<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, 1995
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, 1995: $15,867 million.
Common stock outstanding at October 31, 1995: 224,003,608 shares.
Documents Incorporated by Reference
1. Portions of Emerson Electric Co. 1995 Annual Report to Stockholders
(Parts I and II).
2. Portions of Emerson Electric Co. Notice of 1996 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, 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 changes and total assets
attributable to each industry segment for the three years ended
September 30, 1995 are set forth in Note 12 of Notes to Consolidated
Financial Statements on page 39 of the 1995 Annual Report, which note is
hereby incorporated by reference. Information with respect to acquisition
and divestiture activities by Emerson is set forth in Note 2 of Notes to
Consolidated Financial Statements on page 33 of the 1995 Annual Report,
which note is 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, various types of pressure and vacuum relief valves and personal
computer-based software used for industrial automation applications. 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, electronic variable speed drives and diesel generator
sets. 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 $1,815
million and $1,546 million at September 30, 1995 and 1994, respectively.
Nearly all of the September 30, 1995 consolidated backlog amount is
expected to be shipped within one year. The estimated backlog by industry
segment at September 30, 1995 and 1994 follows (dollars in millions):
1995 1994
------- -------
Commercial and Industrial $ 1,215 1,000
Appliance and Construction-Related 600 546
------- -------
Consolidated Order Backlog $ 1,815 1,546
======= =======
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 $354.2 million in 1995,
$298.2 million in 1994 and $272.4 million in 1993.
ENVIRONMENT
-----------
Compliance with laws regulating the discharge of materials into the
environment or otherwise relating to the protection of the
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.
5
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EMPLOYEES
---------
Emerson and its subsidiaries had an average of approximately 78,900
employees during 1995.
DOMESTIC AND FOREIGN OPERATIONS
-------------------------------
International sales were $4,386 million in 1995, $3,243 million in
1994 and $3,168 million in 1993, including U.S. exports of $768
million, $589 million and $562 million in 1995, 1994 and 1993,
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 39
of the 1995 Annual Report for further information with respect to
foreign operations.
Item 2. Properties
-------------------
At September 30, 1995, Emerson had approximately 275 manufacturing
locations worldwide, of which approximately 150 were located in 25
countries outside the United States. Approximately 185 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, 1995.
-------------------------------------------
6
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Executive Officers of the Registrant
The following sets forth certain information as of December 1995 with
respect to Emerson's executive officers. These officers have been
elected or appointed to terms which will expire February 6, 1996:
First
Served as
Name Position Age Officer
---- -------- --- ----------
C. F. Knight* Chairman of the Board, President
and Chief Executive Officer 59 1972
A. E. Suter* Senior Vice Chairman and
Chief Operating Officer 60 1979
R. W. Staley* Vice Chairman - Asia Pacific 60 1975
W. J. Galvin Senior Vice President - Finance
and Chief Financial Officer 49 1984
W. W. Withers Senior Vice President,
Secretary and
General Counsel 55 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.
7
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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 40 of the
1995 Annual Report is hereby incorporated by reference. There were
approximately 31,000 stockholders at September 30, 1995.
Item 6. Selected Financial Data
--------------------------------
Years ended September 30
(Dollars in millions except per share amounts)
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
Net sales $ 10,012.9 8,607.2 8,173.8 7,706.0 7,427.0
Net earnings $ 907.7 788.5 708.1 662.9 631.9
Earnings
per common share $ 4.06 3.52 3.15 2.96 2.83
Cash dividends
per common share $ 1.78 1.56 1.44 1.38 1.32
Long-term debt $ 208.6 279.9 438.0 448.0 450.2
Total assets $ 9,399.0 8,215.0 7,814.5 6,627.0 6,364.4
Income before cumulative effect of change in accounting for postemployment
benefits ($21.3 million; $.10 per share) was $929.0 million in 1995. Net
earnings in 1995 includes non-recurring items which were substantially
offset by the accounting change.
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 and 7 of Notes to Consolidated
Financial Statements on pages 33 and 36 of the 1995 Annual Report for
information regarding these items and the Company's acquisition and
divestiture activities.
8
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Item 7. Management's Discussion and Analysis of Financial Condition
--------------------------------------------------------------------
and Results of Operations
-------------------------
Narrative discussion appearing in the 1995 Annual Report under "Results
of Operations" and "Financial Position, Capital Resources and Liquidity"
on pages 22 through 26, is hereby incorporated by reference. Subsequent to
year end, the Company announced an agreement in principle for Caterpillar Inc.
to take an equity position in Emerson's F.G. Wilson subsidiary. The
transaction is contingent upon negotiating a definitive agreement and
receiving applicable regulatory approvals.
Item 8. Financial Statements and Supplementary Data
----------------------------------------------------
The consolidated financial statements of the Company and its
subsidiaries on pages 27 through 40 and the report thereon of KPMG
Peat Marwick LLP appearing on page 41 of the 1995 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 1996
annual stockholders' meeting (the "1996 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 1996 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
1996 Proxy Statement is hereby incorporated by reference.
Item 13. Certain Relationships and Related Transactions
--------------------------------------------------------
Information appearing under "Certain Business Relationships" in the
1996 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 27 through 40 and the report
thereon of KPMG Peat Marwick LLP appearing on page 41 of
the 1995 Annual Report.
2. Financial Statement Schedules
All 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 1995 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, incorporated by reference to Emerson
Electric Co. 1994 Form 10-K, Exhibit 3(b).
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. 33-62545, 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.
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.
11
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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)* 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(e)* 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(f)* 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(g)* 1993 Incentive Shares Plan, incorporated by
reference to Emerson Electric Co. 1993 Proxy
Statement dated December 16, 1992, Exhibit A, and
Amendment No. 2 filed herewith.
10(h)* 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(i)* Emerson Electric Co. Directors' Continuing
Compensation Plan, incorporated by reference to
Emerson Electric Co. 1987 Form 10-K, Exhibit 10(g).
10(j)* Deferred Compensation Plan for Non-Employee
Directors, as amended, incorporated by reference to Emerson
Electric. Co. 1994 Form 10-K, Exhibit 10(k).
10(k)* Emerson Electric Co. Supplemental Executive
Retirement Plan, incorporated by reference to
Emerson Electric Co. 1989 Form 10-K, Exhibit 10(i).
12
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10(l)* Second Amendment to the Supplemental Executive
Savings Investment Plan, incorporated by reference
to Emerson Electric Co. 1991 Form 10-K, Exhibit
10(j).
10(m)* 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, 1995
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, 1995.
13
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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 20, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below on December 20, 1995, by the
following persons on behalf of the registrant and in the capacities
indicated.
Signature Title
--------- -----
*
---------------------------------------- Chairman of the Board, President
C. F. Knight and 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
L. L. Browning, Jr.
*
---------------------------------------- Director
A. A. Busch III
*
---------------------------------------- Director
D. C. Farrell
*
---------------------------------------- Director
J. A. Frates
14
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*
---------------------------------------- Director
R. B. Horton
*
---------------------------------------- Director
G. A. Lodge
*
---------------------------------------- Director
V. R. Loucks, Jr.
*
---------------------------------------- Director
R. B. Loynd
*
---------------------------------------- Director
R. L. Ridgway
*
---------------------------------------- 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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INDEX TO EXHIBITS
-----------------
Exhibits are listed by numbers corresponding to the Exhibit Table of
Item 601 in Regulation S-K.
Exhibit No. Exhibit
---------- -------
10(g) Amendment No. 2 to the 1993 Incentive Shares plan
13 Portions of Annual Report to Stockholders for
the year ended September 30, 1995, 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.
16
<PAGE>
EXHIBIT 10(g)
AMENDMENT NO. 2 TO
EMERSON ELECTRIC CO.
1993 INCENTIVE SHARES PLAN
--------------------------
WHEREAS, pursuant to Section 12 of the Emerson Electric Co. 1993
Incentive Shares Plan ("Plan") the Compensation and Human Resources Committee
("Committee")of the Board of Directors of Emerson Electric Co. was given the
authority, subject to specified limitations, to amend the Plan; and
WHEREAS, the Committee has approved an authorized Amendment to the Plan
as herein set forth.
NOW THEREFORE, the Plan is amended as follows:
1. The title and the first paragraph of Section 7 are deleted and in
their place is substituted the following:
"7. Time of Payment. Subject to the provisions of the following
paragraghs of this Section 7, distribution of amounts to which a Participant
is entitled, because the applicable targeted performance objective is met,
shall be made as soon as practicable after the holder of the Performance
Shares becomes entitled thereto, unless payment of the Performance Award is
subject to specified vesting conditions after attainment of the performance
objective, in which case payment shall be delayed until such vesting
conditions have been satisfied."
* * * * * * *
The foregoing is the full text of Amendment No. 2 to the Emerson Electric
Co. 1993 Incentive Shares Plan as approved by the Compensation and Human
Resources Committee of the Board of Directors of Emerson Electric Co. on June
6, 1995.
