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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 June 30, 2022

OR

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
emr-20220630_g1.jpg
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,Missouri63136
(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 classTrading
Symbol(s)
Name of each exchange on which registered
Common Stock of $0.50 par value per shareEMRNew York Stock Exchange
NYSE Chicago
0.375% Notes due 2024EMR 24New York Stock Exchange
1.250% Notes due 2025EMR 25ANew York Stock Exchange
2.000% Notes due 2029EMR 29New 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 filerAccelerated filer
Non-accelerated filerSmaller 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 July 31, 2022: 591.3 million shares.








PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

Consolidated Statements of Earnings
EMERSON ELECTRIC CO. & SUBSIDIARIES

Three and nine months ended June 30, 2021 and 2022
(Dollars in millions, except per share amounts; unaudited)
 
 Three Months Ended
June 30,
Nine Months Ended
June 30,
 2021 2022 2021 2022 
Net sales$4,697 5,005 13,289 14,269 
Cost of sales2,715 2,908 7,722 8,398 
Selling, general and administrative expenses1,073 1,052 3,125 3,112 
Gain on subordinated interest   (453)
Gain on sale of business (483) (483)
Other deductions, net88 283 243 374 
Interest expense (net of interest income of $3, $11, $9, and $18, respectively)
37 50 115 140 
Earnings before income taxes784 1,195 2,084 3,181 
Income taxes151 243 431 659 
Net earnings633 952 1,653 2,522 
Less: Noncontrolling interests in subsidiaries6 31 20 31 
Net earnings common stockholders$627 921 1,633 2,491 
Earnings per share:
Basic$1.05 1.55 2.73 4.19 
Diluted$1.04 1.54 2.71 4.17 
Weighted average outstanding shares:
Basic598.2 592.8 598.7 593.6 
Diluted602.1 596.2 602.3 596.9 

 














See accompanying Notes to Consolidated Financial Statements.





1




Consolidated Statements of Comprehensive Income
EMERSON ELECTRIC CO. & SUBSIDIARIES

Three and nine months ended June 30, 2021 and 2022
(Dollars in millions; unaudited)
 Three Months Ended June 30,Nine Months Ended June 30,
 2021 2022 2021 2022 
Net earnings$633 952 1,653 2,522 
Other comprehensive income (loss), net of tax:
Foreign currency translation(5)(187)163 (319)
Pension and postretirement27 18 81 54 
Cash flow hedges(6)(27)26 (17)
        Total other comprehensive income (loss)16 (196)270 (282)
Comprehensive income649 756 1,923 2,240 
Less: Noncontrolling interests in subsidiaries7 30 20 29 
Comprehensive income common stockholders$642 726 1,903 2,211 

































See accompanying Notes to Consolidated Financial Statements.





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Consolidated Balance Sheets
EMERSON ELECTRIC CO. & SUBSIDIARIES

(Dollars and shares in millions, except per share amounts; unaudited)
 Sept 30, 2021June 30, 2022
ASSETS  
Current assets  
Cash and equivalents$2,354 2,529 
Receivables, less allowances of $116 and $112, respectively
2,971 2,957 
Inventories2,050 2,319 
Other current assets1,057 1,570 
Total current assets8,432 9,375 
Property, plant and equipment, net3,738 3,359 
Other assets 
Goodwill7,723 14,748 
Other intangible assets2,877 6,930 
Other1,945 2,630 
Total other assets12,545 24,308 
Total assets$24,715 37,042 
LIABILITIES AND EQUITY  
Current liabilities  
Short-term borrowings and current maturities of long-term debt$872 3,227 
Accounts payable2,108 2,040 
Accrued expenses3,266 3,545 
Total current liabilities6,246 8,812 
Long-term debt5,793 8,367 
Other liabilities2,753 3,576 
Equity  
Common stock, $0.50 par value; authorized, 1,200.0 shares; issued, 953.4 shares; outstanding, 595.8 shares and 592.2 shares, respectively
477 477 
Additional paid-in-capital522 42 
Retained earnings26,047 27,618 
Accumulated other comprehensive income (loss)(872)(1,152)
Cost of common stock in treasury, 357.6 shares and 361.2 shares, respectively
(16,291)(16,670)
Common stockholders’ equity9,883 10,315 
Noncontrolling interests in subsidiaries40 5,972 
Total equity9,923 16,287 
Total liabilities and equity$24,715 37,042 



See accompanying Notes to Consolidated Financial Statements.





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Consolidated Statements of Equity
EMERSON ELECTRIC CO. & SUBSIDIARIES

Three and nine months ended June 30, 2021 and 2022
(Dollars in millions; unaudited)
Three Months Ended June 30,Nine Months Ended June 30,
2021 2022 2021 2022 
Common stock$477 477 477 477 
Additional paid-in-capital
     Beginning balance511 579 470 522 
     Stock plans7 13 48 70 
     AspenTech acquisition  (550) (550)
        Ending balance518 42 518 42 
Retained earnings
     Beginning balance25,354 27,003 24,955 26,047 
     Net earnings common stockholders627 921 1,633 2,491 
Dividends paid (per share: $0.505, $0.515, $1.515 and $1.545, respectively)
(303)(306)(909)(920)
     Adoption of accounting standard  (1) 
        Ending balance25,678 27,618 25,678 27,618 
Accumulated other comprehensive income (loss)
     Beginning balance(1,322)(957)(1,577)(872)
     Foreign currency translation(6)(186)163 (317)
     Pension and postretirement27 18 81 54 
     Cash flow hedges(6)(27)26 (17)
        Ending balance(1,307)(1,152)(1,307)(1,152)
Treasury stock
     Beginning balance(15,890)(16,527)(15,920)(16,291)
     Purchases(193)(145)(275)(430)
     Issued under stock plans8 2 120 51 
        Ending balance(16,075)(16,670)(16,075)(16,670)
Common stockholders' equity9,291 10,315 9,291 10,315 
Noncontrolling interests in subsidiaries
     Beginning balance50 39 42 40 
     Net earnings6 31 20 31 
     Stock plans 15  15 
     Other comprehensive income1 (1) (2)
     Dividends paid(9)(2)(14)(2)
     AspenTech acquisition 5,890  5,890 
        Ending balance48 5,972 48 5,972 
Total equity$9,339 16,287 9,339 16,287 




See accompanying Notes to Consolidated Financial Statements.





4




Consolidated Statements of Cash Flows
EMERSON ELECTRIC CO. & SUBSIDIARIES

Nine Months Ended June 30, 2021 and 2022
(Dollars in millions; unaudited)
Nine Months Ended
June 30,
 2021 2022 
Operating activities  
Net earnings$1,653 2,522 
Adjustments to reconcile net earnings to net cash provided by operating activities:
        Depreciation and amortization720 722 
        Stock compensation191 107 
        Pension expense23 2 
        Changes in operating working capital246 (706)
        Gain on subordinated interest (453)
        Gain on sale of business (428)
        Other, net(113)(61)
            Cash provided by operating activities2,720 1,705 
Investing activities
Capital expenditures(350)(335)
Purchases of businesses, net of cash and equivalents acquired(1,611)(5,615)
Divestitures of businesses 578 
Proceeds from subordinated interest 438 
Other, net53 (41)
    Cash used in investing activities(1,908)(4,975)
Financing activities
Net increase in short-term borrowings31 1,633 
Proceeds from short-term borrowings greater than three months71 1,162 
Payments of short-term borrowings greater than three months (445)
Proceeds from long-term debt 2,975 
Payments of long-term debt(305)(512)
Dividends paid(909)(918)
Purchases of common stock(268)(418)
Other, net89 80 
    Cash provided by (used in) financing activities(1,291)3,557 
Effect of exchange rate changes on cash and equivalents24 (112)
Increase (Decrease) in cash and equivalents(455)175 
Beginning cash and equivalents3,315 2,354 
Ending cash and equivalents$2,860 2,529 
Changes in operating working capital
Receivables$76 (118)
Inventories(160)(513)
Other current assets(69)(86)
Accounts payable216 80 
Accrued expenses183 (69)
Total changes in operating working capital$246 (706)


See accompanying Notes to Consolidated Financial Statements.





5




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, 2021. Certain prior year amounts have been reclassified to conform to the current year presentation to reflect the business combination with AspenTech (see Note 4), which is reported as a new segment and includes the historical results of Open Systems International, Inc. and the Geological Simulation Software business. These businesses were previously reported in the Automation Solutions segment (see Note 13).

Effective October 1, 2021, the Company adopted three accounting standard updates which had an immaterial or no impact on the Company's financial statements as of and for the nine months ended June 30, 2022. These included:

Updates to ASC 805, Business Combinations, which clarify the accounting for contract assets and liabilities assumed in a business combination. In general, this will result in contract liabilities being recognized at their historical amounts under ASC 606, rather than at fair value in accordance with the general requirements of ASC 805.

Updates to ASC 740, Income Taxes, which require the recognition of a franchise tax that is partially based on income as an income-based tax with any incremental amount as a non-income based tax. These updates also make certain changes to intra-period tax allocation principles and interim tax calculations.

Updates to ASC 321, Equity Securities, ASC 323 Investments - Equity Method and Joint Ventures, and ASC 815, Derivatives and Hedging, which clarify how to account for the transition into and out of the equity method of accounting when evaluating observable transactions.

(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 13 for additional information about the Company's revenues.

The following table summarizes the balances of the Company's unbilled receivables (contract assets), which are reported in Other assets (current and noncurrent), and its customer advances (contract liabilities), which are reported in Accrued expenses and Other liabilities.     
Sept 30, 2021June 30, 2022
Unbilled receivables (contract assets)$528 1,323 
Customer advances (contract liabilities)(730)(917)
      Net contract assets (liabilities)$(202)406 
    
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 sold by AspenTech where the license revenue is recognized upfront upon delivery. The change in the net contract balance was due to the AspenTech acquisition, which added net contract assets of approximately $700, partially offset by an increase in net contract liabilities for the Company's existing businesses due to customer billings exceeding revenue recognized for performance completed during the period.





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Revenue recognized for the three and nine months ended June 30, 2022 included $63 and $519 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 nine months ended June 30, 2022 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 June 30, 2022, the Company's backlog relating to unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was approximately $8.5 billion, which includes approximately $700 related to the AspenTech acquisition. AspenTech's remaining performance obligations primarily relate to software maintenance in long-term contracts for unspecified future software updates provided on a when-and-if available basis. 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 following two years.     

(3) COMMON SHARES AND SHARE-BASED COMPENSATION

Reconciliations of weighted-average shares for basic and diluted earnings per common share follow. Earnings allocated to participating securities were inconsequential.
Three Months Ended
June 30,
Nine Months Ended
June 30,
 2021 2022 2021 2022 
Basic shares outstanding598.2 592.8 598.7 593.6 
Dilutive shares3.9 3.4 3.6 3.3 
Diluted shares outstanding602.1 596.2 602.3 596.9 
 
The Company changed the terms of its annual performance share awards issued in the first quarter of fiscal 2022. The new terms meet the criteria for equity classification in accordance with ASC 718, Compensation - Stock Compensation, and therefore expense will be recognized on a fixed basis over the three-year performance period. The terms of the performance share awards issued in fiscal 2020 and 2021 are unchanged and will therefore continue to be accounted for as liability awards and marked-to-market each period based on changes in the stock price.

As discussed in Note 4, Emerson completed the acquisition of AspenTech in the third quarter of fiscal 2022. New AspenTech, as defined in Note 4, operates as a separate publicly traded company and has various stock-based compensation plans, including stock options and restricted stock units, which are settled in their own common stock and are accounted for as equity awards. Stock compensation expense for New AspenTech was $15 for the three and nine months ended June 30, 2022.

