What changed in this filing

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Item 1. Financial Statements

2024-08-07 compared with 2024-05-08 · 216 added, 185 removed, 767 unchanged (34% of the section changed)

3 unchanged sentences

& SUBSIDIARIES

Three and six months ended March 31, 2023 and 2024

Three and nine months ended June 30, 2023 and 2024

(Dollars in millions, except per share amounts;

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2023 2024 2023 2024

3 unchanged sentences

Gain on subordinated interest — — — ( 79 )

Loss on Copeland note receivable — 279 — 279

Other deductions, net 130 294 359 1,075

29 unchanged sentences

& SUBSIDIARIES

Three and six months ended March 31, 2023 and 2024

Three and nine months ended June 30, 2023 and 2024

(Dollars in millions;

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

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

2023 2024 2023 2024

13 unchanged sentences

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

Sept 30, 2023 Mar 31, 2024

Sept 30, 2023 June 30, 2024

Current assets

7 unchanged sentences

Other intangible assets 6,263 10,627

Copeland note receivable and equity investment 3,255 3,191

Copeland note receivable and equity investment held-for-sale 3,255 2,908

Other 2,566 2,606

26 unchanged sentences

& SUBSIDIARIES

Three and six months ended March 31, 2023 and 2024

Three and nine months ended June 30, 2023 and 2024

(Dollars in millions;

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

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

2023 2024 2023 2024

29 unchanged sentences

AspenTech purchases of common stock ( 44 ) ( 25 ) ( 44 ) ( 80 )

Dividends paid ( 1 ) ( 3 ) ( 1 ) ( 3 )

Climate Technologies divestiture ( 29 ) — ( 29 ) —

Other comprehensive income 1 ( 2 ) 5 —

5 unchanged sentences

& SUBSIDIARIES

Six Months Ended March 31, 2023 and 2024

Nine Months Ended June 30, 2023 and 2024

(Dollars in millions;

Six Months Ended

Nine Months Ended

Operating activities

7 unchanged sentences

Changes in operating working capital ( 359 ) ( 176 )

Loss on Copeland note receivable — 279

Other, net ( 383 ) ( 552 )

6 unchanged sentences

Proceeds from subordinated interest 15 79

Proceeds from related party note receivable 918 —

Other, net ( 124 ) ( 86 )

5 unchanged sentences

Proceeds from short-term borrowings greater than three months 395 322

Payments of short-term borrowings greater than three months ( 400 ) ( 100 )

Payments of long-term debt ( 744 ) ( 547 )

2 unchanged sentences

AspenTech purchases of common stock ( 100 ) ( 188 )

Payment of related party note payable ( 918 ) —

Other, net ( 159 ) ( 57 )

22 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, 2023.

Certain prior year amounts have been reclassified to conform to the current year presentation.

On June 6, 2024, the Company entered into definitive agreements to sell its 40 percent non-controlling common equity interest in Copeland to private equity funds managed by Blackstone for $ 1.5 billion and its note receivable to Copeland for $ 1.9 billion.

As a result of the definitive agreements, the equity interest and note receivable are reported as held-for-sale, and the equity method losses related to the Company's non-controlling common equity interest in Copeland, which were reported since May 2023 in Other deductions, net, have been reclassified and are now reported as discontinued operations for all periods presented (see Notes 5 and 10).

(2) REVENUE RECOGNITION

3 unchanged sentences

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, 2023 Mar 31, 2024

Sept 30, 2023 June 30, 2024

Unbilled receivables (contract assets) $ 1,453 1,541

3 unchanged sentences

The decrease in net contract assets was primarily due to the acquisition of National Instruments, which increased contract liabilities by approximately $ 160 , while customer billings slightly exceeded revenue recognized for performance completed during the period.

Revenue recognized for the three and six months ended March 31, 2024 included $ 154 and $ 522 , respectively, that was included in the beginning contract liability balance.

Revenue recognized for the three and nine months ended June 30, 2024 included $ 83 and $ 605 , respectively, that was included in the beginning contract liability balance.

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

Revenue recognized for the three and six months ended March 31, 2024 for performance obligations that were satisfied in previous periods, including cumulative catchup adjustments on the Company's long- term contracts, was immaterial.

As of March 31, 2024, the Company's backlog relating to unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was approximately $ 8.8 billion (of which approximately $ 1.25 billion was attributable to AspenTech and approximately $ 500 was attributable to National Instruments) .

Revenue recognized for the three and nine months ended June 30, 2024 for performance obligations that were satisfied in previous periods, including cumulative catchup adjustments on the Company's long- term contracts, was immaterial.

As of June 30, 2024, the Company's backlog relating to unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was approximately $ 8.7 billion (of which approximately $ 1.3 billion was attributable to AspenTech and approximately $ 450 was attributable to National Instruments) .

The Company expects to recognize appro ximately 75 percent of its remaining performance obligations as revenue over the next 12 months, with the remainder substantially over the following two years.

3 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2023 2024 2023 2024

36 unchanged sentences

Total $ 5,275

Results of operations for the three and six months ended March 31, 2024 attributable to the NI acquisition include sales of $ 367 and $ 749 , respectively, and a net loss of $ 80 and $ 406 , respectively.

Results of operations for the three and nine months ended June 30, 2024 attributable to the NI acquisition include sales of $ 355 and $ 1,104 , respectively, and a net loss of $ 86 and $ 492 , respectively.

The net loss included the impact of inventory step-up amortization recorded in the first quarter, intangibles amortization, retention bonuses, stock compensation expense and restructuring.

2 unchanged sentences

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 March 31, Six Months Ended March 31,

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

2023 2024 2023 2024

2 unchanged sentences

Diluted earnings per share from continuing operations $ 1.00 0.65 1.53 2.43

Pro forma Net sales for the three and six months ended March 31, 2023 include $ 437 and $ 885 , respectively, attributable to NI.

The pro forma results for the three months ended March 31, 2023 include ongoing intangibles amortization of $ 107 and backlog amortization of $ 34 , and exclude the mark-to-market gain of $ 35 recognized in the prior year on the Company's equity investment in National Instruments Corporation (see Note 7).

The pro forma results for the six months ended March 31, 2023 include transaction costs of $ 198 which were assumed to be incurred in the first quarter of fiscal 2023.

Pro forma Net sales for the three and nine months ended June 30, 2023 include $ 417 and $ 1,302 , respectively, attributable to NI.

The pro forma results for the three months ended June 30, 2023 include ongoing intangibles amortization of $ 105 and backlog amortization of $ 34 , and exclude the mark-to-market gain of $ 12 recognized in the prior year on the Company's equity investment in National Instruments Corporation (see Note 7).

The pro forma results for the nine months ended June 30, 2023 include transaction costs of $ 198 which were assumed to be incurred in the first quarter of fiscal 2023.

These transaction costs include $ 88 incurred by NI prior to the completion of the transaction and $ 110 incurred by Emerson in periods subsequent to the first quarter of fiscal 2023.

The pro forma results for the six months ended March 31, 2023 also include $ 212 of ongoing intangibles amortization, backlog amortization of $ 68 , inventory step-up amortization of $ 213 , and retention bonuses of $ 47 , and exclude the mark-to-market gain of $ 35 recognized in the prior year on the equity investment in National Instruments Corporation.

The pro forma results for the nine months ended June 30, 2023 also include $ 317 of ongoing intangibles amortization, backlog amortization of $ 102 , inventory step-up amortization of $ 213 , and retention bonuses of $ 51 , and exclude the mark-to-market gain of $ 47 recognized in the prior year on the equity investment in National Instruments Corporation.