<PAGE>
Financial Review Exhibit 13
RESULTS OF OPERATIONS
NET SALES
Emerson achieved record sales in fiscal 1995 of $10.0 billion, up $1.4 billion
or 16.3 percent from 1994. The 1995 sales comparison reflects strong demand,
impact of acquisitions and favorable exchange rates. Excluding the impact of
acquisitions and currency, international sales increased nearly $500 million
in 1995, or 15 percent, reflecting strong sales volume in all international
regions. Domestic sales increased approximately $265 million, primarily due
to moderate volume growth and slight price increases. New product sales,
from products introduced in the past five years, increased approximately $460
million or 21.7 percent to a record $2.6 billion, representing nearly 26
percent of sales. See note 2 for additional discussion of the Company's
acquisition and divestiture activity, which includes the U.K.-based F.G.
Wilson and Control Techniques acquisitions in 1995.
The joint ventures in which Emerson is a partner had combined annual sales
of $2.3 billion, $2.2 billion and $2.0 billion in 1995, 1994 and 1993,
respectively, which were not consolidated in Emerson's financial statements.
Emerson's proportionate share of the sales of its equity investees was $1.1
billion, $1 billion and $900 million, respectively. Joint ventures reported
double-digit sales growth excluding the contribution of Control Techniques in
1994. Equity earnings were $63 million in 1995, up from $48 million and $38
million in 1994 and 1993, respectively, reflecting increased volume and margin
improvement.
In 1994, sales were $8.6 billion, up $433 million or 5.3 percent from $8.2
billion in 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 of Rosemount Inc. New product sales
increased $167 million or 8.6 percent to $2.1 billion, representing 24.6
percent of sales.
INTERNATIONAL SALES
International sales, including U.S. exports, increased 35 percent to a record
$4.4 billion in 1995, representing nearly 44 percent of the Company's total
sales. All major international regions achieved double-digit sales growth,
highlighted by strong demand in Europe and continued rapid growth in Asia
Pacific. International sales benefited from strong worldwide markets, favorable
currency translation and acquisitions. Sales by non-U.S. subsidiaries were $3.6
billion in 1995, up $964 million or 36 percent from 1994. Excluding the impacts
of acquisition and divestiture activity and currency, non-U.S. subsidiary sales
increased 11 percent due to strong growth in all regions. U.S. exports
increased $179 million, or 30 percent, to a record $768 million in 1995,
reflecting strong export sales in the heating, ventilating and air conditioning
and process control businesses.
In 1994, international sales increased $75 million, or 2.4 percent to $3.2
billion, 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
22
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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 $589 million in 1994, while underlying export sales were up more
than 8 percent despite the stronger dollar.
INDUSTRY SEGMENT SALES
Sales in the Commercial and Industrial segment were $6.0 billion in 1995, up
$1.1 billion or 21.5 percent from 1994. Excluding acquisitions and
divestitures, underlying sales of the segment increased approximately 13
percent, reflecting robust international demand, solid domestic growth, new
products and favorable exchange rates. The underlying industrial motors and
drives business achieved double-digit growth due to strong domestic and
international capital goods demand, while total industrial motors and drives
sales were further aided by the acquisition of F.G. Wilson and Control
Techniques. The industrial components and equipment business realized a
double-digit sales increase due to worldwide strength in the capital goods
market. The process business also reported double-digit sales growth due to
strengthening international demand for measurement, distributed control system
and control valve products. Strong sales growth in the electronics business
resulted from new product acceptance and strong domestic market demand.
Sales in the Appliance and Construction-Related segment were $4.0 billion in
1995, an increase of $341 million or 9.3 percent from 1994, primarily
reflecting double-digit underlying international growth. Double-digit sales
growth by the heating, ventilating and air conditioning business reflected
strong international demand, further acceptance of new products and market
penetration gains. The tools business reported strong sales growth due to
domestic demand for hand tools, global demand for professional plumbing tools
and an acquisition. The appliance components business reported strong sales
growth due to international appliance market strength and an acquisition. Sales
growth in the fractional horsepower motors business benefited from strength in
the domestic market during the first half of the fiscal year.
In 1994, sales in the Appliance and Construction-Related segment increased $377
million, or 11.5 percent, to $3.7 billion, 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.
In 1994, sales in the Commercial and Industrial segment increased $56 million,
or 1.1 percent, to $4.9 billion. Excluding acquisitions, the divestiture of the
Aerospace unit of Rosemount Inc. 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.
23
<PAGE>
TOTAL COSTS AND EXPENSES
Cost of sales for 1995 was $6.5 billion, an increase of 16.7 percent over 1994,
due primarily to increased sales volume. In 1994, cost of sales was $5.6
billion compared to $5.3 billion in 1993, an increase of 5.0 percent. Cost of
sales as a percent of net sales was 64.7 percent in 1995 compared to 64.5
percent and 64.7 percent in 1994 and 1993, respectively. Gross profit margins
have remained at high levels as a result of the Company's ongoing commitments
to cost reduction efforts and productivity improvement programs.
Selling, general and administrative (SG&A) expenses were $1.9 billion, $1.7
billion and $1.6 billion in 1995, 1994 and 1993, respectively. As a percent of
net sales, SG&A expenses were 19.3 percent in 1995 compared to 19.5 percent and
19.7 percent in 1994 and 1993, respectively. The decreases in SG&A expenses as
a percent of net sales in 1995 and 1994 are due primarily to higher volume and
ongoing cost reduction efforts, partially offset by increased investment in new
product development and other revenue growth programs. The Company continued
its commitment to new product development by increasing engineering and
development expense 18.8 percent to a record $354 million in 1995, compared to
$298 million and $272 million in 1994 and 1993, respectively.
Interest expense increased to $111 million in 1995 from $89 million in 1994
primarily due to additional debt issued to finance the F.G. Wilson and Control
Techniques acquisitions. In 1994, interest expense decreased from $119 million
in 1993 due to debt reduction resulting from strong operating cash flow.
The first quarter of 1995 included a $41 million preferential distribution from
the S-B Power Tool joint venture and other non-recurring items. The net
earnings impact of the non-recurring items was substantially offset by the
adoption of SFAS No. 112. The first quarter of 1994 included a gain on sale of
the Aerospace unit of Rosemount Inc. of $242 million and other non-recurring
items of $50 million. Other non-recurring items principally consisted of
severance and related costs arising from relocation of several operations, or
workforce reductions, primarily in the Company's European process control and
heating, ventilating and air conditioning 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 $63 million in 1995, compared to $50 million and $46
million in 1994 and 1993, respectively. The increase in other deductions, net,
in 1995 is primarily due to additional goodwill amortization.
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECTS OF ACCOUNTING CHANGES
Income before income taxes and cumulative effects of changes in accounting
principles included the S-B Power Tool distribution in 1995, the gain on sale
of the Aerospace unit of Rosemount Inc. in 1994 and other non-recurring items
in both years. Excluding these items, income increased approximately 15
percent, reflecting increased worldwide sales volume, acquisitions and improved
international margins, partially offset by higher interest expense.
Income before interest expense, income taxes and accounting changes in the
Commercial and Industrial segment increased $161 million, or 23.9 percent, to
$836 million in 1995. This improvement is primarily a result of underlying
strength in international markets, solid domestic growth and the F.G. Wilson
and Control Techniques acquisitions. Income of the segment was 13.9 percent and
13.6 percent of net sales in 1995 and 1994, respectively, reflecting the
increase in volume and ongoing cost reduction efforts.
Income in the Appliance and Construction-Related segment increased $82 million,
or 13.6 percent, to $684
24
<PAGE>
million in 1995. As a percent of net sales, income of the segment was 17.1
percent in 1995 and 16.4 percent in 1994. These results reflect the increase in
international sales volume and effect of prior year non-recurring items. See
note 12 for additional information by industry segment and geographic area.
Excluding non-recurring items, income before income taxes and cumulative effect
of accounting change increased 11 percent in 1994, 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, reflecting a
solid increase in domestic sales volume in all businesses, partially offset by
non-recurring items. Income in the Commercial and Industrial segment increased
$19 million, or 2.9 percent, to $675 million in 1994, primarily resulting from
a modest increase in domestic sales volume and ongoing cost reduction efforts.
Excluding non-recurring items, margins improved in both segments.
INCOME TAXES
Income taxes before accounting changes were $531 million, $523 million and $404
million in 1995, 1994 and 1993, respectively. The effective income tax rate was
36.4 percent in 1995, compared to 36.7 percent in 1994 and 36.3 percent in
1993. The higher 1994 rate primarily reflects $95 million of income taxes on
the divestiture of the Aerospace unit of Rosemount Inc.
