EMERSON ELECTRIC CO

See the Company's consolidated financial statements and accompanying notes and the report thereon of KPMG LLP (PCAOB ID 185) that follow.

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

(Dollars in millions)

As of September 30 (Dollars and shares in millions, except per share amounts)

Consolidated Statements of Equity

As of September 30

(Dollars in millions, except per share amounts)

Years ended September 30 (Dollars in millions)

Notes to Consolidated Financial Statements

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

(1)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Financial Statement Presentation

The preparation of the financial statements 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 and its resultsare reported withinthe Control Systems & Software segment. See Notes 4 and 20.

On November 20, 2025, Emerson announced that with the completion of the Company's transformation, it has revised its management organization and updated its reportable segments. Effective in fiscal 2026, Emerson reports results forfive segments: Control Systems & Software and Test & Measurement, which are combined and reported as the Software & Systems group; Sensors and Final Control, which are combined and reported as the Intelligent Devices group; and Safety & Productivity. Prior year amounts have been reclassified to conform to the current year presentation. See Note 20 for further details.

In the fourth quarter of 2026, the Company adopted ASU No. 2023-09 (Topic 740), Improvements to Income Tax Disclosures, which expands the disclosures required with respect to the income tax rate reconciliation and income taxes paid both in U.S. and foreign jurisdictions. The standard changes disclosures only and had no impact on the Company’s results of operations. See Note 16.

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.

Change in Accounting

Effective for the fiscal year ended September 30, 2026, Emerson elected to change its method of accounting for actuarial gains and losses associated with its defined benefit pension and other postretirement benefit plans. Under the new method, commonly referred to as mark-to-market accounting, actuarial gains and losses are recognized in earnings in the period in which they arise. Previously, Emerson had recognized actuarial gains and losses in accumulated other comprehensive income and amortized a portion of those amounts into net periodic benefit cost in subsequent periods.

Emerson believes the new method is preferable under U.S. GAAP because it improves the transparency of the Company's results of operations by recognizing the effects of current economic conditions and plan experience in the period in which they arise, rather than amortizing those effects into earnings over future periods. The new method also better aligns the measurement of pension and other postretirement benefit expense with fair value principles.

Under the mark-to-market method of accounting, the Company recognizes actuarial gains and losses annually in the fourth quarter based on the plans' September 30 annual measurement date. The annual mark-to-market adjustment principally reflects changes in discount rates, returns on plan assets and other actuarial assumptions. This accounting change has been applied retrospectively to all periods presented. As of October 1, 2023, the cumulative effect of the change decreased Retained earnings by $251 and increased Accumulated other comprehensive income (loss) by $251, both of which are components of total equity in the consolidated balance sheet.

The change in accounting impacted Other deductions, net in the Company's Consolidated Statements of Earnings. The change decreased pretax earnings by $29 ($23 after-tax, $0.04 per share) in 2025 and increased pretax earnings by $11 ($6 after-tax, $0.01 per share) in 2024. For 2026, pretax earnings were higher by $17 ($14 after-tax, $0.02 per share) under the new method. The change had no impact on Cash provided by operating activities, as the changes in net earnings were offset by corresponding changes in noncash pension and other postretirement benefit adjustments within operating activities. The cumulative effect of the change decreased Retained earnings and increased Accumulated other comprehensive income (loss) by $254 as of September 30, 2026, compared with the amounts that would have been reported under the prior method, and by $268 and $245 as of September 30, 2025 and 2024, respectively. The change had no effect on total assets, liabilities or equity.

The annual mark-to-market adjustment is reported in the Company's consolidated results but is not allocated to its reportable segments. Further, it has no impact on the funded status of its plans, the Company's funding requirements or benefits payable to plan participants. See Note 14.

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.

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:

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:

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.

With the exception of certain trade names, including $430 related to the AspenTech acquisition, 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 ofone totwo 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, aswell 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 & Systems 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 & Systems business group. Tangible products represent a large majority of the delivered items in contracts with multiple performance obligations or where revenue is recognized over time, while a smaller portion is attributable to installation, service and maintenance.

