UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________________

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~June 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from ____________________ to __________________

Commission file number 1-278

EMERSON ELECTRIC CO.

(Exact name of registrant as specified in its charter)


Missouri		43-0259330
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

8000 W. Florissant Ave.
P.O. Box 4100
St. Louis,	Missouri	63136
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (314) 553-2000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock of $0.50 par value per share	EMR	New York Stock Exchange
		NYSE Chicago
0.375% Notes due 2024	EMR 24	New York Stock Exchange
1.250% Notes due 2025	EMR 25A	New York Stock Exchange
2.000% Notes due 2029	EMR 29	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common stock of $0.50 par value per share outstanding at ~~March 31,~~June 30, 2021: ~~599.7~~597.8 million shares.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Statements of Earnings

EMERSON ELECTRIC CO. & SUBSIDIARIES

Three and ~~six~~nine months ended ~~March 31,~~June 30, 2020 and 2021

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

Three Months Ended
March 31, Six Months Ended
March 31,
2020 2021 2020 2021
Net sales $ 4,162 4,431 8,313 8,592
Costs and expenses:
Cost of sales 2,412 2,569 4,804 5,007
Selling, general and administrative expenses 983 1,054 2,106 2,052
Other deductions, net 42 33 220 155
Interest expense (net of interest income of $6, $4, $12 and $6, respectively) 36 38 71 78
Earnings before income taxes 689 737 1,112 1,300
Income taxes 165 169 259 280
Net earnings 524 568 853 1,020
Less: Noncontrolling interests in earnings of subsidiaries 7 7 10 14
Net earnings common stockholders $ 517 561 843 1,006
Basic earnings per share common stockholders $ 0.85 0.94 1.38 1.68
Diluted earnings per share common stockholders $ 0.84 0.93 1.37 1.67


	Three Months Ended June 30,			Nine Months Ended June 30,
	2020		2021	2020	2021
Net sales	$	3,914	4,697	12,227	13,289

Costs and expenses:
Cost of sales	2,296		2,715	7,100	7,722
Selling, general and administrative expenses	934		1,073	3,040	3,125
Other deductions, net	181		88	401	243
Interest expense (net of interest income of $4, $3, $16 and $9, respectively)	45		37	116	115

Earnings before income taxes	458		784	1,570	2,084

Income taxes	51		151	310	431





Net earnings	407		633	1,260	1,653

Less: Noncontrolling interests in earnings of subsidiaries	8		6	18	20

Net earnings common stockholders	$	399	627	1,242	1,633









Basic earnings per share common stockholders	$	0.67	1.05	2.05	2.73




Diluted earnings per share common stockholders	$	0.67	1.04	2.04	2.71

See accompanying Notes to Consolidated Financial Statements.

Consolidated Statements of Comprehensive Income

EMERSON ELECTRIC CO. & SUBSIDIARIES

Three and ~~six~~nine months ended ~~March 31,~~June 30, 2020 and 2021

(Dollars in millions; unaudited)


		Three Months Ended March 31,				Six Months Ended March 31,				Three Months Ended June 30,				Nine Months Ended June 30,
			2020		2021		2020	2021			2020		2021		2020	2021
Net earnings	Net earnings		$	524	568		853	1,020	Net earnings		$	407	633		1,260	1,653

Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:								Other comprehensive income (loss), net of tax:
Foreign currency translation	Foreign currency translation		(281)		(21)		(182)	168	Foreign currency translation		134		(5)		(48)	163
Pension and postretirement	Pension and postretirement		30		27		58	54	Pension and postretirement		29		27		87	81
Cash flow hedges	Cash flow hedges		(75)		1		(56)	32	Cash flow hedges		40		(6)		(16)	26
Total other comprehensive income (loss)	Total other comprehensive income (loss)		(326)		7		(180)	254	Total other comprehensive income (loss)		203		16		23	270

Comprehensive income	Comprehensive income		198		575		673	1,274	Comprehensive income		610		649		1,283	1,923

Less: Noncontrolling interests in comprehensive income of subsidiaries	Less: Noncontrolling interests in comprehensive income of subsidiaries		8		6		11	13	Less: Noncontrolling interests in comprehensive income of subsidiaries		7		7		18	20
Comprehensive income common stockholders	Comprehensive income common stockholders		$	190	569		662	1,261	Comprehensive income common stockholders		$	603	642		1,265	1,903

See accompanying Notes to Consolidated Financial Statements.

Consolidated Balance Sheets

EMERSON ELECTRIC CO. & SUBSIDIARIES

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

Sept 30, 2020 Mar 31, 2021
ASSETS
Current assets
Cash and equivalents $ 3,315 2,342
Receivables, less allowances of $138 and $129, respectively 2,802 2,754
Inventories 1,928 2,016
Other current assets 761 849
Total current assets 8,806 7,961
Property, plant and equipment, net 3,688 3,663
Other assets
Goodwill 6,734 7,787
Other intangible assets 2,468 3,095
Other 1,186 1,294
Total other assets 10,388 12,176
Total assets $ 22,882 23,800
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings and current maturities of long-term debt $ 1,160 1,456
Accounts payable 1,715 1,797
Accrued expenses 2,910 3,041
Total current liabilities 5,785 6,294
Long-term debt 6,326 5,823
Other liabilities 2,324 2,503
Equity
Common stock, $0.50 par value; authorized, 1,200.0 shares; issued, 953.4 shares; outstanding, 598.0 shares and 599.7 shares, respectively 477 477
Additional paid-in-capital 470 511
Retained earnings 24,955 25,354
Accumulated other comprehensive income (loss) (1,577) (1,322)
Cost of common stock in treasury, 355.4 shares and 353.7 shares, respectively (15,920) (15,890)
Common stockholders’ equity 8,405 9,130
Noncontrolling interests in subsidiaries 42 50
Total equity 8,447 9,180
Total liabilities and equity $ 22,882 23,800


	Sept 30, 2020		June 30, 2021
ASSETS
Current assets
Cash and equivalents	$	3,315	2,860
Receivables, less allowances of $138 and $124, respectively	2,802		2,754
Inventories	1,928		2,114
Other current assets	761		1,038

Total current assets	8,806		8,766

Property, plant and equipment, net	3,688		3,664
Other assets
Goodwill	6,734		7,777
Other intangible assets	2,468		2,993
Other	1,186		1,284

Total other assets	10,388		12,054
Total assets	$	22,882	24,484

LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings and current maturities of long-term debt	$	1,160	1,478
Accounts payable	1,715		1,966
Accrued expenses	2,910		3,226


Total current liabilities	5,785		6,670

Long-term debt	6,326		5,835

Other liabilities	2,324		2,640



Equity
Common stock, $0.50 par value; authorized, 1,200.0 shares; issued, 953.4 shares; outstanding, 598.0 shares and 597.8 shares, respectively	477		477
Additional paid-in-capital	470		518
Retained earnings	24,955		25,678
Accumulated other comprehensive income (loss)	(1,577)		(1,307)
Cost of common stock in treasury, 355.4 shares and 355.6 shares, respectively	(15,920)		(16,075)
Common stockholders’ equity	8,405		9,291
Noncontrolling interests in subsidiaries	42		48
Total equity	8,447		9,339
Total liabilities and equity	$	22,882	24,484

See accompanying Notes to Consolidated Financial Statements.

Consolidated Statements of Equity

EMERSON ELECTRIC CO. & SUBSIDIARIES

Three and ~~six~~nine months ended ~~March 31,~~June 30, 2020 and 2021

(Dollars in millions; unaudited)


		Three Months Ended March 31,			Six Months Ended March 31,			Three Months Ended June 30,			Nine Months Ended June 30,
		2020		2021	2020	2021		2020		2021	2020	2021

Common stock	Common stock	$	477	477	477	477	Common stock	$	477	477	477	477

Additional paid-in-capital	Additional paid-in-capital						Additional paid-in-capital
Beginning balance	Beginning balance	447		499	393	470	Beginning balance	453		511	393	470
Stock plans	Stock plans	6		12	60	41	Stock plans	6		7	66	48

Ending balance	Ending balance	453		511	453	511	Ending balance	459		518	459	518

Retained earnings	Retained earnings						Retained earnings
Beginning balance	Beginning balance	24,220		25,096	24,199	24,955	Beginning balance	24,431		25,354	24,199	24,955
Net earnings common stockholders	Net earnings common stockholders	517		561	843	1,006	Net earnings common stockholders	399		627	1,242	1,633
Dividends paid (per share: $0.50, $0.505, $1.00 and $1.01, respectively)		(306)		(303)	(611)	(606)
Dividends paid (per share: $0.50, $0.505, $1.50 and $1.515, respectively)							Dividends paid (per share: $0.50, $0.505, $1.50 and $1.515, respectively)	(299)		(303)	(910)	(909)
Adoption of accounting standard	Adoption of accounting standard	0		0	0	(1)	Adoption of accounting standard	0		0	0	(1)
Ending balance	Ending balance	24,431		25,354	24,431	25,354	Ending balance	24,531		25,678	24,531	25,678

Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)						Accumulated other comprehensive income (loss)
Beginning balance	Beginning balance	(1,576)		(1,330)	(1,722)	(1,577)	Beginning balance	(1,903)		(1,322)	(1,722)	(1,577)
Foreign currency translation	Foreign currency translation	(282)		(20)	(183)	169	Foreign currency translation	135		(6)	(48)	163
Pension and postretirement	Pension and postretirement	30		27	58	54	Pension and postretirement	29		27	87	81
Cash flow hedges	Cash flow hedges	(75)		1	(56)	32	Cash flow hedges	40		(6)	(16)	26
Ending balance	Ending balance	(1,903)		(1,322)	(1,903)	(1,322)	Ending balance	(1,699)		(1,307)	(1,699)	(1,307)

Treasury stock	Treasury stock						Treasury stock
Beginning balance	Beginning balance	(15,147)		(15,847)	(15,114)	(15,920)	Beginning balance	(15,941)		(15,890)	(15,114)	(15,920)
Purchases	Purchases	(813)		(69)	(942)	(82)	Purchases	0		(193)	(942)	(275)
Issued under stock plans	Issued under stock plans	19		26	115	112	Issued under stock plans	4		8	119	120
Ending balance	Ending balance	(15,941)		(15,890)	(15,941)	(15,890)	Ending balance	(15,937)		(16,075)	(15,937)	(16,075)

Common stockholders' equity	Common stockholders' equity	7,517		9,130	7,517	9,130	Common stockholders' equity	7,831		9,291	7,831	9,291

Noncontrolling interests in subsidiaries	Noncontrolling interests in subsidiaries						Noncontrolling interests in subsidiaries
Beginning balance	Beginning balance	38		44	40	42	Beginning balance	46		50	40	42
Net earnings	Net earnings	7		7	10	14	Net earnings	8		6	18	20
Other comprehensive income	Other comprehensive income	1		(1)	1	(1)	Other comprehensive income	(1)		1	0	0
Dividends paid	Dividends paid	0		0	(5)	(5)	Dividends paid	(6)		(9)	(11)	(14)

Ending balance	Ending balance	46		50	46	50	Ending balance	47		48	47	48

Total equity	Total equity	$	7,563	9,180	7,563	9,180	Total equity	$	7,878	9,339	7,878	9,339

See accompanying Notes to Consolidated Financial Statements.

Consolidated Statements of Cash Flows

EMERSON ELECTRIC CO. & SUBSIDIARIES

~~Six~~Nine Months Ended ~~March 31,~~June 30, 2020 and 2021

(Dollars in millions; unaudited)


	Nine Months Ended
	June 30,
	2020		2021
Operating activities
Net earnings	$	1,260	1,653

Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	631		720
Stock compensation	69		191
Pension expense	50		23
Changes in operating working capital	(86)		246


Other, net	(70)		(113)


Cash provided by operating activities	1,854		2,720

Investing activities
Capital expenditures	(329)		(350)
Purchases of businesses, net of cash and equivalents acquired	(114)		(1,611)

Other, net	(65)		53


Cash used in investing activities	(508)		(1,908)

Financing activities
Net increase in short-term borrowings	269		31
Proceeds from short-term borrowings greater than three months	546		71
Payments of short-term borrowings greater than three months	(340)		0
Proceeds from long-term debt	1,488		0
Payments of long-term debt	(502)		(305)
Dividends paid	(910)		(909)
Purchases of common stock	(942)		(268)
Other, net	28		89
Cash used in financing activities	(363)		(1,291)

Effect of exchange rate changes on cash and equivalents	(27)		24
Increase (Decrease) in cash and equivalents	956		(455)
Beginning cash and equivalents	1,494		3,315
Ending cash and equivalents	$	2,450	2,860

Changes in operating working capital
Receivables	$	456	76
Inventories	(218)		(160)
Other current assets	40		(69)
Accounts payable	(439)		216
Accrued expenses	75		183

Total changes in operating working capital	$	(86)	246

Six Months Ended
March 31,
2020 2021
Operating activities
Net earnings $ 853 1,020
Adjustments to reconcile net earnings to net cash provided by operating activities:
        Depreciation and amortization 422 483
        Stock compensation 18 125
        Pension expense 34 16
        Changes in operating working capital (260) 66
        Other, net (55) (95)
            Cash provided by operating activities 1,012 1,615
Investing activities
Capital expenditures (225) (222)
Purchases of businesses, net of cash and equivalents acquired (96) (1,611)
Other, net (42) 61
    Cash used in investing activities (363) (1,772)
Financing activities
Net increase in short-term borrowings 2,076 60
Proceeds from short-term borrowings greater than three months 433 0
Payments of long-term debt (502) (301)
Dividends paid (611) (606)
Purchases of common stock (942) (78)
Other, net 39 83
    Cash provided by (used in) financing activities 493 (842)
Effect of exchange rate changes on cash and equivalents (53) 26
Increase (Decrease) in cash and equivalents 1,089 (973)
Beginning cash and equivalents 1,494 3,315
Ending cash and equivalents $ 2,583 2,342
Changes in operating working capital
Receivables $ 283 75
Inventories (216) (61)
Other current assets 32 (16)
Accounts payable (290) 55
Accrued expenses (69) 13
Total changes in operating working capital $ (260) 66

See accompanying Notes to Consolidated Financial Statements.

Notes to Consolidated Financial Statements

EMERSON ELECTRIC CO. & SUBSIDIARIES

(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 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). 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, 2020. Certain prior year amounts have been reclassified to conform to current year ~~presentation. See~~presentation - see Note 12.

Effective October 1, 2020, the Company adopted two accounting standard updates and one new accounting standard which had an immaterial impact on the Company's financial statements as of and for the ~~six~~nine months ended ~~March 31,~~June 30, 2021. These included:

•Updates to ASC 350, Intangibles - Goodwill and Other, which eliminate the requirement to measure impairment based on the implied fair value of goodwill compared to the carrying amount of a reporting unit’s goodwill. Instead, goodwill impairment will be measured as the excess of a reporting unit’s carrying amount over its estimated fair value.

•Updates to ASC 350, Intangibles - Goodwill and Other, which align the requirements for capitalizing implementation costs incurred in a software hosting arrangement with the requirements for costs incurred to develop or obtain internal-use software.

•Adoption of ASC 326, Financial Instruments - Credit Losses, which amends the impairment model by requiring entities to use a forward-looking approach to estimate lifetime expected credit losses on certain types of financial instruments, including trade receivables.

(2) REVENUE RECOGNITION

Emerson is a global manufacturer that combines technology and engineering to provide innovative solutions to its customers, largely in the form of tangible products. The vast majority of the Company's revenues relate to a broad offering of manufactured products 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 12 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 current assets, and its customer advances (contract liabilities), which are reported in Accrued expenses.

Sept 30, 2020 Mar 31, 2021
Unbilled receivables (contract assets) $ 458 472
Customer advances (contract liabilities) (583) (749)
Net contract liabilities $ (125) (277)


	Sept 30, 2020			June 30, 2021
Unbilled receivables (contract assets)		$	458		500
Customer advances (contract liabilities)		(583)			(774)
Net contract liabilities		$	(125)		(274)

The majority of the Company's contract balances relate to arrangements where revenue is recognized over time and payments from customers are made according to a contractual billing schedule. The increase in net contract liabilities was due to customer billings which exceeded revenue recognized for performance completed during the period. Revenue recognized for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2021 included ~~$105~~$53 and ~~$362~~$415 that was included in the beginning contract liability balance. Other factors that impacted the change in net contract liabilities were immaterial. Revenue recognized for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2021 for performance obligations that

were satisfied in previous periods, including cumulative catchup adjustments on the Company's long-term contracts, was not material.

As of ~~March 31,~~June 30, 2021, the Company's backlog relating to unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was approximately ~~$6.3~~$6.6 billion. The Company expects to recognize approximately 80 percent of its remaining performance obligations as revenue over the next 12 months, with the remainder substantially over the subsequent two years thereafter.

(3) WEIGHTED-AVERAGE COMMON SHARES

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

Three Months Ended
March 31, Six Months Ended
March 31,
2020 2021 2020 2021
Basic shares outstanding 607.4 599.4 608.7 599.0
Dilutive shares 3.6 3.4 3.9 3.3
Diluted shares outstanding 611.0 602.8 612.6 602.3


	Three Months Ended June 30,		Nine Months Ended June 30,
	2020	2021	2020	2021

Basic shares outstanding	596.9	598.2	604.8	598.7
Dilutive shares	3.1	3.9	3.6	3.6
Diluted shares outstanding	600.0	602.1	608.4	602.3

(4) ACQUISITIONS AND DIVESTITURES

On October 1, 2020, the Company completed the acquisition of Open Systems International, Inc. (OSI), a leading operations technology software provider in the global power industry, for approximately $1.6 billion, net of cash acquired. This business, which has annual sales of approximately $170 and is reported in the Automation Solutions segment, expands the Company's offerings in the power industry to include the digitization and modernization of the electric grid. The Company recognized goodwill of $960 (NaN of which is expected to be tax deductible), identifiable intangible assets of $783, primarily intellectual property and customer relationships with a weighted-average useful life of approximately 11 years, and deferred tax liabilities of approximately $185. ~~Valuations of these assets and liabilities are in process and subject to refinement.~~ Results of operations for the three months ended ~~March 31,~~June 30, 2021 included first-year pretax acquisition accounting charges related to backlog amortization and deferred revenue of $6$7 and ~~$4,~~$3, respectively, while year-to-date results included ~~$17~~$24 and ~~$8,~~$11, respectively.

On November 17, 2020, the Company acquired the remaining interest of an equity investment for approximately $19, net of cash acquired.

The Company acquired 3 businesses in fiscal 2020, 2 in the Automation Solutions segment and 1 in the Climate Technologies segment, for $126, net of cash acquired.

~~(5) PENSION & POSTRETIREMENT PLANS~~

~~Total~~As previously disclosed, the Company sold its network power systems business (rebranded as Vertiv, now a publicly traded company, symbol VRT) in 2017 and retained a subordinated interest contingent upon the equity holders first receiving a threshold return on their initial investment. As of August 4, 2021, the equity holders have received a return on their investment substantially up to the threshold. Based on the terms of the agreement and the current calculation, the Company could receive approximately $600 on a pretax basis through periodic ~~pension~~distributions over the next two years. However, the distributions are contingent on the timing and ~~postretirement (income) expense is summarized below:~~

Three Months Ended March 31, Six Months Ended March 31,
2020 2021 2020 2021
Service cost $ 22 21 44 42
Interest cost 40 32 80 64
Expected return on plan assets (84) (84) (168) (168)
Net amortization 38 35 75 70
Total $ 16 4 31 8

price at which Vertiv shares are sold by the equity holders and therefore, there can be no assurance as to the amount or timing of the distributions to the Company. As of June 30, 2021, no amounts have been recognized in the financial statements related to this gain contingency.

(5) PENSION & POSTRETIREMENT PLANS

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


	Three Months Ended June 30,				Nine Months Ended June 30,
		2020		2021		2020	2021
Service cost		$	21	21		65	63
Interest cost		40		32		120	96
Expected return on plan assets		(84)		(84)		(252)	(252)
Net amortization		38		35		113	105
Total		$	15	4		46	12

(6) OTHER DEDUCTIONS, NET

Other deductions, net are summarized below:

Three Months Ended
March 31, Six Months Ended
March 31,
2020 2021 2020 2021
Amortization of intangibles (intellectual property and customer relationships) $ 59 74 118 152
Restructuring costs 31 17 128 83
Special advisory fees 0 0 13 0
Other (48) (58) (39) (80)
Total $ 42 33 220 155


	Three Months Ended June 30,				Nine Months Ended June 30,
	2020			2021		2020	2021

Amortization of intangibles (intellectual property and customer relationships)		$	60	71		178	223
Restructuring costs		88		28		216	111
Special advisory fees		0		0		13	0
Other		33		(11)		(6)	(91)
Total		$	181	88		401	243

The increase in intangibles amortization for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2021 was due to the OSI acquisition, including backlog amortization of $6$7 and ~~$17,~~$24, respectively. The change in Other for the third quarter of fiscal 2021 included a favorable impact from foreign currency transactions of $25 due to losses in the prior year and a favorable impact from pensions. For the nine months ended June 30, 2021, the change in Other reflects a favorable impact from pensions and investment-related gains, including gains in the first quarter of fiscal 2021 of $21 from an investment ~~gain of $21~~sale and ~~a gain~~$17 from the acquisition of the remaining interest of an equity investment, ~~of $17 recognized in the first quarter of fiscal 2021,~~ and a gain in the second quarter of $31 onfrom the sale of an equity ~~investment in the second quarter. Unfavorable foreign currency transactions negatively impacted results for the three and six months ended March 31, 2021 by $22 and $29, respectively.~~investment.

(7) 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. Costs incurred in the first ~~six~~nine months of fiscal 2021 relate to the Company's initiatives ~~to improve operating margins~~ that began in the third quarter of fiscal 2019 to improve operating margins and were increased in response to the effects of the COVID-19 pandemic on demand for the Company's products. Expenses incurred in the first ~~six~~nine months of ~~fiscal~~fiscal 2021 included costs related to workforce reductions of approximately ~~1,700~~1,900 employees. The Company expects fiscal 2021 restructuring expense and related costs to be approximately $200, including costs to complete actions initiated in the first ~~six~~nine months of the year.

~~Restructuring expense by business segment follows:~~

Three Months Ended
March 31, Six Months Ended
March 31,
2020 2021 2020 2021
Automation Solutions $ 23 12 106 76
Climate Technologies 2 3 9 4
Tools & Home Products 5 1 8 2
Commercial & Residential Solutions 7 4 17 6
Corporate 1 1 5 1
Total $ 31 17 128 83

~~Details of the change in the liability for restructuring costs during the six months ended March 31, 2021 follow:~~

Sept 30, 2020 Expense Utilized/Paid Mar 31, 2021
Severance and benefits $ 176 71 71 176
Other 5 12 13 4
Total $ 181 83 84 180

The tables above do not include $9 and $4 of costs related to restructuring actions incurred for the three months ended March 31, 2020 and 2021, respectively, that are required to be reported in cost of sales and selling, general and administrative expenses, while year-to-date amounts are $9 and $7, respectively.

Restructuring expense by business segment follows:


	Three Months Ended June 30,					Nine Months Ended June 30,
	2020			2021		2020		2021

Automation Solutions		$	76		18		182		94

Climate Technologies		5			4		14		8
Tools & Home Products		4			2		12		4
Commercial & Residential Solutions		9			6		26		12

Corporate		3			4		8		5

Total		$	88		28		216		111

Details of the change in the liability for restructuring costs during the nine months ended June 30, 2021 follow:


	Sept 30, 2020			Expense		Utilized/Paid		June 30, 2021

Severance and benefits		$	176		87		95		168




Other		5			24		22		7
Total		$	181		111		117		175

The tables above do not include $6 and $4 of costs related to restructuring actions incurred for the three months ended June 30, 2020 and 2021, respectively, that are required to be reported in cost of sales and selling, general and administrative expenses; year-to-date amounts are $15 and $11, respectively.

(8) TAXES

Income taxes were ~~$169~~$151 in the ~~second~~third quarter of fiscal 2021 and ~~$165~~$51 in 2020, resulting in effective tax rates of 2319 percent and 2411 percent, respectively. The current year rate included $24 of favorable net discrete tax items which decreased the rate 3 percentage points. The prior year rate included $57 of discrete benefits, which decreased the rate 12 percentage points, related to updates to estimates for the prior year U.S. income tax return and the impact of a research and development tax credit study.

Income taxes were $431 for the first nine months of 2021 and $310 for 2020, resulting in effective tax rates of 21 percent and 20 percent, respectively. The current year and prior year ~~rate~~rates included ~~unfavorable~~favorable net discrete ~~tax~~ items which ~~increased~~reduced the ~~rate~~rates 1 percentage point ~~in both years.~~

~~Income taxes were $280 for the first six months of 2021~~ and ~~$259 for 2020, resulting in effective tax rates of 22 percent and 23 percent,~~3 percentage points, respectively.

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic, and among other things, provides tax relief to businesses. Tax provisions of the CARES Act include the deferral of certain payroll taxes, relief for retaining employees, and other provisions. The Company deferred $73 of certain payroll taxes through the end of calendar year 2020, half of which is due in December 2021 with the remainder due in December 2022.

(9) OTHER FINANCIAL INFORMATION


	Sept 30, 2020			June 30, 2021
Inventories
Finished products		$	584		666
Raw materials and work in process		1,344			1,448
Total		$	1,928		2,114

Sept 30, 2020 Mar 31, 2021
Inventories
Finished products $ 584 622
Raw materials and work in process 1,344 1,394
Total $ 1,928 2,016

Property, plant and equipment, net
Property, plant and equipment, at cost $ 9,055 9,227
Less: Accumulated depreciation 5,367 5,564
Total $ 3,688 3,663

Goodwill by business segment
Automation Solutions $ 5,583 6,603
Climate Technologies 730 757
Tools & Home Products 421 427
Commercial & Residential Solutions 1,151 1,184
Total $ 6,734 7,787

Other intangible assets
Gross carrying amount $ 5,106 5,963
Less: Accumulated amortization 2,638 2,868
Net carrying amount $ 2,468 3,095

Other intangible assets include customer relationships, net of $1,328 and $1,597 as of September 30, 2020 and March 31, 2021, respectively. The increases in goodwill and other intangible assets reflect the acquisition of OSI. See Note 4.

Other assets include the following:
Operating lease right-of-use assets $ 508 523
Pension assets 265 374
Deferred income taxes 99 108
Asbestos-related insurance receivables 100 97



Property, plant and equipment, net
Property, plant and equipment, at cost	$	9,055	9,318
Less: Accumulated depreciation	5,367		5,654
Total	$	3,688	3,664

Sept 30, 2020 Mar 31, 2021
Accrued expenses include the following:
Customer advances (contract liabilities) $ 583 749
Employee compensation 577 516
Product warranty 148 152
Operating lease liabilities (current) 148 150



	Sept 30, 2020		June 30, 2021
Goodwill by business segment
Automation Solutions	$	5,583	6,594

Climate Technologies	730		757
Tools & Home Products	421		426
Commercial & Residential Solutions	1,151		1,183

Total	$	6,734	7,777



Other intangible assets
Gross carrying amount	$	5,106	5,971
Less: Accumulated amortization	2,638		2,978
Net carrying amount	$	2,468	2,993

Other liabilities include the following:
Pension and postretirement liabilities $ 769 781
Deferred income taxes 261 429
Operating lease liabilities (noncurrent) 373 389
Asbestos litigation 295 272
Other intangible assets include customer relationships, net, of $1,328 and $1,554 as of September 30, 2020 and June 30, 2021, respectively. The increases in goodwill and other intangible assets reflect the acquisition of OSI. See Note 4.



Other assets include the following:
Operating lease right-of-use assets	$	508	503
Pension assets	265		415
Deferred income taxes	99		110
Asbestos-related insurance receivables	100		96



Accrued expenses include the following:
Customer advances (contract liabilities)	$	583	774
Employee compensation	577		629
Product warranty	148		155
Operating lease liabilities (current)	148		151


Other liabilities include the following:
Pension and postretirement liabilities	$	769	781
Deferred income taxes	261		555
Operating lease liabilities (noncurrent)	373		366
Asbestos litigation	295		267

The increase in deferred income taxes is largely due to the OSI acquisition.