CUMULATIVE EFFECTS OF CHANGES IN ACCOUNTING PRINCIPLES
Effective October 1, 1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 112, "Employers' Accounting for Postemployment
Benefits," which establishes accounting standards for workers' compensation,
disability and severance benefits. The Company recognized the obligation in the
first quarter as a cumulative effect of change in accounting principle which
decreased 1995 net earnings and earnings per common share by $21.3 million and
$.10, respectively. The adoption of the statement does not have a material
impact on the Company's ongoing results of operations.
Effective October 1, 1993, the Company adopted 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 of 1994
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 in 1993.
NET EARNINGS AND RETURN ON EQUITY
Net earnings for 1995 were a record $908 million, up 15.1 percent from $789
million in 1994. Net earnings as a percent of sales was 9.1 percent, compared
to 9.2 percent in 1994 which represented the highest level achieved during the
Company's consecutive years of increased earnings. Earnings per common share
were a record $4.06 in 1995, up 15.3 percent from $3.52 in 1994. The 1995
acquisitions made a small contribution to earnings per share. Emerson achieved
a return on average stockholders' equity of 19.7 percent compared to 19.1
percent in 1994 and 18.5 percent in 1993, respectively.
Net earnings for 1994 were up 11.4 percent from $708 million in 1993. Earnings
per common share were up 11.7 percent from $3.15 in 1993.
25
<PAGE>
FINANCIAL POSITION, CAPITAL RESOURCES AND LIQUIDITY
The Company continues to generate substantial cash from operations and remains
in a strong financial position with resources available for reinvestment in
existing businesses, strategic acquisitions and managing the capital structure.
CASH FLOW
Emerson generated record operating cash flow of $1,142 million in 1995,
compared to $1,097 million and $1,075 million in 1994 and 1993, respectively.
Operating working capital was approximately 18 percent of sales in 1995, 1994
and 1993. Accounts receivable and inventories increased from September 30, 1994
due primarily to stronger 1995 operations, acquisitions and the impact of
foreign exchange.
Capital expenditures were $421 million in 1995, up approximately 27 percent
from $332 million in 1994. Capital expenditures increased 8.7 percent in 1994
from $306 million in 1993. 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. The Board of
Directors has approved funding to nearly double the Company's worldwide
production capacity of Copeland Compliant Scroll compressors, including
construction of new facilities in Asia and Europe and expansion of U.S.
capacity.
Dividends were a record $398 million ($1.78 per share) in 1995, compared with
$350 million ($1.56 per share) in 1994 and $324 million ($1.44 per share) in
1993. During the fourth quarter, the Board of Directors voted to increase the
quarterly cash dividend 14 percent to an annualized rate of $1.96 per share, an
amount consistent with the Company's long-standing target payout ratio of 45 to
50 percent of prior year earnings.
Cash paid in connection with Emerson's purchase acquisitions was $236 million,
$58 million and $1,263 million in 1995, 1994 and 1993, respectively. See note 2
for additional information.
LEVERAGE/CAPITALIZATION
Total debt increased to $1.6 billion from $1.2 billion in 1994, reflecting the
acquisitions of F.G. Wilson and Control Techniques. See notes 2 and 3 for
additional information. In 1994, strong operating cash flow and the net
proceeds from the divestiture of the Aerospace unit of Rosemount Inc. of $206
million enabled the Company to reduce total debt $449 million from $1.6 billion
in 1993 and fund net treasury stock purchases of $111 million.
The total debt to total capital ratio was 24.7 percent at year-end 1995,
compared to 21.7 percent in 1994 and 29.3 percent in 1993. At September 30,
1995, net debt (total debt less cash and equivalents and short-term
investments) was 23.3 percent of net capital, compared to 20.0 percent in 1994
and 27.9 percent in 1993. The Company's interest coverage ratio (income before
income taxes, non-recurring items and interest expense divided by interest
expense) was 13.9 times in 1995 compared to 15.0 times in 1994 and 10.3 times
in 1993.
At year-end 1995, the Company maintained lines of credit of $975 million to
support commercial paper and had available non-U.S. bank credit facilities of
$500 million to support non-U.S. operations. In addition, as of September 30,
1995, the Company could issue up to $1 billion of debt securities under its
shelf registration with the Securities and Exchange Commission. Subsequent to
year end, the Company issued $250 million of 6.3%, 10-year notes which were
used to reduce outstanding U.S. commercial paper.
26
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Earnings
EMERSON ELECTRIC CO. AND SUBSIDIARIES
Years ended September 30
(Dollars in millions except per share amounts)
1995 1994 1993
--------- ------- -------
<S> <C> <C> <C>
Net sales $10,012.9 8,607.2 8,173.8
--------- ------- -------
Costs and expenses:
Cost of sales 6,480.4 5,553.0 5,289.8
Selling, general and administrative expenses 1,933.2 1,679.6 1,606.6
Interest expense 110.6 88.5 119.2
Gain on sale of business and other non-recurring items (34.3) (192.0) -
Other deductions, net 63.1 50.3 46.2
--------- ------- -------
Total costs and expenses 8,553.0 7,179.4 7,061.8
--------- ------- -------
Income before income taxes and cumulative
effects of changes in accounting principles 1,459.9 1,427.8 1,112.0
Income taxes 530.9 523.4 403.9
--------- ------- -------
Income before cumulative effects of changes
in accounting principles 929.0 904.4 708.1
Cumulative effects of changes in accounting principles; $.10 and
$.52 per common share, respectively (21.3) (115.9) -
--------- ------- -------
Net earnings $ 907.7 788.5 708.1
========= ======= =======
Earnings per common share $ 4.06 3.52 3.15
========= ======= =======
See accompanying notes to consolidated financial statements.
- -----------------------------------------------------------------------------------------------------
NOTE: Including the pretax impact of the cumulative effects of
accounting changes, income before income taxes would have been: $ 1,424.9 1,237.8 1,112.0
========= ======= =======
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
EMERSON ELECTRIC CO. AND SUBSIDIARIES
September 30
(Dollars in millions except per share amounts)
ASSETS
1995 1994
-------- -------
<S> <C> <C>
Current assets
Cash and equivalents $ 117.3 113.3
Receivables, less allowances of $45.2 in 1995
and $42.0 in 1994 1,757.6 1,542.6
Inventories:
Finished products 587.2 506.5
Raw materials and work in process 1,015.4 885.7
-------- -------
Total inventories 1,602.6 1,392.2
Other current assets 306.6 290.1
-------- -------
Total current assets 3,784.1 3,338.2
-------- -------
Property, plant and equipment
Land 153.4 150.3
Buildings 945.8 860.6
Machinery and equipment 2,950.5 2,671.0
Construction in progress 180.8 158.8
-------- -------
4,230.5 3,840.7
Less accumulated depreciation 2,095.6 1,893.4
-------- -------
Property, plant and equipment, net 2,134.9 1,947.3
-------- -------
Other assets
Excess of cost over net assets of purchased businesses,
less accumulated amortization of $304.4 in 1995 and $237.3 in 1994 2,384.9 1,862.9
Other 1,095.1 1,066.6
-------- -------
Total other assets 3,480.0 2,929.5
-------- -------
$9,399.0 8,215.0
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
28
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
1995 1994
-------- -------
<S> <C> <C>
Current liabilities
Short-term borrowings and current
maturities of long-term debt $1,387.1 923.3
Accounts payable 740.2 611.4
Accrued expenses 979.8 936.4
Income taxes 173.6 146.2
-------- -------
Total current liabilities 3,280.7 2,617.3
-------- -------
Long-term debt 208.6 279.9
-------- -------
Other liabilities 1,038.9 976.0
-------- -------
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
1995 and 1994 238.3 238.3
Additional paid-in capital 15.0 -
Retained earnings 5,128.3 4,619.1
Cumulative translation adjustments 17.0 8.7
-------- -------
5,398.6 4,866.1
Less cost of common stock in treasury, 14,439,861
shares in 1995 and 14,752,649 shares in 1994 527.8 524.3
-------- -------
Total stockholders' equity 4,870.8 4,341.8
-------- -------
$9,399.0 8,215.0
======== =======
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Stockholders' Equity
EMERSON ELECTRIC CO. AND SUBSIDIARIES
Years ended September 30
(Dollars in millions except per share amounts)
1995 1994 1993
-------- ------- -------
<S> <C> <C> <C>
Common stock $ 238.3 238.3 238.3
-------- ------- -------
Additional paid-in capital
Beginning balance - 4.1 -
Stock plans (4.7) (3.5) 5.0
Treasury stock issued for acquisitions and other 19.7 (.6) (.9)
-------- ------- -------
Ending balance 15.0 - 4.1
-------- ------- -------
Retained earnings
Beginning balance 4,619.1 4,182.5 3,798.6
Net earnings 907.7 788.5 708.1
Cash dividends (per share: 1995, $1.78;
1994, $1.56; 1993, $1.44) (398.5) (349.9) (324.2)
Stock plans - (2.0) -
-------- ------- -------
Ending balance 5,128.3 4,619.1 4,182.5
-------- ------- -------
Cumulative translation adjustments
Beginning balance 8.7 (69.1) 133.0
Translation adjustments 8.3 77.8 (202.1)
-------- ------- -------
