Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
______________________
FORM
10-Q
x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
For
the quarterly period ended December 31, 2008
OR
o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
For the
transition period from ____________________ to __________________
Commission
file number 1-278
EMERSON
ELECTRIC CO.
(Exact
name of registrant as specified in its charter)
Missouri
(State
or other jurisdiction of
incorporation
or organization)
|
|
43-0259330
(I.R.S.
Employer
Identification
No.)
|
|
|
|
8000
W. Florissant Ave.
P.O.
Box 4100
St.
Louis, Missouri
(Address
of principal executive offices)
|
|
63136
(Zip
Code)
|
Registrant's
telephone number, including area code: (314) 553-2000
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
Large
accelerated filer x Accelerated
filer o
Non-accelerated
filer o (Do not check if a
smaller reporting
company) Smaller reporting
company o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o No x
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date. Common stock of $0.50 par
value per share outstanding at January 31, 2009: 755,037,306
shares.
FORM
10-Q
PART
I. FINANCIAL INFORMATION
Item
1. Financial Statements.
EMERSON
ELECTRIC CO. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF EARNINGS
THREE
MONTHS ENDED DECEMBER 31, 2007 AND 2008
(Dollars
in millions, except per share amounts; unaudited)
|
|
Three Months Ended
|
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
$ |
5,520 |
|
|
|
5,415 |
|
|
|
|
|
|
|
|
|
|
Costs
and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of sales
|
|
|
3,510 |
|
|
|
3,419 |
|
Selling,
general and administrative expenses
|
|
|
1,184 |
|
|
|
1,193 |
|
Other
deductions, net
|
|
|
3 |
|
|
|
91 |
|
Interest
expense (net of interest income of $14 and $11,
respectively)
|
|
|
50 |
|
|
|
43 |
|
|
|
|
|
|
|
|
|
|
Earnings
from continuing operations before income taxes
|
|
|
773 |
|
|
|
669 |
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
|
254 |
|
|
|
211 |
|
|
|
|
|
|
|
|
|
|
Earnings
from continuing operations
|
|
|
519 |
|
|
|
458 |
|
|
|
|
|
|
|
|
|
|
Discontinued
operations, net of tax
|
|
|
46 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
$ |
565 |
|
|
|
458 |
|
|
|
|
|
|
|
|
|
|
Basic
earnings per common share:
|
|
|
|
|
|
|
|
|
Earnings
from continuing operations
|
|
$ |
0.66 |
|
|
|
0.60 |
|
Discontinued
operations
|
|
|
0.06 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Basic
earnings per common share
|
|
$ |
0.72
|
|
|
|
0.60 |
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per common share:
|
|
|
|
|
|
|
|
|
Earnings
from continuing operations
|
|
$ |
0.65 |
|
|
|
0.60 |
|
Discontinued
operations
|
|
|
0.06 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per common share
|
|
$ |
0.71 |
|
|
|
0.60 |
|
|
|
|
|
|
|
|
|
|
Cash
dividends per common share
|
|
$ |
0.30 |
|
|
|
0.33 |
|
See
accompanying Notes to Consolidated Financial Statements.
FORM
10-Q
EMERSON
ELECTRIC CO. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(Amounts
in millions, except per share; unaudited)
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2008
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash
and equivalents
|
|
$ |
1,777 |
|
|
|
1,668 |
|
Receivables,
less allowances of $90 and $89, respectively
|
|
|
4,618 |
|
|
|
4,007 |
|
Inventories
|
|
|
2,348 |
|
|
|
2,470 |
|
Other
current assets
|
|
|
588 |
|
|
|
728 |
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
9,331 |
|
|
|
8,873 |
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment, net
|
|
|
3,507 |
|
|
|
3,459 |
|
|
|
|
|
|
|
|
|
|
Other
assets
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
6,562 |
|
|
|
6,556 |
|
Other
|
|
|
1,640 |
|
|
|
1,634 |
|
|
|
|
|
|
|
|
|
|
Total
other assets
|
|
|
8,202 |
|
|
|
8,190 |
|
|
|
$ |
21,040 |
|
|
|
20,522 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Short-term borrowings and current maturities of long-term
debt
|
|
$ |
1,221 |
|
|
|
2,042 |
|
Accounts
payable
|
|
|
2,699 |
|
|
|
2,171 |
|
Accrued
expenses
|
|
|
2,480 |
|
|
|
2,412 |
|
Income
taxes
|
|
|
173 |
|
|
|
203 |
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
6,573 |
|
|
|
6,828 |
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
3,297 |
|
|
|
3,234 |
|
|
|
|
|
|
|
|
|
|
Other
liabilities
|
|
|
2,057 |
|
|
|
2,058 |
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity
|
|
|
|
|
|
|
|
|
Preferred
stock of $2.50 par value per share
|
|
|
|
|
|
|
|
|
Authorized
5.4 shares; issued – none
|
|
|
- |
|
|
|
- |
|
Common
stock of $0.50 par value per share
|
|
|
|
|
|
|
|
|
Authorized
1,200.0 shares; issued 953.4 shares; outstanding 771.2 shares and 759.0
shares, respectively
|
|
|
477 |
|
|
|
477 |
|
Additional
paid-in capital
|
|
|
146 |
|
|
|
140 |
|
Retained
earnings
|
|
|
14,002 |
|
|
|
14,208 |
|
Accumulated
other comprehensive income
|
|
|
141 |
|
|
|
(356 |
) |
Cost
of common stock in treasury, 182.2 shares and
194.4 shares, respectively
|
|
|
(5,653 |
) |
|
|
(6,067 |
) |
|
|
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
9,113 |
|
|
|
8,402 |
|
|
|
$ |
21,040 |
|
|
|
20,522 |
|
See
accompanying Notes to Consolidated Financial Statements.