Other Transactions

2 unchanged sentences

In the fourth quarter of fiscal 2023, the Company acquired two businesses, Flexim, which is reported in the Measurement & Analytical segment, and Afag, which is reported in the Discrete Automation segment, for $ 715 , net of cash acquired.

The Company recognized goodwill of $ 423 ( none of which is expected to be tax deductible) and other

identifiable intangible assets of $ 323 , primarily customer relationships and intellectual property with a weighted-average useful life of approximately 9 years.

The Company recognized goodwill of $ 424 ( none of which is expected to be tax deductible) and other identifiable intangible assets of $ 323 , primarily customer relationships and intellectual property with a weighted-average useful life of approximately 9 years.

On March 31, 2023, Emerson completed the divestiture of Metran, its Russia-based manufacturing subsidiary.

2 unchanged sentences

On May 31, 2023, the Company completed the sale of a majority stake in its Climate Technologies business (which constitutes the former Climate Technologies segment, excluding Therm-O-Disc which was divested earlier in fiscal 2022) to private equity funds managed by Blackstone in a $ 14.0 billion transaction.

Emerson received upfront, pre-tax cash proceeds of approximately $ 9.7 billion and a note receivable with a face value of $ 2.25 billion (which accrues 5 percent interest payable in kind by capitalizing interest), while retaining a 40 percent non-controlling common equity interest in a new standalone joint venture between Emerson and Blackstone.

Emerson received upfront, pretax cash proceeds of approximately $ 9.7 billion and a note receivable with a face value of $ 2.25 billion (which accrues 5 percent interest payable in kind by capitalizing interest), while retaining a 40 percent non-controlling common equity interest in a new standalone joint venture between Emerson and Blackstone.

The Climate Technologies business, which includes the Copeland compressor business and the entire portfolio of products and services across all residential and commercial HVAC and refrigeration end-markets, had fiscal 2022 net sales of approximately $ 5.0 billion and pretax earnings of $ 1.0 billion.

1 unchanged sentence

The new standalone business is named Copeland.

On June 6, 2024, the Company entered into a definitive agreement to sell its 40 percent non-controlling common equity interest in Copeland to private equity funds managed by Blackstone for $ 1.5 billion, and the transaction is expected to close by the end of August 2024.

The equity method losses related to the Company's non-controlling common equity interest in Copeland, which were reported since May 2023 in Other deductions, net, have been reclassified and are now reported as discontinued operations for all periods presented and are included within Climate Technologies in Other deductions, net in the tables below.

See Note 10 for further details.

2 unchanged sentences

The Company recognized a pretax gain of approximately $ 2.8 billion (approximately $ 2.1 billion after-tax) in the first quarter of fiscal 2023.

The financial results of Climate Technologies and InSinkErator ("ISE") are reported as discontinued operations for the three and six months ended March 31, 2023 and were as follows:

Three Months Ended March 31, 2023

For the three and nine months ended June 30, 2024, the results of discontinued operations primarily reflect the Company's equity method losses on its non-controlling common equity interest in Copeland, which were $ 16 ($ 9 after-tax) and $ 111 ($ 82 after-tax), respectively.

For the three and nine months ended June 30, 2023, the financial results of Climate Technologies (including equity method losses on the equity interest in Copeland) and InSinkErator ("ISE") are reported as discontinued operations and were as follows:

Three Months Ended June 30, 2023

Climate Technologies ISE Total

7 unchanged sentences

Earnings, net of tax $ 8,712 — 8,712

Six Months Ended March 31, 2023

Nine Months Ended June 30, 2023

Climate Technologies ISE Total

7 unchanged sentences

Earnings, net of tax $ 8,849 2,130 10,979

Climate Technologies' results for the three and six months ended March 31, 2023 included lower expense of $ 43 and $ 70 , respectively, due to ceasing depreciation and amortization upon the held-for-sale classification.

Other deductions, net for Climate Technologies included $ 28 and $ 55 of transaction-related costs for the three and six months ended March 31, 2023, respectively.

Income taxes for the six months ended March 31, 2023 included approximately $ 245 for Climate Technologies subsidiary restructurings and approximately $ 660 related to the gain on the InSinkErator divestiture.

Net cash from operating and investing activities for Climate Technologies, InSinkErator and Therm-O-Disc for the six months ended March 31, 2024 and 2023 were as follows:

Climate Technologies' results for the three and nine months ended June 30, 2023 included lower expense of $ 26 and $ 96 , respectively, due to ceasing depreciation and amortization upon the held-for-sale classification.

Other deductions, net for Climate Technologies included $ 57 of transaction-related costs for the nine months ended June 30, 2023.

For the three and nine months ended June 30, 2023, the Company recorded a loss of $ 61 in Other deductions, net to reflect equity method losses on its non-controlling common equity interest in Copeland.

Income taxes for the three and nine months ended June 30, 2023 included a tax benefit of $ 10 related to Copeland's U.S.

business, which is taxed as a partnership.

Income taxes for the nine months ended June 30, 2023 included approximately $ 2.2 billion for the gain on the Climate Technologies subsidiary restructurings and approximately $ 660 related to the gain on the InSinkErator divestiture.

Net cash from operating and investing activities for Climate Technologies, InSinkErator and Therm-O-Disc for the nine months ended June 30, 2024 and 2023 were as follows:

Climate Technologies ISE and TOD Total

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

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

2023 2024 2023 2024 2023 2024

1 unchanged sentence

Cash from investing activities $ 9,430 36 3,055 — 12,485 36

Cash from operating activities for the six months ended March 31, 2023 reflects approximately $ 575 of income taxes paid related to the gain on the InSinkErator divestiture and the Climate Technologies subsidiary restructurings, transaction fees and unfavorable working capital.

Cash from investing activities for the six months ended March 31, 2023 reflects the proceeds of $ 3.0 billion related to the InSinkErator divestiture.

Cash from operating activities for the nine months ended June 30, 2023 reflects approximately $ 750 of income taxes paid related to the gain on the InSinkErator divestiture and the Climate Technologies subsidiary restructurings,

transaction fees and unfavorable working capital.

Cash from investing activities for the nine months ended June 30, 2023 reflects the proceeds of approximately $ 9.7 billion related to the Copeland transaction and approximately $ 3.0 billion related to the InSinkErator divestiture.

(6) 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,

2023 2024 2023 2024

8 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2023 2024 2023 2024

5 unchanged sentences

( 26 ) — ( 63 ) —

Loss on Copeland equity method investment — 59 — 95

Loss on divestiture of business — — — 39

2 unchanged sentences

Total $ 130 294 359 1,075

Intangibles amortization for the three and six months ended March 31, 2024 included $ 141 and $ 280 , respectively, related to the NI acquisition.

Foreign currency transaction losses for the three and six months ended March 31, 2023 included a mark-to-market loss of $ 14 and a gain of $ 21 , respectively, related to foreign currency forward contracts that were terminated in June 2023 .

The Company recognized a mark-to-market gain of $ 35 for the three months ended March 31, 2023 related to its equity investment in National Instruments Corporation.

Intangibles amortization for the three and nine months ended June 30, 2024 included $ 139 and $ 419 , respectively, related to the NI acquisition.

Foreign currency transaction losses for the three and nine months ended June 30, 2023 included a mark-to-market gain of $ 3 and $ 24 , respectively, related to foreign currency forward contracts that were terminated in June 202 3.

The Company recognized a mark-to-market gain of $ 12 and $ 47 for the three and nine months ended June 30, 2023, respectively, related to its equity investment in National Instruments Corporation.