(10) FINANCIAL INSTRUMENTS

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

Hedging Activities – As of ~~March 31,~~June 30, 2021, the notional amount of foreign currency hedge positions was approximately ~~$2.1~~$1.9 billion, and commodity hedge contracts totaled approximately ~~$111~~$139 (primarily 3942 million pounds of copper and aluminum). All derivatives receiving hedge accounting are cash flow hedges. The majority of hedging gains and losses deferred as of ~~March 31,~~June 30, 2021 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. 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 ~~six~~nine months ended ~~March 31,~~June 30, 2021 and 2020:


			Into Earnings					Into OCI						Into Earnings					Into OCI
			2nd Quarter			Six Months		2nd Quarter		Six Months				3rd Quarter			Nine Months		3rd Quarter		Nine Months
Gains (Losses)	Gains (Losses)	Location	2020		2021	2020	2021	2020	2021	2020	2021	Gains (Losses)	Location	2020		2021	2020	2021	2020	2021	2020	2021
Commodity	Commodity	Cost of sales	$	(1)	8	(4)	11	(23)	13	(16)	26	Commodity	Cost of sales	$	(4)	13	(8)	24	17	8	1	34
Foreign currency	Foreign currency	Sales	(1)		1	(3)	2	(8)	(2)	(5)	3	Foreign currency	Sales	(2)		0	(5)	2	6	0	1	3
Foreign currency	Foreign currency	Cost of sales	4		2	11	2	(66)	0	(49)	27	Foreign currency	Cost of sales	(3)		3	8	5	21	1	(28)	28
Foreign currency	Foreign currency	Other deductions, net	13		29	21	25					Foreign currency	Other deductions, net	(26)		8	(5)	33

Net Investment Hedges	Net Investment Hedges											Net Investment Hedges
Euro denominated debt	Euro denominated debt							57	53	31	(27)	Euro denominated debt							(72)	6	(41)	(21)
Total	Total		$	15	40	25	40	(40)	64	(39)	29	Total		$	(35)	24	(10)	64	(28)	15	(67)	44

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 ~~March 31,~~June 30, 2021, the fair value of long-term debt was ~~$6.8~~$6.9 billion, which exceeded the

carrying value by ~~$425.~~$526. The fair values of commodity and foreign currency contracts were reported in Other current assets and Accrued expenses and did not materially change since September 30, 2020.

Counterparties to derivatives 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 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. NaN collateral was posted with counterparties and NaN was held by the Company as of ~~March 31,~~June 30, 2021.

~~(11) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)~~

~~Activity in Accumulated other comprehensive income (loss) for the three and six months ended March 31, 2021 and 2020 is shown below, net of income taxes:~~

Three Months Ended March 31, Six Months Ended March 31,
2020 2021 2020 2021
Foreign currency translation
   Beginning balance $ (695) (522) (794) (711)
   Other comprehensive income (loss), net of tax of $(13), $(13), $(7) and $6, respectively (282) (20) (183) 169
   Ending balance (977) (542) (977) (542)
Pension and postretirement
   Beginning balance (900) (837) (928) (864)
Amortization of deferred actuarial losses into earnings, net of tax of $(8), $(8), $(17) and $(16), respectively 30 27 58 54
   Ending balance (870) (810) (870) (810)
Cash flow hedges
   Beginning balance 19 29 0 (2)
Deferral of gains (losses) arising during the period, net of tax of $23, $(2), $17 and $(13), respectively (74) 9 (53) 43
   Reclassification of realized (gains) losses to sales and cost of sales, net of tax of $1, $3, $1 and $4, respectively (1) (8) (3) (11)
   Ending balance (56) 30 (56) 30
Accumulated other comprehensive income (loss) $ (1,903) (1,322) (1,903) (1,322)

(11) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Activity in Accumulated other comprehensive income (loss) for the three and nine months ended June 30, 2021 and 2020 is shown below, net of income taxes:


	Three Months Ended June 30,				Nine Months Ended June 30,
		2020		2021		2020	2021
Foreign currency translation
Beginning balance		$	(977)	(542)		(794)	(711)
Other comprehensive income (loss), net of tax of $17, $(1), $10 and $5, respectively		135		(6)		(48)	163


Ending balance		(842)		(548)		(842)	(548)

Pension and postretirement
Beginning balance		(870)		(810)		(928)	(864)
Amortization of deferred actuarial losses into earnings, net of tax of $(9), $(8), $(26) and $(24), respectively		29		27		87	81

Ending balance		(841)		(783)		(841)	(783)

Cash flow hedges
Beginning balance		(56)		30		0	(2)
Deferral of gains (losses) arising during the period, net of tax of $(11), $(2), $6 and $(15), respectively		33		7		(20)	50
Reclassification of realized (gains) losses to sales and cost of sales, net of tax of $(2), $3, $(1) and $7, respectively		7		(13)		4	(24)
Ending balance		(16)		24		(16)	24

Accumulated other comprehensive income (loss)		$	(1,699)	(1,307)		(1,699)	(1,307)

(12) BUSINESS SEGMENTS

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

Three Months Ended March 31, Six Months Ended March 31,
Sales Earnings Sales Earnings
2020 2021 2020 2021 2020 2021 2020 2021
Automation Solutions $ 2,709 2,793 391 471 5,561 5,485 701 832
Climate Technologies 1,026 1,160 217 245 1,899 2,191 368 457
Tools & Home Products 432 485 89 112 862 930 175 210
Commercial & Residential Solutions 1,458 1,645 306 357 2,761 3,121 543 667
Stock compensation 38 (61) (18) (125)
Unallocated pension and postretirement costs 12 23 25 47
Corporate and other (22) (15) (68) (43)
Eliminations/Interest (5) (7) (36) (38) (9) (14) (71) (78)
Total $ 4,162 4,431 689 737 8,313 8,592 1,112 1,300


	Three Months Ended June 30,					Nine Months Ended June 30,
	Sales			Earnings		Sales		Earnings
	2020		2021	2020	2021	2020	2021	2020	2021

Automation Solutions	$	2,589	2,947	311	521	8,150	8,432	1,012	1,353

Climate Technologies	970		1,268	195	274	2,869	3,459	563	731
Tools & Home Products	357		489	58	101	1,219	1,419	233	311
Commercial & Residential Solutions	1,327		1,757	253	375	4,088	4,878	796	1,042

Stock compensation				(51)	(66)			(69)	(191)
Unallocated pension and postretirement costs				12	24			37	71
Corporate and other				(22)	(33)			(90)	(76)
Eliminations/Interest	(2)		(7)	(45)	(37)	(11)	(21)	(116)	(115)
Total	$	3,914	4,697	458	784	12,227	13,289	1,570	2,084

In fiscal 2021, the Company reclassified certain software product sales that were previously reported in Measurement and Analytical Instrumentation to Systems & Software (previously described as Process Control Systems & Solutions). Automation Solutions sales by major product offering are summarized below, including the reclassification of prior year amounts to reflect this change.


		Three Months Ended March 31,				Six Months Ended March 31,				Three Months Ended June 30,				Nine Months Ended June 30,
			2020		2021		2020	2021			2020		2021		2020	2021

Measurement & Analytical Instrumentation	Measurement & Analytical Instrumentation		$	776	732		1,571	1,430	Measurement & Analytical Instrumentation		$	709	781		2,280	2,211
Valves, Actuators & Regulators	Valves, Actuators & Regulators		854		836		1,767	1,642	Valves, Actuators & Regulators		842		880		2,609	2,522
Industrial Solutions	Industrial Solutions		494		555		1,001	1,063	Industrial Solutions		469		593		1,470	1,656
Systems & Software	Systems & Software		585		670		1,222	1,350	Systems & Software		569		693		1,791	2,043
Automation Solutions	Automation Solutions		$	2,709	2,793		5,561	5,485	Automation Solutions		$	2,589	2,947		8,150	8,432

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

Three Months Ended March 31, Six Months Ended March 31,
2020 2021 2020 2020
Automation Solutions $ 138 156 277 312
Climate Technologies 45 47 89 96
Tools & Home Products 19 20 38 39
Commercial & Residential Solutions 64 67 127 135
Corporate and other 9 16 18 36
Total $ 211 239 422 483


	Three Months Ended June 30,				Nine Months Ended June 30,
		2020		2021		2020	2020
Automation Solutions		$	137	152		414	464

Climate Technologies		44		48		133	144
Tools & Home Products		20		20		58	59
Commercial & Residential Solutions		64		68		191	203

Corporate and other		8		17		26	53
Total		$	209	237		631	720

Sales by geographic destination are summarized below:

Three Months Ended March 31,
2020 2021
Automation Solutions Commercial & Residential Solutions Total Automation Solutions Commercial & Residential Solutions Total
Americas $ 1,346 1,037 2,383 1,223 1,119 2,342
Asia, Middle East & Africa 830 235 1,065 953 305 1,258
Europe 533 186 719 617 221 838
Total $ 2,709 1,458 4,167 2,793 1,645 4,438
Six Months Ended March 31,
2020 2021
Automation Solutions Commercial & Residential Solutions Total Automation Solutions Commercial & Residential Solutions Total
Americas $ 2,756 1,900 4,656 2,390 2,100 4,490
Asia, Middle East & Africa 1,726 512 2,238 1,896 613 2,509
Europe 1,079 349 1,428 1,199 408 1,607
Total $ 5,561 2,761 8,322 5,485 3,121 8,606


	Three Months Ended June 30,
	2020				2021
	Automation Solutions		Commercial & Residential Solutions	Total	Automation Solutions	Commercial & Residential Solutions	Total

Americas	$	1,159	915	2,074	1,321	1,190	2,511
Asia, Middle East & Africa	893		253	1,146	1,011	331	1,342
Europe	537		159	696	615	236	851
Total	$	2,589	1,327	3,916	2,947	1,757	4,704

	Nine Months Ended June 30,
	2020				2021
	Automation Solutions		Commercial & Residential Solutions	Total	Automation Solutions	Commercial & Residential Solutions	Total

Americas	$	3,915	2,815	6,730	3,711	3,290	7,001
Asia, Middle East & Africa	2,619		765	3,384	2,907	944	3,851
Europe	1,616		508	2,124	1,814	644	2,458
Total	$	8,150	4,088	12,238	8,432	4,878	13,310

Items 2 and 3.