FORM
10-Q
EMERSON
ELECTRIC CO. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
THREE
MONTHS ENDED DECEMBER 31, 2007 AND 2008
(Dollars
in millions; unaudited)
|
|
Three Months Ended
|
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2008
|
|
Operating
activities
|
|
|
|
|
|
|
Net
earnings
|
|
$ |
565 |
|
|
|
458 |
|
Adjustments
to reconcile net earnings to net cash
|
|
|
|
|
|
|
|
|
provided
by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
171 |
|
|
|
176 |
|
Changes
in operating working capital
|
|
|
(307 |
) |
|
|
(316 |
) |
Other
|
|
|
(6 |
) |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
Net
cash provided by operating activities
|
|
|
423 |
|
|
|
319 |
|
|
|
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(127 |
) |
|
|
(132 |
) |
Purchases
of businesses, net of cash and equivalents acquired
|
|
|
(377 |
) |
|
|
(271 |
) |
Other
|
|
|
183 |
|
|
|
(12 |
) |
|
|
|
|
|
|
|
|
|
Net
cash used in investing activities
|
|
|
(321 |
) |
|
|
(415 |
) |
|
|
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
|
|
|
Net
increase in short-term borrowings
|
|
|
1,050 |
|
|
|
968 |
|
Proceeds
from long-term debt
|
|
|
- |
|
|
|
2 |
|
Principal
payments on long-term debt
|
|
|
- |
|
|
|
(186 |
) |
Dividends
paid
|
|
|
(237 |
) |
|
|
(252 |
) |
Purchases
of treasury stock
|
|
|
(194 |
) |
|
|
(433 |
) |
Other
|
|
|
(61 |
) |
|
|
(35 |
) |
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities
|
|
|
558 |
|
|
|
64 |
|
|
|
|
|
|
|
|
|
|
Effect
of exchange rate changes on cash and equivalents
|
|
|
38 |
|
|
|
(77 |
) |
|
|
|
|
|
|
|
|
|
Increase
(decrease) in cash and equivalents
|
|
|
698 |
|
|
|
(109 |
) |
|
|
|
|
|
|
|
|
|
Beginning
cash and equivalents
|
|
|
1,008 |
|
|
|
1,777 |
|
|
|
|
|
|
|
|
|
|
Ending
cash and equivalents
|
|
$ |
1,706 |
|
|
|
1,668 |
|
|
|
|
|
|
|
|
|
|
Changes
in operating working capital
|
|
|
|
|
|
|
|
|
Receivables
|
|
$ |
143 |
|
|
|
439 |
|
Inventories
|
|
|
(170 |
) |
|
|
(164 |
) |
Other
current assets
|
|
|
74 |
|
|
|
(85 |
) |
Accounts
payable
|
|
|
(244 |
) |
|
|
(424 |
) |
Accrued
expenses
|
|
|
(152 |
) |
|
|
(142 |
) |
Income
taxes
|
|
|
42 |
|
|
|
60 |
|
|
|
$ |
(307 |
) |
|
|
(316 |
) |
See
accompanying Notes to Consolidated Financial Statements.
Notes
to Consolidated Financial Statements
|
1.
|
The
accompanying unaudited consolidated financial statements, in the opinion
of management, include all adjustments necessary for a fair presentation
of the results for the interim periods presented. These
adjustments consist of normal recurring accruals. The
consolidated financial statements are presented in accordance with the
requirements of Form 10-Q and consequently do not include all the
disclosures required for annual financial statements presented in
conformity with U.S. generally accepted accounting
principles. First quarter 2008 results in this Form 10-Q
reflect the Company’s reclassification of its European appliance motor and
pump business as discontinued operations, which occurred in the second
quarter of 2008. For further information refer to the
consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended September 30,
2008.
|
|
2.
|
Reconciliations
of weighted average common shares for basic earnings per common share and
diluted earnings per common share follow (shares in
millions):
|
|
|
Three Months Ended
|
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2008
|
|
|
|
|
|
|
|
|
Basic
|
|
|
786.5 |
|
|
|
763.2 |
|
Dilutive
shares
|
|
|
10.0 |
|
|
|
4.7 |
|
Diluted
|
|
|
796.5 |
|
|
|
767.9 |
|
|
3.
|
Comprehensive
income (loss) is summarized as follows (dollars in
millions):
|
|
|
Three Months Ended
|
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2008
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
$ |
565 |
|
|
|
458 |
|
Foreign
currency translation
|
|
|
95 |
|
|
|
(400 |
) |
Cash
flow hedges and other
|
|
|
(33 |
) |
|
|
(97 |
) |
|
|
$ |
627 |
|
|
|
(39 |
) |
Changes in foreign currency translation
are due to the stronger U.S. dollar.
EMERSON
ELECTRIC CO. AND SUBSIDIARIES
|
FORM
10-Q
|
|
4.
|
Other
Financial Information (dollars in
millions):
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2008
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
|
|
|
|
Finished
products
|
|
$ |
884 |
|
|
|
980 |
|
Raw
materials and work in process
|
|
|
1,464 |
|
|
|
1,490 |
|
|
|
$ |
2,348 |
|
|
|
2,470 |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment,
net
|
|
|
|
|
|
|
|
|
Property,
plant and equipment, at cost
|
|
$ |
8,691 |
|
|
|
8,589 |
|
Less
accumulated depreciation
|
|
|
5,184 |
|
|
|
5,130 |
|
|
|
$ |
3,507 |
|
|
|
3,459 |
|
|
|
|
|
|
|
|
|
|
Goodwill by segment
|
|
|
|
|
|
|
|
|
Process
Management
|
|
$ |
2,043 |
|
|
|
2,002 |
|
Industrial
Automation
|
|
|
1,107 |
|
|
|
1,178 |
|
Network
Power
|
|
|
2,432 |
|
|
|
2,387 |
|
Climate
Technologies
|
|
|
412 |
|
|
|
407 |
|
Appliance
and Tools
|
|
|
568 |
|
|
|
582 |
|
|
|
$ |
6,562 |
|
|
|
6,556 |
|
Changes
in the goodwill balances since September 30, 2008, are primarily due to foreign
currency translation, as well as additions from acquisitions, primarily in the
Industrial Automation segment ($131 million). Valuations of certain
assets are in-process; purchase price allocations for acquisitions are subject
to refinement.
Other
assets, other
|
|
|
|
|
|
|
Intellectual
property and customer relationships
|
|
$ |
627 |
|
|
|
680 |
|
Pension
plans
|
|
|
436 |
|
|
|
393 |
|
Capitalized
software
|
|
|
192 |
|
|
|
196 |
|
Other
|
|
|
385 |
|
|
|
365 |
|
|
|
$ |
1,640 |
|
|
|
1,634 |
|
|
|
|
|
|
|
|
|
|
Product
warranty liability
|
|
$ |
204 |
|
|
|
187 |
|
|
|
|
|
|
|
|
|
|
Other
liabilities
|
|
|
|
|
|
|
Deferred
income taxes
|
|
$ |
533 |
|
|
|
566 |
|
Postretirement
plans, excluding current portion
|
|
|
417 |
|
|
|
419 |
|
Retirement
plans
|
|
|
325 |
|
|
|
314 |
|
Minority
interests
|
|
|
188 |
|
|
|
158 |
|
Other
|
|
|
594 |
|
|
|
601 |
|
|
|
$ |
2,057 |
|
|
|
2,058 |
|
EMERSON
ELECTRIC CO. AND SUBSIDIARIES
|
FORM
10-Q
|
|
5.
|
Net
periodic pension expense is summarized as follows (dollars in
millions):
|
|
|
Three Months Ended
|
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2008
|
|
|
|
|
|
|
|
|
Service
cost
|
|
$ |
18 |
|
|
|
18 |
|
Interest
cost
|
|
|
52 |
|
|
|
56 |
|
Expected
return on plan assets
|
|
|
(68 |
) |
|
|
(72 |
) |
Net
amortization
|
|
|
24 |
|
|
|
21 |
|
|
|
$ |
26 |
|
|
|
23 |
|
Net postretirement plan expense is
summarized as follows (dollars in millions):
|
|
Three Months Ended
|
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2008
|
|
|
|
|
|
|
|
|
Service
cost
|
|
$ |
1 |
|
|
|
1 |
|
Interest
cost
|
|
|
7 |
|
|
|
7 |
|
Net
amortization
|
|
|
7 |
|
|
|
2 |
|
|
|
$ |
15 |
|
|
|
10 |
|
|
6.
|
Other
deductions, net are summarized as follows (dollars in
millions):
|
|
|
Three Months Ended
|
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2008
|
|
|
|
|
|
|
|
|
Other
deductions, net
|
|
|
|
|
|
|
Rationalization
of operations
|
|
$ |
9 |
|
|
|
43 |
|
Amortization
of intangibles
|
|
|
17 |
|
|
|
23 |
|
Other
|
|
|
41 |
|
|
|
29 |
|
Gains
|
|
|
(64 |
) |
|
|
(4 |
) |
|
|
$ |
3 |
|
|
|
91 |
|
Other
deductions, net increased due to higher rationalization costs in fiscal 2009
(see note 7 for further details) and nonrecurring gains in fiscal
2008. For the three months ended December 31, 2007, the Company
received $54 million and recognized a gain of $39 million ($20 million
after-tax) on the sale of an equity investment in Industrial Motion Control
Holdings, LLC, a manufacturer of motion control components for automation
equipment, and recorded a pretax gain of $18 million related to the sale of a
facility. For the first quarter of fiscal 2009, Other included
approximately $7 million of losses on foreign exchange transactions compared
with $4 million of gains in the prior year period. During the first
quarter of fiscal 2008, Other included an approximate $15 million charge for
in-process research and development in connection with the acquisition of
Motorola Inc.’s Embedded Computing business.
EMERSON
ELECTRIC CO. AND SUBSIDIARIES
|
FORM
10-Q
|
|
7.
|
The
change in the liability for rationalization of operations during the three
months ended December 31, 2008, follows (dollars in
millions):
|
|
|
September 30,
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2008
|
|
|
Expense
|
|
|
Paid/Utilized
|
|
|
2008
|
|
Severance
and benefits
|
|
$ |
33 |
|
|
|
34 |
|
|
|
12 |
|
|
|
55 |
|
Lease/contract
terminations
|
|
|
5 |
|
|
|
1 |
|
|
|
1 |
|
|
|
5 |
|
|
|
|
- |
|
|
|
1 |
|
|
|
1 |
|
|
|
- |
|
Vacant facility and
other shutdown costs
|
|
|
1 |
|
|
|
2 |
|
|
|
2 |
|
|
|
1 |
|
Start-up
and moving costs
|
|
|
1 |
|
|
|
5 |
|
|
|
5 |
|
|
|
1 |
|
|
|
$ |
40 |
|
|
|
43 |
|
|
|
21 |
|
|
|
62 |
|
Expense
associated with the rationalization of operations summarized by business segment
follows (dollars in millions):
|
|
Three Months Ended
|
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2008
|
|
|
|
|
|
|
|
|
Process
Management
|
|
$ |
1 |
|
|
|
2 |
|
Industrial
Automation
|
|
|
3 |
|
|
|
3 |
|
Network
Power
|
|
|
3 |
|
|
|
20 |
|
Climate
Technologies
|
|
|
1 |
|
|
|
14 |
|
Appliance
and Tools
|
|
|
1 |
|
|
|
4 |
|
|
|
$ |
9 |
|
|
|
43 |
|
Rationalization
of operations comprises expenses associated with the Company’s efforts to
continuously improve operational efficiency and to expand globally in order to
remain competitive on a worldwide basis. These expenses result from
numerous individual actions implemented across the divisions on an ongoing
basis. Rationalization of operations includes costs for moving
facilities, starting-up plants after relocation or business expansion, exiting
product lines, curtailing/downsizing operations because of changing economic
conditions, and other costs resulting from asset redeployment
decisions. Noteworthy rationalization actions during the first
quarter of 2009 included Network Power which incurred severance and
benefits and start up and moving costs related to the consolidation of certain
power systems production into low cost areas in North America and Europe,
severance and start up and moving costs related to shifting certain engineering
capabilities from Europe to Asia, as well as integration costs related to the
Embedded Computing acquisition. Climate Technologies incurred
severance related to relocation of a production facility in
Europe. Appliance and Tools incurred severance related to
consolidation and downsizing of certain production facilities in North
America.
Given the
difficult economic environment, the Company expects actions to be taken that
will increase rationalization expense for all of fiscal 2009 to a total of
approximately $175 million to $200 million. This total includes the
$43 million shown above, as well as costs to complete actions initiated before
the end of the first quarter and actions anticipated to be approved and
initiated during the remainder of the year.
EMERSON
ELECTRIC CO. AND SUBSIDIARIES
|
FORM
10-Q
|
|
8.
|
Summarized
information about the Company's operations by business segment follows
(dollars in millions):
|
|
|
Sales
|
|
|
Earnings
|
|
Three months ended December 31,
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Process
Management
|
|
$ |
1,436 |
|
|
|
1,553 |
|
|
|
258 |
|
|
|
302 |
|
Industrial
Automation
|
|
|
1,125 |
|
|
|
1,103 |
|
|
|
171 |
|
|
|
153 |
|
Network
Power
|
|
|
1,406 |
|
|
|
1,435 |
|
|
|
180 |
|
|
|
149 |
|
Climate
Technologies
|
|
|
766 |
|
|
|
692 |
|
|
|
102 |
|
|
|
53 |
|
Appliance
and Tools
|
|
|
932 |
|
|
|
771 |
|
|
|
132 |
|
|
|
79 |
|
|
|
|
5,665 |
|
|
|
5,554 |
|
|
|
843 |
|
|
|
736 |
|
Differences
in accounting methods
|
|
|
|
|
|
|
|
|
|
|
53 |
|
|
|
50 |
|
Corporate
and other
|
|
|
|
|
|
|
|
|
|
|
(73 |
) |
|
|
(74 |
) |
Eliminations/Interest
|
|
|
(145 |
) |
|
|
(139 |
) |
|
|
(50 |
) |
|
|
(43 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales/Earnings before income taxes
|
|
$ |
5,520 |
|
|
|
5,415 |
|
|
|
773 |
|
|
|
669 |
|
Compared
to the prior year, fiscal 2009 reflects lower stock compensation expense of $31
million due to a decrease in Emerson’s stock price, and lower commodity
mark-to-market costs of $27 million, offset by higher one-time gains in fiscal
2008. Intersegment sales of the Appliance and Tools segment for the three months
ended December 31, 2008 and 2007, respectively, were $112 million and $122
million.
|
9.
|
Effective
October 1, 2008, the Company adopted the recognition and disclosure
provisions of Statement of Financial Accounting Standards (FAS)
No. 157, “Fair Value Measurements.” FAS 157 defines
fair value, establishes a formal hierarchy and framework for measuring
fair value, and expands disclosures about fair value measurements and the
reliability of valuation inputs. Under FAS 157, a fair value
measurement assumes that the transaction to sell an asset or transfer a
liability occurs in the principal market for that asset or liability or,
in the absence of a principal market, the most advantageous market
available. Level 1 instruments have the most reliable
valuations and are measured using observable market prices for the same
item in active markets. Fair values using market-observable
inputs in active markets, including forward and spot prices, interest
rates and volatilities for similar underlying currencies or commodities
are considered Level 2. Unobservable inputs are the least
reliable for valuation and are considered Level 3. In February
2008, the FASB delayed until fiscal 2010 the effective date of
FAS 157 for nonfinancial assets and nonfinancial
liabilities. This includes goodwill and certain other
intangible and long-lived assets. The Company has in place
bilateral collateral agreements with thresholds indexed to credit ratings
that limit both Emerson’s and its counterparties’ exposure in the event of
default. Due to the high credit quality of the Company and its
counterparties there was only an inconsequential impact on the fair value
of the Company’s derivative assets and liabilities due to the adoption of
FAS 157.
|
A summary
of financial assets and liabilities that were measured at fair value on a
recurring basis as of December 31, 2008, follows (dollars in
millions):
|
|
Level
|
|
|
Assets
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Commodity
futures
|
|
|
2
|
|
|
$ |
- |
|
|
|
135 |
|
Commodity
options
|
|
|
2
|
|
|
$ |
6 |
|
|
|
- |
|
Foreign currency
forwards
|
|
|
2
|
|
|
$ |
1 |
|
|
|
92 |
|
Foreign currency
options
|
|
|
2
|
|
|
$ |
11 |
|
|
|
- |
|
Available for sale
investments
|
|
|
1
|
|
|
$ |
4 |
|
|
|
- |
|
|
10.
|
In
December 2008, the Company acquired System Plast, a manufacturer of
engineered modular belts and custom conveyer components for the bottling,
baking, food processing and packaging industries, for approximately $200
million in cash. System Plast has annual revenues of
approximately $100 million and is reported in the Industrial Automation
business segment.
|
EMERSON
ELECTRIC CO. AND SUBSIDIARIES
|
FORM
10-Q
|
Items
2 and 3. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
OVERVIEW
The first
quarter of fiscal 2009 was challenging, but the Company’s diverse international
presence provided strong underlying sales growth in Asia, Latin America, and
Canada and modest sales growth in Europe, while sales in the United States
declined. Unfavorable foreign currency translation negatively
impacted the first quarter results due to the strength in the U.S.
dollar. Sales increased for the Process Management and Network Power
segments over the prior year period, while the Industrial Automation business
experienced a slight decline as foreign currency translation had an unfavorable
impact. Sales and earnings for the Climate Technologies and Appliance
and Tools businesses declined due to the weakness in the U.S. consumer
markets. Despite the economic downturn, Emerson's financial position
remains strong and the Company continues to generate substantial operating cash
flow.
