EMERSON ELECTRIC CO 10-K

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See the Company's consolidated financial statements and accompanying notes and the report thereon of KPMG LLP (PCAOB ID 185 ) that follow. 34 Consolidated Statements of Earnings EMERSON ELECTRIC CO. & SUBSIDIARIES Years ended September 30 (Dollars and shares in millions, except per share amounts) 2023 2024 2025 Net sales $ 15,165 17,492 18,016 Cost of sales 7,738 8,607 8,497 Selling, general and administrative expenses 4,186 5,142 5,103 Gain on subordinated interest ( 161 ) ( 79 ) — Loss on Copeland note receivable — 279 — Other deductions, net 506 1,434 1,245 Interest expense, net of interest income of: 2023, $ 227 ; 2024, $ 148 ; 2025, $ 150 34 175 237 Interest income from related party ( 41 ) ( 86 ) — Earnings from continuing operations before income taxes 2,903 2,020 2,934 Income taxes 642 415 696 Earnings from continuing operations 2,261 1,605 2,238 Discontinued operations, net of tax of $ 2,969 , $ 85 and $( 4 ), respectively 10,939 350 8 Net earnings 13,200 1,955 2,246 Less: Noncontrolling interests in earnings of subsidiaries ( 19 ) ( 13 ) ( 47 ) Net earnings common stockholders $ 13,219 1,968 2,293 Earnings common stockholders: Earnings from continuing operations $ 2,286 1,618 2,285 Discontinued operations 10,933 350 8 Net earnings common stockholders $ 13,219 1,968 2,293 Basic earnings per share common stockholders: Earnings from continuing operations $ 3.98 2.83 4.05 Discontinued operations 19.02 0.61 0.01 Basic earnings per common share $ 23.00 3.44 4.06 Diluted earnings per share common stockholders: Earnings from continuing operations $ 3.96 2.82 4.03 Discontinued operations 18.92 0.61 0.01 Diluted earnings per common share $ 22.88 3.43 4.04 Weighted average outstanding shares: Basic 574.2 571.3 564.0 Diluted 577.3 574.0 566.7 See accompanying Notes to Consolidated Financial Statements. 35 Consolidated Statements of Comprehensive Income EMERSON ELECTRIC CO. & SUBSIDIARIES Years ended September 30 (Dollars in millions) 2023 2024 2025 Net earnings $ 13,200 1,955 2,246 Other comprehensive income (loss), net of tax: Foreign currency translation 254 400 47 Pension and postretirement ( 25 ) 2 ( 24 ) Cash flow hedges 4 ( 13 ) 20 Total other comprehensive income (loss) 233 389 43 Comprehensive income 13,433 2,344 2,289 Less: Noncontrolling interests in comprehensive income of subsidiaries ( 18 ) ( 9 ) ( 51 ) Comprehensive income common stockholders $ 13,451 2,353 2,340 See accompanying Notes to Consolidated Financial Statements. 36 Consolidated Balance Sheets EMERSON ELECTRIC CO. & SUBSIDIARIES Years ended September 30 (Dollars and shares in millions, except per share amounts) 2024 2025 ASSETS Current assets Cash and equivalents $ 3,588 1,544 Receivables, less allowances of $ 121 in 2024 and $ 123 in 2025 2,927 3,101 Inventories 2,180 2,213 Other current assets 1,497 1,725 Total current assets 10,192 8,583 Property, plant and equipment, net 2,807 2,871 Other assets Goodwill 18,067 18,193 Other intangible assets 10,436 9,458 Other 2,744 2,859 Total other assets 31,247 30,510 Total assets $ 44,246 41,964 LIABILITIES AND EQUITY Current liabilities Short-term borrowings and current maturities of long-term debt $ 532 4,797 Accounts payable 1,335 1,384 Accrued expenses 3,875 3,616 Total current liabilities 5,742 9,797 Long-term debt 7,155 8,319 Other liabilities 3,840 3,550 Equity Common stock, $ 0.50 par value; authorized, 1,200.0 shares; issued, 953.4 shares; outstanding, 570.2 shares in 2024; 562.8 shares in 2025 477 477 Additional paid-in-capital 169 85 Retained earnings 40,830 40,603 Accumulated other comprehensive income (loss) ( 868 ) ( 821 ) Cost of common stock in treasury, 383.2 shares in 2024; 390.6 shares in 2025 ( 18,972 ) ( 20,062 ) Common stockholders’ equity 21,636 20,282 Noncontrolling interests in subsidiaries 5,873 16 Total equity 27,509 20,298 Total liabilities and equity $ 44,246 41,964 See accompanying Notes to Consolidated Financial Statements. 37 Consolidated Statements of Equity EMERSON ELECTRIC CO. & SUBSIDIARIES Years ended September 30 (Dollars in millions, except per share amounts) 2023 2024 2025 Common stock $ 477 477 477 Additional paid-in-capital Beginning balance 57 62 169 Stock plans 127 226 71 AspenTech purchases of common stock ( 122 ) ( 119 ) — Purchase of noncontrolling interest — — ( 1,400 ) Settlement of AspenTech share awards — — ( 76 ) Reclass negative APIC to retained earnings — — 1,321 Ending balance 62 169 85 Retained earnings Beginning balance 28,053 40,070 40,830 Net earnings common stockholders 13,219 1,968 2,293 Dividends paid (per share: 2023, $ 2.08 ; 2024, $ 2.10 ; 2025, $ 2.11 ) ( 1,202 ) ( 1,208 ) ( 1,199 ) Reclass negative APIC to retained earnings — — ( 1,321 ) Ending balance 40,070 40,830 40,603 Accumulated other comprehensive income (loss) Beginning balance ( 1,485 ) ( 1,253 ) ( 868 ) Foreign currency translation 253 396 51 Pension and postretirement ( 25 ) 2 ( 24 ) Cash flow hedges 4 ( 13 ) 20 Ending balance ( 1,253 ) ( 868 ) ( 821 ) Treasury stock Beginning balance ( 16,738 ) ( 18,667 ) ( 18,972 ) Purchases ( 2,000 ) ( 435 ) ( 1,178 ) Issued under Emerson stock plans 71 130 88 Ending balance ( 18,667 ) ( 18,972 ) ( 20,062 ) Common stockholders' equity 20,689 21,636 20,282 Noncontrolling interests in subsidiaries Beginning balance 5,952 5,909 5,873 Net earnings ( 19 ) ( 13 ) ( 47 ) Stock plans 94 64 29 AspenTech purchases of common stock ( 92 ) ( 89 ) — Other comprehensive income 1 4 ( 4 ) Dividends paid ( 1 ) ( 2 ) ( 3 ) AspenTech acquisition — — — Purchase of noncontrolling interests 3 — ( 5,832 ) Climate Technologies divestiture ( 29 ) — — Ending balance 5,909 5,873 16 Total equity $ 26,598 27,509 20,298 See accompanying Notes to Consolidated Financial Statements. 38 Consolidated Statements of Cash Flows EMERSON ELECTRIC CO. & SUBSIDIARIES Years ended September 30 (Dollars in millions) 2023 2024 2025 Operating activities Net earnings $ 13,200 1,955 2,246 Earnings from discontinued operations, net of tax ( 10,939 ) ( 350 ) ( 8 ) Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 1,051 1,689 1,518 Stock compensation 250 260 263 Amortization of acquisition-related inventory step-up — 231 — Pension expense (income) ( 71 ) ( 79 ) ( 12 ) Pension funding ( 43 ) ( 38 ) ( 46 ) Gain on subordinated interest ( 161 ) ( 79 ) — Loss on Copeland note receivable — 279 — Changes in operating working capital ( 148 ) ( 151 ) ( 9 ) Other, net ( 429 ) ( 400 ) ( 276 ) Cash from continuing operations 2,710 3,317 3,676 Cash from discontinued operations ( 2,073 ) 15 ( 578 ) Cash provided by operating activities 637 3,332 3,098 Investing activities Capital expenditures ( 363 ) ( 419 ) ( 431 ) Purchases of businesses, net of cash and equivalents acquired ( 705 ) ( 8,342 ) ( 37 ) Proceeds from subordinated interest 176 79 — Proceeds from related party note receivable 918 — — Other, net ( 141 ) ( 114 ) ( 125 ) Cash from continuing operations ( 115 ) ( 8,796 ) ( 593 ) Cash from discontinued operations 12,530 3,436 — Cash provided by (used in) investing activities 12,415 ( 5,360 ) ( 593 ) Financing activities Net increase (decrease) in short-term borrowings ( 1,578 ) ( 15 ) 1,110 Proceeds from short-term borrowings greater than three months 395 322 8,008 Payments of short-term borrowings greater than three months ( 400 ) ( 327 ) ( 4,918 ) Proceeds from long-term debt — — 1,544 Payments of long-term debt ( 741 ) ( 547 ) ( 503 ) Dividends paid ( 1,198 ) ( 1,201 ) ( 1,192 ) Purchases of common stock ( 2,000 ) ( 435 ) ( 1,167 ) AspenTech purchases of common stock ( 214 ) ( 208 ) — Payment of related party note payable ( 918 ) — — Purchase of noncontrolling interest — — ( 7,244 ) Repurchase of AspenTech share awards — — ( 76 ) Other, net ( 169 ) ( 44 ) ( 72 ) Cash used in financing activities ( 6,823 ) ( 2,455 ) ( 4,510 ) Effect of exchange rate changes on cash and equivalents 18 20 ( 39 ) Increase (Decrease) in cash and equivalents 6,247 ( 4,463 ) ( 2,044 ) Beginning cash and equivalents 1,804 8,051 3,588 Ending cash and equivalents $ 8,051 3,588 1,544 Changes in operating working capital Receivables $ ( 191 ) ( 99 ) ( 171 ) Inventories ( 160 ) 122 ( 1 ) Other current assets ( 1 ) ( 149 ) ( 152 ) Accounts payable ( 17 ) ( 16 ) 34 Accrued expenses 221 ( 9 ) 281 Total changes in operating working capital $ ( 148 ) ( 151 ) ( 9 ) See accompanying Notes to Consolidated Financial Statements. 39 Notes to Consolidated Financial Statements EMERSON ELECTRIC CO. & SUBSIDIARIES Years ended September 30 (Dollars in millions, except per share amounts or where noted) (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Financial Statement Presentation The preparation of the financial s tatements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from these estimates. Certain prior year amounts have been reclassified to conform to the current year presentation. On March 12, 2025, Emerson completed its purchase of the remaining outstanding shares of common stock of AspenTech not already owned by the Company . As a result of the transaction, AspenTech is now a wholly owned subsidiary of the Company. AspenTech was reorganized upon completion of the transaction and now reports to Control Systems & Software leadership. AspenTech's results, which were previously reported as a separate segment, are now consolidated into the Control Systems & Software segmen t for all periods presented. See Notes 4 and 20. In the fourth quarter of 2025, the Company adopted ASU No. 2023-07 (Topic 280), Improvements to Reportable Segment Disclosures , which requires disclosure of significant segment expenses on an annual and interim basis. The new standard also requires disclosure of the Company's chief operating decision maker and interim disclosure of each reportable segment's total assets. This standard has no impact on the accounting for reportable segments. See Note 20. 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. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its controlled affiliates. Intercompany transactions, profits and balances are eliminated in consolidation. Investments of 20 percent to 50 percent of the voting shares of other entities are accounted for by the equity method. Investments in publicly traded companies of less than 20 percent are carried at fair value, with changes in fair value reflected in earnings. Investments in nonpublicly traded companies of less than 20 percent are carried at cost, minus impairment, and adjusted for observable price changes in orderly transactions. Foreign Currency Translation The functional currency for most of the Company's non-U.S. subsidiaries is the local currency. Adjustments resulting from translating local currency financial statements into U.S. dollars are reflected in accumulated other comprehensive income. Cash Equivalents Cash equivalents consist of highly liquid investments with original maturities of three months or less. 40 Inventories Inventories are stated at the lower of cost and net realizable value. The majority of inventory is valued based on standard costs, which are revised at the beginning of each year and approximate average costs, while the remainder is principally valued on a first-in, first-out basis. Following are the components of inventory as of September 30: 2024 2025 Finished products $ 512 520 Raw materials and work in process 1,668 1,693 Total inventories $ 2,180 2,213 Fair Value Measurement ASC 820, Fair Value Measurement , establishes a formal hierarchy and framework for measuring certain financial statement items at fair value, and requires disclosures about fair value measurements and the reliability of valuation inputs. Under ASC 820, measurement assumes the transaction to sell an asset or transfer a liability occurs in the principal or at least the most advantageous market for that asset or liability. Within the hierarchy, Level 1 instruments use observable market prices for an identical item in active markets and have the most reliable valuations. Level 2 instruments are valued through broker/dealer quotation or other approaches using market-observable inputs for similar items in active markets, including forward and spot prices, interest rates and volatilities. Level 3 instruments are valued using inputs not observable in an active market, such as company-developed future cash flow estimates, and are considered the least reliable. Valuations for all of the Company's financial instruments fall within Level 2. 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 The Company records investments in land, buildings, and machinery and equipment at cost. Depreciation is computed principally using the straight-line method over estimated service lives, which for principal assets are 30 to 40 years for buildings and 8 to 12 years for machinery and equipment. Long-lived tangible assets are reviewed for impairment whenever events or changes in business circumstances indicate the carrying value of the assets may not be recoverable. Impairment losses are recognized based on estimated fair values if the sum of estimated future undiscounted cash flows of the related assets is less than the carrying values. The components of property, plant and equipment as of September 30 follow: 2024 2025 Land $ 278 273 Buildings 2,048 2,127 Machinery and equipment 3,538 3,694 Construction in progress 321 314 Property, plant and equipment, at cost 6,185 6,408 Less: Accumulated depreciation 3,378 3,537 Property, plant and equipment, net $ 2,807 2,871 Goodwill and Other Intangible Assets Assets and liabilities acquired in business combinations are accounted for using the acquisition method and recorded at their respective fair values. Substantially all goodwill is assigned to the reporting unit that acquires a business. A reporting unit is an operating segment as defined in ASC 280, Segment Reporting , or a business one level below an operating segment if discrete financial information for that business unit is prepared and regularly reviewed by the segment manager. The Company conducts annual impairment tests of goodwill in the fourth quarter. If an initial assessment indicates it is more likely than not goodwill might be impaired, it is evaluated by comparing the reporting unit's estimated fair value to its carrying value. An impairment charge would be recorded for the amount by which the carrying value of the reporting unit exceeds the estimated fair value. 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. Fair values are subject to changes in underlying economic conditions. 41 With the exception of certain trade names, all of the Company's identifiable intangible assets are subject to amortization on a straight-line basis over their estimated useful lives. Ident ifiable intangibles consist of intellectual property such as technology, patents and trademarks, customer relationships and capitalized software. Identifiable intangibles are also subject to evaluation for potential impairment if events or circumstances indicate the carrying amount may not be recoverable. See Note 10. Leases The Company leases offices; manufacturing facilities and equipment; and transportation, information technology and office equipment under operating lease arrangements. Finance lease arrangements are immaterial. The Company determines whether an arrangement is, or contains, a lease at contract inception. An arrangement contains a lease if the Company has the right to direct the use of and obtain substantially all of the economic benefits of an identified asset. Right-of-use assets and lease liabilities are recognized at lease commencement based on the present value of lease payments over the lease term. Leases with an initial term of 12 months or less are not recognized on the balance sheet and are recorded as short-term lease expense. The discount rate used to calculate present value is the Company's incremental borrowing rate based on the lease term and the economic environment of the applicable country or region. Certain leases contain renewal options or options to terminate prior to lease expiration, which are included in the measurement of right-of-use assets and lease liabilities when it is reasonably certain they will be exercised. The Company has elected to account for lease and non-lease components as a single lease component for its offices and manufacturing facilities. Some lease arrangements include payments that are adjusted periodically based on actual charges incurred for common area maintenance, utilities, taxes and insurance, or changes in an index or rate referenced in the lease. The fixed portion of these payments is included in the measurement of right-of-use assets and lease liabilities at lease commencement, while the variable portion is recorded as variable lease expense. The Company's leases typically do not contain material residual value guarantees or restrictive covenants. Product Warranty Warranties vary by product line and are competitive for the markets in which the Company operates. Warranties are largely offered to provide assurance that the product will function as intended and generally extend for a period of one to two years from the date of sale or installation. Provisions for warranty expense are estimated at the time of sale based on historical experience and adjusted quarterly for any known issues that may arise. Product warranty expense is less than one-half of one percent of sales. Revenue Recognition Emerson is a global manufacturer that designs and manufactures products and delivers services that bring technology and engineering together to provide innovative solutions for its customers. In accordance with ASC 606, Revenue from Contracts with Customers , the Company evaluates its contracts with customers to identify the promised goods or services and recognizes revenue for the identified performance obligations at the amount the Company expects to be entitled to in exchange for those goods or services. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer. Revenue is recognized when, or as, performance obligations are satisfied and control has transferred to the customer, typically when products are shipped or delivered, title and risk of loss pass to the customer, and the Company has a present right to payment. 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. 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 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. 42 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. The Company believes costs incurred closely correspond with its performance under the contract and the transfer of control to the customer. For software maintenance contracts, revenue is recognized ratably over the maintenance term. In sales arrangements that involve multiple performance obligations, revenue is allocated based on the relative standalone selling price for each performance obligation. Observable selling prices from actual transactions are used whenever possible. In other instances, the Company determines the standalone selling price based on third-party pricing or management's best estimate. Generally, contract duration is short-term, and cancellation, termination or refund provisions apply only in the event of contract breach and are rarely invoked. Payment terms vary but are generally short-term in nature. The Company's long-term contracts, where revenue is generally recognized over time, are typically billed as work progresses in accordance with the contract terms and conditions, either at periodic intervals or upon achievement of certain milestones. The timing of revenue recognition and billings under these contracts results in either unbilled receivables (contract assets) when revenue recognized exceeds billings, or customer advances (contract liabilities) when billings exceed revenue recognized. Unbilled receivables are reclassified to accounts receivable when an unconditional right to consideration exists, typically when a milestone in the contract is achieved. The Company does not evaluate whether the transaction price includes a significant financing component for contracts where the time between cash collection and performance is less than one year. Certain arrangements with customers include variable consideration, typically in the form of rebates, cash discounts or penalties. In limited circumstances, the Company sells products with a general right of return. In most instances, returns are limited to product quality issues. The Company records a reduction to revenue at the time of sale to reflect the ultimate amount of consideration it expects to receive. The Company's estimates are updated quarterly based on historical experience, trend analysis, and expected market conditions. Variable consideration is typically not constrained at the time revenue is recognized. See Notes 2 and 20 for additional information about the Company's revenues. Derivatives and Hedging 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 Chinese yuan. As part of the Company's risk management strategy, derivative instruments are selectively used in an effort to minimize the impact of these exposures. Foreign exchange forwards and options are utilized to hedge foreign currency exposures impacting sales or cost of sales transactions, firm commitments and the fair value of assets and liabilities. Non-U.S. dollar obligations are utilized to reduce foreign currency risk associated with the Company's net investments in foreign operations. All derivatives are associated with specific underlying exposures and the Company does not hold derivatives for trading or speculative purposes. The duration of hedge positions is generally two years or less, except for the Company's net investment hedges. All derivatives are accounted for under ASC 815, Derivatives and Hedging , and recognized at fair value. 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. 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. Currency fluctuations on non-U.S. dollar obligations that have been designated as hedges of net investments in foreign operations are recognized in accumulated other comprehensive income (loss) and reclassified to income in the same period when a foreign operation is sold or substantially liquidated and the gain or loss related to the sale is included in income. To the extent that any hedge is not fully effective at offsetting changes in the underlying hedged item, there could be a net earnings impact. The Company also uses derivatives to he dge economic exposures that do not receive hedge accounting under ASC 815. 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. On June 21, 2023, AspenTech terminated all outstanding foreign currency forward contracts and on August 1, 2023, announced the 43 termination of the agreement to purchase Micromine. Gains or losses on derivative instruments not designated as hedges are recognized in the income statement immediately. Counterparties to derivative arrangements are companies with investment-grade credit ratings. The Company has bilateral collateral arrangements with counterparties with credit rating-based posting thresholds that vary depending on the arrangement. If credit ratings on the Company's debt fall below pre-established levels, counterparties can require immediate full collateralization on all derivatives in net liability positions. The maximum amount that could potentially have been required was immaterial. 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 at year end. Risk from credit loss when derivatives are in asset positions is not considered material. The Company has master netting arrangements in place with its counterparties that allow the offsetting of certain derivative-related amounts receivable and payable when settlement occurs in the same period. Accordingly, counterparty balances are netted in the consolidated balance sheet and are reported in other current assets or accrued expenses as appropriate, depending on positions with counterparties as of the balance sheet date. See Note 11. Income Taxes The provision for income taxes is based on pretax income reported in the consolidated statements of earnings and tax rates currently enacted in each jurisdiction. Certain income and expense items are recognized in different time periods for financial reporting and income tax filing purposes, and deferred income taxes are provided for the effect of temporary differences. The Tax Cuts and Jobs Act subjects the Company to U.S. tax on global intangible low-taxed income earned by certain of its non-U.S. subsidiaries. The Company has elected to recognize this tax as a period expense when it is incurred. The Company also provides for withholding taxes and any applicable U.S. income taxes on earnings intended to be repatriated from non-U.S. locations. No provision has been made for these taxes on approxim ately $ 5.3 billion o f undistributed earnings of non-U.S. subsidiaries as of September 30, 2025, as these earnings are considered indefinitely reinvested or otherwise retained for continuing international operations. Recognition of withholding taxes and any applicable U.S. income taxes on undistributed non-U.S. earnings would be triggered by a management decision to repatriate those earnings. Determination of the amount of taxes that might be paid on these undistributed earnings if eventually remitted is not practicable. See Note 16. (2) REVENUE RECOGNITION 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. 2024 2025 Unbilled receivables (contract assets) $ 1,599 1,891 Customer advances (contract liabilities) ( 1,115 ) ( 1,105 ) Net contract assets $ 484 786 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 where the license revenue is recognized upfront upon delivery. Net contract assets increased as revenue recognized for performance completed during the period exceeded customer billings. Revenue recognized for 2025 included approximately $ 798 that was included in the beginning contract liability balanc e. Other factors that impacted the change in net contract assets were immaterial. Revenue recognized for 2025 for performance obligations that were satisfied in previous periods, including cumulative catchup adjustments on the Company's long-term contracts, was not material. Capitalized amounts related to incremental costs to obtain customer contracts and costs to fulfill contracts are immaterial. As of September 30, 2025, the Company's backlog relating to unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was approximately $ 8.6 billion . 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. 44 (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, 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 2025, 2024 and 2023 as the effect would have been antidilutive. Earnings allocated to participating securities were inconsequential for all years presented. Reconciliations of weighted-average shares for basic and diluted earnings per common share follow (shares in millions): 2023 2024 2025 Basic shares outstanding 574.2 571.3 564.0 Dilutive shares 3.1 2.7 2.7 Diluted shares outstanding 577.3 574.0 566.7 (4) ACQUISITIONS AND DIVESTITURES AspenTech On March 12, 2025, Emerson completed its purchase of the remaining outstanding shares of common stock of AspenTech not already owned by the Company for approximately $ 7.2 billion. Emerson also incurred fees of $ 76 ($ 65 after-tax) and paid $ 76 to settle certain AspenTech share-based awards that were outstanding prior to the transaction closing. The purchase of the remaining outstanding shares and related costs are reported as an adjustment to Equity. Separately, AspenTech incurred $ 127 ($ 113 after-tax) of deal-related fees which are reported as acquisition/divestiture costs in Other deductions, net. AspenTech is now reported as a part of the Control Systems & Software segment in the Software and Control business group, see Note 20. 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 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 45 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) 3,442 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). 2023 2024 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). 46 Other Transactions On November 15, 2024, AspenTech acquired Open Grid Systems Limited, a global provider of network model management technology and a pioneer in developing model-driven applications supporting open access to data through industry standards, for a total purchase price of $ 46 , net of cash acquired. The Company recognized goodwill of $ 32 ( none of which is expected to be tax deductible) and other identifiable intangible assets of $ 20 , consisting of developed technology and customer relationships with a weighted-average useful life of approximately 5 years . 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 received distributions related to its subordinated interest in Vertiv totaling $ 161 ($ 122 after-tax, $ 0.21 per share) and received $ 15 related to gains recognized in 2022. In 2024, the Company received its final distribution of $ 79 ($ 60 after-tax, $ 0.10 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. On March 31, 2023, Emerson completed the divestiture of Metran, its Russia-based manufacturing subsidiary and in 2023, 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. Emerson's historical net sales in Russia represented approximately 2.0 percent of consolidated annual sales. On July 27, 2022, AspenTech entered into an agreement to acquire Micromine, a global leader in design and operational solutions for the mining industry, for AU $ 900 (approximately $ 623 USD based on exchange rates when the transaction was announced). On August 1, 2023, AspenTech announced the termination of the agreement to purchase Micromine. AspenTech, along with the sellers of Micromine, had been waiting to secure final Russian regulatory approval as a condition to the closing of the transaction. As this process continued, the timing and requirements necessary to get this approval became increasingly unclear. This lack of clarity on the potential for, and timing of, a successful review led AspenTech and the sellers of Micromine to this mutual course of action. AspenTech did not pay any termination fee as part of this arrangement. (5) DISCONTINUED OPERATIONS 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. The Company recognized a pretax gain of approximately $ 10.6 billion (approximately $ 8.4 billion after-tax including tax expense recognized in prior quarters related to subsidiary restructurings). 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. See Note 8 for further details. On October 31, 2022, the Company completed the divestiture of its InSinkErator business, which manufactures food waste disposers, to Whirlpool Corporation for $ 3.0 billion. This business had net sales of $ 630 and pretax earnings of $ 152 in 2022. The Company recognized a pretax gain of approximately $ 2.8 billion (approximately $ 2.1 billion after-tax) in the first quarter of 2023. 47 The financial results of Climate Technologies and InSinkErator ("ISE") (through the completion of the divestitures), are reported as discontinued operations for all years presented and were as follows: Climate Technologies ISE Total 2023 2024 2025 2023 2024 2025 2023 2024 2025 Net sales $ 3,156 — — 49 — — 3,205 — — Cost of sales 2,000 — — 29 — — 2,029 — — SG&A 390 — 1 7 — — 397 — 1 Gain on sale of business ( 10,610 ) ( 539 ) — ( 2,783 ) — — ( 13,393 ) ( 539 ) — Other deductions, net 252 104 ( 10 ) 12 — 5 264 104 ( 5 ) Earnings before income taxes 11,124 435 9 2,784 — ( 5 ) 13,908 435 4 Income taxes 2,315 85 ( 3 ) 654 — ( 1 ) 2,969 85 ( 4 ) Earnings, net of tax $ 8,809 350 12 2,130 — ( 4 ) 10,939 350 8 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 included 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. Net cash from operating and investing activities for Climate Technologies, InSinkErator and Therm-O-Disc ("TOD", which was divested in the third quarter of 2022) were as follows: Climate Technologies ISE and TOD Total 2023 2024 2025 2023 2024 2025 2023 2024 2025 Cash from operating activities $ ( 1,314 ) 15 ( 578 ) ( 759 ) — — ( 2,073 ) 15 ( 578 ) Cash from investing activities $ 9,475 3,436 — 3,055 — — 12,530 3,436 — Cash from operating activities for 2025 primarily reflects approximately $ 0.6 billion of income taxes paid related to the sale of the Company's 40 percent non-controlling common equity interest in Copeland. 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 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. 48 (6) OTHER DEDUCTIONS, NET Other deductions, net are summarized below: 2023 2024 2025 Amortization of intangibles (intellectual property and customer relationships) $ 482 1,077 884 Restructuring costs 72 228 136 Acquisition/divestiture fees and related costs 69 96 214 Foreign currency transaction (gains) losses 50 105 92 Investment-related gains & gains from sales of capital assets ( 69 ) — — Russia business exit 47 — — Other ( 145 ) ( 72 ) ( 81 ) Total $ 506 1,434 1,245 Intangibles amortization for 2025 and 2024 included $ 425 and $ 560 , respectively, related to the NI acquisition. The increase in acquisition/divestiture costs in 2025 is primarily related to the AspenTech transaction. 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. On June 21, 2023, AspenTech terminated all outstanding foreign currency forward contracts. 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). 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 (income), litigation costs, provision for bad debt and other items, none of which is individually significant. (7) RESTRUCTURING COSTS Each year the Company incurs costs to size its businesses to levels appropriate for current economic conditions and to continually improve its cost structure and operational efficiency, deploy assets globally, and remain competitive on a worldwide basis. Costs result from numerous individual actions implemented across the Company's various operating units on an ongoing basis and can include costs for moving facilities to best-cost locations, restarting plants after relocation or geographic expansion to better serve local markets, reducing headcount or the number of facilities, exiting certain product lines, and other costs resulting from asset deployment decisions (such as contract termination costs, asset write-downs and vacant facility costs). Restructuring expenses were $ 136 , $ 228 and $ 72 for 2025, 2024 and 2023, respectively. The Company expects fiscal year 2026 restructuring and related costs to be approximate ly $ 100 . Restructuring costs by business segment follows: 2023 2024 2025 Final Control $ 12 12 9 Measurement & Analytical 9 26 14 Discrete Automation 27 35 28 Safety & Productivity — 7 4 Intelligent Devices 48 80 55 Control Systems & Software 10 19 25 Test & Measurement — 78 15 Software and Control 10 97 40 Corporate 14 51 41 Total $ 72 228 136 A ctions taken in 2025, 2024 and 2023 inc luded workforce reductions of approximately 2,100 , 2,250 and 700 positions and the exit of thirteen , twenty-two and ten production facilities and sales offices worldwide, respectively. Corporate restructuring for 2025 includes $ 22 of integration-related stock compensation expense attributable to AspenTech and $ 3 attributable to NI, while 2024 includes $ 43 attributable to NI. 49 The change in the liability for restructuring costs during the years ended September 30 follows: 2024 Expense Utilized/Paid 2025 Severance and benefits $ 105 120 109 116 Other 7 16 19 4 Total $ 112 136 128 120 2023 Expense Utilized/Paid 2024 Severance and benefits $ 85 191 171 105 Other 2 37 32 7 Total $ 87 228 203 112 The tables above do not include $ 26 , $ 16 and $ 20 of costs related to restructuring actions incurred in 2025, 2024 and 2023 respectively. (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 intere st in Copeland. 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. 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. 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 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. 2023 2024 Net sales $ 1,677 $ 4,323 Gross profit $ 479 $ 1,495 Income (loss) from continuing operations $ ( 442 ) $ ( 326 ) Net income (loss) $ ( 442 ) $ ( 326 ) Net income (loss) attributable to shareholders $ ( 442 ) $ ( 322 ) 50 (9) LEASES The components of lease expense for the years ended September 30 were as follows: 2023 2024 2025 Operating lease expense $ 178 208 201 Variable lease expense $ 20 24 21 Short-term lease expense and sublease income were immaterial for the years ended September 30, 2025, 2024 and 2023. Cash paid for operating leases is classified within operating cash flows from continuing operations and was $ 190 , $ 202 and $ 170 for the years ended September 30, 2025, 2024 and 2023, respectively. Operating lease right-of-use asset additions were $ 141 , $ 250 and $ 247 for the years ended September 30, 2025, 2024 and 2023, respectively. The following table summarizes the balances of the Company's operating lease right-of-use assets and operating lease liabilities as of September 30, 2024 and 2025, the vast majority of which relates to offices and manufacturing facilities: 2024 2025 Right-of-use assets (Other assets) $ 692 637 Current lease liabilities (Accrued expenses) $ 158 138 Noncurrent lease liabilities (Other liabilities) $ 511 505 The weighted-average remaining lease term for operating leases was 7.3 years and 7.7 years, and the weighted-average discount rate was 4.4 percent and 4.4 percent as of September 30, 2025 and September 30, 2024, respectively. Future maturities of operating lease liabilities as of September 30, 2025 are summarized below: 2025 2026 $ 170 2027 131 2028 98 2029 72 2030 53 Thereafter 244 Total lease payments 768 Less: Interest 125 Total lease liabilities $ 643 Lease commitments that have not yet commenced were immaterial as of September 30, 2025. 51 (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 Test & Measurement Total Balance, September 30, 2023 $ 2,660 1,545 892 388 8,995 — 14,480 Acquisitions — — — — — 3,442 3,442 Foreign currency translation and other 42 31 27 16 8 21 145 Balance, September 30, 2024 2,702 1,576 919 404 9,003 3,463 18,067 Acquisitions — — — — 32 — 32 Foreign currency translation and other 16 28 26 17 2 5 94 Balance, September 30, 2025 $ 2,718 1,604 945 421 9,037 3,468 18,193 The gross carrying amount and accumulated amortization of identifiable intangible assets by major class follow: Customer Relationships Intellectual Property Capitalized Software Total 2024 2025 2024 2025 2024 2025 2024 2025 Gross carrying amount $ 8,114 8,180 6,017 6,069 1,497 1,583 15,628 15,832 Less: Accumulated amortization 1,818 2,379 2,116 2,658 1,258 1,337 5,192 6,374 Net carrying amount $ 6,296 5,801 3,901 3,411 239 246 10,436 9,458 Intangible asset amortization expense for the major classes included above for 2025, 2024 and 2023 was $ 1,174 , $ 1,366 and $ 764 , respectively. Based on intangible asset balances as of September 30, 2025, amortization expense is expected to approximate $ 1,110 in 2026, $ 1,076 in 2027, $ 1,030 in 2028, $ 977 in 2029 and $ 940 in 2030. The increase in goodwill and intangible assets in 2024 reflects the National Instruments acquisition. 52 (11) FINANCIAL INSTRUMENTS Following is a discussion regarding the Company’s use of financial instruments: Hedging Activities As of September 30, 2025, the notional amount of foreign currency hedge positions was approximately $ 4.1 billion. All derivatives receiving hedge accounting are cash flow hedges. The majority of hedging gains and losses deferred as of September 30, 2025 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. Cash flows related to foreign currency hedges are classified within operating cash flows. Net Investment Hedge In March 2025, the Company issued € 500 of 3.0 % notes due March 2031 and € 500 of 3.5 % notes due March 2037. The net proceeds from the sale of the euro notes were used for general corporate purposes and to fund a portion of the purchase price of the AspenTech transaction (see Note 4). 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): Gain (Loss) to Earnings Gain (Loss) to OCI 2023 2024 2025 2023 2024 2025 Location Commodity Cost of sales $ ( 19 ) — — 6 — — Foreign currency Sales ( 3 ) — 5 — 2 7 Foreign currency Cost of sales 65 10 1 42 ( 8 ) 25 Foreign currency Other deductions, net ( 128 ) 10 ( 8 ) Net Investment Hedge Euro denominated debt 16 — — ( 128 ) ( 70 ) ( 181 ) Total $ ( 69 ) 20 ( 2 ) ( 80 ) ( 76 ) ( 149 ) Regardless of whether derivatives and non-derivative financial instruments receive hedge accounting, the Company expects hedging gains or losses to be offset by losses or gains on the related underlying exposures. The amounts ultimately recognized will differ from those presented above for open positions, which remain subject to ongoing market price fluctuations until settlement. Derivatives receiving hedge accounting are highly effective and no amounts were excluded from the assessment of hedge effectiveness. Equity Investment The Company had an equity investment in National Instruments Corporation ("NI") and recognized a mark-to-market gain of $ 56 in 2023. On April 12, 2023, Emerson announced an agreement to acquire NI for $ 60 per share in cash for the remaining shares not already owned by Emerson and the transaction closed on October 11, 2023. See Note 4. Fair Value Measurement 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 $ 8.2 billion and $ 7.0 billion, respec tively, as of September 30, 2025 and 2024, 53 which was lower than the carrying value by $ 693 and $ 705 , respectively. The fair values of foreign currency contracts were reported in Other current assets and Accrued expenses as summarized below: 2024 2025 Assets Liabilities Assets Liabilities Foreign currency $ 31 20 33 23 (12) SHORT-TERM BORROWINGS AND LINES OF CREDIT Short-term borrowings and current maturities of long-term debt are as follows: 2024 2025 Current maturities of long-term debt $ 532 605 Commercial paper and other short-term borrowings — 4,192 Total $ 532 4,797 Interest rate for weighted-average short-term borrowings at year end — 4.3 % On February 11, 2025, the Company entered into a $ 3 billion, 364-day revolving backup credit facility to support increased commercial paper borrowings in connection with the AspenTech transaction. This facility is in addition to the Company's existing $ 3.5 billion five-year revolving backup credit facility with various banks. Both credit facilities are unsecured and may be accessed under various interest rate alternatives at the Company's option. The fees to maintain the facilities are immaterial and the Company has not incurred any borrowings under either facility or previous facilities. Overall, the Company's commercial paper borrowings increased to approximate ly $ 4.2 billion at September 30, 2025. (13) LONG-TERM DEBT The details of long-term debt follow: 2024 2025 3.15 % notes due June 2025 $ 500 — 1.25 % euro notes due October 2025 557 587 0.875 % notes due October 2026 750 750 1.80 % notes due October 2027 500 500 2.00 % notes due December 2028 1,000 1,000 2.00 % euro notes due October 2029 557 587 1.95 % notes due October 2030 500 500 3.00 % euro notes due March 2031 — 587 2.20 % notes due December 2031 1,000 1,000 6.00 % notes due August 2032 250 250 5.00 % notes due March 2035 — 500 3.50 % euro notes due March 2037 — 587 6.125 % notes due April 2039 250 250 5.25 % notes due November 2039 300 300 2.75 % notes due October 2050 500 500 2.80 % notes due December 2051 1,000 1,000 Other 23 26 Long-term debt 7,687 8,924 Less: Current maturities 532 605 Total, net $ 7,155 8,319 54 Long-term debt maturing during each of the four years after 2026 is $ 757 , $ 528 , $ 997 and $ 584 , respectively. Total interest paid on long-term debt was approximate ly $ 221 , $ 193 and $ 200 in 2025, 2024 and 2023, respectively. During the year, the Company repaid $ 500 of 3.15 % notes that matured in June 2025. In March 2025, the Company issued € 500 of 3.0 % notes due March 2031, $ 500 of 5.0 % notes due March 2035, and € 500 of 3.5 % notes due March 2037. The Company used the net proceeds from the sale of the notes and increased commercial paper borrowings (see Note 12), along with cash on hand, to fund the AspenTech transaction (see Note 4). In 2024, the Company repaid $ 529 of 0.375 % euro notes that matured in May 2024. 