(4) ACQUISITIONS AND DIVESTITURES

Aspen Technology

On May 16, 2022, the Company completed the transactions contemplated by its definitive agreement with Aspen Technology, Inc. ("AspenTech") to contribute two of Emerson's stand-alone industrial software businesses, Open Systems International, Inc. and the Geological Simulation Software business (collectively, the “Emerson Industrial Software Business”), along with approximately $6.0 billion in cash to AspenTech stockholders, to create "New AspenTech", a diversified, high-performance industrial software leader with greater scale, capabilities and technologies. Upon closing of the transaction, Emerson beneficially owned 55 percent of the outstanding shares of New AspenTech common stock (on a fully diluted basis) and former AspenTech stockholders owned the remaining outstanding shares of New AspenTech common stock. New AspenTech and its subsidiaries now operate under AspenTech’s previous name “Aspen Technology, Inc.” and New AspenTech common stock is traded on NASDAQ under AspenTech’s previous stock ticker symbol “AZPN.”

The business combination has been accounted for using the acquisition method of accounting with Emerson considered the accounting acquirer of AspenTech. The net assets of AspenTech were recorded at their estimated fair value and the Emerson Industrial Software Business continues at its historical basis. The Company recorded a noncontrolling interest of $5.9 billion for the 45 percent ownership interest of former AspenTech stockholders in New AspenTech. The noncontrolling interest associated with the AspenTech acquired net assets was recorded at fair value determined using the closing market price per share of AspenTech as of May 16, 2022, while the portion attributable





7




to the Emerson Industrial Software business was recorded at its historical carrying amount. The impact of recognizing the noncontrolling interest in the Emerson Industrial Software Business resulted in a decrease to additional paid-in-capital of $550.
The following table summarizes the components of the purchase consideration reflected in the acquisition accounting using AspenTech's shares outstanding and closing market price per share as of May 16, 2022 (in millions except share and per share data):

AspenTech shares outstanding66,662,482 
AspenTech share price$166.30 
Purchase price$11,086 
Value of stock-based compensation awards attributable to pre-combination service102 
Total purchase consideration$11,188 

The total purchase consideration for AspenTech was preliminarily allocated to assets and liabilities as follows. Valuations of acquired assets and liabilities are in-process and subject to refinement.

Cash and equivalents$274 
Receivables61 
Other current assets262 
Property, plant equipment4 
Goodwill ($34 expected to be tax-deductible)
7,223 
Other intangible assets4,390 
Other assets511 
Total assets12,725 
Short-term borrowings27 
Accounts payable8 
Accrued expenses113 
Long-term debt253 
Deferred taxes and other liabilities1,136 
Total purchase consideration$11,188 

Emerson's cash contribution of approximately $6.0 billion was paid out at approximately $87.69 per share (on a fully diluted basis) to holders of issued and outstanding shares of AspenTech common stock as of the closing of the transactions, with $168 of cash remaining on New AspenTech's balance sheet as of the closing which is not included in the allocation of purchase consideration above.

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

AmountEstimated Weighted Average Life (Years)
Developed technology $1,350 10
Customer relationships 2,300 15
Trade names430 Indefinite-lived
Backlog310 3
Total $4,390 

Results of operations for the third quarter of 2022 attributable to the AspenTech acquisition include sales of $173 while the impact to GAAP net earnings was not material.





8




Pro Forma Financial Information

The following unaudited proforma consolidated condensed financial results of operations are presented as if the acquisition of AspenTech occurred on October 1, 2020. 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).
 Three Months Ended June 30,Nine Months Ended June 30,
 2021 2022 2021 2022 
Net Sales$4,895 5,060 13,884 14,683 
Net earnings common stockholders$614 964 1,480 2,517 
Diluted earnings per share$1.02 1.62 2.46 4.21 

The pro forma results for the nine months ended June 30, 2021 include $159 of transaction costs which were assumed to be incurred in the first fiscal quarter of 2021. Of these transaction costs, $61 and $91 were included in the Company's reported results for the three and nine months ended June 30, 2022, respectively, but have been excluded from the fiscal 2022 pro forma results above. In addition, AspenTech incurred $68 of transaction costs prior to the completion of the acquisition that were not included in Emerson's reported results. The pro forma results for the three and nine months ended June 30, 2021 include estimated interest expense of $37 and $110, respectively, related to the issuance of $3 billion of term debt and increased commercial paper borrowings to fund the acquisition, while results for the nine months ended June 30, 2022 include additional interest expense of $56 to reflect the increased borrowings as if they were outstanding for the entire fiscal year.

