<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to __________________
Commission file number 1-278
EMERSON ELECTRIC CO.
(Exact name of registrant as specified in its charter)
Missouri 43-0259330
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8000 W. Florissant Ave.
P.O. Box 4100
St. Louis, Missouri 63136
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 553-2000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock of $1.00 par value per share New York Stock Exchange
Chicago Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
Chicago Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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,
and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [X]
<PAGE>
Aggregate market value of the voting stock held by nonaffiliates of the
registrant as of close of business on October 31, 1994: $13,495 million.
Common stock outstanding at October 31, 1994: 223,538,697 shares.
Documents Incorporated by Reference
1. Portions of Emerson Electric Co. 1994 Annual Report to Stockholders
(Parts I and II).
2. Portions of Emerson Electric Co. Notice of 1995 Annual Meeting of
the Stockholders and Proxy Statement (Part III).
<PAGE>
PART I
Item 1. Business
-----------------
Emerson was incorporated in Missouri in 1890. Originally engaged in
the manufacture and sale of electric motors and fans prior to World
War II and aircraft armament items during the war, Emerson's product
lines were subsequently expanded through internal growth and
acquisitions. Emerson is now engaged principally in the design,
manufacture and sale of a broad range of electrical, electromechanical
and electronic products and systems.
-------------------------------
The products manufactured by the Company are classified into the
following industry segments: Commercial and Industrial Components and
Systems; and Appliance and Construction-Related Components. Net
sales, income before income taxes and accounting change and total assets
attributable to each industry segment for the three years ended
September 30, 1994 are set forth in Note 12 of Notes to Consolidated
Financial Statements on page 37 of the 1994 Annual Report, which note is
hereby incorporated by reference. Information with respect to acquisition
and divestiture activities by Emerson is set forth in Notes 2 and 11 of
Notes to Consolidated Financial Statements on pages 31 and 36 of the 1994
Annual Report, respectively, which notes are hereby incorporated by
reference.
COMMERCIAL AND INDUSTRIAL COMPONENTS AND SYSTEMS
------------------------------------------------
The Commercial and Industrial segment includes process control
instrumentation, valves and systems; industrial motors and drives;
industrial machinery, equipment and components; and electronic products.
These products are generally highly engineered, both in product design
and manufacturing process. Products of this segment are sold to commercial
and industrial distributors and end-users for manufacturing and commercial
applications.
Products used in process industries include various types of
instrumentation, valves and control systems for measurement and
control of fluid flow. Included are various types of meters such as
rotameters, positive displacement meters, magnetic flow meters,
turbine meters, direct mass flow meters and laboratory instruments to
measure water quality. Other products include solid state telemetering
equipment and various types of pressure and vacuum relief valves.
In addition, Emerson manufactures and sells temperature sensors,
pressure sensors and transmitters used to measure and/or control
temperature, pressure, level and rate and amount of flow. Also produced
are process gas chromatographs, in-situ absorptive oxygen analyzers,
infrared gas and trace moisture analyzers, combustion analyzers and
systems, and other analyzers which measure pH and conductivity.
The Company also manufactures and sells sliding stem valves, rotary valves,
plastic-lined plug valves, butterfly valves, pressure regulators, and
related actuators and controllers.
2
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Emerson also manufactures electronic measurement and data acquisition
equipment for use in industrial processing. In addition, Emerson
produces vibratory separating equipment used primarily in the
chemical, mining, pharmaceutical, food processing, pulp and paper,
ceramic and metal-working markets.
Beginning with a line of electric motors for industrial and heavy
commercial applications, Emerson's products for industrial automation
include certain kinds of integral horsepower motors, gear drives, pump
motors, alternators and electronic variable speed drives. Emerson also
produces electronic uninterruptible power supplies, power conditioning
and distribution equipment, modular power systems and environmental control
systems used in communications and information processing applications.
Emerson manufactures and sells components for the transmission and
regulation of mechanical power, such as certain kinds of chains,
sprockets, sheaves, gears, bearings, couplings and speed reducers, and
a line of cam-operated index drives, programmable motion controllers
and automation accessories. These products are used primarily in
industrial and commercial applications requiring the transmission of
mechanical motion or drive systems of various types.
Emerson also manufactures a line of multi-purpose pressure and
solenoid valves, pressure, vacuum and temperature switches, automatic
transfer switches, remote control switches and electric power control
systems. These products are widely used in the automation of
equipment and industrial processes and for the control of emergency
electric power.
Emerson also produces a variety of industrial and commercial
ultrasonic products for applications such as cleaning, sealing, welding
and flaw detection. Other products include material preparation and
microstructure analysis equipment. Emerson also manufactures electric
circulation heaters, fluid heat transfer systems and component heating
elements.
Emerson manufactures a broad line of components for current- and
noncurrent-carrying electrical distribution devices such as panelboards,
receptacles, fittings, cable handling reels and lighting products for
use in hazardous and nonhazardous environments.
APPLIANCE AND CONSTRUCTION-RELATED COMPONENTS
---------------------------------------------
The Appliance and Construction-Related segment consists of fractional
horsepower motors; appliance components; heating, ventilating and air
conditioning components; and tools. This segment includes components sold
to distributors and original equipment manufacturers for inclusion in
end-products and systems (ultimately sold through commercial and residential
building construction channels); and construction-related products which
retain their identity and are sold through distributors to consumers and
the professional trades.
3
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Emerson manufactures and sells a variety of components and systems for
refrigeration and comfort control applications, including hermetic
and semi-hermetic compressors; hermetic motors and terminals for
hermetically sealed compressors; and fractional and sub-fractional
horsepower motors for selected appliance, office equipment,
ventilating equipment, pump, heater and other motor-driven machine
applications. Automatic temperature controls, timers, switches, and
thermo-protective devices are manufactured for gas and electric
heating systems, refrigeration and air conditioning equipment and
various large and small appliances. Emerson also manufactures and
sells a variety of electric heating elements and electrostatic air
cleaners.
Emerson manufactures and sells a line of electrical products primarily
for the residential markets, including humidifiers, electric waste
disposers, hot water dispensers, ventilating equipment and exhaust
fans.
Emerson is a producer of selected professional and hardware tools and
service equipment. These products include certain kinds of wrenches,
thread cutters, pipe cutters, reamers, vises, pipe and bolt threading
machines and sewer and drain cleaning equipment. The principal
markets for these professional tools and service equipment include
plumbing, heating and air conditioning contractors, construction and
maintenance companies, petroleum and gas producers, refiners and
processors, and farm and home consumers.
Emerson also produces a specialized line of light-duty industrial
bench power tools, ladders and scaffolding and related accessories.
Also produced by Emerson for marketing by a major retailer are shop
vacuum cleaners, a line of bench power tools for home workshop use
and a line of hand tools including adjustable wrenches, screwdrivers,
pliers and chisels.
PRODUCTION
----------
Emerson utilizes various production operations and methods. The
principal production operations are metal stamping, forming, casting,
machining, welding, plating, heat treating, painting and assembly.
In addition, Emerson also uses specialized production operations,
including automatic and semiautomatic testing, automated material
handling and storage, ferrous and nonferrous machining and special
furnaces for heat treating and foundry applications. Management
believes the equipment, machinery and tooling used in these processes
are of modern design and well maintained.
RAW MATERIALS AND ENERGY
------------------------
Emerson's major requirements for basic raw materials include steel,
copper, cast iron, aluminum and brass and, to a lesser extent,
plastics and other petroleum-based chemicals. Emerson has multiple
sources of supply for each of its material requirements. The raw
materials and various purchased components required for its products
have generally been available in sufficient quantities.
4
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Emerson uses various forms of energy, principally natural gas and
electricity, obtained from public utilities. A majority of the plants
have the capability of being converted to use alternative sources of
energy.
PATENTS, TRADEMARKS, LICENSES AND FRANCHISES
--------------------------------------------
The Company has a number of patents, trademarks, licenses and
franchises, none of which is considered material to any segment of
its consolidated operations.
BACKLOG
-------
The estimated consolidated order backlog of the Company was $1,546
million and $1,362 million at September 30, 1994 and 1993,
respectively. Of the 1994 consolidated year-end backlog amount, $40
million is expected to extend beyond one year. The estimated backlog
by industry segment at September 30, 1994 and 1993 follows (dollars
in millions):
1994 1993
------- -----
Commercial and Industrial $ 1,000 958
Appliance and Construction-Related 546 404
------- -----
Consolidated Order Backlog $ 1,546 1,362
======= =====
COMPETITION
-----------
Emerson's businesses are highly competitive and the methods of
competition vary across the industry segments served. Although no
single company competes directly with Emerson in all of its product
lines, various companies compete in one or more product lines. Some
of these companies have substantially greater sales and assets than
Emerson. In addition, Emerson competes with many smaller companies.
RESEARCH AND DEVELOPMENT
------------------------
Costs associated with Company-sponsored research, new product
development and product improvement were $298.2 million in 1994,
$272.4 million in 1993 and $244.8 million in 1992.
ENVIRONMENT
-----------
Compliance with laws regulating the discharge of materials into the
environment or otherwise relating to the protection of the
5
<PAGE>
environment has not had a material effect upon Emerson's capital
expenditures, earnings or competitive position. It is not
anticipated that Emerson will have material capital expenditures for
environmental control facilities during the next fiscal year.
EMPLOYEES
---------
Emerson and its subsidiaries had an average of approximately 73,900
employees during 1994.
DOMESTIC AND FOREIGN OPERATIONS
-------------------------------
International sales were $3,243 million in 1994, $3,168 million in
1993 and $3,064 million in 1992, including U.S. exports of $589
million, $562 million and $486 million in 1994, 1993 and 1992,
respectively. Although there are additional risks attendant to
foreign operations, such as nationalization of facilities, currency
fluctuations and restrictions on the movement of funds, Emerson's
financial position has not been materially affected thereby to date.
See Note 12 of Notes to Consolidated Financial Statements on page 37
of the 1994 Annual Report for further information with respect to
foreign operations.
Item 2. Properties
-------------------
At September 30, 1994, Emerson had approximately 270 manufacturing
locations worldwide, of which approximately 140 were located in 22
countries outside the United States. Approximately 180 locations are
occupied by the Commercial and Industrial segment, and approximately
90 are occupied by the Appliance and Construction-Related segment.
The majority of the locations are owned or occupied under capital lease
obligations with the remainder occupied under operating leases.
The Company considers its facilities suitable and adequate for the
purposes for which they are used.
Item 3. Legal Proceedings
--------------------------
Emerson is a party to a number of pending legal proceedings, several
of which claim substantial amounts of damages. There are no pending
legal proceedings that, in the opinion of management, are expected to
be material in relation to the Company's business or financial
position.
Item 4. Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
There were no matters submitted to a vote of security holders during
the quarter ended September 30, 1994.
-------------------------------
6
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Executive Officers of the Registrant
The following sets forth certain information as of December 1994 with
respect to Emerson's executive officers. These officers have been
elected or appointed to terms which will expire February 7, 1995:
First
Served as
Officer
Name Position Age In
---- -------- --- --------
C. F. Knight* Chairman of the Board and
Chief Executive Officer 58 1972
A. E. Suter* Senior Vice Chairman and
Chief Operating Officer 59 1979
J. J. Adorjan* President 55 1975
R. W. Staley* Vice Chairman of Emerson and
Chief Executive Officer of 59 1975
Emerson - Asia Pacific
W. J. Galvin Senior Vice President - Finance
and Chief Financial Officer 48 1984
W. W. Withers Senior Vice President,
Secretary and
General Counsel 54 1989
*Also chairman and/or member of certain committees of the Board of
Directors.
There are no family relationships among any of the executive officers
and directors.
Each of the above has served as an officer or in a supervisory
capacity with Emerson for the last five years, except J. J. Adorjan.
Mr. Adorjan was an Executive Vice President of the Company from October
1983 to July 1987, a Vice Chairman of the Company and Group Vice President
of its Government and Defense Group from 1987 until August 1990, and
Chairman and Chief Executive Officer of ESCO Electronics Corporation from
August 1990 to October 1992, when he was elected President of the Company.
7
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
----------------------------------------------------------------------
Matters
--------
The information regarding the market for the Company's common stock,
quarterly market price ranges and dividend payments set forth in Note
13 of Notes to Consolidated Financial Statements on page 38 of the
1994 Annual Report is hereby incorporated by reference. There were
approximately 31,800 stockholders at September 30, 1994.
Item 6. Selected Financial Data
--------------------------------
Years ended September 30
(Dollars in millions except per share amounts)
1994 1993 1992 1991 1990
--------- ------- ------- ------- -------
Net sales $ 8,607.2 8,173.8 7,706.0 7,427.0 7,573.4
Net earnings $ 788.5 708.1 662.9 631.9 613.2
Earnings
per common share $ 3.52 3.15 2.96 2.83 2.75
Cash dividends
per common share $ 1.56 1.44 1.38 1.32 1.26
Long-term debt $ 279.9 438.0 448.0 450.2 496.2
Total assets $ 8,215.0 7,814.5 6,627.0 6,364.4 6,376.4
Income before cumulative effect of change in accounting for postretirement
benefits ($115.9 million; $.52 per share) was $904.4 million in 1994. Net
earnings in 1994 includes non-recurring items which were substantially offset
by the accounting change. See Notes 2, 7 and 11 of Notes to Consolidated
Financial Statements on pages 31, 34 and 36 of the 1994 Annual Report for
information regarding these items and the Company's acquisition and
divestiture activities.
Item 7. Management's Discussion and Analysis of Financial Condition
--------------------------------------------------------------------
and Results of Operations
--------------------------
Narrative discussion appearing in the 1994 Annual Report under "Results
of Operations" and "Financial Position, Capital Resources and Liquidity"
on pages 20 through 24, is hereby incorporated by reference.
8
<PAGE>
Item 8. Financial Statements and Supplementary Data
----------------------------------------------------
The consolidated financial statements of the Company and its
subsidiaries on pages 25 through 38 and the report thereon of KPMG
Peat Marwick LLP appearing on page 39 of the 1994 Annual Report are
hereby incorporated by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting
--------------------------------------------------------------------
and Financial Disclosure
------------------------
None.
9
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
------------------------------------------------------------
Information regarding nominees and directors appearing under "Nominees
and Continuing Directors" in the Emerson Electric Co. Notice of Annual
Meeting of the Stockholders and Proxy Statement for the February 1995
annual stockholders' meeting (the "1995 Proxy Statement") is hereby
incorporated by reference. Information regarding executive officers
is set forth in Part I of this report.
Item 11. Executive Compensation
--------------------------------
Information appearing under "Board of Directors and Committees" and
"Executive Compensation" in the 1995 Proxy Statement is hereby
incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
-------------------------------------------------------------
Management
----------
The information regarding beneficial ownership of shares by nominees
and continuing directors and by all directors and executive officers
as a group appearing under "Nominees and Continuing Directors" in the
1995 Proxy Statement is hereby incorporated by reference.
Item 13. Certain Relationships and Related Transactions
--------------------------------------------------------
Information appearing under "Certain Business Relationships" in the
1995 Proxy Statement is hereby incorporated by reference.
10
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
-----------------------------------------------------------------
Form 8-K
--------
A) Documents filed as a part of this report:
1. The consolidated financial statements of the Company and its
subsidiaries on pages 25 through 38 and the report
thereon of KPMG Peat Marwick LLP appearing on page 39 of
the 1994 Annual Report.
2. Financial Statement Schedules
Independent Auditors' Report (page 16)
I - Marketable Securities - Other Investments (page 17)
All other schedules are omitted because they are not
required, not applicable or the information is given in the
financial statements or notes thereto contained in the 1994
Annual Report.
3. Exhibits (Listed by numbers corresponding to the Exhibit Table
of Item 601 in Regulation S-K).
3(a) Restated Articles of Incorporation of Emerson
Electric Co., incorporated by reference to Emerson
Electric Co. 1989 Form 10-K, Exhibit 3(a).
3(b) Bylaws of Emerson Electric Co., as amended through
May 3, 1994, filed herewith.
4(a) Indenture dated as of April 17, 1991, between
Emerson Electric Co. and The Boatmen's National Bank
of St. Louis, Trustee, incorporated by reference to
Emerson Electric Co. Registration Statement on
Form S-3, File No. 33-39109, Exhibit 4.1.
No other long-term debt instruments are filed since
the total amount of securities authorized under any
such instrument does not exceed 10 percent of the
total assets of Emerson Electric Co. and its
subsidiaries on a consolidated basis. Emerson
Electric Co. agrees to furnish a copy of such
instruments to the Securities and Exchange
Commission upon request.
11
<PAGE>
4(b) Rights Agreement dated as of November 1, 1988
between Emerson Electric Co. and Centerre Trust
Company of St. Louis, incorporated by reference to
Emerson Electric Co. Form 8-K, dated November 1,
1988, Exhibits 1 and 2.
10(a)* 1974 Non-qualified Stock Option Plan, as amended,
incorporated by reference to Emerson Electric Co.
1991 Form 10-K, Exhibit 10(a) and Form 10-Q for the
quarter ended December 31, 1992, Exhibit 10(a).
10(b)* 1982 Incentive Stock Option Plan, as amended,
incorporated by reference to Emerson Electric Co.
1992 Form 10-K, Exhibit 10(b).
10(c)* Employment Agreement made as of October 1, 1975 and
amended January 9, 1987 between Emerson Electric Co.
and C. F. Knight, incorporated by reference to
Emerson Electric Co. 1987 Form 10-K, Exhibit 10(e).
10(d)* Employment Agreement made as of September 30, 1992
between Emerson Electric Co. and J. J. Adorjan,
incorporated by reference to Emerson Electric Co.
1992 Form 10-K, Exhibit 10(d).
10(e)* 1986 Stock Option Plan, as amended, incorporated by
reference to Emerson Electric Co. 1992 Form 10-K,
Exhibit 10(e) and Form 10-Q for the quarter ended
December 31, 1992, Exhibit 10(b).
10(f)* 1991 Stock Option Plan, as amended, incorporated by
reference to Emerson Electric Co. 1992 Form 10-K,
Exhibit 10(f) and Form 10-Q for the quarter ended
December 31, 1992, Exhibit 10(c).
10(g)* 1988 Incentive Shares plan, incorporated by
reference to Emerson Electric Co. 1988 Proxy
Statement dated December 18, 1987, Exhibit A, and
Form 10-Q for the quarter ended December 31, 1992,
Exhibits 10(d) and 10(e), and Amendments No. 3 and
No. 4 thereto, incorporated by reference to Emerson
Electric Co. 1993 Form 10-K, Exhibit 10(g).
10(h)* 1993 Incentive Shares Plan, incorporated by
reference to Emerson Electric Co. 1993 Proxy
Statement dated December 16, 1992, Exhibit A, and
Amendment No. 1 thereto, incorporated by reference
to Emerson Electric Co. 1993 Form 10-K, Exhibit 10(h).
10(i)* Restricted Shares Award Agreement with C. F. Knight
dated November 1, 1993, incorporated by reference to
Emerson Electric Co. 1993 Form 10-K, Exhibit 10(i).
10(j)* Emerson Electric Co. Directors' Continuing
Compensation Plan, incorporated by reference to
Emerson Electric Co. 1987 Form 10-K, Exhibit 10(g).
12
<PAGE>
10(k)* Deferred Compensation Plan for Non-Employee
Directors, as amended, filed herewith.
10(l)* Emerson Electric Co. Supplemental Executive
Retirement Plan, incorporated by reference to
Emerson Electric Co. 1989 Form 10-K, Exhibit 10(i).