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

1 unchanged sentence

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.

The Company expects fiscal 2024 restructuring expense and related costs to be approximately $ 230 , including costs to complete actions initiated in the first six months of the year.

The Company expects fiscal 2024 restructuring expense and related costs to be approximately $ 250 , 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

Three Months Ended June 30, Nine Months Ended

2023 2024 2023 2024

10 unchanged sentences

Total $ 12 57 41 170

Corporate restructuring of $ 11 and $ 37 for the three and six months ended March 31, 2024, respectively, is comprised almost entirely of integration-related stock compensation expense attributable to NI.

Details of the change in the liability for restructuring costs during the six months ended March 31, 2024 follow:

Sept 30, 2023 Expense Utilized/Paid Mar 31, 2024

Corporate restructuring of $ 5 and $ 42 for the three and nine months ended June 30, 2024, respectively, is comprised almost entirely of integration-related stock compensation expense attributable to NI.

Details of the change in the liability for restructuring costs during the nine months ended June 30, 2024 follow:

Sept 30, 2023 Expense Utilized/Paid June 30, 2024

Severance and benefits $ 85 142 129 98

1 unchanged sentence

Total $ 87 170 153 104

The tables above do not include $ 7 and $ 3 of costs related to restructuring actions incurred for the three months ended March 31, 2023 and 2024, respectively, that are required to be reported in cost of sales and selling, general and administrative expenses;

The tables above do not include $ 1 and $ 3 of costs related to restructuring actions incurred for the three months ended June 30, 2023 and 2024, respectively, that are required to be reported in cost of sales and selling, general and administrative expenses;

year-to-date amounts are $ 13 and $ 10 , respectively .

Income taxes were $ 149 in the second quarter of fiscal 2024 and $ 134 in 2023, resulting in effective tax rates of 23 percent and 21 percent, respectively.

The current year rate was negatively impacted by approximately 2 percentage points due to the loss on divestiture (see Note 4), which was nondeductible for tax purposes.

Income taxes were $ 156 in the first six of months of fiscal 2024 and $ 232 in 2023 , resulting in effective tax rates of 20 percent and 22 percent, respectively.

The current year rate i ncluded a $ 57 ($ 0.10 per share) benefit related to discrete tax items, partially offset by unfavorable impacts from inventory step-up amortization and the loss on divestiture noted above.

In total, the net impact of these items benefited the rate by approximately 1 percentage point.

Income taxes were $ 88 in the third quarter of fiscal 2024 and $ 168 in 2023, resulting in effective tax rates of 19 percent and 21 percent, respectively.

The current year rate reflected a 3 percentage point benefit related to the filing of the prior year U.S.

tax return, partially offset by other items.

Income taxes were $ 266 in the first nine of months of fiscal 2024 and $ 400 in 2023 , resulting in effective tax rates of 20 percent and 21 percent, respectively.

The current year rate i ncluded a $ 57 ($ 0.10 per share) benefit related to discrete tax items and the benefit discussed above related to the prior year U.S.

tax return, partially offset by unfavorable impacts from inventory step-up amortization and the loss on divestiture (see Note 4), which was nondeductible for tax purposes.

In total, the net impact of these items benefited the rate by approximately 2 percentage points, which was partially offset by other items.

(10) EQUITY METHOD INVESTMENT AND NOTE RECEIVABLE

As discussed in Note 5, the Company completed the divestiture of a majority stake in Copeland on May 31, 2023, and received upfront, pre-tax cash proceeds of approximately $ 9.7 billion and a note receivable with a face value of $ 2.25 billion, while retaining a 40 percent non-controlling common equity interest in Copeland.

The Company records its share of Copeland's income or loss using the equity method of accounting.

For the three and six months ended March 31, 2024 the Company recorded a loss of $ 59 and $ 95 , respectively, in Other deductions to reflect its share of Copeland's losses and a tax benefit of $ 13 and $ 22 , respectively, in Income taxes related to Copeland's U.S.

business, which is taxed as a partnership (in total, a loss of $ 0.08 and $ 0.12 per share, respectively).

The Company recognized non-cash interest income on the note receivable of $ 31 and $ 62 for the three and six months ended March 31, 2024, respectively, which is reported in Interest income from related party and capitalized to the carrying value of the note.

As of March 31, 2024, the carrying values of the retained equity investment and note receivable were $ 1,036 and $ 2,155 , respectively.

Summarized financial information for Copeland for the three and six months ended March 31, 2024 is as follows.

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

As discussed in Note 5, the Company completed the divestiture of a majority stake in Copeland on May 31, 2023, and received upfront, pretax cash proceeds of approximately $ 9.7 billion and a note receivable with a face value of $ 2.25 billion, while retaining a 40 percent non-controlling common equity interest in Copeland.

The equity interest and note receivable, as well as $ 33 of future indemnity obligations included in Other liabilities (net of tax), are reported as held-for-sale as of June 30, 2024.

Subsequent to the end of the quarter, the Company completed the sale of the note receivable on August 2, 2024 and received $ 1.9 billion of pretax cash proceeds.

The sale of the equity interest is expected to close by the end of August 2024.

The Company recognized non-cash interest income on the note receivable (through the date of the agreement) of $ 24 and $ 86 for the three and nine months ended June 30, 2024, respectively, which is reported in Interest income from related party within continuing operations and capitalized to the carrying value of the note.

Upon entering into the note agreement, the Company recorded a pretax loss of $ 279 ($ 217 after-tax, $ 0.38 per share) to adjust the carrying value of the note to $ 1.9 billion to reflect the transaction price.

The Company's share of Copeland's income or loss, which will continue to be recorded using the equity method of accounting until the transaction is completed, is now reported in discontinued operations for all periods presented (see Note 5).

As of June 30, 2024, the carrying value of the retained equity investment was $ 1,008 .

Summarized financial information for Copeland for the three and nine months ended June 30, 2024 is as follows.

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

Net sales $ 1,259 $ 3,458

4 unchanged sentences

(11) OTHER FINANCIAL INFORMATION

Sept 30, 2023 Mar 31, 2024

Sept 30, 2023 June 30, 2024

Finished products $ 446 551

5 unchanged sentences

Total $ 2,363 2,688

Sept 30, 2023 June 30, 2024

Goodwill by business segment

9 unchanged sentences

Total $ 14,480 17,936

Sept 30, 2023 Mar 31, 2024

Other intangible assets

2 unchanged sentences

Net carrying amount $ 6,263 10,627

Other intangible assets include customer relationships, net, of $ 3,353 and $ 6,501 and intellectual property, net, of $ 2,707 and $ 4,247 as of September 30, 2023 and March 31, 2024, respectively.

Other intangible assets include customer relationships, net, of $ 3,353 and $ 6,325 and intellectual property, net, of $ 2,707 and $ 4,067 as of September 30, 2023 and June 30, 2024, respectively.

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

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

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

2023 2024 2023 2024

5 unchanged sentences

Total $ 257 417 780 1,263

Amortization of intangibles included $ 141 and $ 280 related to the NI acquisition for the three and six months ended March 31, 2024.

Sept 30, 2023 Mar 31, 2024

Amortization of intangibles included $ 139 and $ 419 related to the NI acquisition for the three and nine months ended June 30, 2024.

Sept 30, 2023 June 30, 2024

Other assets include the following:

4 unchanged sentences

Asbestos-related insurance receivables 53 38

Sept 30, 2023 June 30, 2024

Accrued expenses include the following:

11 unchanged sentences

(12) FINANCIAL INSTRUMENTS

Hedging Activities – As of March 31, 2024, the notional amount of foreign currency hedge positions was approximately $ 3.2 billion.

