What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-11-12 compared with 2023-11-13 · 232 added, 192 removed, 1137 unchanged (27% of the section changed)

11 unchanged sentences

Gain on subordinated interest ( 453 ) ( 161 ) ( 79 )

Loss on Copeland note receivable — — 279

Other deductions, net 519 506 1,434

Interest expense, net of interest income of:

2023, $ 227 ;

Interest income from related party — ( 41 ) ( 86 )

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Other current assets 1,244 1,497

Current assets held-for-sale 1,398 —

Total current assets 13,819 10,192

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Other intangible assets 6,263 10,436

Copeland note receivable and equity investment — 3,255

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

Other 2,566 2,744

Noncurrent assets held-for-sale 2,258 —

Total other assets 26,564 31,247

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Accrued expenses 3,210 3,875

Current liabilities held-for-sale 1,348 —

Total current liabilities 5,032 5,742

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Other liabilities 3,506 3,840

Noncurrent liabilities held-for-sale 167 —

Common stock, $ 0.50 par value;

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( 1,225 ) ( 1,202 ) ( 1,208 )

Adoption of accounting standard updates ( 1 ) — —

Ending balance 28,053 40,070 40,830

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Stock compensation 125 250 260

Amortization of acquisition-related inventory step-up — — 231

Pension expense (income) 2 ( 71 ) ( 79 )

Pension funding ( 43 ) ( 43 ) ( 38 )

Changes in operating working capital 167 ( 312 ) ( 190 )

Gain on subordinated interest ( 453 ) ( 161 ) ( 79 )

Loss on Copeland note receivable — — 279

Changes in operating working capital ( 312 ) ( 148 ) ( 151 )

Other, net 4 ( 429 ) ( 400 )

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Financial Statement Presentation

The preparation of the financial statements in conformity with U.S.

The preparation of the financial s tatements in conformity with U.S.

generally accepted accounting principles (U.S.

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

This includes reporting financial results for Climate Technologies, InSinkErator and Therm-O-Disc as discontinued operations for all periods presented, and the assets and liabilities of Climate Technologies and InSinkErator (prior to completion of the divestitures) as held-for-sale (see Note 5).

In addition, as a result of its portfolio transformation, the Company now reports six segments and two business groups (see Note 20).

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, and the transactions were subsequently completed in August 2024.

As a result of these transactions, the equity interest and note receivable are reported as held-for-sale in the prior year, 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 cash flows related to U.S.

tax distributions have been reclassified to operating cash flows from discontinued operations (see Notes 5 and 8).

In 2024, the Company adopted ASU No.

2022-04 (Subtopic 405-50), Liabilities - Supplier Finance Programs, which requires disclosures about the use of supplier finance programs.

This standard has no impact on the accounting for supplier finance programs and did not materially impact the Company's disclosures.

In 2023, the Company adopted ASU No.

2021-10 (Topic 832), Government Assistance, which requires annual disclosures about certain types of government assistance received.

This standard has no impact on the accounting for government assistance and did not materially impact the Company's disclosures.

In 2022, the Company adopted three accounting standard updates, and in 2021 adopted two accounting standard updates and one new accounting standard, each of which had an immaterial or no impact on the Company's financial statements.

In 2022, the Company adopted three accounting standard updates, each of which had an immaterial or no impact on the Company's financial statements.

These included:

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• Updates to ASC 321, Equity Securities , ASC 323 Investments - Equity Method and Joint Ventures , and ASC 815, Derivatives and Hedging , which clarify how to account for the transition into and out of the equity method of accounting when evaluating observable transactions.

• Updates to ASC 350, Intangibles - Goodwill and Other , which eliminate the requirement to measure impairment based on the implied fair value of goodwill compared to the carrying amount of a reporting unit’s goodwill.

Instead, goodwill impairment will be measured as the excess of a reporting unit’s carrying amount over its estimated fair value.

• Updates to ASC 350, Intangibles - Goodwill and Other , which align the requirements for capitalizing implementation costs incurred in a software hosting arrangement with the requirements for costs incurred to develop or obtain internal-use software.

• Adoption of ASC 326, Financial Instruments - Credit Losses , which amends the impairment model by requiring entities to use a forward-looking approach to estimate lifetime expected credit losses on certain types of financial instruments, including trade receivables.

Principles of Consolidation

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Valuations for all of the Company's financial instruments fall within Level 2.

The fair value of the Company's long-term debt and note receivable from Copeland are Level 2, estimated using current interest rates and pricing from financial institutions and other market sources for debt with similar maturities and characteristics.

The fair value of the Company's long-term debt is Level 2, estimated using current interest rates and pricing from financial institutions and other market sources for debt with similar maturities and characteristics.

Property, Plant and Equipment

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Goodwill is also tested for impairment between annual tests if events or circumstances indicate the fair value of a unit may be less than its carrying value.

Estimated fair values of reporting units are Level 3 measures and are developed generally under an income approach that discounts estimated future cash flows using risk-adjusted interest rates, as well as earnings multiples or other techniques as warranted.

Estimated fair values of reporting units are Level 3 measures and are developed generally

under an income approach that discounts estimated future cash flows using risk-adjusted interest rates, as well as earnings multiples or other techniques as warranted.

Fair values are subject to changes in underlying economic conditions.

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The majority of the Company's revenues relate to a broad offering of manufactured products and software which are recognized at the point in time when control transfers, generally in accordance with shipping terms, or the first day of the contractual term for software.

A portion of the Company's

revenues relate to the sale of post-contract customer support, parts and labor for repairs, and engineering services.

A portion of the Company's revenues relate to the sale of post-contract customer support, parts and labor for repairs, and engineering services.

In some circumstances, contracts include multiple performance obligations, where revenue is recognized separately for each good or service, as well as contracts where revenue is recognized over time as control transfers to the customer.

Revenue is recognized over time for approximately 10 percent of the Company's revenues.

These revenues primarily relate to projects in the Control Systems & Software segment where revenue is recognized using the percentage-of-completion method to reflect the transfer of control over time, and software maintenance contracts in the AspenTech and Control Systems & Software segments where revenue is typically recognized on a straight-line basis.

Approximately 10 percent of revenues relate to sales arrangements with multiple performance obligations, principally in the AspenTech and Control Systems & Software segments.

Tangible products represent a large majority of the delivered items in contracts with multiple performance obligations or where revenue is recognized over time, while a smaller portion is attributable to installation, service and maintenance.

These revenues primarily relate to projects in the Control Systems & Software segment where revenue is recognized using the percentage-of-completion method to reflect the transfer of control over time, and software maintenance contracts in the Software and Control business group where revenue is typically recognized on a straight-line basis.

Approximately 15 percent of revenues relate to sales arrangements with multiple performance obligations, principally in the Software and Control business group.

T angible products represent a large majority of the delivered

items in contracts with multiple performance obligations or where revenue is recognized over time, while a smaller portion is attributable to installation, service and maintenance.

For projects where revenue is recognized over time, the Company typically uses an input method to determine progress and recognize revenue, based on costs incurred.