10(m)* Second Amendment to the Supplemental Executive
Savings Investment Plan, incorporated by reference
to Emerson Electric Co. 1991 Form 10-K, Exhibit
10(j).
10(n)* Annual Incentive Plan incorporated by reference to
Emerson Electric Co. 1995 Proxy Statement dated
December 14, 1994, Appendix A.
13 Portions of Emerson Electric Co. Annual Report to
Stockholders for the year ended September 30, 1994
incorporated by reference herein.
21 Subsidiaries of Emerson Electric Co.
23 Independent Auditors' Consent.
24 Power of Attorney.
27 Financial Data Schedule
* Management contract or compensatory plan.
B) No reports on Form 8-K were filed during the quarter ended
September 30, 1994.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By /s/ W. J. Galvin
-------------------
W. J. Galvin
Senior Vice President -
Finance and Chief Financial
Officer (and Principal Accounting
Officer)
Date: December 21, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below on December 21, 1994, by the
following persons on behalf of the registrant and in the capacities
indicated.
Signature Title
--------- -----
*
--------------------------------------- Chairman of the Board and
C. F. Knight Chief Executive Officer
and Director
/s/ W. J. Galvin
--------------------------------------- Senior Vice President -
W. J. Galvin Finance and Chief Financial
Officer (and Principal Accounting
Officer)
*
--------------------------------------- Director
J. J. Adorjan
*
--------------------------------------- Director
L. L. Browning, Jr.
*
--------------------------------------- Director
A. A. Busch III
*
--------------------------------------- Director
D. C. Farrell
*
--------------------------------------- Director
J. A. Frates
14
<PAGE>
*
--------------------------------------- Director
R. B. Horton
*
--------------------------------------- Director
G. A. Lodge
*
--------------------------------------- Director
V. R. Loucks, Jr.
*
--------------------------------------- Director
R. B. Loynd
*
--------------------------------------- Director
B. A. Schriever
*
--------------------------------------- Director
R. W. Staley
*
--------------------------------------- Director
A. E. Suter
*
--------------------------------------- Director
W. M. Van Cleve
*
--------------------------------------- Director
E. E. Whitacre, Jr.
*
--------------------------------------- Director
E. F. Williams, Jr.
* By /s/ W. J. Galvin
--------------------------------
W. J. Galvin
Attorney-in-fact
15
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INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors and Stockholders
Emerson Electric Co.:
Under date of November 1, 1994, we reported on the consolidated
balance sheets of Emerson Electric Co. and subsidiaries as of
September 30, 1994 and 1993, and the related consolidated statements
of earnings, stockholders' equity, and cash flows for each of the
years in the three-year period ended September 30, 1994, as
contained in the 1994 annual report to stockholders. These
consolidated financial statements and our report thereon are
incorporated by reference in the annual report on Form 10-K for the
year 1994. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related
consolidated financial statement schedule as listed in the
accompanying index. This financial statement schedule is the
responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement schedule
based on our audits.
In our opinion, this financial statement schedule, when considered
in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set
forth therein.
St. Louis, Missouri KPMG PEAT MARWICK LLP
November 1, 1994
16
<PAGE>
SCHEDULE I
----------
EMERSON ELECTRIC CO.
MARKETABLE SECURITIES - OTHER INVESTMENTS
AT SEPTEMBER 30, 1994
(Millions)
NAME OF ISSUER
AND TITLE NUMBER OF COST OF
OF ISSUE SHARES ISSUE MARKET VALUE NET BOOK VALUE
--------------- -------- ------- ------------ --------------
Astec (BSR) PLC
common stock 150.5 $127.4 $199.3 $124.1
Other Equity Investments 285.9
------
Total Equity Investments included in Other Assets
at September 30, 1994 $410.0
======
17
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibits are listed by numbers corresponding to the Exhibit Table of
Item 601 in Regulation S-K.
Exhibit No. Exhibit
----------- -------
3(b) Bylaws, as amended through May 3, 1994
10(k) Deferred Compensation Plan for Non-Employee Directors,
as amended
13 Portions of Annual Report to Stockholders for
the year ended September 30, 1994, incorporated
by reference herein
21 Subsidiaries of Emerson Electric Co.
23 Independent Auditors' Consent
24 Power of Attorney
27 Financial Data Schedule
See Item 14(A)(3) for a list of exhibits incorporated by reference.
18
<PAGE>
Exhibit 3(b)
EMERSON ELECTRIC CO.
--------------------
BYLAWS
------
As Amended through May 3, 1994
<PAGE>
EMERSON ELECTRIC CO.
BYLAWS
INDEX
Page
ARTICLE I - OFFICES; DEFINITIONS
Section 1. Registered Office . . . . . . . . . . . . 1
Section 2. Other Offices . . . . . . . . . . . . . . 1
Section 3. Definitions . . . . . . . . . . . . . . . 1
ARTICLE II - MEETINGS OF SHAREHOLDERS
Section 1. Place of Meetings . . . . . . . . . . . . 1
Section 2. Annual Meeting. . . . . . . . . . . . . . 2
Section 3. Special Meetings. . . . . . . . . . . . . 2
Section 4. Notice of Meetings. . . . . . . . . . . . 3
Section 5. List of Shareholders Entitled to Vote . . 3
Section 6. Quorum. . . . . . . . . . . . . . . . . . 4
Section 7. Requisite Vote. . . . . . . . . . . . . . 5
Section 8. Voting. . . . . . . . . . . . . . . . . . 6
Section 9. Notice of Shareholder Business at Annual
Meetings. . . . . . . . . . . . . . 6
ARTICLE III - DIRECTORS
Section 1. Number; Classification; Nominations;
Election; Term of Office . . . . . . . 9
Section 2. Filling of Vacancies. . . . . . . . . . . 13
Section 3. Qualifications. . . . . . . . . . . . . . 13
Section 4. Removal . . . . . . . . . . . . . . . . . 14
Section 5. General Powers. . . . . . . . . . . . . . 14
Section 6. Place of Meetings . . . . . . . . . . . . 15
Section 7. Regular Annual Meeting. . . . . . . . . . 15
Section 8. Additional Regular Meetings . . . . . . . 15
Section 9. Special Meetings. . . . . . . . . . . . . 16
Section 10. Place of Meetings . . . . . . . . . . . . 17
Section 11. Notices . . . . . . . . . . . . . . . . . 17
Section 12. Quorum. . . . . . . . . . . . . . . . . . 17
Section 13. Compensation of Directors . . . . . . . . 18
Section 14. Executive Committee . . . . . . . . . . . 18
Section 15. Finance Committee . . . . . . . . . . . . 19
Section 16. Other Committees of the Board . . . . . . 19
Section 17. Committees - General Rules. . . . . . . . 20
Section 18. Director Emeritus and Advisory Directors. 20
i
<PAGE>
ARTICLE IV - NOTICES Page
Section 1. Service of Notices. . . . . . . . . . . . 21
Section 2. Waiver of Notices . . . . . . . . . . . . 22
ARTICLE V - OFFICERS
Section 1. Titles. . . . . . . . . . . . . . . . . . 22
Section 2. Election. . . . . . . . . . . . . . . . . 23
Section 3. Term. . . . . . . . . . . . . . . . . . . 24
Section 4. Chairman of the Board . . . . . . . . . . 24
Section 5. President . . . . . . . . . . . . . . . . 25
Section 6. Vice Chairmen of the Board. . . . . . . . 25
Section 7. Vice Presidents . . . . . . . . . . . . . 25
Section 8. Secretary and Assistant Secretaries . . . 26
Section 9. Treasurer and Assistant Treasurers. . . . 26
Section 10. Controller and Assistant Controllers. . . 27
Section 11. Appointed Officers. . . . . . . . . . . . 28
ARTICLE VI - CERTIFICATES OF SHARES
Section 1. Certificates. . . . . . . . . . . . . . . 29
Section 2. Signatures on Certificates. . . . . . . . 29
Section 3. Transfer Agents and Registrars;
Facsimile Signatures . . . . . . . . . 29
Section 4. Lost Certificates . . . . . . . . . . . . 30
Section 5. Transfer of Shares. . . . . . . . . . . . 31
Section 6. Registered Shareholders . . . . . . . . . 31
Section 7. Interested Shareholders . . . . . . . . . 31
ARTICLE VII - INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS
Section 1. Actions Involving Directors, Officers
or Employees . . . . . . . . . . . . 32
Section 2. Actions Involving Agents. . . . . . . . . 33
Section 3. Determination of Right to Indemnification
in Certain Instances . . . . . . . . 34
Section 4. Advance Payment of Expenses . . . . . . . 35
Section 5. Successful Defense. . . . . . . . . . . . 36
Section 6. Not Exclusive Right . . . . . . . . . . . 36
Section 7. Insurance . . . . . . . . . . . . . . . . 37
Section 8. Subsidiaries of Corporation . . . . . . . 38
Section 9. Spousal Indemnification . . . . . . . . . 39
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ARTICLE VIII - GENERAL PROVISIONS Page
Section 1. Dividends . . . . . . . . . . . . . . . . 40
Section 2. Checks. . . . . . . . . . . . . . . . . . 40
Section 3. Fiscal Year . . . . . . . . . . . . . . . 40
Section 4. Seal. . . . . . . . . . . . . . . . . . . 40
Section 5. Closing of Transfer Books and Fixing of
Record Dates . . . . . . . . . . . . . 41
ARTICLE IX - AMENDMENTS
Section 1. . . . . . . . . . . . . . . . . . . . . . 42
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EMERSON ELECTRIC CO.
* * * * *
BYLAWS
* * * * *
ARTICLE I
OFFICES; DEFINITIONS
Section 1. Registered Office. The registered office
of Emerson Electric Co. (the "Corporation") shall be located
in the County of St. Louis, State of Missouri.
Section 2. Other Offices. The Corporation may also
have offices at such other places both within and without the
State of Missouri as the Board may, from time to time,
determine of the business of the Corporation may require.
Section 3. Definitions. Unless the context otherwise
requires, defined terms herein shall have the meaning ascribed
thereto in the Articles of Incorporation (the "Articles").
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Place of Meeting. All meetings of the
shareholders shall be held at such place within or without the
State of Missouri as may be, from time to time, fixed or
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determined by the Board.
Section 2. Annual Meeting. The annual meeting of the
shareholders shall be held on the first Tuesday in February of
each year if not a legal holiday, or, if a legal holiday, then
on the next business day following, at such hour as may be
specified in the notice of the meeting; provided, however,
that the day fixed for such meeting in any year may be changed
by resolution of the Board to such other day in February,
March, April, May or June not a legal holiday as the Board may
deem desirable or appropriate. At the annual meeting the
shareholders shall elect Directors in accordance with Article
5 of the Articles of Incorporation and Article III of these
Bylaws, and shall transact such other business as may properly
be brought before the meeting. If no other place for the
annual meeting is determined by the Board of Directors and
specified in the notice of such meeting, the annual meeting
shall be held at the principal offices of the Corporation at
8000 West Florissant Avenue, St. Louis, Missouri.
Section 3. Special Meetings.
(a) Unless otherwise limited by statute
or by the Articles, special meetings of the shareholders, for any
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purpose or purposes, may be called at any time by the Chairman
of the Board, any Vice Chairman of the Board, the President,
the Secretary, or a majority of the Board.
(b) A special meeting may also be called
by the holders of not less than 85% of all of the outstanding
shares entitled to vote at such meeting, upon written request
delivered to the Secretary of the Corporation. Such request
shall state the purpose or purposes of the proposed meeting.
Upon receipt of any such request, it shall be the duty of the
Secretary to call a special meeting of the shareholders to be
held at any time, not less than (10) nor more than seventy
(70) days thereafter, as the Secretary may fix. If the
Secretary shall neglect to issue such call, the person or
persons making the request may issue the call.
Section 4. Notice of Meetings. Written notice of
every meeting of the shareholders, specifying the place, date
and hour of the meeting, and, in the case of a special
meeting, the purpose or purposes for which the meeting is
called shall be delivered or mailed, postage prepaid, by or
at the direction of the Secretary, not less than ten (10) nor
more than seventy (70) days before the date of the meeting to
each shareholder of record entitled to vote at such meeting.
Section 5. List of Shareholders Entitled to Vote. At
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least ten (10) days before each meeting of the shareholders,
a complete list of the shareholders entitled to vote at such
meeting shall be prepared and arranged in alphabetical order
with the address of each shareholder and the number of shares
held by each, which list, for a period of ten (10) days prior
to such meeting, shall be kept on file at the registered
office of the Corporation and shall be subject to inspection
by any shareholder at any time during usual business hours.
Such list shall also be produced and kept open at the time and
place of the meeting, and shall be subject to the inspection
of any shareholder during the whole time of the meeting. The
original share ledger or transfer book, or a duplicate thereof
kept in the State of Missouri, shall be prima facie evidence
as to who are the shareholders entitled to examine such list
or share ledger or transfer book or to vote at any meeting of
the shareholders. Failure to comply with the above
requirements in respect of lists of shareholders shall not
affect the validity of any action taken at such meeting.
Section 6. Quorum. The holders of a majority of the
issued and outstanding shares entitled to vote, present in
person or represented by proxy, shall be requisite and shall
constitute a quorum at all meetings of the shareholders for
the transaction of business, except as otherwise provided by
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law, the Articles or by these Bylaws. The shareholders
present at a meeting at which a quorum is present may continue
to transact business until adjournment, notwithstanding the
withdrawal of such number of shareholders as to reduce the
remaining shareholder to less than a quorum. Whether or not
a quorum is present, the chairman of the meeting or a majority
of the shareholders entitled to vote thereat, present in
person or by proxy, shall have power, except as otherwise
provided by statute, successively to adjourn the meeting to
such time and place as they may determine, to a date not
longer than ninety (90) days after each such adjournment, and
no notice of any such adjournment need be given to
shareholders other than the announcement of the adjournment at
the meeting. At any adjourned meeting at which a quorum shall
be present or represented, any business may be transacted
which might have been transacted at the meeting as originally
called.
Section 7. Requisite Vote. When a quorum is present
or represented at any meeting, the vote of the holders of a
majority of the shares entitled to vote which are present in
person or represented by proxy shall decide any questions
brought before such meeting, unless the question is one upon
which, by express provision of law, the Articles or by these
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Bylaws, a different vote is required, in which case such
express provisions shall govern and control the decision of
such question.
Section 8. Voting. Each shareholder shall, at every
meeting of the shareholders, be entitled to one vote in person
or by proxy for each share having voting power held by such
shareholder, but no proxy shall be voted after eleven (11)
months from the date of its execution unless otherwise
provided in the proxy. In each election for Directors, no
shareholder shall be entitled to vote cumulatively or to
cumulate his votes.
Section 9. Notice of Shareholder Business at Annual
Meetings. At any annual meeting of shareholders, only such
business shall be conducted as shall have been properly
brought before the meeting. In addition to any other
requirements imposed by or pursuant to law, the Articles or
these Bylaws, each item of business to be properly brought
before an annual meeting must (a) be specified in the notice
of meeting (or any supplement thereto) given by or at the
direction of the Board or the persons calling the meeting
pursuant to the Articles; (b) be otherwise properly brought
before the meeting by or at the direction of the Board; or
(c) be otherwise properly brought before the meeting by a
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shareholder. For business to be properly brought before an
annual meeting by a shareholder, the shareholder must have
given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a shareholder's notice must be
delivered to or mailed and received at the principal executive
offices of the Corporation not less than 60 days nor more than
90 days prior to the annual meeting; provided, however, that
in the event less than 70 days' notice or prior public
disclosure of the date of the annual meeting is given or made
to shareholders, notice by the shareholder to be timely must
be so received not later than the close of business on the
10th day following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure was
made. For purposes of these Bylaws "public disclosure" shall
mean disclosure in a press release reported by the Dow Jones,
Associated Press, Reuters or comparable national news service,
or in a document publicly filed by the Corporation with the
Securities and Exchange Commission pursuant to Sections 13, 14
or 15(d) of the Securities Exchange Act of 1934, as amended
(the "1934 Act"). A shareholder's notice to the Secretary
shall set forth as to each matter he or she proposes to bring
before the annual meeting (a) a brief description of the
business desired to be brought before the meeting and the
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reasons for conducting such business at the annual meeting,
(b) the name and address, as they appear on the Corporation's
books, of the shareholder(s) proposing such business, (c) the
class and number of shares of the Corporation which are
beneficially owned by the proposing shareholder(s), and (d)
any material interest of the proposing shareholder(s) in such
business. Notwithstanding anything in these Bylaws to the
contrary, but subject to Article III, Section 1(c) hereof, no
business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section. The
Chairman of the annual meeting shall, if the facts warrant,
determine and declare to the annual meeting that business was
not properly brought before the annual meeting in accordance
with the provisions of this Section; and if he or she should
so determine, shall so declare to the meeting and any such
business not properly brought before the annual meeting shall
not be transacted. The Chairman of the meeting shall have
absolute authority to decide questions of compliance with the
foregoing procedures, and his or her ruling thereon shall be
final and conclusive.
8
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ARTICLE III
DIRECTORS
Section 1. Number; Classification; Nominations;
Election; Term of Office.
(a) The Board shall consist of such number
of Directors as the Board may from time to time determine,
provided that in no event shall the number of Directors be
less than three (3), and provided further that no reduction in
the number of Directors shall have the effect of shortening
the term of any incumbent Director. In addition, the Board
may, from time to time, appoint such number of "Advisory
Directors" and "Directors Emeritus" as it may deem advisable.
(b) The Board of Directors (herein the
"Board") shall be divided into three classes, as nearly equal
in number as possible. In the event of any increase in the
number of Directors, the additional Director(s) shall be added
to such class(es) as may be necessary so that all classes
shall be as nearly equal in number as possible. In the event
of any decrease in the number of Directors, all classes of
Directors shall be decreased as nearly equally as may be
possible. Subject to the foregoing, the Board shall determine
the class(es) to which any additional Director(s) shall be
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<PAGE>
added and the class(es) which shall be decreased in the event
of any decrease in the number of Directors.
At each annual meeting of shareholders the
successors to the class of Directors whose term shall then
expire shall be elected for a term expiring at the third
succeeding annual meeting after such election.