Management's Discussion and Analysis of Financial Condition and Results of Operations

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

OVERVIEW

For the ~~second~~third quarter of fiscal 2021, net sales were ~~$4.4~~$4.7 billion, up 620 percent compared with the prior year, supported by foreign currency translation which added 34 percent and the Open Systems International, Inc. (OSI) acquisition ~~which~~which added 1 percent. Underlying sales, which exclude foreign currency translation, acquisitions and divestitures, were up 215 percent. Automation Solutions underlying sales were ~~down slightly compared to the prior year, but continued to improve sequentially~~up high single digits, as ~~global markets recover from the impacts of COVID-19. Sales in North America~~all businesses turned positive and all geographies were ~~down 15 percent as automation markets remained weak, but hybrid and discrete markets improved sequentially. Sales rebounded sharply in China (up 42 percent) due to easier comparisons and Europe was~~ up ~~6 percent.~~mid-to-high single digits. Commercial & Residential Solutions underlying sales were up sharply, reflecting strong growth across all businesses and ~~geographies. Demand for residential-oriented products and solutions~~geographies including robust demand in North ~~America~~American residential markets and global cold chain ~~end markets were strong, while sales in China rebounded sharply.~~markets. Both business platforms also benefited from the impact of COVID-19 on prior year comparisons.

Net earnings common stockholders were ~~$561,~~$627, up 957 percent, and diluted earnings per share were ~~$0.93,~~$1.04, up 1155 percent compared with ~~$0.84~~$0.67 in the prior year. Operating results increased ~~$0.14~~$0.33 per share, onreflecting higher sales and strong segment margins ~~reflecting~~due to significant savings from the Company's restructuring and cost reset actions. This was largely offset by higher stock compensation expense ($0.12 per share), reflecting a higher stock price in the current year compared to a sharply lower price in the prior year due to market conditions. SecondThird quarter results also benefited from ~~a gain on the sale of an equity investment ($0.04 per share),~~ lower restructuring costs ($~~0.02 per share), a lower tax rate ($0.01~~0.09 per share) and ~~share repurchases~~favorable foreign currency translation ($~~0.01~~0.06), offset by a higher tax rate compared to the prior year ($0.10 per share)~~, partially offset by~~ and first year acquisition accounting charges related to the OSI acquisition ($0.01 per share).

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED ~~MARCH 31~~JUNE 30

Following is an analysis of the Company’s operating results for the ~~second~~third quarter ended ~~March 31,~~June 30, 2021, compared with the ~~second~~third quarter ended ~~March 31,~~June 30, 2020.

2020 2021 Change
Net sales $ 4,162 4,431 6 %
Gross profit $ 1,750 1,862 6 %
Percent of sales 42.1 % 42.0 %
SG&A $ 983 1,054 7 %
Percent of sales 23.7 % 23.8 %
Other deductions, net $ 42 33
Amortization of intangibles $ 59 74
Restructuring costs $ 31 17
Interest expense, net $ 36 38
Earnings before income taxes $ 689 737 7 %
Percent of sales 16.6 % 16.6 %
Net earnings common stockholders $ 517 561 9 %
Percent of sales 12.4 % 12.7 %
Diluted earnings per share $ 0.84 0.93 11 %


	2020			2021		Change


Net sales	$	3,914		4,697		20	%
Gross profit	$	1,618		1,982		23	%
Percent of sales	41.3		%	42.2	%

SG&A	$	934		1,073		15	%
Percent of sales	23.8		%	22.9	%



Other deductions, net	$	181		88
Amortization of intangibles	$	60		71
Restructuring costs	$	88		28

Interest expense, net	$	45		37

Earnings before income taxes	$	458		784		71	%
Percent of sales	11.7		%	16.7	%

Net earnings common stockholders	$	399		627		57	%
Percent of sales	10.2		%	13.3	%


Diluted earnings per share	$	0.67		1.04		55	%

Net sales for the ~~second~~third quarter of fiscal 2021 were ~~$4.4~~$4.7 billion, up 620 percent compared with 2020. Automation Solutions sales were up 314 percent and Commercial & Residential Solutions sales were up 1332 percent. Underlying sales were up 215 percent, as foreign currency translation added 34 percent and the OSI acquisition added 1 percent.Underlying sales were up 18 percent in the U.S. and up 13 percent internationally. The Americas was up 18 percent, Europe was up 13 percent and Asia, Middle East & Africa was up 11 percent (China up 7 percent).

Cost of sales for the third quarter of fiscal 2021 were $2,715, an increase of $419 compared with 2020, due to higher sales volume, the impact of foreign currency translation and the OSI acquisition. Gross margin of 42.2 percent

Underlying sales were down 5 percent in the U.S. and up 9 percent internationally. The Americas was down 4 percent, Europe was up 7 percent and Asia, Middle East & Africa was up 12 percent (China up 45 percent).

Cost of sales for the second quarter of fiscal 2021 were $2,569, an increase of $157 compared with 2020, due to the impact of foreign currency translation, higher sales volume and the OSI acquisition. Gross margin of 42.0 percent decreased 0.1increased 0.9 percentage points compared with the prior year ~~due to~~reflecting leverage on higher sales volume, partially offset by unfavorable ~~mix.~~price-cost in Commercial & Residential Solutions.

Selling, general and administrative (SG&A) expenses of ~~$1,054~~$1,073 increased ~~$71~~$139 compared with the prior year on increased sales volume and higher stock and other performance-based compensation expense. SG&A as a percent of sales ~~increased 0.1~~decreased 0.9 percentage points to ~~23.8 percent. Higher stock compensation expense of $99 negatively impacted comparisons by 2.3 percentage points.~~22.9 percent ~~Excluding the higher stock compensation expense, SG&A as a percent of sales decreased 2.2 percentage points,~~ reflecting ~~significant~~ savings from the Company's restructuring and cost reset actions.

Other deductions, net were ~~$33~~$88 in 2021, a decrease of $9$93 compared with the prior year, reflecting lower restructuring costs of ~~$14 and~~$60, a ~~gain on the sale of an equity investment of $31, partially offset by unfavorable~~favorable impact from foreign currency transactions of ~~$22~~$25 due to losses in the prior year, and a favorable impact from pensions, partially offset by higher intangibles amortization of ~~$15,~~$11, primarily related to the OSI acquisition. See Notes 6 and 7.

Pretax ~~earnings~~earnings of ~~$737~~$784 increased ~~$48,~~$326, up 771 percent compared with the prior year. Earnings increased ~~$80~~$210 in Automation Solutions and ~~$51~~$122 in ~~Commercial~~Commercial & Residential ~~Solutions. Costs~~Solutions, while costs reported at Corporate increased ~~$81 primarily due to higher stock compensation expense of~~ ~~$99, partially offset by the gain on sale of an equity investment of~~ ~~$31~~.$14. See the Business Segments discussion that follows and Note 12.

Income taxes were ~~$169~~$151 for 2021 and ~~$165~~$51 for 2020, resulting in effective tax rates of 2319 percent and 2411 percent, respectively. The current year ~~and~~rate included $24 of favorable net discrete tax items which decreased the rate 3 percentage points, while the prior year rate included ~~unfavorable~~$57 of discrete ~~tax items~~benefits which ~~increased~~decreased the rate 112 percentage ~~point in both years.~~points.

Net earnings common stockholders in the ~~second~~third quarter of fiscal 2021 were ~~$561,~~$627, up 957 percent, compared with ~~$517~~$399 in the prior year, and earnings per share were ~~$0.93,~~$1.04, up 1155 percent, compared with ~~$0.84~~$0.67 in the prior year. See discussion in the Overview above for further details.

Business Segments

Following is an analysis of operating results for the Company’s business segments for the ~~second~~third quarter ended ~~March 31,~~June 30, 2021, compared with the ~~second~~third quarter ended ~~March 31,~~June 30, 2020. The Company defines segment earnings as earnings before interest and taxes. See Note 12 for a discussion of the Company's business segments.

AUTOMATION SOLUTIONS


Three Months Ended Mar 31		2020			2021		Change
Three Months Ended June 30									Three Months Ended June 30	2020			2021		Change

Sales	Sales	$	2,709		2,793		3	%	Sales	$	2,589		2,947		14	%
Earnings	Earnings	$	391		471		20	%	Earnings	$	311		521		67	%
Margin	Margin	14.4		%	16.8	%			Margin	12.0		%	17.7	%


Sales by Major Product Offering	Sales by Major Product Offering						Sales by Major Product Offering
Measurement & Analytical Instrumentation	Measurement & Analytical Instrumentation	$	776	732	(6)	%	Measurement & Analytical Instrumentation	$	709	781	10	%
Valves, Actuators & Regulators	Valves, Actuators & Regulators	854		836	(2)	%	Valves, Actuators & Regulators	842		880	5	%
Industrial Solutions	Industrial Solutions	494		555	12	%	Industrial Solutions	469		593	26	%
Systems & Software	Systems & Software	585		670	14	%	Systems & Software	569		693	22	%
Total	Total	$	2,709	2,793	3	%	Total	$	2,589	2,947	14	%

Automation Solutions sales were ~~$2.8~~$2.9 billion in the ~~second~~third quarter, an increase of ~~$84~~$358 or 314 percent. Underlying sales ~~decreased 2~~increased 8 percent on ~~lower~~7 percent higher volume ~~but continued to improve sequentially as~~and 1 percent higher price, reflecting recovery in global markets ~~recover~~ from the impacts of COVID-19. Foreign currency translation had a 34 percent favorable impact and the OSI acquisition had a 2 percent favorable impact. Underlying sales ~~decreased 12~~turned positive and increased 9 percent in the Americas (U.S. ~~down 15~~up 9 percent), as process end markets recovered, while Europe increased 6 percent and Asia, Middle East & Africa increased 97 percent (China up 425 percent). Sales for Measurement & Analytical Instrumentation ~~decreased $44,~~increased $72, or 610 percent, and Valves, Actuators & Regulators ~~decreased $18,~~increased $38, or 25 percent, ~~due~~as market conditions continued to ~~continued weakness in~~improve for North American process ~~industries, partially offset by~~industries. Measurement & Analytical sales were strong in Asia, Middle East & Africa, while demand in Europe for both businesses was soft. Industrial Solutions sales were up $124, or 26 percent, reflecting strong global demand in discrete end markets. Systems & Software increased $124, or 22 percent, on strength in process end markets in North America and Europe and solid growth in Asia, Middle East & Africa, while power end markets were strong in North America, and the OSI acquisition added $51. Earnings were $521, an increase of $210, or 67 percent, and margin increased 5.7 percentage points to 17.7 percent, reflecting leverage on

moderate growth in Europe and robust growth in China on easier comparisons. Industrial Solutions sales were up $61, or 12 percent, reflecting robust demand in China due to easier comparisons and strong growth in Europe. North American discrete end markets declined compared to the prior year but improved sequentially. Systems & Software increased $85, or 14 percent, reflecting the OSI acquisition,higher volume, lower restructuring expenses which added $48, and strong demand in Europe, while Asia, Middle East & Africa was up moderately and process end markets were down modestly in North America. Earnings were $471, an increase of $80, or 20 percent, and margin increased 2.4benefited margins 2.5 percentage points, ~~to 16.8 percent, as significant~~ savings from cost reduction actions and favorable ~~price-cost more than offset deleverage on lower volume, unfavorable foreign currency transactions and unfavorable mix.~~price-cost.