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In the normal course of business, the Company is exposed to changes in interest rates and foreign currency exchange rates due to its worldwide presence and diverse business pr ofile.

The Company's foreign currency exposures relate to transactions denominated in currencies that differ from the functional currencies of its business units, primarily in euros, Mexican pesos, and Singapore dollars.

As part of the Company's risk management strategy, derivative instruments are selectively used in an effort to minimize the impact of these exposures.

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For derivatives hedging variability in future cash flows, any gain or loss is deferred in stockholders' equity and recognized when the underlying hedged transaction impacts earnings.

The majority of the Company's derivatives

that are designated as hedges and qualify for hedge accounting are cash flow hedges.

The majority of the Company's derivatives that are designated as hedges and qualify for hedge accounting are cash flow hedges.

For derivatives hedging the fair value of existing assets or liabilities, both the gain or loss on the derivative and the offsetting loss or gain on the hedged item are recognized in earnings each period.

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The underlying exposures for these hedges relate primarily to the revaluation of certain foreign-currency-denominated assets and liabilities.

In addition, in 2022 AspenTech entered into foreign currency forward contracts to mitigate the impact of foreign currency exchange associated with the Micromine purchase price.

In addition, in 2022 AspenTech entered into foreign currency forward contracts to

mitigate the impact of foreign currency exchange associated with the Micromine purchase price.

On June 21, 2023, AspenTech terminated all outstanding foreign currency forward contracts and on August 1, 2023, announced the termination of the agreement to purchase Micromine.

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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 decrease in net contract assets was due to customer billings exceeding revenue recognized for performance

completed during the period.

The decrease in net contract assets was primarily due to the acquisition of National Instruments, which increased contract liabilities by approximately $ 150 , while customer billings slightly exceeded revenue recognized for performance completed during the period.

Revenue recognized for 2024 included approximately $ 635 that was included in the beginning contract liability balanc e.

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Capitalized amounts related to incremental costs to obtain customer contracts and costs to fulfill contracts are immaterial.

As of September 30, 2023, the Company's backlog relating to unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was approximately $ 7.8 billion (of which approximately $ 1.2 billion related to AspenTech).

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 approxima tely 75 percent of its remaining performance obligations as revenue over the next 12 months, with the remainder substantially over the subsequent two years thereafter.

As of September 30, 2024, the Company's backlog relating to unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was approximately $ 8.4 billion (of which approximately $ 1.3 billion was attributable to AspenTech and approximately $ 400 was attributable to National Instruments).

The Company expects

to recognize approxima tely 75 percent of its remaining performance obligations as revenue over the next 12 months, with the remainder substantially over the subsequent two years thereafter.

See Note 20 for additional information about the Company's revenues.

(3) WEIGHTED-AVERAGE COMMON SHARES

Basic earnings per common share consider only the weighted-average of common shares outstanding while diluted earnings per common share also consider the dilutive effects of stock options and incentive shares.

Basic earnings per common share consider only the weighted-average of common shares outstanding while diluted earnings per common share, which are calculated using the two-class method, also consider the dilutive effects of stock options and incentive shares.

An inconsequential number of shares of common stock were excluded from the computation of dilutive earnings per share in 2024, 2023 and 2022 as the effect would have been antidilutive.

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(4) ACQUISITIONS AND DIVESTITURES

National Instruments

On October 11, 2023, the Company completed the acquisition of National Instruments Corporation (“NI”).

NI, which provides software-connected automated test and measurement systems that enable enterprises to bring products to market faster and at a lower cost, had revenues of approximately $ 1.7 billion and pretax earnings of approximately $ 170 for the 12 months ended September 30, 2023.

NI is now referred to as Test & Measurement and reported as a new segment in the Software and Control business group, see Note 20.

The following table summarizes the components of the purchase consideration reflected in the acquisition accounting for NI.

Cash paid to acquire remaining NI shares not already owned by Emerson $ 7,833

Payoff of NI debt at closing 634

Total consideration paid in cash at closing 8,467

Fair value of NI shares already owned by Emerson prior to acquisition 137

Value of stock-based compensation awards attributable to pre-combination service 49

Total purchase consideration $ 8,653

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

Cash and equivalents $ 135

Receivables 309

Inventory 490

Other current assets 140

Property, plant and equipment 328

Goodwill ($ 121 expected to be tax-deductible)

Other intangible assets 5,275

Other assets 105

Total assets 10,224

Accounts payable 52

Accrued expenses 315

Deferred taxes and other liabilities 1,204

Total purchase consideration $ 8,653

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

Amount Estimated Weighted Average Life (Years)

Developed technology $ 1,570 9

Customer relationships 3,360 15

Trade names 210 9

Backlog 135 1

Total $ 5,275

Results of operations for the year ended September 30, 2024 attributable to the NI acquisition include sales of $ 1,464 and a net loss of $ 537 .

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

Pro Forma Financial Information

The following unaudited proforma consolidated condensed financial results of operations are presented as if the acquisition of NI occurred on October 1, 2022.

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).

Net Sales 16,858 17,511

Net earnings from continuing operations common stockholders 1,508 1,982

Diluted earnings per share from continuing operations 2.61 3.45

Pro forma Net sales for the year ended September 30, 2023 include $ 1,693 attributable to NI.

The pro forma results for the year ended September 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 year ended September 30, 2023 also include $ 424 of ongoing intangibles amortization, backlog amortization of $ 136 , inventory step-up amortization of $ 213 , and retention bonuses of $ 55 , and exclude the mark-to-market gain of $ 56 recognized on the equity investment in National Instruments Corporation (see Note 6).

Aspen Technology

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The following unaudited proforma consolidated condensed financial results of operations are presented as if the acquisition of Heritage 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).

Net Sales $ 14,218

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Diluted earnings per share from continuing operations $ 3.21

The pro forma results for 2021 include $ 159 of transaction costs which were assumed to be incurred in the first quarter of 2021.

Of these transaction costs, $ 91 were included in the Company's reported results for 2022, but have been excluded from the 2022 pro forma results above.

In addition, Heritage 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 2021 include estimated interest expense of $ 147 related to the issuance of $ 3.0 billion of term debt and increased commercial paper borrowings to fund the acquisition, while results for 2022 include additional interest expense of $ 56 to reflect the increased borrowings as if they were outstanding for the entire year.

The pro forma results for 2022 exclude $ 91 of transaction costs which were included in the Company's reported results for 2022, but were assumed to be incurred in the first quarter of 2021.

The pro forma results for 2022 include additional interest expense of $ 56 related to the issuance of $ 3.0 billion of term debt and increased commercial paper borrowings to fund the acquisition, which assumes such borrowings were outstanding for the entire year.

Other Transactions

In 2023, the Company acquired two businesses, Flexim, which will be reported in the Measurement & Analytical segment, and Afag, which will be reported in the Discrete Automation segment, for $ 705 , net of cash acquired.

In 2024, the Company divested two small businesses, both in the Final Control segment, and recognized a pretax loss of $ 48 in total ($ 50 after-tax, $ 0.09 per share).

In 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 $ 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.

