,615 less capital expenditures of $222), reflecting the decrease in operating cash flow.

Cash provided by investing activities was $159, reflecting cash received related to the Vertiv subordinated interest of $438.

Free cas h flow of $1,370 in the first nine months of fiscal 2022 (operating cash flow of $1,705 less capital expenditures of $335) decreased $1,000 compared to free cash flow of $2,370 in 2021 (operating cash flow of $2,720 less capital expenditures of $350), reflecting the decrease in operating cash flow.

Cash used in investing activities was $4,975, reflecting $5.6 billion of cash paid, net of cash acquired related to the AspenTech acquisition, partially offset by the Vertiv gain and proceeds from the Therm-O-Disc divestiture.

Cash provided by financing activities was $3,557, primarily due to proceeds of nearly $3 billion from the December 2021 debt issuance and increased commercial paper borrowings of $2.4 billion to fund the AspenTech transaction, partially offset by the repayment of $500 of long-term debt, dividend payments, and share repurchases.

5 unchanged sentences

FISCAL 2022 OUTLOOK

Emerson continues to see strong overall business performance while managing continued macroeconomic and geopolitical uncertainty, supply chain constraints and challenges related to COVID-19.

For the full year, consolidated net sales are expected to be up 8 to 10 percent, with underlying sales up 9 to 11 percent excluding a 1 percent unfavorable impact from foreign currency translation.

Emerson continues to see strong demand for the Company's technology, software and solutions.

The outlook for fiscal 2022 reflects the impacts of the AspenTech and Therm-O-Disc transactions and write-offs associated with the Russia business exit, and considers continued macroeconomic and geopolitical uncertainty, supply chain constraints, exchange rate fluctuations and challenges related to COVID-19.

For the full year, consolidated net sales are expected to be up 7 to 8 percent, with underlying sales up 9 to 10 percent excluding a 2 to 3 percent unfavorable impact from foreign currency translation, a 1 to 2 percent favorable impact from acquisitions and a 1 percent deduction from divestitures.

Automation Solutions net sales are expected to be up 4 to 5 percent, with underlying sales up 6 to 7 percent excluding a 2 percent unfavorable impact from foreign currency translation.

Commercial & Residential Solutions net sales are expected to be up 11 to 13 percent with underlying sales up 12 to 14 percent excluding a 1 percent unfavorable impact from foreign currency translation.

Commercial & Residential Solutions net sales are expected to be up 9 to 10 percent with underlying sales up 13 to 14 percent excluding a 1 percent unfavorable impact from foreign currency translation and a 3 percent negative impact from divestitures.

Earnings per share are expected to be $5.25 to $5.35, while adjusted earnings per share are expected to be $5.05 to $5.15.

Adjusted earnings per share exclude a $0.20 impact from restructuring actions, a $0.39 impact from amortization of intangibles, a $0.60 gain from the Vertiv subordinated interest (see Note 4), and a $0.19 impact from transaction and Aspen Tech pre-closing costs.

Adjusted earnings per share exclude a $0.20 impact from restructuring actions, a $0.47 impact from amortization of intangibles, a $0.60 gain from the Vertiv subordinated interest (see Note 4), a $0.72 gain from the sale of Therm-O-Disc (see Note 4), a $0.29 loss from the Company exiting business in Russia (see Note 4) and a $0.16 impact from transaction and AspenTech pre-closing costs.

Operating cash flow is expected to be approximately $3.0 billion and free cash flow, which excludes projected capital spending of $525 million, is expected to be approximately $2.5 billion.

Share repurchases are expected to be approximately $250 to $500 million in fiscal 2022.

Emerson's guidance excludes the operational impact of the transaction with AspenTech, which is expected to close in the second calendar quarter of 2022, but does include estimated transaction fees and interest expense on $3 billion of debt already issued to fund the transaction.

The guidance also excludes the effect of the Therm-O-Disc sale, expected to close in the second calendar quarter of 2022.

The guidance includes the operational impact of exiting the Russia business, discussed below, but excludes any potential charges or other costs associated with the exit.

Share repurchases are expected to be approximately $500 million in fiscal 2022.

Statements in this report that are not strictly historical may be "forward-looking" statements, which involve risks and uncertainties, and Emerson undertakes no obligation to update any such statements to reflect later developments.

These risks and uncertainties include the Company's ability to successfully complete on the terms and conditions contemplated, and the financial impact of, the proposed AspenTech transaction, the scope, duration and ultimate impact of the COVID-19 pandemic, and the Russia-Ukraine conflict, as well as economic and currency conditions, market demand, including related to the pandemic and oil and gas price declines and volatility, pricing, protection of intellectual property, cybersecurity, tariffs, competitive and technological factors, inflation, among others, which are set forth in the “Risk Factors” of Part I, Item 1A, and the "Safe Harbor Statement" of Part II, Item 7, to the Company's Annual Report on Form 10-K for the year ended September 30, 2021 and in subsequent reports filed with the SEC, which are hereby incorporated by reference.

On May 4, 2022, Emerson announced its intention to exit business operations in Russia and is exploring strategic options to divest Metran, its Russia-based manufacturing subsidiary.

Emerson is committed to an orderly transfer of these assets and will support its employees through this process.

Emerson's historical net sales in Russia were principally in the Automation Solutions segment and in total, represent approximately 1.5 percent of consolidated annual sales.

As of March 31, 2022, Emerson's Russian operations had net assets of approximately $50 and accumulated foreign currency translation losses of approximately $145 (which will be recognized as a non-cash charge when the exit is completed).

The Company is currently unable to estimate the full financial consequences of the exit due to uncertainty regarding the commercial terms of the exit and related tax impacts.

These risks and uncertainties include the the Company's ability to successfully complete on the terms and conditions contemplated, and the financial impact of, the proposed sale of its InSinkErator food waste disposal business, the financial impact of the AspenTech acquisition, the scope, duration and ultimate impacts of the COVID-19 pandemic and the Russia-Ukraine conflict, as well as economic and currency conditions, market demand, including related to the pandemic and oil and gas price declines and volatility, pricing, protection of intellectual property, cybersecurity, tariffs, competitive and technological factors, inflation, among others, which are set forth in the “Risk Factors” of Part I, Item 1A, and the "Safe Harbor Statement" of Part II, Item 7, to the Company's Annual Report on Form 10-K for the year ended September 30, 2021 and in subsequent reports filed with the SEC, which are hereby incorporated by reference.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements