<PAGE>
UNITED STATES
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, 1997
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 $.50 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. [ ]
<PAGE>
Aggregate market value of the voting stock held by nonaffiliates of the
registrant as of close of business on October 31, 1997: $22,927 million.
Common stock outstanding at October 31, 1997: 440,017,902 shares.
Documents Incorporated by Reference
1. Portions of Emerson Electric Co. 1997 Annual Report to Stockholders
(Parts I and II).
2. Portions of Emerson Electric Co. Notice of 1998 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 subsequently
expanded its product lines through internal growth and acquisitions.
Emerson is now engaged principally in the worldwide design, manufacture
and sale of a broad range of electrical, electromechanical and electronic
products and systems.
------------------------------------------------------
The products manufactured by the Company are classified into the
following industry segments: Commercial and Industrial Components and
Systems, and Appliance and Construction-Related Components. Net sales,
income before income taxes and accounting change and total assets
attributable to each industry segment for the three years ended
September 30, 1997, are set forth in Note 12 of Notes to Consolidated
Financial Statements on page 37 of the 1997 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 31 of the 1997 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 electronics. 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 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 oxygen
analyzers, infrared gas and process fluid 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 and services electronic uninterruptible and
primary power supplies, power conditioning, conversion and distribution
equipment, modular power systems, electrical testing equipment and
environmental control systems and electronic components 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, and electrical signaling and signage for
industrial, commercial and institutional facilities.
APPLIANCE AND CONSTRUCTION-RELATED COMPONENTS
---------------------------------------------
The Appliance and Construction-Related segment consists of fractional motors
and 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
<PAGE>
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 electric waste disposers, hot water dispensers,
ventilating equipment and exhaust fans.
Emerson is a producer of selected professional and hardware tools and
accessories, 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. Emerson also
manufactures power tool accessories such as drill, router and screwdriver
bits, and saw blades. 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 produces ladders, scaffolding and related accessories, free-standing
and wall-mounted ventilated shelving and specialty storage products. 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 are 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
<PAGE>
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 $1,989 million
and $1,810 million at September 30, 1997 and 1996, respectively. Nearly all
of the September 30, 1997 consolidated backlog amount is expected to be
shipped within one year. The estimated backlog by industry segment at
September 30, 1997 and 1996 follows (dollars in millions):
1997 1996
------- -------
Commercial and Industrial $ 1,331 1,191
Appliance and Construction-Related 658 619
------- -------
Consolidated Order Backlog $ 1,989 1,810
======= =======
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 the Company's 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 $445.1 million in 1997, $398.7 million in 1996
and $354.2 million in 1995.
ENVIRONMENT
-----------
The Company's manufacturing locations generate waste, the treatment, storage,
transportation and disposal of which are subject to federal, state and local
laws and regulations relating to the protection of the 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
<PAGE>
EMPLOYEES
---------
Emerson and its subsidiaries had an average of approximately 100,700 employees
during 1997.
DOMESTIC AND FOREIGN OPERATIONS
-------------------------------
International sales were $5,245 million in 1997, $4,867 million in 1996 and
$4,386 million in 1995, including U.S. exports of $1,054 million, $885 million
and $768 million in 1997, 1996 and 1995, respectively. Although there are
additional risks attendant to foreign operations, such as nationalization of
facilities, currency fluctuations and restrictions on the movement of funds,
Emerson's financial position has not been materially affected thereby to date.
See Note 12 of Notes to Consolidated Financial Statements on page 37 of the
1997 Annual Report for further information with respect to foreign operations.
Item 2. Properties
-------------------
At September 30, 1997, Emerson had approximately 360 manufacturing locations
worldwide, of which approximately 190 were located outside the United States,
primarily in Europe and to a lesser extent in Asia-Pacific, Canada and Latin
America. Approximately 220 locations are occupied by the Commercial and
Industrial segment, and approximately 140 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 management believes will 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, 1997.
-------------------------------------------
6
<PAGE>
Executive Officers of the Registrant
The following sets forth certain information as of December 1997 with respect
to Emerson's executive officers. These officers have been elected or
appointed to terms which will expire February 3, 1998:
First
Served as
Name Position Age Officer
---- -------- --- ----------
C. F. Knight* Chairman of the Board
and Chief Executive Officer 61 1972
G. W. Tamke* President and Chief Operating
Officer 50 1989
A. E. Suter* Senior Vice Chairman and
Chief Administrative Officer 62 1979
R. W. Staley* Vice Chairman and Chairman
Emerson Asia-Pacific 62 1975
J. G. Berges* Vice Chairman 50 1989
W. J. Galvin Senior Vice President - Finance
and Chief Financial Officer 51 1984
W. W. Withers Senior Vice President, Secretary
and General Counsel 57 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
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
----------------------------------------------------------------------
Matters
-------
The information regarding the market for the Company's common stock, quarterly
market price ranges and dividend payments set forth in Note 13 of Notes to
Consolidated Financial Statements on page 38 of the 1997 Annual Report is
hereby incorporated by reference. There were approximately 35,900
stockholders at September 30, 1997. On September 30, 1997, the Company issued
35,952 shares of common stock for all of the stock of an electrical systems
and components testing company. The shares were not registered under the 1933
Securities Act in reliance on the exemption provided by Regulation D of the
Act. Both shareholders of the acquired company were accredited investors.
Item 6. Selected Financial Data
--------------------------------
Years ended September 30
(Dollars in millions except per share amounts)
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
Net sales $ 12,298.6 11,149.9 10,012.9 8,607.2 8,173.8
Net earnings $ 1,121.9 1,018.5 907.7 788.5 708.1
Earnings
per common share $ 2.52 2.27 2.03 1.76 1.57
Cash dividends
per common share $ 1.08 .98 .89 .78 .72
Long-term debt $ 570.7 772.6 208.6 279.9 438.0
Total assets $ 11,463.3 10,481.0 9,399.0 8,215.0 7,814.5
Income before cumulative effect of change in accounting for postemployment
benefits ($21.3 million, $.05 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, $.26 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 Note 2 of Notes to Consolidated Financial Statements on page 31
of the 1997 Annual Report for information regarding the Company's acquisition
and divestiture activities.
8
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
--------------------------------------------------------------------
and Results of Operations
-------------------------
Narrative discussion appearing under "Results of Operations" and "Financial
Position, Capital Resources and Liquidity" on pages 20 through 24, and the
"Safe Harbor Statement" on page 48 of the 1997 Annual Report are hereby
incorporated by reference.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
---------------------------------------------------------------------
Narrative discussion appearing under "Financial Instruments" on page 24 of the
1997 Annual Report is hereby incorporated by reference.
Item 8. Financial Statements and Supplementary Data
----------------------------------------------------
The consolidated financial statements of the Company and its subsidiaries
on pages 25 through 38 and the report thereon of KPMG Peat Marwick LLP
appearing on page 39 of the 1997 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 1998 annual
stockholders' meeting (the "1998 Proxy Statement") is hereby incorporated
by reference. Information regarding executive officers is set forth in
Part I of this report. Information appearing under "Section 16(a) Beneficial
Ownership Reporting Compliance" in the 1998 Proxy Statement is hereby
incorporated by reference.
Item 11. Executive Compensation
--------------------------------
Information appearing under "Director Compensation" and "Executive
Compensation" in the 1998 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 1998 Proxy
Statement is hereby incorporated by reference.
Item 13. Certain Relationships and Related Transactions
--------------------------------------------------------
Information appearing under "Certain Business Relationships" in the 1998
Proxy Statement is hereby incorporated by reference.
10
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
-----------------------------------------------------------------
Form 8-K
---------
A) Documents filed as a part of this report:
1. The consolidated financial statements of the Company and its
subsidiaries on pages 25 through 38 and the report
thereon of KPMG Peat Marwick LLP appearing on page 39 of
the 1997 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 1997 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. Form 10-Q for the quarter ended
March 31, 1997, Exhibit 3(a).
3(b) Bylaws of Emerson Electric Co., as amended through
October 7, 1997, filed herewith.
4(a) Indenture dated as of April 17, 1991, between
Emerson Electric Co. and The Boatmen's National Bank
of St. Louis, Trustee, incorporated by reference to
Emerson Electric Co. Registration Statement on
Form S-3, File No. 33-62545, 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 ChaseMellon Shareholder
Services, L.L.C. incorporated by reference to
Emerson Electric Co. Form 8-K, dated November 1,
1988, Exhibits 1 and 2; as amended by First Amendment
dated as of October 7, 1997, incorporated by reference to
Emerson Electric Co. Form 8-K dated October 17, 1997,
Exhibit 4.
11
<PAGE>
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, as
amended January 9, 1987, and as further amended
October 22, 1997, between Emerson Electric Co. and
C. F. Knight, filed herewith.
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 and restated effective
October 1, 1997, filed herewith.
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)* Third Amendment to the Emerson Electric Co. 1993
Incentive Shares Plan, as restated, incorporated by
reference to Emerson Electric Co. 1996 Form 10-K,
Exhibit 10(g).
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),
and Amendment incorporated by reference to Emerson
Electric Co. 1996 Form 10-K, Exhibit 10(i).
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
<PAGE>
10(l)* Third Amendment to the Supplemental Executive
Savings Investment Plan, incorporated by reference
to Emerson Electric Co. Form 10-Q for the quarter ended
June 30, 1996, Exhibit 10(1).
10(m)* Annual Incentive Plan incorporated by reference to
Emerson Electric Co. 1995 Proxy Statement dated
December 14, 1994, Appendix A.
10(n)* 1997 Incentive Shares Plan, incorporated by reference to
Emerson Electric Co. 1997 Proxy Statement dated
December 6, 1996, Exhibit A.
13 Portions of Emerson Electric Co. Annual Report to
Stockholders for the year ended September 30, 1997,
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, 1997.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
EMERSON ELECTRIC CO.
By /s/ W. J. Galvin
-------------------------
W. J. Galvin
Senior Vice President -
Finance and Chief Financial
Officer (and Principal Accounting
Officer)
Date: December 17, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below on December 17, 1997, by the
following persons on behalf of the registrant and in the capacities
indicated.
Signature Title
--------- -----
*
---------------------------------------- Chairman of the Board
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
J. G. Berges
*
---------------------------------------- Director
L. L. Browning, Jr.
*
---------------------------------------- Director
A. A. Busch, III
*
---------------------------------------- Director
D. C. Farrell
14
<PAGE>
*
---------------------------------------- Director
J. A. Frates
*
---------------------------------------- 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
G. W. Tamke
*
---------------------------------------- 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
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibits are listed by numbers corresponding to the Exhibit Table of
Item 601 in Regulation S-K.
Exhibit No. Exhibit
---------- -------
3(b) Bylaws of Emerson Electric Co.
10(c) Employment Agreement
10(e) 1991 Stock Option Plan
13 Portions of Annual Report to Stockholders for
the year ended September 30, 1997, 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 3(b)
EMERSON ELECTRIC CO.
BYLAWS
As Amended through October 7, 1997
<PAGE>
EMERSON ELECTRIC CO.