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

In 2023, the Company recognized a pretax loss of $ 47 in Other deductions ($ 47 after-tax, in total $ 0.08 per share) related to its exit of business operations in Russia.

In 2023, the Company recognized a pretax loss of $ 47 in Other deductions ($ 47 after-tax, in total $ 0.08 per share)

related to its exit of business operations in Russia.

The Company had previously announced its intention to exit business operations in 2022 and recognized a pretax loss of $ 181 ($ 190 after-tax, in total $ 0.32 per share).

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In the first quarter of 2022, the Company received a distribution of $ 438 related to its subordinated interest in Vertiv (in total, a pretax gain of $ 453 was recognized in the first quarter of 2022, $ 358 after-tax, $ 0.60 per share) and received the remaining $ 15 related to the pretax gain in the first quarter of 2023.

In 2023, the Company received additional distributions totaling $ 161 ($ 122 after-tax, $ 0.21 per share).

Based on the terms of the agreement and the current calculation, the Company could receive additional distributions of approximately $ 40 .

The remaining 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.

In 2023, the Company received additional distributions totaling $ 161 ($ 122 after-tax, $ 0.21 per share) and in 2024, received its final distribution of $ 79 ($ 60 after-tax, $ 0.10 per share).

(5) DISCONTINUED OPERATIONS

On May 31, 2023, the Company completed the previously announced 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 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 (an increase of $ 0.2 billion from when the

transaction was announced due to Blackstone's decision to purchase an additional 5 percent of the common equity) and a note receivable with a face value of $ 2.25 billion (which will accrue 5 percent interest payable in kind by capitalizing interest), while retaining a 40 percent non-controlling common equity interest (down from 45 percent when the transaction was announced) in a new standalone joint venture between Emerson and Blackstone.

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 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.

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 2022 net sales of approximately $ 5.0 billion and pretax earnings of $ 1.0 billion.

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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.

The transaction closed on August 13, 2024 and the Company recognized a gain of $ 539 ($ 435 after-tax) in discontinued operations.

In addition, 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 table below.

See Note 8 for further details.

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Earnings, net of tax $ 793 8,809 350 554 2,130 — 1,347 10,939 350

Climate Technologies' results for 2023 include lower expense of $ 96 due to ceasing depreciation and amortization upon the held-for-sale classification and $ 57 of transaction-related costs reported in Other deductions, net.

Climate Technologies' results for 2024 included a gain on the sale of the Company's 40 percent non-controlling common equity interest in Copeland of $ 539 ($ 435 after-tax), while 2023 include lower expense of $ 96 due to ceasing depreciation and amortization upon the held-for-sale classification and $ 57 of transaction-related costs reported in Other deductions, net.

Equity method losses related to the Company's 40 percent non-controlling common equity interest in Copeland were $ 125 and $ 177 for 2024 and 2023, respectively.

Income taxes for 2023 included approximately $ 2.2 billion for the gain on the Copeland transaction and subsidiary restructurings, and approximately $ 660 related to the gain on the InSinkErator divestiture.

The aggregate carrying amounts of the major classes of assets and liabilities classified as held-for-sale as of September 30, 2023 and 2022 are summarized as follows:

Climate Technologies ISE Total

September 30, September 30, September 30,

Assets 2022 2023 2022 2023 2022 2023

Receivables $ 747 — 68 — 815 —

Inventories 449 — 81 — 530 —

Other current assets 49 — 4 — 53 —

Property, plant & equipment, net 1,122 — 141 — 1,263 —

Goodwill 716 — 2 — 718 —

Other noncurrent assets 265 — 12 — 277 —

Total assets held-for-sale $ 3,348 — 308 — 3,656 —

Accounts payable $ 752 — 60 — 812 —

Other current liabilities 475 — 61 — 536 —

Deferred taxes and other noncurrent liabilities

154 — 13 — 167 —

Total liabilities held-for-sale $ 1,381 — 134 — 1,515 —

Net cash from operating and investing activities for Climate Technologies, InSinkErator and Therm-O-Disc were as follows:

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Cash from operating activities for 2023 reflects approximately $ 2.3 billion of income taxes paid related to the gains on the Copeland transaction and InSinkErator divestiture and subsidiary restructurings related to the Copeland transaction.

Cash from investing activities for 2023 reflects the proceeds of approximately $ 9.7 billion related to the Copeland transaction and approximately $ 3.0 billion related to the InSinkErator divestiture.

Cash from investing activities for 2024 reflects the proceeds of approximately $ 1.5 billion related to the sale of the Company's 40 percent non-controlling common equity interest in Copeland and $ 1.9 billion related to the sale of the note receivable, while 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) OTHER DEDUCTIONS, NET

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Investment-related gains & gains from sales of capital assets ( 30 ) ( 69 ) —

Loss on Copeland equity method investment — — 177

Russia business exit 135 47 —

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Total $ 519 506 1,434

In 2023, intangibles amortization included $ 258 related to the Heritage AspenTech acquisition compared to $ 97 in 2022, while 2021 included backlog amortization related to the OSI acquisition of $ 30 .

Intangibles amortization for 2024 included $ 560 related to the NI acquisition, while 2023 included $ 258 related to the Heritage AspenTech acquisition compared to $ 97 in 2022.

Foreign currency transaction losses included a mark-to-market gain of $ 24 in 2023 related to foreign currency forward contracts entered into by AspenTech to mitigate the impact of foreign currency exchange associated with the Micromine purchase price compared to a mark-to-market loss of $ 50 in 2022.

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The Company recognized a mark-to-market gain of $ 56 in 2023 related to its equity investment in National Instruments Corporation (see Note 11 for further information).

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

In 2024, Other includes a loss of $ 48 related to the divestiture of two small businesses (see Note 4).

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

(7) RESTRUCTURING COSTS

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Restructuring expenses were $ 228 , $ 72 and $ 75 for 2024, 2023 and 2022, respectively.

The Company expects fiscal year 2024 restructuring and related costs to be approximately $ 160 , including incremental costs related to the National Instruments acquisition.

The Company expects fiscal year 2025 restructuring and related costs to be approximately $ 120 .

Restructuring costs by business segment follows:

2022 2023 2024

Measurement & Analytical $ 58 3 9

Final Control $ 38 12 12

Measurement & Analytical 3 9 26

Discrete Automation — 27 35

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Intelligent Devices 51 48 80

AspenTech 2 — 1

Control Systems & Software 11 9 11

Test & Measurement — — 78

AspenTech — 1 8

Software and Control 11 10 97

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Total $ 75 72 228

A ctions taken in 2023 and 2022 inc luded workforce reductions of approximately 700 and 2,150 positions and the exit of ten and seven production facilities worldwide, respectively.

Cos ts incurred in 2021 primarily relate to the Company's initiatives to improve operating margins that began in the third quarter of fiscal 2019 and were expanded in the third quarter of fiscal 2020 in response to the effects of COVID-19 on demand for the Company's products.

Expenses incurred in 2021 included actions to exit five facilities and eliminate approximately 3,000 positions.

