Emerson Electric (EMR) 10-K risk factor changes: FY2018 vs FY2017

In [removed: 2017] [added: 2018] and in past years, we have made various acquisitions, including the valves & controls [removed: business,] [added: business in 2017,] and entered into joint venture arrangements intended to complement or expand our business, and may continue to do so in the future.

[removed: The] success of these transactions will depend on our ability to integrate assets and personnel acquired in these transactions and to cooperate with our strategic partners.

[added: While we] monitor market prices of the commodities we require and attempt to mitigate price exposure through hedging activities, this risk could adversely affect our operating results.

Our manufacturing facilities abroad are dependent on the stability of governments and business conditions and may be more susceptible to changes in laws, policies and [removed: regulation] [added: regulations] in host countries, as well as economic and political upheaval, than our domestic facilities.

Our Substantial Sales Both in the U.S. and Abroad Subject Us to Economic Risk as Our Results of Operations May Be Adversely Affected by Changes in [removed: Local] Government Regulations and Policies and [removed: Foreign] Currency Fluctuations

Our U.S. and international operations [removed: are] subject [added: the Company] to changes in [removed: local] government regulations and [removed: policies,] [added: policies in a large number of jurisdictions around the world,] including those related to [removed: tariffs and trade barriers,] [added: trade,] investments, taxation, exchange controls and repatriation of [removed: earnings, which could adversely affect our results.][added: earnings.]

Despite the implementation of [removed: extensive security] [added: cybersecurity] measures (including access controls, data encryption, vulnerability assessments, continuous monitoring, and maintenance of backup and protective systems), the Company’s information technology systems [removed: are potentially] [added: may still be] vulnerable to [removed: unauthorized access, computer viruses, cyberattack] [added: cybersecurity threats] and other [removed: events, ranging from individual attempts to advanced persistent threats.][added: electronic security breaches.]

[removed: Although considered unlikely,] [added: In addition,] it is possible a security breach could result in theft of trade secrets or other intellectual property or disclosure of confidential customer, supplier or employee information.

Should the Company be unable to prevent security [removed: breaches,] [added: breaches or other damage to our information technology systems,] disruptions could have an adverse effect on our operations, as well as expose the Company to litigation, [added: liability or penalties under privacy laws,] increased cybersecurity protection [removed: costs and] [added: costs,] reputational [removed: damage.][added: damage and product failure.]

We are, and may in the future be, a party to a number of legal proceedings and claims, including those involving intellectual property, product liability [added: (including asbestos)] and environmental matters, several of which claim, or may in the future claim, significant damages.

The

Changes in laws or policies governing the terms of foreign trade, trade restrictions or barriers, tariffs or taxes, including on imports from countries where we manufacture products, could adversely impact our business and financial results.

Changes in Tax Rates, Laws or Regulations and the Resolution of Tax Disputes Could Adversely Impact Our Financial Results

As a global company, we are subject to taxation in the U.S. and numerous non-U.S. jurisdictions.

Significant judgment is required to determine our consolidated income tax provision and related liabilities.

The Company’s effective tax rate, cash flows and operating results could be affected by changes in the mix of earnings in countries with different statutory tax rates, as well as by changes in the local tax laws and regulations, or the interpretations thereof.

For example, on December 22, 2017, the U.S. government enacted tax reform, the Tax Cuts and Jobs Act (the “Act”), which made comprehensive changes to U.S. federal income tax laws by moving from a global to a modified territorial tax regime.

The changes made by the Act are broad and complex.

As such, the final one-time deemed repatriation tax may differ materially from the Company’s provisional amounts due to additional regulatory guidance expected to be issued, changes in interpretations, or any legislative actions to address questions arising from the Act, as well as further evaluation of the Company's actions, assumptions and interpretations.

In addition, the Company’s tax returns are subject to regular review and audit by U.S. and non-U.S. tax authorities.

While we believe our tax provisions are appropriate, the final outcome of tax audits or disputes could result in adjustments to the Company’s tax liabilities, which could adversely affect our financial results.

The Company relies on information technology networks and systems, including the internet, to process, transmit and store electronic information, and to manage or support a variety of business processes and activities.

Additionally, the Company collects and stores certain data, including proprietary business information, and may have access to confidential or personal information in certain of our businesses that is subject to privacy and security laws and regulations, which are potentially conflicting, and customer-imposed controls.

These technology networks and systems may be susceptible to damage, disruptions or shutdowns due to failures during the process of upgrading or replacing software, databases or components; power outages; telecommunications or system failures; terrorist attacks; natural disasters; employee error or malfeasance; server or cloud provider breaches; and computer viruses or cyberattacks.

Cybersecurity threats and incidents can range from uncoordinated individual attempts to gain unauthorized access to information technology networks and systems to more sophisticated and targeted measures, known as advanced persistent threats, directed at the Company, its products, its customers and/or its third-party service providers.

It is possible for such vulnerabilities to remain undetected for an extended period, up to and including several years.

There may be other challenges and risks as the Company upgrades its enterprise resource planning software and related systems across a majority of its businesses.

Our Products and Services are Highly Sophisticated and Specialized, and a Major Product Failure or Similar Event Caused by Defects, Cybersecurity Incidents or Other Failures, Could Adversely Affect Our Business, Reputation, Financial Position and Results of Operations

We produce highly sophisticated products and provide specialized services that incorporate or use complex or leading-edge technology, including both hardware and software.

Many of our products and services, including measurement and analytical instrumentation, industrial valves and equipment, and process control systems, are integrated and used in complex process, hybrid and discrete manufacturing environments.

As a result, the impact of a catastrophic product failure or similar event could be significant.

While we have built operational processes to ensure that our product design, manufacture, performance and servicing meet rigorous quality standards, there can be no assurance that we or our customers or other third parties will not experience operational process or product failures and other problems, including through manufacturing or design defects, process or other failures of contractors or third-party suppliers, cybersecurity incidents or other intentional acts, that could result in potential product, safety, regulatory or environmental risks.

Cybersecurity incidents aimed at the software embedded in our products could lead to third-party claims resulting from damages caused by our product failures, and this risk is enhanced by the increasingly connected nature of our products.

The potential consequences of a material cybersecurity incident include financial loss, reputational damage, litigation with third parties, diminution in the value of our investment in research, development and engineering, and increased cybersecurity protection and remediation costs due to the increasing sophistication and proliferation of threats, which in turn could adversely affect our competitiveness and results of operations.

Our Proposed Acquisition of Rockwell Automation, Inc. May Not Be Completed or Completed On the Terms and Conditions Contemplated, or With the Expected Benefits

We are currently pursuing a potential acquisition of Rockwell Automation, Inc. Rockwell has not engaged with the Company on this or previous proposals.

If the proposed transaction were to proceed, we can make no assurance as to the completion, terms, timing, costs or benefits anticipated from any such acquisition.

The acquisition would involve increases in the Company's debt levels and outstanding shares.

Unforeseen developments, including delays in obtaining various tax, regulatory and other approvals, could delay any acquisition, or cause it to occur on terms and conditions that are less favorable, or at a higher cost, than expected.

In addition, the Company may encounter difficulties in integration and may not realize the degree or timing of the anticipated benefits of the acquisition.

While we

The Company utilizes a variety of information technology systems to manage and operate its businesses.

For example, non-GAAP measures may exclude the impact of certain items such as our strategic repositioning actions, other acquisitions or divestitures, [added: U.S. tax reform,] changes in reporting segments, gains, losses and impairments, or items outside of management’s control, such as foreign currency exchange rate fluctuations.

Earnings, earnings per share, return on common stockholders’ equity and return on total capital excluding certain gains and losses, impairments, costs, impacts of the strategic portfolio repositioning [removed: actions,] [added: actions and other acquisitions] or [added: divestitures, impacts of U.S. tax reform, or] other items provide additional insight into the underlying, ongoing operating performance of the Company and facilitate period-to-period comparisons by excluding the earnings impact of these items.

Management believes that the financial statements for the three years ended September 30, [removed: 2017] [added: 2018] have been prepared in conformity with U.S. generally accepted accounting principles appropriate in the circumstances.

Based on this evaluation, management has concluded that internal control over financial reporting was effective as of September 30, [removed: 2017.][added: 2018.]

Management has excluded [removed: this business] [added: these businesses] from its assessment of internal control over financial reporting as of September 30, [removed: 2017.][added: 2018.]

[removed: Valves & controls' total] [added: Total] assets and revenues [added: of these businesses] excluded from the assessment represented approximately [removed: 20] [added: 9] percent and [removed: 4] [added: 1] percent, respectively, of the Company's related consolidated financial statement amounts as of and for the year ended September 30, [removed: 2017.][added: 2018.]

