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)
|
Three
Months Ended
|
|
||||||
|
|
December
31,
|
|
||||
|
|
|
|
|
|
||
|
|
2006
|
|
2007
|
|||
Net
Sales
|
$
|
5,051
|
5,637
|
||||
Costs
and expenses:
|
|||||||
Cost
of sales
|
3,256
|
3,615
|
|||||
Selling,
general and administrative expenses
|
1,078
|
1,190
|
|||||
Other
deductions, net
|
19
|
5
|
|||||
Interest
expense (net of interest income of $7 and $15,
respectively)
|
58
|
49
|
|||||
Earnings from
continuing operations before income taxes
|
640
|
778
|
|||||
Income
taxes
|
195
|
256
|
|||||
Earnings
from continuing operations
|
445
|
522
|
|||||
Discontinued
operations, net of tax
|
-
|
43
|
|||||
Net
earnings
|
$
|
445
|
565
|
||||
Basic
earnings per common share:
|
|||||||
Earnings
from continuing operations
|
$
|
0.56
|
0.67
|
||||
Discontinued
operations
|
-
|
0.05
|
|||||
Basic
earnings per common share
|
$
|
0.56
|
0.72
|
||||
Diluted
earnings per common share:
|
|||||||
Earnings
from continuing operations
|
$
|
0.55
|
0.66
|
||||
Discontinued
operations
|
-
|
0.05
|
|||||
Diluted
earnings per common share
|
$
|
0.55
|
0.71
|
||||
Cash
dividends per common share
|
$
|
0.2625
|
0.3000
|
||||
September
30, 2007 |
|
December
31, 2007 |
|||||
ASSETS
|
|||||||
Current
assets
|
|||||||
Cash
and equivalents
|
$
|
1,008
|
1,706
|
||||
Receivables,
less allowances of $86 and $87,
respectively
|
4,260
|
4,296
|
|||||
Inventories
|
2,227
|
2,480
|
|||||
Other
current assets
|
570
|
512
|
|||||
Total
current assets
|
8,065
|
8,994
|
|||||
Property,
plant and equipment, net
|
3,431
|
3,435
|
|||||
Other
assets
|
|||||||
Goodwill
|
6,412
|
6,595
|
|||||
Other
|
1,772
|
1,830
|
|||||
Total
other assets
|
8,184
|
8,425
|
|||||
$
|
19,680
|
20,854
|
|||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
liabilities
|
|||||||
Short-term
borrowings and current maturities of long-term
debt
|
$
|
404
|
1,696
|
||||
Accounts
payable
|
2,501
|
2,329
|
|||||
Accrued
expenses
|
2,337
|
2,151
|
|||||
Income
taxes
|
304
|
232
|
|||||
Total
current liabilities
|
5,546
|
6,408
|
|||||
Long-term
debt
|
3,372
|
3,197
|
|||||
Other
liabilities
|
1,990
|
2,075
|
|||||
Stockholders’
equity
|
|||||||
Preferred
stock of $2.50 par value per share
|
|||||||
Authorized
5,400,000 shares; issued - none
|
-
|
-
|
|||||
Common
stock of $0.50 par value per share
|
|||||||
Authorized
1,200,000,000 shares; issued 953,354,012 shares;
|
|||||||
outstanding
788,434,076 shares and 787,639,092 shares,
respectively
|
477
|
477
|
|||||
Additional
paid-in capital
|
31
|
174
|
|||||
Retained
earnings
|
12,536
|
12,858
|
|||||
Accumulated
other comprehensive income
|
382
|
444
|
|||||
Cost
of common stock in treasury, 164,919,936 shares
|
|||||||
and
165,714,920 shares, respectively
|
(4,654
|
)
|
(4,779
|
)
|
|||
Total
stockholders' equity
|
8,772
|
9,174
|
|||||
$
|
19,680
|
20,854
|
|||||
Three
Months Ended December
31, |
|
||||||
|
|
2006
|
|
2007
|
|||
Operating
activities
|
|||||||
Net
earnings
|
$
|
445
|
565
|
||||
Adjustments
to reconcile net earnings to net cash provided by operating
activities:
|
|||||||
Depreciation
and amortization
|
161
|
171
|
|||||
Changes
in operating working capital
|
(327
|
)
|
(307
|
)
|
|||
Other
(including gains on sale of assets, see Notes 6 and 10)
