Financial Analysis

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 …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

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 a …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

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. …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

"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 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 acqu …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

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 Lea …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

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 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 maint …

LongTermDebtTextBlock · excerpt; the full note is in the filing

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 …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

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 sale …

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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) …

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"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. …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

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 N …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

STOCK-BASED COMPENSATION In 2025, the Board of Directors of the Company adopted and shareholders approved the 2025 Employee Stock Purchase Plan (the ESPP), and the plan commenced on January 1, 2026. The ESPP permits eligible employees to purchase shares of common stock at a discount through payroll deductions with a maximum of 10 million shares of common stock available to be issued over the term of the plan. The shares purchasable under the ESPP shall be shares of authorized but unissued or reacquired common stock, including shares of common stock purchased on the open market. …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

"TAXESIncome taxes were $169 in the first quarter of fiscal 2026 and $182 in 2025, resulting in effective tax rates of 22 percent and 24 percent, respectively. In the current year, the One Big Beautiful Bill Act (the ""OBBBA"") increased the effective tax rate by approximately 1 percentage point due to a lower tax deduction for foreign derived intangible income from the change to domestic research and development in fiscal 2026. Excluding the impact related to the OBBBA, the lower rate in the current year reflected favorable tax items compared to unfavorable items in the prior year."

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PENSION & POSTRETIREMENT PLANS Total periodic pension and postretirement (income) expense is summarized below: Three Months Ended December 31, 2024 2025 Service cost $ 18 19 Interest cost 48 48 Expected return on plan assets (73) (75) Net amortization 4 5 Total $ (3) (3)

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RESTRUCTURING COSTS Restructuring expense reflects costs associated with the Companys ongoing efforts to improve operational efficiency and deploy assets globally in order to remain competitive on a worldwide basis. The Company expects fiscal 2026 restructuring expense and related costs to be approximately $100 , including costs to complete actions initiated in the first three months of the year. Restructuring expense by business segment follows: Three Months Ended December 31, 2024 2025 Control Systems & Software $ 2 1 Test & Measurement (1) Software & Systems 1 1 Sensors 1 5 Final Control 7 2 Intelligent Devices 8 7 Safety & Productivity 1 1 Corporate 1 Total $ 11 9 Details of the change in the liability for restructuring costs during the three months ended December 31, 2025 follow: Sept 30, 2025 Expense Utilized/Paid Dec 31, 2025 Severance and benefits $ 116 4 25 95 Other 4 5 6 3 Total $ 120 9 31 98 The tables above do not includ e $2 a nd $2 of costs related to restructuring actions incurred for the three months ended December 31, 2025 and 2024, respectively. …

RestructuringAndRelatedActivitiesDisclosureTextBlock · excerpt; the full note is in the filing

REVENUE RECOGNITION Emerson is a global technology and software company that provides innovative solutions for customers in a wide range of end markets around the world. 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, while a smaller portion is recognized over time or relates to sales arrangements with multiple performance obligations. See Note 13 for additional information about the Company's revenues. The following table summarizes the balances of the Company's unbilled receivables (contract assets), which are reported in Other assets (current and noncurrent), and its customer advances (contract liabilities), which are reported in Accrued expenses and Other liabilities. Sept 30, 2025 Dec 31, 2025 Unbilled receivables (contract assets) $ 1,891 1,900 Customer advances (contract liabilities) (1,105) (1,171) Net contract assets (liabilities) $ 786 729 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 license arrangements where the license revenue is recognized upfront upon delivery. Revenue recognized for the three months ended December 31, 2025 included $428 that was included in the beginning contract liability balance. Other factors that impacted the change in net contract assets …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

"BUSINESS SEGMENTS On November 20, 2025, Emerson announced that with the completion of the Company's portfolio transformation, it has revised its management organization and updated its reportable segments. Effective in fiscal 2026, Emerson now reports results for five segments which are described in further detail below. Prior year amounts have been reclassified to conform to the current year presentation. The Control Systems & Software segment delivers a portfolio of automation systems, intelligent software and industrial AI solutions. This segment empowers industrial organizations worldwide to harness data, optimize performance and achieve operational excellence on the plant level and across the enterprise. Featuring market-leading brands and technologies including DeltaV and Ovation control systems and AspenTechs asset optimization software this segment integrates advanced automation, edge-to-cloud analytics and AI. These solutions enable customers to make faster, smarter decisions, boost productivity and accelerate their digital transformation in complex environments. This segment also now includes programmable automation controllers, which were previously reported in the former Discrete Automation segment. The Test & Measurement segment offers an integrated portfolio of intelligent test platforms, modular hardware and powerful software to accelerate innovation, reduce complexity and enhance product quality. With automated test solutions, the NI brand delivers fl …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing