01—Abstract
Summary
Summary of the 8-K filed October 13, 2026. Cited figures are marked; the original filing is the authoritative source.
Emerson Electric (EMR) disclosed a change in its accounting for defined benefit pension and other postretirement plans, effective for fiscal 2026.
Actuarial gains and losses will now be recognized in earnings in the period they arise (mark-to-market accounting), instead of being deferred in accumulated other comprehensive income and amortized into future periods. The company will record the adjustment annually in fiscal Q4, based on the plans' September 30 measurement date. The change is applied retrospectively, and Exhibit 99.1 provides recast results for FY2024, FY2025, the nine months ended June 30, 2026, and the related quarters.
The company describes this as a non-cash, non-segment item that does not affect cash flows, plan funded status, funding requirements, or benefits payable. The near-term earnings effect is small. Emerson expects a pretax mark-to-market gain of less than $5 milliona in fiscal Q4 2026, based on current assumptions.
The nine months ended June 30, 2026 were increased by $8 millionb pretax ($6 million after tax, or $0.01 per diluted share). Neither amount was included in the previously announced fiscal 2026 outlook, and the filing states it does not reaffirm or update that outlook. Emerson will exclude the annual adjustment from adjusted EPS, so adjusted EBITA and adjusted EPS are largely unaffected in the recast presentation.
The recast does change the historical GAAP profile: FY2025 pretax earnings from continuing operations fall $29 million to $2,905 millionc, while FY2024 pretax earnings rise $11 million to $2,031 million. For investors, the key takeaway is that this is primarily a reporting-methodology change with modest reported impact. Its main implication is greater period-to-period volatility in GAAP results, because the annual remeasurement will reflect discount rate moves, asset returns, and assumption changes.
Investors should note that the adjustment will sit outside segment results and outside adjusted EPS, so comparability will depend on reconciling GAAP earnings to the adjusted measures. The filing is voluntary and unaudited, and it does not restate previously issued financial statements.
02—Key points
Key Highlights
- Accounting policy change: Emerson adopted mark-to-market accounting for pension and other postretirement benefit plans effective fiscal 2026, recognizing actuarial gains and losses in earnings rather than deferring them through AOCI and amortization.
- Annual recognition: The mark-to-market adjustment will be recorded once a year in fiscal Q4, based on the September 30 measurement date, and will reflect changes in discount rates, plan asset returns and other actuarial assumptions.
- Near-term impact is small: Expected pretax gain in fiscal Q4 2026 is less than $5 million. The nine months ended June 30, 2026 rose by $8 million pretax ($6 million after tax, $0.01 per diluted share).
- Recast historical results: FY2025 pretax earnings from continuing operations decline $29 million to $2,905 million, and FY2024 pretax earnings increase $11 million to $2,031 million. FY2025 GAAP diluted EPS from continuing operations moves from $4.03 to $3.99.
- Adjusted metrics largely unchanged: Adjusted EBITA for the nine months ended June 30, 2026 remains $3,647 million (26.5% of sales), and adjusted EPS for the period moves only from $4.71 to $4.72. The annual mark-to-market adjustment is excluded from adjusted EPS.
- No cash or funding impact: The change has no effect on total cash flows, plan funded status, funding requirements, or benefits payable to participants.
- Outlook not updated: The expected gain and the benefit from reversed amortized losses are not included in prior fiscal 2026 guidance, and the filing does not reaffirm or update the outlook.
03—Questions
Frequently Asked Questions
Does this accounting change affect Emerson's cash flow or pension funding?
No. Emerson states the change has no impact on total cash flows, the funded status of its plans, its funding requirements, or benefits payable to plan participants. It affects only how actuarial gains and losses are recognized in the income statement.
How large is the impact on Emerson's reported earnings?
The impact is modest. Emerson expects a fiscal Q4 2026 pretax mark-to-market gain of less than $5 million. The nine months ended June 30, 2026 increased by $8 million pretax ($6 million after tax, $0.01 per share). Recast FY2025 pretax earnings from continuing operations fall $29 million, and FY2024 pretax earnings rise $11 million.
Will this change affect Emerson's adjusted EPS or segment results?
Not materially. Emerson will exclude the annual mark-to-market adjustment from adjusted EPS, and it will not be allocated to reportable segments. The recast adjusted EPS for FY2025 is $6.01, versus $6.00 previously, and FY2024 is $5.35, versus $5.49 previously.
Does this change the fiscal 2026 outlook?
The filing says the expected mark-to-market gain and the benefit from reversed amortized losses were not reflected in the previously announced fiscal 2026 outlook. It also states the 8-K is not intended to reaffirm or update that outlook, so investors should look to subsequent company guidance.
Are these recast figures restated financial statements?
No. The recast information in Exhibit 99.1 is supplemental and unaudited. The company says it does not represent a restatement of previously issued financial statements, and it should be read together with the Form 10-K and Form 10-Q filings. Although the accounting change is applied retrospectively, the filing presents recast results rather than amended financial statements.
04—Continue