Ending balance 17.0 8.7 (69.1)
-------- ------- -------
Treasury stock
Beginning balance (524.3) (440.7) (440.1)
Acquired (81.1) (116.5) (30.6)
Issued under stock plans 17.5 26.5 26.5
Issued for acquisitions and other 60.1 6.4 3.5
-------- ------- -------
Ending balance (527.8) (524.3) (440.7)
-------- ------- -------
Total stockholders' equity $4,870.8 4,341.8 3,915.1
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
30
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
EMERSON ELECTRIC CO. AND SUBSIDIARIES
Years ended September 30
(Dollars in millions)
1995 1994 1993
-------- ------- --------
<S> <C> <C> <C>
Operating activities
Net earnings $ 907.7 788.5 708.1
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation 303.0 274.0 269.3
Amortization of intangibles 105.9 90.5 71.4
Changes in operating working capital (190.9) (82.4) 25.7
Cumulative effects of changes in accounting principles 21.3 115.9 -
Gain on sale of business and other non-recurring items,
net of income taxes (20.7) (117.1) -
Other 16.1 27.4 .3
-------- ------- --------
Net cash provided by operating activities 1,142.4 1,096.8 1,074.8
-------- ------- --------
Investing activities
Capital expenditures (420.7) (332.3) (305.6)
Purchases of businesses, net of cash and equivalents acquired (235.5) (58.1) (1,263.4)
Proceeds from divestiture of businesses, net 8.3 205.9 -
Other 20.6 (1.2) 74.9
-------- ------- --------
Net cash used in investing activities (627.3) (185.7) (1,494.1)
-------- ------- --------
Financing activities
Net increase (decrease) in short-term borrowings
with maturities of 90 days or less 177.7 (239.7) 726.4
Proceeds from short-term borrowings 0.1 227.6 99.7
Principal payments on short-term borrowings (28.8) (266.8) (132.7)
Proceeds from long-term debt 2.4 4.6 190.4
Principal payments on long-term debt (217.2) (175.0) (91.6)
Net purchases of treasury stock (51.3) (110.8) (8.2)
Dividends paid (398.5) (349.9) (324.2)
-------- ------- --------
Net cash provided by (used in) financing activities (515.6) (910.0) 459.8
-------- ------- --------
Effect of exchange rate changes on cash and equivalents 4.5 10.3 (18.8)
-------- ------- --------
Increase in cash and equivalents 4.0 11.4 21.7
Beginning cash and equivalents 113.3 101.9 80.2
-------- ------- --------
Ending cash and equivalents $ 117.3 113.3 101.9
======== ======= ========
Changes in operating working capital
Receivables $ (85.2) (93.2) (11.5)
Inventories (100.2) (88.5) 53.4
Other current assets (32.1) 26.2 14.2
Accounts payable 47.2 96.0 (29.4)
Accrued expenses (47.3) (23.7) 6.9
Income taxes 26.7 .8 (7.9)
-------- ------- --------
$ (190.9) (82.4) 25.7
======== ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
31
<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. Depreciation is computed principally using the straight-line method
over estimated service lives. 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 nearly all of its revenues through the sale of
manufactured products as shipped.
Financial Instruments
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. Gains and losses on currency option and forward exchange contracts are
generally recognized in income with the underlying hedged transactions.
Currency fluctuations on non-U.S. dollar obligations that have been designated
as hedges of non-U.S. net asset exposures are included in cumulative
translation adjustments.
Income Taxes
No provision is made for U.S. income taxes on the undistributed earnings of
non-U.S. subsidiaries (approximately $620 million at September 30, 1995),
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 223,753,018 shares,
224,232,225 shares, and 225,082,844 shares in 1995, 1994 and 1993, respectively.
Financial Presentation Changes
Certain prior year amounts have been reclassified to conform to the current
year presentation.
32
<PAGE>
(2) BUSINESS COMBINATIONS AND DIVESTITURE
In the first quarter of 1995, the Company purchased F.G. Wilson (Engineering)
Ltd., a United Kingdom-based manufacturer of diesel generator sets, for
approximately $274 million. Emerson completed the acquisition of the remaining
shares of Control Techniques, plc, a United Kingdom-based manufacturer of
variable speed drives used for motor applications, in the second quarter of
1995 for approximately $227 million. F.G. Wilson and Control Techniques had
combined annual sales of approximately $425 million in 1994. The 1995 increases
in excess of cost over net assets of purchased businesses, receivables,
inventories, and short-term borrowings reflect the impact of these
acquisitions. In 1993, the Company purchased Fisher Controls International,
Inc., and related operations for $1,254.7 million. Fisher is a worldwide
manufacturer of control valves and control systems for major process
industries.
Cash paid in connection with the Company's purchase acquisitions, which include
several smaller businesses, follows (dollars in millions):
<TABLE>
<CAPTION>
1995 1994 1993
------- ---- -------
<S> <C> <C> <C>
Fair value of assets acquired...................... $855.7 96.7 1,644.1
Less liabilities assumed........................... 227.0 38.6 380.7
Less notes and common stock issued to sellers...... 393.2 - -
------- ---- -------
Cash paid (net of cash and equivalents acquired).. $235.5 58.1 1,263.4
======= ==== =======
</TABLE>
Earnings in the first quarter of fiscal 1995 included a $41.3 million
preferential distribution from the S-B Power Tool Company joint venture
("S-B") which was substantially offset by other non-recurring items and the
adoption of SFAS No. 112 (see note 7). Emerson has entered into an agreement
for Robert Bosch GmbH to acquire Emerson's fifty-percent interest in S-B,
subject to regulatory approvals, in late calendar 1996 and expects to recognize
a gain upon completion of the transaction.
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 of 1994 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 process control and heating, ventilating and air
conditioning businesses.
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 divestiture date.
(3) SHORT-TERM BORROWINGS AND LINES OF CREDIT
Short-term borrowings consist of commercial paper, notes issued to sellers in
connection with business combinations and non-U.S. bank borrowings as follows
(dollars in millions):
<TABLE>
<CAPTION>
United States Non-U.S.
-------------- -------------
1995 1994 1995 1994
----- ----- ----- -----
<S> <C> <C> <C> <C>
Borrowings at year end...................... $860.6 502.2 458.0 264.2
Weighted average interest rate at year end.. 6.0% 4.6% 5.0% 6.2%
</TABLE>
The 1995 F.G. Wilson and Control Techniques acquisitions were partially
financed by issuing notes to the sellers totaling 203 million British pounds.
The Company has swapped 141 million British pounds with a weighted average
interest rate of 6.9 percent to $223 million at U.S. commercial paper rates.
The remaining British pound obligations have been designated as a partial hedge
of the Company's U.K. net asset exposure.
In October 1992, in connection with the Fisher acquisition, 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 periods expiring during 1995.
Excluding the impact of these swaps, interest expense would have been $120
million and $83 million, and the U.S. year-end weighted average interest rate
would have been 6.3 percent and 4.9 percent in 1995 and 1994, respectively. At
September 30, 1995, the Company had $700 million of floating interest rate
obligations which have been capped at 7 percent throughout 1996.
33
<PAGE>
Lines of credit amounting to $975 million were maintained with various banks at
September 30, 1995, to support commercial paper and to assure availability of
funds. These lines of credit are effective through various dates in 1996. 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 $635 million ($500 million unused) at September 30,
1995. In some instances, borrowings against these credit facilities have been
guaranteed by the Company to assure the availability of funds at favorable
interest rates. In addition, as of September 30, 1995, the Company could issue
up to $1 billion of debt securities under its shelf registration with the
Securities and Exchange Commission.
(4) LONG-TERM DEBT
Long-term debt is summarized as follows (dollars in millions):
<TABLE>
<CAPTION>
1995 1994
----- -----
<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 5.3 percent at September 30, 1995.................. 53.5 153.5
8% convertible subordinated debentures due 1997 through 2011................... 38.5 45.6
Lease obligations payable in installments through 2009 with a weighted
average interest rate of 6.5 percent at September 30, 1995.................... 25.1 25.7
Other, principally notes payable in installments through 2006 with a weighted
average interest rate of 5.6 percent at September 30, 1995.................... 60.0 112.0
------ -----
277.1 436.8
Less current maturities........................................................ 68.5 156.9
------ -----
Total......................................................................... $208.6 279.9
====== =====
</TABLE>
The 7 7/8% Eurodollar notes and $55 million of U.S. commercial paper have
effectively been exchanged for non-U.S. dollar obligations due in 1998. The
non-U.S. dollar obligations have an effective weighted average interest rate of
5.0 percent and 5.5 percent at September 30, 1995 and 1994, 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.