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 profile. The Company's foreign currency exposures relate to transactions denominated in currencies that differ from the functional currencies of its business units, primarily in Mexican pesos, euros, 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 generallytwo 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 hedge 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. 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 andnone 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 taxes on undistributed earnings of non-U.S. subsidiaries as of September 30, 2026, 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.

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 2026 included approximately $794 that was included in the beginning contract liability balance. Other factors that impacted the change in net contract assets were immaterial.

Revenue recognized for 2026 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, 2026, the Company's backlog relating to unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was approximately $9.6 billion. The Company expects to recognize approximately 70 percent of its remaining performance obligations as revenue over the next 12 months, with the remainder substantially over the subsequenttwo years thereafter.

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

(3)WEIGHTED-AVERAGE COMMON SHARES

Basic earnings per common share consider only the weighted-average of common shares outstanding while diluted earnings per common share, 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 2026, 2025 and 2024 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):

(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. As a result of the transaction, AspenTech is now a wholly owned subsidiary of the Company and its results are reported within the Control Systems & Software segment. See Note 20.

National Instruments

On October 11, 2023, the Company completed the acquisition of National Instruments Corporation (“NI”). NI provides software-connected automated test and measurement systems that enable enterprises to bring products to market faster and at a lower cost. NI is now referred to as Test & Measurement and reported as a segment in the Software & Systems business group, see Note 20.

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

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

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

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).

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 divestedtwo 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 2024, the Company received its final distribution related to its subordinated interest in Vertiv of $79 ($60 after-tax, $0.10 per share). The Company received $161 and $15 related to gains recognized in 2023 and 2022, respectively.

(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. As a part of this transaction, Emerson retained a 40 percent non-controlling common equity interest in a new standalone joint venture between Emerson and Blackstone named Copeland. Subsequently, in August of 2024, the Company sold its 40 percent non-controlling common equity interest in Copeland to private equity funds managed by Blackstone for $1.5 billion.

Results from discontinued operations were as follows:

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

Net cash from operating and investing activities related to discontinued operations were as follows:

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 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.

(6)OTHER DEDUCTIONS, NET

The decline in intangibles amortization in 2026 was due to backlog amortization of $65 in the prior year related to the AspenTech acquisition, while the decline in 2025 was primarily due to backlog amortization of $136 recognized in 2024 related to the NI acquisition. The higher acquisition/divestiture costs in 2025 are primarily related to the AspenTech transaction. Pension and OPEB mark-to-market adjustments reflect the Company's recognition ofactuarial gains and losses annually in the fourth quarter based on its plans' September 30 annual measurement date (see Note 14). In 2024, Other includes a loss of $48 related to the divestiture oftwo 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. In addition to the divestiture losses, the change in Other in 2025 compared to 2024 was primarily due to the change in pension expense (income), see Note 14.

(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$187, $136 and $228 for 2026, 2025 and 2024, respectively. The Company expects fiscal year 2027 restructuring and related costs to be approximately $100.

Restructuring costs by business segment follows:

Actions taken in 2026, 2025 and 2024 included workforce reductions of approximately 1,700, 2,100 and 2,250 positions and the exit of eight, thirteen andtwenty-two 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.

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

The tables above do not include$40, $26 and $16 of costs related to restructuring actions incurred in 2026, 2025 and 2024, 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 interest 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 in 2024, 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.

Summarized financial information for Copeland for 2024 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.

(9)LEASES

The components of lease expense for the years ended September 30 were as follows:

Short-term lease expense and sublease income were immaterial for the years ended September 30, 2026, 2025 and 2024. Cash paid for operating leases is classified within operating cash flows from continuing operations and was $196, $190 and $202 for the years ended September 30, 2026, 2025 and 2024, respectively. Operating lease right-of-use asset additions were $201, $141 and $250 for the years ended September 30, 2026, 2025 and 2024, 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, 2025 and 2026, the vast majority of which relates to offices and manufacturing facilities:

The weighted-average remaining lease term for operating leases was 6.9 years and 7.3 years, and the weighted-average discount rate was 4.5 percent and 4.4 percent as of September 30, 2026 and September 30, 2025, respectively.