THREE
MONTHS ENDED DECEMBER 31, 2008, COMPARED WITH THREE MONTHS ENDED
DECEMBER
31, 2007
RESULTS
OF OPERATIONS
Three months ended December
31,
|
|
2007
|
|
|
2008
|
|
|
Change
|
|
(dollars
in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$ |
5,520 |
|
|
|
5,415 |
|
|
|
(2 |
)% |
Gross
profit
|
|
$ |
2,010 |
|
|
|
1,996 |
|
|
|
(1 |
)% |
Percent
of sales
|
|
|
36.4 |
% |
|
|
36.9 |
% |
|
|
|
|
SG&A
|
|
$ |
1,184 |
|
|
|
1,193 |
|
|
|
|
|
Percent
of sales
|
|
|
21.4 |
% |
|
|
22.1 |
% |
|
|
|
|
Other
deductions, net
|
|
$ |
3 |
|
|
|
91 |
|
|
|
|
|
Interest
expense, net
|
|
$ |
50 |
|
|
|
43 |
|
|
|
|
|
Earnings
from continuing operations before income taxes
|
|
$ |
773 |
|
|
|
669 |
|
|
|
(14 |
)% |
Earnings
from continuing operations
|
|
$ |
519 |
|
|
|
458 |
|
|
|
(12 |
)% |
Net
earnings
|
|
$ |
565 |
|
|
|
458 |
|
|
|
(19 |
)% |
Percent
of sales
|
|
|
10.2 |
% |
|
|
8.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS-
Continuing operations
|
|
$ |
0.65 |
|
|
|
0.60 |
|
|
|
(8 |
)% |
EPS-
Net earnings
|
|
$ |
0.71 |
|
|
|
0.60 |
|
|
|
(15 |
)% |
Net sales
for the quarter ended December 31, 2008 were $5,415 million, a decrease of $105
million, or 2 percent, compared with net sales of $5,520 million for the quarter
ended December 31, 2007. The consolidated results reflect underlying
sales (which exclude acquisitions, divestitures and foreign currency
translation) that were essentially flat, with an increase of only $12 million, a
4 percent ($208 million) unfavorable impact from foreign currency translation
and a 2 percent ($91 million) positive contribution from
acquisitions. The underlying sales for the first quarter were driven
by a 7 percent increase in total international sales, offset by a 7 percent
decrease in the United States. The international sales growth
reflects increased international demand in all of the major geographic regions,
including Asia (8 percent), Europe (4 percent), Latin America (16 percent),
Canada (16 percent) and Middle East/Africa (4 percent). Underlying
sales reflect a less than 2 percent loss from volume, which includes an
estimated 1 percent positive impact from penetration gains, and a 2 percent
positive impact from higher sales prices. Strong sales growth in the
Process Management business and slight sales growth in the Network Power
business were offset by a slight sales decline in the Industrial Automation
business and significant declines in the Climate Technologies and Appliance and
Tools businesses which continued to be impacted by the U.S. consumer
slowdown.
Costs of
sales for the first quarters of fiscal 2009 and 2008 were $3,419 million and
$3,510 million, respectively. Cost of sales as a percent of net sales
was 63.1 percent in the first quarter of 2009, compared with 63.6 percent in the
first quarter of 2008. Gross profit was $1,996 million and $2,010
million for the first quarters ended December 31, 2008 and 2007, respectively,
primarily due to losses on foreign currency translation and lower sales volume,
which were partially offset by savings from productivity
improvements. Gross profit margin was 36.9 percent and 36.4 percent
for the first quarters of fiscal 2009 and 2008, respectively, reflecting
benefits realized from productivity improvements and higher sales prices, which
were partially offset by higher raw material and wage costs.
EMERSON
ELECTRIC CO. AND SUBSIDIARIES
|
FORM
10-Q
|
Selling,
general and administrative (SG&A) expenses for the first quarter of 2009
were $1,193 million, or 22.1 percent of net sales, compared with $1,184 million,
or 21.4 percent of net sales, for the first quarter of 2008. The
increase of $9 million was largely due to acquisitions. The increase
in SG&A as a percent of sales was primarily the result of deleverage on
lower sales volume and acquisitions, partially offset by lower incentive stock
compensation expense of $31 million due to a decrease in Emerson’s stock
price.
Other
deductions, net were $91 million for the first quarter of 2009, an $88 million
increase from the $3 million for the same period in the prior year, due to
higher rationalization costs in 2009 and nonrecurring gains in
2008. For the quarter ended December 31, 2008, ongoing costs for the
rationalization of operations were $43 million, compared with $9 million in the
prior year period. Gains were $4 million in the first quarter of
fiscal 2009, compared with $64 million in the prior year period. In
the first quarter of fiscal 2008, the Company recognized gains of $39 million
($20 million after-tax) on the sale of an equity investment in Industrial Motion
Control Holdings, LLC and $18 million on the sale of a facility. See
notes 6 and 7 for further details regarding other deductions, net and
rationalization costs.
Earnings
from continuing operations before income taxes for the first quarter of 2009
decreased $104 million, or 14 percent, to $669 million, compared with $773
million for the first quarter of 2008, primarily due to the increase in other
deductions, net. The earnings results predominantly reflect decreases
by business segment of $53 million in Appliance and Tools, $49 million in
Climate Technologies and $31 million in Network Power, partially offset by a $44
million increase in Process Management.
Income
taxes were $211 million and $254 million for the three months ended December 31,
2008 and 2007, respectively, resulting in effective tax rates of 31 percent and
33 percent, respectively. The effective tax rate for the entire
fiscal year 2009 is currently estimated to be 32 percent.
Earnings
from continuing operations were $458 million and earnings per share from
continuing operations were $0.60 for the three months ended December 31, 2008,
decreases of 12 percent and 8 percent, respectively, compared with $519 million
and $0.65 for the three months ended December 31, 2007. Higher
restructuring expenses in 2009 combined with lower gains versus the prior year
negatively impacted earnings per share comparisons by $0.08 per
share.
As there
were no discontinued operations in the first quarter of fiscal 2009, net
earnings were also $458 million and earnings per share were also $0.60 for the
three months ended December 31, 2008, decreases of 19 percent and 15 percent,
respectively, compared with $565 million and $0.71 for the three months ended
December 31, 2007. Earnings for the first quarter of fiscal 2008
included discontinued operations of $46 million, or $0.06 per share, which
included $43 million related to the Brooks Instrument flow meters and flow
controls unit and $3 million related to the European appliance motor and pump
business. The 15 percent decrease in earnings per share also reflects
the purchase of treasury shares.
