<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to __________________
Commission file number 1-278
EMERSON ELECTRIC CO.
(Exact name of registrant as specified in its charter)
Missouri 43-0259330
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8000 W. Florissant Ave.
P.O. Box 4100
St. Louis, Missouri 63136
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 553-2000
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 ( )
Common stock outstanding at December 31, 1994: 223,305,562 shares.
1
<PAGE>
PART I. FINANCIAL INFORMATION FORM 10-Q
Item 1. Financial Statements.
EMERSON ELECTRIC CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
THREE MONTHS ENDED DECEMBER 31, 1994 AND 1993
(Dollars in millions except per share amounts; unaudited)
Three Months Ended
December 31,
---------------------
1994 1993
---------- --------
Net sales $ 2,284.6 2,009.5
---------- --------
Costs and expenses:
Cost of sales 1,492.6 1,303.4
Selling, general and administrative expenses 440.9 396.5
Interest expense 21.2 24.4
Gain on sale of business and other
non-recurring items (34.3) (192.0)
Other deductions, net 9.9 7.8
---------- --------
Total costs and expenses 1,930.3 1,540.1
---------- --------
Income before income taxes and cumulative
effects of changes in accounting principles 354.3 469.4
Income taxes 129.6 175.5
---------- --------
Income before cumulative effects of changes
in accounting principles 224.7 293.9
Cumulative effects of changes in accounting principles;
$.10 and $.52 per common share, respectively (21.3) (115.9)
---------- --------
Net earnings $ 203.4 178.0
========== ========
Earnings per common share $ .91 .79
========== ========
Cash dividends per common share $ .43 .39
========== ========
Average number of shares used in computing
earnings per common share (in thousands) 223,526 224,748
========== ========
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: $ 319.3 279.4
========== ========
2
<PAGE>
EMERSON ELECTRIC CO. AND SUBSIDIARIES FORM 10-Q
CONSOLIDATED BALANCE SHEETS
(Dollars in millions except per share amounts; unaudited)
December 31, September 30,
ASSETS 1994 1994
------ --------- -------
CURRENT ASSETS
Cash and equivalents $ 200.0 113.3
Receivables, less allowances of $45.1 and $42.0 1,597.3 1,542.6
Inventories 1,455.7 1,392.2
Other current assets 306.4 290.1
--------- -------
Total current assets 3,559.4 3,338.2
--------- -------
PROPERTY, PLANT AND EQUIPMENT, NET 1,973.0 1,947.3
--------- -------
OTHER ASSETS
Excess of cost over net assets of purchased
businesses 2,061.7 1,862.9
Other 1,134.2 1,066.6
--------- -------
Total other assets 3,195.9 2,929.5
--------- -------
$ 8,728.3 8,215.0
========= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Short-term borrowings and current maturities
of long-term debt $ 1,350.7 923.3
Accounts payable 523.6 611.4
Accrued expenses 878.4 936.4
Income taxes 230.6 146.2
--------- -------
Total current liabilities 2,983.3 2,617.3
--------- -------
LONG-TERM DEBT 278.0 279.9
--------- -------
OTHER LIABILITIES 1,041.6 976.0
--------- -------
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 and 238,338,503 shares 238.3 238.3
Retained earnings 4,722.5 4,619.1
Cumulative translation adjustments 6.7 8.7
Cost of common stock in treasury, 15,032,941
shares and 14,752,649 shares (542.1) (524.3)
--------- -------
Total stockholders' equity 4,425.4 4,341.8
--------- -------
$ 8,728.3 8,215.0
========= =======
See accompanying notes to consolidated financial statements.