Future maturities of operating lease liabilities as of September 30, 2026 are summarized below:

Lease commitments that have not yet commenced were immaterial as of September 30,2026.

(10)GOODWILL AND OTHER INTANGIBLES

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

The gross carrying amount and accumulated amortization of identifiable intangible assets by major class follow:

Intangible asset amortization expense for the major classes included above for 2026, 2025 and 2024 was$1,116, $1,174 and $1,366, respectively. Based on intangible asset balances as of September 30, 2026, amortization expense is expected to approximate$1,102 in 2027, $1,052 in 2028, $996 in 2029, $948 in 2030 and $892 in 2031.

(11)FINANCIAL INSTRUMENTS

Following is a discussion regarding the Company’s use of financial instruments:

Hedging Activities

As of September 30, 2026, the notional amount of foreign currency hedge positions was approximately$2.9 billion. All derivatives receiving hedge accounting are cash flow hedges. The majority of hedging gains and losses deferred as of September 30, 2026 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 and €500 was repaid in 2026. 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):

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 derivativesand the Company's long-term debt fall within Level 2 of the GAAP valuation hierarchy. The fair value of long-term debt was $7.2 billion and $8.2 billion, respec tively, as of September 30, 2026 and 2025, which was lower than the carrying value by $1,047 and $693, respectively. The fair values of foreign currency contracts were reported in Other current assets and Accrued expenses as summarized below:

(12)SHORT-TERM BORROWINGS AND LINES OF CREDIT

Short-term borrowings and current maturities of long-term debt are as follows:

On February 10, 2026, the Company entered into a $2 billion 364-day revolving backup credit facility to support commercial paper borrowings. This facility replaced the Company's $3 billion,364-day revolving backup credit facility entered into on February 11, 2025, which expired by its terms. This facility is in addition to the Company's existing $3.5 billion five-year revolving backup credit facility with various banks, which was entered into in February 2023. The credit facilities are maintained to support general corporate purposes, including commercial paper borrowings. The Company has not incurred any borrowings under these or previous facilities. The credit facilities contain no financial covenants and are not subject to termination based on a change of credit rating or material adverse changes. The facilities are unsecured and may be accessed under various interest rate alternatives at the Company’s option. Fees to maintain the facilities are immaterial.

(13)LONG-TERM DEBT

The details of long-term debt follow:

Long-term debt maturing during each of the four years after 2027 is $523, $1,005, $565 and $1,064, respectively. Total interest paid on long-term debt was approximately$249, $221 and $193 in 2026, 2025 and 2024, respectively.

During the year, the Company repaid$587 of 1.25% notes that matured in October 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 2025, the Company repaid$500 of 3.15% notes that matured in June 2025.

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 orshare 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:

Effective for the fiscal year ended September 30, 2026, Emerson elected to change its method of accounting for actuarial gains and losses associated with its defined benefit pension and other postretirement benefit plans. Under the new method, commonly referred to as mark-to-market accounting, actuarial gains and losses are recognized in earnings in the period in which they arise. Previously, Emerson had recognized actuarial gains and losses in accumulated other comprehensive income and amortized a portion of those amounts into net periodic benefit cost in subsequent periods.

Under the mark-to-market method of accounting, the Company recognizes actuarial gains and losses annually in the fourth quarter based on the plans' September 30 annual measurement date. The annual mark-to-market adjustment principally reflects changes in discount rates, returns on plan assets and other actuarial assumptions. This accounting change has been applied retrospectively to all periods presented.

Total net periodic pension (income) increased in 2026 primarily due to lower mark-to-market expense. 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 benefits 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. The interest crediting rate for the U.S. plan is 5.0%. For employees that had continued to accrue benefits in the principal U.S. defined benefit plan, future service after December 31, 2024 is frozen.

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:

Actuarial gains in 2026 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 6.41% and 5.9% at September 30, 2026 compared to 5.27% and 5.2% at September 30, 2025, respectively. Actuarial gains in 2025 were also 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. As of September 30, 2026, U.S. pension plans were overfunded by $886 in total, including unfunded plans totaling $145. The non-U.S. plans were underfunded by $38, including unfunded plans totaling $235.