A ctions taken in 2024, 2023 and 2022 inc luded workforce reductions of approximately 2,250 , 700 and 2,150 positions and the exit of twenty-two , ten and seven production facilities and sales offices worldwide, respectively.

Corporate restructuring for 2024 includes $ 43 of integration-related stock compensation expense attributable to NI.

The change in the liability for restructuring costs during the years ended September 30 follows:

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(8) 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.

As a result of the transaction, the Company deconsolidated Copeland from its financial statements, as it no longer has a controlling interest, and initially recognized its common equity investment and note receivable at fair values of $ 1,359 and $ 2,052 , respectively.

The fair value of the common equity investment was determined using a discounted cash flow model, which included estimating financial projections for Copeland and applying an appropriate discount rate, and an option pricing model based on various assumptions.

Fair value for the note receivable was determined using a market approach primarily based on interest rates for companies with similar credit quality and the expected duration of the note.

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

For the year ended September 30, 2023 the Company recorded a loss of $ 177 in Other deductions to reflect its share of Copeland's reported GAAP losses and a tax benefit of $ 43 in Income taxes related to Copeland's U.S.

business, which is taxed as a partnership (in total, $ 0.24 per share).

The Company recognized non-cash interest income on the note receivable of $ 41 , which is reported in Interest income from related party and capitalized to the carrying value of the note.

Copeland's valuations of acquired assets and liabilities are in-process and subject to refinement.

As of September 30, 2023, the carrying values of the retained equity investment and note receivable were $ 1,162 and $ 2,093 , respectively.

As a result of the transaction, the Company deconsolidated Copeland from its financial statements, as it no longer had a controlling interest, and initially recognized its common equity investment and note receivable at fair values of $ 1,359 and $ 2,052 , respectively.

As a result of these transactions, the equity interest and note receivable are reported as held-for-sale in the prior year, and the gain on the sale of the Company's non-controlling common equity interest in Copeland and the historical equity method losses, 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 Note 5).

The Company recognized non-cash interest income on the note receivable (through the date of the agreement) of $ 86 and $ 41 in 2024 and 2023, 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.

During the year ended September 30, 2023, the Company settled a note receivable and note payable with Copeland of $ 918 , which is reported in Investing and Financing cash flows, respectively.

Summarized financial information for Copeland as of and for the year ended September 30, 2023 is as follows.

Copeland's results only reflect activity subsequent to the Company's divestiture of its majority stake.

Current assets $ 1,737

Noncurrent assets $ 13,818

Current liabilities $ 1,371

Noncurrent liabilities $ 8,007

Noncontrolling interests $ 215

Summarized financial information for Copeland for 2024 and 2023 is presented below.

Copeland's results only reflect activity subsequent to the Company's divestiture of its majority stake and through the completion of the sale of the 40 percent non-controlling common equity interest.

Net sales $ 1,677 4,323

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Total lease liabilities $ 669

As of September 30, 2023, the Company had one operating lease that had not yet commenced with a lease term of approximately 15 years and total undiscounted future minimum payments of approximately $ 80 .

This lease is expected to commence in 2024 and will be recorded as a right-of-use asset and lease liability.

Lease commitments that have not yet commenced were immaterial as of September 30, 2024.

(10) GOODWILL AND OTHER INTANGIBLES

The change in the carrying value of goodwill by business segment follows:

Final Control Measurement & Analytical Discrete Automation Safety & Productivity Control Systems & Software AspenTech Total

Final Control Measurement & Analytical Discrete Automation Safety & Productivity Control Systems & Software Test & Measurement AspenTech Total

Balance, September 30, 2022 $ 2,616 1,170 807 364 663 — 8,326 13,946

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Based on intangible asset balances as of September 30, 2024, amortization expense is expected to approximate $ 1,168 in 2025, $ 1,065 in 2026, $ 1,030 in 2027, $ 988 in 2028 and $ 949 in 2029.

The increase in goodwill and intangible assets in 2022 reflects the Heritage AspenTech acquisition.

The increase in goodwill and intangible assets in 2024 reflects the National Instruments acquisition.

(11) FINANCIAL INSTRUMENTS

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

Cash flows related to foreign currency hedges are classified within operating cash flows.

Net Investment Hedge

In 2019, the Company issued euro-denominated debt of € 1.5 billion.

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.

In 2019, the Company issued euro-denominated debt of € 1.5 billion, of which € 500 was repaid in 2024.

The outstanding 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.

Cash flows related to the euro-denominated debt are classified within financing cash flows.

The following gains and losses are included in earnings and other comprehensive income (OCI):

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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 September 30, 2023 was approximately $ 1.9 billion, which was lower than the carrying value by approximately $ 200 .

See Note 8 for further details.

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

The fair value of long-term debt was $ 7.0 billion and $ 6.9 billion, respec tively, as of September 30, 2024 and 2023, which was lower than the carrying value by $ 705 and $ 1,275 , respectively.

The fair values of commodity and foreign currency contracts were reported in Other current assets and Accrued expenses as summarized below:

The fair values of foreign currency contracts were reported in Other current assets and Accrued expenses as summarized below:

Assets Liabilities Assets Liabilities

Commodity $ — 25 — —

Foreign currency $ 30 22 31 20

Commodity contracts, which related to discontinued operations, were novated to Copeland upon the completion of the transaction and therefore no amounts are reported in the Company's balance sheet as of September 30, 2023 .

The fair value of the Company's equity investment in National Instruments falls within Level 1 and was based on the most recent quoted closing market price from its principal exchange for the period ended September 30, 2023.

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The details of long-term debt follow:

2.625 % notes due February 2023

0.375 % euro notes due May 2024

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Total interest paid on long-term debt was approximately $ 193 , $ 200 and $ 199 in 2024, 2023 and 2022, respectively.

During the year, the Company repaid $ 500 of 2.625 % notes that matured in February 2023 and AspenTech repaid $ 264 to pay off the outstanding balance on its existing term loan facility plus accrued interest.

In 2022, the Company repaid $ 500 of 2.625 % notes that matured in December 2021.

In December 2021, the Company issued $ 1,000 of 2.0 % notes due December 2028, $ 1,000 of 2.20 % notes due December 2031 and $ 1,000 of 2.80 % notes due December 2051.

The Company maintains a universal shelf registration statement on file with the SEC under which it can issue debt securities, preferred stock, common stock, warrants, share purchase contracts or share purchase units without a predetermined limit.

During the year, the Company repaid $ 529 of 0.375 % euro notes that matured in May 2024.

In 2023, the Company repaid $ 500 of 2.625 % notes that matured in February 2023 and AspenTech repaid $ 264 to pay off the outstanding balance on its existing term loan facility plus accrued interest.

predetermined limit.

Securities can be sold in one or more separate offerings with the size, price and terms to be determined at the time of sale.

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Total retirement plans expense (income) $ 121 ( 2 ) 14 57 98 107

Net periodic pension expense decreased in 2023 primarily due to lower amortization of deferred losses partially offset by higher interest costs.

Total net periodic pension (income) increased in 2024 primarily due to higher return on plan assets, partially offset by higher interest costs.

Net periodic pension expense (income) includes $ 7 and $ 16 and defined contribution expense includes $ 14 and $ 32 for 2023 and 2022, respectively, related to discontinued operations.

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The Company's principal U.S.

defined benefit plan is closed to employees hired after January 1, 2016 while shorter-tenured employees ceased accruing benefits effective October 1, 2016.

defined benefit plan is closed to employees hired after January 1, 2016 while shorter-tenured employees ceased accruing b enefits effective October 1, 2016.

Effective January 1, 2025, the Company is implementing a new profit sharing retirement program for all U.S.

non-union employees.

Eligible employees will receive a base contribution to a cash balance account administered within the principal U.S.

defined benefit plan, to be funded by surplus pension assets, as well as a potential profit sharing contribution to their defined contribution account.

After December 31, 2024, future service for employees that had continued to accrue benefits in the principal U.S.

defined benefit plan will be frozen.

All of the following tables include defined benefit pension plans related to continuing and discontinued operations.

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Interest cost 164 169 50 49

Actuarial gain ( 1,170 ) ( 75 ) ( 404 ) ( 25 )

Actuarial (gain) loss ( 75 ) 283 ( 25 ) 13

Curtailments ( 31 ) ( 4 ) — —

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Noncurrent asset $ 815 961 180 233

Noncurrent asset held-for-sale 13 — — —

Current liability ( 14 ) ( 14 ) ( 17 ) ( 17 )

Noncurrent liability ( 145 ) ( 147 ) ( 225 ) ( 254 )

Net liability held-for-sale — — ( 42 ) —

Net amount recognized in the balance sheet $ 656 800 ( 62 ) ( 38 )

Pretax accumulated other comprehensive loss $ ( 257 ) ( 243 ) ( 181 ) ( 163 )

Actuarial gains in 2023 were largely due to an increase in the discount rates used to estimate the benefit obligations for the U.S.

Actuarial losses in 2024 were largely due to a decrease in the discount rates used to estimate the benefit obligations for the U.S.

plans, which were 4.97 % and 4.7 % at September 30, 2024 compared to 6.03 % and 5.2 % at September 30, 2023, respectively.

A ctuarial gains in 2023 were largely due to an increase in the discount rates used to estimate the benefit obligations for the U.S.

plans, which were 5.64 % and 4.9 % at September 30, 2022 compared to 2.92 % and 2.2 % at September 30, 2021, respectively.

p lans, which were 6.03 % and 5.2 % at September 30, 2023 compared to 5.64 % and 4.9 % at September 30, 2022, respectively.

As of September 30, 2024, U.S.

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The total projected benefit obligation, accumulated benefit obligation and fair value of plan assets for individual plans with projected benefit obligations in excess of plan assets were $ 558 , $ 470 and $ 125 , respectively, for 2024, and $ 519 , $ 435 and $ 118 , respectively, for 2023.

The total projected benefit obligation, accumulated benefit obligation and fair value of plan assets for individual plans with accumulated benefit obligations

in excess of plan assets were $ 469 , $ 413 and $ 77 , respectively, for 2023, and $ 477 , $ 421 and $ 63 , respectively, for 2022.

The total projected benefit obligation, accumulated benefit obligation and fair value of plan assets for individual plans with accumulated benefit obligations in excess of plan assets were $ 515 , $ 452 and $ 92 , respectively, for 2024, and $ 469 , $ 413 and $ 77 , respectively, for 2023.

Future benefit payments by U.S.

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The equity strategy is to minimize concentrations of risk by investing primarily in a mix of companies that are diversified across geographies, market capitalization, style, sectors and industries worldwide.

The approach for bonds emphasizes investment-grade corporate and government debt with maturities matching a portion of the longer duration pension liabilities.

The approach for bonds emphasizes investment-grade corporate and government debt with maturities matching the duration of pension liabilities.

The bonds strategy also includes a high-yield element which is generally shorter in duration.

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The postretirement benefit liability for all plans was $ 71 and $ 72 as of September 30, 2024 and 2023, respectively, and included deferred actuarial gains in accumulated other comprehensive income of $ 68 and $ 95 , respectively.

Service and interest costs are negligible and more than offset by the amortization of deferred actuarial gains, which resulted in net postretirement income of $ 19 for 2023 and $ 12 for 2022 and $ 15 for 2021.

Benefits paid were $ 9 and $ 10 for 2023 and 2022, respectively, and the Company estimates that future health care benefit payments will be approximately $ 8 per year for 2024 through 2028, and $ 29 in total over the five years 2029 through 2033.

Service and interest costs are negligible and more than offset by the amortization of deferred actuarial gains, which resulted in net postretirement income of $ 18 for 2024, $ 19 for 2023 and $ 12 for 2022.

Benefits paid

were $ 10 and $ 9 for 2024 and 2023, respectively, and the Company estimates that future health care benefit payments will be approximately $ 7 per year for 2025 through 2029, and $ 27 in total over the five years 2030 through 2034.

(15) CONTINGENT LIABILITIES AND COMMITMENTS

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Historically, payments under indemnity arrangements have been inconsequential.

At September 30, 2023, there were no known contingent liabilities (including guarantees, pending litigation, taxes and other claims) that management believes will be material in relation to the Company's financial statements, nor were there any material commitments outside the normal course of business.

At September 30, 2024, there were no known c ontingent liabilities (including guarantees, pending litigation, taxes and other claims) that management believes will be material in relation to the Company's financial statements, nor were there any material commitments outside the normal course of business.

(16) INCOME TAXES

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Foreign derived intangible income ( 2.0 ) ( 2.6 ) ( 3.8 )

taxation of Non-U.S.

Earnings 0.4 1.3 2.1

Subsidiary restructuring 0.8 — ( 2.9 )

Test & Measurement purchase accounting — — 1.7

Russia business exit 2.0 0.2 —

1 unchanged sentence

Effective income tax rate 22.6 % 22.1 % 20.6 %

The 2023 increase in other was driven by a 1 percentage point impact from U.S.

taxation of Non-U.S.

operations and a 2 percentage point impact due to an increase in unrecognized tax benefits.

Test & Measurement purchase accounting reflects a lower tax benefit on inventory step-up amortization.

The increase in Other in 2024 includes the losses on two small divestitures, which were non-deductible for tax purposes.

See Note 4 for further details.

The increase in Other in 2023 compared to 2022 was driven by a 2 percentage point impact due to an increase in unrecognized tax benefits.

The Company has elected to recognize the tax on global intangible low-taxed income earned by certain of its non-U.S.

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tax holidays reduce tax rates in certain jurisdictions.

Approximately 80 percent of the tax holidays expire over the next four years , with the remainder expiring by 2030.

Approximately 65 percent of the tax holidays expire over the next three years , with the remainder expiring by 2037.

Following are changes in unrecognized tax benefits before considering recoverability of any cross-jurisdictional tax credits (U.S.

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Net deferred income tax liability $ ( 1,869 ) ( 2,074 )

Total income taxes paid were approximately $ 3,310 , $ 720 and $ 680 in 2023, 2022 and 2021, respectively.