BYLAWS
INDEX
Page
ARTICLE I - OFFICES; DEFINITIONS
Section 1. Registered Office . . . . . . . . . . . . 1
Section 2. Other Offices . . . . . . . . . . . . . . 1
Section 3. Definitions . . . . . . . . . . . . . . . 1
ARTICLE II - MEETINGS OF SHAREHOLDERS
Section 1. Place of Meetings . . . . . . . . . . . . 1
Section 2. Annual Meeting. . . . . . . . . . . . . . 1
Section 3. Special Meetings. . . . . . . . . . . . . 2
Section 4. Notice of Meetings. . . . . . . . . . . . 3
Section 5. List of Shareholders Entitled to Vote . . 3
Section 6. Quorum. . . . . . . . . . . . . . . . . . 4
Section 7. Requisite Vote. . . . . . . . . . . . . . 5
Section 8. Voting. . . . . . . . . . . . . . . . . . 5
Section 9. Notice of Shareholder Business at Annual
Meetings. . . . . . . . . . . . . . . . 5
ARTICLE III - DIRECTORS
Section 1. Number; Classification; Nominations;
Election; Term of Office . . . . . . . 7
Section 2. Filling of Vacancies. . . . . . . . . . . 11
Section 3. Qualifications. . . . . . . . . . . . . . 11
Section 4. Removal . . . . . . . . . . . . . . . . . 12
Section 5. General Powers. . . . . . . . . . . . . . 12
Section 6. Place of Meetings . . . . . . . . . . . . 12
Section 7. Regular Annual Meeting. . . . . . . . . . 12
Section 8. Additional Regular Meetings . . . . . . . 13
Section 9. Special Meetings. . . . . . . . . . . . . 14
Section 10. Place of Meetings . . . . . . . . . . . . 14
Section 11. Notices . . . . . . . . . . . . . . . . . 14
Section 12. Quorum. . . . . . . . . . . . . . . . . . 14
Section 13. Compensation of Directors . . . . . . . . 15
Section 14. Executive Committee . . . . . . . . . . . 15
Section 15. Finance Committee . . . . . . . . . . . . 16
Section 16. Other Committees of the Board . . . . . . 16
Section 17. Committees - General Rules . . . . . . . 16
Section 18. Director Emeritus and Advisory Directors. 17
<PAGE>
ARTICLE IV - NOTICES Page
Section 1. Service of Notice . . . . . . . . . . . . 18
Section 2. Waiver of Notices . . . . . . . . . . . . 18
ARTICLE V - OFFICERS
Section 1. Titles. . . . . . . . . . . . . . . . . . 18
Section 2. Election. . . . . . . . . . . . . . . . . 19
Section 3. Term. . . . . . . . . . . . . . . . . . . 20
Section 4. Chairman of the Board . . . . . . . . . . 20
Section 5. President . . . . . . . . . . . . . . . . 20
Section 6. Vice Chairmen of the Board. . . . . . . . 21
Section 7. Vice Presidents . . . . . . . . . . . . . 21
Section 8. Secretary and Assistant Secretaries . . . 21
Section 9. Treasurer and Assistant Treasurers. . . . 22
Section 10. Controller and Assistant Controllers. . . 22
Section 11. Appointed Officers. . . . . . . . . . . . 23
ARTICLE VI - CERTIFICATES OF SHARES
Section 1. Certificates. . . . . . . . . . . . . . . 24
Section 2. Signatures on Certificates. . . . . . . . 24
Section 3. Transfer Agents and Registrars;
Facsimile Signatures . . . . . . . . . 24
Section 4. Lost Certificates . . . . . . . . . . . . 25
Section 5. Transfer of Shares. . . . . . . . . . . . 25
Section 6. Registered Shareholders . . . . . . . . . 26
Section 7. Interested Shareholders . . . . . . . . . 26
ARTICLE VII - INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS
Section 1. Actions Involving Directors, Officers
or Employees . . . . . . . . . . . . 26
Section 2. Actions Involving Agents. . . . . . . . . 28
Section 3. Determination of Right to Indemnification
in Certain Instances . . . . . . . . 28
Section 4. Advance Payment of Expenses . . . . . . . 29
Section 5. Successful Defense. . . . . . . . . . . . 30
Section 6. Not Exclusive Right . . . . . . . . . . . 30
Section 7. Insurance . . . . . . . . . . . . . . . . 31
Section 8. Subsidiaries of Corporation . . . . . . . 31
Section 9. Spousal Indemnification . . . . . . . . . 33
ARTICLE VIII - GENERAL PROVISIONS
Section 1. Dividends . . . . . . . . . . . . . . . . 33
Section 2. Checks. . . . . . . . . . . . . . . . . . 33
Section 3. Fiscal Year . . . . . . . . . . . . . . . 34
Section 4. Seal. . . . . . . . . . . . . . . . . . . 34
Section 5. Closing of Transfer Books and Fixing of
Record Dates . . . . . . . . . . . . . 34
ARTICLE IX - AMENDMENTS
Section 1. . . . . . . . . . . . . . . . . . . . . . 35
<PAGE>
EMERSON ELECTRIC CO.
* * * * *
BYLAWS
* * * * *
ARTICLE I
OFFICES; DEFINITIONS
Section 1. Registered Office. The registered office of Emerson
Electric Co. (the "Corporation") shall be located in the County of St. Louis,
State of Missouri.
Section 2. Other Offices. The Corporation may also have offices at
such other places both within and without the State of Missouri as the Board
may, from time to time, determine or the business of the Corporation may
require.
Section 3. Definitions. Unless the context otherwise
requires, defined terms herein shall have the meaning ascribed thereto in the
Articles of Incorporation (the "Articles").
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Place of Meeting. All meetings of the shareholders shall
be held at such place within or without the State of Missouri as may be, from
time to time, fixed or determined by the Board.
Section 2. Annual Meeting. The annual meeting of the shareholders
shall be held on the first Tuesday in February of each year if not a legal
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holiday, or, if a legal holiday, then on the next business day following, at
such hour as may be specified in the notice of the meeting; provided, however,
that the day fixed for such meeting in any year may be changed by resolution
of the Board to such other day in February, March, April, May or June not a
legal holiday as the Board may deem desirable or appropriate. At the annual
meeting the shareholders shall elect Directors in accordance with Article 5 of
the Articles of Incorporation and Article III of these Bylaws, and shall
transact such other business as may properly be brought before the meeting.
If no other place for the annual meeting is determined by the Board of
Directors and specified in the notice of such meeting, the annual meeting
shall be held at the principal offices of the Corporation at 8000 West
Florissant Avenue, St. Louis, Missouri.
Section 3. Special Meetings.
(a) Unless otherwise limited by statute or by the Articles,
special meetings of the shareholders, for any purpose or purposes, may be
called at any time by the Chairman of the Board, any Vice Chairman of the
Board, the President, the Secretary, or a majority of the Board.
(b) A special meeting may also be called by the holders of
not less than 85% of all of the outstanding shares entitled to vote at such
meeting, upon written request delivered to the Secretary of the Corporation.
Such request shall state the purpose or purposes of the proposed meeting.
Upon receipt of any such request, it shall be the duty of the Secretary to
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call a special meeting of the shareholders to be held at any time, not less
than ten (10) nor more than seventy (70) days thereafter, as the Secretary may
fix. If the Secretary shall neglect to issue such call, the person or persons
making the request may issue the call.
Section 4. Notice of Meetings. Written notice of every meeting of
the shareholders, specifying the place, date and hour of the meeting, and, in
the case of a special meeting, the purpose or purposes for which the meeting
is called shall be delivered or mailed, postage prepaid, by or at the
direction of the Secretary, not less than ten (10) nor more than seventy (70)
days before the date of the meeting to each shareholder of record entitled to
vote at such meeting.
Section 5. List of Shareholders Entitled to Vote. At least ten (10)
days before each meeting of the shareholders, a complete list of the
shareholders entitled to vote at such meeting shall be prepared and arranged
in alphabetical order with the address of each shareholder and the number of
shares held by each, which list, for a period of ten (10) days prior to such
meeting, shall be kept on file at the registered office of the Corporation and
shall be subject to inspection by any shareholder at any time during usual
business hours. Such list shall also be produced and kept open at the time
and place of the meeting, and shall be subject to the inspection of any
shareholder during the whole time of the meeting. The original share ledger
or transfer book, or a duplicate thereof kept in the State of Missouri, shall
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be prima facie evidence as to who are the shareholders entitled to examine
such list or share ledger or transfer book or to vote at any meeting of the
shareholders. Failure to comply with the above requirements in respect of
lists of shareholders shall not affect the validity of any action taken at
such meeting.
Section 6. Quorum. The holders of a majority of the issued and
outstanding shares entitled to vote, present in person or represented by
proxy, shall be requisite and shall constitute a quorum at all meetings of the
shareholders for the transaction of business, except as otherwise provided by
law, the Articles or by these Bylaws. The shareholders present at a meeting
at which a quorum is present may continue to transact business until
adjournment, notwithstanding the withdrawal of such number of shareholders as
to reduce the remaining shareholder to less than a quorum. Whether or not a
quorum is present, the chairman of the meeting or a majority of the
shareholders entitled to vote thereat, present in person or by proxy, shall
have power, except as otherwise provided by statute, successively to adjourn
the meeting to such time and place as they may determine, to a date not longer
than ninety (90) days after each such adjournment, and no notice of any such
adjournment need be given to shareholders other than the announcement of the
adjournment at the meeting. At any adjourned meeting at which a quorum shall
be present or represented, any business may be transacted which might have
been transacted at the meeting as originally called.
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Section 7. Requisite Vote. When a quorum is present or represented
at any meeting, the vote of the holders of a majority of the shares entitled
to vote which are present in person or represented by proxy shall decide any
questions brought before such meeting, unless the question is one upon which,
by express provision of law, the Articles or by these Bylaws, a different vote
is required, in which case such express provisions shall govern and control
the decision of such question.
Section 8. Voting. Each shareholder shall, at every meeting of the
shareholders, be entitled to one vote in person or by proxy for each share
having voting power held by such shareholder, but no proxy shall be voted
after eleven (11) months from the date of its execution unless otherwise
provided in the proxy. In each election for Directors, no shareholder shall
be entitled to vote cumulatively or to cumulate his votes.
Section 9. Notice of Shareholder Business at Annual Meetings. At any
annual meeting of shareholders, only such business shall be conducted as shall
have been properly brought before the meeting. In addition to any other
requirements imposed by or pursuant to law, the Articles or these Bylaws, each
item of business to be properly brought before an annual meeting must (a) be
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board or the persons calling the meeting pursuant to the
Articles; (b) be otherwise properly brought before the meeting by or at the
direction of the Board; or (c) be otherwise properly brought before the
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meeting by a shareholder. For business to be properly brought before an
annual meeting by a shareholder, the shareholder must have given timely notice
thereof in writing to the Secretary of the Corporation. To be timely, a
shareholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation not less than 60 days nor more
than 90 days prior to the annual meeting; provided, however, that in the event
less than 70 days' notice or prior public disclosure of the date of the annual
meeting is given or made to shareholders, notice by the shareholder to be
timely must be so received not later than the close of business on the 10th
day following the day on which such notice of the date of the annual meeting
was mailed or such public disclosure was made. For purposes of these Bylaws
"public disclosure" shall mean disclosure in a press release reported by the
Dow Jones, Associated Press, Reuters or comparable national news service, or
in a document publicly filed by the Corporation with the Securities and
Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"). A shareholder's notice to
the Secretary shall set forth as to each matter he or she proposes to bring
before the annual meeting (a) a brief description of the business desired to
be brought before the meeting and the reasons for conducting such business at
the annual meeting, (b) the name and address, as they appear on the
Corporation's books, of the shareholder(s) proposing such business, (c) the
class and number of shares of the Corporation which are beneficially owned by
the proposing shareholder(s), and (d) any material interest of the proposing
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shareholder(s) in such business. Notwithstanding anything in these Bylaws to
the contrary, but subject to Article III, Section 1(c) hereof, no business
shall be conducted at an annual meeting except in accordance with the
procedures set forth in this Section. The Chairman of the annual meeting
shall, if the facts warrant, determine and declare to the annual meeting that
business was not properly brought before the annual meeting in accordance with
the provisions of this Section; and if he or she should so determine, shall
so declare to the meeting and any such business not properly brought before
the annual meeting shall not be transacted. The Chairman of the meeting shall
have absolute authority to decide questions of compliance with the foregoing
procedures, and his or her ruling thereon shall be final and conclusive.
ARTICLE III
DIRECTORS
Section 1. Number; Classification; Nominations; Election; Term of
Office.
(a) The Board shall consist of such number of Directors as
the Board may from time to time determine, provided that in no event shall the
number of Directors be less than three (3), and provided further that no
reduction in the number of Directors shall have the effect of shortening the
term of any incumbent Director. In addition, the Board may, from time to
time, appoint such number of "Advisory Directors" and "Directors Emeritus" as
it may deem advisable.
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(b) The Board of Directors (herein the "Board") shall be
divided into three classes, as nearly equal in number as possible. In the
event of any increase in the number of Directors, the additional Director(s)
shall be added to such class(es) as may be necessary so that all classes shall
be as nearly equal in number as possible. In the event of any decrease in the
number of Directors, all classes of Directors shall be decreased as nearly
equally as may be possible. Subject to the foregoing, the Board shall
determine the class(es) to which any additional Director(s) shall be added and
the class(es) which shall be decreased in the event of any decrease in the
number of Directors.
At each annual meeting of shareholders the successors to the
class of Directors whose term shall then expire shall be elected for a term
expiring at the third succeeding annual meeting after such election.
(c) In addition to the qualifications set out in Section 3
of this Article III, in order to be qualified for election as a Director,
persons must be nominated in accordance with the following procedure:
Nominations of persons for election to the Board of the
Corporation may be made at a meeting of shareholders by or at the direction of
the Board or by any shareholder of the Corporation entitled to vote for the
election of Directors at the meeting who complies with the procedures set
forth in this Section 1(c). In order for persons nominated to the Board,
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other than those persons nominated by or at the direction of the Board, to be
qualified to serve on the Board, such nominations shall be made pursuant to
timely notice in writing to the Secretary of the Corporation. To be timely, a
shareholder's notice shall be delivered to or mailed and received by the
Secretary of the Corporation not less than 60 days nor more than 90 days prior
to the meeting; provided, however, that in the event less than 70 days' notice
or prior public disclosure of the date of the meeting is given or made to
shareholders, notice by the shareholder to be timely must be so received not
later than the close of business on the 10th day following the day on which
such notice of the date of the meeting was mailed or such public disclosure
was made. Such shareholder's notice shall set forth (i) as to each person
whom the shareholder proposes to nominate for election or re-election as a
Director, (A) the name, age, business address and residence address of such
person, (B) the principal occupation or employment of such person, (C) the
class and number of shares of the Corporation which are beneficially owned by
such person, (D) any other information relating to such person that is
required to be disclosed in solicitations of proxies for election of
Directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended, (including without
limitation such person's written consent to being named in the proxy statement
as a nominee and to serving as a Director if elected) and (E) if the
shareholder(s) making the nomination is an Interested Person, details of any
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relationship, agreement or understanding between the shareholder(s) and the
nominee; and (ii) as to the shareholder(s) making the nomination (A) the name
and address, as they appear on the Corporation's books, of such shareholder(s)
and (B) the class and number of shares of the Corporation which are
beneficially owned by such shareholder(s). At the request of the Board, any
person nominated by the Board for election as a Director shall furnish to the
Secretary of the Corporation that information required to be set forth in a
shareholder's notice of nomination which pertains to the nominee. No person
shall be qualified for election as a Director of the Corporation unless
nominated in accordance with the procedures set forth in this Section 1(c).
The Chairman of a meeting shall, if the facts warrant, determine and declare
to the meeting that a nomination was not made in accordance with the
procedures prescribed by the Bylaws, and if he or she should so determine,
shall so declare to the meeting, and the defective nomination shall be
disregarded. The Chairman of a meeting shall have absolute authority to
decide questions of compliance with the foregoing procedures, and his or her
ruling thereon shall be final and conclusive.
(d) Directors shall be elected at annual meetings of the
shareholders, except as provided in Section 2 of this Article III, and each
Director shall hold office until his or her successor is elected and
qualified.
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Section 2. Filling of Vacancies. Vacancies and newly created
directorships shall be filled only by a majority of the remaining Directors,
though less than a quorum, and each person so elected shall be a Director
until his or her successor is elected by the shareholders, who may make such
election at the next annual meeting of the shareholders at which Directors of
his or her class are elected or at any special meeting of shareholders duly
called for that purpose and held prior thereto.
Section 3. Qualifications. Directors must be nominated in
accordance with the procedure set out in Section 1(c) of this Article III.
Directors need not be shareholders. No person shall be eligible for election
as a Director, either under Section 1 or Section 2 of this Article III, if
such person's seventy-second (72d) birthday shall fall on a date prior to the
commencement of the Term for which such Director is to be elected or
appointed; provided, however, that this limitation shall not apply to persons
who were Directors of the Corporation on April 4, 1967. No person shall be
qualified to be elected and to hold office as a Director if such person is
determined by a majority of the whole Board to have acted in a manner contrary
to the best interests of the Corporation, including, but not limited to,
violation of either State or Federal law, maintenance of interests not
properly authorized and in conflict with the interests of the Corporation, or
breach of any agreement between such Director and the Corporation relating to
such Director's services as a Director, employee or agent of the Corporation.
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Section 4. Removal. By action of a majority of the whole Board, any
Director may be removed from office for cause if such Director shall at the
time of such removal fail to meet the qualifications for election as a
Director as set forth under Article III, Section 3 hereof. Notice of the
proposed removal shall be given to all Directors of the Corporation prior to
action thereon. Directors may be otherwise removed only in the manner
prescribed in the Articles.
Section 5. General Powers. The property and business of the
Corporation shall be controlled and managed by its Board of Directors which
may exercise all such powers of the Corporation and do all such lawful acts
and things as are not, by law, the Articles or by these Bylaws, directed or
required to be exercised and done by the shareholders or the Continuing
Directors.
Section 6. Place of Meetings. The Board may hold meetings, both
regular and special, either within or without the State of Missouri.
Section 7. Regular Annual Meeting. A regular annual meeting of the
Board, including newly elected Directors, shall be held immediately following
the annual meeting of the shareholders and shall be held at the principal
offices of the Corporation at 8000 West Florissant Avenue, St. Louis,
Missouri, unless another time or place shall be fixed therefor by the
Directors. No notice of such meeting shall be necessary to the Directors in
order, legally, to constitute the meeting, provided a majority of the whole
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Board shall be present. In the event such annual meeting of the Board is not
held at the time and place specified herein, or at such other time and place
as may be fixed by the Directors, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
meetings of the Board, or as shall be specified in a written waiver signed by
all of the Directors.
Section 8. Additional Regular Meetings. Additional regular meetings
of the Board shall be held once each month on the first Tuesday thereof, or on
such other day thereof as the Board may, by resolution, prescribe, and at such
hour of such day as shall be stated in the notice of the meeting; provided
that the Chairman, in his or her discretion, may dispense with any one or more
of such meetings, by having notice of the intention so to do given, by letter
or telegram, to each Director not less than ten (10) days prior to the
regularly scheduled date of each meeting so to be dispensed with. If the
first Tuesday of any month shall be a legal holiday, the regular meeting for
such month shall be held on the Thursday following, and if the Monday
preceding the first Tuesday of any month shall be a legal holiday, the regular
meeting for such month shall be held on the Wednesday following, in each case
unless the Board shall otherwise prescribe by resolution. Notice of any
regular meeting shall be given to each Director at least forty-eight (48)
hours in advance thereof, either personally, by mail or by telegram.
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Section 9. Special Meetings. Special meetings of the Board may be
called by the Chairman, any Vice Chairman, the President, any Vice President
or the Secretary, on notice given personally, by mail, by telephone, by
telegram or by facsimile to each Director given twenty-four (24) hours in
advance of such meeting. Special meetings shall be called by the Chairman,
any Vice Chairman, the President or Secretary in like manner and on like
notice on the written request of any two Directors.
Section 10. Place of Meetings. Special meetings and regular
meetings of the Board, other than the regular annual meeting, shall be held at
such place within the City or County of St. Louis, Missouri, as may be
specified in the notice of such meeting; provided that any meeting may be held
elsewhere, within or without the State of Missouri, pursuant to resolution of
the Board or pursuant to the call of the Chairman, any Vice Chairman or the
President. Members of the Board and its Committees may participate in
meetings by means of conference telephone or similar communications equipment
whereby all persons participating in the meeting can hear each other, and such
participation shall constitute presence at the meeting.
Section 11. Notices. Notice of any meeting may be given by the
Chairman, any Vice Chairman, the President, any Vice President or the
Secretary and shall specify the time and place of the meeting.
Section 12. Quorum. At all meetings of the Board a majority of
Directors in office (the "whole Board") shall be necessary to constitute a
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quorum for the transaction of business, and the acts of a majority of the
Directors present at a meeting at which a quorum is present shall be the acts
of the Board, except as otherwise may be specifically provided by law or by
the Articles. If a quorum shall not be present at any meeting of the Board,
the Directors present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present. So long as the whole Board shall consist of sixteen (16) or more
members, a Director who may be disqualified, by reason of personal interest,
from voting on any particular matter before a meeting of the Board may
nevertheless be counted for the purpose of constituting a quorum of the Board.
Section 13. Compensation of Directors. Directors, as such, shall
receive for their services such compensation as may be fixed, from time to
time, by resolution of the Board, together with a stipend for attendance, and
expenses of attendance, if any, for each meeting of the Board or meetings of
any committee on which the Directors may serve; provided that nothing herein
contained shall be construed to preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor.
Section 14. Executive Committee. The Board may, by resolution
passed by a majority of the whole Board, designate two or more of its number
to constitute an Executive Committee which, to the extent provided in such
resolution, shall have and exercise the authority of the Board in the
management and business of the Corporation.