As of the September 30, 2026 and 2025 measurement dates, the plans' total accumulated benefit obligation was $3,455 and $3,769, 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 $476, $386 and $66, respectively, for 2026, and $567, $473 and $130, respectively, for 2025. 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 $404, $346 and $11, respectively, for 2026, and $493, $431 and $71, respectively, for 2025.

Future benefit payments by U.S. plans are estimated to be $269 in 2027, $263 in 2028, $258 in 2029, $253 in 2030, $247 in 2031 and $1,127 in total over the five years 2032 through 2036. Based on foreign currency exchange rates as of September 30, 2026, future benefit payments by non-U.S. plans are estimated to be $72 in 2027, $69 in 2028,

$73 in 2029, $72 in 2030, $78 in 2031 and $398 in total over the five years 2032 through 2036. The Company expects to contribute approximately $45 to its retirement plans in 2027.

The weighted-average assumptions used in the valuation of pension benefits follow:

The discount rate for the U.S. retirement plans was 6.41% as of September 30, 2026. 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, 2026 and 2025, and weighted-average target allocations follow:

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 as of September 30, organized 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.

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 approximately $62 at September 30, 2026. 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 was $52 and $61 as of September 30, 2026 and 2025, respectively. Service and interest costs are negligible; net postretirement income, which includes the impact of the mark-to-market adjustment, was $2 for 2026 and $2 for 2025 with net postretirement expense of $9 for 2024. Benefits paid were $7 and $8 for 2026 and 2025, respectively, and the Company estimates that future health care benefit payments will be approximately $6 per year for 2027 through 2031, and $21 in total over the five years 2032 through 2036.

(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, 2026, there wereno known contingent liabilities (including guarantees, pending litigation, taxes and other claims) that management believes will be material in relation to the Company's financial statements, nor were there any material commitments outside the normal course of business.

(16)INCOME TAXES

In the fourth quarter of 2026, the Company adopted ASU No. 2023-09 (Topic 740), Improvements to Income Tax Disclosures, on a prospective basis.

Pretax earnings from continuing operations consist of the following:

The principal components of income tax expense follow:

The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the U.S. federal statutory tax amount and rate to the actual global effective amount and rate for the year ended September 30, 2026:

The following table presents the required disclosures prior to the adoption of ASU 2023-09 and reconciles the U.S. federal statutory income tax rate to the actual global effective income tax rate for the years ended September 30, 2025 and September 30, 2024:

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. In the current year, 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.

The release of valuation allowances in Germany reduced the 2026 effective tax rate by approximately 1 percentage point, while the OBBBA increased the rate by approximately 1 percentage point (see above), resulting in substantially offsetting impacts. State and local taxes in 2025 include a discrete deferred tax 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. See Note 4 for further details related to acquisitions.

Non-U.S. tax holidays reduce tax rates in certain jurisdictions and benefited the effective income tax rate in 2026 by approximately 0.9%. Approximately 70 percent of the tax holidays expire over the next year, 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.

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 $269, 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 $12, $6 and $6 in 2026, 2025 and 2024, respectively. As of September 30, 2026 and 2025, total accrued interest and penalties were $57 and $46, 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:

Income Taxes Paid

The Company adopted ASU 2023-09 on a prospective basis and has included the following table as a result of the adoption, which presents income taxes paid (net of refunds received) for the year ended September 30, 2026:

Total income taxes paid were approx imately$1,440 and $950 in 2025 and 2024, respectively. Of the total taxes paid in 2025, $0.6 billion related to the sale of the Company's 40 percent noncontrolling common equity interest in Copeland. See Notes 5 and 8. Approximately two-thirds of the $333 of losses and other carryforwards can be carried forward indefinitely, while most of the remaining balance expires within the next 5 years.

(17)STOCK-BASED COMPENSATION

The Company's stock-based compensation plans include performance shares, restricted stock, restricted stock units, stock options and an employee stock purchase plan. 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 thethree-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.

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.