Hedging Activities – As of June 30, 2024, the notional amount of foreign currency hedge positions was approximately $ 3.1 billion.

All derivatives receiving hedge accounting are cash flow hedges.

The majority of hedging gains and losses deferred as of March 31, 2024 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, 2024 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.

Net Investment Hedge – In fiscal 2019, the Company issued euro-denominated debt of € 1.5 billion.

Net Investment Hedge – In fiscal 2019, the Company issued euro-denominated debt of € 1.5 billion, of which € 500 was repaid in the third quarter of fiscal 2024.

The euro notes reduce foreign currency risk associated with the Company's international subsidiaries that use the euro as their functional currency and have been designated as a hedge of a portion of the investment in these operations.

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, 2023 and 2024:

The following gains and losses are included in earnings and other comprehensive income (OCI) for the three and nine months ended June 30, 2023 and 2024:

Into Earnings Into OCI

2nd Quarter Six Months 2nd Quarter Six Months

3rd Quarter Nine Months 3rd Quarter Nine Months

Gains (Losses) Location 2023 2024 2023 2024 2023 2024 2023 2024

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Derivatives receiving hedge accounting are highly effective and no amounts were excluded from the as sessment of hedge effectiveness.

Fair Value Measurement – Valuations for all derivatives, the Company's note receivable from Copeland, and the Company's long-term debt fall within Level 2 of the GAAP valuation hierarchy.

The fair value of the note receivable as of March 31, 2024 was approximately $ 2.0 billion, which was lower than the carrying value by approximately $ 100 .

See Note 10 for further details.

As of March 31, 2024, the fair value of long-term debt was approximately $ 7.2 billion, which was lower than the carrying value by $ 963 .

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

As of June 30, 2024, the fair value of long-term debt was approximately $ 6.6 billion, which was lower than the carrying value by $ 1,012 .

The fair value of foreign currency contracts, which are reported in Other current assets and Accrued expenses, did not materially change since September 30, 2023.

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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, 2024.

No collateral was posted with counterparties and none was held by the Company as of June 30, 2024.

(13) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Activity in Accumulated other comprehensive income (loss) for the three and six months ended March 31, 2023 and 2024 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, 2023 and 2024 is shown below, net of income taxes:

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

2023 2024 2023 2024

9 unchanged sentences

( 12 ) ( 12 ) ( 45 ) ( 36 )

Reclassified to gain on sale of business 22 — 22 —

Ending balance ( 245 ) ( 283 ) ( 245 ) ( 283 )

4 unchanged sentences

( 7 ) ( 2 ) ( 11 ) ( 7 )

Reclassified to gain on sale of business ( 19 ) — ( 19 ) —

Ending balance 6 2 6 2

4 unchanged sentences

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 (Loss) Sales Earnings (Loss)

13 unchanged sentences

Corporate and other ( 43 ) ( 38 ) ( 154 ) ( 540 )

Loss on Copeland equity method investment — ( 59 ) — ( 95 )

Loss on Copeland note receivable — ( 279 ) — ( 279 )

Gain on subordinated interest — — — 79

2 unchanged sentences

Total $ 3,946 4,380 822 455 11,075 12,873 1,883 1,341

Stock compensation for the three months and six months ended March 31, 2024 included $ 14 and $ 44 of integration-related stock compensation expense attributable to NI (of which $ 10 and $ 36 , respectively, was reported as restructuring costs).

Corporate and other for the three and six months ended March 31, 2024 included acquisition/divestiture fees and related costs of $ 16 and $ 146 , respectively, and a divestiture loss of $ 39 , while year-to-date also includes acquisition-related inventory step-up amortization of $ 231 .

Corporate and other for the six months ended March 31, 2023 included a loss of $ 47 related to the Company's exit of business operations in Russia and a mark-to-market gain of $ 35 related to its equity investment in National Instruments Corporation.

Stock compensation for the three months and nine months ended June 30, 2024 included $ 9 and $ 53 of integration-related stock compensation expense attributable to NI (of which $ 5 and $ 41 , respectively, was reported as restructuring costs).

Corporate and other for the three and nine months ended June 30, 2024 included acquisition/divestiture fees and related costs of $ 13 and $ 159 , respectively, while year-to-date also includes acquisition-related inventory step-up amortization of $ 231 and a divestiture loss of $ 39 .

Corporate and other for the three and nine months ended June 30, 2023 included acquisition/divestiture costs of $ 38 and $ 48 , respectively, and a mark-to-market gain of $ 12 and $ 47 , respectively, related to its equity investment in National Instruments Corporation, while year-to-date also included a loss of $ 47 related to the Company's exit of business operations in Russia.

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,

2023 2024 2023 2024

10 unchanged sentences

Total $ 257 417 780 1,263

Test & Measurement depreciation and amortization for the three and six months ended March 31, 2024 included intangibles amortization of $ 141 and $ 280 due to the acquisition.

Test & Measurement depreciation and amortization for the three and nine months ended June 30, 2024 included intangibles amortization of $ 139 and $ 419 due to the acquisition.

Sales by geographic destination, Americas, Asia, Middle East & Africa ("AMEA") and Europe, are summarized below:

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

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

Americas AMEA Europe Total Americas AMEA Europe Total

9 unchanged sentences

Total $ 1,994 1,211 757 3,962 2,206 1,312 877 4,395

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

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

Americas AMEA Europe Total Americas AMEA Europe Total

8 unchanged sentences

Software and Control 1,267 806 612 2,685 1,886 1,153 1,005 4,044

Corporate and other

Total $ 5,729 3,318 2,080 11,127 6,485 3,859 2,580 12,924

4 unchanged sentences

NI provides software-connected automated test and measurement systems that enable enterprises to bring products to market faster and at a lower cost, and had revenues of approximately $1.7 billion for the 12 months ended September 30, 2023.

For the second quarter of fiscal 2024, net sales were $4.4 billion, up 17 percent compared with the prior year.

On June 6, 2024, the Company entered into definitive agreements to sell its 40 percent non-controlling common equity interest in Copeland to private equity funds managed by Blackstone for $1.5 billion and its note receivable to Copeland for $1.9 billion.

Upon entering into the note agreement, the Company recorded a pretax loss of $279 ($217 after-tax, $0.38 per share) to adjust the carrying value of the note to $1.9 billion to reflect the transaction price.

See Notes 5 and 10 for further detail.

For the third quarter of fiscal 2024, net sales were $4.4 billion, up 11 percent compared with the prior year.

Underlying sales, which exclude foreign currency translation, acquisitions and divestitures, were up 3 percent.

1 unchanged sentence

Earnings from continuing operations attributable to common stockholders were $344, down 46 percent, and diluted earnings per share from continuing operations were $0.60, down 46 percent compared with $1.12 in the prior year.

Adjusted diluted earnings per share from continuing operations were $1.36, up 25 percent compared with $1.09 in the prior year, reflecting the strong sales growth and operating performance, as well as an $0.11 contribution from Test & Measurement.

The decrease was largely due to the Company's definitive agreement to sell its Copeland note receivable for $1.9 billion, which resulted in a pretax loss of $279 ($217 after-tax, $0.38 per share) to adjust the carrying value of the note to reflect the transaction price (see Note 10 and further discussion below).