BUSINESS
SEGMENTS
Process
Management
Three months ended December
31,
|
|
2007
|
|
|
2008
|
|
|
Change
|
|
(dollars
in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ |
1,436 |
|
|
|
1,553 |
|
|
|
8 |
% |
Earnings
|
|
$ |
258 |
|
|
|
302 |
|
|
|
17 |
% |
Margin
|
|
|
18.0 |
% |
|
|
19.4 |
% |
|
1.4
|
pts |
Process
Management sales were $1,553 million in the first quarter of fiscal 2009, an
increase of 8 percent over the prior year period. Nearly all of the
businesses reported higher sales, with sales and earnings
(defined as earnings before interest and taxes for the business segments
discussion) strong for the valves and measurement and flow businesses,
reflecting continued worldwide demand in the oil and gas and power markets that
the Company expects to weaken as the year progresses. Underlying sales
increased 14 percent, while foreign currency translation had a 6 percent ($77
million) negative impact. The underlying sales increase reflects
higher volume of approximately 13 percent, which includes an estimated 2 percent
from penetration gains, and a 1 percent positive impact from higher
prices. Nearly all major geographic regions increased compared with
the prior year period, including underlying sales growth in the United States
(10 percent), Asia (23 percent), Europe (12 percent), Latin America (29 percent)
and Canada (33 percent). First quarter earnings increased 17 percent
to $302 million from $258 million in the prior year period, reflecting higher
sales volume and costs reductions. The increase in margin reflects
leverage on the higher volume and savings from cost reduction programs, while
sales price increases and material containment nearly offset higher wage
costs.
EMERSON
ELECTRIC CO. AND SUBSIDIARIES
|
FORM
10-Q
|
Industrial
Automation
Three months ended December
31,
|
|
2007
|
|
|
2008
|
|
|
Change
|
|
(dollars
in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ |
1,125 |
|
|
|
1,103 |
|
|
|
(2 |
)% |
Earnings
|
|
$ |
171 |
|
|
|
153 |
|
|
|
(10 |
)% |
Margin
|
|
|
15.2 |
% |
|
|
13.9 |
% |
|
(1.3
|
) pts |
Sales
decreased 2 percent to $1,103 million in the Industrial Automation segment for
the three months ended December 31, 2008. The first quarter results
reflect declines in the fluid automation, electrical distribution and mechanical
power transmission businesses due to slowing in the capital goods markets,
partially offset by solid growth in the power generating alternator
business. The Company anticipates continued weakness in the capital goods
markets for the remainder of the year. Underlying sales grew 2
percent, foreign currency translation had a 5 percent ($51 million) unfavorable
impact and the System Plast acquisition had a 1 percent ($6 million) positive
contribution. The underlying growth reflects an estimated 3 percent
positive impact from price, as well as an approximate 1 percent decline from
volume. The underlying sales increase included 3 percent growth
internationally and 1 percent growth in the United States. The
increase in international sales primarily reflects growth in Asia (7 percent),
while sales in Europe were flat. Earnings were $153 million compared
with $171 million in the prior year period. The decrease reflects
significant negative mix with deleverage on lower sales volume of higher margin
businesses. Additionally,
higher sales prices were more than offset by higher material and wage costs,
diluting the margin.
Network
Power
Three months ended December
31,
|
|
2007
|
|
|
2008
|
|
|
Change
|
|
(dollars
in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ |
1,406 |
|
|
|
1,435 |
|
|
|
2 |
% |
Earnings
|
|
$ |
180 |
|
|
|
149 |
|
|
|
(17 |
)% |
Margin
|
|
|
12.8 |
% |
|
|
10.4 |
% |
|
(2.4
|
) pts |
Sales in
the Network Power segment increased 2 percent to $1,435 million for the first
quarter of 2009 compared with the prior year period, reflecting strength in the
China power systems and inbound power businesses, partially offset by a
decline in the embedded power business and weakness in the uninterruptible
power supply and precision cooling businesses due to the slowdown in
customers’ capital spending. The sales increase reflects underlying
sales that were flat, a 6 percent ($85 million) contribution from the Embedded
Computing acquisition and a 4 percent ($49 million) unfavorable impact from
foreign currency translation. The underlying sales reflect lower
volume of less than 1 percent, which includes an estimated 2 percent from
penetration gains, and a less than 1 percent positive impact from higher sales
prices. Geographically, underlying sales reflect increases of 9
percent in Asia and 16 percent in Latin America, while sales decreased 9 percent
in the United States and 6 percent in Europe. The Company’s market
penetration in China and other Asian markets continued. Earnings of
$149 million decreased 17 percent from the prior year period primarily due to
higher restructuring costs of $17 million (including acquisition integration
costs) and higher wage costs. The margin decrease also reflects a
negative impact from acquisitions and unfavorable product mix, which was
partially offset by savings from cost reduction actions.
Climate
Technologies
Three months ended December
31,
|
|
2007
|
|
|
2008
|
|
|
Change
|
|
(dollars
in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ |
766 |
|
|
|
692 |
|
|
|
(10 |
)% |
Earnings
|
|
$ |
102 |
|
|
|
53 |
|
|
|
(48 |
)% |
Margin
|
|
|
13.4 |
% |
|
|
7.7 |
% |
|
(5.7
|
) pts |
EMERSON
ELECTRIC CO. AND SUBSIDIARIES
|
FORM
10-Q
|
Climate
Technologies sales decreased 10 percent to $692 million for the quarter ended
December 31, 2008, reflecting declines across all of the businesses, including
the compressor and water-heater controls businesses. The sales
decrease was driven by a 7 percent decrease in underlying sales and a 3 percent
($19 million) unfavorable impact from foreign currency
translation. The underlying sales decrease includes an estimated 10
percent decline from lower volume, which includes an approximate 2 percent
benefit from penetration gains, and an estimated 3 percent positive impact from
higher sales prices. Sales declines in the compressor business
reflect the slowdown in the U.S. and Asian air-conditioning and refrigeration
markets. Sales in the United States decreased 13
percent. International sales decreased 1 percent reflecting declines
in Asia (21 percent) and Latin America (5 percent), partially offset by sales
growth in Europe (30 percent) due to higher heat pump compressor sales compared
with low levels in the prior year period. Earnings decreased 48
percent during the quarter to $53 million primarily due to lower sales volume,
higher restructuring costs of $13 million and a negative $13 million impact from
foreign currency transactions related to strengthening of the U.S. dollar in
2009 versus weakening in the prior year. The decrease in profit
margin also reflects deleverage on the lower sales volume, partially offset by
favorable product mix, and higher material costs which were only partially
offset by sales price increases.