(c) In addition to the qualifications set
out in Section 3 of this Article III, in order to be qualified
for election as a Director, persons must be nominated in
accordance with the following procedure:
Nominations of persons for election to the
Board of the Corporation may be made at a meeting of
shareholders by or at the direction of the Board or by any
shareholder of the Corporation entitled to vote for the
election of Directors at the meeting who complies with the
procedures set forth in this Section 1(c). In order for
persons nominated to the Board, other than those persons
nominated by or at the direction of the Board, to be qualified
to serve on the Board, such nominations shall be made pursuant
to timely notice in writing to the Secretary of the
Corporation. To be timely, a shareholder's notice shall be
delivered to or mailed and received by the Secretary of the
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Corporation not less than 60 days nor more than 90 days prior
to the meeting; provided, however, that in the event less than
70 days' notice or prior public disclosure of the date of the
meeting is given or made to shareholders, notice by the
shareholder to be timely must be so received not later than
the close of business on the 10th day following the day on
which such notice of the date of the meeting was mailed or
such public disclosure was made. Such shareholder's notice
shall set forth (i) as to each person whom the shareholder
proposes to nominate for election or re-election as a
Director, (A) the name, age, business address and residence
address of such person, (B) the principal occupation or
employment of such person, (C) the class and number of shares
of the Corporation which are beneficially owned by such
person, (D) any other information relating to such person that
is required to be disclosed in solicitations of proxies for
election of Directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act
of 1934, as amended, (including without limitation such
person's written consent to being named in the proxy statement
as a nominee and to serving as a Director if elected) and (E)
if the shareholder(s) making the nomination is an Interested
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Person, details of any relationship, agreement or
understanding between the shareholder(s) and the nominee; and
(ii) as to the shareholder(s) making the nomination (A) the
name and address, as they appear on the Corporation's books,
of such shareholder(s) and (B) the class and number of shares
of the Corporation which are beneficially owned by such
shareholder(s). At the request of the Board, any person
nominated by the Board for election as a Director shall
furnish to the Secretary of the Corporation that information
required to be set forth in a shareholder's notice of
nomination which pertains to the nominee. No person shall be
qualified for election as a Director of the Corporation unless
nominated in accordance with the procedures set forth in this
Section 1(c). The Chairman of a meeting shall, if the facts
warrant, determine and declare to the meeting that a
nomination was not made in accordance with the procedures
prescribed by the Bylaws, and if he or she should so
determine, shall so declare to the meeting, and the defective
nomination shall be disregarded. The Chairman of a meeting
shall have absolute authority to decide questions of
compliance with the foregoing procedures, and his or her
ruling thereon shall be final and conclusive.
(d) Directors shall be elected at annual
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meetings of the shareholders, except as provided in Section 2
of this Article III, and each Director shall hold office until
his or her successor is elected and qualified.
Section 2. Filling of Vacancies. Vacancies and newly
created directorships resulting from any increase in the
authorized number of Directors shall be filled only by a
majority of the remaining Directors, though less than a
quorum, and each person so elected shall be a Director until
his or her successor is elected by the shareholders, who may
make such election at the next annual meeting of the
shareholders at which Directors are elected or at any special
meeting of shareholders duly called for that purpose and held
prior thereto.
Section 3. Qualifications. Directors must be
nominated in accordance with the procedure set out in Section
1(c) of this Article III. Directors need not be shareholders.
No person shall be eligible for election as a Director,
either under Section 1 or Section 2 of this Article III, if
such person's seventy-second (72d) birthday shall fall on a
date prior to the commencement of the Term for which such
Director is to be elected or appointed; provided, however,
that this limitation shall not apply to persons who were
Directors of the Corporation on April 4, 1967. No person
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shall be qualified to be elected and to hold office as a Director
if such person is determined by a majority of the whole Board to
have acted in a manner contrary to the best interests of the
Corporation, including, but not limited to, violation of
either State or Federal law, maintenance of interests not
properly authorized and in conflict with the interests of the
Corporation, or breach of any agreement between such Director
and the Corporation relating to such Director's services as a
Director, employee or agent of the Corporation.
Section 4. Removal. By action of a majority of the
whole Board, any Director may be removed from office for cause
if such Director shall at the time of such removal fail to
meet the qualifications for election as a Director as set
forth under Article III, Section 3 hereof. Notice of the
proposed removal shall be given to all Directors of the
Corporation prior to action thereon. Directors may be
otherwise removed only in the manner prescribed in the
Articles.
Section 5. General Powers. The property and business
of the Corporation shall be controlled and managed by its
Board of Directors which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not,
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by law, the Articles or by these Bylaws, directed or required
to be exercised and done by the shareholders or the Continuing
Directors.
Section 6. Place of Meetings. The Board may hold
meetings, both regular and special, either within or without
the State of Missouri.
Section 7. Regular Annual Meeting. A regular annual
meeting of the Board, including newly elected Directors, shall
be held immediately following the annual meeting of the
shareholders and shall be held at the principal offices of the
Corporation at 8000 West Florissant Avenue, St. Louis,
Missouri, unless another time or place shall be fixed therefor
by the Directors. No notice of such meeting shall be
necessary to the Directors in order, legally, to constitute
the meeting, provided a majority of the whole Board shall be
present. In the event such annual meeting of the Board is not
held at the time and place specified herein, or at such other
time and place as may be fixed by the Directors, the meeting
may be held at such time and place as shall be specified in a
notice given as hereinafter provided for meetings of the
Board, or as shall be specified in a written waiver signed by
all of the Directors.
Section 8. Additional Regular Meetings. Additional
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regular meetings of the Board shall be held once each month
on the first Tuesday thereof, or on such other day thereof as the
Board may, by resolution, prescribe, and at such hour of such
day as shall be stated in the notice of the meeting; provided
that the Chairman, in his or her discretion, may dispense with
any one or more of such meetings, by having notice of the
intention so to do given, by letter or telegram, to each
Director not less than ten (10) days prior to the regularly
scheduled date of each meeting so to be dispensed with. If
the first Tuesday of any month shall be a legal holiday, the
regular meeting for such month shall be held on the Thursday
following, and if the Monday preceding the first Tuesday of
any month shall be a legal holiday, the regular meeting for
such month shall be held on the Wednesday following, in each
case unless the Board shall otherwise prescribe by resolution.
Notice of any regular meeting shall be given to each Director
at least forty-eight (48) hours in advance thereof, either
personally, by mail or by telegram.
Section 9. Special Meetings. Special meetings of the
Board may be called by the Chairman, any Vice Chairman, the
President, any Vice President or the Secretary, on notice
given personally, by mail, by telephone, by telegram or by
facsimile to each Director given twenty-four (24) hours in
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advance of such meeting. Special meetings shall be called by
the Chairman, any Vice Chairman, the President or Secretary
in like manner and on like notice on the written request of
any two Directors.
Section 10. Place of Meetings. Special meetings and
regular meetings of the Board, other than the regular annual
meeting, shall be held at such place within the City or County
of St. Louis, Missouri, as may be specified in the notice of
such meeting; provided that any meeting may be held elsewhere,
within or without the State of Missouri, pursuant to
resolution of the Board or pursuant to the call of the
Chairman, any Vice Chairman or the President. Members of the
Board and its Committees may participate in meetings by means
of conference telephone or similar communications equipment
whereby all persons participating in the meeting can hear each
other, and such participation shall constitute presence at the
meeting.
Section 11. Notices. Notice of any meeting may be
given by the Chairman, any Vice Chairman, the President, any
Vice President or the Secretary and shall specify the time and
place of the meeting.
Section 12. Quorum. At all meetings of the Board a
majority of Directors in office (the "whole Board") shall be
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necessary to constitute a quorum for the transaction of
business, and the acts of a majority of the Directors present
at a meeting at which a quorum is present shall be the acts
of the Board, except as otherwise may be specifically provided
by law or by the Articles. If a quorum shall not be present
at any meeting of the Board, the Directors present thereat may
adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be
present. So long as the whole Board shall consist of sixteen
(16) or more members, a Director who may be disqualified, by
reason of personal interest, from voting on any particular
matter before a meeting of the Board may nevertheless be
counted for the purpose of constituting a quorum of the Board.
Section 13. Compensation of Directors. Directors, as
such, shall receive for their services such compensation as
may be fixed, from time to time, by resolution of the Board,
together with a stipend for attendance, and expenses of
attendance, if any, for each meeting of the Board or meetings
of any committee on which the Directors may serve; provided
that nothing herein contained shall be construed to preclude
any Director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 14. Executive Committee. The Board may, by
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resolution passed by a majority of the whole Board, designate
two or more of its number to constitute an Executive Committee
which, to the extent provided in such resolution, shall have
and exercise the authority of the Board in the management and
business of the Corporation.
Section 15. Finance Committee. The Board may, by
resolution passed by a majority of the whole Board, designate
two or more of its number, one of whom shall be the Committee
Chairman, as the Finance Committee of the Board, which to the
extent provided in such resolution shall have and exercise the
authority of the Board in the management and business of the
Corporation. The Committee shall study and consider financial
matters affecting the operations of the Corporation, including
its long range financial requirements, shall advise the Board
in respect thereto, and shall have such other duties as shall
be specified by resolution of the Board.
Section 16. Other Committees of the Board. The Board
may, by resolution passed by a majority of the whole Board,
designate two or more of its members to constitute such other
Committees of the Board as the Board by such resolution or
resolutions may determine. To the extent provided in such
resolution or resolutions, such Committees shall have and
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<PAGE>
exercise the authority of the Board in the management and
business of the Corporation.
Section 17. Committees-General Rules. Each Committee
of the Board shall keep regular minutes of its proceedings and
report the same to the Board when required. Vacancies in the
membership of each Committee shall be filled by the Board at
any regular or special meeting of the Board. A Director who
may be disqualified, by reason of personal interest, from
voting on any particular matter before a meeting of a
Committee may nevertheless be counted for the purpose of
constituting a quorum of the Committee. At all meetings of a
Committee, a majority of the Committee members then in office
shall constitute a quorum for the purpose of transacting
business, and the acts of a majority of the Committee members
present at any meeting at which there is a quorum shall be the
acts of the Committee.
Section 18. Directors Emeritus and Advisory Directors.
The Board may from time to time create one or more positions
of Director Emeritus and Advisory Director, and may fill such
position or positions for such term as the Board deems proper.
Each Director Emeritus and Advisory Director shall have the
privilege of attending meetings of the Board but shall do so
solely as an observer. Notice of such meetings to a Director
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Emeritus or Advisory Director shall not be required under any
applicable law, the Articles, or these Bylaws. Each Director
Emeritus and Advisory Director shall be entitled to receive
such compensation as may be fixed from time to time by the
Board. No Director Emeritus or Advisory Director shall be
entitled to vote on any business coming before the Board, nor
shall they be counted as members of the Board for the purpose
of determining the number of Directors necessary to constitute
a quorum, for the purpose of determining whether a quorum is
present, or for any other purpose whatsoever. In the case of
a Director Emeritus or Advisory Director, the occurrence of
any event which in the case of a Director would create a
vacancy on the Board, shall be deemed to create a vacancy in
such position; but the Board may declare the position
terminated until such time as the Board shall again deem it
proper to create and to fill the position.
ARTICLE IV
NOTICES
Section 1. Service of Notice. Notices to Directors and
shareholders shall be in writing and delivered personally or
mailed or sent by telegram, telex or facsimile transmission to
the Directors or shareholders at their addresses appearing on
the books of the Corporation, except that notice to Directors
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of a special meeting of the Board may be given orally. Notice
by mail shall be deemed to be given at the time when the same
shall be mailed; notice by telegram when such notice is
delivered to the telegraph company; notice by facsimile
transmission when transmitted.
Section 2. Waiver of Notices. Whenever any notice is
required to be given under the provisions of law, the
Articles, or of these Bylaws, a waiver thereof in writing,
signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be
deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 1. Titles. The Officers of the Corporation
shall be chosen by the Board of Directors and shall be a
Chairman of the Board (herein the "Chairman"), a President,
at least one Vice President, a Secretary and a Treasurer. The
Board may also elect one or more Vice Chairmen of the Board
(herein "Vice Chairmen"), additional Vice Presidents, a
Controller, one or more Assistant Controllers, and such other
officers as the Board may deem appropriate. Any two of the
aforesaid offices, except those of President and Vice
President or President and Secretary, may be held by the same
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person. Vice Presidents of the Corporation may be given
distinctive designations such as Executive Vice President,
Group Vice President, Senior Vice President and the like.
Section 2. Election. The Board, at its annual meeting
immediately following each annual meeting of the shareholders,
shall elect a Chairman and a President, and may elect one or
more Vice Chairmen, all of whom shall be Directors or Advisory
Directors; and the Board shall also at such annual meeting
elect one or more Vice Presidents, a Secretary and a
Treasurer, who may, but need not, be Directors or Advisory
Directors. The Board may elect such other officers and agents
as it shall determine necessary who shall hold their offices
for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board.
In connection with the election of any officer of the
Corporation, the Board may determine that such officer, in
addition to the title of the office to which he is elected,
shall have a further title such as Chief Administrative
Officer, Chief Operating Officer or such other title as the
Board may designate, and the Board may prescribe powers to be
exercised and duties to be performed by any such officer to
whom any such additional title of office is given in addition
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to those powers and duties provided for by these Bylaws for
such office.
Section 3. Term. The officers of the Corporation
shall hold office until their respective successors are
elected and qualify. Any officer elected or appointed by the
Board may be removed by the Board at any time with or without
cause by the affirmative vote of a majority of the whole
Board. Any vacancy occurring in any such office may be filled
only by the Board.
Section 4. Chairman of the Board. The Chairman shall
be the Chief Executive Officer of the Corporation. In
addition to his or her duties as Chairman and Chief Executive
Officer, the Chairman shall be responsible for the general and
active management of the business and affairs of the
Corporation, subject only to the control of the Board; shall
have full authority in respect to the signing and execution
of deeds, bonds, mortgages, contracts and other instruments
of the Corporation; and, in the absence or disability of a
Vice Chairman or the President, shall exercise all of the
powers and discharge all of the duties of such Vice Chairman
or the President. The Chairman shall also be, ex officio, a
member of all standing Board Committees, shall preside at all
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meetings of shareholders and Directors, and shall perform such
other duties as the Board may prescribe.
Section 5. President. The President shall be an
executive Officer of the Corporation, shall preside at all
meetings of the shareholders and Directors in the absence of
the Chairman and the Senior Vice Chairman, and shall perform
such other duties as the Chairman or the Board shall
prescribe. The President shall have equal authority with the
Chairman and the Vice Chairmen, if any, to sign and execute
deeds, bonds, mortgages, contracts and other instruments of
the Corporation.
Section 6. Vice Chairmen of the Board. Vice Chairmen,
if any, may but need not be executive officers of the
Corporation. The Vice Chairmen shall perform such other
duties, and have such other powers as the Chairman or the
Board may, from time to time, prescribe. Each Vice Chairman
shall have equal authority with the Chairman and the President
with respect to the signing and execution of deeds, bonds,
mortgages, contracts and other instruments of the Corporation.
Section 7. Vice Presidents. The Vice President, or if
there shall be more than one, the Vice Presidents shall, in
the absence or disability of the Chairman, the President and
all Vice Chairmen, perform the duties and exercise the powers
25
<PAGE>
of the President. Each Vice President shall perform such
other duties and have such other powers as the Chairman and
the Board may, from time to time, prescribe.
Section 8. Secretary and Assistant Secretaries. The
Secretary shall attend all meetings of the Board and all
meetings of the shareholders and record all the proceedings
of the meetings of the Corporation and of the Board in books
to be kept for that purpose, shall perform like duties for
Committees of the Board when required, and shall perform such
other duties as may be prescribed by the Board, the Chairman,
any Vice Chairman, or the President. The Secretary shall keep
in safe custody the seal of the Corporation and affix the same
to any instrument requiring it, and, when so affixed, it shall
be attested by his or her signature or by the signature of an
Assistant Secretary. The Assistant Secretary, or, if there be
more than one, the Assistant Secretaries, in the order
determined by the Board, shall, in the absence or disability
of the Secretary, perform the duties and exercise the powers
of the Secretary and shall perform such other duties and have
such other powers as the Board may, from time to time,
prescribe.
Section 9. Treasurer and Assistant Treasurers. The
Treasurer shall have charge of the funds of the Corporation;
26
<PAGE>
shall keep the same in depositories designated by the Board
or by officers of the Corporation authorized by the Board to
make such designation; shall cause said funds to be disbursed
upon checks, drafts, bills of exchange or orders for the
payment of money signed in such manner as the Board or
authorized officers of the Corporation may, from time to time,
direct; shall perform such other duties as directed by the
Board, the Chairman or other senior officers; and, if
required by the Board, shall give bond for the faithful
performance of his or her duties in such form and amount as
may be determined by the Board. The Assistant Treasurer, or,
if there be more than one, the Assistant Treasurers, in the
order determined by the Board, shall, in the absence or
disability of the Treasurer, perform the duties and exercise
the powers of the Treasurer, and shall have such other duties
and powers as the Board may prescribe.
Section 10. Controller and Assistant Controllers. The
Controller, if one is elected by the Board, shall have charge
of the accounting records of the Corporation; shall keep full
and accurate accounts of all receipts and disbursements in
books and records belonging to the Corporation; shall
maintain appropriate internal control and auditing of the
Corporation; and shall perform such other duties as directed
27
<PAGE>
by the Board, the Chairman or other senior officers. The
Assistant Controller or, if there be more than one, the
Assistant Controllers, in the order determined by the Board,
shall, in the absence or disability of the Controller, perform
the duties and exercise the powers of the Controller and shall
have such other duties and powers as the Board may prescribe.
Section 11. Appointed Officers. In addition to the
corporate officers elected by the Board as hereinabove in this
Article V provided, the Chairman may, from time to time,
appoint one or more other persons as appointed officers who
shall not be deemed to be corporate officers, but may,
respectively, be designated with such titles as the Chairman
may deem appropriate. The Chairman may prescribe the powers
to be exercised and the duties to be performed by each such
appointed officer, may designate the term for which each such
appointment is made, and may, from time to time, terminate any
or all of such appointments with or without cause. Such
appointments and termination of appointments shall be reported
periodically to the Board.
28
<PAGE>
ARTICLE VI
CERTIFICATES OF SHARES
Section 1. Certificates. The certificates of shares
of the Corporation shall be numbered and registered in a share
register as they are issued. They shall exhibit the name of
the registered holder and the number and class of shares and
the series, if any, represented thereby and the par value of
each share or a statement that such shares are without par
value as the case may be.
Section 2. Signatures on Certificates. Every share
certificate shall be signed by the Chairman of the Board, the
President or a Vice President; and by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant
Treasurer; and shall be sealed with the Corporation's seal
which may be facsimile, engraved or printed.
Section 3. Transfer Agents and Registrars; Facsimile
Signatures. The Board may appoint one or more transfer agents
or transfer clerks and one or more registrars and may require
all certificates for shares to bear the signature or
signatures of any of them. Where a certificate is signed (a)
by a transfer agent or an assistant or co-transfer agent, or
(b) by a transfer clerk or (c) by a registrar or co-registrar,
the signature of any officer thereon may be facsimile. Where
29
<PAGE>
a certificate is signed by a registrar or co-registrar the
certificate of any transfer agent or co-transfer agent thereon
may be by facsimile signature of the authorized signatory of
such transfer agent or co-transfer agent. In case any officer
or officers of the Corporation who have signed, or whose
facsimile signature or signatures have been used on, any such
certificate or certificates shall cease to be such officer or
officers, whether because of death, resignation or otherwise,
before such certificate or certificates have been delivered by
the Corporation, such certificate or certificates may,
nevertheless, be issued and delivered as though the person or
persons who signed such certificate or certificates or whose
facsimile signature or signatures have been used thereon had
not ceased to be such officer or officers of the Corporation.
Section 4. Lost Certificates. In case of loss or
destruction of any certificate of stock or other security of
the Corporation, another may be issued in its place upon
satisfactory proof of such loss or destruction and upon the
giving of a satisfactory bond of indemnity to the Corporation
and to the transfer agents and registrars, if any, of such
stock or other security, in such sum as the Board may provide.
The Board may delegate to any officer or officers of the
Corporation the authorization of the issue of such new
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<PAGE>
certificate or certificates and the approval of the form and
amount of such indemnity bond and the surety thereon.