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

Stock compensation expense for 2026 includes $15 of integration-related compensation expense. 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, 2026, total unrecognized compensation expense related to unvested shares awarded under Emerson plans was $238, which is expected to be recognized over a weighted-average period of 1.3 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 athree-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.

Information related to performance share payouts for the years ended September 30, 2025 and 2026 follows (shares in thousands):

As of September 30, 2026, approximately 497,000 shares awarded primarily in 2024 were outstanding, contingent on the Company achieving its performance objectives through 2026. The objectives for these shares were met at the 169 percent level and the shares will be distributed in early fiscal 2027.

Additionally, the rights to receive approximately 435,000 and 458,000 shares awarded in 2026 and 2025, respectively, are outstanding and contingent upon the Company achieving its performance objectives through 2028 and 2027, 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 toten years while restricted stock units granted to employees generally vest over athree-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 2026, approximately 121,000 shares of restricted stock and approximately 1,162,000 restricted stock units vested as a result of participants fulfilling the applicable service requirements. Consequently, approximately 73,000 shares and 854,000 units were issued while 48,000 shares and 308,000 units were withheld for income taxes in accordance with minimum withholding requirements. As of September 30, 2026, there were approximately 2,611,000 shares of unvested restricted stock and restricted stock units outstanding.

In addition to the employee stock option and incentive share plans, in 2026 the Company awarded approximately 12,000 restricted stock units under the restricted stock plan for non-management directors. As of September 30, 2026, approximately 13,000 shares were available for issuance under this plan.

As of September 30, 2026,13.5 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, 2026 follow (shares in thousands; assumes 100 percent payout of unvested awards):

Information related to Emerson incentive shares plans follows:

Emerson Stock Options

On November 13, 2025, the Compensation Committee of the Board of Directors of the Company approved the grant of a Special Performance-based Award to our President and Chief Executive Officer and to our Executive Vice President and Chief Operating Officer. Under the Special Performance-based Awards, each individual was awarded 350,000 stock options infive tranches of 70,000 stock options. The exercise prices for 80 percent of the awards were set at a significant premium to the fair market value of our common stock as of the grant date and the average exercise price across all tranches was $192.69. Each tranche of 70,000 stock options vests pro rata over five years and must be exercised within 10 years of the grant date.

There wereno stock option grants in 2025 and 2024. Previously awarded stock options allow key officers and employees to purchase common stock at specified prices, which were equal to 100 percent of the closing market price of the Company's stock on the date of grant. Previous options generally vestone-third in each of thethree 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, 2026 follow (shares in thousands):

Information related to Emerson stock options follows:

(18)COMMON AND PREFERRED STOCK

At September 30, 2026,29.1 million shares of common stock were reserved for issuance under the Company's stock-based compensation plans. During 2026,7.2 million common shares were purchased and 1.7 million treasury shares were reissued. In 2025,9.3 million common shares were purchased and 1.9 million treasury shares were reissued.

At September 30, 2026 and 2025, the Company had 5.4 million shares of $2.50 par value preferred stock authorized, with none issued.

(19)ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

(20)BUSINESS SEGMENTS INFORMATION

Effective in fiscal 2026, Emerson reports results forfive 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 AspenTech’s 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 flexible, AI-enabled tools that provide insights and adaptability for measurement and control challenges across diverse industries.

Featuring open software architectures, flexible hardware systems and expert services, Test & Measurement enables customers to connect data and automation, optimize testing processes and assist in reliable performance. By integrating advanced analytics and automation technologies, these solutions help companies drive efficiency and respond quickly to evolving demands.

The Control Systems & Software and Test & Measurement segments are combined and reported as the Software & Systems group.

The Sensors segment (formerly described as Measurement & Analytical) delivers leading sensing and measurement solutions that provide real-time, reliable data for the world’s most essential applications. Leveraging innovative technologies and trusted brands like Rosemount and Micro Motion, the segment helps customers to monitor critical parameters, optimize operations and support safer, more sustainable performance.

With a comprehensive portfolio that includes secure, wireless and non-intrusive instrumentation, Emerson’s Sensors segment empowers organizations to detect, analyze and respond to changing conditions in even the harshest environments. By integrating advanced sensors with automation platforms and analytics, these solutions help customers unlock operational insights, ensure compliance and accelerate productivity at scale.