Taxes paid in 2023 included approximately $ 2.3 billion related to the gains on the Copeland transaction and InSinkErator divestiture and subsidiary restructurings related to the Copeland transaction.

Approximately two-thirds of the $ 253 of net operating losses can be carried forward indefinitely, while most of the remainder expire over the next 10 years.

Total income taxes paid were appro ximately $ 950 , $ 3,310 and $ 720 in 2024, 2023 and 2022, respectively.

Taxes paid in 2023 included approximately $ 2.3 billion related to the gains on the sale of the majority stake in Copeland and the InSinkErator divestiture and subsidiary restructurings related to the Copeland transaction.

Taxes related to the Company's sale of its non-controlling common equity interest in Copeland will be paid in 2025.

Approximately

half of the $ 283 of net operating losses can be carried forward indefinitely, while most of the remainder expire over the next 5 years.

(17) STOCK-BASED COMPENSATION

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In fiscal 2022, the Company changed the terms of its annual performance share awards that were issued in the first quarter.

The terms meet the criteria for equity classification in accordance with ASC 718, Compensation - Stock Compensation , and therefore expense will be recognized on a fixed basis over the three-year performance period.

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

The terms meet the criteria for equity classification in accordance with ASC 718, Compensation - Stock Compensation , and therefore expense is recognized on a fixed basis over the three-year performance period.

AspenTech also has stock-based compensation plans that are settled in its own stock.

These plans consist of performance shares, restricted stock units and stock options.

As a result of the Company's acquisition of NI, outstanding NI restricted stock units and performance stock units were assumed by Emerson and converted at the time of the acquisition into Emerson time-based restricted stock units, but otherwise subject to the same terms and conditions (including vesting and payment schedule) as the awards originally issued by NI.

Total compensation expense and income tax benefits for Emerson and AspenTech stock options and incentive shares follows.

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Income tax benefits recognized $ 19 28 32

As of September 30, 2023, total unrecognized compensation expense related to unvested shares awarded under Emerson plans was $ 119 , which is expected to be recognized over a weighted-average period of 1.1 years, while the total future unrecognized compensation cost related to AspenTech stock options, RSUs and performance stock units was $ 18 , $ 59 and $ 12 respectively, which is expected to be recorded over a weighted average period of 2.1 years, 3.0 years and 2.8 respectively.

Stock compensation expense for 2024 includes $ 96 related to NI restricted stock units, which includes $ 58 of integration-related stock compensation expense (of which $ 43 was reported as restructuring costs).

As of September 30, 2024, total unrecognized compensation expense related to unvested shares awarded under Emerson plans was $ 190 , which is expected to be recognized over a weighted-average period of 1.1 years, while the total future unrecognized compensation cost related to AspenTech stock options, RSUs and performance stock un its was $ 8 , $ 63 and $ 23 respectively, which is expected to be recorded over a weighted average period of 2.2 years, 2.2 years and 2.6 years, respectively.

Emerson Performance Shares, Restricted Stock and Restricted Stock Units

The Company's incentive shares plans include performance shares awards which distribute the value of common stock to key management employees at the conclusion of a three-year period subject to certain operating performance conditions and other terms and restrictions.

The form of distribution is primarily shares of common stock, with a portion in cash in the first quarter following the end of the applicable three-year performance period.

Dividend equivalents are only paid on earned awards after the performance period has concluded.

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As of September 30, 2024, approximately 919,000 shares awarded primarily in 2022 were outstanding, contingent on the Company achieving its performance objectives through 2024.

The objectives for these shares were met at t he 118 percent level a nd the shares will be distributed in early fiscal 2024.

The objectives for these shares were met at t he 118 percent level and the shares will be distributed in early fiscal 2025.

Additionally, the rights to receive approximately 518,000 and 928,000 shares awarded in 2024 and 2023, respectively, are outstanding and contingent upon the Company achieving its performance objectives through 2026 and 2025, respectively.

Incentive shares plans also include restricted stock awards and restricted stock units.

Restricted stock awards involve distribution of common stock to key management employees subject to cliff vesting at the end of service periods ranging from three to ten years while restricted stock units granted to employees cliff vest at the end of a three-year period.

The fair value of restricted stock awards and restricted stock units is determined based on the average of the high and low market prices of the Company's common stock on the date of grant, with compensation expense recognized ratably over the applicable vesting period.

1 unchanged sentence

Consequently, approximately 38,000 shares and 1,404,000 units were issued while 17,000 shares and 58,000 units were withheld for income taxes in accordance with minimum withholding requirements.

A s of September 30, 2023, there were approximately 1,065,000 shares of unvested restricted stock and restricted stock units outstanding.

As of September 30, 2024, there were approximately 2,269,000 shares of unvested restricted stock and restricted stock units outstanding.

In addition to the employee stock option and incentive share plans, in 2024 the Company awarded approximately 19,000 restricted stock units under the restricted stock plan for non-management directors.

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Granted 1,257 $ 91.88

Assumed 2,114 $ 96.65

Earned/vested ( 2,986 ) $ 80.83

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Options generally vest one-third in each of the three years subsequent to grant and expire 10 years from the date of grant.

Compensation expense is recognized ratably over the vesting period based on the number of options expected to vest.

Changes in shares subject to options during the year ended September 30, 2024 follow (shares in thousands):

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

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.

Restricted stock units generally vest over four years .

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

Restricted stock units and performance stock units generally vest over three years .

In fiscal 2023 and 2024, the Company granted performance stock units with both a performance and service condition.

The performance condition relates to the attainment of predefined goals based on annual contract value and free cash flows.

On a quarterly basis, management evaluates the probability that the threshold performance goals will be achieved, if at all, and the anticipated level of attainment to determine the amount of compensation expense to record in the condensed consolidated financial statements.

Option awards have been granted with an exercise price equal to the market closing price of AspenTech's stock on the trading day prior to the grant date.

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The expected life of an option represents the period for which options are expected to be outstanding as determined by historic option exercises and cancellations.

The risk-free interest rate is based on the U.S.

Treasury yield curve for notes with terms approximating the expected life of the options granted.

The risk-free

interest rate is based on the U.S.

Treasury yield curve for notes with terms approximating the expected life of the options g ranted.

The expected dividend yield is zero , based on AspenTech's history and expectation of not paying dividends on common shares.

Stock-based compensation expense is recognized on a straight-line basis, net of forfeitures as they occur, over the requisite service period for time-vested awards.

The weighted-average assumptions used in valuations for 2023 are:

risk-free interest rate, 3.8 percent;

dividend yield, none ;

expected volatility, 39.3 percent;

and expected life, approximately 5 years.

Stoc k-based compensation expense is recognized on a straight-line basis, net of forfeitures as they occur, over the requisite service period for time-vested awards.

There were no stock option grants in 2024.

A summary of AspenTech stock option activity in 2024 is as follows (shares in thousands):

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$ 142.10 676 $ 65 5.6

The weighted average estimated fair value of option awards granted during 2023 was $ 76.99 .

The total intrinsic value of options exercised during 2024 was $ 15 .