Section 5. Transfer of Shares. Upon surrender to the
Corporation or a transfer agent of the Corporation of a
certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer,
the Corporation may issue a new certificate to the person
entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 6. Registered Shareholders. The Corporation
and its transfer agents shall be entitled to treat the holder
of record of any share or shares as the holder in fact thereof
and shall not be bound to recognize any equitable or other
claims to, or interest in, such shares on the part of any
other person and shall not be liable for any registration or
transfer of shares which are registered, or to be registered,
in the name of a fiduciary or the nominee of a fiduciary
unless made with actual knowledge that a fiduciary, or nominee
of a fiduciary, is committing a breach of trust in requesting
such registration or transfer, or with knowledge of such facts
that its participation therein amounts to bad faith.
Section 7. Interested Shareholders. The provisions of
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<PAGE>
these Bylaws, including without limitation the provisions of
this Article VI as they apply to any Interested Person or
shares beneficially owned by such Interested Person, are
subject to the provisions of Article 9 of the Articles.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
Section 1. Actions Involving Directors, Officers or
Employees. The Corporation shall indemnify any person who was
or is a party (other than a party plaintiff suing on his own
behalf or in the right of the Corporation), or who is
threatened to be made such a party, to any threatened, pending
or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including, but not
limited to, an action by or in the right of the Corporation)
by reason of the fact that he or she is or was a Director,
officer or employee of the Corporation, or is or was serving
at the request of the Corporation as a director, officer or
employee of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her in
32
<PAGE>
connection with such action, suit or proceeding; provided,
that no such person shall be indemnified (a) except to the
extent that the aggregate of losses to be indemnified under
the provisions of this Article VII exceeds the amount of such
losses for which the Director, officer or employee is insured
pursuant to any directors and officers liability insurance
policy maintained by the Corporation; (b) in respect to
remuneration paid to such person if it shall be finally
adjudged that such remuneration was in violation of law;
(c) on account of any suit in which judgment is rendered
against such person for an accounting of profits made from the
purchase or sale by such person of securities of the
Corporation pursuant to the provisions of Section 16(b) of the
1934 Act and amendments thereto or similar provisions of any
federal, state or local statutory law; (d) on account of such
person's conduct which is finally adjudged to have been
knowingly fraudulent, deliberately dishonest or willful
misconduct; and (e) if it shall be finally adjudged that such
indemnification is not lawful.
Section 2. Actions Involving Agents. The Corporation
may indemnify any person who was or is a party (other than a
party plaintiff suing on his own behalf or in the right of the
Corporation), or who is threatened to be made such a party, to
33
<PAGE>
any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (including, but not limited to, an action by or
in the right of the Corporation) by reason of the fact that
he or she is an agent of the Corporation, or is or was serving
at the request of the Corporation as an agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such
action, suit or proceeding, all to the full extent permitted
by law.
Section 3. Determination of Right to Indemnification
in Certain Instances.
(a) Any indemnification under Section 1 of this
Article VII (unless ordered by a court) shall be made by the
Corporation unless a determination is reasonably and promptly
made that indemnification of the director, officer or employee
is not proper in the circumstances because he or she has not
satisfied the conditions set forth in such Section 1. Such
determination shall be made (1) by the Board by a majority
vote of a quorum consisting of Directors who were not parties
to such action, suit or proceeding, or (2) if such a quorum is
34
<PAGE>
not obtainable, or, even if obtainable, a quorum of
disinterested Directors so directs, by independent legal
counsel in a written opinion, or (3) by the shareholders;
provided, that no such determination shall preclude an action
brought in an appropriate court to challenge such
determination.
(b) Any indemnification under Section 2 of this
Article VII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a
determination that indemnification of the agent is proper in
the circumstances because he or she has met the applicable
standard of conduct set forth in such Section 2. Such
determination shall be made (1) by the Board by a majority
vote of a quorum consisting of Directors who were not parties
to such action, suit or proceeding, or (2) if such a quorum
is not obtainable, or, even if obtainable, a quorum of
disinterested Directors so directs, by independent legal
counsel in a written opinion, or (3) by the shareholders.
Section 4. Advance Payment of Expenses. Expenses
incurred by defending a civil or criminal action, suit or
proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of the director,
35
<PAGE>
officer, employee or agent to repay such amounts unless it
shall ultimately be determined that he or she is entitled to
be indemnified by the Corporation as authorized in this
Article.
Section 5. Successful Defense. Notwithstanding any
other provision of this Article VII, to the extent that a
director, officer, employee or agent of the Corporation has
been successful on the merits or otherwise (including the
dismissal of an action without prejudice or the settlement of
an action without admission of liability) in defense of any
action, suit or proceeding referred to in Sections 1 or 2 of
this Article VII, or in defense of any claim, issue or matter
therein, he or she shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred
in connection therewith.
Section 6. Not Exclusive Right. The indemnification
provided by this Article VII shall not be deemed exclusive of
any other rights to which those seeking indemnification may be
entitled under any statute, bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, both as
to action in an official capacity and as to action in another
capacity while holding such office. Without limiting the
generality of the foregoing, in the event of conflict between
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<PAGE>
the provisions of this Article VII and the provisions of any
agreement adopted by the shareholders between the Corporation
on the one hand, and any director, officer, employee or agent
of the Corporation on the other, providing for
indemnification, the terms of such agreement shall prevail.
Any indemnification, whether required under this Bylaw or
permitted by statute or otherwise, shall continue as to a
person who has ceased to be a director, officer or employee
and shall inure to the benefit of the heirs, executors and
administrators of such person.
Section 7. Insurance. The Board shall have the power to
cause the Corporation to purchase and maintain insurance on
behalf of any person who is or was a Director, officer,
employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability
asserted against him or her and incurred by him or her in any
such capacity, arising out of his or her status as such,
whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of
this Article.
37
<PAGE>
Section 8. Subsidiaries of Corporation. For the
purposes of this Article VII, (a) any officer, Director, or
employee of the Corporation who shall serve as an officer,
director, employee or agent of any other corporation, joint
venture, trust or other enterprise of which the Corporation,
directly or indirectly, is or was a stockholder or creditor,
or in which the Corporation is or was in any way interested,
or (b) any officer, director, or employee of any subsidiary
corporation, venture, trust or other enterprise wholly owned
by the Corporation, shall be deemed to be serving as such
director, officer, employee or agent at the request of the
Corporation, unless the Board shall determine otherwise. In
all instances where any person shall serve as a director,
officer, employee or agent of another corporation, joint
venture, trust or other enterprise of which the Corporation
is or was a stockholder or creditor, or in which it is or was
otherwise interested, if it is not otherwise established that
such person is or was serving as such director, officer,
employee or agent at the request of the Corporation, the Board
may determine whether such service is or was at the request of
the Corporation, and it shall not be necessary to show any
actual or prior request for such service.
_____________________
38
<PAGE>
Note: The indemnification provided in the foregoing
provisions of Article VII (and related matters) was approved
by the stockholders of the Corporation on February 10, 1987.
Section 9. Spousal Indemnification. The spouse of a
person entitled to indemnification under Section 1 hereof or
who is granted indemnification under Section 2 hereof, shall
be entitled to be so indemnified; provided, that the spouse
was or is a party (other than a party plaintiff suing on his
or her own behalf or in the right of the Corporation), or was
or is threatened to be made a party, to any threatened,
pending, or completed action, suit or proceeding, whether
civil, criminal, administrative, or investigative (including,
but not limited to, an action by or in the right of the
Corporation), solely by reason of the spousal relationship to
the person entitled to indemnification under Section 1 hereof
or who is granted indemnification under Section 2 hereof.
39
<PAGE>
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the shares of the
Corporation, subject to the provisions of the Articles, if
any, may be declared by the Board at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in
property, or in shares of the capital stock or other
securities of the Corporation, in rights or warrants relating
thereto, or in any other form authorized by law.
Section 2. Checks. All checks or demands for money and
notes of the Corporation shall be signed by such officer or
officers or such other person or persons as the Board, or
officers authorized by the Board, may, from time to time,
designate.
Section 3. Fiscal Year. The fiscal year of the
Corporation shall commence on October 1, and close on
September 30.
Section 4. Seal. The Corporation's seal shall have
inscribed thereon the name of the Corporation, the numeral
"1890" being the year of the incorporation of the Corporation,
and the words "Corporate Seal, Missouri". The seal may be
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<PAGE>
used by causing it, or a facsimile thereof, to be impressed,
affixed, reproduced or otherwise.
Section 5. Closing of Transfer Books and Fixing of
Record Dates. The Board shall have power to close the share
transfer books of the Corporation for a period not exceeding
seventy (70) days preceding the date of any meeting of
shareholders, or the date for the payment of any dividend, or
the date for the allotment of rights, or the date when any
change, conversion or exchange of shares shall go into effect;
provided, however, that, in lieu of closing the share transfer
books as aforesaid, the Board may fix in advance a date, not
exceeding seventy (70) days preceding the date of any meeting
of shareholders, or the date for the payment any dividend, or
the date for the allotment of rights, or the date when any
change or conversion or exchange of shares shall go into
effect, as a record date for the determination of the
shareholders entitled to notice of, and to vote at, any such
meeting, and any adjournment thereof, or entitled to receive
payment of any such dividend, or to any such allotment of
rights, or to exercise rights in respect of any such change,
conversion or exchange of shares; and, in each such case,
such shareholders and only such shareholders as shall be
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shareholders of record on the date of closing the share
transfer books, or on the record date so fixed, shall be
entitled to notice of, and to vote at, such meeting and any
adjournment thereof, or to receive payment of such dividend,
or to receive such allotment of rights, or to exercise such
rights, as the case may be, notwithstanding any transfer of
any shares after such date of closing of the share transfer
books or such record date fixed as aforesaid.
ARTICLE IX
AMENDMENTS
Section 1. These Bylaws may be altered, amended or
repealed solely by a majority vote of the members of the whole
Board at any regular or special meeting thereof duly called
and convened.
42
<PAGE> Exhibit 10(k)
DEFERRED COMPENSATION
For Non-Employee Directors
(As Amended February, 1994)
1. Eligibility
Effective February 1, 1982, each director who is not an employee of
Emerson Electric Co. ("Emerson" or the "Company") or a corporation
in which Emerson owns 50% or more of the outstanding stock, shall
have the right to elect to defer the payment of all or any part of
the cash compensation to which such director would otherwise be
entitled as retainers or fees, whether for service on the Board of
Directors of Emerson or on a Committee thereof ("Fees"), with such
deferred compensation payable at the time or times in the manner
hereinafter stated. Effective upon implementation of the Amendment
and Restatement approved on June 6, 1989, as determined by the
Committee (as hereafter defined in Section 4), each such director
who elects to defer Fees hereunder may, at the time of such
election, also elect to have some or all of such deferred Fees
converted into units equivalent to shares of Emerson common stock
("Units") in which case Emerson shall establish an account for
such director and shall credit to the account a number of Units
equal to the number of full and fractional shares of Emerson common
stock ("Shares") which could be purchased with such deferred Fees
on the date such Fees would have been paid had there been no
deferral. In addition, any such director who elected to defer Fees
hereunder prior to such implementation, may elect to have such
deferred Fees not previously paid also converted into full and
fractional Units. The price per Share for converting into Units
shall be the mean between the high and the low of the price per
Share on the New York Stock Exchange on such dates for such Shares,
or if no Shares have been traded on such date, then the next
succeeding date on which such Shares have been traded ("Market
Price").
2. Election
Each director who elects to defer the payment of Fees shall execute
and deliver to the Vice President Corporate Administration (J. A.
Harmon) a "Notice of Election". Such Notice will provide (i) the
percentage or amount of Fees to be deferred, (ii) the date such
deferral is to commence, (iii) the manner of distribution, (iv) the
date each distribution is to commence (which date, in the case of
an election to convert all or any deferred fees into Units, shall
be at least six months after the last Fee or dividend payment or
other distribution subject to the Notice would otherwise have been
payable), (v) the extent to which the deferred Fees are to be
credited with interest as provided in Section 4 or converted into
Units as provided in Section 1, and (vi) the beneficiary
designations of the participating director. Such deferral
election shall be applicable only to Fees earned by reason of
services rendered after the date of such Notice.
<PAGE>
An election to defer Fees shall continue in effect until revoked
(in the case of an election in which no portion of any deferred
Fees will be converted into Units), or modified by a subsequent
"Notice of Election", provided however, (i) that every election to
defer (whether such deferred Fees are converted into Units or not),
and the manner and date of distribution thereof, shall be
irrevocable as to Fees earned prior to the date of revocation or
modification, (ii) in the case of an election in which no portion
of any deferred Fees will be converted into Units, such election
may be changed or revoked with respect to both future and past
deferrals, but no more frequently than once per calendar year,
provided, that any change to an election to convert deferred Fees
into Units must comply with the first paragraph of this Section 2,
and (iii) in the case of an election to convert all or any deferred
Fees into Units, such election may not be revoked and may not be
changed more frequently than once per calendar year and then only
to cease future deferrals or to change the level of future
deferrals. Revocation or modification shall be made in writing to
the Vice President Corporate Administration (J. A. Harmon) and
shall be effective upon the date stated therein.
3. Payment of Deferred Fees
No Fees so deferred shall be payable to a director until the time
designated in the Notice of Election, his disability, resignation
as a director, removal from office or demonstration of severe
financial hardship. Demonstration of severe financial hardship must
be proved to the satisfaction of the Compensation and Human
Resources Committee of the Company's Board of Directors, or such
other Committee of such Board as may be designated by such Board
to administer the Plan from time to time (the "Committee").
Provided that no Fees which have been converted into Units shall
be payable on account of hardship. Provided, further, that Fees
which have been converted into Units and which become payable by
reason of a director's resignation as a director or his removal
from office shall be payable six months after his resignation or
removal. Subject to Section 6 and the foregoing provisions of this
Section 3, upon the occurrence of any of these events, all such
deferred Fees, together with any interest or dividend accruals
thereon, as hereafter provided, shall be payable in a cash lump sum
amount (with Fees which have been converted into Units, converted
into cash equal to the Market Price on the payment date multiplied
by the number of Units then being paid) to such director, or his
beneficiary, within thirty (30) days from the date of such event,
unless the director shall have designated an optional installment
payment in the Notice of Election with respect to the Fees then
being deferred, in which event the first such installment shall be
paid within thirty (30) days of such date. Installment payments
will be made in approximately equal periodic installments over a
period not to exceed ten (10) years, provided however, that no such
installment method of distribution may be elected which will result
in any regular installment being less than $400. In the event a
director shall elect such installment method of distribution,
either interest shall continue to be credited on the undistributed
sums as provided in Section 4, or dividend accruals shall continue
to be credited on the undistributed Units in his account as
provided in the next paragraph of this Section 3, as the director
shall elect.
<PAGE>
A director who elects to have deferred Fees converted into Units
shall have his account credited with additional Units equal in
value to dividends which he would have received if he had been the
owner of a number of Shares equal to the number of Units in his
account. The price per share for converting dividends into such
additional Units shall be the Market Price as of the payment dates
for such dividends. Within 30 days after the date ending the
deferral period, the director shall commence receiving payment of
deferred Fees, either in cash (with interest) or the cash value of
Units paid (said cash being equal to the Market Price on such
payment date multiplied by the number of Units then being paid).
No director shall be deemed to be the owner of any Shares pursuant
to this Plan. The form of payments shall be a cash lump sum or
approximately equal periodic installments over a period of not to
exceed ten (10) years, as the director shall designate in
accordance with this Section 3.
Notwithstanding anything else contained in the Plan, in no event
shall a director receive payment in respect of any Fees converted
into Units prior to the expiration of six (6) months after such
Fees were converted.
4. Interest Rate
Fees deferred by a director who has not elected to have his
deferred Fees converted into Units, shall be credited with interest
compounded quarterly at the prime rate with any change in interest
rates taking effect simultaneously with the change in the prime
rate, or such other rate as may be established from time to time
by the Committee. Such interest shall accrue from the dates that
Fees would otherwise be payable had such Fees not been deferred.
For all purposes of this Plan, the term "prime rate" shall mean the
prime rate publicly announced by The Boatmen's National Bank of St.
Louis for 90-day commercial loans.
5. Designation of Beneficiary
Each director may designate one or more beneficiaries to receive
all sums due to such director hereunder upon his death. Such
beneficiary designation may be revoked or amended by such director,
from time to time, by appropriate notice in writing delivered to
the Vice President Corporate Administration (J. A. Harmon). In the
absence of any beneficiary designation or in the event that the
designated beneficiaries shall not be living at the time of death
of the director, the account value on the date of death of the
director shall be payable and delivered to the estate of such
deceased director.
<PAGE>
6. Death or Incapacity of Director
Upon the death of a serving director, the entire account balance,
including all Fees deferred under the Plan, and all unpaid
installments of Fees then being paid and interest and earnings
thereon, shall be made in one lump sum cash amount to his
designated beneficiary or estate. In addition, with respect to
each director who has elected to have his deferred Fees converted
into Units a cash lump sum equal to the Market Price on the date of
death multiplied by the number of Units credited to his account on
such date shall be paid to his designated beneficiary or estate.
Upon the death of a director who had previously retired and had
elected an installment method of distribution, all sums remaining
undistributed shall be paid in one lump sum cash amount to his
designated beneficiary or estate.
In the event that any person to whom deferred Fees are
distributable under the terms of this Plan shall be unable to
properly manage his or her own affairs by reason of incapacity, all
amounts payable hereunder may be paid to a duly appointed personal
representative, conservator or guardian or to any person, firm or
corporation furnishing or providing support and maintenance to such
distributee. The Company and its officers and employees shall be
fully and completely exonerated from all liability to any
distributee upon making payment in accordance with the terms of
this paragraph.
7. Change of Control
Notwithstanding anything else contained in the Plan, in the event
of a Change of Control (as hereinafter defined), the entire account
balance of each director, including all Fees deferred under the
Plan, and all unpaid installments of Fees then being paid, and
interest and earnings thereon, shall immediately be paid to the
director in a single cash lump sum. Provided, however, that no
Fees which have at any time been converted into Units shall be paid
or accelerated on account of a Change of Control. For the purpose
of this section, a "Change of Control" shall mean:
(i) The purchase or other acquisition (other than from Emerson) by
any person, entity or group of persons, within the meaning of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (excluding, for this purpose, Emerson
or its subsidiaries or any employee benefit plan of Emerson or its
subsidiaries), of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of either
the then-outstanding shares of common stock of Emerson or the
combined voting power of Emerson's then-outstanding voting
securities entitled to vote generally in the election of directors;
or
<PAGE>
(ii) Individuals who, as of the date hereof, constitute the Board
of Directors of Emerson (the "Board" and, as of the date hereof,
the "Incumbent Board") cease for any reason to constitute at least
a majority of the Board, provided that any person who becomes a
director subsequent to the date hereof whose election, or
nomination for election by Emerson's shareholders, was approved by
a vote of at least a majority of the directors then comprising the
Incumbent Board (other than an individual whose initial assumption
of office is in connection with an actual or threatened election
contest relating to the election of directors of Emerson, as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) shall be, for purposes of this section,
considered as though such person were a member of the Incumbent
Board; or
(iii) Approval by the stockholders of Emerson of a reorganization,
merger or consolidation, in each case with respect to which persons
who were the stockholders of Emerson immediately prior to such
reorganization, merger or consolidation do not, immediately
thereafter, own more than 50% of, respectively, the common stock
and the combined voting power entitled to vote generally in the
election of directors of the reorganized, merged or consolidated
corporation's then-outstanding voting securities, or of a
liquidation or dissolution of Emerson or of the sale of all or
substantially all of the assets of Emerson.