COMMERCIAL & RESIDENTIAL SOLUTIONS


Three Months Ended Mar 31		2020			2021		Change
Three Months Ended June 30									Three Months Ended June 30	2020			2021		Change

Sales:	Sales:								Sales:
Climate Technologies	Climate Technologies	$	1,026		1,160		13	%	Climate Technologies	$	970		1,268		31	%
Tools & Home Products	Tools & Home Products	432			485		13	%	Tools & Home Products	357			489		37	%
Total	Total	$	1,458		1,645		13	%	Total	$	1,327		1,757		32	%

Earnings:	Earnings:								Earnings:
Climate Technologies	Climate Technologies	$	217		245		13	%	Climate Technologies	$	195		274		40	%
Tools & Home Products	Tools & Home Products	89			112		25	%	Tools & Home Products	58			101		74	%
Total	Total	$	306		357		17	%	Total	$	253		375		48	%
Margin	Margin	21.0		%	21.7	%			Margin	19.1		%	21.3	%

Commercial & Residential Solutions sales were ~~$1.6~~$1.8 billion in the ~~second~~third quarter, up ~~$187,~~$430, or 1332 percent compared to the prior year. Underlying sales increased 1129 percent due to ~~higher volume and~~strong growth ~~reflected growth~~ across all businesses and geographies while foreign currency translation added 23 percent. Results also benefited from comparisons to prior year results which were negatively impacted by COVID-19. Overall, underlying sales increased 829 percent in the Americas (U.S. up 728 percent), 937 percent in Europe and 2425 percent in Asia, Middle East & Africa (China up 5615 percent). Climate T~~echnologies~~Technologies sales were ~~$1.2~~$1.3 billion in the ~~second~~third quarter, an increase of ~~$134,~~$298, or 1331 percent. Air conditioning and heating sales were up ~~high single-digits, reflecting strong demand for residential-oriented products~~20 percent and ~~solutions in North America and robust growth in Europe and China. Cold~~cold chain sales were up ~~mid teens, driven by favorable~~over 40 percent, reflecting strong global ~~market conditions.~~ demand across all end markets, especially food service, food retail and aftermarket. Tools & Home Products sales were ~~$485~~$489 in the ~~second~~third quarter, an increase of ~~$53,~~$132, or 1337 percent. Sales ~~for~~of wet/dry vacuums were ro~~bust~~robust in part due to competitor outages, while ~~growth was strong for~~ professional tools and food waste disposers ~~and solid for professional tools.~~were up sharply. Earnings were ~~$357,~~$375, up 1748 percent compared with the prior year, and margin increased ~~0.7~~2.2 percentage points to ~~21.7~~21.3 percent due to leverage on higher sales volume and savings from cost reduction actions, ~~while leverage on higher volume~~partially offset by unfavorable price-cost.

RESULTS OF OPERATIONS FOR THE ~~SIX~~NINE MONTHS ENDED ~~MARCH 31~~JUNE 30

Following is an analysis of the Company’s operating results for the ~~six~~nine months ended ~~March 31,~~June 30, 2021, compared with the ~~six~~nine months ended ~~March 31,~~June 30, 2020.

2020 2021 Change
Net sales $ 8,313 8,592 3 %
Gross profit $ 3,509 3,585 2 %
Percent of sales 42.2 % 41.7 %
SG&A $ 2,106 2,052 (3) %
Percent of sales 25.3 % 23.9 %
Other deductions, net $ 220 155
Amortization of intangibles $ 118 152
Restructuring costs $ 128 83
Interest expense, net $ 71 78
Earnings before income taxes $ 1,112 1,300 17 %
Percent of sales 13.4 % 15.1 %
Net earnings common stockholders $ 843 1,006 19 %
Percent of sales 10.1 % 11.7 %
Diluted earnings per share $ 1.37 1.67 22 %


	2020			2021		Change


Net sales	$	12,227		13,289		9	%
Gross profit	$	5,127		5,567		9	%
Percent of sales	41.9		%	41.9	%

SG&A	$	3,040		3,125		3	%
Percent of sales	24.8		%	23.5	%


Other deductions, net	$	401		243
Amortization of intangibles	$	178		223
Restructuring costs	$	216		111

Interest expense, net	$	116		115

Earnings before income taxes	$	1,570		2,084		33	%
Percent of sales	12.8		%	15.7	%

Net earnings common stockholders	$	1,242		1,633		31	%
Percent of sales	10.2		%	12.3	%


Diluted earnings per share	$	2.04		2.71		33	%

Net sales for the first ~~six~~nine months of 2021 were ~~$8.6~~$13.3 billion, up 39 percent compared with 2020. Automation Solutions sales were ~~down 1~~up 3 percent while Commercial & Residential Solutions sales were up 1319 percent. Underlying sales were ~~flat,~~up 5 percent, as foreign currency translation added 23 percent and acquisitions added 1 percent. Underlying sales ~~decreased 6~~increased 1 percent in the U.S. and increased 58 percent internationally. The Americas was ~~down 5~~up 2 percent, Europe was up 58 percent and Asia, Middle East & Africa was up 79 percent (China up 2216 percent).

Cost of sales for 2021 were ~~$5,007,~~$7,722, an increase of ~~$203~~$622 versus ~~$4,804~~$7,100 in 2020, primarily due to the impact of higher sales volume in Commercial & Residential Solutions, foreign currency translation, and the OSI acquisition. Gross margin ~~decreased 0.5 percentage points~~was 41.9 percent, flat compared to ~~41.7 percent, reflecting~~the prior year, as leverage on higher sales volume was offset by unfavorable mix and ~~deleverage on lower sales volume within Automation~~unfavorable price-cost in Commercial & Residential Solutions.

SG&A expenses of ~~$2,052 decreased $54 and~~$3,125 increased $85 compared with the prior year on higher stock compensation expense, as well as increased sales volume. SG&A as a percent of sales decreased ~~1.4~~1.3 percentage points to ~~23.9~~23.5 percent, reflecting significant savings from the Company's restructuring and cost reset actions, ~~which more than~~partially offset by higher stock compensation expense of ~~$107 (1.3~~$122 (0.8 percentage points) due to a higher share price in the current year~~nd deleverage on lower sales volume within Automation Solutions.~~.

Other deductions, net were ~~$155~~$243 in 2021, a decrease of ~~$65~~$158 compared with the prior year, reflecting lower restructuring costs of ~~$45 and~~$105, investment-related ~~gains. In~~gains, including gains in the first quarter of fiscal 2021 ~~the Company recognized~~of $21 from an investment ~~gain of $21~~sale and ~~a gain~~$17 from the acquisition of the remaining interest of an equity investment, ~~of $17,~~ and a gain in the second quarter ~~recognized a gain~~ of $31 onfrom the sale of an equity ~~investment.~~ investment, and a favorable impact from pensions. These items were partially offset by higher intangibles amortization of ~~$34,~~$45, primarily related to the OSI ~~acquisition, and unfavorable foreign currency transactions of $29.~~acquisition. See Notes 6 and 7.

Pretax earnings of ~~$1,300~~$2,084 increased ~~$188,~~$514, or 1733 percent. Earnings increased ~~$131~~$341 in Automation Solutions and ~~$124~~$246 in Commercial & Residential Solutions. Costs reported at Corporate increased ~~$60,~~$74, reflecting higher stock compensation expense of ~~$107~~$122 and first year acquisition accounting charges and fees related to the OSI acquisition of ~~$31,~~$41, partially offset by the investment-related gains discussed above and lower unallocated pension and postretirement costs ~~of $22.~~which decreased by $34. See the Business Segments discussion that follows and Note 12.

Income taxes were ~~$280~~$431 for 2021 and ~~$259~~$310 for 2020, resulting in effective tax rates of 2221 percent and 2320 percent, respectively.

The current year and prior year rates included favorable net discrete items which reduced the rates 1 percentage point and 3 percentage points, respectively.

Net earnings common stockholders in 2021 were ~~$1,006,~~$1,633, up 1931 percent compared with the prior year, and earnings per share were ~~$1.67,~~$2.71, up 2233 percent compared with ~~$1.37~~$2.04 in 2020. Operating results increased ~~$0.24~~$0.54 per share, asreflecting significant savings from the Company's restructuring and cost reset actions ~~more than offset deleverage~~and leverage on ~~lower~~higher sales volume in ~~Automation~~Commercial & Residential Solutions. Lower restructuring and advisory fees ($~~0.07~~0.16 per share), afavorable foreign currency translation ($0.05 per share), lower ~~tax rate~~pension expense ($0.03 per share) and share repurchases ($~~0.03~~0.02 per share) also benefited operating results, while higher stock compensation expense deducted ~~$0.13~~$0.15 per share and a higher tax rate deducted $0.03 per share. The Company recognized several investment-related gains in the current year ($0.10 per share), while first year acquisition accounting charges and fees related to the OSI acquisition deducted ~~$0.04~~$0.05 per share.