|
48
|
(6
|
)
|
||||
Net
cash provided by operating activities
|
327
|
423
|
|||||
Investing
activities
|
|||||||
Capital
expenditures
|
(121
|
)
|
(127
|
)
|
|||
Purchases
of businesses, net of cash and equivalents acquired
|
-
|
(377
|
)
|
||||
Other
(including sale of assets, see Notes 6 and 10)
|
43
|
183
|
|||||
Net
cash used in investing activities
|
(78
|
)
|
(321
|
)
|
|||
Financing
activities
|
|||||||
Net
increase in short-term borrowings
|
270
|
1,050
|
|||||
Proceeds
from long-term debt
|
248
|
-
|
|||||
Principal
payments on long-term debt
|
(1
|
)
|
-
|
||||
Dividends
paid
|
(211
|
)
|
(237
|
)
|
|||
Purchases
of treasury stock
|
(283
|
)
|
(194
|
)
|
|||
Other
|
(6
|
)
|
(61
|
)
|
|||
Net
cash provided by financing activities
|
17
|
558
|
|||||
Effect
of exchange rate changes on cash and equivalents
|
14
|
38
|
|||||
Increase
in cash and equivalents
|
280
|
698
|
|||||
Beginning
cash and equivalents
|
810
|
1,008
|
|||||
Ending
cash and equivalents
|
$
|
1,090
|
1,706
|
||||
Changes
in operating working capital
|
|||||||
Receivables
|
$
|
67
|
143
|
||||
Inventories
|
(174
|
)
|
(170
|
)
|
|||
Other
current assets
|
6
|
74
|
|||||
Accounts
payable
|
(227
|
)
|
(244
|
)
|
|||
Accrued
expenses
|
(90
|
)
|
(152
|
)
|
|||
Income
taxes
|
91
|
42
|
|||||
$
|
(327 | ) |
|
(307 | ) |
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. 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, 2007.
|
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,
|
|
||||
|
|
2006
|
|
2007
|
|||
Basic
|
799.4
|
786.5
|
|||||
Dilutive
shares
|
9.1
|
10.0
|
|||||
Diluted
|
808.5
|
796.5
|
3. |
Comprehensive
income is summarized as follows (dollars in
millions):
|
Three
Months Ended December
31, |
|
||||||
|
|
2006
|
|
2007
|
|||
Net
earnings
|
$
|
445
|
565
|
||||
Changes
in foreign currency translation, cash flow hedges and
other
|
70
|
62
|
|||||
$
|
515
|
627
|
4. |
Other
Financial Information (dollars in
millions):
|
September
30,
2007
|
|
December
31, 2007 |
|||||
Inventories
|
|||||||
Finished
products
|
$
|
884
|
969
|
||||
Raw
materials and work in process
|
1,343
|
1,511
|
|||||
$
|
2,227
|
2,480
|
|||||
Property,
plant and equipment, net
|
|||||||
Property,
plant and equipment, at cost
|
$
|
8,434
|
8,605
|
||||
Less
accumulated depreciation
|
5,003
|
5,170
|
|||||
$
|
3,431
|
3,435
|
|||||
Goodwill
|
|||||||
Process
Management
|
$
|
1,985
|
2,001
|
||||
Industrial
Automation
|
1,070
|
1,095
|
|||||
Network
Power
|
2,259
|
2,401
|
|||||
Climate
Technologies
|
420
|
420
|
|||||
Appliance
and Tools
|
678
|
678
|
|||||
$
|
6,412
|
6,595
|
Other
assets, other
|
|||||||
Pension
plans
|
$
|
649
|
630
|
||||
Intellectual
property and customer relationships
|
544
|
648
|
|||||
Capitalized
software
|
171
|
166
|
|||||
Equity
and other investments
|
103
|
81
|
|||||
Leveraged
leases
|
100
|
97
|
|||||
Other
|
205
|
208
|
|||||
$
|
1,772
|
1,830
|
|||||
Product
warranty liability
|
$
|
197
|
189
|
||||
Other
liabilities
|
|||||||
Deferred
income taxes
|
$
|
519
|
540
|
||||
Postretirement
plans, excluding current portion
|
451
|
457
|
|||||
Retirement
plans
|
296
|
306
|
|||||
Minority
interest
|
191
|
171
|
|||||
Other
|
533
|
601
|
|||||
$
|
1,990
|
2,075
|
5. |
Net
periodic pension expense is summarized as follows (dollars in
millions):
|
Three
Months Ended December
31, |
|
||||||
|
|
2006
|
|
2007
|
|||
Service
cost
|
$
|
16
|
18
|
||||
Interest
cost
|
49
|
52
|
|||||
Expected
return on plan assets
|
(63
|
)
|
(68
|
)
|
|||
Net
amortization
|
25
|
24
|
|||||
$
|
27
|
26
|
Three
Months Ended December
31, |
|
||||||
|
|
2006
|
|
2007
|
|||
|
|||||||
Service
cost
|
$
|
1
|
1
|
||||
Interest
cost
|
7
|
7
|
|||||
Net
amortization
|
7
|
7
|
|||||
$
|
15
|
15
|
6. |
Other
deductions, net are summarized as follows (dollars in
millions):
|
Three
Months Ended December
31, |
|
||||||
|
|
2006
|
|
2007
|
|||
Other
deductions, net
|
|||||||
Rationalization
of operations
|
$
|
16
|
10
|
||||
Amortization
of intangibles
|
14
|
17
|
|||||
Other
|
31
|
42
|
|||||
Gains
|
(42
|
)
|
(64
|
)
|
|||
$
|
19
|
5
|
7. |
The
change in the liability for rationalization of operations during
the three
months ended December 31, 2007, follows (dollars in
millions):
|
September
30, 2007 |
|
Expense
|
|
Paid/Utilized
|
|
December
31, 2007 |
|||||||
Severance
and benefits
|
$
|
28
|
4
|
9
|
23
|
||||||||
Lease/contract
terminations
|
8
|
-
|
1
|
7
|
|||||||||
Vacant
facility and other
|
|||||||||||||
shutdown
costs
|
1
|
1
|
2
|
-
|
|||||||||
Start-up
and moving costs
|
-
|
5
|
4
|
1
|
|||||||||
$
|
37
|
10
|
16
|
31
|
Three
Months Ended December
31, |
|
||||||
|
|
2006
|
|
2007
|
|||
Process
Management
|
$
|
2
|
1
|
||||
Industrial
Automation
|
3
|
3
|
|||||
Network
Power
|
4
|
3
|
|||||
Climate
Technologies
|
3
|
1
|
|||||
Appliance
and Tools
|
4
|
2
|
|||||
$
|
16
|
10
|
8.
|
Summarized
information about the Company's operations by business segment
follows
(dollars in millions):
|
Sales
|
Earnings
|
||||||||||||
Three
months ended December 31,
|
2006
|
2007
|
2006
|
2007
|
|||||||||
Process
Management
|
$
|
1,218
|
1,436
|
217
|
258
|
||||||||
Industrial
Automation
|
994
|
1,125
|
166
|
171
|
|||||||||
Network
Power
|
1,199
|
1,406
|
117
|
180
|
|||||||||
Climate
Technologies
|
688
|
766
|
90
|
102
|
|||||||||
Appliance
and Tools
|
1,088
|
1,049
|
133
|
136
|
|||||||||
5,187
|
5,782
|
723
|
847
|
||||||||||
Differences
in accounting methods
|
48
|
53
|
|||||||||||
Corporate
and other
|
(73
|
)
|
(73
|
)
|
|||||||||
Eliminations/Interest
|
(136
|
)
|
(145
|
)
|
(58
|
)
|
(49
|
)
|
|||||
Net
sales/Earnings before income taxes
|
$
|
5,051
|
5,637
|
640
|
778
|
9. |
Effective
October 1, 2007, the Company adopted the recognition and disclosure
provisions of Financial Accounting Standards Board Interpretation
No. 48,
“Accounting for Uncertainty in Income Taxes - an Interpretation
of FASB
Statement 109” (FIN 48). FIN 48 addresses the accounting for uncertain tax
positions that a company has taken or expects to take on a tax
return. As
of October 1, 2007, the Company had total unrecognized tax benefits
of
$149 million before recoverability of cross-jurisdictional tax
credits
(U.S., state and non-U.S.) and temporary differences, and including
amounts related to acquisitions that would reduce goodwill. If
none of
these liabilities are ultimately paid, the tax provision and tax
rate
would be favorably impacted by $90 million. As a result of adoption,
the
Company recorded a charge of $6 million to beginning retained earnings.