| | [removed: 2015] [added: 2016] | | | | [removed: 2016] [added: 2017] | | | [removed: 2017] [added: 2018] | | | [removed: 16] [added: 17] vs. [removed: 15] [added: 16] | | | [removed: 17] [added: 18] vs. [removed: 16] [added: 17] | |

| Net sales | $ | [removed: 16,249 | | |] 14,522 | | | 15,264 | | | [removed: (11] [added: 17,408] | [removed: )%] | | 5 | % | [added: | 14 | % |]

| Gross profit | $ | [removed: 7,008 | | |] 6,262 | | | 6,404 | | | [removed: (11] [added: 7,460] | [removed: )%] | | 2 | % | [added: | 16 | % |]

| Percent of sales | 43.1 | | % | | [removed: 43.1] [added: 42.0] | % | | [removed: 42.0] [added: 42.9] | % | | | | | | |

| SG&A | $ | [removed: 3,735] [added: 3,464] | | | [removed: 3,464] [added: 3,618] | | | [removed: 3,618] [added: 4,258] | | | | | | | |

| Percent of sales | [removed: 23.0] [added: 23.8] | | % | | [removed: 23.8] [added: 23.7] | % | | [removed: 23.7] [added: 24.5] | % | | | | | | |

| Other deductions, net | $ | [removed: 330] [added: 294] | | | [removed: 294] [added: 286] | | | [removed: 286] [added: 376] | | | | | | | |

| Interest expense, net | $ | [removed: 175] [added: 188] | | | [removed: 188] [added: 165] | | | [removed: 165] [added: 159] | | | | | | | |

| before income taxes | $ | [removed: 3,807 | | |] 2,316 | | | 2,335 | | | [removed: (39] [added: 2,667] | [removed: )%] | | 1 | % | [added: | 14 | % |]

| Percent of sales | [removed: 23.4] [added: 16.0] | | % | | [removed: 16.0] [added: 15.3] | % | | 15.3 | % | | | | | | |

| common stockholders | $ | [removed: 2,517 | | |] 1,590 | | | 1,643 | | | [removed: (37] [added: 2,203] | [removed: )%] | | 3 | % | [added: | 34 | % |]

| Net earnings common stockholders | $ | [removed: 2,710 | | |] 1,635 | | | 1,518 | | | [removed: (40] [added: 2,203] | [removed: )%] | | (7 | )% | [added: | 45 | % |]

| Percent of sales | [removed: 16.7] [added: 11.3] | | % | | [removed: 11.3] [added: 9.9] | % | | [removed: 9.9] [added: 12.7] | % | | | | | | |

| Diluted EPS – Earnings from continuing operations | $ | [removed: 3.71 | | |] 2.45 | | | 2.54 | | | [removed: (34] [added: 3.46] | [removed: )%] | | 4 | % | [added: | 36 | % |]

| Diluted EPS – Net earnings | $ | [removed: 3.99 | | |] 2.52 | | | 2.35 | | | [removed: (37] [added: 3.46] | [removed: )%] | | (7 | )% | [added: | 47 | % |]

| Return on common stockholders' equity | [removed: 29.8] [added: 20.9] | | % | | [removed: 20.9] [added: 18.6] | % | | [removed: 18.6] [added: 24.9] | % | | | | | | |

| Return on total capital | [removed: 22.8] [added: 15.5] | | % | | [removed: 15.5] [added: 15.3] | % | | [removed: 15.3] [added: 20.6] | % | | | | | | |

Underlying sales were up [removed: 1] [added: 8] percent compared with the prior [removed: year reflecting improving economic conditions and industrial end markets.][added: year.]

Earnings from continuing operations common stockholders were [removed: $1,643 million] [added: $2.2 billion] in [removed: 2017,] [added: 2018,] up [removed: 3] [added: 34] percent compared with prior year earnings of [removed: $1,590 million.][added: $1.6 billion.]

Diluted earnings per share [removed: from continuing operations] were [removed: $2.54,] [added: $3.46,] up [removed: 4] [added: 47] percent versus [removed: $2.45] [added: $2.35] per share in [removed: 2016.][added: 2017.]

Discontinued operations [removed: in 2017] was a net loss of $125 million, $0.19 per share, [removed: reflecting the impact] [added: in 2017 and income] of [removed: completing the divestitures.][added: $45 million, $0.07 per share, in 2016.]

See Note [removed: 4 for further information.][added: 4.]

Net earnings common [removed: stockholders, which includes the impact of discontinued operations,] [added: stockholders] were [removed: $1,518 million] [added: $2.2 billion] in [removed: 2017, down 7] [added: 2018, up 45] percent compared with prior year earnings of [removed: $1,635 million.][added: $1.5 billion, which included the impact of discontinued operations.]

The Company generated operating cash flow from continuing operations of [removed: $2.7] [added: $2.9] billion in [removed: 2017,] [added: 2018,] an increase of [removed: $191] [added: $202] million, or 8 percent.

Underlying [removed: sales, which exclude foreign currency translation, acquisitions and divestitures,] [added: sales] increased 1 percent ($168 million) on higher volume and slightly lower price.

Net sales for [removed: 2016] [added: 2018] were [removed: $14.5] [added: $17.4] billion, [removed: a decrease] [added: an increase] of [removed: $1,727 million,] [added: $2.1 billion,] or [removed: 11] [added: 14] percent compared with [removed: 2015.][added: 2017.]

Underlying sales [removed: decreased 7] [added: increased 4] percent [removed: ($1,046] [added: ($226] million) on [removed: 6 percent lower] [added: higher] volume and [removed: 1 percent lower] [added: slightly higher] price.

[removed: Foreign currency translation subtracted 2] [added: Acquisitions added 10] percent [removed: ($266] [added: ($978] million) and [removed: divestitures, net of acquisitions subtracted 2] [added: foreign currency translation added 1] percent [removed: ($415] [added: ($123] million).

Underlying sales [removed: decreased 5] [added: increased 9] percent in the U.S. and [removed: 8] [added: 7] percent internationally.

Sales [added: increased $2.0 billion] in Automation Solutions [removed: decreased $1,176 million] and [added: $125 million in] Commercial & Residential [removed: solutions decreased $76 million.][added: Solutions.]

Emerson is a global business with international sales representing [removed: 52] [added: 54] percent of total sales, including U.S. exports.

[removed: Although economic conditions are currently soft worldwide, the] [added: The] Company generally expects faster economic growth in emerging markets in Asia, Latin America, Eastern Europe and Middle [removed: East/Africa in the future.][added: East/Africa.]

Underlying international destination sales [removed: declined 8] [added: were up 7] percent, as foreign currency translation [removed: and divestitures] had a [removed: 3] [added: 2] percent [removed: and] [added: favorable impact, while acquisitions, net of the divestiture of the residential storage business, had] a [removed: 1] [added: 9] percent [removed: unfavorable impact, respectively,] [added: favorable impact] on the comparison.

Underlying sales [removed: were up] [added: increased] 2 percent in Europe and [removed: decreased] 10 percent in [removed: both] Asia [removed: and Latin America.][added: (China up 17 percent).]

The tools and test equipment business and Aventics were acquired in the fourth quarter of fiscal 2018.

Sales from continuing operations for 2018 were $17.4 billion, an increase of $2.1 billion, or 14 percent.

The Company funded $2.2 billion in acquisitions, which added 7 percent, while the divestiture of the residential storage business subtracted 2 percent and foreign currency translation added 1 percent.

Automation Solutions sales were up 21 percent, reflecting broad-based demand across energy-related and general industrial markets, and the impact of acquisitions.

Commercial & Residential Solutions sales increased 2 percent as favorable demand in global HVAC and refrigeration markets and the impact of acquisitions were partially offset by the divestiture of the residential storage business.

Diluted earnings per share from continuing operations were $3.46, up 36 percent versus $2.54 per share in 2017, due to strong sales growth and operational performance, as well as an income tax benefit of $189 million ($0.30 per share) from the impacts of U.S. tax reform and an $0.18 per share benefit from the lower tax rate on 2018 earnings.

Underlying sales, which exclude foreign currency translation, acquisitions and divestitures, increased 8 percent ($1.1 billion) on higher volume.

Acquisitions, net of the divestiture of the residential storage business, added 5 percent ($819 million) and foreign currency translation added 1 percent ($181 million).

International destination sales, including U.S. exports, increased 18 percent, to $9.5 billion in 2018, reflecting increases in both the Automation Solutions and Commercial & Residential Solutions businesses.

U.S. exports of $1.1 billion were up 19 percent compared with 2017, reflecting increases in both Automation Solutions and Commercial & Residential Solutions which benefited from acquisitions.

On July 17, 2018, the Company completed the acquisition of Aventics, a global provider of smart pneumatics technologies that power machine and factory automation applications, for $622 million, net of cash acquired.

This business, which has annual sales of approximately $425 million, is included in the Industrial Solutions product offering within the Automation Solutions segment.

On July 2, 2018, the Company completed the acquisition of Textron's tools and test equipment business for $810 million, net of cash acquired.

This business, with annual sales of approximately $470 million, is a manufacturer of electrical and utility tools, diagnostics, and test and measurement instruments, and is reported in the Tools & Home products segment.

On December 1, 2017, the Company acquired Paradigm, a provider of software solutions for the oil and gas industry, for $505 million, net of cash acquired.

This business had annual sales of approximately $140 million and is included in the Measurement & Analytical Instrumentation product offering within Automation Solutions.

In fiscal 2018, the Company also acquired four smaller businesses, two in the Automation Solutions segment and two in the Climate Technologies segment.

Assets and liabilities for this business were classified as held-for-sale in the consolidated balance sheet at September 30, 2017.

See Note 3 for further information on acquisitions and divestitures, including pro forma financial information.

Cost of sales for 2018 were $9.9 billion, an increase of $1.1 billion compared with $8.9 billion in 2017.

The increase is primarily due to acquisitions, higher volume and the impact of foreign currency translation.

Gross profit was $7.5 billion in 2018 compared to $6.4 billion in 2017.

Gross margin increased 0.9 percentage points to 42.9 percent, reflecting leverage on higher volume and savings from cost reduction actions, partially offset by the impact of acquisitions.

Gross profit margin was 42.0 percent in 2017.

Selling, general and administrative (SG&A) expenses of $4.3 billion in 2018 increased $640 million compared with 2017 due to acquisitions and an increase in volume.

SG&A as a percent of sales of 24.5 percent increased 0.8 percentage points due to higher incentive stock compensation of $106 million, reflecting an increase in the Company's stock price and progress toward achieving its performance objectives, the impact of acquisitions, and higher investment spending in Automation Solutions, partially offset by leverage on higher volume.

Other deductions, net were $376 million in 2018, an increase of $90 million compared with 2017.

The increase primarily reflects higher intangibles amortization of $75 million due to acquisitions and higher acquisition/divestiture costs of $18 million, partially offset by lower restructuring expense of $13 million.

acquisition/divestiture costs of $24 million.

On December 22, 2017, the U.S. government enacted tax reform, the Tax Cuts and Jobs Act (the “Act”), which made comprehensive changes to U.S. federal income tax laws by moving from a global to a modified territorial tax regime.

The Act includes a reduction of the U.S. corporate income tax rate from 35 percent to 21 percent in calendar year 2018 along with the elimination of certain deductions and credits, and a one-time “deemed repatriation” of accumulated foreign earnings.

During 2018, the Company recognized a net tax benefit of $189 million ($0.30 per share) due to impacts of the Act, consisting of a $94 million benefit on revaluation of net deferred income tax liabilities to the lower tax rate, $35 million of expense for the tax on deemed repatriation of accumulated foreign earnings and withholding taxes, and the reversal of $130 million accrued in previous periods for the planned repatriation of non-U.S. cash.