Long-term debt maturing during each of the four years after 1996 is $10.3
million, $130.2 million, $6.4 million and $1.9 million, respectively. Total
interest paid related to short-term borrowings and long-term debt was
approximately $121 million, $90 million and $126 million in 1995, 1994 and
1993, respectively.
(5) FINANCIAL INSTRUMENTS
The Company selectively uses derivative financial instruments to manage
interest costs and minimize currency exchange risk. The Company does not hold
derivatives for trading purposes. No credit loss is anticipated as the
counterparties to these agreements are major financial institutions with high
credit ratings.
As part of its currency hedging strategy, the Company utilizes option and
forward exchange contracts to minimize the impact of currency fluctuations on
transactions, cash flows and firm commitments. The Company and its subsidiaries
had approximately $390 million and $225 million of contracts outstanding at
September 30, 1995 and 1994, respectively. These contracts for the sale or
purchase of European and other currencies generally mature within one year, and
deferred gains and losses are not material.
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. At September 30, 1995 and 1994, respectively, the
market value of the Company's convertible debentures was $102 million and $101
million, compared to the related carrying value of $38.5 million and $45.6
million. Common stock has been reserved for the conversion of these debentures
(see note 8). The fair values of derivative financial instruments were not
material at September 30, 1995, and the estimated fair value of each of the
Company's other classes of financial instruments approximated the related
carrying value at September 30, 1995 and 1994.
34
<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, 1995, 1994 and 1993,
follows (dollars in millions):
<TABLE>
<CAPTION>
U.S. Plans Non-U.S. Plans
---------------------------- ----------------------------
1995 1994 1993 1995 1994 1993
------- -------- ------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
Defined benefit plans:
Service cost (benefits earned during the period).. $ 28.0 27.9 23.5 7.7 7.2 7.8
Interest cost..................................... 80.8 75.6 69.0 15.2 13.3 13.6
Actual return on plan assets...................... (221.6) (26.3) (137.3) (18.4) (8.9) (21.9)
Net amortization and deferral..................... 113.5 (76.8) 38.2 5.1 (3.3) 8.8
------- ------- ------- ----- ----- -----
Net periodic pension expense (income)........... .7 .4 (6.6) 9.6 8.3 8.3
Defined contribution and multiemployer plans....... 39.4 39.5 41.5 7.5 6.5 6.1
------- ------- ------- ----- ----- -----
Total retirement plan expense..................... $ 40.1 39.9 34.9 17.1 14.8 14.4
======= ======= ======= ======= ===== =====
</TABLE>
The actuarial present value of benefit obligations and the funded status of the
Company's defined benefit pension plans as of September 30, 1995 and 1994,
follow (dollars in millions):
<TABLE>
<CAPTION>
U.S. Plans Non-U.S. Plans
--------------- ----------------
1995 1994 1995 1994
-------- ------- ------- ------
<S> <C> <C> <C> <C>
Accumulated benefit obligation........................................... $ 903.9 840.0 187.3 167.7
======== ======= ===== =====
Vested benefits included in accumulated benefit obligation............... $ 847.5 729.3 157.0 139.8
======== ======= ===== =====
Projected benefit obligation............................................. $1,068.2 1,000.6 216.8 193.6
Plan assets at fair value (primarily corporate equity
and fixed income securities)............................................ 1,238.0 1,057.5 158.6 136.7
-------- ------- ----- -----
Plan assets in excess of (less than) projected benefit obligation..... 169.8 56.9 (58.2) (56.9)
Unamortized transition amount............................................ (50.9) (58.1) (1.5) (1.8)
Unrecognized net loss (gain)............................................. (42.8) 73.8 (9.0) (3.5)
Unrecognized prior service costs......................................... 20.9 23.8 1.3 1.1
-------- ------- ----- -----
Pension asset (liability) recognized in the balance sheet............... $ 97.0 96.4 (67.4) (61.1)
======== ======= ====== ======
</TABLE>
For 1995, 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, 4.2 percent and 8.8 percent for non-
U.S. plans. For 1994, 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 10.5 percent for U.S. plans; and an
average of 7.6 percent, 4.4 percent and 9.1 percent for non-U.S. plans.
35
<PAGE>
(7) POSTRETIREMENT PLANS AND POSTEMPLOYMENT BENEFITS
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 of 1994 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 adoption of the statement does not have a
material impact on the Company's ongoing results of operations.
Net postretirement plan expense for the years ended September 30, 1995 and 1994
follows (dollars in millions):
<TABLE>
<CAPTION>
1995 1994
------ -----
<S> <C> <C>
Service cost......................................... $ 4.1 5.6
Interest cost........................................ 19.6 21.7
Net amortization and deferral........................ (3.5) ----
------ -----
$ 20.2 27.3
====== =====
</TABLE>
Prior to the adoption of SFAS No. 106, postretirement plan expense was
approximately $16 million in 1993. The actuarial present value of accumulated
postretirement benefit obligations as of September 30, 1995 and 1994 follows
(dollars in millions):
<TABLE>
<CAPTION>
1995 1994
------ -----
<S> <C> <C>
Retirees............................................. $168.2 186.5
Fully eligible active plan participants.............. 15.9 17.6
Other active plan participants....................... 64.4 74.0
------ -----
Accumulated postretirement benefit obligation...... 248.5 278.1
Unrecognized net gain................................ 48.1 27.7
Unrecognized prior service benefit................... 12.4 ----
------ -----
Postretirement benefit liability................... $309.0 305.8
====== =====
</TABLE>
The assumed discount rate used in measuring the obligation as of September 30,
1995 was 7.75 percent; the initial assumed health care cost trend rate was 9.0
percent, declining to 5.0 percent in the year 2004. 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. A one-percentage-point increase in the assumed health
care cost trend rate for each year would increase the obligation as of
September 30, 1995 by approximately 5 percent and increase the 1995
postretirement plan expense by approximately 6 percent.
Effective October 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits," which establishes accounting standards for workers' compensation,
disability and severance benefits. The Company recognized the obligation in the
first quarter of 1995 as a cumulative effect of change in accounting principle
of $21.3 million (net of $13.7 million in related income tax benefits). The
adoption of the statement does not have a material impact on the Company's
ongoing results of operations.
(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, 1995,
2,356,177 options were available for grant under these plans. Changes in the
number of shares subject to option during 1995 follow:
<TABLE>
<CAPTION>
Shares
Average Subject
Price to Option
------- ---------
<S> <C> <C>
Beginning of year....................................................... $43.61 2,030,497
Options granted........................................................ 58.23 408,063
Assumed options of acquired company.................................... 16.31 208,592
Options exercised (337,780 shares in 1994 and 419,730 shares in 1993).. 35.29 (356,281)
Options canceled....................................................... 55.79 (49,453)
---------
End of year............................................................. 44.78 2,241,418
=========
Exercisable at year end (1,019,440 shares in 1994)...................... 1,185,020
=========
</TABLE>
36
<PAGE>
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,
1995, 307,000 incentive shares had been issued and 1,455,382 rights to receive
common shares had been awarded, contingent upon accomplishing certain
objectives by 1997.
At September 30, 1995, 8,785,076 shares of common stock were reserved,
including 7,358,750 shares for issuance under the Company's stock plans and
1,426,326 shares for conversion of the outstanding 8% convertible subordinated
debentures at a price of $26.97 per share. During 1995, 1,229,900 treasury
shares were acquired and 1,542,688 treasury shares were issued.
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>
1995 1994 1993
------- ----- -----
<S> <C> <C> <C>
Federal:
Current............................................................ $ 301.5 383.1 258.5
Deferred........................................................... 46.3 8.9 35.5
State and local..................................................... 49.8 57.5 41.0
Non-U.S............................................................. 133.3 73.9 68.9
------- ----- -----
Income tax expense................................................. $ 530.9 523.4 403.9
======= ===== =====
</TABLE>
The federal corporate statutory rate is reconciled to the Company's effective
income tax rate as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Federal corporate statutory rate.................................... 35.0% 35.0% 34.8%
State and local taxes, less federal tax benefit.................... 2.2 2.4 2.4
Other.............................................................. (.8) (.7) (.9)
----- ----- -----
Effective income tax rate........................................... 36.4% 36.7% 36.3%
===== ===== =====
</TABLE>
The principal components of deferred tax assets (liabilities) follow (dollars
in millions):
<TABLE>
<CAPTION>
1995 1994
------- ------
<S> <C> <C>
Property, plant and equipment and intangibles.............................. $(242.5) (205.7)
Leveraged leases........................................................... (196.4) (189.8)
Pension.................................................................... (42.7) (42.0)
Accrued liabilities........................................................ 207.3 193.8
Postretirement and postemployment benefits................................. 132.7 119.2
Employee compensation and benefits......................................... 86.9 78.7
Other...................................................................... 61.3 57.0
------- ------
Total deferred tax assets (liabilities)................................... $ 6.6 11.2
======= ======
</TABLE>
At September 30, 1995 and 1994, respectively, net current deferred tax assets
were $232.8 million and $244.0 million, and net noncurrent deferred tax
liabilities were $226.2 million and $232.8 million. Total income taxes paid
were approximately $485 million, $535 million and $365 million in 1995, 1994
and 1993, respectively.