The amount of unrecognized tax benefits is not materially different
as of
December 31, 2007, and is not expected to significantly increase
or
decrease within the next 12 months.
|
10.
|
During
the first quarter of fiscal 2008, the Company received $100 million
from
the sale of the Brooks Instrument (Brooks) flow meters and flow
controls
unit, which resulted in a pretax gain of $63 million ($42 million
after-tax). Sales for the first quarter of 2008 were $21 million
and net
earnings were $1 million. The net gain and results of operations
for the
first quarter of fiscal 2008 were classified as discontinued operations;
prior year results of operations were inconsequential.
|
Three
months ended December 31,
|
2006
|
2007
|
Change
|
|||||||
(dollars
in millions, except per share amounts)
|
||||||||||
Net
sales
|
$
|
5,051
|
5,637
|
12
|
%
|
|||||
Gross
profit
|
$
|
1,795
|
2,022
|
13
|
%
|
|||||
Percent
of sales
|
|
35.5
|
%
|
35.9
|
%
|
|||||
SG&A
|
$
|
1,078
|
1,190
|
|||||||
Percent
of sales
|
|
21.3
|
%
|
21.1
|
%
|
|||||
Other
deductions, net
|
$
|
19
|
5
|
|||||||
Interest
expense, net
|
$
|
58
|
49
|
|||||||
Earnings
from
continuing operations before income taxes
|
$
|
640
|
778
|
22
|
%
|
|||||
Earnings
from continuing operations
|
$
|
445
|
522
|
17
|
%
|
|||||
Net
earnings
|
$
|
445
|
565
|
27
|
%
|
|||||
Percent
of sales
|
|
8.8
|
%
|
10.0
|
%
|
|||||
EPS-
Continuing operations
|
$
|
0.55
|
0.66
|
20
|
%
|
|||||
EPS-
Net earnings
|
$
|
0.55
|
0.71
|
29
|
%
|
|||||
Three
months ended December 31,
|
2006
|
2007
|
Change
|
|||||||
(dollars
in millions)
|
||||||||||
Sales
|
$
|
1,218
|
1,436
|
18
|
%
|
|||||
Earnings
|
$
|
217
|
258
|
19
|
%
|
|||||
Margin
|
17.8
|
%
|
18.0
|
%
|
Three
months ended December 31,
|
2006
|
2007
|
Change
|
|||||||
(dollars in millions) | ||||||||||
Sales
|
$
|
994
|
1,125
|
13
|
%
|
|||||
Earnings
|
$
|
166
|
171
|
3
|
%
|
|||||
Margin
|
16.7
|
%
|
15.2
|
%
|
Three
months ended December 31,
|
2006
|
2007
|
Change
|
|||||||
(dollars
in millions)
|
||||||||||
Sales
|
$
|
1,199
|
1,406
|
17
|
%
|
|||||
Earnings
|
$
|
117
|
180
|
53
|
%
|
|||||
Margin
|
9.8
|
%
|
12.8
|
%
|
Three
months ended December 31,
|
2006
|
2007
|
Change
|
|||||||
(dollars in millions) | ||||||||||
Sales
|
$
|
688
|
766
|
11
|
%
|
|||||
Earnings
|
$
|
90
|
102
|
15
|
%
|
|||||
Margin
|
13.0
|
%
|
13.4
|
%
|
Three
months ended December 31,
|
2006
|
2007
|
Change
|
|||||||
(dollars
in millions)
|
||||||||||
Sales
|
$
|
1,088
|
1,049
|
(4
|
%)
|
|||||
Earnings
|
$
|
133
|
136
|
2
|
%
|
|||||
Margin
|
12.2
|
%
|
12.9
|
%
|
September
30,
|
December
31,
|
||||||
|
2007
|
2007
|
|||||
Working capital (in millions) |
$
|
2,519
|
2,586
|
||||
Current
ratio
|
1.5
to 1
|
1.4
to 1
|
|||||
Total
debt to total capital
|
30.1
|
%
|
34.8
|
%
|
|||
Net
debt to net capital
|
23.6
|
%
|
25.4
|
%
|
Period
|
(a)
Total Number of Shares Purchased
(000s)
|
|
(b)
Average Price Paid
per Share
|
|
(c)
Total Number of Shares Purchased as Part of Publicly Announced
Plans or
Programs (000s)
|
|
(d)
Maximum Number of Shares that May Yet Be Purchased Under the
Plans
or Programs (000s)
|
||||||
October
2007
|
1,320
|
$
|
52.45
|
1,320
|
13,476
|
||||||||
November
2007
|
1,014
|
$
|
54.32
|
1,014
|
12,462
|
||||||||
December
2007
|
1,120
|
$
|
56.90
|
1,120
|
11,342
|
||||||||
Total
|
3,454
|
$
|
54.44
|
3,454
|
11,342
|
(a)
|
Exhibits
(Listed by numbers corresponding to the Exhibit Table of Item 601
in
Regulation S-K).
|
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. | ||
|
|
|
Date: February 6, 2008 | 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)
|
Exhibit
No.
|
Exhibit
|
|
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.
|