Business Segments

Following is an analysis of operating results for the Company’s business segments for the ~~six~~nine months ended ~~March 31,~~June 30, 2021, compared with the ~~six~~nine months ended ~~March 31,~~June 30, 2020. The Company defines segment earnings as earnings before interest and taxes.

~~AUTOMATION SOLUTIONS~~

Six Months Ended Mar 31 2020 2021 Change
Sales $ 5,561 5,485 (1) %
Earnings $ 701 832 19 %
Margin 12.6 % 15.2 %

Sales by Major Product Offering
Measurement & Analytical Instrumentation $ 1,571 1,430 (9) %
Valves, Actuators & Regulators 1,767 1,642 (7) %
Industrial Solutions 1,001 1,063 6 %
Systems & Software 1,222 1,350 10 %
Total $ 5,561 5,485 (1) %
AUTOMATION SOLUTIONS


Nine Months Ended June 30	2020			2021		Change

Sales	$	8,150		8,432		3	%
Earnings	$	1,012		1,353		34	%
Margin	12.4		%	16.0	%





Sales by Major Product Offering
Measurement & Analytical Instrumentation	$	2,280	2,211	(3)	%
Valves, Actuators & Regulators	2,609		2,522	(3)	%
Industrial Solutions	1,470		1,656	13	%
Systems & Software	1,791		2,043	14	%
Total	$	8,150	8,432	3	%

Automation Solutions sales were ~~$5.5~~$8.4 billion in the first ~~six~~nine months of 2021, ~~a decrease~~an increase of ~~$76,~~$282, or 13 percent. Underlying sales decreased 51 percent onas lower ~~volume.~~volume was partially offset by slightly higher price. Foreign currency translation had a 23 percent favorable impact and the OSI acquisition added 21 percent. Underlying sales decreased 169 percent in the Americas, while Europe increased 45 percent and Asia, Middle East & Africa was up 56 percent (China up 2114 percent). Sales for Measurement & Analytical Instrumentation decreased ~~$141,~~$69, or 93 percent, ~~due to weakness in~~as process industries ~~particularly~~were weak in ~~North America, partially offset by moderate growth in Europe and Asia.~~the first half of the year, but have improved sequentially as markets continue to recover from the impacts of COVID-19. Valves, Actuators & Regulators decreased ~~$125,~~$87, or 73 percent, reflecting slower demand in most end markets, particularly in North America and Europe, partially offset by strength in Asia. Industrial Solutions sales increased ~~$62,~~$186, or 613 percent, on ~~moderate~~strong growth in Europe and robust growth in China, ~~partially offset by weakness in~~while North American discrete end markets ~~in North America.~~were down slightly but continued to improve sequentially. Systems & Software increased ~~$128,~~$252, or 14 percent, reflecting the impact of the OSI acquisition which added ~~$90. Power end markets grew moderately in North America offset by softness in Asia, while process~~$141. Process end markets were strong in Europe and had solid growth in Asia ~~offset by declines~~while North America declined. Power end markets were solid in North America, ~~and Middle East & Africa.~~partially offset by softness in Asia. Earnings were ~~$832,~~$1,353, an increase of ~~$131,~~$341, or 1934 percent, and margin increased ~~2.6~~3.6 percentage points to ~~15.2~~16.0 percent, as significant savings from cost reduction actions and favorable price-cost more than offset ~~deleverage on~~unfavorable mix, while lower ~~sales volume and unfavorable mix. Lower~~ restructuring expense benefited margins ~~0.6 percentage points, while foreign currency transactions had an unfavorable impact of 0.3~~1.3 percentage points.

COMMERCIAL & RESIDENTIAL SOLUTIONS


Six Months Ended Mar 31		2020			2021		Change
Nine Months Ended June 30									Nine Months Ended June 30	2020			2021		Change

Sales:	Sales:								Sales:
Climate Technologies	Climate Technologies	$	1,899		2,191		15	%	Climate Technologies	$	2,869		3,459		21	%
Tools & Home Products	Tools & Home Products	862			930		8	%	Tools & Home Products	1,219			1,419		16	%
Total	Total	$	2,761		3,121		13	%	Total	$	4,088		4,878		19	%

Earnings:	Earnings:								Earnings:
Climate Technologies	Climate Technologies	$	368		457		24	%	Climate Technologies	$	563		731		30	%
Tools & Home Products	Tools & Home Products	175			210		20	%	Tools & Home Products	233			311		34	%
Total	Total	$	543		667		23	%	Total	$	796		1,042		31	%
Margin	Margin	19.7		%	21.4	%			Margin	19.5		%	21.4	%

Commercial & Residential Solutions sales were ~~$3.1~~$4.9 billion in the first ~~six~~nine months of 2021, an increase of ~~$360,~~$790, or 1319 percent compared to the prior year. Underlying sales were up 1117 percent ~~on higher volume and~~due to strong global demand while foreign currency translation added 2 percent. Overall, underlying sales increased 1117 percent in the Americas, 817 percent in Europe and 1518 percent in Asia, Middle East & Africa (China up 2622 percent). Climate Technologies sales were ~~$2.2~~$3.5 billion in the first ~~six~~nine months of 2021, an increase of ~~$292,~~$590, or 1521 percent. Air conditioning and heating sales were up ~~significantly,~~mid-teens, reflecting strong demand for residential-oriented products and solutions in North America and robust growth in Europe and China. Cold chain sales were ~~strong,~~up over 20 percent, driven by favorable global market ~~conditions.~~conditions and strength in food retail and aftermarket. Tools & Home Products sales were ~~$930 million~~$1.4 billion in the first ~~six~~nine months of 2021, up ~~$68,~~$200, or 816 percent. Sales ~~for~~of wet/dry vacuums were robust in part due to competitor outages, ~~and~~while sales were strong for food waste disposers and~~while~~ global professional tools, ~~were up slightly.~~partially due to easier comparisons in the third quarter. Earnings were ~~$667,~~$1,042, up 2331 percent compared to the prior year, and margin increased ~~1.7~~1.9 percentage points, reflecting leverage on higher volume and savings from cost reduction actions, partially offset by unfavorable price-cost and mix.

FINANCIAL CONDITION

Key elements of the Company's financial condition for the ~~six~~nine months ended ~~March 31,~~June 30, 2021 as compared to the year ended September 30, 2020 and the ~~six~~nine months ended ~~March 31,~~June 30, 2020 follow.

Mar 31, 2020 Sept 30, 2020 Mar 31, 2021
Operating working capital $ 1,250 $ 866 $ 781
Current ratio 1.0 1.5 1.3
Total debt-to-total capital 50.6 % 47.1 % 44.4 %
Net debt-to-net capital 40.5 % 33.2 % 35.1 %
Interest coverage ratio 14.4 X 14.4 X 16.6 X


	June 30, 2020			Sept 30, 2020			June 30, 2021
Operating working capital	$	1,169		$	866		$	714
Current ratio	1.3			1.5			1.3
Total debt-to-total capital	48.0		%	47.1		%	44.0		%
Net debt-to-net capital	37.9		%	33.2		%	32.4		%
Interest coverage ratio	12.9		X	14.4		X	17.8		X

The Company's operating working capital decreased ~~$469~~$455 compared to the same quarter last year largely due to timing-related reductions reflecting current business conditions. The interest coverage ratio (earnings before income taxes plus interest expense, divided by interest expense) of ~~16.6~~17.8X for the first ~~six~~nine months of fiscal 2021 compares to ~~14.4X~~12.9X for the ~~six~~nine months ended ~~March 31,~~June 30, 2020. The increase reflects higher pretax earnings in the current year.

Operating cash flow for the first ~~six~~nine months of fiscal 2021 was ~~$1.6~~$2.7 billion, an increase of ~~$603~~$866 compared with ~~$1.0~~$1.9 billion in the prior year due to higher earnings and favorable operating working ~~capital and higher earnings.~~capital. Free cash flow of ~~$1.4~~$2.4 billion in the first ~~six~~nine months of fiscal 2021 (operating cash flow of ~~$1.6~~$2.7 billion less capital expenditures of ~~$222)~~$350) increased ~~$606~~$845 compared to free cash flow of ~~$0.8~~$1.5 billion in 2020 (operating cash flow of ~~$1.0~~$1.9 billion less capital expenditures of ~~$225)~~$329), reflecting the increase in operating cash flow. Cash used for investing activities was ~~$1.8~~$1.9 billion largely due to the OSI acquisition. Cash used for financing activities was $1.3 billion, primarily due to dividends and share repurchases.

Emerson maintains a conservative financial structure to provide the strength and flexibility necessary to achieve our strategic objectives and has been successful in efficiently deploying cash where needed worldwide to fund operations,

complete acquisitions and sustain long-term growth. Emerson is in a strong financial position, with total assets of $24 billion and stockholders' equity of $9 billion, and has the resources available for reinvestment in existing businesses, strategic acquisitions and managing its capital structure on a short- and long-term basis.