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Section 15. Finance Committee. The Board may, by resolution passed
by a majority of the whole Board, designate two or more of its number, one of
whom shall be the Committee Chairman, as the Finance Committee of the Board,
which to the extent provided in such resolution shall have and exercise the
authority of the Board in the management and business of the Corporation. The
Committee shall study and consider financial matters affecting the operations
of the Corporation, including its long range financial requirements, shall
advise the Board in respect thereto, and shall have such other duties as shall
be specified by resolution of the Board.
Section 16. Other Committees of the Board. The Board may, by
resolution passed by a majority of the whole Board, designate two or more of
its members to constitute such other Committees of the Board as the Board by
such resolution or resolutions may determine. To the extent provided in such
resolution or resolutions, such Committees shall have and exercise the
authority of the Board in the management and business of the Corporation.
Section 17. Committees-General Rules. Each Committee of the Board
shall keep regular minutes of its proceedings and report the same to the Board
when required. Vacancies in the membership of each Committee shall be filled
by the Board at any regular or special meeting of the Board. A Director who
may be disqualified, by reason of personal interest, from voting on any
particular matter before a meeting of a Committee may nevertheless be counted
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for the purpose of constituting a quorum of the Committee. At all meetings of
a Committee, a majority of the Committee members then in office shall
constitute a quorum for the purpose of transacting business, and the acts of a
majority of the Committee members present at any meeting at which there is a
quorum shall be the acts of the Committee.
Section 18. Directors Emeritus and Advisory Directors. The Board
may from time to time create one or more positions of Director Emeritus and
Advisory Director, and may fill such position or positions for such term as
the Board deems proper. Each Director Emeritus and Advisory Director shall
have the privilege of attending meetings of the Board but shall do so solely
as an observer. Notice of such meetings to a Director Emeritus or Advisory
Director shall not be required under any applicable law, the Articles, or
these Bylaws. Each Director Emeritus and Advisory Director shall be entitled
to receive such compensation as may be fixed from time to time by the Board.
No Director Emeritus or Advisory Director shall be entitled to vote on any
business coming before the Board, nor shall they be counted as members of the
Board for the purpose of determining the number of Directors necessary to
constitute a quorum, for the purpose of determining whether a quorum is
present, or for any other purpose whatsoever. In the case of a Director
Emeritus or Advisory Director, the occurrence of any event which in the case
of a Director would create a vacancy on the Board, shall be deemed to create a
vacancy in such position; but the Board may declare the position terminated
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until such time as the Board shall again deem it proper to create and to fill
the position.
ARTICLE IV
NOTICES
Section 1. Service of Notice. Notices to Directors and shareholders
shall be in writing and delivered personally or mailed or sent by telegram,
telex or facsimile transmission to the Directors or shareholders at their
addresses appearing on the books of the Corporation, except that notice to
Directors of a special meeting of the Board may be given orally. Notice by
mail shall be deemed to be given at the time when the same shall be mailed;
notice by telegram when such notice is delivered to the telegraph company;
notice by facsimile transmission when transmitted.
Section 2. Waiver of Notices. Whenever any notice is required to
be given under the provisions of law, the Articles, or of these Bylaws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. Titles. The Officers of the Corporation shall be chosen
by the Board of Directors and shall be a Chairman of the Board (herein the
"Chairman"), a President, at least one Vice President, a Secretary and a
Treasurer. The Board may also elect one or more Vice Chairmen of the Board
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(herein "Vice Chairmen"), additional Vice Presidents, a Controller, one or
more Assistant Controllers, and such other officers as the Board may deem
appropriate.
Any two of the aforesaid offices, except those of President and Vice President
or President and Secretary, may be held by the same person. Vice Presidents
of the Corporation may be given distinctive designations such as Executive
Vice President, Group Vice President, Senior Vice President and the like.
Section 2. Election. The Board, at its annual meeting immediately
following each annual meeting of the shareholders, shall elect a Chairman and
a President, and may elect one or more Vice Chairmen, all of whom shall be
Directors or Advisory Directors; and the Board shall also at such annual
meeting elect one or more Vice Presidents, a Secretary and a Treasurer, who
may, but need not, be Directors or Advisory Directors. The Board may elect
such other officers and agents as it shall determine necessary who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board. In connection
with the election of any officer of the Corporation, the Board may determine
that such officer, in addition to the title of the office to which he is
elected, shall have a further title such as Chief Administrative Officer,
Chief Operating Officer or such other title as the Board may designate, and
the Board may prescribe powers to be exercised and duties to be performed by
any such officer to whom any such additional title of office is given in
addition to those powers and duties provided for by these Bylaws for such
office.
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Section 3. Term. The officers of the Corporation shall hold office
until their respective successors are elected and qualify. Any officer
elected or appointed by the Board may be removed by the Board at any time with
or without cause by the affirmative vote of a majority of the whole Board.
Any vacancy occurring in any such office may be filled only by the Board.
Section 4. Chairman of the Board. The Chairman shall be the Chief
Executive Officer of the Corporation. In addition to his or her duties as
Chairman and Chief Executive Officer, the Chairman shall be responsible for
the general and active management of the business and affairs of the
Corporation, subject only to the control of the Board; shall have full
authority in respect to the signing and execution of deeds, bonds, mortgages,
contracts and other instruments of the Corporation; and, in the absence or
disability of a Vice Chairman or the President, shall exercise all of the
powers and discharge all of the duties of such Vice Chairman or the President.
The Chairman shall also be, ex officio, a member of all standing Board
Committees, shall preside at all meetings of shareholders and Directors, and
shall perform such other duties as the Board may prescribe.
Section 5. President. The President shall be an executive Officer
of the Corporation, shall preside at all meetings of the shareholders and
Directors in the absence of the Chairman and the Senior Vice Chairman, and
shall perform such other duties as the Chairman or the Board shall prescribe.
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The President shall have equal authority with the Chairman and the Vice
Chairmen, if any, to sign and execute deeds, bonds, mortgages, contracts and
other instruments of the Corporation.
Section 6. Vice Chairmen of the Board. Vice Chairmen, if any, may
but need not be executive officers of the Corporation. The Vice Chairmen
shall perform such other duties, and have such other powers as the Chairman or
the Board may, from time to time, prescribe. Each Vice Chairman shall have
equal authority with the Chairman and the President with respect to the
signing and execution of deeds, bonds, mortgages, contracts and other
instruments of the Corporation.
Section 7. Vice Presidents. The Vice President, or if there shall
be more than one, the Vice Presidents shall, in the absence or disability of
the Chairman, the President and all Vice Chairmen, perform the duties and
exercise the powers of the President. Each Vice President shall perform such
other duties and have such other powers as the Chairman and the Board may,
from time to time, prescribe.
Section 8. Secretary and Assistant Secretaries. The Secretary shall
attend all meetings of the Board and all meetings of the shareholders and
record all the proceedings of the meetings of the Corporation and of the Board
in books to be kept for that purpose, shall perform like duties for Committees
of the Board when required, and shall perform such other duties as may be
prescribed by the Board, the Chairman, any Vice Chairman, or the President.
The Secretary shall keep in safe custody the seal of the Corporation and affix
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the same to any instrument requiring it, and, when so affixed, it shall be
attested by his or her signature or by the signature of an Assistant
Secretary. The Assistant Secretary, or, if there be more than one, the
Assistant Secretaries, in the order determined by the Board, shall, in the
absence or disability of the Secretary, perform the duties and exercise the
powers of the Secretary and shall perform such other duties and have such
other powers as the Board may, from time to time, prescribe.
Section 9. Treasurer and Assistant Treasurers. The Treasurer shall
have charge of the funds of the Corporation; shall keep the same in
depositories designated by the Board or by officers of the Corporation
authorized by the Board to make such designation; shall cause said funds to
be disbursed upon checks, drafts, bills of exchange or orders for the payment
of money signed in such manner as the Board or authorized officers of the
Corporation may, from time to time, direct; shall perform such other duties
as directed by the Board, the Chairman or other senior officers; and, if
required by the Board, shall give bond for the faithful performance of his or
her duties in such form and amount as may be determined by the Board. The
Assistant Treasurer, or, if there be more than one, the Assistant Treasurers,
in the order determined by the Board, shall, in the absence or disability of
the Treasurer, perform the duties and exercise the powers of the Treasurer,
and shall have such other duties and powers as the Board may prescribe.
22
<PAGE>
Section 10. Controller and Assistant Controllers. The Controller,
if one is elected by the Board, shall have charge of the accounting records of
the Corporation; shall keep full and accurate accounts of all receipts and
disbursements in books and records belonging to the Corporation; shall
maintain appropriate internal control and auditing of the Corporation; and
shall perform such other duties as directed by the Board, the Chairman or
other senior officers. The Assistant Controller or, if there be more than
one, the Assistant Controllers, in the order determined by the Board, shall,
in the absence or disability of the Controller, perform the duties and
exercise the powers of the Controller and shall have such other duties and
powers as the Board may prescribe.
Section 11. Appointed Officers. In addition to the corporate
officers elected by the Board as hereinabove in this Article V provided, the
Chairman may, from time to time, appoint one or more other persons as
appointed officers who shall not be deemed to be corporate officers, but may,
respectively, be designated with such titles as the Chairman may deem
appropriate. The Chairman may prescribe the powers to be exercised and the
duties to be performed by each such appointed officer, may designate the term
for which each such appointment is made, and may, from time to time, terminate
any or all of such appointments with or without cause. Such appointments and
termination of appointments shall be reported periodically to the Board.
23
<PAGE>
ARTICLE VI
CERTIFICATES OF SHARES
Section 1. Certificates. The certificates of shares of the
Corporation shall be numbered and registered in a share register as they are
issued. They shall exhibit the name of the registered holder and the number
and class of shares and the series, if any, represented thereby and the par
value of each share or a statement that such shares are without par value as
the case may be.
Section 2. Signatures on Certificates. Every share certificate shall
be signed by the Chairman of the Board, the President or a Vice President;
and by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer; and shall be sealed with the Corporation's seal which
may be facsimile, engraved or printed.
Section 3. Transfer Agents and Registrars; Facsimile Signatures. The
Board may appoint one or more transfer agents or transfer clerks and one or
more registrars and may require all certificates for shares to bear the
signature or signatures of any of them. Where a certificate is signed (a) by
a transfer agent or an assistant or co-transfer agent, or (b) by a transfer
clerk or (c) by a registrar or co-registrar, the signature of any officer
thereon may be facsimile. Where a certificate is signed by a registrar or co
24
<PAGE>
-registrar the certificate of any transfer agent or co-transfer agent thereon
may be by facsimile signature of the authorized signatory of such transfer
agent or co-transfer agent. In case any officer or officers of the
Corporation who have signed, or whose facsimile signature or signatures have
been used on, any such certificate or certificates shall cease to be such
officer or officers, whether because of death, resignation or otherwise,
before such certificate or certificates have been delivered by the
Corporation, such certificate or certificates may, nevertheless, be issued and
delivered as though the person or persons who signed such certificate or
certificates or whose facsimile signature or signatures have been used thereon
had not ceased to be such officer or officers of the Corporation.