37
<PAGE>
(10) OTHER FINANCIAL DATA
Items charged to earnings during the years ended September 30, 1995, 1994 and
1993, included the following (dollars in millions):
<TABLE>
<CAPTION>
1995 1994 1993
------ ----- -----
<S> <C> <C> <C>
Research, new product development and product improvement costs.. $354.2 298.2 272.4
Rent expense..................................................... 129.2 113.1 109.2
</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 $63 million in 1996 and decline
substantially thereafter.
Other assets at September 30, 1995 and 1994, included the following (dollars in
millions):
<TABLE>
<CAPTION>
1995 1994
------ -----
<S> <C> <C>
Equity investments............................ $415.8 410.0
Investment in leveraged leases................ 198.4 201.1
</TABLE>
The market value of the Company's equity investments in publicly traded
companies exceeded the related carrying value by approximately $149 million and
$108 million at September 30, 1995 and 1994, respectively.
Selected accrued expenses at September 30, 1995 and 1994, follow (dollars in
millions):
<TABLE>
<CAPTION>
1995 1994
------ -----
<S> <C> <C>
Employee compensation......................... $236.0 218.2
Insurance, including self-insurance........... 110.8 109.0
Taxes, excluding income taxes................. 98.2 93.2
Warranty...................................... 86.1 84.4
Pension and profit-sharing plans.............. 51.7 47.9
Interest...................................... 26.6 25.6
</TABLE>
(11) CONTINGENT LIABILITIES AND COMMITMENTS
At September 30, 1995, the Company had guaranteed $370 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 $147
million by its joint venture partner, Robert Bosch GmbH.
At September 30, 1995, 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.
38
<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)
Income Before Income
Net Sales to Taxes and
Unaffiliated Customers Accounting Changes Total Assets
---------------------- ---------------------- -----------------------
1995 1994 1993 1995 1994 1993 1995 1994 1993
-------- ----- ----- ----- ----- ----- ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial and Industrial..... $ 6,012 4,947 4,891 836 675 656 6,076 5,009 4,816
Appliance and Construction-
Related...................... 4,001 3,660 3,283 684 602 558 2,794 2,711 2,512
Corporate and other items*.... - - - 51 240 17 529 495 486
Interest expense.............. - - - (111) (89) (119) - - -
-------- ----- ----- ------- ----- ----- ----- ------- -----
Total........................ $10,013 8,607 8,174 1,460 1,428 1,112 9,399 8,215 7,814
======== ===== ===== ======= ===== ===== ===== ======= =====
Depreciation and Capital
Amortization Expense Expenditures
---------------------- ----------------------
1995 1994 1993 1995 1994 1993
------ ----- ----- ----- ----- -----
Commercial and Industrial............................ $ 254 215 202 214 161 137
Appliance and Construction-Related................... 149 145 135 195 156 148
Corporate and other items............................ 6 5 4 12 15 21
------ ----- ----- ----- ----- -----
Total............................................... $ 409 365 341 421 332 306
====== ===== ===== ===== ===== =====
Geographic Areas
(By origin)
Income Before Income
Net Sales to Taxes and
Unaffiliated Customers Accounting Changes Total Assets
---------------------- ----------------------- -----------------------
1995 1994 1993 1995 1994 1993 1995 1994 1993
-------- ----- ----- ------- ----- ----- ----- ------ -----
United States................. $ 6,395 5,953 5,568 1,031 956 862 5,119 4,910 4,828
Europe........................ 2,668 1,933 1,948 244 147 162 2,983 2,140 1,893
Other Areas................... 950 721 658 134 85 71 953 840 759
Corporate and other items*.... - - - 51 240 17 529 495 486
Eliminations.................. - - - - - - (185) (170) (152)
------- ----- ----- ------ ----- ----- ----- ------ -----
Total........................ $10,013 8,607 8,174 1,460 1,428 1,112 9,399 8,215 7,814
======= ===== ===== ====== ===== ===== ===== ====== =====
</TABLE>
*Income includes $41 million S-B Power Tool preferential distribution in 1995
and $242 million gain on sale of the Aerospace unit of Rosemount Inc. in 1994.
39
<PAGE>
(13) QUARTERLY FINANCIAL INFORMATION (Unaudited)
(Dollars in millions except per share amounts)
<TABLE>
<CAPTION>
Financial Results
Net Sales Gross Profit Net Earnings
------------------- ---------------- ------------
1995 1994 1995 1994 1995 1994
---------- ------- ------- ------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
First Quarter*..... $ 2,284.6 2,009.5 792.0 706.1 203.4 178.0
Second Quarter..... 2,514.1 2,116.5 878.9 745.7 227.1 194.3
Third Quarter...... 2,629.7 2,243.7 922.7 784.0 239.5 208.0
Fourth Quarter..... 2,584.5 2,237.5 938.9 818.4 237.7 208.2
--------- ------- ------- ------- ----- -----
Fiscal Year...... $10,012.9 8,607.2 3,532.5 3,054.2 907.7 788.5
========= ======= ======= ======= ===== =====
</TABLE>
<TABLE>
<CAPTION>
Earnings Per Dividends Per
Common Share Common Share
------------ --------------
1995 1994 1995 1994
<S> <C> <C> <C> <C>
First Quarter*............. $ .91 .79 .43 .39
Second Quarter............. 1.02 .87 .43 .39
Third Quarter.............. 1.07 .93 .43 .39
Fourth Quarter............. 1.06 .93 .49 .39
----- ---- ---- ----
Fiscal Year.............. $4.06 3.52 1.78 1.56
===== ==== ==== ====
</TABLE>
*Income before cumulative effects of changes in accounting principles was $224.7
($1.01 per common share) and $293.9 ($1.31 per common share) in the first
quarter of 1995 and 1994, respectively, reflecting non-recurring items (see
notes 2 and 7).
- --------------------------------------------------------------------------------
Stock Prices
<TABLE>
<CAPTION>
Price Range Per Common Share
----------------------------------------
1995 1994
----------------------------------------
High Low High Low
------- ------ ------ ------
<S> <C> <C> <C> <C>
First Quarter................. $64 1/4 57 1/4 61 55 3/8
Second Quarter................ 67 1/8 61 1/2 65 7/8 57 7/8
Third Quarter................. 72 64 1/8 61 1/8 56 1/8
Fourth Quarter................ 75 3/8 69 3/4 64 57
Fiscal Year................. $75 3/8 57 1/4 65 7/8 55 3/8
</TABLE>
Emerson Electric Co. common stock (Symbol EMR) is listed on the New York Stock
Exchange and Chicago Stock Exchange.
40
<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, 1995 and 1994, 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, 1995.
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, 1995 and 1994, and the results of
their operations and their cash flows for each of the years in the three-year
period ended September 30, 1995, 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 and effective October 1, 1994, the
Company changed its method of accounting for postemployment benefits.
/s/ KPMG Peat Marwick LLP
St. Louis, Missouri
November 1, 1995
41
<PAGE>
EXHIBIT 21
SUBSIDIARIES AND AFFILIATES OF EMERSON ELECTRIC CO.
SEPTEMBER 30, 1995
Jurisdiction
of
Legal Name Incorporation
- ---------- -------------
Alco Controls S.A. de C.V. Mexico
Applied Concepts, Inc. Pennsylvania
Branson Ultrasonic S.A. Switzerland
Buehler Ltd. Illinois
Buehler Holdings Delaware
Buehler Europe Ltd. U.K.
Buehler UK Ltd. U.K.
Buehler-Met AG Switzerland
Buehler-Met Handelgesellschaff M.B.H. Austria
Tech-Met Canada Ltd. Canada
Wirtz-Buehler Corporation Delaware
Wirtz-Buehler GmbH Germany
Commercial Cam Co., Inc. Delaware
Compania de Motores Domesticos S.A.de C.V. Mexico
Control Techniques Iberia S.A. Spain
Controles Electromecanicos De Mexico Mexico
Con-Tek Valves, Inc. Georgia
Copeland Electric Corporation Delaware
Digital Appliance Controls, Inc. Delaware
Digital Appliance Controls Manufacturing
(Singapore) Pte Ltd. Singapore
DACM SDN BHD Malaysia
Digital Appliance Controls (UK) Limited U.K.
EECO, Inc. Delaware
Appleton Electric Company Delaware
Copeland Corporation Delaware
CDP International, Inc. Delaware
Copeland Access +, Inc. Delaware
Copeland de Mexico S.A. de C.V. Mexico
Copeland International, Inc. Ohio
Copeland Redevelopment Corporation Missouri
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. Netherland
Asco Mideast B.V. Netherlands
Asco GmbH Hungary
Asco/Joucomatic SP. Z.O.O. Poland
Asco Electrical Products Co., Inc. New Jersey
Ascomation Pty. Ltd. Australia
Ascomation (NZ) Limited New Zealand
Asco Sweden AB Sweden
Asco (Japan) Company Ltd. Japan
<PAGE>
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
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 Benelux BV Netherland
Copeland Corporation Limited U.K.
