EMERSON ELECTRIC CO

(Dollars in millions, except per share amounts; unaudited)

Consolidated Statements of Comprehensive Income

Consolidated Balance Sheets

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

Consolidated Statements of Equity

Consolidated Statements of Cash Flows

Nine Months Ended June 30, 2024 and 2025

Notes to Consolidated Financial Statements

(Dollars and shares in millions, except per share amounts or where noted)

(1)BASIS OF PRESENTATION

In the opinion of management, the accompanying unaudited consolidated financial statements of Emerson Electric Co. ("Emerson", "we", "us", "our" or the "Company") include all adjustments necessary for a fair presentation of operating results for the interim periods presented. Adjustments consist of normal and recurring accruals. The consolidated financial statements are presented in accordance with the requirements of Form 10-Q and consequently do not include all disclosures required for annual financial statements presented in conformity with U.S. generally accepted accounting principles (GAAP). Results are computed independently each period; as a result, the quarterly amounts may not sum to the calculated year-to-date figures. For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2024.

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 Aspen Technology, Inc. ("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. See Notes 4 and 15.

(2)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 15 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.

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 and nine months ended June 30, 2025 included $65 and $711, respectively, that was included in the beginning contract liability balance. Other factors that impacted the change in net contract assets were immaterial. Revenue recognized for the three and nine months ended June 30, 2025 for performance obligations that were satisfied in previous periods, including cumulative catchup adjustments on the Company's long-term contracts, was immaterial.

As of June 30, 2025, the Company's backlog relating to unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was approximately $8.9 billion. The Company expects to recognize appro ximately 75 percent of its remaining performance obligations as revenue over the next 12 months, with the remainder substantially over the followingtwo years.

(3)COMMON SHARES

Reconciliations of weighted-average shares for basic and diluted earnings per common share follow. Earnings allocated to participating securities were inconsequential.

(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 15.

National Instruments

On October 11, 2023, the Company completed the acquisition of National Instruments Corporation (“NI”). NI, which provides software-connected automated test and measurement systems that enable enterprises to bring products to market faster and at a lower cost, had revenues of approximately $1.7 billion and pretax earnings of approximately $170 for the 12 months ended September 30, 2023. NI is now referred to as Test & Measurement and reported as a new segment in the Software and Control business group, see Note 15.

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

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).

The pro forma results for the three months ended June 30, 2024 exclude backlog amortization of $34 which was assumed to be incurred in the third quarter of fiscal 2023.

The pro forma results for the nine months ended June 30, 2024 exclude transaction costs of $69 which were assumed to be incurred in the first quarter of fiscal 2023. The pro forma results for the nine months ended June 30, 2024 also exclude backlog amortization of $102, inventory step-up amortization of $213, and retention bonuses of $51 which were all assumed to be incurred in the nine months ended June 30, 2023.

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 the second quarter of fiscal 2024, the Company received its final distribution of $79 related to its subordinated interest in Vertiv. In addition, the Company divested a small business in the Final Control segment and recognized a non-cash loss of $39.

(5)DISCONTINUED OPERATIONS

On May 31, 2023, the Company completed the sale of a majority stake in its Climate Technologies business to private equity funds managed by Blackstone in a $14.0 billion transaction. As a part of this transaction, Emerson received a note receivable with a face value of $2.25 billion and retained a 40 percent non-controlling common equity interest in a new standalone joint venture between Emerson and Blackstone named Copeland. Subsequently, on June 6, 2024, the Company entered into a definitive agreement to sell its 40 percent non-controlling common equity interest in Copeland to private equity funds managed by Blackstone for$1.5 billion. The transaction closed on August 13, 2024 and the Company recognized a gain of $539 ($435 after-tax) in discontinued operations in fiscal 2024. See Note 10 for further details.

Results from discontinued operations were as follows:

Results for the three months ended and nine months ended June 30, 2024 included equity method losses of $16 ($9 after-tax) and $111 ($82 after-tax), respectively, related to the Company's non-controlling common equity interest in Copeland.

Net cash from operating and investing activities from discontinued operations for the nine months ended June 30, 2025 and 2024 were as follows:

Cash from operating activities for thenine months ended June 30, 2025 primarily reflects income taxes paid related to the sale of the Company's 40 percent non-controlling common equity interest in Copeland.

(6)PENSION & POSTRETIREMENT PLANS

Total periodic pension and postretirement (income) expense is summarized below:

(7)OTHER DEDUCTIONS, NET

Other deductions, net are summarized below:

For the three and nine months ended June 30, 2025, the increase in acquisition/divestiture costs is primarily related to the AspenTech transaction. See Note 4. Other is composed of several items, including a portion of pension expense, litigation costs, provision for bad debt and other items, none of which is individually significant.

(8)RESTRUCTURING COSTS

Restructuring expense reflects costs associated with the Company’s ongoing efforts to improve operational efficiency and deploy assets globally in order to remain competitive on a worldwide basis. The Company expects fiscal 2025 restructuring expense and related costs to be approximately $140, including costs to complete actions initiated in the first nine months of the year.

Restructuring expense by business segment follows:

Corporate restructuring for the three and nine months ended June 30, 2025 includes $20 and $21, respectively, of integration-related stock compensation expense attributable to the AspenTech transaction. Corporate restructuring of $5 and $42 for the three and nine months ended June 30, 2024, respectively, is comprised almost entirely of integration-related stock compensation expense attributable to NI.