Adjusted diluted earnings per share from continuing operations were $1.43, up 11 percent compared with $1.29 in the prior year, reflecting sales growth and strong operating performance, as well as a $0.09 contribution from Test & Measurement.

The table below presents the Company's diluted earnings per share from continuing operations 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 from continuing operations excludes intangibles amortization expense, restructuring expense, first year purchase accounting related items and transaction-related costs, and certain gains, losses or impairments.

Three Months Ended March 31, 2023 2024

Three Months Ended June 30, 2023 2024

Diluted earnings from continuing operations per share $ 1.12 0.60

2 unchanged sentences

Acquisition/divestiture fees and related costs 0.07 0.02

Loss on divestiture of business — 0.07

Gain on subordinated interest — (0.10)

National Instruments investment gain (0.02) —

AspenTech Micromine purchase price hedge 0.01 —

Loss on Copeland equity method investment — 0.08

Interest income on undeployed proceeds from Copeland transaction (0.05) —

Loss on Copeland note receivable — 0.38

Adjusted diluted earnings from continuing operations per share $ 1.29 1.43

2 unchanged sentences

Three Months Ended

Adjusted diluted earnings from continuing operations per share - March 31, 2023

Adjusted diluted earnings from continuing operations per share - June 30, 2023

Operations 0.16

Corporate and other 0.02

Stock compensation (0.04)

Foreign currency 0.01

Pensions (0.01)

Effective tax rate 0.01

Interest income from related party 0.04

Adjusted diluted earnings from continuing operations per share - March 31, 2024

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, 2023, compared with the second quarter ended March 31, 2024.

Effective tax rate and other (0.03)

Adjusted diluted earnings from continuing operations per share - June 30, 2024

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, 2023, compared with the third quarter ended June 30, 2024.

2023 2024 Change

5 unchanged sentences

Percent of sales 26.4 % 28.6 % 2.2 pts

Gain on subordinated interest $ — (79)

Loss on Copeland note receivable $ — 279

Other deductions, net $ 130 294

11 unchanged sentences

Adjusted Diluted EPS - Earnings from continuing operations $ 1.29 1.43 11 %

Net sales for the second quarter of fiscal 2024 were $4.4 billion, up 17 percent compared with 2023.

Net sales for the third quarter of fiscal 2024 were $4.4 billion, up 11 percent compared with 2023.

Intelligent Devices sales were up 1 percent, while Software and Control sales were up 42 percent , which included the impact of the Test & Measurement acquisition.

1 unchanged sentence

For eign currency translation had a 1 percent unfavorable impact and t he Test & Measurement acquisition added 9 percent.

Underlying sales were up 2 percent in the U.S.

Underlying sales were down 2 percent in the U.S.

and up 7 percent internationally.

was up 4 percent, Europe was up 12 percent, and Asia, Middle East & Africa was up 11 percent (China down 3 percent).

Cost of sales for the second quarter of fiscal 2024 were $2,092, an increase of $137 compared with 2023, reflecting the impact of higher volume and the Test & Measurement acquisition.

Gross margin of 52.2 percent increased 4.3 percentage po ints, reflecting the Test & Measurement acquisition, higher price and leverage on higher sales.

Selling, general and administrative (SG&A) expens es of $1,296 increased $296 and SG&A as a percent of sales increased 2.9 percentage points to 29.6 percent compared with the prior year, reflecting the impact of the Test & Measurement acquisition and higher stock compensation expense, partially offset by strong operating leverage on higher sales.

In the second quarter of fiscal 2024, the Company received its final distribution of $79 related to its subordinated interest in Vertiv.

Other deductions, net were $389 for the second quarter of fiscal 2024, an increase of $280 compared with the prior year.

The current year included intangibles amortization r elated to the Test & Measurement acquisition of $141, restructuring costs of $30, a loss of $59 on the Company's equity method investment in Copeland and a divestiture loss of $39.

The prior year included a mark-to-market gain of $35 related to its equity investment in National Instruments Corporation and a mark-to-market loss of $14 related to foreign currency forward contracts that were terminated in June 2023.

The Americas was up 3 percent, Europe was up 4 percent, and Asia, Middle East & Africa was up 2 percent (China down 11 percent).

Cost of sales for the third quarter of fiscal 2024 were $2,066, an increase of $114 compared with 2023, reflecting the impact of higher volume and the Test & Measurement acquisition.

Gross margin of 52.8 percent increased 2.3 percentage po ints, reflecting the Test & Measurement acquisition and higher price, partially offset by unfavorable geographic mix in Intelligent Devices.

Selling, general and administrative (SG&A) expens es of $1,254 increased $212 and SG&A as a percent of sales increased 2.2 percentage points to 28.6 percent compared with the prior year, reflecting the impact of the Test & Measurement acquisition.

As discussed above, u pon entering into the agreement to sell the Copeland note receivable, the Company recorded a pretax loss of $279 ($217 after-tax, $0.38 per share) to adjust the carrying value of the note to $1.9 billion to reflect the transaction price.

Other deductions, net were $ 294 for the third quarter of fiscal 2024, an increase of $164 compared with the prior year.

The current year included intangibles amortization r elated to the Test & Measurement acquisition of $139 and restructuring costs of $57.

The prior year included acquisition/divestiture costs of $38, a mark-to-market gain of $12 related to the Company's equity investment in National Instruments Corporation and a mark-to-market gain of $3 related to foreign currency forward contracts that were terminated in June 2023.

See Note 7 and Note 10.

Pretax earnings from continuing operations of $652 increased $13, up 2 percent compared with the prior year.

Earnings increased $72 in Intelligent Devices and decreased $9 in Software and Control, see the Business Segments discussion that follows and Note 14.

Income taxes were $ 149 in the second quarter of fiscal 2024 and $134 in 2023, resulting in effective tax rates of 23 percent and 21 percent, respectively.

The current year rate was negatively impacted by approximately 2 percentage points due to the loss on divestiture (see Note 4), which was nondeductible for tax purposes.

Pretax earnings from continuing operations of $455 decreased $367, down 45 percent compared with the prior year.

Earnings decreased $15 in Intelligent Devices and decreased $42 in Software and Control.

See the Business Segments discussion that follows and Note 14.

Income taxes were $88 in the third quarter of fiscal 2024 and $168 in 2023, resulting in effective tax rates of 19 percent and 21 percent, respectively.

The current year rate reflected a 3 percentage point benefit related to the filing of the prior year U.S.

tax return, partially offset by other items.

Earnings from continuing operations attributable to common stockholders were $344 , down 46 percent, and diluted earnings per share from continuing operations were $ 0.60 , down 46 percent compared with $ 1.12 in the prior year.

Adjusted diluted earnings per share from continuing operations were $1.36 compared with $1.09 in the prior year, reflecting strong operating results.

Adjusted diluted earnings per share from continuing operations were $1.43 compared with $1.29 in the prior year, up 11 percent, reflecting strong operating results.

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

Earnings from discontinued operations were $262 ($0.46 per share) in the prior year.

Net earnings common stockholders in the second quarter of fiscal 2024 were $501 compared with $792 in the prior year, and earnings per share were $0.87 compared with $1.38 in the prior year.

Earnings (Loss) from discontinued operations were ($15) ($(0.03) per share) for the third quarter of fiscal 2024 and $ 8,709 ($15.16 per share) in the prior year.

Net earnings common stockholders in the third quarter of fiscal 2024 were $329 compared with $9,352 in the prior year, and earnings per share were $0.57 compared with $16.28 in the prior year.

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

The Company defines adjusted EBITA as earnings from continuing operations excluding interest expense, net, income taxes, intangibles amortization expense, restructuring expense, first year purchase accounting related items and transaction-related costs, gains or losses on the Copeland equity method investment, and certain gains, losses or impairments.

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 March 31, 2023 2024 Change

Three Months Ended June 30, 2023 2024 Change

Earnings from continuing operations before income taxes $ 822 455 (45) %

5 unchanged sentences

Acquisition/divestiture fees and related costs 38 17

Loss on divestiture of business — 39

Gain on subordinated interest — (79)

National Instruments investment gain (12) —

AspenTech Micromine purchase price hedge (3) —

Loss on Copeland equity method investment — 59

Loss on Copeland note receivable — 279

Adjusted EBITA from continuing operations $ 1,027 1,156 13 %

1 unchanged sentence

Business Segments

Following is an analysis of operating results for the Company’s business segments for the second quarter ended March 31, 2023, compared with the second quarter ended March 31, 2024.

Following is an analysis of operating results for the Company’s business segments for the third quarter ended June 30, 2023, compared with the third quarter ended June 30, 2024.

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

24 unchanged sentences

Safety & Productivity (1) 1

Total $ 11 25

Adjusted EBITA $ 761 765 1 %

Adjusted EBITA Margin 25.5 % 25.5 % - pts

Intelligent Devices sales were $3.1 billion in the second quarter of 2024, an increase of $137, or 5 percent.

Underlying sales increased 6 percent on 3 percent higher volume and 3 percent higher price.

Unde rlying sales increased 4 percent in the Americas, Europe increased 6 percent and Asia, Middle East & Africa was up 9 percent (China down 5 percent ).

F inal Control sales increased $59 , or 6 percent, reflecting strength in energy and power end markets, particularly in Asia, Middle East & Africa.

Sales for Measurement & Analytical increased $125 , or 14 percent, reflecting robust growth in all geographies and strong backlog conversion.

Discrete Automation sales decreased $51, or 8 percent, reflecting softness in all geographies driven in part by lower factory automation demand.

Safety & Productivity sales increased $4, or 1 percent, as modest growth in Europe and strength in Asia, Middle Ease & Africa was largely offset by softness in the Americas.

Earnings for Intelligent Devices were $732 , an increase of $72 , or 11 percent , and margin increased 1.3 percentage points to 23.9 percent.

Adjusted EBITA margin was 25.6 percent, an increase of 1.0 percentage points, reflecting leverage on higher sales, favorable mix and favorable price less net material inflation, partially offset by increases in other costs.

Intelligent Devices sales were $3.0 billion in the third quarter of 2024, an increase of $18, or 1 percent.

Underlying sales increased 2 percent on higher price.

Unde rlying sales were flat in the Americas, Europe increased 3 percent and Asia, Middle East & Africa was up 4 percent (China down 9 percent ).

Final Control sales increased $11, or 1 percent, reflecting strength in energy and power end markets, particularly in Latin America and Middle East & Africa, largely offset by declines in the U.S.

Sales for Measurement & Analytical increased $69, or 8 percent, reflecting strong growth in nearly all geographies and strong backlog conversion.

Discrete Automation sales decreased $50, or 8 percent, reflecting weakness across most geographies driven in part by lower factory automation demand.

Safety & Productivity sales decreased $12, or 3 percent, due to softness across all geographies.

Earnings for Intelligent Devices were $693, a decrease of $15, or 2 percent, and margin decreased 0.6 percentage points to 23.1 percent, reflecting higher restructuring costs.

Adjusted EBITA margin was 25.5 percent, flat compared with the prior year, reflecting favorable price less net material inflation, partially offset by unfavorable geographic mix, softer MRO and increases in other costs.

SOFTWARE AND CONTROL

20 unchanged sentences

Adjusted EBITA Margin 30.4 % 30.3 % (0.1) pts

Software and Control sales were $1,332 in the second quarter of 2024, an increase of $479, or 56 percent compared to the prior year, reflecting the impact of the Test & Measurement acquisition and strong growth in Control Systems & Software.

Software and Control sales were $1.4 billion in the third quarter of 2024, an increase of $415, or 42 percent compared to the prior year, reflecting the impact of the Test & Measurement acquisition and strong growth in Control Systems & Software and AspenTech.

Underlying sales were up 7 percent on 5 percent higher volume and 2 percent higher price.

Underlying sales increased 4 percent in the Americas, 31 percent in Europe and 20 percent in Asia, Middle East & Africa (China up 9 percent).

Control Systems & Software sales increased $64, or 11 percent, reflecting strong international demand in process end markets and strong demand in power end markets in the Americas.

Test & Measurement sales were $367 in the second quarter, reflecting the acquisition.

AspenTech sales increased $48, or 21 percent, primarily due to higher license and maintenance revenue.

Underlying sales increased 15 percent in the Americas and 6 percent in Europe, while Asia, Middle East & Africa decreased 3 percent (China down 20 percent).

Control Systems & Software sales increased $37, or 6 percent, reflecting strong international demand in process and hybrid end markets and strong demand in power end markets in the Americas.

Test & Measurement sales were $355 for the third quarter.

AspenTech sales increased $23, or 7 percent, reflecting higher license, maintenance and services revenue.

Earnings for Software and Control decreased $42, down 24 percent, and margin decreased 8.2 percentage points due to the Test & Measurement loss which reflected significant intangibles amortization and restructuring.

Adjusted EBITA margin increased 2.6 percentage points, reflecting leverage on higher sales and higher price.

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, 2023, compared with the six months ended March 31, 2024.

Adjusted EBITA margin decreased 0.1 perce ntage points, reflecting the impact of the Test & Measurement acquisition, largely offset by leverage on higher sales and higher price.

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, 2023, compared with the nine months ended June 30, 2024.

2023 2024 Change

5 unchanged sentences

Percent of sales 27.7 % 29.7 % 2.0 pts

Loss on Copeland note receivable $ — 279

Gain on subordinated interest $ — (79)

12 unchanged sentences

Adjusted Diluted EPS - Earnings from continuing operations $ 3.15 4.01 27 %

Net sales for the first six months of 2024 were $8.5 billion, up 19 percent compared with 2023.

Net sales for the first nine months of 2024 were $12.9 billion , up 16 percent compared with 2023.

Intelligent Devices sales were up 5 percent, while Software and Control sales were up 51 percent, which included the impact of the Test & Measurement acquisition.

Underlying sales were up 7 percent on 5 percent higher volume and 2 percent higher price.

Foreign currency translation had a negligible impact, the Test & Measurement acquisition added 11 percent and the divestiture of Metran deducted 1 percent.

Foreign currency translation had a 0.5 percent unfavorable impact, the Test & Measurement acquisition added 10 percent and the divestiture of Metran deducted 0.5 percent.

Underlying sales increased 3 percent in the U.S.

and increased 10 percent internationally.

The Americas was up 6 percent, Europe was up 11 percent and Asia, Middle East & Africa was up 13 percent (China was up 3 percent).

The Americas was up 5 percent, Europe was up 9 percent and Asia, Middle East & Africa was up 9 percent (China was down 2 percent).

Cost of sales for 2024 were $6,359, an increase of $699 versus $5,660 in 2023, r eflecting the impact of higher volume and the Test & Measurement acquisition .

Gross margin of 50.6 percent increased 1.7 percentage points, reflecting the Test & Measurement acquisition, higher price and leverage on higher sales, partially offset by the impact from acquisition-related inventory step-up amortization of $231, which negatively impacted margins by approximately 1.8 percentage points.