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. Securities can be sold in one or more separate offerings with the size, price and terms to be determined at the time of sale. (14) PENSION AND POSTRETIREMENT PLANS Retirement plans expense includes the following components: U.S. Plans Non-U.S. Plans 2023 2024 2025 2023 2024 2025 Defined benefit plans: Service cost (benefits earned during the period) $ 25 17 50 20 20 22 Interest cost 164 169 140 50 49 46 Expected return on plan assets ( 247 ) ( 259 ) ( 252 ) ( 39 ) ( 38 ) ( 43 ) Net amortization and other ( 55 ) ( 43 ) 22 18 6 3 Net periodic pension expense (income) ( 113 ) ( 116 ) ( 40 ) 49 37 28 Defined contribution plans 111 130 140 49 70 67 Total retirement plans expense (income) $ ( 2 ) 14 100 98 107 95 Total net periodic pension (income) decreased in 2025 primarily due to higher amortization of deferred losses and higher service cost, partially offset by lower interest costs. Net periodic pension expense (income) includes $ 7 and defined contribution expense includes $ 14 for 2023 related to discontinued operations. For defined contribution plans, the Company makes cash contributions based on plan requirements, which are expensed as incurred. The Company's principal U.S. 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 implemented a new profit sharing retirement program for all U.S. non-union employees. Eligible employees receive a base contribution to a cash balance account administered within the principal U.S. defined benefit plan, funded by surplus pension assets, as well as a potential profit sharing contribution to their defined contribution account. For employees that had continued to accrue benefits in the principal U.S. defined benefit plan, future service after December 31, 2024 is frozen. 55 Details of the changes in the actuarial present value of the projected benefit obligation and the fair value of plan assets for defined benefit pension plans follow: U.S. Plans Non-U.S. Plans 2024 2025 2024 2025 Projected benefit obligation, beginning $ 2,934 3,089 926 1,004 Service cost 17 50 20 22 Interest cost 169 140 49 46 Actuarial (gain) loss 283 ( 80 ) 13 ( 24 ) Curtailments ( 4 ) — — ( 4 ) Benefits paid ( 205 ) ( 227 ) ( 41 ) ( 40 ) Settlements ( 108 ) ( 43 ) ( 39 ) ( 35 ) Acquisitions (Divestitures), net — — 6 — Foreign currency translation and other 3 — 70 16 Projected benefit obligation, ending $ 3,089 2,929 1,004 985 Fair value of plan assets, beginning $ 3,590 3,889 864 966 Actual return on plan assets 598 151 73 ( 11 ) Employer contributions 14 15 24 31 Benefits paid ( 205 ) ( 227 ) ( 41 ) ( 40 ) Settlements ( 108 ) ( 43 ) ( 39 ) ( 35 ) Acquisitions (Divestitures), net — — ( 2 ) — Foreign currency translation and other — — 87 9 Fair value of plan assets, ending $ 3,889 3,785 966 920 Net amount recognized in the balance sheet $ 800 856 ( 38 ) ( 65 ) Location of net amount recognized in the balance sheet: Noncurrent asset $ 961 1,017 233 212 Current liability ( 14 ) ( 14 ) ( 17 ) ( 18 ) Noncurrent liability ( 147 ) ( 147 ) ( 254 ) ( 259 ) Net amount recognized in the balance sheet $ 800 856 ( 38 ) ( 65 ) Pretax accumulated other comprehensive loss $ ( 243 ) ( 242 ) ( 163 ) ( 187 ) Actuarial gains in 2025 were largely due to an increase in the discount rates used to estimate the benefit obligations for the U.S. and non-U.S. plans, which were 5.27 % and 5.2 % at September 30, 2025 compared to 4.97 % and 4.7 % at September 30, 2024, respectively. A ctuarial losses in 2024 were largely due to a decrease in the discount rates used to estimate the benefit obligations for the U.S. and non-U.S. p lans, which were 4.97 % and 4.7 % at September 30, 2024 compared to 6.03 % and 5.2 % at September 30, 2023, respectively. As of September 30, 2025, U.S. pension plans were overfunded by $ 856 in total, including unfunded plans totaling $ 161 . The non-U.S. plans were underfunded by $ 65 , including unfunded plans totaling $ 242 . As of the September 30, 2025 and 2024 measurement dates, the plans' total accumulated benefit obligation was $ 3,769 and $ 3,942 , respectively. 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 $ 567 , $ 473 and $ 130 , respectively, for 2025, and $ 558 , $ 470 and $ 125 , respectively, for 2024. 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 $ 493 , $ 431 and $ 71 , respectively, for 2025, and $ 515 , $ 452 and $ 92 , respectively, for 2024. 56 Future benefit payments by U.S. plans are estimated to be $ 265 in 2026, $ 263 in 2027, $ 258 in 2028, $ 254 in 2029, $ 248 in 2030 and $ 1,148 in total over the five years 2031 through 2035. Based on foreign currency exchange rates as of September 30, 2025, future benefit payments by non-U.S. plans are estimated to be $ 67 in 2026, $ 64 in 2027, $ 70 in 2028, $ 74 in 2029, $ 71 in 2030 and $ 396 in total over the five years 2031 through 2035. The Company expects to contribute approximately $ 40 to its retirement plans in 2026. The weighted-average assumptions used in the valuation of pension benefits follow: U.S. Plans Non-U.S. Plans 2023 2024 2025 2023 2024 2025 Net pension expense Discount rate used to determine service cost 5.66 % 6.09 % 5.29 % 4.9 % 5.2 % 4.7 % Discount rate used to determine interest cost 5.49 % 5.94 % 4.67 % 4.9 % 5.2 % 4.7 % Expected return on plan assets 6.00 % 6.50 % 6.50 % 4.4 % 4.7 % 4.6 % Rate of compensation increase 4.00 % 4.00 % 4.00 % 4.0 % 3.9 % 3.9 % Benefit obligations Discount rate 6.03 % 4.97 % 5.27 % 5.2 % 4.7 % 5.2 % Rate of compensation increase 4.00 % 4.00 % 4.00 % 3.9 % 3.9 % 4.1 % The discount rate for the U.S. retirement plans was 5.27 percent as of September 30, 2025. An actuarially developed, company-specific yield curve is used to determine the discount rate. To determine the service and interest cost components of pension expense for its U.S. retirement plans, the Company applies the specific spot rates along the yield curve, rather than the single weighted-average rate, to the projected cash flows to provide more precise measurement of these costs. The expected return on plan assets assumption is determined by reviewing the investment returns of the plans for the past 10 years plus longer-term historical returns of an asset mix approximating the Company's asset allocation targets, and periodically comparing these returns to expectations of investment advisors and actuaries to determine whether long-term future returns are expected to differ significantly from the past. The Company's asset allocations at September 30, 2025 and 2024, and weighted-average target allocations follow: U.S. Plans Non-U.S. Plans 2024 2025 Target 2024 2025 Target Equity securities 29 % 29 % 25 - 35 % 7 % 12 % 5 - 15 % Debt securities 63 63 60 - 70 69 69 65 - 75 Other 8 8 0 - 10 24 19 15 - 25 Total 100 % 100 % 100 % 100 % 100 % 100 % The primary objective for the investment of pension assets is to secure participant retirement benefits by earning a reasonable rate of return. Plan assets are invested consistent with the provisions of the prudence and diversification rules of ERISA and with a long-term investment horizon. The Company continuously monitors the value of assets by class and routinely rebalances to remain within target allocations. 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 the duration of pension liabilities. The bonds strategy also includes a high-yield element which is generally shorter in duration. For diversification, a small portion of U.S. plan assets is allocated to private equity partnerships and real asset fund investments, providing opportunities for above market returns. Leveraging techniques are not used and the use of derivatives in any fund is limited and inconsequential. The fair values of defined benefit pension assets a s of September 30, o rganized by asset class and by the fair value hierarchy of ASC 820, Fair Value Measurement, follow. Investments valued based on the net asset value (NAV) of fund units held, as derived from the fair value of the underlying assets, are excluded from the fair value hierarchy. 57 Level 1 Level 2 Level 3 Measured at NAV Total % 2025 U.S. equities $ 246 10 — 581 837 18 % International equities 169 11 — 111 291 6 % Emerging market equities — 1 — 94 95 2 % Corporate bonds — 1,170 — 835 2,005 43 % Government bonds — 899 — 106 1,005 21 % Other 137 1 143 191 472 10 % Total $ 552 2,092 143 1,918 4,705 100 % 2024 U.S. equities $ 245 10 — 620 875 18 % International equities 154 12 — 65 231 5 % Emerging market equities — 1 — 101 102 2 % Corporate bonds — 1,221 — 879 2,100 43 % Government bonds — 904 — 108 1,012 21 % Other 206 1 132 196 535 11 % Total $ 605 2,149 132 1,969 4,855 100 % Asset Classes U.S. equities reflect companies domiciled in the U.S., including multinational companies. International equities are comprised of companies domiciled in developed nations outside the U.S. Emerging market equities are comprised of companies domiciled in portions of Asia, Eastern Europe and Latin America. Corporate bonds represent investment-grade debt of issuers primarily from the U.S. Government bonds include investment-grade instruments issued by federal, state and local governments, primarily in the U.S. Other includes cash, interests in mixed asset funds investing in commodities, natural resources, agriculture, real estate and infrastructure funds, life insurance contracts (U.S.), and shares in certain general investment funds of financial institutions or insurance arrangements (non-U.S.) that typically ensure no market losses or provide for a small minimum return guarantee. Fair Value Hierarchy Categories Valuations of Level 1 assets for all classes are based on quoted closing market prices from the principal exchanges where the individual securities are traded. Cash is valued at cost, which approximates fair value. Debt securities categorized as Level 2 assets are generally valued based on independent broker/dealer bids or by comparison to other debt securities having similar durations, yields and credit ratings. Valuation techniques and inputs for these assets include discounted cash flow analysis, earnings multiple approaches, recent transactions, transfer restrictions, prevailing discount rates, volatilities, credit ratings and other factors. In the Other class, interests in mixed asset funds are Level 2, and U.S. life insurance contracts and non-U.S. general fund investments and insurance arrangements are Level 3. Investments measured at NAV are primarily nonexchange-traded commingled or collective funds where the underlying securities have observable prices available from active markets and typically provide liquidity daily or within a few days. The NAV category also includes fund investments in private equities, real estate and infrastructure where the fair value of the underlying assets is determined by the investment manager. Total unfunded commitments for the private equity funds were approximate ly $ 71 at September 30, 2025. These investments cannot be redeemed, but instead the funds will make distributions through liquidation of the underlying assets, which is expected to occur over approximately the next 10 years. The real estate and infrastructure funds typically offer quarterly redemption. Postretirement Plans The Company also sponsors unfunded postretirement benefit plans (primarily health care) for certain U.S. retirees and their dependents. The Company’s principal U.S. postretirement plan has been frozen to new employees since 1993. The postretirement benefit liability for all plans wa s $ 61 and $ 71 as of September 30, 2025 and 2024, respectively, and included deferred actuarial gains in accumulated other comprehensive income of $ 59 and $ 68 , 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 $ 11 for 2025, $ 18 for 2024 and $ 19 for 2023. Benefits paid 58 were $ 8 and $ 10 for 2025 and 2024, respectively, and the Company estimates that future health care benefit payments will be app roximately $ 6 per year for 2026 through 2030, and $ 23 in total over the five years 2031 through 2035. (15) CONTINGENT LIABILITIES AND COMMITMENTS The Company is a party to a number of pending legal proceedings and claims, including those involving general and product liability (including asbestos) and other matters, several of which claim substantial amounts of damages. The Company accrues for such liabilities when it is probable that future costs (including legal fees and expenses) will be incurred and such costs can be reasonably estimated. Accruals are based on developments to date; management's estimates of the outcomes of these matters; and the Company's experience in contesting, litigating and settling similar matters. The Company engages an outside expert to develop an actuarial estimate of its expected costs to resolve all pending and future asbestos claims, including defense costs, as well as its related insurance receivables. The reserve for asbestos litigation, which is recorded on an undiscounted basis, is based on projected claims through 2065. See Note 21 for additional information about the Company's asbestos liabilities and related insurance receivables. Although it is not possible to predict the ultimate outcome of these matters, the Company historically has been largely successful in defending itself against claims and suits that have been brought against it, and will continue to defend itself vigorously in all such matters. While the Company believes a material adverse impact is unlikely, given the inherent uncertainty of litigation, a remote possibility exists that a future development could have a material adverse impact on the Company. The Company enters into certain indemnification agreements in the ordinary course of business in which the indemnified party is held harmless and is reimbursed for losses incurred from claims by third parties, usually up to a prespecified limit. In connection with divestitures of certain assets or businesses, the Company often provides indemnities to the buyer with respect to certain matters including, for example, environmental or unidentified tax liabilities related to periods prior to the disposition. Because of the uncertain nature of the indemnities, the maximum liability cannot be quantified. As such, contingent liabilities are recorded when they are both probable and reasonably estimable. Historically, payments under indemnity arrangements have been inconsequential. At September 30, 2025, 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 Pretax earnings from continuing operations consist of the following: 2023 2024 2025 United States $ 1,529 712 1,118 Non-U.S. 1,374 1,308 1,816 Total pretax earnings $ 2,903 2,020 2,934 59 The principal components of income tax expense follow: 2023 2024 2025 Current: U.S. federal $ 463 325 463 State and local 47 34 56 Non-U.S. 369 452 481 Deferred: U.S. federal ( 159 ) ( 284 ) ( 212 ) State and local ( 17 ) ( 18 ) 11 Non-U.S. ( 61 ) ( 94 ) ( 103 ) Income tax expense $ 642 415 696 Reconciliations of the U.S. federal statutory income tax rate to the Company's effective tax rate follow. 2023 2024 2025 U.S. federal statutory rate 21.0 % 21.0 % 21.0 % State and local taxes, net of U.S. federal tax benefit 0.8 0.6 1.8 Non-U.S. rate differential 0.8 2.0 1.2 Non-U.S. tax holidays ( 0.8 ) ( 1.7 ) ( 1.3 ) Research and development credits ( 0.5 ) ( 1.2 ) ( 0.9 ) Foreign derived intangible income ( 2.6 ) ( 3.8 ) ( 2.0 ) U.S. taxation of Non-U.S. Earnings 1.3 2.1 1.7 Subsidiary restructuring — ( 2.9 ) ( 0.2 ) Test & Measurement purchase accounting — 1.7 — Other 2.1 2.8 2.4 Effective income tax rate 22.1 % 20.6 % 23.7 % State and local taxes in 2025 include a discrete deferred expense due to the purchase of the remaining shares of AspenTech. Test & Measurement purchase accounting in 2024 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 related to acquisitions and divestitures. On July 4, 2025, the One Big Beautiful Bill Act (the "OBBBA") was signed into law. The OBBBA extends certain key elements of the 2017 Tax Cuts and Jobs Act including provisions related to bonus depreciation and domestic research and development, among others. The OBBBA did not have a material impact in the current fiscal year. The Company is currently assessing the impact of the OBBBA on future periods. Non-U.S. tax holidays reduce tax rates in certain jurisdictions. Approximately 60 percent of the tax holidays expire over the next two years , with the remainder expiring by 2038. 60 Following are changes in unrecognized tax benefits before considering recoverability of any cross-jurisdictional tax credits (U.S. federal, state and non-U.S.) and temporary differences. The amount of unrecognized tax benefits is not expected to change significantly in the next 12 months. 2024 2025 Unrecognized tax benefits, beginning $ 235 291 Additions for current year tax positions 59 24 Additions for prior year tax positions 18 12 Reductions for prior year tax positions ( 22 ) ( 26 ) Acquisitions and divestitures 13 — Reductions for settlements with tax authorities ( 7 ) ( 8 ) Reductions for expiration of statutes of limitations ( 5 ) ( 5 ) Unrecognized tax benefits, ending $ 291 288 If none of the unrecognized tax benefits shown is ultimately paid, the tax provision and the calculation of the effective tax rate would be favorably impacted by $ 245 , which is net of cross-jurisdictional tax credits and temporary differences. The Company accrues interest and penalties related to income taxes in income tax expense. Total expense recognized was $ 6 , $ 6 and $ 1 in 2025, 2024 and 2023, respectively. As of September 30, 2025 and 2024, total accrued interest and penalties were $ 46 and $ 27 , respectively. The U.S. is the major jurisdiction for which the Company files income tax returns. Examinations for U.S. federal are complete through 2019. The status of state and non-U.S. tax examinations varies due to the numerous legal entities and jurisdictions in which the Company operates. The principal items that gave rise to deferred income tax assets and liabilities follow: 2024 2025 Deferred tax assets: Net operating losses, capital losses and tax credits $ 283 276 Accrued liabilities 149 149 Postretirement and postemployment benefits 17 13 Employee compensation and benefits 121 122 Other 176 249 Total $ 746 809 Valuation allowances $ ( 256 ) ( 251 ) Deferred tax liabilities: Intangibles $ ( 2,161 ) ( 1,871 ) Pensions ( 193 ) ( 195 ) Property, plant and equipment ( 121 ) ( 149 ) Undistributed non-U.S. earnings ( 36 ) ( 34 ) Other ( 53 ) ( 51 ) Total $ ( 2,564 ) ( 2,300 ) Net deferred income tax liability $ ( 2,074 ) ( 1,742 ) Total income taxes paid were appro x imately $ 1,440 , $ 950 and $ 3,310 in 2025, 2024 and 2023, respectively. Total taxes paid related to the sale of the Company's 40 percent noncontrolling common equity interest in Copeland were approximately $ 0.6 billion in 2025, while taxes related to the Copeland transaction in 2023 were $ 2.3 billion. See Notes 5 and 8. Approximately half of the $ 276 of net operating losses can be carried forward indefinitely, while most of the remainder expire over the next 5 years. 61 (17) STOCK-BASED COMPENSATION The Company's stock-based compensation plans include performance shares, restricted stock, restricted stock units, and stock options. Although the Company has discretion, shares distributed under these plans are issued from treasury stock. 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 is recognized on a fixed basis over the three-year performance period. Prior to Emerson's purchase of the remaining outstanding shares of common stock of AspenTech not already owned by the Company in March 2025, AspenTech had stock-based compensation plans that were settled in its own stock. These plans consisted of performance shares, restricted stock units and stock options. Upon completion of the transaction, each award of performance shares and restricted stock units that were outstanding and unvested were assumed by Emerson and converted into Emerson time-based restricted stock units, but otherwise subject to the same terms and conditions (including vesting and payment schedule). The Company also paid $ 76 to settle AspenTech stock options that were outstanding prior to the transaction closing. As a result of the Company's acquisition of NI in 2024, 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. 