Section 4. Lost Certificates. In case of loss or destruction of any
certificate of stock or other security of the Corporation, another may be
issued in its place upon satisfactory proof of such loss or destruction and
upon the giving of a satisfactory bond of indemnity to the Corporation and to
the transfer agents and registrars, if any, of such stock or other security,
in such sum as the Board may provide. The Board may delegate to any officer
or officers of the Corporation the authorization of the issue of such new
certificate or certificates and the approval of the form and amount of such
indemnity bond and the surety thereon.
Section 5. Transfer of Shares. Upon surrender to the Corporation or
a transfer agent of the Corporation of a certificate for shares duly endorsed
25
<PAGE>
or accompanied by proper evidence of succession, assignment or authority to
transfer, the Corporation may issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Section 6. Registered Shareholders. The Corporation and its
transfer agents shall be entitled to treat the holder of record of any share
or shares as the holder in fact thereof and shall not be bound to recognize
any equitable or other claims to, or interest in, such shares on the part of
any other person and shall not be liable for any registration or transfer of
shares which are registered, or to be registered, in the name of a fiduciary
or the nominee of a fiduciary unless made with actual knowledge that a
fiduciary, or nominee of a fiduciary, is committing a breach of trust in
requesting such registration or transfer, or with knowledge of such facts that
its participation therein amounts to bad faith.
Section 7. Interested Shareholders. The provisions of these Bylaws,
including without limitation the provisions of this Article VI as they apply
to any Interested Person or shares beneficially owned by such Interested
Person, are subject to the provisions of Article 9 of the Articles.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
Section 1. Actions Involving Directors, Officers or Employees.
The Corporation shall indemnify any person who was or is a party (other than a
26
<PAGE>
party plaintiff suing on his own behalf or in the right of the Corporation),
or who is threatened to be made such a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (including, but not limited to, an action by or in the right
of the Corporation) by reason of the fact that he or she is or was a Director,
officer or employee of the Corporation, or is or was serving at the request of
the Corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding; provided, that no such person shall be indemnified (a)
except to the extent that the aggregate of losses to be indemnified under the
provisions of this Article VII exceeds the amount of such losses for which the
Director, officer or employee is insured pursuant to any directors and
officers liability insurance policy maintained by the Corporation; (b) in
respect to remuneration paid to such person if it shall be finally adjudged
that such remuneration was in violation of law; (c) on account of any suit in
which judgment is rendered against such person for an accounting of profits
made from the purchase or sale by such person of securities of the Corporation
pursuant to the provisions of Section 16(b) of the 1934 Act and amendments
thereto or similar provisions of any federal, state or local statutory law;
(d) on account of such person's conduct which is finally adjudged to have been
27
<PAGE>
knowingly fraudulent, deliberately dishonest or willful misconduct; and (e)
if it shall be finally adjudged that such indemnification is not lawful.
Section 2. Actions Involving Agents. The Corporation may indemnify
any person who was or is a party (other than a party plaintiff suing on his
own behalf or in the right of the Corporation), or who is threatened to be
made such a party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
(including, but not limited to, an action by or in the right of the
Corporation) by reason of the fact that he or she is an agent of the
Corporation, or is or was serving at the request of the Corporation as an
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding, all to the full extent
permitted by law.
Section 3. Determination of Right to Indemnification in Certain
Instances.
(a) Any indemnification under Section 1 of this Article VII (unless
ordered by a court) shall be made by the Corporation unless a determination is
reasonably and promptly made that indemnification of the director, officer or
employee is not proper in the circumstances because he or she has not
satisfied the conditions set forth in such Section 1. Such determination
28
<PAGE>
shall be made (1) by the Board by a majority vote of a quorum consisting of
Directors who were not parties to such action, suit or proceeding, or (2) if
such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested Directors so directs, by independent legal counsel in a written
opinion, or (3) by the shareholders; provided, that no such determination
shall preclude an action brought in an appropriate court to challenge such
determination.
(b) Any indemnification under Section 2 of this Article VII (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the agent is proper
in the circumstances because he or she has met the applicable standard of
conduct set forth in such Section 2. Such determination shall be made (1) by
the Board by a majority vote of a quorum consisting of Directors who were not
parties to such action, suit or proceeding, or (2) if such a quorum is not
obtainable, or, even if obtainable, a quorum of disinterested Directors so
directs, by independent legal counsel in a written opinion, or (3) by the
shareholders.
Section 4. Advance Payment of Expenses. Expenses incurred by
defending a civil or criminal action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amounts unless it shall ultimately be
determined that he or she is entitled to be indemnified by the Corporation as
29
<PAGE>
authorized in this Article.
Section 5. Successful Defense. Notwithstanding any other provision
of this Article VII, to the extent that a director, officer, employee or agent
of the Corporation has been successful on the merits or otherwise (including
the dismissal of an action without prejudice or the settlement of an action
without admission of liability) in defense of any action, suit or proceeding
referred to in Sections 1 or 2 of this Article VII, or in defense of any
claim, issue or matter therein, he or she shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred in
connection therewith.
Section 6. Not Exclusive Right. The indemnification provided by
this Article VII shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under any statute, bylaw,
agreement, vote of shareholders or disinterested directors or otherwise, both
as to action in an official capacity and as to action in another capacity
while holding such office. Without limiting the generality of the foregoing,
in the event of conflict between the provisions of this Article VII and the
provisions of any agreement adopted by the shareholders between the
Corporation on the one hand, and any director, officer, employee or agent of
the Corporation on the other, providing for indemnification, the terms of such
agreement shall prevail. Any indemnification, whether required under this
Bylaw or permitted by statute or otherwise, shall continue as to a person who
has ceased to be a director, officer or employee and shall inure to the
30
<PAGE>
benefit of the heirs, executors and administrators of such person.
Section 7. Insurance. The Board shall have the power to cause the
Corporation to purchase and maintain insurance on behalf of any person who is
or was a Director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by
him or her in any such capacity, arising out of his or her status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article.
Section 8. Subsidiaries of Corporation. For the purposes of this
Article VII, (a) any officer, Director, or employee of the Corporation who
shall serve as an officer, director, employee or agent of any other
corporation, joint venture, trust or other enterprise of which the
Corporation, directly or indirectly, is or was a stockholder or creditor, or
in which the Corporation is or was in any way interested, or (b) any officer,
director, or employee of any subsidiary corporation, venture, trust or other
enterprise wholly owned by the Corporation, shall be deemed to be serving as
such director, officer, employee or agent at the request of the Corporation,
unless the Board shall determine otherwise. In all instances where any person
shall serve as a director, officer, employee or agent of another corporation,
31
<PAGE>
joint venture, trust or other enterprise of which the Corporation is or was a
stockholder or creditor, or in which it is or was otherwise interested, if it
is not otherwise established that such person is or was serving as such
director, officer, employee or agent at the request of the Corporation, the
Board may determine whether such service is or was at the request of the
Corporation, and it shall not be necessary to show any actual or prior request
for such service.
___________________________
Note: The indemnification provided in the foregoing provisions of Article VII
(and related matters) was approved by the stockholders of the Corporation on
February 10, 1987.
32
<PAGE>
Section 9. Spousal Indemnification. The spouse of a person entitled
to indemnification under Section 1 hereof or who is granted indemnification
under Section 2 hereof, shall be entitled to be so indemnified; provided, that
the spouse was or is a party (other than a party plaintiff suing on his or her
own behalf or in the right of the Corporation), or was or is threatened to be
made a party, to any threatened, pending, or completed action, suit or
proceeding, whether civil, criminal, administrative, or investigative
(including, but not limited to, an action by or in the right of the
Corporation), solely by reason of the spousal relationship to the person
entitled to indemnification under Section 1 hereof or who is granted
indemnification under Section 2 hereof.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the shares of the Corporation,
subject to the provisions of the Articles, if any, may be declared by the
Board at any regular or special meeting, pursuant to law. Dividends may be
paid in cash, in property, or in shares of the capital stock or other
securities of the Corporation, in rights or warrants relating thereto, or in
any other form authorized by law.
Section 2. Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person
or persons as the Board, or officers authorized by the Board, may, from time
33
<PAGE>
to time, designate.
Section 3. Fiscal Year. The fiscal year of the
Corporation shall commence on October 1, and close on September 30.
Section 4. Seal. The Corporation's seal shall have inscribed
thereon the name of the Corporation, the numeral "1890" being the year of the
incorporation of the Corporation, and the words "Corporate Seal, Missouri".
The seal may be used by causing it, or a facsimile thereof, to be impressed,
affixed, reproduced or otherwise.
Section 5. Closing of Transfer Books and Fixing of Record Dates.
The Board shall have power to close the share transfer books of the
Corporation for a period not exceeding seventy (70) days preceding the date of
any meeting of shareholders, or the date for the payment of any dividend, or
the date for the allotment of rights, or the date when any change, conversion
or exchange of shares shall go into effect; provided, however, that, in lieu
of closing the share transfer books as aforesaid, the Board may fix in advance
a date, not exceeding seventy (70) days preceding the date of any meeting of
shareholders, or the date for the payment any dividend, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
shares shall go into effect, as a record date for the determination of the
shareholders entitled to notice of, and to vote at, any such meeting, and any
adjournment thereof, or entitled to receive payment of any such dividend, or
34
<PAGE>
to any such allotment of rights, or to exercise rights in respect of any such
change, conversion or exchange of shares; and, in each such case, such
shareholders and only such shareholders as shall be shareholders of record on
the date of closing the share transfer books, or on the record date so fixed,
shall be entitled to notice of, and to vote at, such meeting and any
adjournment thereof, or to receive payment of such dividend, or to receive
such allotment of rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any shares after such date of closing of the
share transfer books or such record date fixed as aforesaid.
ARTICLE IX
AMENDMENTS
Section 1. These Bylaws may be altered, amended or repealed solely
by a majority vote of the members of the whole Board at any regular or special
meeting thereof duly called and convened.
35
<PAGE> Exhibit 10(c)
EMPLOYMENT AGREEMENT
----------------------
THIS AGREEMENT made as of the 1st day of October, 1975, and amended
January 9, 1987 as of the 1st day of October 1986 and October 22, 1997 as of
the 1st day of October, 1997, by and between EMERSON ELECTRIC CO., a Missouri
corporation ("Emerson") and CHARLES F. KNIGHT ("Employee"),
WITNESSETH THAT:
WHEREAS, Employee presently is Chairman of the Board and Chief
Executive Officer of Emerson and possesses executive skills and experience
which Emerson believes are of substantial value and important to the success of
Emerson's business operations; and
WHEREAS, Emerson and Employee desire to provide for the terms and
conditions upon which Employee will continue in the employ and service of
Emerson,
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein set forth, the parties hereto agree as follows:
1. Employment and Duties. Emerson hereby employs Employee, and
Employee agrees to continue in the employ of Emerson, for the term herein
specified (the "Employment Term"). During the Employment Term Employee shall
serve Emerson in a senior executive capacity, shall perform such duties as may
be assigned to him by the Board of Directors of Emerson and shall devote his
full time, attention and effort to the business and affairs of Emerson.