SG&A expenses of $2,573 increased $543 and SG&A as a percent of sales increased 1.8 percentage points to 30.3 percent, reflecting the impact of the Test & Measurement acquisition, partially offset by strong operating leverage on higher sales.

SG&A expenses of $3,827 increased $755 and SG&A as a percent of sales increased 2.0 percentage points to 29.7 percent, reflecting the impact of the Test & Measurement acquisition, partially offset by strong operating leverage on higher sales and mix.

On June 6, 2024, the Company entered into definitive agreements to sell its 40 percent non-controlling common equity interest in Copeland to private equity funds managed by Blackstone for $1.5 billion and its note receivable to Copeland for $1.9 billion.

Upon entering into the note agreement, the Company recorded a pretax loss of $279 ($217 after-tax, $0.38 per share) to adjust the carrying value of the note to $1.9 billion to reflect the transaction price.

See Notes 5 and 10 for further detail.

In the second quarter of fiscal 2024, the Company received its final distribution of $79 related to its subordinated interest in Vertiv.

Other deductions, net were $1,075 in 2024, an increase of $716 compared with the prior year.

The current year included intangibles amortization r elated to the Test & Measurement acquisition of $280 , restructuring costs of $113 , acquisition/divestiture costs of $85, a loss of $95 on the Company's equity method investment in Copeland and a divestiture loss of $39 .

The prior year included a charge of $47 related to the Company exiting its business in Russia, a mark-to-market gain of $35 related to its equity investment in National Instruments Corporation and a mark-to-market gain of $21 related to foreign currency forward contracts that were terminated in June 2023 .

The current year included intangibles amortization r elated to the Test & Measurement acquisition of $419 , restructuring costs of $170 , acquisition/divestiture costs of $92 , and a divestiture loss of $39 .

The prior year included a charge of $47 related to the Company exiting its business in Russia, acquisition/divestiture costs of $48, a mark-to-market gain of $47 related to the Company's equity investment in National Instruments Corporation and a mark-to-market gain of $24 related to foreign currency forward contracts that were terminated in June 2023 .

See Note 7 and Note 10.

Pretax earnings from continuing operations of $1,341 decreased $542 compared with prior year.

Earnings increased $149 in Intelligent Devices and decreased $47 in Software and Control, see the Business Segments discussion that follows and Note 14.

Income taxes were $156 in the first six of months of fiscal 2024 and $232 in 2023 , resulting in effective tax rates of 20 percent and 22 percent, respectively.

The current year rate i ncluded a $57 ($0.10 per share) benefit related to discrete tax items, partially offset by unfavorable impacts from inventory step-up amortization and the loss on divestiture noted above.

In total, the net impact of these items benefited the rate by approximately 1 percentage point.

Earnings increased $134 in Intelligent Devices and decreased $89 in Software and Control.

See the Business Segments discussion that follows and Note 14.

Income taxes were $266 in the first nine of months of fiscal 2024 and $400 in 2023 , resulting in effective tax rates of 20 percent and 21 percent , re spectively.

The current year rate included a $57 ($0.10 per share) benefit related to discrete tax items and a benefit related to the filing of the prior year U.S.

tax return, partially offset by unfavorable impacts from inventory step-up amortization and the loss on divestiture (see Note 4), which was nondeductible for tax purposes.

In total, the net impact of these items benefited the rate by approximately 2 percentage points, which was partially offset by other items.

Earnings from continuing operations attributable to common stockholders were $1,060, down 30 percent compared with the prior year, and diluted earnings per share from continuing operations were $1.84, down 29 percent compared with $2.60 in 2023.

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

Earnings from discontinued operations were $2,264 ($3.90 per share) in the prior year, reflecting the $2.1 billion after-tax gain on the InSinkErator divestiture.

Adjusted diluted earnings per share from continuing operations were $4.01 compared with $3.15 in the prior year, up 27 percent.

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

Earnings (Loss) from discontinued operations were $ (88) ($ (0.15) per share) , compared with $10,973 ($19.06 per share) in the prior year, reflecting the $8.4 billion after-tax gain on the Copeland transaction and the $2.1 billion after-tax gain on the InSinkErator divestiture.

Net earnings common stockholders were $972 ($ 1.69 per share) compared with $12,475 ($21.56 per share) in the prior year.

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.

Six Months Ended March 31, 2023 2024

Nine Months Ended June 30, 2023 2024

Diluted earnings from continuing operations per share $ 2.60 1.84

8 unchanged sentences

AspenTech Micromine purchase price hedge (0.02) —

Loss on Copeland equity method investment — 0.12

Interest income on undeployed proceeds from Copeland transaction (0.05) —

Loss on Copeland note receivable — 0.38

Russia business exit charge 0.08 —

2 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 from continuing operations per share - March 31, 2023

Nine Months Ended

Adjusted diluted earnings from continuing operations per share - June 30, 2023

Operations 0.79

Corporate and other 0.03

Stock compensation 0.05

4 unchanged sentences

Share count 0.01

Adjusted diluted earnings from continuing operations per share - March 31, 2024

Adjusted diluted earnings from continuing operations per share - June 30, 2024

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 March 31, 2023 2024 Change

Nine Months Ended June 30, 2023 2024 Change

Earnings from continuing operations before income taxes $ 1,883 1,341 (29) %

10 unchanged sentences

AspenTech Micromine purchase price hedge (24) —

Loss on Copeland equity method investment — 95

Loss on Copeland note receivable — 279

Russia business exit charge 47 —

2 unchanged sentences

Business Segments

Following is an analysis of operating results for the Company’s business segments for the six months ended March 31, 2023, compared with the six months ended March 31, 2024.

Following is an analysis of operating results for the Company’s business segments for the nine months ended June 30, 2023, compared with the nine months ended June 30, 2024.

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

27 unchanged sentences

Adjusted EBITA Margin 24.2 % 25.0 % 0.8 pts

Intelligent Devices sales were $5.9 billion in the first six months of 2024, an increase of $420, or 8 percent.

Intelligent Devices sales were $8.9 billion in the first nine months of 2024, an increase of $438, or 5 percent.

Underlying sales increased 6 percent on 4 percent higher volume and 2 percent higher price.

Underlying sales increased 5 percent in the Americas, Europe increased 10 percent, and Asia, Middle East & Africa was up 13 percent (China up 2 percent).

Underlying sales increased 3 percent in the Americas, Europe increased 8 percent, and Asia, Middle East & Africa was up 10 percent (China down 2 percent).

Final Control sales increased $148, or 5 percent, reflecting strength in energy and power end markets.

1 unchanged sentence

Discrete Automation sales decreased $106, or 5 percent, reflecting softness in all geographies.

Safety & Productivity sales increased $16, or 2 percent, reflecting slight growth in the Americas, moderate growth in Europe and strength in Asia, Middle East & Africa.

Safety & Productivity sales increased $4, essentially flat, reflecting moderate results across all geographies.

Earnings for Intelligent Devices were $2,019, an increase of $134, or 7 percent, and margin increased 0.4 percentage points to 22.7 percent.

Adjusted EBITA margin was 24.7 percent, an increase of 1.2 percentage points, reflecting leverage on higher sales, favorable mix and favorable price less net material inflation, partially offset by increases in other costs.

Adjusted EBITA margin was 25.0 percent, an increase of 0.8 percentage points, reflecting leverage on higher sales and favorable price less net material inflation, partially offset by increases in other costs.

SOFTWARE AND CONTROL

20 unchanged sentences

Adjusted EBITA Margin 26.3 % 27.8 % 1.5 pts

Software and Control sales were $2,646 in the first six months of 2024, an increase of $944, or 56 percent compared to the prior year, reflecting the impact of the Test & Measurement acquisition.