Appliance and
Tools
Three months ended December
31,
|
|
2007
|
|
|
2008
|
|
|
Change
|
|
(dollars
in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ |
932 |
|
|
|
771 |
|
|
|
(17 |
)% |
Earnings
|
|
$ |
132 |
|
|
|
79 |
|
|
|
(40 |
)% |
Margin
|
|
|
14.1 |
% |
|
|
10.2 |
% |
|
(3.9
|
) pts |
The
Appliance and Tools segment sales decreased 17 percent to $771 million in the
first quarter of 2009. This decrease reflects a 16 percent decline in
underlying sales and a 1 percent ($12 million) unfavorable impact from foreign
currency translation. Declines in the storage, tools and appliance
businesses were driven by the continued downturn in the U.S. residential market
and declines in the motors and appliance solutions businesses reflect major
customers reducing inventory and production levels due to the difficult economic
conditions. The underlying sales decrease of 16 percent reflects an
estimated 21 percent decline in volume and a 5 percent positive impact from
price. Total international underlying sales declined approximately 3
percent during the quarter, while underlying sales in the United States
decreased 19 percent. Earnings were $79 million, a decrease of 40
percent compared with the prior year period. The decrease reflects
deleverage on the lower sales volume, partially offset by savings from cost
reductions. Higher sales prices were substantially offset by higher
raw material and wage costs.
FINANCIAL
CONDITION
A
comparison of key elements of the Company's financial condition at the end of
the first quarter as compared to the end of the prior fiscal year and prior
quarter follows:
|
|
September 30,
2008
|
|
|
December 31,
2008
|
|
|
|
|
|
|
|
|
Working
capital (in millions)
|
|
$ |
2,758 |
|
|
|
2,045 |
|
Current
ratio
|
|
1.4
to 1
|
|
|
1.3
to 1
|
|
Total
debt to total capital
|
|
|
33.1 |
% |
|
|
38.6 |
% |
Net
debt to net capital
|
|
|
22.7 |
% |
|
|
29.6 |
% |
Interest
coverage ratio
|
|
|
15.7 |
|
|
|
13.4 |
|
The
ratios of debt to capital have changed due to an increase in short-term debt as
a result of acquisitions and a decrease in capital primarily as a result of
unfavorable foreign currency translation. The Company's long-term
debt is rated A2 by Moody's Investors Service and A by Standard and Poor's. The
Company's interest coverage ratio (earnings before income taxes and interest
expense, divided by interest expense) was 13.4 times for the three months ended
December 31, 2008, compared with 13.2 times for the same period in the prior
year primarily due to lower interest expense in the first quarter of
2009.
In
January 2009, the Company issued $500 million of 4.875% notes due October 2019,
under an automatic shelf registration statement filed with the Securities and
Exchange Commission. The net proceeds from the sale of the notes are
expected to be used for general corporate purposes and to repay a portion of
commercial paper borrowings.
EMERSON
ELECTRIC CO. AND SUBSIDIARIES
|
FORM
10-Q
|
Cash and
equivalents decreased by $109 million during the three months ended December 31,
2008. Cash flow provided by operating activities of $319 million was
down $104 million compared with $423 million in the prior year period as a
result of decreased earnings and an $81 million margin deposit for commodity
futures contracts. Operating cash flow and a $968 million increase in
short-term borrowings were the primary funding sources for treasury stock
purchases of $433 million, acquisitions of $271 million, dividends of $252
million and capital expenditures of $132 million. For the three
months ended December 31, 2008, free cash flow of $187 million (operating cash
flow of $319 million less capital expenditures of $132 million) was down 37
percent from free cash flow of $296 million (operating cash flow of $423 million
less capital expenditures of $127 million) for the same period in the prior
year, primarily due to lower operating cash flows. Other investing
cash flow for fiscal 2008 included proceeds of $54 million related to the sale
of an equity investment and $100 million related to the divestiture of the
Brooks Instrument unit.
Based on
the decline in asset values stemming from adverse conditions in the financial
markets, and with a discount rate of 5.75%, the Company estimates the funded
status of its pension plans is a $1 billion deficit at December 31,
2008. The Company currently anticipates increasing its planned
pension contributions for fiscal 2009 from $200 million to approximately $300
million, subject to review later in the year. Fiscal 2009 pension
expense is not impacted by the change in funded status. The impact on
fiscal 2010 expense is currently unknown and will be determined based on the
funded status as of September 30, 2009, when the Company’s adopts the
measurement date provisions of FAS 158.
Emerson
maintains a conservative financial structure to provide the strength and
flexibility necessary to achieve our strategic objectives. Although
the credit markets have continued to experience adverse conditions, the Company
currently believes that sufficient funds will be available to meet the Company’s
needs for the foreseeable future through existing resources, ongoing operations
and commercial paper (or backup credit lines). However, the Company
could be adversely affected if credit market conditions deteriorate further or
continue for an extended period of time and customers, suppliers and financial
institutions are unable to meet their commitments to the
Company. Emerson is in a strong financial position, with total assets
of $21 billion and stockholders' equity of $8 billion, and has the resources
available for reinvestment in existing businesses, strategic acquisitions and
managing its capital structure on a short- and long-term basis.
New Accounting
Pronouncements
In March
2008, the FASB issued FAS No. 161, “Disclosures about Derivative Instruments and
Hedging Activities.” FAS 161 requires additional derivative
disclosures, including objectives and strategies for using derivatives, fair
values, balance sheet locations, gains and losses for derivative instruments,
and credit-risk-related contingent features in derivative
agreements. The Company believes FAS 161, which will be effective for
the second quarter of fiscal 2009, will not have a material impact on the
financial statements.