8. Amendment and Termination
The Committee may at any time amend or terminate this Deferred
Compensation Plan with respect to Fees earned on or after the date
of amendment or termination, except that this Plan, as amended,
shall apply to deferred fees, Units and interests in this Plan
earned prior to the date hereof in order to comply with Rule
16a-1 (c)(3)(ii), as referred to in Section 9. No action of the
Committee may permit anyone other than the directors eligible under
Section 1 to participate in the Plan or withdraw the administration
of the Plan from the Committee or the Administrator who has been
designated by the Committee to administer the Plan.
9. Miscellaneous
The Committee shall have full power and authority to administer,
construe and interpret this Plan. The Committee may, from time to
time, name a Company employee to administer, construe or interpret
the terms of the Plan. The decisions of the Committee concerning
the administration, construction and interpretation of this Plan
shall be final, conclusive and binding upon all parties involved,
including the successors and assigns of Emerson. Payments required
to be made under Section 6 or 7 shall be made as soon as
practicable after the death of the director or termination of the
Plan, as the case may be.
<PAGE>
No right or payment under this Plan shall be subject to
anticipation, alienation, sale, assignment, pledge,
encumbrance or charge, and any attempt to anticipate, alienate,
sell, assign, pledge, encumber or charge the same shall be null and
void. No right or payment hereunder shall be liable for or subject
to the debts, contracts, liabilities or torts of the person
entitled to such benefit. If any participant or beneficiary
hereunder should become bankrupt or attempt to anticipate,
alienate, sell, assign, pledge, encumber or charge any right or
payment hereunder, then such right or payment shall, in the
discretion of the Committee terminate. In such a case, the Company
may hold or apply the same or any part thereof for the benefit of
the participant or beneficiary, his or her spouse, children or
other dependents, or any of them, in such manner and in such
proportion as the Committee shall determine, and their decision
shall be final, conclusive and binding upon all persons involved.
In the event of changes in the outstanding Shares of the Company by
reason of stock dividends, spin-offs, recapitalization, mergers,
consolidations, split-ups, combinations or exchange of shares and
the like, the account of a director who has elected to convert his
deferred Fees into Units shall be appropriately adjusted to reflect
such action if such action consists of distribution of Company
stock. If such action consists of any other distribution, the
value of such distribution shall be converted to Units on the date
of such distribution.
This Plan is unfunded. Detailed records of amounts deferred
hereunder, including interest credits and payouts, shall be
maintained by the Vice President Corporate Administration (J. A.
Harmon), and made available on reasonable notice for any director's
inspection with respect to such director's own deferrals.
This Plan shall at all times be interpreted and administered in
accordance with Rule 16a-1(c)(3)(ii) as amended from time to time
and any successor provision thereto, under Section 16 of the
Securities Exchange Act of 1934, as promulgated by the Securities
and Exchange Commission, such that Units and interests in this Plan
shall not be deemed to be "derivative securities" within the
meaning of Rule 16a-1(c), as amended from time to time and any
successor provision thereto. Any provision of this Plan which is
in conflict with Rule 16a-1(c)(3)(ii) shall be null and void.
<PAGE> Exhibit 13
FINANCIAL REVIEW
RESULTS OF OPERATIONS
NET SALES
Emerson achieved record sales in fiscal 1994 of $8.6 billion, up $433 million or
5.3 percent from 1993. This sales performance was primarily attributable to a
$358 million increase in domestic sales. Excluding acquisitions and
divestitures, domestic sales increased more than 8 percent, reflecting strong
sales volume and slight price increases. International sales increased
approximately $135 million, excluding the impact of unfavorable exchange rates
in 1994 of approximately $60 million. Several minor acquisitions, which
contributed approximately $75 million to sales in 1994, were more than offset by
the impact of the divestiture of the Aerospace unit (Aero) of Rosemount Inc. of
approximately $100 million. See note 2 for additional discussion of the
Company's acquisition and divestiture activities. New product sales, from
products introduced in the past five years, increased $167 million or 8.6
percent to a record $2.1 billion, representing 24.6 percent of sales.
The joint ventures in which Emerson is a partner had combined annual sales of
approximately $2.2 billion, $2.0 billion and $1.4 billion in 1994, 1993 and
1992, respectively, which were not consolidated in Emerson's financial
statements. Emerson's proportionate share of these sales was approximately $1
billion, $900 million and $625 million, respectively. Equity earnings were $48
million in 1994, up from $38 million and $14 million in 1993 and 1992,
respectively. The 1994 increases reflect improved performance by each of the
Company's major equity investees, with the tools joint ventures reporting
double-digit sales gains. The 1993 increases reflect the impact of the Skil
transaction in 1992 as well as improved performance by other equity investees.
In 1993, sales were $8.2 billion, up $468 million or 6.1 percent from $7.7
billion in 1992. The 1993 sales comparison reflects the impact of the October 1,
1992 acquisition of Fisher Controls International (1993 sales of approximately
$900 million), the September 30, 1992 contribution of Skil to a 50-50 joint
venture (1992 sales of approximately $350 million) and the impact of unfavorable
exchange rates in 1993 (approximately $120 million). Excluding the impact of
Fisher, Skil and foreign exchange, sales increased slightly as strong new
product growth, modest domestic sales gains and slight price increases were
substantially offset by recessionary European and Japanese economies. New
product sales increased 10.3 percent to $2.0 billion.
INTERNATIONAL SALES
International sales, including U.S. exports, increased $75 million or 2.4
percent to a record $3.2 billion in 1994, representing approximately 38 percent
of the Company's total sales. Asia Pacific sales, excluding Japan, experienced
double-digit increases, with sales to China up approximately 20 percent. Sales
by non-U.S. subsidiaries were $2.7 billion in 1994, up $48 million or 1.8
percent from 1993, despite unfavorable currency translation. European and
Canadian markets strengthened in the second half of the year, and continued
solid growth in Latin American and other Asia Pacific subsidiaries more than
offset the impact of the continued recession in Japan. U.S. exports increased
$27 million to a record $589 million in 1994, while
20
<PAGE>
underlying export sales were up more than 8 percent despite the stronger dollar.
In 1993, international sales increased 3.4 percent to $3.2 billion compared to
$3.1 billion in 1992. Sales by non-U.S. subsidiaries were $2.6 billion in 1993,
up slightly from 1992. Excluding Fisher, Skil and the impact of unfavorable
exchange rates of approximately $120 million, non-U.S. subsidiary sales declined
moderately due to recessions in Europe and Japan partially offset by strong
growth sustained in other Asia Pacific and Latin American subsidiaries. U.S.
exports increased 15.5 percent to $562 million in 1993, while underlying export
sales were up 4.2 percent despite the stronger dollar.
INDUSTRY SEGMENT SALES
Sales in the Appliance and Construction-Related segment were $3.7 billion in
1994, an increase of $377 million or 11.5 percent from 1993, primarily
reflecting strong domestic volume growth in all businesses. The largest sales
gain was achieved by the heating, ventilating and air conditioning business, as
it experienced a double-digit sales increase resulting from hot summer weather,
strong demand for new products and market penetration gains. The fractional
horsepower motors business realized a double-digit sales increase due to strong
domestic end-market demand. The appliance components business also reported
double-digit growth due to strong domestic demand, market penetration gains, and
an acquisition. Sales of the tools business increased moderately with double-
digit sales gains in the second half of the year.
Sales in the Commercial and Industrial segment were $4.9 billion in 1994, up $56
million or 1.1 percent from 1993. Excluding acquisitions, the Aero divestiture
and foreign exchange, sales of the segment increased approximately 3 percent,
reflecting modest domestic sales volume gains, slight price increases and
improved international sales in the second half of the year. The electronics
business experienced double-digit growth primarily as a result of the
introduction of new products and sales of environmental systems in the U.S. and
Asia Pacific. Sales of the industrial components and equipment business
increased modestly as European economies strengthened in the second half of the
year. Sales of the industrial motors and drives business increased slightly as
domestic gains were offset by weak international sales, which were impacted by
unfavorable exchange rates. Sales of the underlying process control business
increased slightly while total process control sales were negatively impacted by
the divestiture of Aero.
In 1993, sales in the Commercial and Industrial segment increased $812 million,
or 19.9 percent, to $4.9 billion. Excluding Fisher and foreign exchange, sales
of the segment were unchanged. Sales of the industrial components and equipment,
industrial motors and drives, and process control businesses (excluding Fisher)
were down modestly as improvements in domestic sales were more than offset by
weak non-U.S. subsidiary sales, which were impacted by unfavorable exchange
rates. The electronics business was down moderately due to the stronger dollar
and sluggish mainframe computer markets.
Sales in the Appliance and Construction-Related segment decreased $344 million,
or 9.5 percent, to $3.3 billion in 1993. Excluding the effects of the Skil joint
venture transaction, sales of the segment increased slightly. The appliance
components business recorded strong gains due to continued improvements in
appliance end-markets, while sales in the tools business (excluding Skil)
increased slightly. Sales of the fractional horsepower motors business
increased, aided by improved sales in the second half of the year. Sales in the
heating, ventilating and air conditioning components business were down due to
strong 1992 performance and the persistence of high industry inventory levels
throughout most of 1993.
21
<PAGE>
TOTAL COSTS AND EXPENSES
Cost of sales for 1994 was $5.6 billion, an increase of 5.0 percent over 1993,
due primarily to increased sales volume. In 1993, cost of sales was $5.3 billion
compared to $5.1 billion in 1992, an increase of 4.7 percent. Excluding the
impact of Fisher and Skil, cost of sales decreased modestly in 1993, due
primarily to the impact of foreign exchange, cost savings from plant
consolidations and material cost reductions. Cost of sales as a percent of net
sales was 64.5 percent in 1994 compared to 64.7 percent and 65.6 percent in 1993
and 1992, respectively. As a result of ongoing cost reduction efforts and
productivity improvement programs, cost of sales increases have remained below
sales growth rates.
Selling, general and administrative (SG&A) expenses were $1.7 billion, $1.6
billion and $1.5 billion in 1994, 1993 and 1992, respectively. As a percent of
net sales, SG&A expenses were 19.5 percent in 1994 compared to 19.7 percent and
18.9 percent in 1993 and 1992, respectively. The decrease in SG&A expenses as a
percent of net sales in 1994 is due primarily to higher volume, positive
contribution from product mix, and ongoing cost reduction efforts, partially
offset by increased investment in new product development and other top-line
growth programs. The increase in SG&A expenses as a percent of net sales in 1993
is due primarily to the Fisher acquisition. The Company continued its commitment
to new product development by increasing engineering and development expense 9.5
percent to a record $298 million in 1994, compared to $272 million and $245
million in 1993 and 1992, respectively.
Interest expense of $89 million in 1994 decreased from $119 million in 1993 due
to reduction of debt resulting from continued strong operating cash flow. In
1993, interest expense increased $28 million from $91 million in 1992, resulting
from the additional U.S. commercial paper issued to finance the Fisher
acquisition.
The first quarter of 1994 included a gain on sale of the Aero business of $242
million and other non-recurring items of $50 million. Other non-recurring items
principally consist of severance and related costs arising from relocation of
several operations, or workforce reductions, primarily in the Company's European
heating, ventilating and air conditioning, and process control businesses. The
net earnings impact of these non-recurring items was substantially offset by the
adoption of SFAS No. 106. See notes 2 and 7 for additional information.
Other deductions, net, was $50 million in 1994, compared to $46 million and $56
million in 1993 and 1992, respectively. In 1992, other deductions, net, included
restructuring charges of approximately $50 million and a gain on the Skil
transaction of $43 million.
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE
Income before income taxes and cumulative effect of change in accounting
principle included the Aero gain and other non-recurring items in 1994.
Excluding these items, income increased 11 percent, reflecting increased
domestic sales volume, improved underlying domestic and international operating
margins, and reduced interest expense.
Income before interest expense, income taxes and accounting change in the
Appliance and Construction-Related segment increased $44 million, or 7.9
percent, to $602 million in 1994. These results reflect a solid increase in
domestic sales volume in all businesses, partially offset by non-recurring
items. As a percent of net sales, income of the segment was 16.4 percent in 1994
and 17.0 percent in 1993. Excluding
22
<PAGE>
non-recurring items, income of the segment as a percent of sales increased
slightly in 1994.
Income in the Commercial and Industrial segment increased $19 million, or 2.9
percent, to $675 million in 1994. Income of the segment was 13.6 percent and
13.4 percent of net sales in 1994 and 1993, respectively. These improvements are
primarily a result of a modest increase in domestic sales volume and ongoing
cost reduction efforts. See note 12 for additional information by industry
segment and geographic area.
In 1993, income before income taxes was $1,112 million, up 6.5 percent from
$1,044 million in 1992, reflecting improved domestic operating margins and
increased equity earnings. As a result of ongoing cost reduction efforts and
productivity improvement programs, consolidated profit margins increased over
the prior year despite the lower profit margins of Fisher. Income before
interest expense and income taxes in the Commercial and Industrial segment
increased $122 million or 22.8 percent, to $656 million, reflecting the Fisher
acquisition and cost reduction efforts. Income in the Appliance and
Construction-Related segment increased slightly to $558 million despite the Skil
transaction. Margins in both segments improved despite the persistently
difficult global economic environment.
INCOME TAXES
Income taxes in 1994 increased $119 million to $523 million, compared to $404
million and $381 million in 1993 and 1992, respectively. The effective income
tax rate was 36.7 percent in 1994 (36.3 percent excluding non-recurring items),
compared to 36.3 percent in 1993 and 36.5 percent in 1992. The 1994 increases
were due primarily to $95 million of income taxes on the Aero divestiture.
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
Effective October 1, 1993, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions." This statement requires that other postretirement benefits
(primarily health care) be accrued over the service lives of employees. The
Company recognized the transition obligation arising from service prior to
adoption in the first quarter as a cumulative effect of change in accounting
principle which decreased 1994 net earnings and earnings per common share by
$115.9 million and $.52, respectively. In addition, ongoing expense for these
benefits increased to $27 million in 1994, compared to $16 million and $11
million in 1993 and 1992, respectively.
NET EARNINGS AND RETURN ON EQUITY
Net earnings for 1994 were a record $789 million, up 11.4 percent from $708
million in 1993. Net earnings as a percent of sales was 9.2 percent, the highest
level achieved during the Company's 37 consecutive years of increased earnings.
Earnings per common share were a record $3.52, up 11.7 percent from $3.15 in
1993. Emerson achieved a return on average stockholders' equity of 19.1 percent
compared to 18.5 percent and 19.0 percent in 1993 and 1992, respectively.
Net earnings for 1993 were up 6.8 percent from $663 million in 1992. Earnings
per common share were up 6.4 percent from $2.96 in 1992. The Fisher and Skil
transactions did not materially impact 1993 net earnings or earnings per share.
OTHER MATTERS
Emerson is in the process of acquiring several companies with combined annual
sales of approximately $450 million. If completed, the total cost of these
transactions would approximate $550 million. These
23
<PAGE>
companies include F.G. Wilson (Engineering) Ltd., a manufacturer of diesel
generator sets located in the United Kingdom, and Control Techniques, plc, an
industry leader in the design and production of electronic drives for electric
motors. Prior to the proposed transaction, Emerson owned nearly 30 percent of
Control Techniques.
FINANCIAL POSITION, CAPITAL RESOURCES AND LIQUIDITY
The Company continues to generate substantial cash from operations, which has
been used to significantly reduce leverage since the Fisher acquisition (see
notes 2 and 3). The Company remains in a strong financial position and has the
resources available for reinvestment in existing businesses, strategic
acquisitions and managing the capital structure.
CASH FLOW
Emerson's earnings growth and focus on asset management generated record
operating cash flow of $1,097 million in 1994, compared to $1,075 million and
$1,001 million in 1993 and 1992, respectively. Accounts receivable, inventories
and accounts payable increased from September 30, 1993, due primarily to
stronger 1994 operations and the impact of foreign exchange. Operating working
capital was approximately 18 percent of sales in 1994 and 1993, down from 20
percent in 1992. This reduction reflects an improvement in average inventory
turnover.
Dividends were a record $350 million ($1.56 per share) in 1994, compared with
$324 million ($1.44 per share) in 1993 and $309 million ($1.38 per share) in
1992. On November 1, 1994, the Board of Directors approved a 10.3 percent
increase in the quarterly dividend to an annualized rate of $1.72 per share, an
amount consistent with the Company's long-standing target payout ratio of 45 to
50 percent of prior year earnings.
Capital expenditures were $332 million in 1994, compared to $306 million in 1993
and $346 million in 1992, as construction spending on the Copeland Compliant
Scroll compressor project peaked in 1992. Emphasis continues to be placed on
programs designed to improve productivity by incorporating advanced processes
and technology into existing facilities, cost reduction projects and new
products.
LEVERAGE/CAPITALIZATION
Strong operating cash flow and the net proceeds from the Aero divestiture of
$206 million in 1994 enabled the Company to reduce total debt $449 million to
$1.2 billion and fund net treasury stock purchases of $111 million. In 1993,
total debt increased to $1.6 billion from $882 million in 1992, reflecting the
issuance of U.S. commercial paper related to the October 1, 1992 acquisition of
Fisher for $1.25 billion. Strong operating cash flow in 1993 allowed the Company
to reduce debt by $483 million subsequent to the Fisher acquisition.
The total debt to total capital ratio was 21.7 percent at year-end 1994,
compared to 29.3 percent in 1993 and 19.1 percent in 1992. At September 30,
1994, net debt (total debt less cash and equivalents and short-term investments)
was 20.0 percent of net capital, compared to 27.9 percent in 1993 (35.5 percent
immediately after the Fisher acquisition) and 17.7 percent in 1992. The
Company's interest coverage ratio (income before income taxes, non-recurring
items and interest expense divided by interest expense) was 15.0 times in 1994
compared to 10.3 times in 1993 and 12.5 times in 1992.
<PAGE>
At year-end 1994, the Company maintained lines of credit of $700 million to
support U.S. commercial paper and had available non-U.S. bank credit facilities
of $455 million to support non-U.S. operations. In addition, the Company can
issue up to $330 million of debt securities under its shelf registration with
the Securities and Exchange Commission. The Company has swapped approximately
$650 million of its floating interest rate obligations to fixed rates for up to
one year.
24
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS
EMERSON ELECTRIC CO. AND SUBSIDIARIES
Years ended September 30
(Dollars in millions except per share amounts)
1994 1993 1992
-------- ------- -------
<S> <C> <C> <C>
NET SALES $8,607.2 8,173.8 7,706.0
-------- ------- -------
Costs and expenses:
Cost of sales 5,553.0 5,289.8 5,054.6
Selling, general and administrative expenses 1,679.6 1,606.6 1,460.1
Interest expense 88.5 119.2 91.0
Gain on sale of business and other non-recurring items (192.0) -- --
Other deductions, net 50.3 46.2 56.4
-------- ------- -------
Total costs and expenses 7,179.4 7,061.8 6,662.1
-------- ------- -------
Income before income taxes and cumulative
effect of change in accounting principle 1,427.8 1,112.0 1,043.9
Income taxes 523.4 403.9 381.0
-------- ------- -------
Income before cumulative effect of change
in accounting principle 904.4 708.1 662.9
Cumulative effect of change in accounting for postretirement benefits
($190.0 less income tax benefit of $74.1); $.52 per common share (115.9) -- --
-------- ------- -------
NET EARNINGS $ 788.5 708.1 662.9
======== ======= =======
EARNINGS PER COMMON SHARE $ 3.52 3.15 2.96
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
- -------------------------------------------------------------------------------
NOTE: Including the pretax impact of the cumulative effect of accounting
change, income before income taxes would have been $1,237.8 million in 1994,
compared to $1,112.0 million and $1,043.9 million in 1993 and 1992,
respectively.