Copeland Italia S.a.R.l. Italy
Copeland Iberica CIB S.A. Spain
Copeland Norden AB Sweden
Copeland Refrigeration Europe S.A. Belgium
Copeland S.A. Belgium
Emerson Electric GmbH Germany
Emerson Electric GmbH & Co. Germany
Emerson Electric Overseas Finance Corp. Delaware
Emerson Electric de Colombia, LTDA Colombia
Motores U.S. de Mexico, S.A. Mexico
U.S.E.M. de Mexico S.A.deC.V. Mexico
Emerson Technologies Verwaltungs-GmbH Germany
Emerson Technologies GmbH & Co. Germany
Branson Ultraschall Germany
Krautkramer GmbH Germany
Krautkramer GmbH & Co. Germany
Liebert GmbH Germany
Liebert A.G. Switzerland
Ridge Tool GmbH Germany
Ridge Tool GmbH & Co. Germany
Fisher-Rosemount GmbH Germany
Fisher-Rosemount GmbH & Co. Germany
Rosemount Inc. Minnesota
Fisher-Rosemount Middle East, Inc. Delaware
Kay-Ray/Sensall, Inc. Delaware
Fisher-Rosemount Japan Co. Ltd. Japan
P I Components Corp. Texas
Rosemount AB Sweden
Rosemount Analytical Inc. Delaware
Fisher-Rosemount AS (Norway) Norway
Rosemount China Inc. Minnesota
Fisher-Rosemount Espana, S.A. Spain
Fisher-Rosemount Holding AG Switzerland
Fisher-Rosemount Ges. M.B.H. Austria
Fisher-Rosemount AG Switzerland
Rosemount Spo Czech
Fisher-Rosemount A/S Denmark
Rosemount Poland Ltd. Poland
Fisher-Rosemount Instruments Pty.
Ltd. Australia
Emerson Electric Co. Pty Ltd. Australia
2
<PAGE>
Fisher-Rosemount Instruments Ltd. New Zealand
Fisher-Rosemount Instruments
Taiwan, Ltd. Taiwan
Rosemount Korea, Ltd. Korea
Rosemount Mexicana S.A. de C.V. Mexico
Rosemount Nuclear Instruments Delaware
Rosemount S.A.R.L. France
Rosemount Portugal Instru-
mentos Lta. Portugal
Rosemount Shanghai Co. Limited China
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 Elektrowerkzeuge
Geschaftsfuhrung GMBH Germany
Skil Elektrowerkzeuge
GmbH & Co., oHG Germany
Skil France S.A. France
Skil Sweden A.B. Sweden
Skil(Western Hemisphere) Corp. Illinois
Skil Europe Corporation Delaware
Tauandromeda Beteiligungs GmbH Germany
Xomox Corporation Ohio
Fisher-Rosemount do Brasil
Industria e Comerco Ltda. Brazil
Flow Technology, Inc. (Taiwan) Ohio
Flow Technology S.A. de C.V. Mexico
Inversiones Xomox Venezuela
Naegelen S.A. France
Xomox A.G. Switzerland
Xomox Corporation de Venezuela,C.A. Venezuela
Xomox Korea Ltd. Korea
Xomox S.A. de C.V. Mexico
Xomox South America S.A. Uruguay
Xomox Uruguay S.A. Uruguay
Xomox International GmbH Germany
Fisher-Gulde GmbH Germany
Fisher-Guld GmbH & Co. Germany
Xomox International GmbH & Co. Germany
Emerson Power Transmission Corporation Delaware
Emerson Chain, Inc. Delaware
Regina-Emerson Company (Partnership
50% owned) Wisconsin
UCC Corp. Wisconsin
Emerson Electronic Motion Controls, Inc. Minnesota
Liebert Corporation Ohio
Control Concepts Corporation Delaware
3
<PAGE>
Emersub XXV, Inc. Delaware
Computersite-Preparations, Inc. Ohio
Liebert Corporation Australia Pty, Ltd. Australia
Liebert Far East Pte. Ltd. Singapore
Liebert (Malaysia) Sdn.Bhd. Malaysia
Liebert Hong Kong Ltd. Hong Kong
Tata Liebert Limited (50% owned) India
Liebert International B.V. Netherlands
Liebert Limited U.K.
Liebert Tecnologia Ltda. Brazil
Emerson Computer Power B.V. Netherlands
Micro Motion, Inc. Colorado
Ridge Tool Company Ohio
Ridge Tool (Australia) Pty., Ltd. Australia
Ridge Tool Manufacturing Company Delaware
Ridgid Italia SRL 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 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
Capax Electrische Apparatenfabriek B.V. Netherlands
Emerson Electric Slovakia Limited Slovakia
Vuma a.s. Czech Republic
Emerson Electric, SpoL, s.r.o. Czech Republic
Fusite, B.V. Netherlands
Fisher-Rosemount 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 Middle East, Inc. Delaware
Emerson Sice S.p.A. Italy
C.E. Set S.r.l. Italy
Branson Ultrasuoni S.P.A. Italy
Fisher-Rosemount Italia S.R.L. Italy
Xomox Italia S.R.L. Italy
Emerson Pacific Pte. Ltd. Singapore
Emersub XXXVI, Inc. Delaware
Control Techniques plc U.K.
Control Techniques (Holding) GmbH Germany
Control Techniques GmbH Germany
Dr Henschen GmbH Germany
4
<PAGE>
Reta Anlagenbau Gmbh Germany
Reta Elektronic GmbH Germany
Control Techniques (North) Limited U.K.
Control Techniques (South) Limited U.K.
Control Techniques (USA) Inc. U.S.A
Control Techniques Asia-Pacific Pte Limited Singapore
Control Techniques (Thailand) Limited Thailand
Control Techniques Drives (Malaysia) Sdn Bhd Malaysia
Control Techniques East Asia Pte Limited
(50% owned) Hong Kong
Control Techniques Singapore Pte Limited Singapore
Pacific Asia Control Techniques
Manufacturing Pte Limited Singapore
PT Kontroltek Indopratama Indonesia
Control Techniques Australia Pty Ltd. Australia
Control Techniques Bermuda Limited Bermuda
Control Techniques Drives Limited U.K.
Technodrives Limited U.K.
Control Techniques Drives Limited (Canada) Canada
Control Techniques Drives, Inc. U.S.A.
Control Techniques Dynamics Limited U.K.
Control Techniques Inc. U.S.A.
Control Techniques Italia srl Italy
Control Techniques Precision Systems Limited U.K.
Control Techniques (Sussex) Ltd. U.K.
Control Techniques Process Controls Limited U.K.
Control Techniques Process Systems Limited U.K.
Control Techniques SpA Italy
Electronic Control Systems, Inc. U.S.A.
Evershed Powerotor Limited U.K.
Fairmont Building and Investment Corp. U.S.A.
Foray 600 Limited U.K.
Foray 606 Limited U.K.
K.T.K. (Newtown) Limited U.K.
Control Techniques Worldwide BV Netherlands
ASI Control Techniques A/B Norway
Control Technika Kft Hungary
Control Techniques Automation BV Netherlands
Control Techniques BV Netherlands
Control Techniques BV/SA Belgium
Control Techniques Denmark A/S Denmark
Control Techniques Endustriyel
Kontrol Sistemerli Sanayi ve Ticaret A.S. Turkey
Control Techniques India Pvt Limited India
Control Techniques Vietnam Vietnam
Control Techniques VUES s.r.o.(Czech Repub.) Czech Republic
CTS Control Techniques Antrebsregelungen GmbH Switzerland
Moore Reed and Company Limited U.K.
Emersub XXXVIII, Inc. (Vacant) Delaware
Emersub XL, Inc. Delaware
Emersub XLI, Inc. (Vacant) Delaware
Emersub XLIII, Inc. Ohio
EMR Holdings, Inc. Delaware
Branson de Mexico, S.A. de C.V. Mexico
Emerson de Mexico, S.A. de C.V. Mexico
Emerson Electric (China) Holdings Ltd. China
Shanghai Branson Co. Ltd. China
Hangzhou Ridge Co. Ltd. China
5
<PAGE>
Emerson Electric (Shenzhen) Co. Ltd. China
Emerson Machinery Equipment (Shenzhen)Co. Ltd. China
Emerson White-Rodgers Electric (Xiamen) Co. Ltd. China
Emerson Trading Co. Ltd. China
Emerson Electric (M) SDN BHD Malaysia
Emerson Electric (Thailand) Limited Thailand
Emerson Electric do Brasil Ltda. Brazil
Emerson Electric Canada Ltd. Canada
Appleton Electric Limited Canada
Ascolectric Limited Canada
Fisher Controls Inc. (Controles Fisher Inc.) 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 Korea Ltd. Korea
Emerson Electric Mauritius Mauritius
Emerson Electric Company (India) Private Limited India
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.