FISCAL 2021 OUTLOOK

~~Despite ongoing~~The Company delivered strong financial performance in the quarter, despite pandemic and operating-related challenges, ~~in many parts of the world,~~including material costs, availability, logistics, and labor constraints. Overall, the Company expects ~~overall~~ continued improvement in industrial and commercial demand over the remainder of 2021. ~~Residential demand~~Operational, supply chain, and materials inflation is expected to remain ~~robust, but begin to taper in~~challenging through the ~~second half.~~remainder of the fiscal year. For the full year, consolidated net sales are expected to be up 69 to 910 percent, with underlying sales up 35 to 6 percent excluding a 23 percent favorable impact from foreign currency translation and a 1 percent favorable impact from the OSI acquisition. Automation Solutions net sales are expected to be up 35 to 56 percent, with underlying sales ~~down 1~~flat to up 1 percent excluding a 3 percent favorable impact from foreign currency translation and a 12 percent favorable impact from the OSI acquisition. Commercial & Residential Solutions net sales are expected to be up 1417 to 1618 percent, with underlying sales up 1215 to 1416 percent excluding a 2 percent impact from favorable foreign currency translation. Earnings per share are expected to be ~~$3.55~~$3.78 to ~~$3.65,~~$3.80, while adjusted earnings per share, which exclude a ~~$0.26~~$0.24 per share impact from restructuring actions, a $0.07 per share impact from OSI first year acquisition accounting charges and fees, and a $0.03 per share equity investment gain, are expected to be ~~$3.85~~$4.06 to ~~$3.95.~~$4.08. Operating cash flow is expected to be approximately ~~$3.3~~$3.6 billion and free cash flow, which excludes targeted capital spending of $600 million, is expected to be approximately ~~$2.7~~$3.0 billion. Fiscal 2021 share repurchases ~~and acquisition activity~~ are expected to be in the amount of $500 ~~million to $1 billion, excluding the OSI acquisition which closed on October 1, 2020.~~million. However, future developments related to COVID-19, including further actions taken by governmental authorities, potential shutdowns of our operations, or delays in the stabilization and recovery of economic conditions could further adversely affect our operations and financial results, as well as those of our customers and suppliers. See Item 1A – “Risk Factors” in our Annual Report on Form 10-K.

Statements in this report that are not strictly historical may be "forward-looking" statements, which involve risks and uncertainties, and Emerson undertakes no obligation to update any such statements to reflect later developments. These risks and uncertainties include the scope, duration and ultimate impact of the COVID-19 pandemic, as well as economic and currency conditions, market demand, including related to the pandemic and oil and gas price declines and volatility, pricing, protection of intellectual property, cybersecurity, tariffs, competitive and technological factors, among others, which are set forth in the “Risk Factors” of Part I, Item 1A, and the "Safe Harbor Statement" of Part II, Item 7, to the Company's Annual Report on Form 10-K for the year ended September 30, 2020 and in subsequent reports filed with the SEC, which are hereby incorporated by reference.

The United Kingdom's (UK) withdrawal from the European Union (EU), commonly known as "Brexit", was completed on January 31, 2020. Negotiations over the terms of trade and other laws and regulations took place during 2020 and an agreement between the EU and the UK was reached on December 24, 2020, which included zero tariffs and quotas on goods. The Company's net sales in the UK are principally in the Automation Solutions segment and represent less than two percent of consolidated sales. While there could be certain incremental costs for logistics and other items, the Company expects any impact of these items will be immaterial.

Item 4. Controls and Procedures

The Company maintains a system of disclosure controls and procedures designed to ensure that information required to be disclosed in its reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported in a timely manner. This system also is designed to ensure information is accumulated and communicated to management, including the Company's certifying officers, to allow timely decisions regarding required disclosure. Based on an evaluation performed, the certifying officers have concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report.

Notwithstanding the foregoing, there can be no assurance that the Company's disclosure controls and procedures will detect or uncover all failures of persons within the Company and its consolidated subsidiaries to report material information otherwise required to be set forth in the Company's reports.

There was no change in the Company's internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Period Total Number of Shares
Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 2021 — $0.00 — 65,339
February 2021 320 $85.83 320 65,019
March 2021 460 $90.01 460 64,559
Total 780 $88.30 780 64,559


Period	Total Number of Shares Purchased		Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
April 2021		803	$91.52		803	63,756
May 2021		467	$93.14		467	63,289
June 2021		801	$95.96		801	62,488
Total		2,071	$93.60		2,071	62,488

In November 2015, the Board of Directors authorized the purchase of up to 70 million shares. In March 2020, the Board of Directors authorized the purchase of an additional 60 million shares and a total of approximately ~~64.6~~62.5 million shares remain available for purchase under the authorizations.

Item 6. Exhibits

(a) Exhibits (Listed by numbers corresponding to the Exhibit Table of Item 601 in Regulation S-K).


3			Bylaws of Emerson Electric Co., as amended through May 4, 2021, incorporated by reference to the Company's Form 8-K dated May 4, 2021, filed on May 4, 2021, File No. 1-278, Exhibit 3.1.

~~10.1~~			~~Letter Agreement dated February 23, 2021, by and between Emerson Electric Co. and David N. Farr, incorporated by reference to the Company's Form 8-K dated February 23, 2021, filed on February 26, 2021, File No. 1-278, Exhibit 10.1.~~

~~10.2~~			~~Consulting Agreement dated February 23, 2021, by and between Emerson Electric Co. and David N. Farr, incorporated by reference to the Company's Form 8-K dated February 23, 2021, filed on February 26, 2021, File No. 1-278, Exhibit 10.2.~~

~~10.3~~			~~Letter Agreement dated February 16, 2021~~ entered into on March 8, 2021, by and between Emerson Electric Co. and Steven J. Pelch, incorporated by reference to the Company's Form 8-K dated March 8, 2021, filed on March 12, 2021, File No. 1-278, Exhibit 10.1.

31			Certifications pursuant to Exchange Act Rule 13a-14(a).

32			Certifications pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350.

101			Attached as Exhibit 101 to this report are the following documents formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Consolidated Statements of Earnings for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2021 and 2020, (ii) Consolidated Statements of Comprehensive Income for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2021 and 2020, (iii) Consolidated Balance Sheets as of September 30, 2020 and ~~March 31,~~June 30, 2021, (iv) Consolidated Statements of Equity for the three and ~~six~~nine months ended ~~March 31,~~June 30, 2021 and 2020, (v) Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~March 31,~~June 30, 2021 and 2020, and (vi) Notes to Consolidated Financial Statements for the three and ~~six~~nine months ended ended ~~March 31,~~June 30, 2021 and 2020.

104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

EMERSON ELECTRIC CO.

/s/ Frank J. Dellaquila

Frank J. Dellaquila

Senior Executive Vice President and Chief Financial Officer

(on behalf of the registrant and as Chief Financial Officer)

~~May 5,~~August 4, 2021


	Three Months Ended March 31,			Six Months Ended March 31,
	2020		2021	2020	2021
Net sales	$	4,162	4,431	8,313	8,592

Costs and expenses:
Cost of sales	2,412		2,569	4,804	5,007
Selling, general and administrative expenses	983		1,054	2,106	2,052
Other deductions, net	42		33	220	155
Interest expense (net of interest income of $6, $4, $12 and $6, respectively)	36		38	71	78

Earnings before income taxes	689		737	1,112	1,300

Income taxes	165		169	259	280





Net earnings	524		568	853	1,020

Less: Noncontrolling interests in earnings of subsidiaries	7		7	10	14

Net earnings common stockholders	$	517	561	843	1,006









Basic earnings per share common stockholders	$	0.85	0.94	1.38	1.68




Diluted earnings per share common stockholders	$	0.84	0.93	1.37	1.67


	Sept 30, 2020		Mar 31, 2021
ASSETS
Current assets
Cash and equivalents	$	3,315	2,342
Receivables, less allowances of $138 and $129, respectively	2,802		2,754
Inventories	1,928		2,016
Other current assets	761		849

Total current assets	8,806		7,961

Property, plant and equipment, net	3,688		3,663
Other assets
Goodwill	6,734		7,787
Other intangible assets	2,468		3,095
Other	1,186		1,294

Total other assets	10,388		12,176
Total assets	$	22,882	23,800

LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings and current maturities of long-term debt	$	1,160	1,456
Accounts payable	1,715		1,797
Accrued expenses	2,910		3,041


Total current liabilities	5,785		6,294

Long-term debt	6,326		5,823

Other liabilities	2,324		2,503



Equity
Common stock, $0.50 par value; authorized, 1,200.0 shares; issued, 953.4 shares; outstanding, 598.0 shares and 599.7 shares, respectively	477		477
Additional paid-in-capital	470		511
Retained earnings	24,955		25,354
Accumulated other comprehensive income (loss)	(1,577)		(1,322)
Cost of common stock in treasury, 355.4 shares and 353.7 shares, respectively	(15,920)		(15,890)
Common stockholders’ equity	8,405		9,130
Noncontrolling interests in subsidiaries	42		50
Total equity	8,447		9,180
Total liabilities and equity	$	22,882	23,800


	Six Months Ended
	March 31,
	2020		2021
Operating activities
Net earnings	$	853	1,020

Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	422		483
Stock compensation	18		125
Pension expense	34		16
Changes in operating working capital	(260)		66


Other, net	(55)		(95)


Cash provided by operating activities	1,012		1,615

Investing activities
Capital expenditures	(225)		(222)
Purchases of businesses, net of cash and equivalents acquired	(96)		(1,611)

Other, net	(42)		61


Cash used in investing activities	(363)		(1,772)

Financing activities
Net increase in short-term borrowings	2,076		60
Proceeds from short-term borrowings greater than three months	433		0


Payments of long-term debt	(502)		(301)
Dividends paid	(611)		(606)
Purchases of common stock	(942)		(78)
Other, net	39		83
Cash provided by (used in) financing activities	493		(842)

Effect of exchange rate changes on cash and equivalents	(53)		26
Increase (Decrease) in cash and equivalents	1,089		(973)
Beginning cash and equivalents	1,494		3,315
Ending cash and equivalents	$	2,583	2,342

Changes in operating working capital
Receivables	$	283	75
Inventories	(216)		(61)
Other current assets	32		(16)
Accounts payable	(290)		55
Accrued expenses	(69)		13

Total changes in operating working capital	$	(260)	66


	Mar 31, 2020			Sept 30, 2020			Mar 31, 2021
Operating working capital	$	1,250		$	866		$	781
Current ratio	1.0			1.5			1.3
Total debt-to-total capital	50.6		%	47.1		%	44.4		%
Net debt-to-net capital	40.5		%	33.2		%	35.1		%
Interest coverage ratio	14.4		X	14.4		X	16.6		X