25
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
EMERSON ELECTRIC CO. AND SUBSIDIARIES
September 30
(Dollars in millions except per share amounts)
ASSETS
1994 1993
-------- --------
<S> <C> <C>
CURRENT ASSETS
Cash and equivalents $ 113.3 101.9
Receivables, less allowances of $42.0 in 1994
and $35.7 in 1993 1,542.6 1,392.1
Inventories:
Finished products 506.5 484.6
Raw materials and work in process 885.7 813.7
-------- -------
Total inventories 1,392.2 1,298.3
Other current assets 290.1 282.0
-------- -------
Total current assets 3,338.2 3,074.3
-------- -------
PROPERTY, PLANT AND EQUIPMENT
Land 150.3 146.5
Buildings 860.6 836.6
Machinery and equipment 2,671.0 2,447.9
Construction in progress 158.8 155.6
-------- -------
3,840.7 3,586.6
Less accumulated depreciation 1,893.4 1,706.5
-------- -------
Property, plant and equipment, net 1,947.3 1,880.1
-------- -------
OTHER ASSETS
Excess of cost over net assets of purchased businesses,
less accumulated amortization of $237.3 in 1994 and $184.7 in 1993 1,862.9 1,834.3
Other 1,066.6 1,025.8
-------- -------
Total other assets 2,929.5 2,860.1
-------- -------
$8,215.0 7,814.5
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
26
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
1994 1993
-------- -------
<S> <C> <C>
CURRENT LIABILITIES
Short-term borrowings and current
maturities of long-term debt $ 923.3 1,183.9
Accounts payable 611.4 492.8
Accrued expenses 936.4 870.0
Income taxes 146.2 145.9
-------- -------
Total current liabilities 2,617.3 2,692.6
-------- -------
LONG-TERM DEBT 279.9 438.0
-------- -------
OTHER LIABILITIES 976.0 768.8
-------- -------
STOCKHOLDERS' EQUITY
Preferred stock of $2.50 par value per share.
Authorized 5,400,000 shares; issued - none -- --
Common stock of $1 par value per share. Authorized
400,000,000 shares; issued 238,338,503 shares in
1994 and 1993 238.3 238.3
Additional paid-in capital -- 4.1
Retained earnings 4,619.1 4,182.5
Cumulative translation adjustments 8.7 (69.1)
-------- -------
4,866.1 4,355.8
Less cost of common stock in treasury, 14,752,649
shares in 1994 and 13,575,263 shares in 1993 524.3 440.7
-------- -------
Total stockholders' equity 4,341.8 3,915.1
-------- -------
$8,215.0 7,814.5
======== =======
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
EMERSON ELECTRIC CO. AND SUBSIDIARIES
Years ended September 30
(Dollars in millions except per share amounts)
1994 1993 1992
-------- ------- -------
<S> <C> <C> <C>
COMMON STOCK $ 238.3 238.3 238.3
-------- ------- -------
ADDITIONAL PAID-IN CAPITAL
Beginning balance 4.1 -- --
Treasury stock issued (.6) (.9) --
Stock plans (3.5) 5.0 --
-------- ------- -------
Ending balance -- 4.1 --
-------- ------- -------
RETAINED EARNINGS
Beginning balance 4,182.5 3,798.6 3,445.7
Net earnings 788.5 708.1 662.9
Cash dividends (per share: 1994, $1.56;
1993, $1.44; 1992, $1.38) (349.9) (324.2) (309.5)
Stock plans (2.0) -- (.5)
-------- ------- -------
Ending balance 4,619.1 4,182.5 3,798.6
-------- ------- -------
CUMULATIVE TRANSLATION ADJUSTMENTS
Beginning balance (69.1) 133.0 17.6
Translation adjustments 77.8 (202.1) 115.4
-------- ------- -------
Ending balance 8.7 (69.1) 133.0
-------- ------- -------
TREASURY STOCK
Beginning balance (440.7) (440.1) (444.7)
Acquired (116.5) (30.6) (7.1)
Issued 6.4 3.5 1.2
Issued under stock plans 26.5 26.5 10.5
-------- ------- -------
Ending balance (524.3) (440.7) (440.1)
-------- ------- -------
TOTAL STOCKHOLDERS' EQUITY $4,341.8 3,915.1 3,729.8
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
28
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
EMERSON ELECTRIC CO. AND SUBSIDIARIES
Years ended September 30
(Dollars in millions)
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 788.5 708.1 662.9
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation 274.0 269.3 253.1
Amortization of intangibles 90.5 71.4 42.1
Changes in operating working capital (82.4) 25.7 43.5
Cumulative effect of change in accounting principle 115.9 -- --
Gain on sale of business and other non-recurring items,
net of income taxes (117.1) -- --
Other 27.4 .3 (.4)
-------- -------- -------
Net cash provided by operating activities 1,096.8 1,074.8 1,001.2
-------- -------- -------
INVESTING ACTIVITIES
Capital expenditures (332.3) (305.6) (345.5)
Purchases of businesses, net of cash and equivalents acquired (58.1) (1,263.4) (61.2)
Proceeds from divestiture of businesses, net 205.9 -- 19.9
Other (1.2) 74.9 46.3
-------- -------- -------
Net cash used in investing activities (185.7) (1,494.1) (340.5)
-------- -------- -------
FINANCING ACTIVITIES
Net increase (decrease) in short-term borrowings
with maturities of 90 days or less (239.7) 726.4 (259.8)
Proceeds from short-term borrowings 227.6 99.7 98.0
Principal payments on short-term borrowings (266.8) (132.7) (180.2)
Proceeds from long-term debt 4.6 190.4 65.0
Principal payments on long-term debt (175.0) (91.6) (117.9)
Net issuances (purchases) of treasury stock (110.8) (8.2) .2
Dividends paid (349.9) (324.2) (309.5)
-------- -------- -------
Net cash provided by (used in) financing activities (910.0) 459.8 (704.2)
-------- -------- -------
Effect of exchange rate changes on cash and equivalents 10.3 (18.8) 21.3
-------- -------- -------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS 11.4 21.7 (22.2)
Beginning cash and equivalents 101.9 80.2 102.4
-------- -------- -------
ENDING CASH AND EQUIVALENTS $ 113.3 101.9 80.2
======== ======== =======
<PAGE>
CHANGES IN OPERATING WORKING CAPITAL
Receivables $ (93.2) (11.5) 16.3
Inventories (88.5) 53.4 45.2
Other current assets 26.2 14.2 (10.9)
Accounts payable 96.0 (29.4) (58.4)
Accrued expenses (23.7) 6.9 9.4
Income taxes .8 (7.9) 41.9
-------- -------- -------
$ (82.4) 25.7 43.5
======== ======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
29
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
EMERSON ELECTRIC CO. AND SUBSIDIARIES
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its majority-owned subsidiaries. All significant intercompany transactions,
profits and balances are eliminated in consolidation. Investments of 20 to 50
percent are accounted for by the equity method. Investments of less than 20
percent are carried at cost.
FOREIGN CURRENCY TRANSLATION
The functional currency of nearly all of the Company's non-U.S. subsidiaries is
the local currency. Adjustments resulting from the translation of financial
statements are reflected as a separate component of stockholders' equity.
CASH EQUIVALENTS
Cash equivalents consist of highly liquid investments with original maturities
of three months or less.
INVENTORIES
Inventories are stated at the lower of cost or market. The majority of inventory
values are based upon standard costs which approximate average costs, while the
remainder are principally valued on a first-in, first-out basis. Standard costs
are revised at the beginning of the fiscal year and variances incurred during
the year are allocated between inventories and cost of sales.
PROPERTY, PLANT AND EQUIPMENT
The Company records investments in land, buildings, and machinery and equipment
at cost. For assets placed in service prior to fiscal 1992, depreciation is
computed principally using accelerated methods over estimated service lives.
Effective October 1, 1991, the Company began depreciating newly acquired assets
using the straight-line method, which conforms to prevailing industry practice.
The effect of the change was not material to the financial results. Service
lives for principal assets are 30 to 40 years for buildings and 8 to 12 years
for machinery and equipment.
EXCESS OF COST OVER NET ASSETS OF PURCHASED BUSINESSES
Assets and liabilities related to business combinations accounted for as
purchase transactions are recorded at their respective fair values. Excess of
cost over net assets of purchased businesses is amortized on a straight-line
basis over the periods estimated to be benefited, not exceeding 40 years.
REVENUE RECOGNITION
The Company recognizes the vast majority of its revenues through the sale of
manufactured products as shipped.
INTEREST RATE SWAP AGREEMENTS
The net amount to be paid or received under interest rate swap agreements is
accrued over the life of the agreements as a separate component of interest
expense.
<PAGE>
INCOME TAXES
No provision is made for U.S. income taxes on the undistributed earnings of
non-U.S. subsidiaries (approximately $550 million at September 30, 1994),
primarily because retention of a significant portion of these earnings is
considered essential for continuing operations. In those cases where
distributions have been made, additional income taxes, if any, have been minimal
due to available foreign tax credits.
EARNINGS PER COMMON SHARE
Earnings per common share is computed by dividing net earnings by the weighted
average number of common shares outstanding during the applicable periods. The
weighted average number of common shares outstanding was 224,232,225 shares,
225,082,844 shares, and 224,252,059 shares in 1994, 1993 and 1992, respectively.
FINANCIAL PRESENTATION CHANGES
Certain prior year amounts have been reclassified to conform to the current year
presentation.
30
<PAGE>
(2) BUSINESS COMBINATIONS AND DIVESTITURES
On October 1, 1992, the Company acquired Fisher Controls International, Inc.,
and its subsidiaries and other related operations for $1,254.7 million (net of
cash and equivalents acquired) in a business combination accounted for as a
purchase. Fisher is a worldwide manufacturer of control valves and control
systems for major process industries including chemical, oil and gas, and pulp
and paper. Assets (excluding cash and equivalents) acquired and liabilities
assumed in connection with the Company's purchase acquisitions follow (dollars
in millions):
<TABLE>
<CAPTION>
1994 1993 1992
----- ------- ----
<S> <C> <C> <C>
Fair value of assets acquired....................... $96.7 1,644.1 74.7
Less liabilities assumed............................ 38.6 380.7 13.5
----- ------- ----
Cash paid, net..................................... $58.1 1,263.4 61.2
===== ======= ====
</TABLE>
On December 14, 1993, the Company sold the Aerospace unit of its Rosemount Inc.
subsidiary (fiscal 1993 sales of approximately $130 million) for $301 million
($206 million net of income taxes). The transaction resulted in a pretax gain of
$242 million. The net earnings impact of this gain was substantially offset in
the first quarter by other non-recurring items ($50 million pretax impact) and
the adoption of SFAS No. 106 (see note 7). Other non-recurring items principally
consist of severance and related costs arising from relocation of several
operations, or work force reductions, primarily in the Company's European
heating, ventilating and air conditioning, and process control businesses.
On September 30, 1992, Emerson and Robert Bosch GmbH established a 50-50 joint
venture for the development, manufacture and distribution of power tools. The
Company contributed its Skil business (excluding receivables totaling $65
million and certain non-U.S. businesses) and Bosch contributed its U.S. power
tool operations and cash of $130 million to form S-B Power Tool Company. Emerson
received $44 million from the sale of the non-U.S. businesses to the newly
formed partnership. The joint venture is accounted for under the equity method;
Skil had 1992 sales of approximately $350 million. The transaction resulted in a
1992 pretax gain of $43 million which is included in Corporate and other items
in note 12. The fourth quarter 1992 results also included a pretax charge of
approximately $50 million for the shutdown and restructuring of facilities and
operations, the majority of which is reflected in the Commercial and Industrial
segment in note 12. In fiscal 1995, the Company received a preferential
distribution from S-B Power Tool Company of approximately $41 million.
On an unaudited pro forma basis, assuming consummation of the Fisher and
Skil/Bosch transactions at the beginning of fiscal 1992, net sales would have
been approximately $8,275 million in 1992. Net earnings and earnings per share
would not have been significantly different from reported amounts.
The results of operations of these businesses have been included in the
Company's consolidated results of operations since the respective dates of the
acquisitions and prior to the dates of the divestitures.
<PAGE>
(3) SHORT-TERM BORROWINGS AND LINES OF CREDIT
Short-term borrowings consist primarily of commercial paper and non-U.S. bank
borrowings as follows (dollars in millions):
<TABLE>
<CAPTION>
United States Non-U.S.
----------------------------- -------------------------
1994 1993 1992 1994 1993 1992
-------- -------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Borrowings at year end........................ $ 502.2 920.4 176.6 264.2 108.2 175.8
Weighted average interest rate at year end.... 4.6% 4.6% 3.8% 6.2% 7.5% 10.5%
Month-end average borrowings during the year.. $ 741.7 1,335.1 462.3 175.5 133.9 190.7
Month-end weighted average
interest rate during the year................ 4.6% 4.4% 4.3% 6.8% 10.0% 10.1%
Highest month-end level of
borrowings during the year................... $1,014.4 1,546.3 581.2 264.2 168.8 230.5
</TABLE>
In October 1992, in connection with the Fisher acquisition (see note 2), the
Company issued $1.275 billion of U.S. commercial paper and swapped these
borrowings to a weighted average fixed rate of 4.6 percent. At September 30,
1994, approximately $650 million of the Company's floating interest rate
borrowings remained swapped for up to one year; at September 30, 1993,
borrowings of approximately $900 million were swapped for periods up to two
years. Excluding the impact of these swaps, interest expense would have been $83
million and $105 million, and the U.S. year-end weighted average interest rate
would have been 4.9 percent and 3.1 percent in 1994 and 1993, respectively.
31
<PAGE>
Lines of credit amounting to $700 million were maintained with various banks at
September 30, 1994, to support U.S. commercial paper and to assure availability
of funds. These lines of credit are effective through January 1995. There were
no borrowings against U.S. lines of credit in the last three years. The
Company's non-U.S. subsidiaries maintained bank credit facilities in various
currencies approximating $560 million ($455 million unused) at September 30,
1994. In some instances, borrowings against these credit facilities have been
guaranteed by the Company to assure the availability of funds at favorable
interest rates.
(4) LONG-TERM DEBT
Long-term debt is summarized as follows (dollars in millions):
<TABLE>
<CAPTION>
1994 1993
------ -----
<S> <C> <C>
7 7/8% Eurodollar notes due 1998.............................................. $100.0 100.0
Medium-term notes due through 1996 swapped to a weighted average
effective interest rate of 4.2 percent at September 30, 1994.................. 153.5 292.6
8% convertible subordinated debentures due 1997 through 2011................... 45.6 47.1
Lease obligations payable in installments through 2009 with a weighted
average interest rate of 6.5 percent at September 30, 1994.................... 25.7 39.4
Other, principally notes payable in installments through 2006 with a weighted
average interest rate of 6.5 percent at September 30, 1994.................... 112.0 114.2
------ -----
436.8 593.3
Less current maturities........................................................ 156.9 155.3
------ -----
Total......................................................................... $279.9 438.0
====== =====
</TABLE>
The 7 7/8% Eurodollar notes were exchanged for non-U.S. dollar obligations of
the same maturity. The non-U.S. dollar obligations have a weighted average
interest rate of 5.5 percent and 6.1 percent at September 30, 1994 and 1993,
respectively, and are composed of 136 million Dutch guilders, 5 billion Japanese
yen and 27 million Swiss francs. These non-U.S. dollar obligations have been
designated as a partial hedge of the Company's non-U.S. dollar net asset
exposure. The effects of exchange rate fluctuations on these obligations are
included in cumulative translation adjustments and other liabilities.
Long-term debt maturing during each of the four years after 1995 is $71.1
million, $9.9 million, $132.2 million and $8.3 million, respectively. Total
interest paid related to short-term borrowings and long-term debt was
approximately $90 million, $126 million and $86 million in 1994, 1993 and 1992,
respectively.
(5) FINANCIAL INSTRUMENTS
The Company is a party to various financial instruments with off-balance-sheet
risk. No loss is anticipated due to nonperformance by the counterparties to
these agreements.
<PAGE>
In addition to the 7 7/8% notes described above, the Company has entered into
foreign currency and interest rate exchange agreements that partially hedge
non-U.S. dollar net asset exposures and provide for the legal right of offset.
At September 30, 1994, the Company was required to deliver 133 million German
marks in fiscal 1995 with interest at 6.6 percent in exchange for U.S. $82
million with interest at U.S. commercial paper rates. At September 30, 1993,
these agreements required the Company to deliver 267 million German marks with
interest at a weighted average rate of 6.9 percent and 2.5 billion Japanese yen
with interest at 4.99 percent in exchange for U.S. $184 million with interest at
U.S. commercial paper rates.
As part of its currency hedging strategy, the Company also utilizes option and
forward exchange contracts to minimize the impact of currency fluctuations on
transactions, cash flows and firm commitments. These contracts for the sale or
purchase of European and other currencies generally mature within one year. The
Company and its subsidiaries had approximately $225 million and $250 million of
contracts outstanding at September 30, 1994 and 1993, respectively.
Fair values of the Company's financial instruments are estimated by reference to
quoted prices from market sources and financial institutions, as well as other
valuation techniques. Unless otherwise stated, the estimated fair value of each
class of financial instruments approximated the related carrying value at
September 30, 1994 and 1993.
32
<PAGE>
(6) RETIREMENT PLANS
The Company sponsors retirement plans covering substantially all employees.
Benefits are provided to employees under defined benefit pay-related and
flat-dollar plans which are primarily noncontributory. Annual contributions to
retirement plans equal or exceed the minimum funding requirements of the
Employee Retirement Income Security Act or applicable local regulations.
The Company also sponsors defined contribution plans and participates in
multiemployer plans for certain union employees. Benefits are determined and
funded annually based on terms of the plans or as stipulated in collective
bargaining agreements.