3
<PAGE>
EMERSON ELECTRIC CO. AND SUBSIDIARIES EXHIBIT I
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1994 AND 1993
(Dollars in millions; unaudited)
1994 1993
--------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 170.7 194.6
INVESTING ACTIVITIES
Capital expenditures (77.7) (67.2)
Purchases of businesses, net of cash and
equivalents acquired (75.2) (1.9)
Proceeds from divestitures of businesses 7.7 300.9
Other 49.6 4.9
--------- -------
Net cash provided by (used in) investing activities (95.6) 236.7
--------- -------
FINANCING ACTIVITIES
Net increase (decrease) in short-term borrowings
with maturities of 90 days or less 307.5 (412.8)
Proceeds from short-term borrowings - 227.6
Principal payments on short-term borrowings (27.6) -
Principal payments on long-term debt (121.9) (5.5)
Dividends paid (96.2) (87.7)
Other (46.4) (57.9)
--------- -------
Net cash provided by (used in) financing activities 15.4 (336.3)
--------- -------
Effect of exchange rate changes on cash and equivalents (3.8) (2.2)
--------- -------
INCREASE IN CASH AND EQUIVALENTS 86.7 92.8
Beginning cash and equivalents 113.3 101.9
--------- -------
ENDING CASH AND EQUIVALENTS $ 200.0 194.7
========= =======
See accompanying notes to consolidated financial statements.
4
<PAGE>
EMERSON ELECTRIC CO. AND SUBSIDIARIES FORM 10-Q
Notes to Consolidated Financial Statements
1. The accompanying unaudited consolidated financial statements, in
the opinion of management, include all adjustments necessary for
a fair presentation of the results for the interim periods
presented. The consolidated financial statements are presented in
accordance with the requirements of Form 10-Q and consequently do
not include all the disclosures required by generally accepted
accounting principles. For further information refer to the
consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended
September 30, 1994.
2. Other Financial Information
(Dollars in millions; unaudited)
December 31, September 30,
Inventories 1994 1994
----------- --------- -------
Finished products $ 530.6 506.5
Raw materials and work in process 925.1 885.7
--------- -------
$ 1,455.7 1,392.2
========= =======
December 31, September 30,
Property, plant and equipment, net 1994 1994
---------------------------------- --------- -------
Property, plant and equipment, at cost $ 3,908.8 3,840.7
Less accumulated depreciation 1,935.8 1,893.4
--------- -------
$ 1,973.0 1,947.3
========= =======
3. The Company has guaranteed performance under certain contracts
related to the government and defense businesses distributed to
stockholders in 1990, and has effectively guaranteed 50 percent
of the indebtedness of a joint venture. For further information,
refer to the Company's 1994 Annual Report on Form 10-K.
4. 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 as a
cumulative effect of change in accounting principle of $21.3 million
(net of $13.7 million in related income tax benefits). The statement
will not have a material impact on the Company's ongoing results of
operations.
5. In the first quarter of fiscal 1995, the Company purchased F. G.
Wilson (Engineering) Ltd., a United Kingdom-based manufacturer of
diesel generator sets. The acquisition was financed by issuing $271
million in notes to the sellers.
5
<PAGE>
EMERSON ELECTRIC CO. AND SUBSIDIARIES FORM 10-Q
6. In December 1994, the Company commenced a tender offer for the
remaining common stock of Control Techniques, plc, a United Kingdom-
based manufacturer of variable speed drives used for motor
applications. The acquisition was completed in the second quarter
for a purchase price of approximately $245 million (including
approximately $70 million expended in the first quarter).
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition.
Results of Operations
Sales, net earnings and earnings per share for the first quarter of
fiscal 1995 were the highest for any first quarter in the Company's
history.
Net sales for the quarter ended December 31, 1994 were $2,284.6 million,
an increase of 13.7 percent over net sales of $2,009.5 million for the
quarter ended December 31, 1993, reflecting continued domestic sales
growth and stronger international sales growth. Excluding the favorable
impact of currency, underlying international subsidiary sales increased
nearly 12 percent, while exports increased 38 percent. All major
geographic regions experienced strong sales growth in the quarter.
The Appliance and Construction-Related segment reported a double-digit
sales increase compared to the first quarter of 1994. The largest sales
gains were achieved by the heating, ventilating and air conditioning
business due to continued strength in domestic end-markets, strengthening
international demand, new product acceptance and market penetration.
Solid sales gains in the fractional motors and appliance components
businesses were achieved due to continued domestic appliance market
strength. The consolidated tools business and the unconsolidated tool
joint ventures reported strong sales growth.
The Commercial and Industrial segment also achieved a double-digit sales
increase compared to the first quarter of the prior year. Sales of
industrial motors and drives and industrial components and equipment
reflected robust domestic and international demand. Sales in the
electronics business continued to benefit from strong domestic and
international markets and the success of new product introductions.
Sales of the process business were up moderately due to strengthening
international sales.