On August 1, 2018, the U.S. Treasury and Internal Revenue Service released proposed regulations relating to the one-time tax on deemed repatriation of accumulated foreign earnings.

The proposed regulations were subject to a 60-day comment period and final regulations are expected to be issued after consideration of comments received.

The Company is currently evaluating the impact of the proposed regulations and anticipates finalizing its provisional estimates after fully evaluating the final regulations.

The changes made by the Act are broad and complex.

As such, the final one-time deemed repatriation tax may differ materially from these provisional amounts due to additional regulatory guidance expected to be issued, changes in interpretations, or any legislative actions to address questions arising from the Act, as well as further evaluation of the Company’s actions, assumptions and interpretations.

The 11 percentage point decrease in 2018 versus the prior year is due to the impacts of the Act, which include the net tax benefit described above and the lower tax rate on 2018 earnings.

The 2018 and 2017 rates also include benefits from restructuring of subsidiaries of $53 million ($0.08 per share) and $47 million ($0.07 per share), respectively.

Earnings per share included the net tax benefit due to impacts of the Act of $0.30 per share discussed above.

The valves & controls business was acquired on April 28, 2017.

| Gains on divestitures of businesses | $ | 1,039 | | | — | | | — | | | | | | | |

In 2017, Emerson successfully completed the previously announced strategic actions to streamline its portfolio and drive growth in its core businesses.

These actions resulted in the divestiture of the network power systems, and power generation, motors and drives businesses, which are reported in discontinued operations for all years presented.

Additionally, on April 28, 2017, the Company completed the acquisition of Pentair's valves & controls business.

Sales from continuing operations for 2017 were $15.3 billion, an increase of $742 million, or 5 percent, supported by the acquisition of the valves & controls business, which added 4 percent.

Earnings per share from continuing operations were $2.64, up 8 percent, excluding first year acquisition accounting charges of $0.10 per share related to the valves & controls business which deducted 4 percentage points.

Discontinued operations income in 2016 was $45 million, $0.07 per share.

Diluted earnings per share were $2.35, down 7 percent versus $2.52 per share in 2016.

Automation Solutions sales increased 5 percent due to the acquisition of the valves & controls business, while underlying sales decreased slightly, reflecting weakness in energy-related markets which began to improve in the second half of the year.

Commercial & Residential Solutions sales increased 5 percent reflecting favorable conditions in HVAC, refrigeration and construction related markets.

Total operating cash flow of $1.9 billion was reduced by cash used for discontinued operations of $778 million to execute the repositioning, primarily for income taxes on completion of the divestitures and repatriation of cash.

International destination sales, including U.S. exports, decreased 12 percent, to $7.6 billion in 2016, reflecting decreases in all segments, partially due to divestitures.

U.S. exports of $888 million were down 25 percent compared with 2015, reflecting reduced spending by global oil and gas customers, weakness in industrial spending and the stronger U.S. dollar.

Weakness in energy-related and industrial end markets and global economic uncertainty challenged growth in these areas.

The Company is currently pursuing a potential acquisition of Rockwell Automation, Inc. On November 16, 2017, the Company announced that it proposed to acquire Rockwell for $29 billion, or $225 per share, consisting of $135 per share in cash, financed primarily with newly issued debt, and $90 per share in Emerson stock, which would result in Rockwell shareholders owning approximately 22 percent of the combined company.

Rockwell has not engaged with the Company on this or previous proposals.

Rockwell had fiscal 2017 sales of approximately $6.3 billion.

See Item 1A - "Risk Factors" for additional information.

The Company completed eight acquisitions in 2015, seven in Automation Solutions and one in Tools & Home Products, which had combined annualized sales of approximately $115 million.

Total cash paid for all businesses was $324 million, net of cash acquired.

In January 2015, the Company completed the sale of its mechanical power transmission solutions business for $1.4 billion, and recognized a pretax gain from the transaction of $939 million ($532 million after-tax, $0.78 per share).

Proceeds from the divestiture were used for share repurchase.

This business was previously reported in the former Industrial Automation segment, and had partial year sales of $189 million in 2015 and related pretax earnings of $21 million.

Power transmission solutions designs and manufactures market-leading couplings, bearings, conveying components and gearing and drive components, and provides supporting services and solutions.

On September 30, 2015, the Company sold its InterMetro commercial storage business for $411 million in cash and recognized a pretax gain from the transaction of $100 million ($79 million after-tax, $0.12 per share).

This business was previously reported in the former Commercial & Residential Solutions segment, and had annual sales of $288 million and pretax earnings of $42 million in 2015.

InterMetro is a leading manufacturer and supplier of storage and transport products in the food service, commercial products and health care industries.

Cost of sales for 2016 were $8.3 billion, a decrease of $981 million compared with $9.2 billion in 2015, primarily due to reduced sales volume, the impact of foreign currency translation ($186 million) and prior year divestitures ($273 million).

Gross profit was $6.3 billion in 2016 compared with $7.0 billion in 2015.

Gross margin of 43.1 percent was flat compared with 2015, as savings from cost reduction and containment actions were offset by deleverage on lower volume and unfavorable mix.

SG&A expenses of $3.5 billion in 2016 decreased $271 million compared with 2015.

SG&A as a percent of sales of 23.8 percent increased 0.8 percent in 2016, reflecting deleverage on lower sales volume and higher incentive stock compensation, primarily due to changes in the stock price and overlap of awards, partially offset by savings from restructuring actions.

GAINS ON DIVESTITURES OF BUSINESSES

In 2015, the Company sold its power transmission solutions and commercial storage businesses and recorded pretax gains of $939 million ($532 million after-tax, $0.78 per share) and $100 million ($79 million after-tax, $0.12 per share), respectively.

Other deductions, net were $294 million in 2016, a $36 million decrease from 2015 primarily due to lower restructuring costs of $42 million, decreased litigation costs of $30 million and a $21 million gain on payments received related to dumping duties.

The decrease in other deductions was partially offset by unfavorable foreign currency transactions of $67 million.

The 2 percentage point decrease versus the prior year is largely due to tax benefits from restructuring a foreign subsidiary.

The 3 percentage point higher rate in 2015 was due to taxes on the gains from the divestitures of the power transmission solutions and commercial storage businesses.

Divestiture gains in the prior year negatively impacted earnings from continuing operations and earnings per share comparisons by 20 and 21 percentage points, respectively.

Emerson (“the Company”) was incorporated in Missouri in 1890, and has evolved through internal growth and strategic acquisitions and divestitures from a regional manufacturer of electric motors and fans into a [removed: diversified] global leader that brings technology and engineering together to provide innovative solutions for customers in a wide range of industrial, commercial and consumer markets around the world.

See Note [removed: 18.][added: 3.]

[removed: This reference] [added: These references] and all other Note references in this document refer to Notes to Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K, which notes are hereby incorporated by reference.

| • | Automation Solutions - enables process, hybrid and discrete manufacturers to maximize production, protect personnel and the environment, and optimize their energy efficiency and operating costs through a broad offering of [removed: integrated solutions] [added: products] and [removed: products,] [added: integrated solutions,] including measurement and analytical instrumentation, industrial valves and equipment, and process control systems. |

Total Emerson sales by geographic destination in [removed: 2017] [added: 2018] were: the United States and Canada, [removed: 52] [added: 49] percent; Asia, [removed: 21] [added: 23] percent; Europe, [removed: 16] [added: 17] percent; Latin America, 5 percent; and Middle East/Africa, 6 percent.

[removed: The] [added: In 2017, the] Company's strategic [added: portfolio] repositioning actions resulted in the sale of the network power systems business [removed: which closed in the first quarter of 2017,] and the sale of the power generation, motors and drives [removed: business which closed in the second quarter of 2017.][added: business.]

These businesses have been reported in discontinued operations for all periods [removed: presented.][added: presented until disposal.]

[removed: Additionally, on] [added: On] April 28, 2017, the Company completed the acquisition of Pentair's valves & controls business, which is reported in the Automation Solutions segment and complements the Valves, Actuators [removed: and] [added: &] Regulators product offering.

Information with respect to acquisition and divestiture activity, including the discontinued businesses, [removed: and restructuring costs] is set forth in Notes [removed: 3, 4] [added: 3] and [removed: 6.][added: 4.]

Significant [removed: end] markets served include oil and gas, refining, chemicals and power generation, as well as pharmaceuticals, food and beverage, automotive, pulp and paper, metals and mining, and municipal water supplies.

Sales by geographic destination in [removed: 2017] [added: 2018] for Automation Solutions were: the United States and Canada, [removed: 44] [added: 43] percent; Asia, [removed: 23] [added: 24] percent; Europe, 20 percent; Latin America, 5 percent; and Middle East/Africa, 8 percent.

Measurement technologies provided by the Company include Coriolis direct mass flow, magnetic flow, vortex flow, ultrasonic flow, differential pressure, ultra-low flow fluid measurement, [added: corrosion measurement, acoustic measurement,] temperature sensors, radar-based tank gauging and magnetic level gauging.

The Company’s measurement products are [removed: also] often used in custody transfer applications, such as the transfer of gasoline from a storage tank to a tanker truck, where precise metering of the amount of fluid transferred helps ensure accurate asset management.

Industrial Solutions include fluid [removed: power and] control [added: and pneumatic] mechanisms, electrical distribution equipment, [removed: and] materials joining [added: solutions] and precision cleaning products which are used in a variety of manufacturing operations to provide integrated solutions to customers.

[removed: Fluid power products control and power the flow of liquids and gases in manufacturing operations such as automobile assembly, food processing, textile manufacturing and petrochemical processing, and] [added: Products] include [removed: products such as] solenoid and pneumatic valves, valve position indicators, pneumatic [removed: cylinders,] [added: cylinders and actuators,] air preparation equipment, and pressure, [removed: vacuum and] [added: vacuum,] temperature [removed: switches.][added: switches and automobile assembly.]

Electrical distribution products are used in hazardous, [removed: industrial, commercial] [added: industrial] and [removed: construction] [added: commercial] environments, such as oil and gas drilling and production sites, [removed: pulp and paper mills and] petrochemical [removed: plants.][added: plants and commercial buildings.]

