Emerson Electric EMR · USD

BUSINESS SEGMENTS INFORMATIONAs 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 2024, 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 DEVICESSOFTWARE AND CONTROL •Final Control•Control Systems & Software•Measurement & Analytical•Test & Measurement•Discrete Automation•Safety & ProductivityThe 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.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.

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 license 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 balance. 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 approximately 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.

LONG-TERM DEBTThe details of long-term debt follow:2024 2025 3.15% notes due June 2025$500 — 1.25% euro notes due October 2025557 587 0.875% notes due October 2026750 750 1.80% notes due October 2027500 500 2.00% notes due December 20281,000 1,000 2.00% euro notes due October 2029557 587 1.95% notes due October 2030500 500 3.00% euro notes due March 2031— 587 2.20% notes due December 20311,000 1,000 6.00% notes due August 2032250 250 5.00% notes due March 2035— 500 3.50% euro notes due March 2037— 587 6.125% notes due April 2039250 250 5.25% notes due November 2039300 300 2.75% notes due October 2050500 500 2.80% notes due December 20511,000 1,000 Other23 26 Long-term debt7,687 8,924 Less: Current maturities532 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 approximately $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.

INCOME TAXESPretax 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 local47 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 rate21.0 %21.0 %21.0 % State and local taxes, net of U.S. federal tax benefit0.8 0.6 1.8 Non-U.S. rate differential0.8 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. Earnings1.3 2.1 1.7 Subsidiary restructuring— (2.9)(0.2) Test & Measurement purchase accounting— 1.7 — Other2.1 2.8 2.4 Effective income tax rate22.1 %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. 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.

STOCK-BASED COMPENSATIONThe 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 2025Performance shares$165 90 94 Restricted stock and restricted stock units24 115 147 AspenTech stock-based compensation plans82 55 24 Total stock compensation expense271 260 265 Less: discontinued operations21 — 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).

LEASESThe 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 2027131 202898 202972 203053 Thereafter244 Total lease payments768 Less: Interest125 Total lease liabilities$643 Lease commitments that have not yet commenced were immaterial as of September 30, 2025.

ACQUISITIONS AND DIVESTITURESAspenTechOn 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 closing634 Total consideration paid in cash at closing8,467 Fair value of NI shares already owned by Emerson prior to acquisition137 Value of stock-based compensation awards attributable to pre-combination service49 Total purchase consideration$8,653 The total purchase consideration for NI was allocated to assets and liabilities as follows.

Emerson has a cybersecurity risk management program that is designed to assess, identify, manage, and govern material risks from cybersecurity threats. Emerson maintains oversight of its cybersecurity risk management program through a governance structure that includes senior management, the Audit Committee and the Board of Directors (the “Board”). Emerson’s cybersecurity risk management program leverages multiple layers of security controls across the Company’s systems designed to establish risk treatment plans and regularly monitor risks. Emerson maintains cybersecurity policies and standards aligned with industry standard control frameworks and applicable regulations, laws and standards, and a global incident response plan.Emerson’s Board directly, or through its appropriate committees, provides oversight of management’s efforts to mitigate cybersecurity risk and response to cyber incidents. The Board and/or its appropriate committees receive regular updates on cybersecurity from management and engage in discussions throughout the year, including with subject-matter experts as appropriate, on the function of the Company’s overall cybersecurity program, cybersecurity risks, strategies for addressing these risks and the implementation thereof. The Audit Committee has oversight responsibility for the Company’s enterprise cybersecurity risks. The Board also receives reports on cyber events, as appropriate, including response efforts, legal obligations and outreach and notification to regulators and/or customers when needed, as well as provide guidance to management as appropriate.Emerson’s Chief Information Security Officer, who has over twenty-five years’ experience in information technology within the engineering and technology industries, with the last fourteen years dedicated to cybersecurity, oversees the Company’s enterprise cybersecurity risk management program. The Chief Information Security Officer leads the global enterprise security team responsible for leading enterprise-wide information security strategy, architecture, processes, as well as assessing, identifying, and managing cybersecurity risks, which is an integrated aspect of our overall enterprise risk management program. The Chief Information Security Officer provides regular updates to senior management on key security performance indicators of our enterprise cybersecurity program.