Retirement plan expense for the years ended September 30, 1994, 1993 and 1992,
follows (dollars in millions):
<TABLE>
<CAPTION>
U.S. Plans Non-U.S. Plans
------------------------- --------------------
1994 1993 1992 1994 1993 1992
------ ------ ------ ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Defined benefit plans:
Service cost (benefits earned during the period).. $ 27.9 23.5 18.5 7.2 7.8 7.3
Interest cost..................................... 75.6 69.0 51.2 13.3 13.6 11.0
Actual return on plan assets...................... (26.3) (137.3) (68.7) (8.9) (21.9) (.6)
Net amortization and deferral..................... (76.8) 38.2 (9.1) (3.3) 8.8 (8.1)
------ ------ ------ ---- ----- ----
Net periodic pension expense (income)........... .4 (6.6) (8.1) 8.3 8.3 9.6
Defined contribution and multiemployer plans....... 39.5 41.5 35.3 3.9 3.5 4.5
------ ------ ------ ---- ----- ----
Total retirement plan expense..................... $ 39.9 34.9 27.2 12.2 11.8 14.1
====== ====== ====== ==== ===== ====
</TABLE>
The retirement plan expense information reflects the impact of the October 1,
1992 Fisher acquisition.
<PAGE>
The actuarial present value of benefit obligations and the funded status of the
Company's defined benefit pension plans as of September 30, 1994 and 1993,
follow (dollars in millions):
<TABLE>
<CAPTION>
U.S. Plans Non-U.S. Plans
----------------- --------------
1994 1993 1994 1993
------ ------ ------ ------
<S> <C> <C> <C> <C>
Accumulated benefit obligation...................................... $ 840.0 768.4 167.7 143.9
======== ======= ===== ======
Vested benefits included in accumulated benefit obligation.......... $ 729.3 698.0 139.8 123.7
======== ======= ===== ======
Projected benefit obligation........................................ $1,000.6 934.3 193.6 169.7
Plan assets at fair value (primarily corporate equity
and fixed income securities)....................................... 1,057.5 1,064.5 136.7 125.2
-------- ------- ----- ------
Plan assets in excess of (less than) projected benefit obligation 56.9 130.2 (56.9) (44.5)
Unamortized transition amount....................................... (58.1) (65.3) (1.8) (2.5)
Unrecognized net loss (gain)........................................ 73.8 1.7 (3.5) (8.5)
Unrecognized prior service costs.................................... 23.8 27.2 1.1 1.1
-------- ------- ----- ------
Pension asset (liability) recognized in the balance sheet.......... $ 96.4 93.8 (61.1) (54.4)
======== ======= ===== ======
</TABLE>
For 1994, the assumed discount rate, rate of increase in compensation levels and
expected long-term rate of return on plan assets used in the actuarial
calculations were, respectively, 8.0 percent, 5.0 percent and 10.5 percent for
U.S. plans; and an average of 7.6 percent, 4.4 percent and 9.1 percent for
non-U.S. plans. For 1993, the assumed discount rate, rate of increase in
compensation levels and expected long-term rate of return on plan assets were,
respectively, 8.0 percent, 5.0 percent and 10.0 percent for U.S. plans; and an
average of 8.0 percent, 4.7 percent and 8.9 percent for non-U.S. plans.
33
<PAGE>
(7) POSTRETIREMENT PLANS
The Company sponsors unfunded postretirement benefit plans (primarily health
care) for U.S. retirees and their dependents. Effective October 1, 1993, the
Company adopted Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" (OPEB), which
requires that these costs be accrued over the service lives of employees. The
Company recognized the transition obligation arising from service prior to
adoption in the first quarter as a cumulative effect of change in accounting
principle of $115.9 million (net of $74.1 million in related income tax
benefits). In addition, prior to adoption the Company had recorded OPEB
liabilities of approximately $100 million in accordance with Accounting
Principles Board Opinion No. 16. The statement will not have a material impact
on the Company's ongoing results of operations.
Total postretirement plan expense for the year ended September 30, 1994 was
$27.3 million, consisting of $5.6 million service cost and $21.7 million
interest. Prior to the adoption of SFAS No. 106, postretirement plan expense was
approximately $16 million and $11 million for 1993 and 1992, respectively.
The actuarial present value of accumulated postretirement benefit obligations as
of September 30, 1994 and October 1, 1993 follows (dollars in millions):
<TABLE>
<CAPTION>
1994 1993
------ -----
<S> <C> <C>
Retirees.................................................................... $186.5 177.4
Fully eligible active plan participants..................................... 17.6 26.9
Other active plan participants.............................................. 74.0 91.7
------ -----
Accumulated postretirement benefit obligation............................. 278.1 296.0
Unrecognized net gain....................................................... 27.7 --
------ -----
Postretirement benefit liability.......................................... $305.8 296.0
====== =====
</TABLE>
The assumed discount rate used in measuring the obligation as of September 30,
1994 was 7.75 percent; the initial assumed health care cost trend rate was 11.0
percent, declining to 5.0 percent in the year 2001. The assumed discount rate
used in measuring the obligation as of October 1, 1993 was 7.25 percent; the
initial assumed health care cost trend rate was 12.0 percent, declining to 5.0
percent in the year 2008. A one-percentage-point increase in the assumed health
care cost trend rate for each year would increase the obligation as of September
30, 1994 by approximately 6 percent and increase the 1994 postretirement plan
expense by approximately 8 percent.
<PAGE>
(8) COMMON STOCK
The Company has various stock option plans which permit certain officers and
employees to purchase common stock at specified prices. At September 30, 1994,
2,716,074 options were available for grant under these plans. Changes in the
number of shares subject to option during 1994 follow:
<TABLE>
<CAPTION>
SHARES
AVERAGE SUBJECT
PRICE TO OPTION
------- ---------
<S> <C> <C>
Beginning of year............................................................ $34.51 1,595,449
Options granted............................................................. 56.63 805,884
Options exercised (419,730 shares in 1993 and 325,316 shares in 1992)....... 30.79 (337,780)
Options canceled............................................................ 53.16 (33,056)
---------
End of year.................................................................. 43.61 2,030,497
=========
Exercisable at year end (1,261,532 shares in 1993)................................... 1,019,440
=========
</TABLE>
The 1993 Incentive Shares Plan authorizes the distribution of a maximum of 3
million shares of common stock to key management personnel. At September 30,
1994, 212,000 incentive shares had been issued and 952,485 rights to receive
common shares had been awarded, contingent upon accomplishing certain objectives
by 1997.
At September 30, 1994, 9,291,714 shares of common stock were reserved, including
7,602,726 shares for issuance under the Company's stock plans and 1,688,988
shares for conversion of the outstanding 8% convertible subordinated debentures
at a price of $26.97 per share. The estimated fair value of the debentures was
$101 million and $103 million at September 30, 1994 and 1993, respectively.
During 1994, 1,976,906 treasury shares were acquired and 799,520 treasury shares
were issued.
34
<PAGE>
Approximately 2.5 million preferred shares are reserved for issuance under a
Preferred Share Purchase Rights Plan. Under certain conditions involving
acquisition of or an offer for 20 percent or more of the Company's common stock,
all holders of Rights, except an acquiring entity, would be entitled (i) to
purchase, at an exercise price of $120, common stock of the Company or an
acquiring entity with a value twice the exercise price, or (ii) at the option of
the Board, to exchange each Right for one share of common stock. The Rights
remain in existence until November 1, 1998, unless earlier redeemed (at one cent
per Right), exercised or exchanged under the terms of the plan.
(9) INCOME TAXES
In the fourth quarter of 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," effective October
1, 1992. The adoption of this standard changed the Company's method of
accounting for income taxes from the deferred method to the liability method.
The effect of the change was not material to the financial statements.
The principal components of income tax expense follow (dollars in millions):
<TABLE>
<CAPTION>
1994 1993 1992
------- ----- -----
Federal:
<S> <C> <C> <C>
Current............................................... $ 383.1 258.5 255.7
Deferred.............................................. 8.9 35.5 14.3
State and local........................................ 57.5 41.0 37.8
Non-U.S................................................ 73.9 68.9 73.2
------- ----- -----
Income tax expense.................................... $ 523.4 403.9 381.0
======= ===== =====
</TABLE>
The federal corporate statutory rate is reconciled to the Company's effective
income tax rate as follows:
<TABLE>
<CAPTION>
1994 1993 1992
----- ----- -----
<S> <C> <C> <C>
Federal corporate statutory rate....................... 35.0% 34.8% 34.0%
State and local taxes, less federal tax benefit....... 2.4 2.4 2.4
Other................................................. (.7) (.9) .1
---- ---- ----
Effective income tax rate.............................. 36.7% 36.3% 36.5%
==== ==== ====
</TABLE>
<PAGE>
The principal components of deferred tax assets (liabilities) follow (dollars in
millions):
<TABLE>
<CAPTION>
1994 1993
-------- -------
<S> <C> <C>
Property, plant and equipment and intangibles.......... $(205.7) (177.2)
Leveraged leases....................................... (189.8) (183.1)
Pension................................................ (42.0) (37.1)
Accrued liabilities.................................... 193.8 172.8
Postretirement benefits................................ 119.2 41.1
Employee compensation and benefits..................... 78.7 83.3
Other.................................................. 57.0 25.4
------- ------
Total deferred tax assets (liabilities)............... $ 11.2 (74.8)
======= ======
</TABLE>
At September 30, 1994 and 1993, respectively, net current deferred tax assets
were $244.0 million and $219.4 million, and net noncurrent deferred tax
liabilities were $232.8 million and $294.2 million. Total income taxes paid were
approximately $535 million, $365 million and $315 million in 1994, 1993 and
1992, respectively.
35
<PAGE>
(10) OTHER FINANCIAL DATA
Items charged to earnings during the years ended September 30, 1994, 1993 and
1992, included the following (dollars in millions):
<TABLE>
<CAPTION>
1994 1993 1992
------ ----- -----
<S> <C> <C> <C>
Research, new product development and product improvement costs.......... $298.2 272.4 244.8
Maintenance and repairs.................................................. 155.1 138.9 126.8
Rent expense............................................................. 113.1 109.2 103.4
</TABLE>
The Company leases computers, transportation equipment and various other
property under operating lease agreements. The minimum annual rentals under
noncancelable long-term leases, exclusive of maintenance, taxes, insurance and
other operating costs, will approximate $54 million in 1995 and decline
substantially thereafter.
Other assets at September 30, 1994 and 1993, included the following (dollars in
millions):
<TABLE>
<CAPTION>
1994 1993
------ -----
<S> <C> <C>
Equity investments.................................... $410.0 375.6
Investment in leveraged leases........................ 201.1 203.4
</TABLE>
The market value of the Company's equity investments in publicly traded
companies exceeded the related carrying value by approximately $108 million and
$78 million at September 30, 1994 and 1993, respectively.
Selected accrued expenses at September 30, 1994 and 1993, follow (dollars in
millions):
<TABLE>
<CAPTION>
1994 1993
------ -----
<S> <C> <C>
Employee compensation................................. $218.2 221.4
Insurance, including self-insurance................... 109.0 115.5
Taxes, excluding income taxes......................... 93.2 87.1
Warranty.............................................. 84.4 68.7
Pension and profit-sharing plans...................... 47.9 49.5
Interest.............................................. 25.6 25.9
</TABLE>
<PAGE>
(11) CONTINGENT LIABILITIES AND COMMITMENTS
At September 30, 1994, the Company had guaranteed $373 million of indebtedness
of a 50-percent-owned joint venture, Vermont American Corporation. If required
to perform under the guarantee, the Company will be indemnified for up to $146
million by its joint venture partner, Robert Bosch GmbH.
In the normal course of business prior to the distribution to stockholders of
ESCO Electronics Corporation in 1990, the Company had guaranteed certain of
ESCO's contracts with agencies of the U.S. Government or as a subcontractor.
ESCO will pay the Company an annual fee of $7.4 million through 1995 in
connection with the guaranteed contracts. The remaining backlog of work expected
to be performed under contracts guaranteed by the Company totaled approximately
$82 million at September 30, 1994. In certain circumstances, if ESCO fails to
secure its obligation to indemnify the Company with respect to one or more of
the guaranteed contracts, the Company will have the right to direct the removal
and election of ESCO's Board of Directors until such time as conditions giving
rise to this right are rectified. Management believes it is highly unlikely that
the Company will incur a loss as a result of the guaranteed contracts, or that
circumstances will arise under which the Company would exercise this right.
At September 30, 1994, there were no other known contingent liabilities
(including guarantees, pending litigation, taxes and other claims) that, in the
opinion of management, are expected to be material in relation to the Company's
financial position, nor were there any material commitments outside the normal
course of business.
Emerson is in the process of acquiring several companies with combined annual
sales of approximately $450 million. If completed, the total cost of these
transactions would approximate $550 million. These companies include F.G. Wilson
(Engineering) Ltd., a manufacturer of diesel generator sets located in the
United Kingdom, and Control Techniques, plc, an industry leader in the design
and production of electronic drives for electric motors. Prior to the proposed
transaction, Emerson owned nearly 30 percent of Control Techniques.
36
<PAGE
(12) INDUSTRY SEGMENT INFORMATION
The Company is engaged principally in the design, manufacture and sale of a
broad range of electrical, electromechanical and electronic products and
systems. The products manufactured by the Company are classified into the
following industry segments: Commercial and Industrial Components and Systems;
and Appliance and Construction-Related Components. The Commercial and Industrial
segment includes process control instrumentation, valves and systems; industrial
motors and drives; industrial machinery, equipment and components; and
electronics. The Appliance and Construction-Related segment consists of
fractional horsepower motors; appliance components; heating, ventilating and air
conditioning components; and tools. Summarized information about the Company's
operations in each industry segment and geographic area follows (dollars in
millions):
<TABLE>
<CAPTION>
INDUSTRY SEGMENTS
(See note 2)
Net Sales to Income Before Income
Unaffiliated Customers Taxes and Accounting Change Total Assets
---------------------- ----------------------------- ----------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial and Industrial.... $4,947 4,891 4,079 675 656 534 5,009 4,816 3,603
Appliance and Construction-
Related..................... 3,660 3,283 3,627 602 558 552 2,711 2,512 2,510
Corporate and other items*... -- -- -- 240 17 49 495 486 514
Interest expense............. -- -- -- (89) (119) (91) -- -- --
------ ----- ----- ----- ----- ----- ----- ----- -----
Total....................... $8,607 8,174 7,706 1,428 1,112 1,044 8,215 7,814 6,627
====== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
Depreciation and Capital
Amortization Expense Expenditures
---------------------- ----------------------
1994 1993 1992 1994 1993 1992
------ ------ ------ ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Commercial and Industrial............................ $215 202 148 161 137 121
Appliance and Construction-Related................... 145 135 143 156 148 210
Corporate and other items............................ 5 4 4 15 21 15
---- --- --- --- --- ---
Total............................................... $365 341 295 332 306 346
==== === === === === ===
</TABLE>
<PAGE>
GEOGRAPHIC AREAS
<TABLE>
<CAPTION>
Net Sales to Income Before Income
Unaffiliated Customers Taxes and Accounting Change Total Assets
---------------------- ----------------------------- ----------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
-------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States................ $5,953 5,568 5,128 956 862 773 4,910 4,828 3,683
Europe....................... 1,933 1,948 2,075 147 162 160 2,140 1,893 2,091
Other Areas.................. 721 658 503 85 71 62 840 759 453
Corporate and other items*... -- -- -- 240 17 49 495 486 514
Eliminations................. -- -- -- -- -- -- (170) (152) (114)
------ ----- ----- ----- ----- ----- ----- ----- -----
Total....................... $8,607 8,174 7,706 1,428 1,112 1,044 8,215 7,814 6,627
====== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
*Income includes $242 million Aero gain in 1994.
37
<PAGE>
(13) QUARTERLY FINANCIAL INFORMATION (Unaudited)
(Dollars in millions except per share amounts)
<TABLE>
<CAPTION>
FINANCIAL RESULTS
Net Sales Gross Profit Net Earnings
----------------- ---------------- -------------
1994 1993 1994 1993 1994 1993
-------- -------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
First Quarter*............ $2,009.5 1,983.8 706.1 687.6 178.0 163.2
Second Quarter............ 2,116.5 2,056.7 745.7 714.4 194.3 177.7
Third Quarter............. 2,243.7 2,092.1 784.0 735.7 208.0 187.2
Fourth Quarter............ 2,237.5 2,041.2 818.4 746.3 208.2 180.0
-------- ------- ------- ------- ----- -----
Fiscal Year.............. $8,607.2 8,173.8 3,054.2 2,884.0 788.5 708.1
======== ======= ======= ======= ===== =====
</TABLE>
<TABLE>
<CAPTION>
Earnings Per Dividends Per
Common Share Common Share
---------------- -------------
1994 1993 1994 1993
------ ------ -------------
<S> <C> <C> <C> <C>
First Quarter*.......................... $ .79 .73 .39 .36
Second Quarter.......................... .87 .79 .39 .36
Third Quarter........................... .93 .83 .39 .36
Fourth Quarter.......................... .93 .80 .39 .36
----- ---- ---- ----
Fiscal Year............................ $3.52 3.15 1.56 1.44
===== ==== ==== ====
</TABLE>
* Income before cumulative effect of change in accounting principle was $293.9
million, or $1.31 per common share, in the first quarter of 1994, reflecting the
gain on sale of Aero and other non-recurring items (see notes 2 and 7).
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Stock Prices
Price Range Per Common Share
---------------------------------
1994 1993
---------------- ---------------
High Low High Low
-------- ------ ------ -------
<S> <C> <C> <C> <C>
First Quarter.............................. $61 55 3/8 55 3/4 50 1/4
Second Quarter............................. 65 7/8 57 7/8 60 52 3/4
Third Quarter.............................. 61 1/8 56 1/8 62 3/8 56 7/8
Fourth Quarter............................. 64 57 61 1/4 57 5/8
Fiscal Year............................... $65 7/8 55 3/8 62 3/8 50 1/4
</TABLE>
Emerson Electric Co. common stock (Symbol EMR) is listed on the New York Stock
Exchange and Chicago Stock Exchange.
38
<PAGE>
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS AND STOCKHOLDERS
EMERSON ELECTRIC CO.:
We have audited the accompanying consolidated balance sheets of Emerson Electric
Co. and subsidiaries as of September 30, 1994 and 1993, and the related
consolidated statements of earnings, stockholders' equity, and cash flows for
each of the years in the three-year period ended September 30, 1994. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Emerson Electric Co.
and subsidiaries as of September 30, 1994 and 1993, and the results of their
operations and their cash flows for each of the years in the three-year period
ended September 30, 1994, in conformity with generally accepted accounting
principles.
As discussed in note 7 to the consolidated financial statements, effective
October 1, 1993, the Company changed its method of accounting for
postretirement benefits other than pensions.
KPMG Peat Marwick LLP
St. Louis, Missouri
November 1, 1994
<PAGE> Exhibit 21
SUBSIDIARIES AND AFFILIATES OF EMERSON ELECTRIC CO.
SEPTEMBER 30, 1994
Jurisdiction
of
Legal Name Incorporation
---------- -------------
Alco Controls S.A. de C.V. Mexico
Branson Ultrasonic S.A. Switzerland
Commercial Cam Co., Inc. Delaware
Compania de Motores Domesticos S.A.de C.V. Mexico
Computer Power Systems (Europe) Ltd. U.K.
Controles Electromecanicos De Mexico Mexico
Con-Tek Valves, Inc. Georgia
Copeland Electric Corporation Delaware
Digital Appliance Controls, Inc. Delaware
Digital Appliance Controls Korea, Inc. Delaware
Digital Appliance Controls Manufacturing Delaware
(Singapore) Pte Ltd. Singapore
EECO, Inc. Delaware
Appleton Electric Company Delaware
Copeland Corporation Delaware
CDP International, Inc. Delaware
Copeland Access +, Inc. Delaware
Copeland International, Inc. Ohio
Copeland Redevelopment Corporation Missouri
Sillcox Overseas Investment, Inc. Delaware
Pameco-Aire Asia Private Limited Singapore
Emerson Electric (U.S.) Holding Corporation Delaware
Asco GmbH Germany
Asco GmbH & Co. Germany
Automatic Switch Company Delaware
Asco Investment Corp. New Jersey
Angar Scientific Company,Inc. New Jersey
Asco Controls A.G. Switzerland
Asco Controls B.V. Netherlands
Asco Mideast B.V. Netherlands
Asco GmbH Hungary
Ascomation Pty. Ltd. Australia
Ascomation (NZ) Limited New Zealand
Asco Sweden AB Sweden
Asco (Japan) Company Ltd. Japan
Asco Services, Inc. New Jersey
Ascomatica S.A. de C.V. Mexico
Ascoval Industria E Commercio Ltda.Brazil
Hanover Advertising Services, Inc. New Jersey
Joucomatic Controls, Inc. N. Carolina
Branson Ultrasonics Corporation Delaware
Branson Korea Co., Inc. Korea
<PAGE>
Branson Plastics Joining, Inc. New York
Branson Precision Cleaning Company California
Branson Ultrasonidos S.A.E. Spain
Branson Ultrasons S.A. France
Krautkramer France S.A. France
Chromalox GmbH Germany
Copeland GmbH Germany
Compresreurs Mechaniques
Frigorifiques S.A. France
Copeland France S.A. France
Copeland Benelux BV Netherland
Copeland Deutchland Verwaltung
GmbH Germany
Copeland Corporation Limited U.K.