Plastic and metal joining technologies and equipment are supplied to a diversified manufacturing customer base, including automotive, medical devices, business and consumer electronics, and [removed: toys.][added: textile manufacturing.]

[added: Products include ultrasonic joining and] cleaning equipment; linear and orbital vibration welding equipment; systems for hot plate, spin and laser [removed: welding equipment;] [added: welding;] and aqueous, semi-aqueous and vapor cleaning systems.

[removed: Process] [added: The Company provides process] control systems and software [added: that] control plant processes by collecting and analyzing information from measurement devices in the plant, and then use that information to adjust valves, pumps, motors, drives and other control hardware for maximum product quality and process efficiency and safety.

[removed: The] [added: Across these product offerings, Automation Solutions offers the] Plantweb [added: TM] Digital [removed: Ecosystem] [added: Ecosystem, a comprehensive Industrial Internet of Things (IIoT) architecture that] combines [removed: the Company’s] intelligent field sensors, communication gateways and controllers, software, and complementary partner [removed: technologies to create a comprehensive Industrial Internet of Things (IIoT) architecture to improve customer operational performance.][added: technologies.]

Service/trademarks and trade names within [added: (but not exclusive to)] Automation Solutions include Emerson Automation Solutions, [removed: AMS, Anderson Greenwood,] Appleton, ASCO, [removed: ASCO Numatics, Baumann,] [added: Aventics,] Bettis, [removed: Biffi,] Branson, [removed: Bristol, Crosby, CSI, Damcos, Daniel,] DeltaV, [removed: EIM, El-O-Matic,] Fisher, [removed: Go Switch, Guardian,] Keystone, KTM, Micro Motion, [removed: Net Safety,][added: Ovation, Plantweb, Rosemount and Vanessa.]

Sales by geographic destination in [removed: 2017] [added: 2018] for Commercial & Residential Solutions were: the United States and Canada, [removed: 64] [added: 61] percent; Asia, [removed: 18] [added: 20] percent; Europe, [removed: 9] [added: 11] percent; Latin America, 5 percent; and Middle East/Africa, [removed: 4] [added: 3] percent.

The Climate Technologies segment provides products and services for many areas of the climate control industry, including residential heating and cooling, commercial air conditioning, [removed: and] commercial and industrial [removed: refrigeration.][added: refrigeration, and cold chain management.]

Sales by geographic destination in [removed: 2017] [added: 2018] for Climate Technologies were: the United States and Canada, [removed: 55] [added: 54] percent; Asia, [removed: 24] [added: 25] percent; Europe, 10 percent; Latin America, 7 percent; and Middle East/Africa, 4 percent.

[removed: This business] [added: The Company] provides a full range of heating and air conditioning products that help reduce operational and energy costs and create comfortable environments in all types of buildings.

Transport and cargo monitoring solutions are also offered, which extend throughout the cold chain to ensure quality and safety as food travels from growers to processing and distribution [removed: facilities] [added: facilities,] and finally to retail points of sale.

Services and solutions [added: provides air conditioning, refrigeration and lighting control technologies that] enable global customers to optimize the performance of [removed: facilities] [added: facilities,] including large-scale retailers, supermarkets, convenience stores and food service operations.

Service/trademarks and trade names within [added: (but not exclusive to)] the Climate Technologies segment include Emerson [added: Commercial & Residential Solutions, Emerson] Climate Technologies, [removed: Control Products, Computer Process Controls,] [added: Cooper-Atkins,] Copeland, [removed: Design Services Network,] [added: CoreSense,] Dixell, [removed: Emerson Climate Technologies Distribution Services, Emerson Climate Technologies Educational Services, Emerson Climate Technologies Retail Services,] Fusite, ProAct, Sensi, Therm-O-Disc, [removed: Vilter,] [added: Vilter] and White-Rodgers.

Sales by geographic destination in [removed: 2017] [added: 2018] for this segment were: the United States and Canada, [removed: 86] [added: 81] percent; Asia, [removed: 4] [added: 5] percent; Europe, [removed: 7] [added: 11] percent; Latin America, 2 percent; and Middle East/Africa, 1 percent.

Professional [removed: and Do-It-Yourself] Tools

[removed: Do-it-yourself] [added: The Company also offers do-it-yourself] tools, available at retail home improvement outlets, [added: which] include drain cleaning equipment, pipe and tube working tools, and wet-dry vacuums.

[removed: This business] [added: The Company] provides a number of appliance solutions, including residential and commercial food waste disposers, ceiling fans, instant hot water dispensers and compact electric water heaters.

Appliance solutions are sold through direct sales force [removed: networks] [added: networks, distributors] and [removed: distributors.][added: online retailers.]

Approximately one-third of this segment's sales are made to a small number of big box [removed: outlets, as well as through online retailers.][added: retail outlets.]

Service/trademarks and trade names within [added: (but not exclusive to)] the Tools & Home Products segment include Emerson, [added: Emerson Professional Tools, Badger, Greenlee,] Grind2Energy, InSinkErator, [removed: Badger, ProTeam, RIDGID] [added: Klauke, ProTeam] and [removed: WORKSHOP.][added: RIDGID.]

On October 2, 2017, the Company sold its residential storage [removed: solutions] business.

The network power systems business and the power generation, motors and drives business were sold in 2017 and are reported as discontinued operations in the Consolidated Financial Statements for all years [removed: presented.][added: presented until disposal.]

Despite market price volatility for certain [removed: requirements and] materials [added: and] pricing pressures at some of our businesses, the raw materials and various purchased components needed for the Company’s products have generally been available in sufficient quantities.

The Company also continues to develop or acquire new intellectual [removed: property on an ongoing basis.][added: property.]

The Company’s estimated consolidated order backlog was [removed: $4,894] [added: $4,966] million and [removed: $3,925] [added: $4,894] million at September 30, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] respectively.

The Company's process of transforming its Automation Solutions and Commercial & Residential Solutions businesses was ongoing as these repositioning actions were being completed.

In 2018, the Company continued to expand the product offerings within its two businesses.

This included the acquisitions of Paradigm, a provider of software solutions for the oil and gas industry, and Aventics, a global provider of smart pneumatics technologies, which are reported in Automation Solutions.

The Company also made two strategic acquisitions to strengthen its Commercial & Residential Solutions business: Textron's tools and test equipment business, a manufacturer of electrical and utility tools, diagnostics, and test and measurement instruments, and Cooper-Atkins, which offers temperature management and monitoring products for foodservice markets.

In the first quarter of 2018 the Company also completed the sale of its residential storage business.

The Automation Solutions segment offers a broad array of products, integrated solutions, software and services which enable process, hybrid and discrete manufacturers to maximize production, protect personnel and the environment, reduce project costs, and optimize their energy efficiency and operating costs.

The segment’s major product offerings are Measurement & Analytical Instrumentation, Valves, Actuators & Regulators, Industrial Solutions and Process Control Systems & Solutions, which are further described below.

This IIoT architecture delivers measurable business performance improvements to customers by providing insights into production performance, energy consumption,

reliability of specific equipment or process units, and safety.

Together with the broad offering of products and integrated solutions, Automation Solutions also provides a portfolio of services and lifecycle service centers which offer consulting, engineering, systems development, project management, training, maintenance, and troubleshooting expertise to aid in process optimization.

On December 1, 2017, the Company acquired Paradigm, enhancing its software solutions offerings in the oil and gas industry.

This technology creates a more comprehensive digital portfolio from exploration to production and enables Emerson to help oil and gas operators increase efficiency and reduce costs.

On April 28, 2017, the Company acquired Pentair’s valves & controls business, which manufactures control, isolation and pressure relief valves and actuators.

These products complement Emerson’s existing offerings, creating a comprehensive valve solutions portfolio that is supported by an extensive service network.

Pneumatic products transform air or gas into energy and power for use in manufacturing operations such as food processing and packaging, life sciences and petrochemical processing.

On July 17, 2018, the Company completed the acquisition of Aventics, a global provider of smart pneumatics technologies that power machine and factory automation applications.

This acquisition significantly expands Emerson’s fluid automation technologies for process and industrial applications.

See Note 3.

In 2018, the Company completed an acquisition to expand its cold chain portfolio of products and services to include temperature management and monitoring products for foodservice markets.

Electrical tools are used by industry professionals for numerous tasks related to the installation of wire and cable, including bending, termination and hole-making.

On July 2, 2018, the Company completed the acquisition of Textron’s tools and test equipment business, which manufactures electrical and utility tools, diagnostics, and test and measurement instruments.

These products expand Emerson’s professional tools business, creating a broad offering for mechanical, electrical and plumbing contractors.

See Note 3.

See Note 3.

| | 2017 | | | | 2018 | |

The Automation Solutions segment includes the former Process Management segment and the remaining businesses in the former Industrial Automation segment, except for the hermetic motors business, which is now included in the Climate Technologies segment.

The new Tools & Home Products segment consists of the businesses previously reported in the Commercial & Residential Solutions segment in fiscal 2016.

Sales, earnings before interest and income taxes, and total assets attributable to each business segment for the three years ended September 30, 2017 are set forth in Note 18.

Sales by business in 2017, as a percentage of the total Company, were: Automation Solutions, 62 percent and Commercial & Residential Solutions, 38 percent.

The Automation Solutions segment offers customers products, software and technology, and engineering, project management, consulting services and integrated manufacturing solutions for precision measurement, control, monitoring, asset optimization, and safety and reliability of oil and gas reservoirs, manufacturing operations and plants that process or treat various items.

The Company’s array of products and services enables customers to optimize their plant capabilities in the areas of plant safety and reliability, product quality, energy and emissions, and output efficiency.

Products include ultrasonic joining and

TM

Plantweb Digital Ecosystem

Newly developed sensors (usually wireless) monitor variables such as equipment health and energy consumption, providing data to software applications.

Existing sensor information from control systems is also incorporated using secure communication designs.

These applications contain analytic capabilities that provide insights into production performance, energy consumption, reliability of specific equipment or process units, and safety.

Alerts are generated in areas such as impending equipment failure or excessive energy consumption.