2023 2024 2025 Performance shares $ 165 90 94 Restricted stock and restricted stock units 24 115 147 AspenTech stock-based compensation plans 82 55 24 Total stock compensation expense 271 260 265 Less: discontinued operations 21 — 2 Stock compensation expense from continuing operations $ 250 260 263 Income tax benefits recognized $ 28 32 35 Stock compensation expense for 2025 includes $ 35 of integration-related stock compensation expense attributable to AspenTech (of which $ 22 was reported as restructuring costs) and $ 12 attributable to NI (of which $ 3 was reported as restructuring costs). 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, 2025, total unrecognized compensation expense related to unvested shares awarded under Emerson plans was $ 247 , which is expected to be recognized over a weighted-average period of 1.2 years. 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. Dividend equivalents are only paid on earned awards after the performance period has concluded. Compensation expense for performance shares is recognized over the service period based on the number of shares ultimately expected to be earned. 62 Information related to performance share payouts for the years ended September 30, 2024 and 2025 follows (shares in thousands): 2024 2025 Performance period 2021 - 2023 2022 - 2024 Percent payout 118 % 118 % Total shares earned 1,733 1,084 Shares distributed in cash, primarily for tax withholding 755 450 As of September 30, 2025, approximately 919,000 shares awarded primarily in 2023 were outstanding, contingent on the Company achieving its performance objectives through 2025. The objectives for these shares were met at t he 115 percent level and the shares will be distributed in early fiscal 2026. Additionally, the rights to receive approximately 477,000 and 505,000 shares awarded in 2025 and 2024, respectively, are outstanding and contingent upon the Company achieving its performance objectives through 2027 and 2026, 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 generally vest over 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. In 2025, approximately 56,000 shares of restricted stock and approximately 1,317,000 restricted stock units vested as a result of participants fulfilling the applicable service requirements. Consequently, approximately 33,000 shares and 1,001,000 units were issued while 23,000 shares and 316,000 units were withheld for income taxes in accordance with minimum withholding requirements. As of September 30, 2025, there were approximately 2,976,000 shares of unvested restricted stock and restricted stock units outstanding. In addition to the employee stock option and incentive share plans, in 2025 the Company awarded approximately 15,000 restricted stock units under the restricted stock plan for non-management directors. As of September 30, 2025, approximately 25,000 shares were available for issuance under this plan. As of September 30, 2025, 15.7 million shares remained available for award under incentive shares plans. Changes in shares outstanding but not yet earned under incentive shares plans during the year ended September 30, 2025 follow (shares in thousands; assumes 100 percent payout of unvested awards): Shares Average Grant Date Fair Value Per Share Beginning of year 4,634 $ 91.46 Granted 1,690 $ 109.21 Assumed 1,097 $ 114.57 Earned/vested ( 2,291 ) $ 96.41 Canceled ( 253 ) $ 105.99 End of year 4,877 $ 98.52 Information related to Emerson incentive shares plans follows: 2023 2024 2025 Total fair value of shares earned/vested $ 158 284 256 Share awards distributed in cash, primarily for tax withholding $ 73 81 59 63 Emerson Stock Options There were no stock option grants in 2025, 2024 and 2023. Previously awarded stock options allow key officers and employees to purchase common stock at specified prices, which are equal to 100 percent of the closing market price of the Company's stock on the date of grant. Options generally vest one-third in each of the three years subsequent to grant and expire 10 years from the date of grant. Changes in shares subject to options during the year ended September 30, 2025 follow (shares in thousands): Weighted- Average Exercise Price Per Share Shares Total Intrinsic Value of Shares Average Remaining Life (Years) Beginning of year $ 51.71 288 Options exercised $ 50.45 ( 189 ) Options canceled $ 46.92 ( 1 ) End of year $ 54.16 98 $ 7 1.0 Exercisable at end of year $ 54.16 98 $ 7 1.0 Information related to Emerson stock options follows: 2023 2024 2025 Cash received for option exercises $ 49 14 9 Intrinsic value of options exercised $ 27 15 14 Tax benefits related to option exercises $ 4 5 3 (18) COMMON AND PREFERRED STOCK At September 30, 2025, 21.6 million shares of common stock were reserved for issuance under the Company's stock-based compensation plans. During 2025, 9.3 million common shares were purchased and 1.9 million treasury shares were reissued. In 2024, 4.4 million common shares were purchased and 2.6 million treasury shares were reissued. At September 30, 2025 and 2024, the Company had 5.4 million shares of $ 2.50 par value preferred stock authorized, with none issued. 64 (19) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Activity in Accumulated other comprehensive income (loss) is shown below, net of income taxes: Foreign currency translation 2023 2024 2025 Beginning balance $ ( 1,265 ) ( 1,012 ) ( 616 ) Other comprehensive income (loss), net of tax of $ 26 , $ 17 and $ 42 , respectively 158 356 48 Purchase of noncontrolling interest — — 3 Reclassification to loss on divestiture of business 95 23 — Reclassification to gain on sale of equity interest — 17 — Ending balance ( 1,012 ) ( 616 ) ( 565 ) Pension and postretirement Beginning balance ( 222 ) ( 247 ) ( 245 ) Actuarial gains (losses) deferred during the period, net of taxes of $ 0 , $( 14 ) and $ 11 , respectively 4 45 ( 36 ) Amortization of deferred actuarial losses into earnings, net of tax of $ 17 , $ 12 and $( 4 ), respectively ( 51 ) ( 43 ) 12 Reclassified to gain on sale of business 22 — — Ending balance ( 247 ) ( 245 ) ( 269 ) Cash flow hedges Beginning balance 2 6 ( 7 ) Gains deferred during the period, net of taxes of $( 11 ), $ 1 and $( 7 ), respectively 37 ( 5 ) 25 Reclassifications of realized (gains) losses to sales and cost of sales, net of tax of $ 4 , $ 2 and $ 1 , respectively ( 14 ) ( 8 ) ( 5 ) Reclassified to gain on sale of business ( 19 ) — — Ending balance 6 ( 7 ) 13 Accumulated other comprehensive income (loss) $ ( 1,253 ) ( 868 ) ( 821 ) (20) BUSINESS SEGMENTS INFORMATION As disclosed in Note 4, on March 12, 2025, Emerson completed its purchase of the remaining outstanding shares of common stock of AspenTech not already owned by the Company. As a result of the transaction, AspenTech is now a wholly owned subsidiary of the Company. AspenTech was reorganized upon completion of the transaction and now reports to Control Systems & Software leadership. AspenTech's results, which were previously reported as a separate segment, are now consolidated into the Control Systems & Software segment for all periods presented. Prior year amounts have been reclassified to conform to the current year presentation. In 202 4, the Company completed the acquisition of NI on October 11, 2023. NI is now referred to as Test & Measurement and reported as a segment in the Software and Control business group. INTELLIGENT DEVICES SOFTWARE AND CONTROL • Final Control • Control Systems & Software • Measurement & Analytical • Test & Measurement • Discrete Automation • Safety & Productivity 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, sustainability and optimized performance. 65 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. 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 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. 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 s ystems, SCADA systems, application software, digital twins, asset performance management and cybersecurity. Control Systems & Software solutions are predominantly used by process and hybrid manufacturers. This segment also includes the AspenTech business, which is a global leader in asset optimization software that enables industrial manufacturers to design, operate and maintain their operations for maximum performance. AspenTech combines decades of modeling, simulation and optimization capabilities with industrial operations expertise and applies advanced analytics to improve the profitability and sustainability of production assets. The purpose-built software drives value for customers by improving operational efficiency and maximizing productivity, reducing unplanned downtime and safety risks, and minimizing energy consumption and emissions. 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. The principal distribution method for each segment is direct sales forces, although the Company also uses independent sales representatives and distributors. Due to its global presence, certain of the Company's international operations are subject to risks including the stability of governments and business conditions in foreign countries which could result in adverse changes in exchange rates, changes in regulations or disruption of operations. The primary income measure used for assessing segment performance and making operating decisions is earnings before interest and income taxes. In the statements below, Other deductions is largely comprised of restructuring, intangibles amortization and foreign currency transaction (gains) losses. Certain expenses are reported at Corporate, including stock compensation expense and a portion of pension and postretirement benefit costs. Corporate and other includes unallocated corporate expenses, acquisition/divestiture costs, first year acquisition accounting charges (which include fair value adjustments related to inventory, backlog and deferred revenue) and other items. Corporate assets are primarily comprised of cash and cash equivalents, investments, certain fixed assets and assets held-for-sale. Summarized below is information about the Company's operations by business segment and by geography. The chief operating decision maker ("CODM") is the Company's President and Chief Executive Officer. The CODM regularly reviews the financial information presented below, including against forecasted results, to assess each segment's operating performance and to make resource allocation decisions. 