Other Transactions

On August 8, 2022 the Company announced an agreement to sell its InSinkErator business, which manufactures food waste disposers and is reported in the Tools & Home Products segment, to Whirlpool Corporation for $3.0 billion. This business had sales and pretax earnings of $565 and $143 in fiscal 2021 and $480 and $117 for the nine months ended June 30, 2022. The assets and liabilities of InSinkErator were classified as held-for-sale as of June 30, 2022 and are included in other current assets, other assets, accrued expenses and other liabilities in the consolidated balance sheet. The transaction is expected to close in fiscal 2023, subject to regulatory approvals and other customary closing conditions.

On July 27, 2022, New AspenTech entered into an agreement to acquire Micromine, a global leader in design and operational solutions for the mining industry, for AU$900 (approximately $623 USD). The transaction is expected to close by the end of calendar 2022, subject to various regulatory approvals.

On May 31, 2022 the Company completed the divestiture of its Therm-O-Disc sensing and protection technologies business, which was reported in the Climate Technologies segment, to an affiliate of One Rock Capital Partners, LLC. The Company recognized a pretax gain of $483 ($428 after-tax, $0.72 per share).
On May 4, 2022, Emerson announced its intention to exit business operations in Russia and divest Metran, its Russia-based manufacturing subsidiary. Emerson's historical net sales in Russia were principally in the Automation Solutions segment and in total, represented approximately 1.5 percent of consolidated annual sales. In the third quarter of fiscal 2022, the Company recognized a pretax loss of $162 ($174 after-tax, in total $0.29 per share) related to its exit of business operations in Russia. This charge, which included a loss of $32 in operations and $130 reported in Other deductions ($9 of which is reported in restructuring costs), is primarily non-cash. Emerson is committed to an orderly transfer of these assets and will support its employees through this process.

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 had net sales of $191 in fiscal 2021 and is now reported in the AspenTech segment, expanded the Company's offerings in the power industry to include the digitization and modernization of the electric grid. The Company recognized goodwill of $967 (none 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






9




of approximately 11 years, and deferred tax liabilities of approximately $193. Results of operations for the three months ended June 30, 2021 included first year pre-tax acquisition accounting charges related to backlog amortization and deferred revenue of $7 and $3, respectively, while year-to-date results included $24 and $11, respectively.

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 cash return on their initial investment. In the first quarter of fiscal 2022, the equity holders' cumulative cash return exceeded the threshold and as a result, the Company received a distribution of $438 in November 2021 (in total, a gain of $453 was recognized in the first quarter). Based on the terms of the agreement and the current calculation, the Company could receive additional distributions of approximately $75 which are expected to be received over the next two-to-three years. However, the distributions are contingent on the timing and 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 remaining distributions to the Company.
(5) PENSION & POSTRETIREMENT PLANS

Total periodic pension and postretirement (income) expense is summarized below:
 Three Months Ended June 30,Nine Months Ended June 30,
 2021 2022 2021 2022 
Service cost$21 19 63 57 
Interest cost32 34 96 102 
Expected return on plan assets
(84)(78)(252)(234)
Net amortization35 23 105 69 
Total$4 (2)12 (6)

(6) OTHER DEDUCTIONS, NET

Other deductions, net are summarized below:
 Three Months Ended
June 30,
Nine Months Ended
June 30,
 2021 2022 2021 2022 
Amortization of intangibles (intellectual property and
  customer relationships)
$71 98 223 223 
Restructuring costs28 31 111 50 
Acquisition/divestiture costs2 61 11 97 
Foreign currency transaction (gains) losses1 (13)7 (41)
Investment-related gains & gains from sales of capital
  assets
  (69)(15)
Russia business exit 121  121 
Other(14)(15)(40)(61)
Total$88 283 243 374 

In the third quarter of fiscal 2022, intangibles amortization for the three and nine months ended June 30, 2022 included $32 related to the AspenTech acquisition, while the prior year included backlog amortization related to the OSI acquisition of $7 and $24, respectively. Other is composed of several items, including pension expense, litigation costs, provision for bad debt and other items, none of which is individually significant.