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Vested and expected to vest at September 30, 2024

During 2023, AspenTech granted performance stock units with a performance condition and service condition.

These performance stock units vest on a cliff basis in three years based upon the achievement of predefined performance goals, with the ability for 25 percent of granted awards to vest on an accelerated basis in each of the first two years .

The performance goal relates to the sum of (i) Annual Contract Value growth and (ii) free cash flow margin over the performance period.

In 2024 , AspenTech granted additional performance stock units with a performance condition and service

The 2024 performance stock units vest on a cliff basis in three years based upon the achievement of predefined performance goals, with no ability for the awards to vest on an accelerated basis.

The performance goal relates to (i) growth in annual contract value over the performance period and (ii) cumulative free cash flow over the performance period.

Up to 150 percent of the performance stock units could vest upon achievement of the performance goals.

Conversely, if a minimum performance goal is not met, none of the performance stock units will vest.

During 2024, the total fair value of vested shares from AspenTech RSU grants amounted to $ 62 .

Withholding taxes of $ 21 were paid on vested RSUs during 2024.

In 2023, AspenTech granted performance stock units with a performance condition and service condition.

The performance goal relates to the sum of (i) annual contract value growth and (ii) free cash flow margin over the

performance period.

Up to 175 percent of the performance stock units could vest upon achievement of the performance goals.

Conversely, if a minimum performance goal is not met, none of the performance stock units will vest.

At September 30, 2024, common stock reserved for future issuance under all AspenTech equity compensation plans was 4 million shares.

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At September 30, 2024, 23.3 million shares of common stock were reserved for issuance under the Company's stock-based compensation plans.

During 2023, 21.3 million common shares were purchased and 1.8 million

treasury shares were reissued.

During 2024, 4.4 million common shares were purchased and 2.6 million treasury shares were reissued.

In 2023, 21.3 million common shares were purchased and 1.8 million treasury shares were reissued.

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( 636 ) 158 356

Reclassified to gain on sale of business — — 95

Reclassification to loss on divestiture of business — 95 23

Reclassification to gain on sale of equity interest — — 17

Ending balance ( 1,265 ) ( 1,012 ) ( 616 )

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(20) BUSINESS SEGMENTS INFORMATION

As disclosed in Note 5, the financial results of Climate Technologies, InSinkErator and Therm-O-Disc are reported as discontinued operations for all periods presented.

As a result of these portfolio actions, the Company has realigned its business segments and now reports six segments and two business groups, which are highlighted in the table below.

The Company also reclassified certain product sales that were previously reported in Control Systems & Software to Discrete Automation.

As a result of the Company's acquisition of NI, which is now referred to as Test & Measurement and reported as a new segment in the Software and Control business group (see Note 4), the Company now reports seven segments and two business groups, which are highlighted in the table below.

INTELLIGENT DEVICES SOFTWARE AND CONTROL

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• Measurement & Analytical

• Test & Measurement

• Discrete Automation

• Safety & Productivity

The new segments were previously described as follows:

Final Control was the Valves, Actuators & Regulators product offering;

Measurement & Analytical was the Measurement & Analytical instrumentation product offering;

Discrete Automation was the Industrial Solutions product offering;

Safety & Productivity was the Tools & Home Products segment, excluding the divested InSinkErator business;

Control Systems & Software was the Systems &

Software product offering;

and, AspenTech remains unchanged.

The AspenTech segment was identified in the third quarter of fiscal 2022 as a result of the Heritage AspenTech acquisition and reflects the combined results of Heritage 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 Control Systems & Software segment), while results related to the Heritage AspenTech business only include periods subsequent to the close of the transaction.

Prior year amounts have been reclassified to conform to the current year presentation.

The Final Control segment is a leading global provider of control valves, isolation valves, shutoff valves, pressure relief valves, pressure safety valves, actuators, and regulators for process and hybrid industries.

These solutions respond to commands from a control system to continuously and precisely control and regulate the flow of liquids or gases to achieve safe operation along with reliability and optimized performance.

The Measurement & Analytical segment is a leading supplier of intelligent instrumentation measuring the physical properties of liquids or gases, such as pressure, temperature, level, flow, acoustics, corrosion, pH, conductivity, water quality, toxic gases, and flame.

The instrumentation transfers data to control systems and automation software, allowing process and hybrid industry operators to make educated decisions regarding production, reliability and safety.

These devices transfer data and asset management information to control systems and automation software, allowing process and hybrid industry operators to make educated decisions regarding production, reliability, sustainability and safety.

The Discrete Automation segment includes solenoid valves, pneumatic valves, valve position indicators, pneumatic cylinders and actuators, air preparation equipment, pressure and temperature switches, electric linear motion solutions, programmable automation control systems and software, electrical distribution equipment, and materials joining solutions used primarily in discrete industries.

The Safety & Productivity segment offers tools for professionals and homeowners that promote safety and productivity.

Pipe-working tools include pipe wrenches, pipe cutters, pipe threading and roll grooving equipment, battery hydraulic tools for press connections, drain cleaners, tubing tools and diagnostic systems, including sewer inspection cameras and locating equipment.

The Safety & Productivity segment delivers tools for professionals and homeowners that support infrastructure, promote safety and enhance productivity.

Pipe-working tools include pipe wrenches and cutters, pipe threading and roll grooving equipment, battery hydraulic tools for press connections, drain cleaners and diagnostic systems, including sewer inspection cameras and locating equipment.

Electrical tools include conduit benders and cable pulling equipment, battery hydraulic tools for cutting and crimping electrical cable, and hole-making equipment.

Other professional tools include water jetters, wet-dry vacuums, commercial vacuums and hand tools.

The Control Systems & Software segment provides control systems and software that control plant processes by collecting and analyzing information from measurement devices in the plant and using that information to adjust valves, pumps, motors, drives and other control hardware for maximum product quality, process efficiency and safety.

The Control Systems & Software segment provides control systems and software that control plant processes by collecting and analyzing information from measurement devices in the plant.

These technologies determine optimal settings with software based on a customer's specific algorithms and use that information to adjust valves, pumps, motors, drives and other control hardware for maximum product quality, process efficiency, sustainability and safety.

These solutions include distributed control systems, safety instrumented systems, SCADA systems, application software, digital twins, asset performance management and cybersecurity.

Control Systems & Software solutions are predominantly used by process and hybrid manufacturers.

The Test & Measurement segment provides software-connected automated test and measurement systems that enable enterprises to bring products to market faster and at a lower cost.

The Test & Measurement business spans the full range of customer needs including modular instrumentation, data acquisition and control solutions, and general-purpose development software.

AspenTech is a global leader in asset optimization software that enables industrial manufacturers to design, operate and maintain their operations for maximum performance.