Complete solutions range from covering a few assets, such as pumps or steam traps with small applications, to complete facility monitoring using more sophisticated modeling.

Customers may also subscribe to IIoT “connected services” to improve the performance of their facilities.

In this model, Company personnel who are experts in specific applications or asset classes monitor and analyze customer data that is supplied on a periodic basis and generate reports that provide specific information on actions to take to improve plant operational performance.

Industry Services

Automation Solutions provides a broad portfolio of services to improve automation project implementation time and costs, increase process availability and productivity, and reduce the total cost of ownership in industries such as oil and gas, chemicals, power generation, food and beverage, and life sciences.

Consulting services help plant owners and operators improve plant safety, reliability, availability, cybersecurity, and operational performance through implementation of on-site and corporate-wide programs.

Global industry centers offer engineering and project management services to help customers optimize cost and schedule on large capital projects.

Lifecycle service centers provide maintenance, engineering, process, quality, and troubleshooting expertise to aid in process optimization for efficient and consistent operations, regulatory compliance, asset repair, asset replacement, shutdown/outage management and employee training.

These offerings are available on demand or through long-term service agreements.

Ovation, O-Z/Gedney, Plantweb, ROC, Rosemount, Roxar, Smart Process, SureService, TESCOM, TopWorx, Vanessa and Virgo.

By providing expertise in air conditioning, refrigeration and lighting control, Climate Technologies performs as a complete facility manager for its customers.

Independent sales representatives are utilized to a lesser extent.

This business provides products for the home including shelving systems, cabinet and closet organizers, home office storage, and drawer systems and containers, available in wire, stainless steel and laminate.

The network power systems business supplies electric power conditioning, power reliability and environmental control products for telecommunications networks, data centers and other critical applications, and also provides comprehensive data center infrastructure management solutions.

The power generation, motors and drives business supplies alternators, AC motor/generator sets, traction generators, wind power generators, wind turbine pitch control systems and solar photovoltaic converters, as well as a broad line of drives and electric motors for use in a wide variety of manufacturing operations and products.

| | 2016 | | | | 2017 | |

The increase in Automation Solutions primarily reflects the acquisition of the valves & controls business.

RESEARCH AND DEVELOPMENT

Costs associated with Company-sponsored research and development activities for continuing operations were $340 million, $320 million and $336 million in 2017, 2016 and 2015, respectively.

DOMESTIC AND FOREIGN OPERATIONS

International sales from continuing operations were $7,991 million in 2017, $7,582 million in 2016 and $8,641 million in 2015, including U.S. exports of $927 million, $888 million and $1,187 million in 2017, 2016 and 2015, respectively.

There are additional risks attendant to foreign operations, such as possible nationalization of facilities, currency fluctuations and potential restrictions on the movement of funds.

See Note 18 for further information with respect to foreign operations.

For the fiscal year ended September 30, [removed: 2017][added: 2018]

| Missouri (State or other jurisdiction of incorporation or organization) | [removed: ] [added: ] | 43-0259330 (I.R.S. Employer Identification No.) |

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Web site, if any,] every Interactive Data File required to be submitted [removed: and posted] 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 [removed: and post] such files).

[removed: Large accelerated filer ý Accelerated filer ¨] [added: |] Non-accelerated filer ¨ [removed: (Do not check if a smaller reporting company)] [added: |] Smaller reporting company ¨ [removed: Emerging growth company ¨][added: |]

| 1. | Portions of Emerson Electric Co. Notice of [removed: 2018] [added: 2019] Annual Meeting of Shareholders and Proxy Statement incorporated by reference into Part III hereof. |

10-K 1 emr-09302018x10xk.htm 10-K

| | |

| Large accelerated filer ý | Accelerated filer ¨ |

| | Emerging growth company ¨ |

March 31, 2018: $42.9 billion.

Common stock outstanding at October 31, 2018: 626,158,598 shares.

| | |

| --- | --- |

10-K 1 emr-09302017x10xk.htm FORM 10-K

March 31, 2017: $38.4 billion.

Common stock outstanding at October 31, 2017: 641,819,838 shares.

At September 30, [removed: 2017,] [added: 2018,] the Company had approximately [removed: 200] [added: 215] manufacturing locations worldwide, of which approximately [removed: 130] [added: 75] were located [added: in the United States and 140 were located] outside the United States, primarily in Europe and Asia, and to a lesser extent in Canada and Latin America.

Manufacturing locations by business are: Automation Solutions, 150, and Commercial & Residential Solutions, [removed: 50,] [added: 65,] including [removed: 40] [added: 45] in the Climate Technologies segment and [removed: 10] [added: 20] in the Tools & Home Products segment.

The following sets forth certain information as of November [removed: 20, 2017] [added: 19, 2018] with respect to the Company's executive officers.

These officers have been elected or appointed to terms which expire February [removed: 6, 2018:][added: 5, 2019:]

| D. N. Farr | Chairman of the Board and Chief Executive Officer* | [removed: 62] [added: 63] | 1985 |

| F. J. Dellaquila | Senior Executive Vice President and Chief Financial Officer | [removed: 60] [added: 61] | 1991 |

| [removed: E. M. Purvis] [added: S. J. Pelch] | [added: Chief Operating Officer and] Executive Vice President [added: - Organization Planning] and [removed: Chief Operating Officer] [added: Development] | [removed: 60] [added: 54] | [removed: 2003] [added: 2005] |

| [removed: S.] [added: M.] J. [removed: Pelch] [added: Bulanda] | [removed: Executive] [added: Senior] Vice President - [removed: Organization] Planning and Development | [removed: 53] [added: 52] | [removed: 2005] [added: 2002] |

| R. T. Sharp | Executive President - Commercial & Residential Solutions | [removed: 50] [added: 51] | [removed: 2012] [added: 1999] |

| M. H. Train | [removed: Executive] President [removed: -] [added: and Chairman] Automation Solutions | [removed: 55] [added: 56] | 1994 |

| S. Y. Bosco | Senior Vice President, Secretary and General Counsel | [removed: 59] [added: 60] | 2005 |

| K. Button Bell | Senior Vice President and Chief Marketing Officer | [removed: 59] [added: 60] | 1999 |

| [removed: R.] [added: M.] J. [removed: Schlueter] [added: Baughman] | Vice President, Controller and Chief Accounting Officer | [removed: 63] [added: 53] | [removed: 1992] [added: 2018] |

Pelch was appointed [added: Chief Operating Officer in January 2018,] Executive Vice President in November 2016, Senior Vice President in November 2015 and Vice President - Organization Planning and Development in November 2014.

[removed: Prior to his current position, Mr. Sharp was Executive Vice President - Commercial & Residential Solutions from February] 2016 through October 2016, Executive Vice President - Climate Technologies from February 2015 through February 2016, Vice President - Profit Planning from 2013 through January 2015 and President - Emerson Process Management Europe from 2009 through 2013.

[removed: Train] [added: Lal Karsanbhai] was appointed Executive President - Automation Solutions in October [removed: 2016.][added: 2018.]

Prior to [removed: his current position,] [added: that,] Mr. Train was Executive [added: President - Automation Solutions from October 2016 through October 2018, Executive] Vice President - Automation Solutions from May 2016 through October 2016 and President of Global Sales for Emerson Process Management from 2010 through May 2016.

[removed: He has been Vice President Accounting since 1999 and] [added: Baughman] was appointed Chief Accounting Officer in February [removed: 2003.][added: 2018, and Vice President and Controller in October 2017.]

| L. Karsanbhai | Executive President - Automation Solutions | 49 | 2002 |

Train was appointed President in October 2018.

Prior to his current position, Mr. Karsanbhai was Group President - Measurement & Analytical from 2016 through September 2018, President Emerson Network Power Europe, Middle East and Africa from 2014 through 2016, Vice President Corporate Planning from 2012 through 2014, President of Emerson's Fisher Regulator Technologies business from 2008 through 2012, and Vice President and General Manager of its Natural Gas Unit from 2005 through 2008.

Prior to his current position, Mr. Sharp was Executive Vice President - Commercial & Residential Solutions from February

Michael J.

Prior to that Mr. Baughman was Vice President, Finance, Global Operations, Quality, and Research and Development of Baxter International Inc., a global healthcare products company, from 2015 through September 2017, Vice President, Finance, Medical Products of Baxter from 2013 to 2015 and Corporate Controller of Baxter from 2005 to 2013.

| | | | |

| E. L. Monser | President | 67 | 2002 |

| M. J. Bulanda | Senior Vice President - Acquisition Planning and Development | 51 | 2002 |

Edward L.

Monser was appointed President in October 2010 and was Chief Operating Officer from November 2001 to January 2015.

Edgar M.

Purvis was appointed Chief Operating Officer in January 2015.

Prior to his current position, Mr. Purvis was Executive Vice President responsible for the Climate Technologies business segment from 2008 to January 2015.

Richard J.

Schlueter was appointed Controller in October 2011.

On November 9, 2017, the Company announced that Mr. Purvis will retire as Executive Vice President and Chief Operating Officer on December 31, 2017, and that Mr. Pelch will be appointed as the Company's Chief Operating Officer and Executive Vice President Organizational Development as of that same date.

Information regarding the market for the Company's common [removed: stock, quarterly market price ranges] [added: stock] and dividend payments is set forth in Note 20.

There were approximately [removed: 19,066] [added: 18,343] stockholders of record at September 30, [removed: 2017.][added: 2018.]

In November 2015, the Board of Directors authorized the purchase of up to 70 million shares, and [removed: 56.9] [added: 41.8] million shares remain available.