Prestcold GmbH Germany
Copeland Italia S.a.R.l. Italy
Copeland Deutchland GmbH & Co. Germany
Copeland Iberica CIB S.A. Spain
Copeland Norden AB Sweden
Copeland Refrigeration Europe S.A. Belgium
Emerson Electric GmbH Germany
Alco Controls France S.A. France
Emerson Electric GmbH & Co. Germany
Emerson Electric Overseas Finance Corp. Delaware
U.S.E.M. de Mexico S.A. de C.V. Mexico
Motores U.S. de Mexico, S.A. Mexico
Emerson Technologies GmbH Germany
Emerson Technologies GmbH & Co. Germany
Fisher Controls G.m.B.H. Germany
Krautkramer GmbH Germany
Krautkramer GmbH & Co. Germany
Liebert GmbH Germany
Liebert A.G. Switzerland
Ridge Tool GmbH Germany
Ridge Tool GmbH & Co. Germany
Rosemount GmbH Germany
Rosemount GmbH & Co. Germany
Rosemount Inc. Minnesota
Fisher Rosemount Middle East Delaware
Kay-Ray/Sensall, Inc. Delaware
Ohkura-Rosemount Co., Ltd. Japan
Rosemount AB Sweden
Rosemount Analytical Inc. Delaware
Rosemount AS (Norway) Norway
Rosemount China Inc. Minnesota
Rosemount Espana, S.A. Spain
Fisher Controls, S.A. Spain
Fisher-Rosemount Holding AG Switzerland
Fisher Controls Ges. M.B.H. Austria
Fisher-Rosemount AG Switzerland
Fisher-Rosemount A/S Denmark
Fisher-Rosemount Poland Ltd. Poland
Rosemount Instruments Pty. Ltd. Australia
Emerson Electric Co. Pty Ltd. Australia
<PAGE>
Rosemount Instruments Ltd. New Zealand
Rosemount Instruments Taiwan, Ltd. Taiwan
Rosemount Korea, Ltd. Korea
Rosemount Mexicana S.A. de C.V. Mexico
Rosemount Nuclear Instruments Delaware
Rosemount Office Systems, Inc. Minnesota
Rosemount S.A.R.L. France
Rosemount Portugal S.A. Portugal
Rosemount Shanghai Co. Limited China
Fisher-Rosemount Singapore
Pte. Ltd. Singapore
Tekmar Company Ohio
Valmet-Rosemount Inc. (50% owned) Finland
PEPT Investment Corporation Delaware
S-B Power Tool Company
(partnership - 50% owned) Delaware
Inversiones 421-10, C.A. Venezuela
Skil Venezolana S.R.L. Venezuela
Skil Canada Inc. Canada
Skil de Mexico S.A. de C.V. Mexico
Skil International
Holding B.V. Netherlands
Skil Europe B.V. Netherlands
Skil Benelux B.V. Netherlands
Skil Trading B.V. Netherlands
Skil Germany GMBH Germany
Skil Germany
GMBH Co. Germany
Skil France S.A. France
Skil Sweden A.B. Sweden
Skil(Western Hemisphere) Corp.Illinois
Skil Europe Corporation Delaware
Skil GmbH Austria
Skil AB Sweden
Xomox Corporation Ohio
Flow Technology, Inc. Ohio
Flow Technology S.A. de C.V. Mexico
Naegelen S.A. France
Industria e Comerco Ltda. Brazil
Xomox A G Switzerland
Xomox S.A. de C.V. Mexico
Xomox Korea Ltd. Korea
Xomox International GmbH Germany
Gulde Regelarmaturen B.V. Netherlands
Gulde Regelarmaturen
Verwaltungs GmbH Germany
Gulde Regelarmaturen
Verwaltungs GmbH & Co. Germany
Xomox International GmbH & Co. Germany
Emerson Power Transmission Corporation Delaware
Emerson Chain, Inc. Delaware
Regina-Emerson Company
(partnership - 50% owned) Wisconsin
<PAGE>
UCC Corp. Wisconsin
Emerson Electronic Motion Controls, Inc.Minnesota
Liebert Corporation Ohio
Control Concepts Corporation Delaware
Emersub XXV, Inc. Delaware
Computersite-Preparations, Inc. Ohio
Liebert Corporation Australia Pty, Ltd. Australia
Liebert Far East Limited Hong Kong
Liebert Far East Pte. Ltd. Singapore
Liebert (Malaysia) Sdn.Bhd. Malaysia
Liebert Hong Kong Ltd. Hong Kong
Liebert International B.V. Netherlands
Liebert Limited U.K.
Micro Motion, Inc. Colorado
Ridge Tool Company Ohio
Ridge Tool (Australia) Pty., Ltd. Australia
Ridge Tool Manufacturing Company Delaware
Ridgid Vaerktoj A/S Denmark
Ridgid Italia S.R.L. Italy
Ridgid Werkzeuge AG Switzerland
Therm-O-Disc, Incorporated Ohio
Componentes Avanzados de Mexico, S.A.
de C.V. Mexico
Controles de Temperatura S.A. de C.V. Mexico
E.G.P. Corporation Delaware
Emerson Electric (Asia) Limited Hong Kong
Branson Ultrasonics (Asia Pacific)
Co. Ltd. Hong Kong
Emerson Electric (South Asia/Pacific)
Pte. Ltd. Singapore
Emerson Electric (Shenzhen) Co. Ltd. China
Emerson Machinery Equipment (Shenzhen)
Co. Ltd. China
Emerson Electric II, C.A. Venezuela
Emerson Electric, C.A. Venezuela
Emerson Electric Foreign Sales Corporation Virgin
Islands
Emerson Electric Ireland Ltd. Bermuda
Emerson Electric Nederland B.V. Netherlands
Branson Ultrasonics B.V. Netherlands
Brooks Instrument B.V. Netherlands
Emerson Computer Power B.V. Netherlands
Capax Electrische Apparatenfabriek B.V. Netherlands
Fisher Controls B.V. Netherlands
Fusite, B.V. Netherlands
Rosemount Benelux B.V. Netherlands
Skil AG Switzerland
Emerson Electric Puerto Rico, Inc. Delaware
Emerson Puerto Rico, Inc. Delaware
Emerson Electric (Taiwan ) Company Limited Taiwan
Emerson Finance Co. Delaware
Emersub XIX, Inc. Delaware
Emerson Capital Funding, Inc. Delaware
Emerson Sice S.p.A. Italy
<PAGE>
C.E. Set S.R.L. Italy
Branson Ultrasuoni S.P.A. Italy
Fisher Controls, S.P.A. Italy
Fisher Italia Italy
Rosemount Italia S.R.L. Italy
Xomox Italia S.R.L. Italy
Emerson Pacific Pte. Ltd. Singapore
EMR Holdings, Inc. Delaware
Emerson Electric Canada Ltd. Canada
Appleton Electric Limited Canada
Ascolectric Limited Canada
Fisher Controls Company of Canada
Ltd. Canada
Rosemount Instruments Ltd. Canada
Sweco Canada, Inc. Canada
Therm-O-Disc (Canada) Limited Canada
Xomox Canada Ltd. Canada
Emerson Electric Hungary Ltd. Hungary
Emerson Electric Iberica S.A. Spain
Emerson Electric (M) SDN BHD Malaysia
Emerson Electric Slovakia Slovakia
Emerson Electric (Thailand) Limited Thailand
Emerson Holding Company Limited U.K.
Emerson Electric (U.K.) Limited U.K.
Hocking Holdings Ltd.(50% owned) U.K.
Hocking NDT Limited U.K.
Nippon Hocking U.K.
Fisher Controls Ltd. U.K.
Rosemount Limited U.K.
Xomox U.K. Limited U.K.
Switched Reluctance Drives Ltd. (SRDL) U.K.
Reluctance Motors Ltd. U.K.
Emerson Europe S.A. France
Crouzet Electromenager S.A. France
Crouzet SpA Italy Italy
Fisher Controls, S.A. France
Francel S.A. France
Joucomatic S.A. France
Fluidocontrol S.A. Spain
Joucomatic Controls Ltd. U.K.
Joucomatic GmbH Steuergeraete Germany
Joucomatic S.p.A. Italy
S.A. Joucomatic N.V. Belgium
Sotrac S.r.l. Italy
Omet S.A. France
Ridge Tool France S.A. France
Leroy-Somer S.A. France
Bertrand-Polico S.A. France
Constructions Electriques
de Beaucourt S.A. France
Electronique du Sud-Ouest S.A. France
Atelier de Bobinage de
Moteurs Electriques
S.a.r.L France
Belzon & Richardot S.A. France
<PAGE>
Construction Electriques
du Nord S.A. France
Lorraine Services Electrique
Electronique Electromecanique
S.A.R.L. France
M.I.S. Poitouraine
S.A.R.L. France
M.I.S. Kerebel Provence
S.A.R.L. France
Marcel Oury S.a.r.L. France
Mezierres S.A. France
Establissements J.
Michel S.A. France
Maintenance Industrie
Service S.a.r.L. France
Maintenance Industrie
Services Le Havre
S.a.r.L. France
Maintenance Industrie
Services Rennes
S.a.r.L. France
Maintenance Industrie
Services Rhone-Alpes
S.A.R.L. France
Maintenance Industrie
Services Toulouse
S.a.r.L. France
Navarre Services S.A.R.L. France
Ouest Electro Service
S.A.R.L. France
Societe Nouvelle Paillet
Services S.A.R.L. France
Radiel Bobinage S.A.R.L. France
Societe Nouvelle Silvain
S.A.R.L. France
M.I.S. Societe Peaucelle
D'Installations et
Reparations Electriques
S.A.R.L. France
Viet Services S.A.R.L. France
Leroy-Somer Chilena Servicios
Electromecanicos Ltd. Chile
Poteau Moderne du
Sud-Ouest S.A. France
Etablissements Sevenier S.A. France
Etablissements Trepeau S.A. France
Girard Transmissions S.A. France
La Francaise de Manutention S.A. France
Leroy-Somer AB Sweden
Leroy-Somer Belgium S.A. Belgium
Leroy-Somer do Brasil Industria
E. Commercio Ltd. Brazil
Leroy-Somer Canada Ltd. Canada
Leroy-Somer Danmark A/S Denmark
<PAGE>
Leroy-Somer
Elektroantriebe GmbH Austria
Leroy-Somer
Elektromotoren GmbH Germany
Leroy-Somer Finland OY Finland
Leroy-Somer Iberica S.A. Spain
Leroy-Somer International N.V. Netherlands
Leroy-Somer Italiana S.p.A. Italy
Leroy-Somer Ltd. U.K.
Leroy-Somer Maroc S.A. (50% owned) Morocco
Leroy-Somer Motores E Sistemas
Electromecanicos Ltda. Portugal
Leroy-Somer Nederland BV Netherlands
Leroy-Somer Norge A/S Norway
Leroy-Somer (Pty) Ltd. Australia
Leroy-Somer (SEA) Pte. Ltd. Singapore
Leroy-Somer Suisse S.A. Switzerland
MLS Industries Inc. Delaware
Yorba Linda
International Inc. Delaware
Maintenance Industrielle de
Vierzon S.A. France
MOTADOUR S.A. France
Moteurs Leroy-Somer S.A. France
Moteurs Leroy-Somer Canada Ltd. Canada
Moteurs Patay S.A. France
Societe Anonyme de Mecanique
et D'outillage du
Vivarais S.A. France
Societe Civile Immobiliere
des Jacquieres France
Societe Con Folentaise de
Metalurgie S.A. France
Societe de Mecanique
et D'Electromthermie
des Pays de L'Adour S.A. France
Societe Commerciale des
Ateliers de Constructions
Electriques D'Orleans S.A. France
Fisher Controls, S.A.N.V. Belgium
Shanghai Branson Co. Limited China
Etirex S.A. France
Fisher Controls International, Inc. Delaware
Exac Corporation California
Fisher Controles Do Brasil Ltda. Brazil
Fisher Controls Asia Pacific Ltd. Delaware
Fisher Controls De Mexico, S.A. De C.V. Mexico
Fisher Controls Hong Kong Limited Hong Kong
Tianjin Fisher Valve Co. Ltd. China
Fisher Controls PTY. Limited Australia
Fisher Service Company Delaware
Fisher Systems & Installation Company Delaware
Industrious Fisher Controls de
Venezuela S.A. Venezuela
<PAGE>
Nippon Fisher Company Ltd. Japan
Fisco Ltd.(Fisco Kabushiki Kaisha) Japan
Fisher-Rosemount Hungary Ltd. Hungary
Fusite Holding Corporation Ohio
Emerson Japan, Ltd. Japan
Brooks Instruments K.K. Japan
Innoven III Corporation Delaware
Krautkramer Branson Incorporated Connecticut
Stresstel Corporation California
Leatherneck Acquisition II Corporation Delaware
Buehler International, Inc. Delaware
Buehler Ltd. Illinois
Buehler Holdings Delaware
Buehler Europe Ltd. U.K.
Buehler UK Ltd. U.K.
Wirtz-Buehler GmbH Germany
Buehler-Met AG Switzerland
Buehler-Met Handela Austria
Buehler-Met Handelgesell-
schaff M.B.H. Australia
Tech-Met Canada Ltd. Canada
Louisville Ladder Corp. Missouri
McGill Manufacturing Company Indiana
McGill International Inc. Taiwan
Metaloy, Inc. Mass
Motores Hermeticos del Sur, S.A. de C.V. Mexico
Ridge Tool Europe, S.A. Belgium
Ridgid Ferramentas E. Maquinas, Ltda. Brazil
Rosemount S.A. (Belgium) Belgium
SWECO, Inc. California
SWECO Europe, S.A. Belgium
Termo-Controles de Juarez S.A. de C.V. Mexico
Transmisiones de Potencia Emerson S.A. de C.V. Mexico
U.S. Electrical Motors D.C. Motor Plant, Inc. Delaware
Vermont American Corporation (50% owned) Delaware
Carbide Blast Joints, Inc. Texas
Clairson International Corp. Florida
Credo Tool Company Delaware
DML, Inc. N. Carolina
Gilmour Manufacturing Company Pennsylvania
Gilmour Hose Company Delaware
VA Export, Ltd. Virgin
Islands
VAC Data Management, Inc. Delaware
Vermont American (Australia) Ltd. Nevada
Vermont American Canada Inc. Canada
Vermont American Corporation,
Fountain Inn Delaware
Vermont Westa Werkzeugbau GmbH Germany
VA Holding Company Delaware
Western Forge Corporation Delaware
Wiegand S.A. de C.V. Mexico
<PAGE>
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors
Emerson Electric Co.:
We consent to incorporation by reference in Registration Statement
Nos. 33-32576, 33-24034, 33-38805, 33-34948, 33-34633, 33-11521,
33-2739, 2-76653, 2-63717, 2-52671, and 2-44288 on Form S-8 and
Registration Statement No. 33-39109 on Form S-3 of Emerson
Electric Co. of our reports dated November 1, 1994, relating to the
consolidated balance sheets of Emerson Electric Co. and subsidiaries
as of September 30, 1994 and 1993, and the related consolidated
statements of earnings, stockholders' equity, and cash flows for
each of the years in the three-year period ended September 30, 1994,
and all related schedules, which reports appear or are incorporated
by reference in the September 30, 1994 annual report on Form 10-K
of Emerson Electric Co. Our report refers to a change in accounting
for postretirement benefits other than pensions.
St. Louis, Missouri KPMG PEAT MARWICK LLP
December 21, 1994
<PAGE> Exhibit 24
POWER OF ATTORNEY
The undersigned members of the Board of Directors and
Executive Officers of Emerson Electric Co., a Missouri corporation
with principal offices at 8000 West Florissant Avenue, St. Louis,
Missouri 63136, hereby appoint W. J. Galvin as their Attorney-in-
Fact for the purpose of signing Emerson Electric Co.'s Securities
and Exchange Commission Form 10-K (and any and all amendments
thereto) for the fiscal year ended September 30, 1994.
Dated: December 21, 1994.
-------------------
Signature Title
--------- -----
/s/C. F. Knight Chairman of the Board and Chief
----------------------------- Executive Officer and Director
C. F. Knight
/s/W. J. Galvin Senior Vice President -
----------------------------- Finance and Chief Financial
W. J. Galvin Officer (and Principal Accounting
Officer)
/s/J. J. Adorjan Director
-----------------------------
J. J. Adorjan
/s/L. L. Browning, Jr. Director
-----------------------------
L. L. Browning, Jr.
/s/A. A. Busch, III Director
-----------------------------
A. A. Busch, III
/s/D. C. Farrell Director
-----------------------------
D. C. Farrell
/s/J. A. Frates Director
-----------------------------
J. A. Frates
<PAGE>
/s/R. B. Horton Director
-----------------------------
R. B. Horton
/s/G. A. Lodge Director
-----------------------------
G. A. Lodge
/s/V. R. Loucks, Jr. Director
-----------------------------
V. R. Loucks, Jr.
/s/R. B. Loynd Director
-----------------------------
R. B. Loynd
/s/B. A. Schriever Director
-----------------------------
B. A. Schriever
/s/R. W. Staley Director
-----------------------------
R. W. Staley
/s/A. E. Suter Director
-----------------------------
A. E. Suter
/s/W. M. Van Cleve Director
-----------------------------
W. M. Van Cleve
/s/E. E. Whitacre, Jr. Director
-----------------------------
E. E. Whitacre, Jr.
/s/E. F. Williams, Jr. Director
-----------------------------
E. F. Williams, Jr.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1994
EMERSON ELECTRIC CO. CONSOLIDATED STATEMENT OF EARNINGS AND CONSOLIDATED
BALANCE SHEET FILED WITH THE COMPANY'S 1994 FORM 10-K AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<CASH> 113,300
<SECURITIES> 0
<RECEIVABLES> 1,584,600
<ALLOWANCES> 42,000
<INVENTORY> 1,392,200
<CURRENT-ASSETS> 3,338,200
<PP&E> 3,840,700
<DEPRECIATION> 1,893,400
<TOTAL-ASSETS> 8,215,000
<CURRENT-LIABILITIES> 2,617,300
<BONDS> 279,900
<COMMON> 238,300
0
0
<OTHER-SE> 4,103,500
<TOTAL-LIABILITY-AND-EQUITY> 8,215,000
<SALES> 8,607,200
<TOTAL-REVENUES> 8,607,200
<CGS> 5,553,000
<TOTAL-COSTS> 5,553,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 88,500
<INCOME-PRETAX> 1,427,800<F1>
<INCOME-TAX> 523,400
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (115,900)<F2>
<NET-INCOME> 788,500
<EPS-PRIMARY> 3.52
<EPS-DILUTED> 0
<FN>
<F1> Income-pretax (before accounting change) includes $242 million Aero
gain and other non-recurring charges of $50 million. The net earnings impact
of these non-recurring items was substantially offset by the accounting change.
<F2> Cumulative effect of change in accounting for postretirement benefits.
Income before accounting change was $904.4 million.
</FN>
</TABLE>