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(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. Expenses incurred in the first nine months of fiscal 2022 included costs related to workforce reductions of approximately 1,400 employees. The Company expects fiscal 2022 restructuring expense and related costs to be approximately $150, including costs to complete actions initiated in the first nine months of the year.

Restructuring expense by business segment follows:
 Three Months Ended
June 30,
Nine Months Ended
June 30,
 2021 2022 2021 2022 
Automation Solutions$20 20 92 33 
AspenTech(2)1 2 1 
Climate Technologies4 2 8 5 
Tools & Home Products2 (1)4 1 
Commercial & Residential Solutions6 1 12 6 
Corporate4 9 5 10 
Total$28 31 111 50 

Details of the change in the liability for restructuring costs during the nine months ended June 30, 2022 follow:
 Sept 30, 2021ExpenseUtilized/PaidJune 30, 2022
Severance and benefits$172 20 52 140 
Other4 30 29 5 
Total$176 50 81 145 
The tables above do not include $4 and $12 of costs related to restructuring actions incurred for the three months ended June 30, 2021 and 2022, respectively, that are required to be reported in cost of sales and selling, general and administrative expenses; year-to-date amounts are $11 and $26, respectively.
 
(8) TAXES

Income taxes were $243 in the third quarter of fiscal 2022 and $151 in 2021, resulting in effective tax rates of 20 percent and 19 percent, respectively. Favorable net discrete tax items decreased the tax rates by 2 and 3 percentage points, respectively.

Income taxes were $659 for the first nine months of 2022 and $431 for 2021, resulting in effective tax rates of 21 percent and 21 percent, respectively. The current year rate included a 2 percentage point benefit related to the completion of tax examinations, partially offset by portfolio restructuring activities which negatively impacted the rate by 1 percentage points, while the prior year had favorable net discrete items which reduced the rate 1 percentage point.
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, of which approximately $37 was paid in December 2021 with the remaining amount due in December 2022.






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(9) OTHER FINANCIAL INFORMATION

Sept 30, 2021June 30, 2022
Inventories
Finished products$616 681 
Raw materials and work in process1,434 1,638 
Total$2,050 2,319 
Property, plant and equipment, net  
Property, plant and equipment, at cost$9,427 8,824 
Less: Accumulated depreciation5,689 5,465 
     Total$3,738 3,359 

Goodwill by business segment
Automation Solutions$5,508 5,378 
AspenTech1,044 8,266 
Climate Technologies753 719 
Tools & Home Products418 385 
Commercial & Residential Solutions1,171 1,104 
     Total$7,723 14,748 
Other intangible assets  
Gross carrying amount$5,911 10,215 
Less: Accumulated amortization3,034 3,285 
     Net carrying amount$2,877 6,930 
Other intangible assets include customer relationships, net, of $1,495 and $3,614 as of September 30, 2021 and June 30, 2022, respectively.
The increase in goodwill and intangibles was primarily due to the AspenTech acquisition. See Note 4.
Three Months Ended June 30,Nine Months Ended June 30,
2021 2022 2021 2022 
Depreciation and amortization expense include the following:
Depreciation expense$123 117 369 366 
Amortization of intangibles (includes $14, $31, $42, and $59 reported in Cost of Sales, respectively)
86 129 266 282 
Amortization of capitalized software28 24 85 74 
Total $237 270 720 722 
Amortization of intangibles included $49 related to the AspenTech acquisition for the three and nine months ended June 30, 2021, while the prior year included backlog amortization of $7 and $24 related to the OSI acquisition for the three and nine months ended June 30, 2021, respectively. For the three and nine months ended June 30, 2022, $5 of amortization of intangibles included in the table above is reported as a restructuring related cost.





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Sept 30, 2021June 30, 2022
Other assets include the following:
Pension assets$1,015 1,083 
Operating lease right-of-use assets558