Fisher-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 Appliance Controls S.A. France
Crouzet Appliance Controls SpA Italy
Francel S.A. France
Joucomatic Controls Ltd. New Zealand
Joucomatic Controls Pty. Limited Australia
Joucomatic S.A. France
Fluidocontrol S.A. Spain
Joucomatic Controls Ltd. U.K.
Joucomatic GmbH Steuergeraete Germany
Joucomatic S.p.A. Italy
Joucomatic N.V. Belgium
Sotrac S.r.l. Italy
Omet S.A. France
Ridgid 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
Andre Cocard S.A.R.L. France
Atelier de Bobinage de
Moteurs Electriques S.a.r.L France
Ets. Belzon & Richardot S.A.R.L. France
Construction Electriques
du Nord S.A. France
Lorraine Services Electrique
Electronique Electromecanique
S.A.R.L. (LS 3E) France
6
<PAGE>
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 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
M.L.S. Holice Spol. S.r.o. Czech Republic
Navarre Services S.A.R.L. France
Ouest Electro Service S.A.R.L. France
Poteau Moderne du Sud-Ouest S.A. France
Radiel Bobinage S.A.R.L. France
Societe Nouvelle Paillet
Services S.A.R.L. France
Societe Nouvelle Silvain S.A.R.L. France
Societe DeReparation Electro-
Mecanique 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
Etablissements Sevenier S.A. France
Etablissements Trepeau S.A. France
Girard Transmissions S.A. France
IMI Kft Hungary
La Francaise de Manutention S.A. France
Leroy-Somer AB Sweden
Leroy-Somer N.V. Belgium
Leroy-Somer Denmark A/S Denmark
Leroy-Somer Elektroantriebe GmbH Austria
Leroy-Somer Elektromotoren GmbH Germany
Leroy-Somer Finland OY Finland
Leroy-Somer Iberica S.A. Spain
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 Patay S.A. France
Societe Anonyme de Mecanique
et D'outillage du Vivarais S.A. France
7
<PAGE>
Societe Confolentaise de Metalurgie S.A. France
Societe de Mecanique et D'Electrom-
thermie des Pays de L'Adour S.A. France
Societe Commerciale des Ateliers de
Constructions Electriques D'Orleans S.A. France
Societe de Reparation de Moteurs (SOREM) France
Fisher-Rosemount Hungary Ltd. Hungary
Fisher-Rosemount Manufacture Ltd. Hungary
(Rotores S.A. de C.V. Mexico
Etirex S.A. France
F.G. Wilson (Engineering) Limited U.K.
Everton Engineering (N.I.) Limited U.K.
F.G. Wilson Australia PTY Limited Australia
F.G. Wilson Engineering (Dublin) Limited U.K.
F.G. Wilson (Engineering) HK Limited Hong Kong
F.G. Wilson Engineering Vertriebs-GmbH Germany
F.G. Wilson Espana S.L. Spain
F.G. Wilson Inc. Delaware
F.G. Wilson (Proprietary) Limited S. Africa
F.G. Wilson S.A. France
F.G. Wilson Singapore Pte Limited Singapore
Genrent Limited U.K.
Fisher Controls International, Inc. Delaware
Exac Corporation California
Fisher Controles Industria E Commecio Ltda. Brazil
Fisher-Rosemount Do Brasil Ltda. Brazil
Fisher-Rosemount 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-Rosemount PTE. Ltd. Singapore
Fisher Controls PTY. Limited Australia
Fisher Service Company Delaware
Fisher-Rosemount Systems, Inc. Delaware
Fisher-Rosemount de Venezuela S.A. Venezuela
H.D. Baumann Inc. Delaware
Nippon Fisher Company Ltd. Japan
Fisco Ltd.(Fisco Kabushiki Kaisha) Japan
Fisher Controls, S.A. France
Fusite Holding Corporation Ohio
Emerson Japan, Ltd. Japan
Brooks Instruments K.K. Japan
Innoven III Corporation Delaware
Intellution, Inc. Massachusetts
Intellution Foreign Sales Corporation (IFSC) Virgin Islands
Intellution GmbH Germany
Intellution International (I), Inc. Massachusetts
Intellution K.K. (Japan) Incorporated Japan
Intellution SARL France
Intellution U.K. Corporation Massachusetts
Intellution Limited U.K.
Krautkramer Branson Incorporated Connecticut
Stresstel Corporation California
Louisville Ladder Corp. Missouri
McGill Manufacturing Company Indiana
McGill International Inc. Taiwan
Metaloy, Inc. Massachusetts
Motores Hermeticos del Sur, S.A. de C.V. Mexico
8
<PAGE>
Ridge Tool Europe NV Belgium
Ridgid Scandinavia A/S Denmark
Ridge Tool Europe S.A. Belgium
Ridgid Ferramentas E. Maquinas, Ltda. Brazil
Fisher-Rosemount N.V./S.A. Belgium
Samsung-Emerson Electric Co. Ltd. (SEECO) Korea
SWECO Europe, S.A. Belgium
Termocontroles de Juarez S.A. de C.V. Mexico
Transmisiones de Potencia Emerson S.A. de C.V. Mexico
Vermont American Corporation (50% owned) Delaware
Clairson Enterprises, Inc. Delaware
Clairson International Corp. Florida
Clairson, Inc. Delaware
Clairson de Mexico Mexico
Credo Tool Company Delaware
Carbide Blast Joints, Inc. Texas
DML Industrial Products, Inc. N. Carolina
Vermont American Corporation, Fountain Inn Delaware
Primark DML, Inc. N. Carolina
VAC Data Management, Inc. Delaware
VAC Services LP
Gilmour Enterprises, Inc. Delaware
Gilmour Manufacturing Company Pennsylvania
Gilmour, Inc. Delaware
Vermont American (Australia) Ltd. Nevada
Vermont American Canada Inc. Canada
VA Export, Ltd. Virgin Islands
VA Holding Delaware
Vermont Westa Werkzeugbau GmbH Germany
Western Forge Corporation Delaware
Wiegand S.A. de C.V. Mexico
9
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors
Emerson Electric Co.:
We consent to incorporation by reference in Registration Statement
Nos. 33-60055, 33-57161, 33-38805, 33-34948, 33-34633, 33-57985,
33-60399, 33-11521, 33-2739, 2-76653, 2-63717, 2-52671, on Form S-8
and Registration Statement Nos. 33-62545 and 33-39109 on Form S-3
of Emerson Electric Co. of our report dated November 1, 1995, relating
to the consolidated balance sheets of Emerson Electric Co. and subsidiaries
as of September 30, 1995 and 1994, 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, 1995, which report appears
or is incorporated by reference in the September 30, 1995 annual report on
Form 10-K of Emerson Electric Co. Our report refers to changes in accounting
for postemployment benefits and postretirement benefits other than pensions.
St. Louis, Missouri KPMG PEAT MARWICK LLP
December 20, 1995
<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, 1995.
Dated: December 20, 1995.
-----------------
Signature Title
--------- -----
/s/C. F. Knight Chairman of the Board, President 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/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/R. L. Ridgway Director
- -----------------------------
R. L. Ridgway
/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 1995
EMERSON ELECTRIC CO. CONSOLIDATED STATEMENT OF EARNINGS AND CONSOLIDATED
BALANCE SHEET FILED WITH THE COMPANY'S 1995 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-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 117,300
<SECURITIES> 0
<RECEIVABLES> 1,802,800
<ALLOWANCES> 45,200
<INVENTORY> 1,602,600
<CURRENT-ASSETS> 3,784,100
<PP&E> 4,230,500
<DEPRECIATION> 2,095,600
<TOTAL-ASSETS> 9,399,000
<CURRENT-LIABILITIES> 3,280,700
<BONDS> 208,600
<COMMON> 238,300
0
0
<OTHER-SE> 4,632,500
<TOTAL-LIABILITY-AND-EQUITY> 9,399,000
<SALES> 10,012,900
<TOTAL-REVENUES> 10,012,900
<CGS> 6,480,400
<TOTAL-COSTS> 6,480,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 110,600
<INCOME-PRETAX> 1,459,900<F1>
<INCOME-TAX> 530,900
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (21,300)<F2>
<NET-INCOME> 907,700
<EPS-PRIMARY> 4.06
<EPS-DILUTED> 0
<FN>
<F1> Income-pretax (before accounting change) includes $34.3 million
non-recurring items. The net earnings impact of the non-recurring items
was substantially offset by the accounting change.
<F2> Cumulative effect of change in accounting for postemployment benefits.
Income before accounting change was $929.0 million.
</FN>
</TABLE>