No shares were purchased in the fourth quarter of [removed: 2017.][added: 2018.]

| | [removed: 2013 (a) | | | |] 2014 | | | [added: |] 2015 [removed: (b)] [added: (a)] | | | 2016 | | | 2017 | | [added: | 2018 (b) | |]

| Net sales | $ | [removed: 17,935 | | |] 17,733 | | | 16,249 | | | 14,522 | | | 15,264 | | [added: | 17,408 | |]

| Earnings from continuing operations – common stockholders | $ | [removed: 1,506 | | |] 2,201 | | | 2,517 | | | 1,590 | | | 1,643 | | [added: | 2,203 | |]

| Basic earnings per common share from continuing operations | $ | [removed: 2.09 | | |] 3.13 | | | 3.72 | | | 2.46 | | | 2.54 | | [added: | 3.48 | |]

| Diluted earnings per common share from continuing operations | $ | [removed: 2.08 | | |] 3.11 | | | 3.71 | | | 2.45 | | | 2.54 | | [added: | 3.46 | |]

| Cash dividends per common share | $ | [removed: 1.64 | | |] 1.72 | | | 1.88 | | | 1.90 | | | 1.92 | | [added: | 1.94 | |]

| Long-term debt | $ | [removed: 4,055 | | |] 3,559 | | | 4,289 | | | 4,051 | | | 3,794 | | [added: | 3,137 | |]

| Total assets | $ | [removed: 24,711 | | |] 24,177 | | | 22,088 | | | 21,732 | | | 19,589 | | [added: | 20,390 | |]

[removed: (b)] [added: (a)] Includes gains from divestitures of businesses of $611 million and $0.90 per share.

See Notes 3 and 4 for information regarding the Company's acquisition and divestiture activities for the last three [removed: years.][added: years, and Note 14 for information regarding the impacts of U.S. tax reform.]

(b) Includes income tax benefit of $189 million ($0.30 per share) from the impacts of U.S. tax reform.

(a) Includes goodwill impairment and income tax charges of $566 million and $0.78 per share.

| | [removed: 2015] | [added: 2016] | | | [added: | 2017 | | |] 2016 | | | 2017 | | [added: | 2016 | | | 2017 | |]

| Net sales | $ | [removed: 16,249] [added: 14,522] | | | [removed: 14,522] [added: 15,264] | | | [removed: 15,264] [added: 17,408] | |

| Cost of sales | [removed: 9,241] [added: 8,260] | | | | [removed: 8,260] [added: 8,860] | | | [removed: 8,860] [added: 9,948] | |

| Selling, general and administrative expenses | [removed: 3,735] [added: 3,464] | | | | [removed: 3,464] [added: 3,618] | | | [removed: 3,618] [added: 4,258] | |

| [removed: Gains on divestitures] [added: Divestitures] of businesses | [removed: 1,039] [added: —] | | | | [removed: —] [added: 39] | | | [removed: —] [added: 201] | |

| Other deductions, net | [removed: 330] [added: 294] | | | | [removed: 294] [added: 286] | | | [removed: 286] [added: 376] | |

| Interest expense, net of interest income of: [removed: 2015, $23;] 2016, $27; 2017, [removed: $36] [added: $36; 2018, $43] | [removed: 175] [added: 188] | | | | [removed: 188] [added: 165] | | | [removed: 165] [added: 159] | |

| Earnings from continuing operations before income taxes | [removed: 3,807] [added: 2,316] | | | | [removed: 2,316] [added: 2,335] | | | [removed: 2,335] [added: 2,667] | |

| Income taxes | [removed: 1,267] [added: 697] | | | | [removed: 697] [added: 660] | | | [removed: 660] [added: 443] | |

| Earnings from continuing operations | [removed: 2,540] [added: 1,619] | | | | [removed: 1,619] [added: 1,675] | | | [removed: 1,675] [added: 2,224] | |

| Discontinued operations, net of tax: [removed: 2015, $161;] 2016, $269; 2017, [removed: $671] [added: $671; 2018, $0] | [removed: 193] [added: 45] | | | | [removed: 45] [added: (125] | [added: )] | | [removed: (125] [added: —] | [removed: )] |

| Net earnings | [removed: 2,733] [added: 1,664] | | | | [removed: 1,664] [added: 1,550] | | | [removed: 1,550] [added: 2,224] | |

| Less: Noncontrolling interests in earnings of subsidiaries | [removed: 23] [added: 29] | | | | [removed: 29] [added: 32] | | | [removed: 32] [added: 21] | |

| Net earnings common stockholders | $ | [removed: 2,710] [added: 1,635] | | | [removed: 1,635] [added: 1,518] | | | [removed: 1,518] [added: 2,203] | |

| Earnings from continuing operations | $ | [removed: 2,517] [added: 1,590] | | | [removed: 1,590] [added: 1,643] | | | [removed: 1,643] [added: 2,203] | |

| Discontinued operations, net of tax | [removed: 193] [added: 45] | | | | [removed: 45] [added: (125] | [added: )] | | [removed: (125] [added: —] | [removed: )] |

| Earnings from continuing operations | $ | [removed: 3.72] [added: 2.46] | | | [removed: 2.46] [added: 2.54] | | | [removed: 2.54] [added: 3.48] | |

| Discontinued operations | [removed: 0.29] [added: 0.07] | | | | [removed: 0.07] [added: (0.19] | [added: )] | | [removed: (0.19] [added: —] | [removed: )] |

| Basic earnings per common share | $ | [removed: 4.01] [added: 2.53] | | | [removed: 2.53] [added: 2.35] | | | [removed: 2.35] [added: 3.48] | |

| Earnings from continuing operations | $ | [removed: 3.71] [added: 2.45] | | | [removed: 2.45] [added: 2.54] | | | [removed: 2.54] [added: 3.46] | |

| Discontinued operations | [removed: 0.28] [added: 0.07] | | | | [removed: 0.07] [added: (0.19] | [added: )] | | [removed: (0.19] [added: —] | [removed: )] |

| Diluted earnings per common share | $ | [removed: 3.99] [added: 2.52] | | | [removed: 2.52] [added: 2.35] | | | [removed: 2.35] [added: 3.46] | |

| | | [removed: 2015] [added: 2016] | | | | [added: 2017 | | |] 2016 | | | 2017 | | [added: | 2016 | | | 2017 | |]

| Net earnings | | $ | [removed: 2,733] [added: 1,664] | | | [removed: 1,664] [added: 1,550] | | | [removed: 1,550] [added: 2,224] | |

| Foreign currency translation | | [removed: (794] [added: (188] | | ) | | [removed: (188] [added: 441] | [removed: )] | | [removed: 441] [added: (231] | [added: )] |

| Pension and postretirement | | [removed: (206] [added: (210] | | ) | | [removed: (210] [added: 500] | [removed: )] | | [removed: 500] [added: 242] | |

| Cash flow hedges | | [removed: (43] [added: 18] | | [removed: )] | | [removed: 18] [added: 37] | | | [removed: 37] [added: (7] | [added: )] |

| Total other comprehensive income (loss) | | [removed: (1,043] [added: (380] | | ) | | [removed: (380] [added: 978] | [removed: )] | | [removed: 978] [added: 4] | |

| Comprehensive income | | [removed: 1,690] [added: 1,284] | | | | [removed: 1,284] [added: 2,528] | | | [removed: 2,528] [added: 2,228] | |

| Less: Noncontrolling interests in comprehensive income of subsidiaries | | [removed: 22] [added: 31] | | | | [removed: 31] [added: 30] | | | [removed: 30] [added: 21] | |

| Comprehensive income common stockholders | | $ | [removed: 1,668] [added: 1,253] | | | [removed: 1,253] [added: 2,498] | | | [removed: 2,498] [added: 2,207] | |

September 30 (Dollars [added: and shares] in millions, except per share amounts)

| | 2016 | | | | 2017 | | [added: | 2018 | |]

| [removed: Cash] [added: Beginning cash] and equivalents | [removed: $] [added: 3,054] | [added: | | |] 3,182 | | | 3,062 | |

| Receivables, less allowances of [removed: $92 in 2016 and] $91 in 2017 [added: and $113 in 2018] | [removed: 2,701] [added: 3,072] | | | | [removed: 3,072] [added: 3,344] | |

| Inventories | [removed: 1,208] [added: 1,696] | | | | [removed: 1,696] [added: 1,813] | |

| Other current assets | [removed: 669] [added: (4] | | [added: )] | | [removed: 349] [added: (12] | [added: )] | [added: | (28 | ) |]

| Total current assets | [removed: 9,960] [added: 8,252] | | | | [removed: 8,252] [added: 6,619] | |

| Property, plant and equipment, net | [removed: 2,931] [added: 3,321] | | | | [removed: 3,321] [added: 3,562] | |

| Goodwill | [removed: 3,909] [added: 5,316] | | | | [removed: 5,316] [added: 6,455] | |

| | 2017 | | | | 2018 | |

| Other | 810 | | | | 1,003 | |

| Other liabilities | 1,980 | | | | 2,099 | |

| Common stock, $0.50 par value; authorized, 1,200.0 shares; issued, 953.4 shares; outstanding, 641.7 shares in 2017; 629.2 shares in 2018 | 477 | | | | 477 | |

| | 21,750 | | | | 22,882 | |

| Net earnings common stockholders | 1,635 | | | | 1,518 | | | 2,203 | |

| Adoption of accounting standard updates | — | | | | — | | | 103 | |

In the fourth quarter of 2018, the Company adopted updates to ASC 220, Comprehensive Income, which permit reclassification of stranded tax effects resulting from U.S. tax reform from accumulated other comprehensive income to retained earnings.

The Company reclassified $100 of stranded tax effects from accumulated other comprehensive income to retained earnings upon adoption of these updates.

In the first quarter of 2018, the Company adopted updates to ASC 740, Income Taxes, which require recognition of the income tax effects of intra-entity transfers of assets other than inventory when the transfer occurs, on a modified retrospective basis.

The adoption of these updates resulted in an increase of $3 to retained earnings.

In the first quarter of 2018, the Company adopted updates to ASC 330, Inventory, which changed the measurement principle for inventory from the lower of cost or market to the lower of cost and net realizable value.

These updates were adopted prospectively and did not materially impact the Company's financial statements.

| | | 2017 | | | | 2018 | |

| | | 2017 | | | | 2018 | |

On July 17, 2018, the Company completed the acquisition of Aventics, a global provider of smart pneumatics technologies that power machine and factory automation applications, for $622, net of cash acquired.

This business, which has annual sales of approximately $425, is reported in the Industrial Solutions product offering in the Automation Solutions segment.

On July 2, 2018, the Company completed the acquisition of Textron's tools and test equipment business for $810, net of cash acquired.

This business, with annual sales of approximately $470, is a manufacturer of electrical and utility tools, diagnostics, and test and measurement instruments, and is reported in the Tools & Home products segment.