Software and Control sales were $4,044 in the first nine months of 2024,an increase of $1,359, or 51 percent compared to the prior year, reflecting the impact of the Test & Measurement acquisition.

Underlying sales were up 10 percent on 8 percent higher volume and 2 percent higher price.

Underlying sales increased 9 percent in the Americas, 16 percent in Europe and 14 percent in Asia, Middle East & Africa (China up 7 percent).

Control Systems & Software sales increased $133, or 11 percent, reflecting global strength in process end markets while power end markets were up strong in the Americas and Europe.

Test & Measurement sales were $749 in the first six months of 2024, reflecting the acquisition.

Underlying sales increased 11 percent in the Americas, 12 percent in Europe and 8 percent in Asia, Middle East & Africa (China down 3 percent).

Control Systems & Software sales increased $170, or 9 percent, reflecting strong international demand in process and hybrid end markets while power end markets were strong globally.

Test & Measurement sales were $1,104 in the first nine months of 2024.

AspenTech sales increased $85, or 11 percent, reflecting higher license, maintenance and services revenue.

Earnings for Software and Control decreased $89, down 28 percent, and margin decreased 6.1 percentage points, reflecting the impact from $419 of incremental intangibles amortization related to the Test & Measurement acquisition.

Adjusted EBITA margin increased 2.5 percentage points, reflecting leverage on higher sales and higher price.

Adjusted EBITA margin increased 1.5 percentage points, reflecting leverage on higher sales and higher price, partially offset by the impact of the Test & Measurement acquisition.

FINANCIAL CONDITION

Key elements of the Company's financial conditi on as of and for the six months ended March 31, 2024 as compared to the year ended September 30, 2023 and the six months ended March 31, 2023 follow.

Mar 31, 2023 Sept 30, 2023 Mar 31, 2024

Key elements of the Company's financial conditi on as of and for the nine months ended June 30, 2024 as compared to the year ended September 30, 2023 and the nine months ended June 30, 2023 follow.

June 30, 2023 Sept 30, 2023 June 30, 2024

Operating working capital $ (144) $ 1,283 $ 1,921

3 unchanged sentences

Interest coverage ratio 10.1 X 12.1 X 6.1 X

Operating working capital increased due to the acquisition of NI and changes in accrued expenses.

As of March 31, 2024 , Emerson's cash and equivalents totaled $2,318, which included approximately $180 attributable to AspenTech.

Operating working capital increased due to the acquisition of NI.

As of June 30, 2024 , Emerson's cash and equivalents totaled $2,298, which included approximately $240 attributable to AspenTech.

The cash held by AspenTech is intended to be used for its own purposes and is not available to return to Emerson shareholders.

The current ratio decreased compared to September 30, 2023, reflecting the decrease in cash and increase in short-term borrowings used to support the NI acquisition.

The interest coverage ratio (earnings before income taxes plus interest expense, divided by interest expense) of 5.5X for the first six months of fiscal 2024 compares to 8.6X for the six months ended March 31, 2023, reflecting lower GAAP pretax earnings largely due to the NI acquisition.

Excluding the impact from acquisition-related inventory step-up amortization of $231, higher intangibles amortization of $310, acquisition/divestiture fees and related costs of $154, higher restructuring and related costs of $79, the loss of $95 on the Copeland equity method investment and the gain on subordinated interest of $79, the interest coverage ratio was 10.1X.

Operating cash flow from continuing operations for the first six months of fiscal 2024 was $1,201, an increase of $324 compared with $877 in the prior year, reflecting higher earnings (excluding the impact of items related to the NI acquisition).

The interest coverage ratio (earnings before income taxes plus interest expense, divided by interest expense) of 6.1X for the first nine months of fiscal 2024 compares to 10.1X for the nine months ended June 30, 2023, reflecting lower GAAP pretax earnings largely due to the NI acquisition.

Excluding the impact from acquisition-related inventory step-up amortization of $231, higher intangibles amortization of $454, acquisition/divestiture fees and related costs of $171, higher restructuring and related costs of $127, the loss of $279 on the Copeland note receivable and the gain on subordinated interest of $79, the interest coverage ratio was 10.7X.

Operating cash flow from continuing operations for the first nine months of fiscal 2024 was $2,244, an increase of $525 compared with $1,719 in the prior year, reflecting higher earnings (excluding the impact of items related to the NI acquisition and the loss on the Copeland note receivable) and favorable changes in working capital.

Acquisition-related costs and integration activities negatively impacted operating cash flow in the current year by approximately $210.

AspenTech generated operating cash flow of approximately $320 compared to approximately $295 in the prior year.

Free cas h flow from continuing operations of $1,042 in the first six months of fiscal 2024 (operating cash flow of $1,201 less capital expenditures of $159) increased $286 compared to free cash flow of $756 in 2023 (operating cash flow of $877 less capital expenditures of $121), reflecting the increase in operating cash flow, partially offset by higher capital expenditures.

Free cas h flow from continuing operations of $1,993 in the first nine months of fiscal 2024 (operating cash flow of $2,244 less capital expenditures of $251) increased $468 compared to free cash flow of $1,525 in 2023 (operating cash flow of $1,719 less capital expenditures of $194), reflecting the increase in operating cash flow, partially offset by higher capital expenditures.

Cash used in investing activities from continuing operations was $8,600, reflecting the acquisition of NI.

Cash provided by financing activities from continuing operations was $1,613, reflecting an increase in short-term borrowings of $2,464 , partially offset by share repurchases and dividends.

Cash provided by financing activities from continuing operations was $583, reflecting an increase in short-term borrowings of $2,229 , partially offset by the repayment of €500 of euro-denominated debt that was due in May 2024, share repurchases and dividends.

Total cash provided by operating activities was $2,248 including the impact of discontinued operations, and increased $968 compared with $1,280 in the prior year.

Subsequent to the end of the quarter, the Company completed the sale of its note receivable to Copeland on August 2, 2024 and received $1.9 billion of pretax cash proceeds.

The Company expects the sale of its 40 percent non-controlling common equity interest in Copeland to private equity funds managed by Blackstone for $1.5 billion to close by the end of August 2024.

The Company intends to use the approximately $2.9 billion of after-tax cash proceeds from both transactions to pay down its existing debt obligations.

Emerson maintains a conservative financial structure to provide the strength and flexibility necessary to achieve our strategic objectives and has been successful in efficiently deploying cash where needed worldwide to fund operations, complete acquisitions and sustain long-term growth.

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FISCAL 2024 OUTLOOK

For the full year, consolidated net sales from continuing operations are expected to be up 15 percent to 16 percent, with underlying sales up 5.5 percent to 6.5 percent excluding a 10 percent impact from the NI acquisition and a 0.5 percent unfavorable impact from foreign currency.

For the full year, consolidated net sales from continuing operations are expected to be up approximately 15 percent, with underlying sales up approximately 6 percent excluding an approximate 9.5 percent impact from the NI acquisition and a 0.5 percent unfavorable impact from foreign currency.

Earnings per share from continuing operations are expected to be $2.82 to $2.87, while adjusted earnings per share from continuing operations are expected to be $5.45 to $5.50 (see the following reconciliation).

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Restructuring and related costs ~ 0.34

Loss on Copeland equity method investment ~ 0.19

Loss on Copeland note receivable 0.38

Amortization of acquisition-related inventory step-up 0.38

8 unchanged sentences

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