2. Term. Subject to Section 4 below, the Employment Term shall be
initially a six (6) year period commencing October 1, 1975 and ending
September 30, 1981, provided, however, that on September 30, 1976 and on each
September 30 thereafter the Employment Term shall be extended automatically
one (1) additional year, unless prior to September 30 of any year Emerson shall
give notice to Employee in writing that the Board of Directors of Emerson has
elected not to have the Employment Term extended for any further period. If
such notice is given, the Employment Term shall then be limited to the balance
of the year in which such notice is given plus the next succeeding five years.
The word "year" as used herein shall mean the twelve month period
commencing October 1 and ending the next succeeding September 30.
3. Compensation. In consideration of his services, Employee shall
receive during the Employment Term a base salary at the rate of not less than
<PAGE>
Nine Hundred Thousand Dollars ($900,000) per year, payable in substantially
equal installments in accordance with Emerson's usual paying practices, but not
less frequently than monthly, and shall be eligible for annual bonus payments
under Emerson's annual executive extra salary plan as determined annually by
the Compensation and Human Resources Committee of the Board of Directors of
Emerson, consistent with the scope of Employee's responsibilities and
performance for such year. In addition, Employee shall participate in
Emerson's group insurance, hospitalization, pension and other benefit plans
and programs applicable generally to employees of Emerson, and in any fringe
benefit programs presently existing or hereafter adopted for the benefit of
executive employees of Emerson. In the event that any of such programs
require future action by the Board of Directors of Emerson or a Committee of
such Board, as in the case of future stock option grants, Employee shall be a
candidate for participation in such programs on the basis applicable to other
executive employees of Emerson. Emerson may from time to time also consider
the award of other forms of compensation to Employee. At the time any such
award is proposed to be made, Employee shall have the right to elect to defer
all or part thereof (a) until the following January 2nd, (b) to some other
date certain, (c) for a stated number of years or (d) until his termination of
employment, on such terms and conditions as shall be agreed at the time of
such election.
4. Effect of Termination of Employment. The Employment Term and,
except as provided in Section 5, Employee's right to compensation (including
benefits) as provided for herein shall terminate only (a) upon the expiration
of the Employment Term pursuant to Section 2, (b) if Employee shall die during
the Employment Term, (c) if Employee shall voluntarily Retire (as defined
below), (d) if Employee shall voluntarily terminate his employment hereunder
other than in a Retirement, or (e) if Employee's employment is terminated for
cause during the Employment Term.
No termination of Employee's employment shall be deemed to have been a
termination for cause unless such termination is for or on account of (i) a
willful failure or refusal of Employee to perform his employment duties and
obligations hereunder; (ii) any fraud, embezzlement or other dishonesty of
Employee adversely affecting Emerson or any of its subsidiaries, or (iii) the
conviction of Employee of a felony committed otherwise than in the performance
by him of services on behalf of Emerson.
Employee's right to compensation shall not be limited or affected by
any illness or disability of Employee, or on account of any accident or other
event which either temporarily or permanently, or wholly or partially, shall
prevent Employee from performing his employment duties hereunder.
For purposes of this agreement, Employee shall be deemed to "Retire"
upon the later to occur of (i) his ceasing (with the consent or as a result
<PAGE>
of the action of the Board of Directors, other than by reason of termination
for cause) to be Chief Executive Officer of Emerson and (ii) his ceasing to be
Chairman of the Board of Emerson. Employee's Retirement shall be deemed
voluntary if he consents in writing to both (i) and (ii) above. Employee's
involuntary Retirement, including by reason of his resignation following the
occurrence of either of (i) or (ii) above without his written consent, shall
not constitute a willful failure of Employee to perform his employment duties
hereunder and in such event the compensation of Employee (including benefits)
shall continue for the balance of the Employment Term on the same basis as then
in effect.
Upon Employee's Retirement he shall be entitled to immediate
commencement of retirement benefits under the Emerson Supplemental Executive
Retirement Plan and upon Employee's Retirement or death during the Employment
Term any and all awards, participations and coverages held by or with respect
to Employee under any other agreements with or plans or programs of Emerson
(including without limitation any options or other stock-based compensation as
well as coverage under Emerson's split dollar insurance program, but not
including welfare programs of general application only to active employees of
Emerson) shall become non-forfeitable, and shall be payable or settled in
accordance with their terms as if Employee's employment with Emerson had not
terminated (or, if earlier, upon Employee's (or his estate's or
beneficiaries') recognition of taxable income in connection therewith), except
to the extent Employee shall direct, or reserve the right to direct, that any
payment not be made.
5. Consulting. Employee agrees that commencing upon Retirement he
will provide consulting services and advice to Emerson when and as requested
by the Chief Executive Officer or by the Board of Directors of Emerson until
the first to occur of notice to Employee by the Board of Directors given after
the fifteenth anniversary of Employee's Retirement that such services are no
longer needed, Employee's death or Employee's notice to the Board of Directors
of the termination of this consulting agreement (the "Consulting Term"). In
no event shall such services and advice exceed 30 days per year. In
consideration of such services, Emerson shall pay employee a daily consulting
fee, for the days he renders such services, equal to his daily salary rate at
the time of his Retirement, and shall provide Employee continued access during
the Consulting Term to Emerson's facilities and services comparable to those
provided to him prior to his Retirement, including club memberships, financial
planning and access to Emerson's aircraft, car and driver, on the same basis as
such facilities and services were provided to Employee prior to his
Retirement. Emerson shall also reimburse Employee, upon the receipt of
appropriate documentation, for reasonable expenses which he incurs in
providing such consulting services at the request of the Chief Executive
Officer or the Board of Directors of Emerson. During the Consulting Term
Employee shall be an independent contractor.
<PAGE>
6. Non-Disclosure and Non-Compete Agreements. Employee agrees that he
will not disclose to any other firm or person any of Emerson's or Emerson's
subsidiaries' trade secrets or any confidential information relating to its or
their business. Employee further agrees that, upon the expiration of the
Employment Term (but excepting any period following a termination by Emerson
without cause), he will not enter the employ of, or have any material interest
in, directly or indirectly, any business in this country in competition with
Emerson or any of it subsidiaries, for a period of two (2) years from the date
of such expiration or, if longer, at any time during the Consulting Term.
7. Miscellaneous. Neither this Agreement nor any rights hereunder
shall be assignable by either party hereto.
This Agreement supersedes and replaces that certain Employment Contract
between the parties hereto dated January 1, 1973.
This Agreement shall be construed and interpreted under the laws of
Missouri.
IN WITNESS WHEREOF, the parties have executed this Agreement, as
amended, this 22nd day of October, 1997.
EMERSON ELECTRIC CO.
By /s/ Vernon R. Loucks, Jr.
-------------------------------
"Emerson"
Chairman, Compensation and
Human Resources Committee
/s/ Charles F. Knight
-------------------------------
"Employee"
<PAGE> Exhibit 10(e)
EMERSON ELECTRIC CO.
1991 STOCK OPTION PLAN
AS AMENDED AND RESTATED
EFFECTIVE OCTOBER 1, 1997
1. Purpose of the Plan.
The Emerson Electric Co. 1991 Stock Option Plan (the "Plan") is intended
as an incentive to, and to encourage ownership of the stock of Emerson
Electric Co. ("Company") by certain key management employees of the Company
and its subsidiaries and joint ventures. It is intended that certain options
granted hereunder will qualify as Incentive Stock Options within the meaning
of Section 422 of the Internal Revenue Code of 1986 as amended (the "Code")
("Incentive Stock Options") and that other options granted hereunder will not
qualify as Incentive Stock Options.
2. Stock Subject to the Plan.
(a) Stock Available For Grants of Options and Stock
Appreciation Rights ("SARs"). 4,000,000 shares of the Common Stock of the
Company par value $1.00 (which, after taking account of the 2 for 1 split on
March 10, 1997, became 8,000,000 shares of the Company par value $.50)
("Common stock") have been allocated to the Plan and will be reserved for the
grant of options or SAR's under the Plan, subject to adjustment under
Paragraph 16.
(b) Reservation of Shares. The Company will allocate and
reserve in each calendar year, a sufficient number of shares of its Common
Stock for issue upon the exercise of options or SAR's granted under the Plan.
(c) Treasury Shares. The Company may, in its discretion,
use shares held in the Treasury under this Plan in lieu of authorized but
unissued shares of Common Stock. If any option shall expire or terminate for
any reason without having been exercised in full, the unpurchased shares
subject thereto shall again be available for the purposes of the Plan. Any
shares of Common Stock which are used as full or partial payment to the
Company by an optionee of the purchase price upon exercise of an option shall
again be available for the purposes of the Plan.
3. Administration.
The Plan shall be administered by the Committee referred to in Paragraph
4 (the "Committee"). Subject to the express provisions of the Plan, the
Committee shall have plenary authority, in its discretion, to determine the
individuals to whom, and the time or times at which, options and SAR's shall
be granted and the number of shares to be subject to each option or SAR. In
making such determinations the Committee may take into account the nature of
the services rendered by the respective individuals, their present and
potential contributions to the Company's success and such other factors as
the Committee, in its discretion, shall deem relevant. Subject to the express
<PAGE>
provisions of the Plan, the Committee shall also have plenary authority to
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to it, to determine the terms and provisions of the respective stock
option and SAR agreements (which need not be identical) and to make all other
determinations necessary or advisable for the administration of the Plan. The
Committee's determinations on the matters referred to in this Paragraph 3
shall be conclusive. The Committee may, in its discretion, delegate to the
Chief Executive Officer of the Company (the "CEO") the authority to determine
the individuals to whom, and the time or times at which and terms upon which,
options and SAR's shall be granted and the number of shares to be subject to
each option or SAR; provided, however, that the Committee may not delegate
such authority to the CEO with respect to employees of the Company who are
subject to the reporting requirements of Section 16(a) of the Securities
Exchange Act of 1934.
4. The Committee.
The Committee shall at all times be constituted to comply with Rule 16b-3
under the Securities Exchange Act of 1934, or any successor Rule. The
Committee shall be appointed by the Board of Directors of the Company
("Board"), which may from time to time appoint members of the Committee in
substitution for members previously appointed and may fill vacancies, however
caused, in the Committee. The Committee may select one of its members as its
Chairman, and shall hold its meetings at such times and places as it may
determine. A majority of its members shall constitute a quorum. All
determinations of the Committee shall be made by a majority of its members.
Any decision or determination reduced to writing and signed by a majority of
the members shall be fully as effective as if it had been made by a majority
vote at a meeting duly called and held. The Committee may appoint a
secretary, shall keep minutes of its meetings and shall make such rules and
regulations for the conduct of its business as it shall deem advisable.
5. Eligibility.
Options (including Incentive Stock Options) and SAR's may be granted only
to key management employees of the Company or its subsidiaries (as defined
below). The term "key management employees" is not limited to, but includes,
officers, whether or not they are directors, and employees who are employed in
positions of management, but does not include directors who are not also
executive employees of the Company, or a subsidiary thereof. The term
"subsidiary" shall mean any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of
2
<PAGE>
the granting of the option or SAR, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain, or such other meaning as may be hereafter ascribed
to it in Section 424 of the Code.