66 The following tables present the financial results for each segment. 2023 Final Control Measurement & Analytical Discrete Automation Safety & Productivity Intelligent Devices Control Systems & Software Test & Measurement Software & Control Net Sales $ 3,970 3,595 2,635 1,388 11,588 3,648 — 3,648 Cost of sales 2,177 1,648 1,387 795 6,007 1,818 — 1,818 Selling, general and administrative expenses 829 972 680 269 2,750 1,058 — 1,058 Other deductions, net 99 39 59 18 215 350 — 350 Earnings (Loss) $ 865 936 509 306 2,616 422 — 422 2024 Final Control Measurement & Analytical Discrete Automation Safety & Productivity Intelligent Devices Control Systems & Software Test & Measurement Software & Control Net Sales $ 4,204 4,061 2,506 1,390 12,161 3,935 1,464 5,399 Cost of sales 2,246 1,799 1,334 796 6,175 1,883 387 2,270 Selling, general and administrative expenses 862 1,097 640 265 2,864 1,118 723 1,841 Other deductions, net 119 109 66 21 315 362 644 1,006 Earnings (Loss) $ 977 1,056 466 308 2,807 572 ( 290 ) 282 2025 Final Control Measurement & Analytical Discrete Automation Safety & Productivity Intelligent Devices Control Systems & Software Test & Measurement Software & Control Net Sales $ 4,380 4,143 2,521 1,356 12,400 4,205 1,486 5,691 Cost of sales 2,323 1,843 1,340 773 6,279 1,917 381 2,298 Selling, general and administrative expenses 869 1,101 645 264 2,879 1,073 734 1,807 Other deductions, net 107 87 67 28 289 320 439 759 Earnings (Loss) $ 1,081 1,112 469 291 2,953 895 ( 68 ) 827 67 The following table reconciles the total segment results from the tables above to the Company's consolidated results. Sales Earnings (Loss) 2023 2024 2025 2023 2024 2025 Segment Totals $ 15,236 17,560 18,091 $ 3,038 3,089 3,780 Corporate items: Stock compensation ( 250 ) ( 260 ) ( 263 ) Unallocated pension and postretirement costs 171 144 109 Corporate and other ( 224 ) ( 664 ) ( 455 ) Loss on Copeland note receivable — ( 279 ) — Gain on subordinated interest 161 79 — Eliminations/Interest ( 71 ) ( 68 ) ( 75 ) ( 34 ) ( 175 ) ( 237 ) Interest income from related party 41 86 — Total $ 15,165 17,492 18,016 $ 2,903 2,020 2,934 In 2025 , stock compensation included $ 35 of integration-related stock compensation expense attributable to AspenTech (of which $ 22 was reported as restructuring costs) and $ 12 attributable to NI (of which $ 3 was reported as restructuring costs). 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 for 2025, 2024 and 2023, respectively, includes acquisition/divestiture fees and related costs of $ 255 ($ 42 of which is reported in operating profit; amounts primarily relate to AspenTech), $ 205 ( $ 109 of which is reported in operating profit) , and $ 84 ( $ 15 of which is reported in operating profit). 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. 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). Total Assets Depreciation and Amortization Capital Expenditures 2023 2024 2025 2023 2024 2025 2023 2024 2025 Final Control $ 5,614 5,706 5,889 $ 170 159 161 $ 93 93 102 Measurement & Analytical 3,976 4,122 4,253 121 138 140 93 84 107 Discrete Automation 2,493 2,470 2,569 84 87 87 56 61 61 Safety & Productivity 1,238 1,228 1,273 57 58 60 35 46 46 Intelligent Devices 13,321 13,526 13,984 432 442 448 277 284 316 Control Systems & Software 16,199 15,903 15,758 582 594 550 39 46 51 Test & Measurement — 9,210 8,809 — 607 476 — 27 29 Software and Control 16,199 25,113 24,567 582 1,201 1,026 39 73 80 Corporate and other (includes assets held-for-sale) 13,226 5,607 3,413 37 46 44 47 62 35 Total $ 42,746 44,246 41,964 $ 1,051 1,689 1,518 $ 363 419 431 Depreciation and amortization includes intellectual property, customer relationships and capitalized software. 68 Geographic Information Sales by major geographic destination are summarized below: 2023 2024 Americas AMEA Europe Total Americas AMEA Europe Total Final Control $ 1,949 1,481 540 3,970 $ 2,010 1,647 547 4,204 Measurement & Analytical 1,847 1,222 526 3,595 2,046 1,382 633 4,061 Discrete Automation 1,234 720 681 2,635 1,178 646 682 2,506 Safety & Productivity 1,049 70 269 1,388 1,048 73 269 1,390 Intelligent Devices 6,079 3,493 2,016 11,588 6,282 3,748 2,131 12,161 Control Systems & Software 1,729 1,104 815 3,648 1,862 1,181 892 3,935 Test & Measurement — — — — 654 389 421 1,464 Software and Control 1,729 1,104 815 3,648 2,516 1,570 1,313 5,399 Total $ 7,808 4,597 2,831 15,236 $ 8,798 5,318 3,444 17,560 2025 Americas AMEA Europe Total Final Control $ 2,164 1,662 555 4,381 Measurement & Analytical 2,052 1,461 631 4,144 Discrete Automation 1,218 630 672 2,520 Safety & Productivity 1,042 67 246 1,355 Intelligent Devices 6,476 3,820 2,104 12,400 Control Systems & Software 2,042 1,238 925 4,205 Test & Measurement 696 391 399 1,486 Software and Control 2,738 1,629 1,324 5,691 Total $ 9,214 5,449 3,428 18,091 Sales in the U.S. were $ 7,481 , $ 7,091 and $ 6,327 for 2025, 2024 and 2023, respectively, while Asia, Middle East & Africa includes sales in China of $ 1,829 , $ 1,901 and $ 1,804 in those years. Property, Plant and Equipment 2023 2024 2025 Americas $ 1,442 1,672 1,717 Asia, Middle East & Africa 428 542 601 Europe 493 593 553 Total $ 2,363 2,807 2,871 Property, plant and equipment located in the U.S. w as $ 1,498 in 2025, $ 1,474 in 2024 and $ 1,261 in 2023. (21) OTHER FINANCIAL DATA Items reported in earnings from continuing operations during the years ended September 30 included the following: 2023 2024 2025 Research and development expense $ 523 781 771 Rent expense $ 210 245 232 69 The components of depreciation and amortization expense reported for the years ended September 30 included the following: 2023 2024 2025 Depreciation expense $ 287 323 344 Amortization of intangibles (includes $ 196 , $ 197 and $ 199 reported in Cost of Sales in 2023, 2024 and 2025, respectively) (a) 678 1,274 1,083 Amortization of capitalized software 86 92 91 Total $ 1,051 1,689 1,518 (a) Amortization of intangibles includes $ 425 and $ 560 related to the NI acquisition in 2025 and 2024, respectively. Items reported in other noncurrent assets included the following: 2024 2025 Pension assets $ 1,194 1,229 Operating lease right-of-use assets $ 692 637 Unbilled receivables (contract assets) $ 519 621 Deferred income taxes $ 64 79 Asbestos-related insurance receivables $ 37 55 Items reported in accrued expenses included the following: 2024 2025 Customer advances (contract liabilities) $ 1,043 1,031 Employee compensation $ 706 740 Income taxes $ 587 130 Operating lease liabilities (current) $ 158 138 Product warranty $ 82 90 Other liabilities are summarized as follows: 2024 2025 Deferred income taxes $ 2,138 1,822 Pension and postretirement liabilities 466 467 Operating lease liabilities (noncurrent) 511 505 Asbestos litigation 151 131 Other 574 625 Total $ 3,840 3,550 70 (22) QUARTERLY FINANCIAL INFORMATION (UNAUDITED) First Quarter Second Quarter Third Quarter Fourth Quarter Full Year 2024 2025 2024 2025 2024 2025 2024 2025 2024 2025 Net sales $ 4,117 4,175 4,376 4,432 4,380 4,553 4,619 4,855 17,492 18,016 Gross profit $ 1,916 2,235 2,284 2,371 2,314 2,393 2,371 2,520 8,885 9,519 Earnings from continuing operations common stockholders $ 169 585 547 485 344 580 558 636 1,618 2,285 Net earnings common stockholders $ 142 585 501 485 329 586 996 637 1,968 2,293 Earnings per common share from continuing operations: Basic $ 0.30 1.03 0.96 0.86 0.60 1.03 0.98 1.13 2.83 4.05 Diluted $ 0.29 1.02 0.95 0.86 0.60 1.03 0.97 1.12 2.82 4.03 Net earnings per common share: Basic $ 0.25 1.03 0.88 0.86 0.58 1.04 1.74 1.13 3.44 4.06 Diluted $ 0.25 1.02 0.87 0.86 0.57 1.04 1.73 1.12 3.43 4.04 Dividends per common share $ 0.525 0.5275 0.525 0.5275 0.525 0.5275 0.525 0.5275 2.10 2.11 Earnings per share are computed independently each period; as a result, the quarterly amounts may not sum to the calculated annual figure. Emerson Electric Co. common stock (symbol EMR) is listed on the New York Stock Exchange and NYSE Texas. 71 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Emerson Electric Co.: Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting We have audited the accompanying consolidated balance sheets of Emerson Electric Co. and subsidiaries (the Company) as of September 30, 2025 and 2024, the related consolidated statements of earnings, comprehensive income, equity, and cash flows for each of the years in the three-year period ended September 30, 2025, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended September 30, 2025, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (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 72 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 beca use 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 communicat ed 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 a 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. Sufficiency of Audit Evidence over Net Sales As discussed in Notes 1, 2 and 20 to the Company’s consolidated financial statements, and disclosed in the consolidated statements of earnings, the Company record ed $18.0 billion of net sales in 2025. We identified the evaluation of the sufficiency of audit evidence over net sales as a critical audit matter. Net sales are recognized primarily from the sale of tangible products from hundreds of Company locations around the world. Evaluating the sufficiency of audit evidence obtained required especially subjective auditor judgment because of the geographical dispersion of the Company’s net sales generating activities. This included determining the Company locations at which procedures were performed and the supervision and review of procedures performed at those locations. The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over net sales, including the determination of the Company locations at which those procedures were to be performed. At each Company location where procedures were performed, we: • evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s net sales processes, including the Company’s controls over the accurate recording of amounts. • assessed the recorded net sales for certain locations by selecting a sample of transactions and compared the amounts recognized to underlying documentation, including contracts with customers and shipping documentation. • assessed the recorded net sales for certain locations by performing a software-assisted data analysis to test relationships among certain revenue transactions. We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of such evidence. /s/ KPMG LLP We or our predecessor firms have served as the Company’s auditor since 1938. St. Louis, Missouri November 10, 2025 73 ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.