The Company recognized goodwill of $374 ($17 of which is expected to be tax deductible), and identifiable intangible assets of $358, primarily intellectual property and customer relationships with a weighted-average useful life of approximately 14 years.

On December 1, 2017, the Company acquired Paradigm, a provider of software solutions for the oil and gas industry, for $505, net of cash acquired.

This business had annual sales of approximately $140 and is included in the Measurement & Analytical Instrumentation product offering within Automation Solutions.

The Company recognized goodwill of $328 ($160 of which is expected to be tax deductible), and identifiable intangible assets of $238, primarily intellectual property and customer relationships with a weighted-average useful life of approximately 11 years.

During 2018, the Company also acquired four smaller businesses, two in the Automation Solutions segment and two in the Climate Technologies segment.

The purchase price of the 2018 acquisitions was preliminarily allocated to assets and liabilities as follows.

| Inventory | | 196 | | |

| Goodwill | | 1,188 | | |

| Intangibles | | 1,012 | | |

Results of operations for the 2018 acquisitions included sales of $365 and a net loss of $3, including intangibles amortization of $40 and restructuring expense of $3.

These results also included first year pretax acquisition accounting charges related to inventory and deferred revenue of $39 and $11, respectively, which are reported in Corporate and other.

| | | | | |

| --- | --- | --- | --- | --- |

| | | | | |

| Accounts receivable | | $ | 349 | |

| Inventory | | 516 | | |

| Property, plant and equipment | | 339 | | |

| Goodwill | | 1,476 | | |

| Intangibles | | 1,076 | | |

| Total assets | | 4,038 | | |

| | | | | |

| Current assets held-for-sale | 2,200 | | | | 73 | |

| Other | 200 | | | | 634 | |

| Noncurrent assets held-for-sale | 3,830 | | | | 176 | |

| Current liabilities held-for-sale | 1,601 | | | | 56 | |

| Other liabilities | 1,729 | | | | 1,975 | |

| Noncurrent liabilities held-for-sale | 326 | | | | 5 | |

| Common stock, $0.50 par value; authorized, 1,200,000,000 shares; issued, 953,354,012 shares; outstanding, 642,796,490 shares in 2016; 641,691,971 shares in 2017 | 477 | | | | 477 | |

| | 20,399 | | | | 21,750 | |

| Purchase of noncontrolling interests | (22 | | ) | | — | | | — | |

| Gains on divestitures of businesses, after tax | (611 | | ) | | — | | | — | |

| Income taxes paid on divestiture gains | (424 | | ) | | — | | | — | |

| Divestitures of businesses | 1,812 | | | | — | | | 39 | |

| Proceeds from long-term debt | 1,000 | | | | — | | | — | |

In the first quarter of 2015, the Company adopted updates to ASC 205, Presentation of Financial Statements, and ASC 360, Property, Plant and Equipment, regarding the reporting of discontinued operations.

These updates raised the threshold for reporting discontinued operations to a strategic business shift having a major effect on an entity's operations and financial results.

The updates also added disclosures for disposals of business units qualifying for discontinued presentation, and for some dispositions that do not qualify as discontinued operations but are still considered individually significant components of the entity.

The increase is primarily due to the valves & controls acquisition.

of certain foreign-currency-denominated assets and liabilities.

| Inventory | | 525 | | |

| Goodwill | | 1,472 | | |

| Intangibles | | 1,045 | | |

| Net sales | | $ | 16,201 | | | 16,112 | |

The pro forma 2016 results also include acquisition costs of $52, while the 2017 pro forma results were adjusted to exclude these charges.

Assets and liabilities were classified as held-for-sale as of September 30, 2017.

The Company completed eight acquisitions in 2015, seven in Automation Solutions and one in Tools & Home Products, which had combined annualized sales of approximately $115.

In January 2015, the Company completed the sale of its mechanical power transmission solutions business for $1.4 billion, and recognized a pretax gain from the transaction of $939 ($532 after-tax, $0.78 per share).

Assets and liabilities sold were as follows: current assets, $182 (accounts receivable, inventories, other current assets); other

assets, $374 (property, plant and equipment, goodwill, other noncurrent assets); accrued expenses, $56 (accounts payable, other current liabilities); and other liabilities, $41.

Proceeds from the divestiture were used for share repurchase.

This business was previously reported in the former Industrial Automation segment, and had partial year sales in 2015 of $189 and related pretax earnings of $21.

Power transmission solutions designs and manufactures market-leading couplings, bearings, conveying components and gearing and drive components, and provides supporting services and solutions.

On September 30, 2015, the Company sold its InterMetro commercial storage business for $411 in cash and recognized a pretax gain from the transaction of $100 ($79 after-tax, $0.12 per share).

This business had annual sales of $288 and pretax earnings of $42 in 2015 and was reported in the former Commercial & Residential Solutions segment.

Assets and liabilities sold were as follows: current assets, $62 (accounts receivable, inventories, other current assets); other assets, $292 (property, plant and equipment, goodwill, other noncurrent assets); current liabilities, $34 (accounts payable, other current liabilities); and other liabilities, $9.

InterMetro is a leading manufacturer and supplier of storage and transport products in the food service, commercial products and health care industries.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

business to the sales price less costs to sell, and lower expense of $24 due to ceasing depreciation and amortization for the discontinued businesses held-for-sale.

Discontinued operations income of $193, $0.28 per share, in 2015 included earnings from operations of $245 and separation costs of $52, comprised of income tax expense of $42 and fees of $10.

The aggregate carrying amounts of the major classes of assets and liabilities classified as held-for-sale as of September 30, 2016 are summarized as follows:

Based on an evaluation performed, the Company's certifying officers have concluded that the disclosure controls and procedures were effective as of September 30, [removed: 2017] [added: 2018] to provide reasonable assurance of achieving these objectives.

There was no change in the Company's internal control over financial reporting during the quarter ended September 30, [removed: 2017,] [added: 2018,] that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

In the first quarter of fiscal 2019, the Company successfully completed upgrades to its Oracle enterprise resource planning system across a majority of its businesses.

Information regarding nominees and directors appearing under "Proxy Item No. 1: Election of Directors" in the Emerson Electric Co. Notice of Annual Meeting of Shareholders and Proxy Statement for the February [removed: 2018] [added: 2019] annual shareholders' meeting (the [removed: "2018] [added: "2019] Proxy Statement") is hereby incorporated by reference.

[removed: Information regarding] executive officers is set forth in Part I of this report.

Information appearing under "Section 16(a) Beneficial Ownership Reporting Compliance" in the [removed: 2018] [added: 2019] Proxy Statement is hereby incorporated by reference.

Information regarding the Audit Committee and Audit Committee Financial Expert appearing under "Board and Committee Operations - Board and Corporate Governance - Committees of Our Board of Directors," "Board and Committee Operations - Corporate Governance and Nominating Committee - Nomination Process" and "- Proxy Access" in the [removed: 2018] [added: 2019] Proxy Statement is hereby incorporated by reference.

Information regarding

Information appearing under “Executive Compensation" (including the information set forth under "Compensation Discussion and Analysis"), "Compensation Tables," "Board and Committee Operations—Corporate Governance and Nominating Committee—Director Compensation," "Board and Committee Operations—Compensation Committee" (including, but not limited to, the information set forth under "Role of Executive Officers and the Compensation [removed: Consultant" and "Compensation Committee Report")] [added: Consultant", "Report of the Compensation Committee"] and "Compensation Committee Interlocks and Insider [removed: Participation"] [added: Participation")] in the [removed: 2018] [added: 2019] Proxy Statement is hereby incorporated by reference.

The information contained in [removed: “Compensation Committee Report”] [added: “Report of the Compensation Committee”] shall not be deemed to be filed with the SEC or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), except to the extent that the Company specifically incorporates such information into future filings under the Securities Act of 1933 or the Exchange Act.

The information regarding beneficial ownership of shares by nominees and continuing directors, named executive officers, five percent beneficial owners, and by all directors and executive officers as a group appearing under "Ownership of Emerson Equity Securities" in the [removed: 2018] [added: 2019] Proxy Statement is hereby incorporated by reference.

The following table sets forth aggregate information regarding the Company’s equity compensation plans as of September 30, [removed: 2017:][added: 2018:]

[removed: | (1) | Includes the Stock Option and Incentive Shares Plans previously approved by the Company's security holders. Included in column (a) are: (i)10,759,141 shares reserved for outstanding stock option awards, (ii) 2,388,125 shares reserved for performance share awards granted in 2017, (iii) 2,178,388 shares reserved for performance share awards granted in 2016 and (iv) 102,761 reserved for outstanding restricted stock unit awards.] As provided by the Company’s Incentive Shares Plans, performance shares awards represent a commitment to issue such shares without cash payment by the employee, contingent upon achievement of the performance objectives and continued service by the employee. [removed: |]

Included in column (c) are shares remaining available for award under previously approved plans as follows: (i) [removed: 11,483,140] [added: 11,560,488] under the 2011 Stock Option Plan, (ii) [removed: 10,481,900] [added: 9,674,500] under the 2015 Incentive Shares Plan, (iii) [removed: 2,440,978] [added: 625,055] under the 2006 Incentive Shares Plan, and (iv) [removed: 174,355] [added: 159,965] under the Restricted Stock Plan for Non-Management Directors.

| Equity compensation plans approved by security holders (1) | | 14,980,377 | | | | $56.37 | | | | 22,020,008 | |

| Total | | 14,980,377 | | | | $56.37 | | | | 22,020,008 | |

| (1) | Includes the Stock Option and Incentive Shares Plans previously approved by the Company's security holders. Shares included in column (a) assume the maximum payouts, where applicable, and are as follows: (i) 7,800,902 shares reserved for outstanding stock option awards, (ii) 2,261,700 shares reserved for performance share awards granted in 2018, (iii) 2,375,313 shares reserved for performance share awards granted in 2017, |

(iv) 2,155,963 shares reserved for performance share awards granted in 2016 and (v) 386,499 shares reserved for outstanding restricted stock unit awards.

| Equity compensation plans approved by security holders (1) | | 15,428,415 | | | | $55.49 | | | | 24,580,373 | |

| Total | | 15,428,415 | | | | $55.49 | | | | 24,580,373 | |

Information appearing under “Board and Committee Operations—Board and Corporate Governance—Review, Approval or Ratification of Transactions with Related Persons," "—Certain Business Relationships and Related [added: Party Transactions" and "—Director Independence" in the 2019 Proxy Statement is hereby incorporated by reference.]