Notwithstanding the foregoing, options which are not Incentive Stock
Options and SAR's may also be granted to employees of joint ventures of the
Company so long as such employees are not subject to Section 16(a) of the
Securities Exchange Act of 1934 by virtue of their position with, or share
holdings of, the Company. The term "joint venture" means a partnership or
other business entity (other than a subsidiary) 50% or more of the profits
interest of which is owned by the Company or a subsidiary.
6. Option Prices.
The purchase price of the Common Stock under each Incentive Stock Option
shall not be less than 100% of the fair market value of the stock at the time
of the granting of the option and the purchase price of the Common Stock under
each other option shall not be less than 85% of the fair market value of the
stock at the time of the granting of the option. Such fair market value shall
generally be considered to be the mean between the high and low prices of
the Company's Common Stock as reported on the New York Stock Exchange
Composite Tape for the day the option is granted; provided, however, that the
Committee may adopt any other criterion for the determination of such fair
market value as it may determine to be appropriate.
7. Payment of Option Prices.
The purchase price is to be paid in full upon the exercise of the option,
either (i) in cash, (ii) in the discretion of the Committee, by the tender to
the Company of shares of the Common Stock of the Company, owned by the
optionee and registered in his name, having a fair market value equal to the
cash exercise price of the option being exercised, with the fair market value
of such stock to be determined in such appropriate manner as may be provided
for by the Committee or as may be required in order to comply with, or to
conform to the requirements of, any applicable laws or regulations, or (iii)
in the discretion of the Committee, by any combination of the payment methods
specified in clauses (i) and (ii) hereof. Provided, however, that no shares
of Common Stock may be tendered in exercise of an option if such shares were
acquired by the optionee through the exercise of an Incentive Stock Option
unless (i) such shares have been held by the optionee for at least one year
and (ii) at least two years have elapsed since such Incentive Stock Option was
granted. The cash proceeds of sale of stock subject to option are to be added
3
<PAGE>
to the general funds of the Company and used for its general corporate
purposes. The shares of Common Stock of the Company received by the Company
as payment of the option price are to be added to the shares of the Common
Stock of the Company held in its Treasury and used for the purposes of
granting options and SAR's under the Plan.
Upon exercise of an option which is not an Incentive Stock Option, the
Company shall withhold sufficient shares to satisfy the Company's obligation
to withhold for federal and state taxes on such exercise.
8. Option Amounts.
The maximum aggregate fair market value (determined at the time an option
is granted in the same manner as provided for in Paragraph 6 hereof) of the
Common Stock of the Company with respect to which Incentive Stock Options are
exercisable for the first time by any optionee during any calendar year (under
all plans of the Company and its subsidiaries) shall not exceed $100,000.
9. Exercise of Options.
The term of each option shall be not more than ten (10) years from the
date of granting thereof or such shorter period as is prescribed in Paragraph
10 hereof. Within such limit, options will be exercisable at such time or
times, and subject to such restrictions and conditions, as the Committee
shall, in each instance, approve, which need not be uniform for all optionees;
provided, however, that except as provided in Paragraphs 10 and 11 hereof, no
option may be exercised at any time unless the optionee is then an employee of
the Company or a subsidiary or joint venture and has been so employed
continuously since the granting of the option. The holder of an option shall
have none of the rights of a stockholder with respect to the shares subject to
option until such shares shall be issued to such holder upon the exercise of
the option.
10. Termination of Employment.
Any option issued hereunder must be exercised prior to the optionee's
termination of employment with the Company, a subsidiary, or a joint venture,
except that if the employment of an optionee terminates with the consent and
approval of the optionee's employer, the Committee in its absolute discretion
may permit the optionee to exercise the option, to the extent that the
optionee was entitled to exercise it at the date of such termination of
employment, at any time within three (3) months after such termination, but
not after ten (10) years from the date of the granting thereof. In addition,
4
<PAGE>
the Committee in its absolute discretion, may permit an optionee who
terminates employment on account of retirement, to exercise such option, to
the extent the optionee was entitled to exercise it at the date of such
termination, at any time within five (5) years of the termination of
employment, but not after ten (10) years from the date of the granting
thereof. If an optionee terminates employment on account of disability,
the optionee may exercise such option, to the extent the optionee was entitled
to exercise it at the date of such termination, at any time within one (1)
year of the termination of employment but not after ten (10) years from the
date of the granting thereof. For this purpose a person shall be deemed to be
disabled if he or she is permanently and totally disabled within the meaning
of Section 422(c)(6) of the Code, which, as of the date hereof, means that he
or she is unable to engage in any substantial gainful activity by reason of
any medically determined physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a period
of not less than twelve (12) months. A person shall be considered disabled
only if he or she furnishes such proof of disability as the Committee may
require. Options granted under the Plan shall not be affected by any change
of employment so long as the optionee continues to be an employee of the
Company or a subsidiary thereof or, in the case of SAR's or options which are
not Incentive Stock Options, a joint venture of the Company. The option
agreements may contain such provisions as the Committee shall approve with
reference to the effect of approved leaves of absence. Nothing in the Plan
or in any option granted pursuant to the Plan shall confer on any individual
any right to continue in the employ of the Company or any subsidiary or joint
venture or interfere in any way with the right of the Company or any
subsidiary or joint venture thereof to terminate his or her employment at any
time.
11. Death.
In the event of the death of an optionee under the Plan, while he or she
is employed by the Company (or a subsidiary or joint venture) or within three
(3) months after termination of such employment (or one (1) year in the case
of the termination of employment of an optionee who is disabled as above
provided or five (5) years in the case of termination of employment on account
of retirement, as provided in paragraph 10 above) the option theretofore
granted may be exercised, to the extent exercisable at the date of death, by a
legatee or legatees under the optionee's last will, or by personal
representatives or distributees, at any time within a period of one (1) year
after death, but not after ten (10) years from the date of granting thereof.
5
<PAGE>
12. Non-Transferability of Options.
Each option granted under the Plan shall, by its terms, be non-
transferable otherwise than by will or the laws of descent and distribution
and an option may be exercised, during the lifetime of an optionee, only by
such optionee; provided, however, that the Committee may, in its sole
discretion, permit an optionee to transfer a non-qualified stock option, or
cause the Company to grant a non-qualified stock option that would otherwise
be granted to a person described in Paragraph 5 (an "Eligible Optionee"), to
any one or more of the following: an Eligible Optionee's descendant, spouse,
descendant of a spouse, spouse of any of the foregoing, a trust established
primarily for the benefit of any of the foregoing, or of such Eligible
Optionee, or to an entity which is a corporation, partnership, or limited
liability company (or any other similar entity) the owners of which are
primarily the aforementioned persons or trusts. Any such option so transferred
or granted directly to the aforementioned persons, trust or entities in
respect of an Eligible Optionee shall be subject to the provisions of
Paragraph 10 concerning the exercisability during the Eligible Optionee's
employment.
13. Successive Option Grants.
Successive option grants may be made to any holder of options under this
Plan.
14. Investment Purpose.
Each option under the Plan shall be granted only on the condition that all
purchases of stock thereunder shall be for investment purposes, and not with a
view to resale or distribution, except that the Committee may make such
provision with respect to options granted under this Plan as it deems
necessary or advisable for the release of such condition upon the registration
with the Securities and Exchange Commission of Common Stock subject to the
option, or upon the happening of any other contingency warranting the release
of such condition.
15. Stock Appreciation Rights.
(a) Grant. The Committee, in its discretion, may grant under
the Plan to key management employees, SAR's for any number of shares. Each
SAR granted shall specify a time period for exercise of such SAR.
In addition, the Committee may grant to an optionee an
alternative SAR for all or any part of the number of shares covered by an
option. If an alternative SAR is granted, the SAR agreement shall specify the
options in respect of which the alternative SAR is granted. Any subsequent
exercise of an option by the holder thereof who also holds an alternative SAR
6
<PAGE>
shall reduce the alternative SAR by the same number of shares as to which the
option is exercised. Any exercise of the alternative SAR shall reduce the
holder's option by the same number of shares as to which the SAR is exercised.
An alternative SAR granted to an option holder shall specify a time period for
exercise of such SAR, which time period may not extend beyond, but may be less
than, the time period during which the corresponding option may be exercised.
The failure of the holder of the alternative SAR to exercise such SAR within
the time period specified shall not reduce the holder's option rights. The
Committee may later grant to the holder of an option that is not an Incentive
Stock Option an alternative SAR covering all or a portion of such shares,
provided, however, that the aggregate amount of all alternative SAR's held by
an option holder shall at no time exceed the total number of shares covered by
such holder's unexercised options.
(b) Exercise. A SAR shall be exercised by the delivery to
the Company of a written notice which shall state that the individual elects
to exercise his or her SAR as to the number of shares specified in the notice
and which shall further state what portion, if any, of the SAR award amount
(hereinafter defined) the holder thereof requests be paid in cash and what
portion, if any, the holder requests be paid in Common Stock of the Company.
The Committee promptly shall cause to be paid to such holder the SAR award
amount either in cash, in Common Stock of the Company, or any combination of
cash and stock as it may determine. Such determination may be either in
accordance with the request made by the holder of the SAR or otherwise, in the
sole discretion of the Committee. The SAR award amount is (i) the excess of
the price of one share of the Company's Common Stock on the date of exercise
over (A) the per share price of the Company's Common Stock on the date the SAR
was granted or (B) in the case of an alternative SAR, the per share option
price for the option in respect of which the alternative SAR was granted
multiplied by (ii) the number of shares as to which the SAR is exercised. For
the purposes hereof the price of one share of the Company's Common Stock on
the date of exercise and on the date of the grant shall be the mean between
the high and low prices of the Company's Common Stock on the New York Stock
Exchange Composite Tape on such dates provided that the Committee may adopt
any other criterion for the determination of such price as it may determine to
be appropriate.
(c) Other Provisions of Plan Applicable. All provisions of
this Plan applicable to options granted hereunder shall apply with equal
effect to SAR's. Not in limitation of the prior sentence it is expressly
provided that no SAR shall be transferable otherwise than by will or the laws
of descent and distribution and an SAR may be exercised, during the lifetime
of the holder thereof, only by such holder.
7
<PAGE>
16. Adjustments Upon Changes in Capitalization or Corporate Acquisitions.
Notwithstanding any other provisions of the Plan, the option and SAR
agreements may contain such provisions as the Committee shall determine to be
appropriate for the adjustment of the number and class of shares subject to
each outstanding option or SAR, the option prices and SAR award amounts in the
event of changes in the outstanding Common Stock by reason of stock dividends,
recapitalizations, mergers, consolidations, spin-offs, split-offs, split-ups,
combinations or exchanges of shares and the like, and, in the event of any
such change in the outstanding Common Stock, the aggregate number and class of
shares available under the Plan and the maximum number of shares as to which
options and SAR's may be granted to any individual shall be appropriately
adjusted by the Committee, whose determination shall be conclusive. In the
event the Company or a subsidiary enters into a transaction described in
Section 424(a) of the Code with any other corporation, the Committee may grant
options or SAR's to employees or former employees of such corporation in
substitution of options or SAR's previously granted to them upon such terms
and conditions as shall be necessary to qualify such grant as a substitution
described in Section 424(a) of the Code.