Emerson
plans to adopt the measurement provision of FAS No. 158, “Employers’ Accounting
for Defined Benefit Pension and Other Postretirement Plans,” in the fourth
quarter of fiscal 2009. This provision requires employers to measure
defined benefit plan assets and obligations as of the date of the employer’s
fiscal year-end. To transition to a fiscal year-end measurement date
pursuant to FAS 158, the Company expects to record an approximate $15 million
after-tax adjustment to ending retained earnings and accumulated other
comprehensive income, and will measure its defined benefit plan assets and
obligations as of September 30, 2009.
OUTLOOK
Based on
current economic conditions and the Company’s performance in the first quarter
of 2009, reported sales are forecast to be in the range of $23 billion to $23.7
billion, or negative 8 percent to negative 5 percent compared to 2008 sales of
$24.8 billion. Underlying sales growth is expected to be in the range
of negative 6 percent to negative 3 percent, which excludes an estimated 5
percent unfavorable impact from foreign currency translation at current exchange
rates, and a favorable impact from completed and assumed future acquisitions of
approximately 3 percent. Based on this level of sales, the Company
forecasts 2009 earnings per share in the range of $2.70 to
$2.95. There can be no assurance when and if future acquisitions will
be completed, and what impact future exchange rates will
have. Rationalization of operations expense is estimated to be
approximately $175 million to $200 million for fiscal 2009. Operating
cash flow is estimated at approximately $3.2 billion to $3.4 billion and capital
expenditures are estimated to be $0.7 billion for 2009.
EMERSON
ELECTRIC CO. AND SUBSIDIARIES
|
FORM
10-Q
|
Statements
in this report that are not strictly historical may be "forward-looking"
statements, which involve risks and uncertainties, and Emerson undertakes no
obligation to update any such statements to reflect later developments. These
risks and uncertainties include economic and currency conditions, market demand,
pricing, and competitive and technological factors, among others which are set
forth in the “Risk Factors” of Part I, Item 1, and the "Safe Harbor Statement"
of Exhibit 13, to the Company's Annual Report on Form 10-K for the year ended
September 30, 2008, which are hereby incorporated by reference.
Item
4. Controls and Procedures
Emerson
maintains a system of disclosure controls and procedures which are designed to
ensure that information required to be disclosed by the Company in the reports
filed or submitted under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms and is accumulated and communicated to management,
including the Company’s certifying officers, as appropriate to allow timely
decisions regarding required disclosure. Based on an evaluation performed, the
Company's certifying officers have concluded that the disclosure controls and
procedures were effective as of December 31, 2008, to provide reasonable
assurance of the achievement of these objectives.
Notwithstanding
the foregoing, there can be no assurance that the Company's disclosure controls
and procedures will detect or uncover all failures of persons within the Company
and its consolidated subsidiaries to report material information otherwise
required to be set forth in the Company's reports.
There was
no change in the Company's internal control over financial reporting during the
quarter ended December
31, 2008, that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial
reporting.
PART
II. OTHER INFORMATION
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.
(c) Issuer Purchases of Equity
Securities.
Period
|
|
Total Number of
Shares
Purchased (000s)
|
|
|
Average Price
Paid per Share
|
|
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs (000s)
|
|
|
Maximum Number of
Shares that May Yet Be
Purchased Under the
Plans or Programs (000s)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October
2008
|
|
|
4,600 |
|
|
|
$34.65 |
|
|
|
4,600 |
|
|
|
67,792 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November
2008
|
|
|
3,800 |
|
|
|
$32.89 |
|
|
|
3,800 |
|
|
|
63,992 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
2008
|
|
|
4,400 |
|
|
|
$33.41 |
|
|
|
4,400 |
|
|
|
59,592 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
12,800 |
|
|
|
$33.70 |
|
|
|
12,800 |
|
|
|
59,592 |
|
The
Company’s Board of Directors authorized the repurchase of up to 80 million
shares under the May 2008 program. The maximum number of shares that
may yet be purchased under this program is 59.6 million as of December 31,
2008.
Item
6. Exhibits.
(a)
|
Exhibits
(Listed by numbers corresponding to the Exhibit Table of Item 601 in
Regulation S-K).
|
3.1
|
|
Bylaws
of Emerson Electric Co., as amended through November 4,
2008.
|
|
|
|
4
|
|
Emerson
agrees to furnish to the Securities and Exchange Commission, upon request,
copies of any long-term debt instruments that authorize an amount of
securities constituting 10 percent or less of the total assets of Emerson
and its subsidiaries on a consolidated basis.
|
|
|
|
12
|
|
Ratio
of Earnings to Fixed Charges.
|
|
|
|
31
|
|
Certifications
pursuant to Exchange Act Rule 13a-14(a).
|
|
|
|
32
|
|
Certifications
pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section
1350.
|
EMERSON
ELECTRIC CO. AND SUBSIDIARIES
|
FORM
10-Q
|
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
|
EMERSON
ELECTRIC CO.
|
|
|
|
Date:
February 4, 2009
|
By
|
/s/
Walter J. Galvin
|
|
|
|
|
Walter
J. Galvin
|
|
Senior
Executive Vice President
|
|
and
Chief Financial Officer
|
|
|
|
(on
behalf of the registrant and
|
|
as
Chief Financial
Officer)
|
EMERSON
ELECTRIC CO. AND SUBSIDIARIES
|
FORM
10-Q
|
INDEX TO
EXHIBITS
Exhibits
are listed by numbers corresponding to the Exhibit Table of Item 601 in
Regulation S-K.
Exhibit No.
|
|
Exhibit
|
|
|
|
3.1
|
|
Bylaws
of Emerson Electric Co., as amended through November 4,
2008.
|
|
|
|
12
|
|
Ratio
of Earnings to Fixed Charges.
|
|
|
|
31
|
|
Certifications
pursuant to Exchange Act Rule 13a-14(a).
|
|
|
|
32
|
|
Certifications
pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section
1350.
|