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Control Systems & Software 2,398 2,606 2,842 437 529 645 1,700 2,151 2,262

Test & Measurement — — 1,464 — — ( 290 ) — — 9,210

AspenTech 656 1,042 1,093 12 ( 107 ) ( 73 ) 14,484 14,048 13,641

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Corporate and other (includes assets held-for-sale) ( 419 ) ( 224 ) ( 664 ) 6,879 13,226 5,607

Loss on Copeland note receivable — — ( 279 )

Gain on subordinated interest 453 161 79

Loss on Copeland equity method investment — — ( 177 )

Eliminations/Interest ( 86 ) ( 71 ) ( 68 ) ( 194 ) ( 34 ) ( 175 )

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Total $ 13,804 15,165 17,492 $ 2,432 2,903 2,020 $ 35,672 42,746 44,246

In 2023 , Corporate and other includes a loss of $ 47 r elated to the Company's exit of business operations in Russia while 2022 includes a loss of $ 181 .

Corporate and other for 2023 includes acquisition/divestiture and related costs of $ 84 ($ 15 of which is reported in operating profit) while 2022 includes $ 91 .

In 2024 , stock compensation included $ 58 of integration-related stock compensation expense attributable to NI (of which $ 43 was reported as restructuring costs).

Corporate and other includes acquisition/divestiture fees and related costs of $ 205 ( $ 109 of which is reported in operating profit) , $ 84 ( $ 15 of which is reported in operating profit) and $ 91 for 2024, 2023 and 2022, respectively.

Additionally, in 2024, Corporate and other includes acquisition-related inventory step-up amortization of $ 231 and divestiture losses totaling $ 48 , while 2023 includes a loss of $ 47 r elated to the Company's exit of business operations in Russia compared to a loss of $ 181 in 2022.

Corporate and other in 2023 also included a mark-to-market gain of $ 24 related to foreign currency forward contracts entered into by AspenTech and a mark-to-market gain of $ 56 related to the Company's equity investment in National Instruments Corporation (see Note 6).

and Amortization Capital

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Control Systems & Software 93 90 101 27 33 39

Test & Measurement — — 607 — — 27

AspenTech 242 492 493 4 6 7

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Americas AMEA Europe Total Americas AMEA Europe Total

Measurement & Analytical $ 1,338 1,181 559 3,078 $ 1,529 1,199 487 3,215

Final Control $ 1,706 1,373 528 3,607 $ 1,949 1,481 540 3,970

Measurement & Analytical 1,529 1,199 487 3,215 1,847 1,222 526 3,595

Discrete Automation 1,217 732 663 2,612 1,234 720 681 2,635

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Intelligent Devices 5,509 3,375 1,952 10,836 6,079 3,493 2,016 11,588

AspenTech 200 60 59 319 362 140 154 656

Control Systems & Software 1,170 745 483 2,398 1,259 818 529 2,606

Test & Measurement — — — — — — — —

AspenTech 362 140 154 656 470 286 286 1,042

Software and Control 1,532 885 637 3,054 1,729 1,104 815 3,648

1 unchanged sentence

Americas AMEA Europe Total

Measurement & Analytical $ 1,847 1,222 526 3,595

Final Control $ 2,010 1,647 547 4,204

Measurement & Analytical 2,046 1,382 633 4,061

Discrete Automation 1,178 646 682 2,506

1 unchanged sentence

Intelligent Devices 6,282 3,748 2,131 12,161

AspenTech 470 286 286 1,042

Control Systems & Software 1,322 920 600 2,842

Test & Measurement 654 389 421 1,464

AspenTech 540 261 292 1,093

Software and Control 2,516 1,570 1,313 5,399

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Amortization of intangibles (includes $ 108 , $ 196 and $ 197 reported in Cost of Sales in 2021, 2022 and 2023, respectively) (a)

444 678 1,274

Amortization of capitalized software 86 86 92

Total $ 842 1,051 1,689

(a) Amortization of intangibles include s $ 397 and $ 148 related to the Heritage AspenTech acquisition for 2023 and 2022, respectively, and $ 14 that is reported as a restructuring related cost in 2022.

Backlog amortization of $ 30 related to the OSI acquisition is included in 2021.

(a) Amortization of intangibles includes $ 560 related to the NI acquisition in 2024, while 2024, 2023 and 2022 includes $ 398 , $ 397 and $ 148 ($ 14 of which is reported as a restructuring related cost), respectively, related to the Heritage AspenTech acquisition.

Items reported in other noncurrent assets included the following:

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(23) SUBSEQUENT EVENTS

On October 11, 2023, the Company completed the acquisition of National Instruments Corporation (“NI”) for $ 60 per share in cash at an equity value of $ 8.2 billion.

The effective price per share is $ 59.61 considering shares previously acquired by Emerson.

NI will be referred to as Test & Measurement and reported as a new segment in the Software and Control business group in 2024.

The initial accounting for this transaction is not yet complete.

On November 5, 2024, the Company announced a proposal to acquire all outstanding shares of common stock of AspenTech not already owned by Emerson for $ 240 per share in cash.

The Company currently owns approximately 57 percent of AspenTech's outstanding shares of common stock.

Also on November 5, 2024, the Company announced that it is exploring strategic alternatives, including a cash sale, for its Safety & Productivity segment.

Report of Independent Registered Public Accounting Firm

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(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

and (3) provide reasonable

assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate beca use of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicat ed or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Sufficiency of Audit Evidence over Net Sales

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• Assessed the recorded net sales by selecting a sample of transactions and compared the amounts recognized for consistency with underlying documentation, including contracts with customers and shipping documentation.

Evaluation of the Acquisition Date Fair Value of Certain Acquired Intangible Assets

As discussed in Notes 4 and 8 to the consolidated financial statements, on October 11, 2023, the Company completed the acquisition of National Instruments Corporation for a total purchase consideration of $8.7 billion.

The estimated intangible assets attributable to the transactions included customer relationships and developed technology intangible assets with acquisition date fair values of $3.36 billion and $1.57 billion, respectively.

We identified the evaluation of the acquisition date fair value of the customer relationships and developed technology intangible assets as a critical audit matter.

A high degree of subjective and complex auditor judgment was required to evaluate key assumptions used to value these acquired intangible assets.

Specifically, key assumptions included projected revenue and customer attrition for the customer relationships intangible asset and projected revenue and obsolescence rates for the developed technology intangible asset.

Changes to these assumptions could have had a significant impact on the fair value of such assets.

valuation professionals with specialized skills and knowledge were needed to assist in the evaluation of the customer attrition and obsolescence rates assumptions.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s business combination process, including controls related to the development of the projected revenue, customer attrition, and obsolescence rate assumptions used in the Company’s valuations of intangible assets.

We evaluated the projected revenue used by the Company by (1) comparing to historical results of the acquired entity and publicly available information for peer companies and (2) inquiring of individuals outside of the accounting function about projected revenue and the process used to develop it.

In addition, we compared the Company’s projected revenue for the acquired entity to their actual revenue subsequent to the acquisition to evaluate the C ompany’s ability to forecast.

We involved valuation professionals with specialized skills and knowledge, who assisted in:

• evaluating the Company's customer attrition rate by comparing it to historical attrition experienced by the acquired company

• evaluating the obsolescence rates by comparing them to companies within the same industry as well as comparable historical transactions

We or our predecessor firms have served as the Company’s auditor since 1938.

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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-K

Item 8. Financial Statements and Supplementary Data