The Final Control segment is a leading supplier of valves, digital valve controllers, actuators and regulators engineered to excel in the most demanding conditions. Anchored by trusted brands like Fisher, ASCO and Bettis, the segment empowers customers to precisely manage the flow of liquids and gases for safer, more reliable and efficient operations. This segment also now includes the fluid & motion control business from the former Discrete Automation segment.

With solutions spanning control, isolation and pressure relief valves, as well as solenoid and pneumatic valves, valve position indicators, cylinders, air preparation equipment and electric linear motion, Final Control supports critical applications across a wide range of industries. By combining deep expertise with leading technologies, these solutions help customers optimize performance and drive long-term sustainability.

The Sensors and Final Control segments are combined and reported as the Intelligent Devices group.

The Safety & Productivity segment delivers innovative tools, connected equipment and technologies that empower professionals in the mechanical, electrical and plumbing industries. The segment provides a comprehensive range of mechanical, electrical and diagnostic solutions to support critical infrastructure, promote safety and drive productivity across construction, maintenance and industrial environments. This segment also now includes the electrical equipment and materials joining businesses from the former Discrete Automation segment.

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 (including the annual mark-to-market adjustment). 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.

The following tables present the financial results for each segment.

The following table reconciles the total segment results from the tables above to the Company's consolidated results.

In 2026, stock compensation included $15 of integration-related stock compensation expense, compared to $47 in 2025 (of which $25 was reported as restructuring costs) and $58 in 2024 (of which $43 was reported as restructuring costs). Corporate and other for 2026, 2025 and 2024, respectively, includes acquisition/divestiture fees and related costs of $70, $255 ($42 of which is reported in operating profit; amounts primarily relate to AspenTech), and $205 ($109 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.

In February 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act ("IEEPA") does not authorize the imposition of tariffs. Subsequently, on April 20, 2026, U.S. Customs and Border Protection launched an administrative portal through which eligible importers could submit claims for refunds. During fiscal 2026, the Company filed certain claims and received tariff refunds of $121 ($0.16 per share), and the benefit was recorded in Cost of sales. The Company also used a portion of the tariff refunds to fund a $30 ($0.04 per share) contribution to its charitable trust. These amounts are reflected in Corporate and Other in the table above.

Depreciation and amortization includes intellectual property, customer relationships and capitalized software.

Geographic Information

Sales by major geographic destination are summarized below:

Sales in the U.S. were $8,064, $7,405 and $7,023 for 2026, 2025 and 2024, respectively, while Asia, Middle East & Africa includes sales in China of $1,773, $1,829 and $1,901 in those years.

Property, plant and equipment located in the U.S. was$1,449 in 2026, $1,498 in 2025 and $1,474 in 2024.

(21)OTHER FINANCIAL DATA

Items reported in earnings from continuing operations during the years ended September 30 included the following:

The components of depreciation and amortization expense reported for the years ended September 30 included the following:

Items reported in other noncurrent assets included the following:

Items reported in accrued expenses included the following:

Other liabilities are summarized as follows:

(22)QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Earnings per share are computed independently each period; as a result, the quarterly amounts may not sum to the calculated annual figure. The quarterly results for 2026 and 2025 have been retrospectively adjusted to reflect the Company's adoption of mark-to-market accounting for its defined benefit pension and other postretirement benefit plans. See Notes 1 and 14.

Emerson Electric Co. common stock (symbol EMR) is listed on the New York Stock Exchange and NYSE Texas.

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, 2026 and 2025, 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, 2026, 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, 2026, 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, 2026 and 2025, and the results of its operations and its cash flows for each of the years in the three-year period ended September 30, 2026, 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, 2026 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for pension and postretirement plans in 2026 to immediately recognize actuarial gains and losses in the consolidated statements of earnings.

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

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of 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 recorded $19.0 billion of net sales in 2026.

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.

We have served as the Company’s auditor since 1938.

St. Louis, Missouri

November 9, 2026