Details of the change in the liability for restructuring costs during the nine months ended June 30, 2025 follow:

The tables above do not include $3 and $4 of costs related to restructuring actions incurred for the three months ended June 30, 2024 and 2025, respectively, that are required to be reported in cost of sales and selling, general and administrative expenses; year-to-date amounts are $10 and $11, respectively.

(9)TAXES

Income taxes were $154 in the third quarter of fiscal 2025 and $88 in 2024, resulting in effective tax rates of 21 percent and 19 percent, respectively. The prior year rate reflected a 3 percentage point benefit from return-to-provision adjustments related to the filing of the prior year U.S. tax return, partially offset by other individually immaterial items.

Income taxes were $536 in the first nine of months of fiscal 2025 and $266 in 2024, resulting in effective tax rates of 25 percent and 20 percent, respectively. The current year rate was negatively impacted by $49 ($0.09 per share) of discrete tax items related to the AspenTech transaction. In addition, the fees incurred by AspenTech were not fully deductible. In total, the net impact of these items increased the rate by approximately 3 percentage points. The prior year rate included a $57 ($0.10 per share) benefit related to discrete tax items and the benefit discussed above related to the prior year U.S. tax return, partially offset by unfavorable impacts from inventory step-up amortization and the loss on divestiture (see Note 4), which was nondeductible for tax purposes. In total, the net impact of these items benefited the rate by approximately 2 percentage points, which was partially offset by other individually immaterial items.

(10)EQUITY METHOD INVESTMENT AND NOTE RECEIVABLE

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

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 the note receivable to Copeland for$1.9 billion, and the transactions were subsequently completed in August 2024.

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

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

(11)OTHER FINANCIAL INFORMATION

Other intangible assets include customer relationships, net, of $5,917 and $6,296 and intellectual property, net, of $3,500 and $3,901 as of June 30, 2025 and September 30, 2024, respectively.

(12)DEBT

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 revolving backup credit facility. 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 approximately $5.4 billion at June 30, 2025.

In June 2025, the Company repaid $500 of 3.15% notes that matured. 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, along with cash on hand, to fund the AspenTech transaction (see Note 4).

(13)FINANCIAL INSTRUMENTS

Hedging Activities – As of June 30, 2025, the notional amount of foreign currency hedge positions was approximately $3.2 billion. All derivatives receiving hedge accounting are cash flow hedges. The majority of hedging gains and losses deferred as of June 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.

Net Investment Hedge– In fiscal 2019, the Company issued euro-denominated debt of €1.5 billion, of which €500 was repaid in 2024. Additionally, 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 March 2025 euro notes were used for general corporate purposes and to fund a portion of the purchase price of the AspenTech transaction (see Note 4). The euro notes reduce foreign currency risk associated with the Company's international subsidiaries that use the euro as their functional currency and have been designated as a hedge of a portion of the investment in these operations. Foreign currency gains or losses associated with the euro-denominated debt are deferred in accumulated other comprehensive income (loss) and will remain until the hedged investment is sold or substantially liquidated.

The following gains and losses are included in earnings and other comprehensive income (OCI) for the three and nine months ended June 30, 2024 and 2025:

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.

Fair Value Measurement – Valuations for all derivatives and the Company's long-term debt fall within Level 2 of the GAAP valuation hierarchy. As of June 30, 2025, the fair value of long-term debt was approximately $8.1 billion, which was lower than the carrying value by $766. The fair value of foreign currency contracts, which are reported in Other current assets and Accrued expenses, did not materially change since September 30, 2024.

Counterparties to derivatives arran gements 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 of 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 andnone was held by the Company as of June 30, 2025.

(14)ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

(15)BUSINESS SEGMENTS

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 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.

Summarized information about the Company's results of operations by business segment follows:

Stock compensation for thethree and nine months ended June 30, 2025 included $24 and $30, respectively, of integration-related stock compensation expense attributable to AspenTech (of which $20 and $21, respectively, was reported as restructuring costs). Additionally, the three and nine months ended June 30, 2025 included $2 and $7, respectively, of integration-related stock compensation expense attributable to NI. Stock compensation for thethree and nine months ended June 30, 2024 included $9 and $53, respectively, of integration-related stock compensation expense attributable to NI (of which $5 and $41, respectively, was reported as restructuring costs). Corporate and other for thethree and nine months ended June 30, 2025 included acquisition/divestiture fees and related costs of $38 and $216, respectively. Corporate and other for thethree and nine months ended June 30, 2024 included acquisition/divestiture fees and related costs of $13 and $159, respectively, while year-to-date also included acquisition-related inventory step-up amortization of $231 and a divestiture loss of $39.

Depreciation and amortization (includes intellectual property, customer relationships and capitalized software) by business segment are summarized below:

Test & Measurement depreciation and amortization for the three and nine months ended June 30, 2024 included backlog amortization of $34 and $102, respectively.

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

(16)SUBSEQUENT EVENTS

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 Company is currently assessing the impact of the OBBBA on its consolidated financial statements, but does not expect the OBBBA to have a material impact in the current fiscal year.

Items 2 and 3.