Party Transactions" and "—Director Independence" in the 2018 Proxy Statement is hereby incorporated by reference.

Information appearing under "Board and Committee Operations—Audit Committee—Fees Paid to KPMG LLP" in the [removed: 2018] [added: 2019] Proxy Statement is hereby incorporated by reference.

| 3(b) | [Bylaws of Emerson Electric [removed: Co.](http://www.sec.gov/Archives/edgar/data/32604/000114036117029789/ex3_1.htm),] [added: Co.](http://www.sec.gov/Archives/edgar/data/32604/000119312518189534/d604989dex31.htm),] as amended through [removed: August 1, 2017,] [added: June 5, 2018,] incorporated by reference to [removed: Emerson Electric Co.] [added: the Company's] Form 8-K [added: dated June 5, 2018,] filed [removed: August 2, 2017,] [added: on June 11, 2018, File No. 1-278,] Exhibit 3.1. |

| 10(a)* | [Third Amendment to the Emerson Electric Co. 1993 Incentive Shares Plan, as restated](http://www.sec.gov/Archives/edgar/data/32604/0000032604-96-000015.txt), incorporated by reference to Emerson Electric Co. 1996 Form 10-K, File No. 1-278, Exhibit 10(g), [removed: and [Fourth Amendment thereto](http://www.sec.gov/Archives/edgar/data/32604/000003260401500032/ex10d.htm), incorporated by reference to Emerson Electric Co. 2001 Form 10-K, File No. 1-278, Exhibit 10(d).] |

| 10(n)* | [Description of Non-Management Director [removed: Compensation,] [added: Compensation](http://www.sec.gov/Archives/edgar/data/32604/000003260417000046/exhibit10nfy17.htm), incorporated by reference to Emerson Electric Co. Form 10-K] filed [removed: herewith](https://www.sec.gov/Archives/edgar/data/32604/000003260417000046/exhibit10nfy17.htm).] [added: November 20, 2017, Exhibit 10(n).] |

| 10(o)* | [Description of Named Executive Officer [removed: Compensation,] [added: Compensation](http://www.sec.gov/Archives/edgar/data/32604/000003260417000046/exhibit10ofy17.htm), incorporated by reference to Emerson Electric Co. Form 10-K] filed [removed: herewith.](https://www.sec.gov/Archives/edgar/data/32604/000003260417000046/exhibit10ofy17.htm)] [added: November 20, 2017, Exhibit 10(o).] |

| 10(q) | [Credit Agreement dated as of [removed: April 30, 2014](http://www.sec.gov/Archives/edgar/data/32604/000144530514001795/chi-2816838xv10xemerson_xx.htm),] [added: May 23, 2018](http://www.sec.gov/Archives/edgar/data/32604/000119312518176799/d588274dex101.htm),] incorporated by reference to Emerson Electric Co. Form 8-K [added: dated May 23, 2018 and] filed May [removed: 2, 2014,] [added: 29, 2018, File No. 1-278,] Exhibit 10.1. |

| 10(r)* | [2011 Stock Option Plan](http://www.sec.gov/Archives/edgar/data/32604/000095012310112771/c61168dfdef14a.htm), incorporated by reference to Emerson Electric Co. 2011 Proxy Statement dated December 10, 2010, File No. 1-278, Appendix B, 2011 [Stock Option Plan as Amended and Restated effective October 1, 2012](http://www.sec.gov/Archives/edgar/data/32604/000003260412000012/exhibit10rfy12.htm), incorporated by reference to Emerson Electric Co. 2012 Form 10-K, File No. 1-278, Exhibit 10(r), [Forms of Notice of Grant of Stock Options, Option Agreement and Incentive Stock Option Agreement under the 2011 Stock Option Plan](http://www.sec.gov/Archives/edgar/data/32604/000003260412000006/exhibit10-1.htm), incorporated by reference to Emerson Electric Co. Form 10-Q for the quarter ended March 31, 2012, File No. [removed: 1-278, Exhibit 10.1 and [Forms of Notice of Grant of Stock Options, Option Agreement and Nonqualified Stock Option Agreement under the 2011 Stock Option Plan](http://www.sec.gov/Archives/edgar/data/32604/000003260412000006/exhibit10-2.htm), incorporated by reference to Emerson Electric Co. Form 10-Q for the quarter ended March 31, 2012, File No. 1-278, Exhibit 10.2.] |

| 21 | [Subsidiaries of Emerson Electric [removed: Co.](https://www.sec.gov/Archives/edgar/data/32604/000003260417000046/exhibit21fy17.htm)] [added: Co.](https://www.sec.gov/Archives/edgar/data/32604/000003260418000044/exhibit21fy18.htm)] |

| 23 | [Consent of Independent Registered Public Accounting [removed: Firm](https://www.sec.gov/Archives/edgar/data/32604/000003260417000046/exhibit23fy17.htm)] [added: Firm](https://www.sec.gov/Archives/edgar/data/32604/000003260418000044/exhibit23fy18.htm)] |

| 24 | [Power of [removed: Attorney](https://www.sec.gov/Archives/edgar/data/32604/000003260417000046/exhibit24fy17.htm)] [added: Attorney](https://www.sec.gov/Archives/edgar/data/32604/000003260418000044/exhibit24fy18.htm)] |

| 31 | [Certifications pursuant to Exchange Act Rule [removed: 13a-14(a)](https://www.sec.gov/Archives/edgar/data/32604/000003260417000046/exhibit31fy17.htm)] [added: 13a-14(a)](https://www.sec.gov/Archives/edgar/data/32604/000003260418000044/exhibit31fy18.htm)] |

| 32 | [Certifications pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section [removed: 1350](https://www.sec.gov/Archives/edgar/data/32604/000003260417000046/exhibit32fy17.htm)] [added: 1350](https://www.sec.gov/Archives/edgar/data/32604/000003260418000044/exhibit32fy18.htm)] |

| 99.1 | [Description of Capital [removed: Stock](https://www.sec.gov/Archives/edgar/data/32604/000003260417000046/exhibit991fy17.htm)] [added: Stock](http://www.sec.gov/Archives/edgar/data/32604/000003260417000046/exhibit991fy17.htm) incorporated by reference to Emerson Electric Co. 2017 Form 10-K, File No. 1-278, Exhibit 99.1.] |

| 101 | Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Earnings for the years ended [removed: September 30, 2015, 2016 and 2017, (ii) Consolidated Statements of Comprehensive Income for the years ended September 30, 2015, 2016, and 2017 (iii) Consolidated Balance Sheets at September 30, 2016 and 2017, (iv) Consolidated Statements of Equity for the years ended September 30, 2015, 2016 and 2017, (v) Consolidated Statements of Cash Flows for the years ended September 30, 2015, 2016 and 2017, and (vi) Notes to Consolidated Financial Statements for the year ended September 30, 2017.] |

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on November [removed: 20, 2017,] [added: 19, 2018,] by the following persons on behalf of the registrant and in the capacities indicated.

| /s/ [removed: R.] [added: M.] J. [removed: Schlueter] [added: Baughman] | | Vice President, Controller and Chief Accounting Officer |

and [Fourth Amendment thereto](http://www.sec.gov/Archives/edgar/data/32604/000003260401500032/ex10d.htm), incorporated by reference to Emerson Electric Co. 2001 Form 10-K, File No. 1-278, Exhibit 10(d).

1-278, Exhibit 10.1 and [Forms of Notice of Grant of Stock Options, Option Agreement and Nonqualified Stock Option Agreement under the 2011 Stock Option Plan](http://www.sec.gov/Archives/edgar/data/32604/000003260412000006/exhibit10-2.htm), incorporated by reference to Emerson Electric Co. Form 10-Q for the quarter ended March 31, 2012, File No. 1-278, Exhibit 10.2.

| 10(y)* | [Letter Agreement, dated November 8, 2017](http://www.sec.gov/Archives/edgar/data/32604/000119312517342528/d479894dex101.htm), by and between Emerson Electric Co. and Edgar M. Purvis, incorporated by reference to the Emerson Electric Co. Form 8-K filed November 14, 2017, File No. 1-278, Exhibit filed 10.1. |

| 10(z)* | [Emerson Electric Co. Savings Investment Restoration Plan II](http://www.sec.gov/Archives/edgar/data/32604/000003260418000038/q3fy18exhibit101.htm), incorporated by reference to the Emerson Electric Co. Form 10-Q for the quarter ended June 30, 2018, File No. 1-278, Exhibit filed 10.1. |

| 10(aa)* | [Letter Agreement effective as of October 2, 2018](http://www.sec.gov/Archives/edgar/data/32604/000119312518294665/d634197dex101.htm), by and between Emerson Electric Co. and Edward L. Monser, incorporated by reference to the Emerson Electric Co. Form 8-K filed October 5, 2018, File No. 1-278, Exhibit filed 10.1. |

| | |

| --- | --- |

| | |

| --- | --- |

September 30, 2016, 2017 and 2018, (ii) Consolidated Statements of Comprehensive Income for the years ended September 30, 2016, 2017, and 2018 (iii) Consolidated Balance Sheets at September 30, 2017 and 2018, (iv) Consolidated Statements of Equity for the years ended September 30, 2016, 2017 and 2018, (v) Consolidated Statements of Cash Flows for the years ended September 30, 2016, 2017 and 2018, and (vi) Notes to Consolidated Financial Statements for the year ended September 30, 2018.

| | | November 19, 2018 | |

| M. J. Baughman | | |

| L. Lee | | |

| 12 | [Ratio of Earnings to Fixed Charges](https://www.sec.gov/Archives/edgar/data/32604/000003260417000046/exhibit12fy17.htm) |

| | | November 20, 2017 | |

| | | |

| R. J. Schlueter | | |

| * | | Director |

| J. W. Prueher | | |

| R. L. Stephenson | | |