Cost of sales for the first quarter was $1,492.6 million or 65.3
percent of sales, compared with $1,303.4 million, or 64.9 percent of
sales, for the first quarter of 1994. Selling, general and
administrative expenses for the three months ended December 31, 1994
were $440.9 million, or 19.3 percent of sales, compared to $396.5
million, or 19.7 percent of sales for the same period a year ago.
The first quarter consolidated profit margins remained at high levels
as a result of the Company's ongoing commitments to cost reduction
efforts and productivity improvement programs across the Company.
6
<PAGE>
EMERSON ELECTRIC CO. AND SUBSIDIARIES FORM 10-Q
Earnings in the first quarter of fiscal 1995 included a $41.3 million
preferential distribution from the S-B Power Tool joint venture which
was substantially offset by other non-recurring items and the adoption of
SFAS No. 112. Earnings in the first quarter of fiscal 1994 included a
gain on the sale of business which was substantially offset by non-
recurring items and the adoption of SFAS No. 106 ($115.9 million, net
of $74.1 million in related income tax benefits).
Financial Condition
A comparison of key elements of the Company's financial condition at
the end of the first quarter as compared to the end of the prior
fiscal year follows:
December 31, September 30,
1994 1994
-------- --------
Working capital (in millions) $576.1 720.9
Current ratio 1.2 to 1 1.3 to 1
Total debt to total capital 26.9% 21.7%
Net debt to net capital 24.4% 20.0%
The Company's interest coverage ratio (earnings before income taxes,
non-recurring items and interest expense, divided by interest expense)
was 16.1 times for the quarter ended December 31, 1994 compared to 12.4
times for the same period one year earlier.
Cash and equivalents increased by $86.7 million during the three
months ended December 31, 1994. Cash flow provided by operating
activities of $170.7 million and an increase in borrowings of $158.7
million were used primarily to pay dividends of $96.2 million, purchase
businesses (net of cash and equivalents acquired) for $75.2 million, and
fund capital expenditures of $77.7 million. In addition, $271 million of
notes were issued to the sellers to finance the F. G. Wilson acquisition.
The Company is in a strong financial position, continues to generate
strong operating cash flow, and has the resources available for
reinvestment in existing businesses, strategic acquisitions and managing
the capital structure.
7
<PAGE>
EMERSON ELECTRIC CO. AND SUBSIDIARIES FORM 10-Q
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits (Listed by numbers corresponding to the Exhibit Table
of Item 601 in Regulation S-K).
27 Financial Data Schedule.
(b) Reports on Form 8-K. The Company did not file any reports on
Form 8-K during the quarter ended December 31, 1994.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
EMERSON ELECTRIC CO.
Date: February 13, 1995 By /s/ Walter J. Galvin
-----------------------
Walter J. Galvin
Senior Vice President - Finance
and Chief Financial Officer
(on behalf of the registrant and
as Chief Financial Officer)
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5 EXHIBIT 27
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE EMERSON
ELECTRIC CO. CONSOLIDATED STATEMENT OF EARNINGS AND CONSOLIDATED BALANCE SHEET
AS OF AND FOR THE THREE MONTHS ENDED DECEMBER 31, 1994 FILED WITH THE COMPANY'S
1995 FIRST QUARTER FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> DEC-31-1994
<CASH> 200,000
<SECURITIES> 0
<RECEIVABLES> 1,642,400
<ALLOWANCES> 45,100
<INVENTORY> 1,455,700
<CURRENT-ASSETS> 3,559,400
<PP&E> 3,908,800
<DEPRECIATION> 1,935,800
<TOTAL-ASSETS> 8,728,300
<CURRENT-LIABILITIES> 2,983,300
<BONDS> 278,000
<COMMON> 238,300
0
0
<OTHER-SE> 4,187,100
<TOTAL-LIABILITY-AND-EQUITY> 8,728,300
<SALES> 2,284,600
<TOTAL-REVENUES> 2,284,600
<CGS> 1,492,600
<TOTAL-COSTS> 1,492,600
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,200
<INCOME-PRETAX> 354,300<F1>
<INCOME-TAX> 129,600
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (21,300)<F2>
<NET-INCOME> 203,400
<EPS-PRIMARY> .91
<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 $224.7 million.
</FN>
</TABLE>