17. Amendment and Termination.
The Board, or the Committee may at any time terminate the Plan, or make
such modifications of the Plan as they shall deem advisable; provided,
however, that the Board or Committee may not, without further approval by the
holders of Common Stock, make any modifications which, by applicable law,
require such approval. No termination or amendment of the Plan may, without
the consent of the optionee to whom any option or SAR shall theretofore have
been granted, adversely affect the rights of such optionee under such option
or SAR.
18. Effectiveness of the Plan.
The Plan became effective upon adoption by the Board on October 2, 1990
subject, however, to its further approval by the stockholders of the Company
which was given on February 5, 1991 and was amended in its entirety effective
June 1, 1997.
19. Time of Granting of Options or SAR's.
An option or SAR grant under the Plan shall be deemed to be made on the
date on which the Committee, by formal action of its members duly recorded in
the records thereof, or the CEO, as the case may be, makes an award of an
option or SAR to an eligible employee of the Company or one of its
subsidiaries or joint ventures provided that such option or SAR is evidenced
8
<PAGE>
by a written option or SAR agreement duly executed on behalf of the Company
and on behalf of the optionee within a reasonable time after the date of the
Committee or CEO action.
20. Term of Plan.
This Plan shall terminate ten (10) years after the date on which it was
initially approved and adopted by the Board as set forth under Paragraph 18
and no option or SAR shall be granted hereunder after the expiration of such
ten-year period. Options or SAR's outstanding at the termination of the Plan
shall continue in full force and effect and shall not be affected thereby.
* * *
The foregoing Amended and Restated Plan was approved and adopted by the
Compensation and Human Resources Committee of the Board of Directors of the
Company on November 4, 1997 effective for options granted on or after October
1, 1997.
9
<PAGE> Exhibit 13
FINANCIAL REVIEW
RESULTS OF OPERATIONS
NET SALES
Sales for 1997 were a record $12.3 billion, an increase of $1,149 million or
10.3 percent from 1996. Approximately half of the sales increase was
attributable to solid international demand and modest domestic growth with the
remainder due to acquisitions (see note 2). All businesses reported sales growth
in 1997. Domestic sales increased approximately $770 million or 12 percent,
benefiting from acquisitions, solid gains in the tools business, very strong
gains in the electronics business and slight price increases. International
sales increased approximately $380 million, reflecting moderate growth in
Europe, continued strength in Asia-Pacific and Latin America, strong growth in
Canada and acquisitions, partially offset by unfavorable foreign currency
translation of approximately $235 million. New product sales, from products
introduced in the past five years, increased approximately $520 million or 15
percent to a record $3.9 billion, representing 32 percent of sales.
In 1996, sales were $11.1 billion, up $1.1 billion or 11.4 percent from 1995.
More than half of the sales increase was attributable to strong international
demand and moderate domestic growth with the remainder due to acquisitions.
International sales increased approximately $480 million due to solid growth in
Europe, rapid growth in Asia-Pacific and acquisitions, partially offset by
unfavorable foreign currency translation. Domestic sales increased approximately
$655 million, benefiting from solid gains in the heating, ventilating and air
conditioning business, very strong gains in the electronics business,
acquisitions and slight price increases. New product sales increased
approximately $815 million or 32 percent to $3.4 billion, representing 30
percent of sales.
INTERNATIONAL SALES
International sales, including U.S. exports, increased approximately 8 percent
to a record $5.2 billion in 1997, representing 43 percent of the Company's total
sales. Sales by non-U.S. subsidiaries were $4.2 billion in 1997, up $209 million
or 5 percent from 1996. U.S. exports exceeded $1 billion for the first time in
1997, increasing 19 percent to $1,054 million, reflecting strong sales gains in
the process and the heating, ventilating and air conditioning businesses and
acquisitions. International sales increased approximately 7 percent excluding
acquisitions and the unfavorable impact of currency translation as all major
geographic regions achieved sales growth, with particular strength in Asia-
Pacific, Latin America and Canada.
In 1996, international sales increased 11 percent to $4.9 billion, representing
approximately 44 percent of the Company's total sales. Sales by non-U.S.
subsidiaries were $4.0 billion in 1996, up $364 million or 10 percent from 1995.
International sales increased more than 7 percent excluding acquisitions and the
unfavorable impact of currency. All major geographic regions except Canada
reported solid sales growth, highlighted by very strong performance in Asia-
Pacific and Latin America. U.S. exports increased $117 million, or 15 percent,
to $885 million, led by continued strong sales gains in the process and heating,
ventilating and air conditioning businesses.
20
<PAGE>
INDUSTRY SEGMENT SALES
Sales in the Commercial and Industrial segment were $7.4 billion, up $730
million or 11.0 percent from 1996, reflecting solid international demand,
moderate domestic gains and acquisitions. The electronics business achieved very
strong underlying sales growth, reflecting broad strength across product lines
and service offerings. During the second quarter of 1997, the Company increased
its ownership and began consolidating the results of Astec (BSR) Plc. The
process business reported modest sales gains as solid international demand was
limited by the impact of the strengthening dollar. Sales of the industrial
motors and drives business increased moderately over a very strong prior year,
as the contribution of 1996 acquisitions helped offset the effects of sluggish
European economies and unfavorable currency translation. The industrial
components and equipment business reported modest sales gains, as solid
international demand was offset by unfavorable exchange rates.
Sales in the Appliance and Construction-Related segment were $4.9 billion, up
$419 million or 9.3 percent from 1996, reflecting slight domestic gains, strong
international demand, the impact of the 1996 Vermont American consolidation and
other acquisitions. Sales of the underlying tools business increased solidly,
reflecting strong domestic demand and the success of new products. The heating,
ventilating and air conditioning business reported slight sales gains as strong
international demand offset the significant impact of cool weather on U.S.
markets. Sales of the fractional motors and appliance components business
increased slightly as the cool weather reduced demand for motors used in room
air-conditioners and fans.
In 1996, sales in the Commercial and Industrial segment were $6.6 billion, up
$623 million or 10.4 percent from 1995, reflecting strong international demand,
modest domestic growth and acquisitions. The process business reported very
strong sales gains due to excellent international demand and product line
acquisitions. The electronics business experienced excellent sales growth,
reflecting very strong domestic markets, the success of new products and recent
acquisitions that enhanced service offerings. The industrial motors and drives
business achieved very strong sales growth benefiting from strong performances
by F.G. Wilson and Control Techniques. The industrial components and equipment
business reported modest sales gains reflecting solid international demand.
In 1996, sales in the Appliance and Construction-Related segment were $4.5
billion, up $514 million, or 12.8 percent from 1995 due to solid international
growth, moderate domestic demand and Vermont American, consolidated into the
Company's financial statements beginning in 1996. The heating, ventilating and
air conditioning business reported strong sales gains driven by worldwide demand
and acceptance of new Copeland Compliant Scroll products. Sales of the
underlying tools business increased moderately, reflecting the continued
acceptance of new products. The fractional motors and appliance components
business increased modestly due to a strong domestic household appliance
industry during the second half of the fiscal year.
TOTAL COSTS AND EXPENSES
Cost of sales for 1997 was $7.9 billion, an increase of 9.8 percent, due
primarily to increased sales volume. In 1996, cost of sales was $7.2 billion,
compared to $6.5 billion in 1995, an increase of 10.6 percent. Cost of sales as
a percent of net sales was 64.0 percent in 1997 compared to 64.3 percent and
64.7 percent in 1996 and 1995, respectively. Gross profit margins have improved
as a result of the Company's ongoing commitment to cost reduction efforts and
productivity improvement programs.
21
<PAGE>
Selling, general and administrative (SG&A) expenses were $2.5 billion, $2.2
billion and $1.9 billion in 1997, 1996 and 1995, respectively. As a percent of
net sales, SG&A expenses were 19.9 percent in 1997 compared to 19.6 percent and
19.3 percent in 1996 and 1995, respectively. The increase in SG&A expenses as a
percent of net sales reflects increased investment in new product development
and other revenue growth programs and acquisitions, partially offset by ongoing
cost reduction efforts. The Company continued its commitment to new product
development by increasing engineering and development expense approximately 12
percent to a record $445 million in 1997, compared to $399 million and $354
million in 1996 and 1995, respectively.
Interest expense decreased to $121 million in 1997 from $127 million in 1996,
reflecting lower interest rates. In 1996, interest expense increased from $111
million in 1995 due to acquisitions.
In the fourth quarter of 1997, the Company and General Signal formed a joint
venture combining Emerson's Appleton Electric operations and General Signal's
Electrical Group. Emerson holds a controlling interest in this venture, and the
transaction resulted in a pretax gain of approximately $80 million. The fourth
quarter of 1996 included a $78 million gain from the disposition of Emerson's
interest in the S-B Power Tool joint venture ("S-B"). These gains were
substantially offset by other non-recurring items. See note 2 for additional
information. Other deductions, net, were $78 million in 1997, compared to $57
million and $29 million in 1996 and 1995, respectively. Earnings in 1995
included a $41 million preferential distribution from S-B.
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE
Income before income taxes increased $175 million, or 10.9 percent, to $1.8
billion in 1997, reflecting increased sales and improved margins. Income
before interest expense and income taxes in the Commercial and Industrial
segment increased $103 million, or 11.3 percent, to $1,013 million in 1997.
This improvement is primarily a result of solid international demand, moderate
domestic sales growth and acquisitions. Income of the segment was 13.8 percent
and 13.7 percent of net sales in 1997 and 1996. Income in the Appliance and
Construction-Related segment increased $71 million, or 9.6 percent, to $813
million in 1997. As a percent of net sales, income of the segment was 16.5
percent in 1997 and 16.4 percent in 1996. These results reflect increased
worldwide sales volume, acquisitions and ongoing cost reduction efforts.
Income before income taxes and cumulative effect of accounting change increased
$149 million, or 10.2 percent, to $1.6 billion in 1996. Excluding non-recurring
items, income before income taxes increased approximately 13 percent in 1996,
reflecting worldwide sales volume, improved margins and acquisitions, partially
offset by higher interest expense. Income before interest expense, income taxes
and accounting change in the Commercial and Industrial segment increased $90
million, or 11.0 percent, to $910 million in 1996. This improvement was
primarily a result of underlying strength in international markets, modest
domestic growth and acquisitions. Income of the segment was 13.7 percent and
13.6 percent of net sales in 1996 and 1995. Income in the Appliance and
Construction-Related segment increased $90 million, or 13.8 percent, to $742
million in 1996. As a percent of net sales, income of the segment was 16.4
percent in 1996 and 16.3 percent in 1995. These results reflect solid underlying
growth, acquisitions and ongoing cost reduction efforts. See note 12 for
additional information by industry segment and geographic area.
22
<PAGE>
INCOME TAXES
Income taxes before accounting change were $662 million, $590 million, and $531
million in 1997, 1996 and 1995, respectively. The effective income tax rate was
37.1 percent in 1997, compared to 36.7 percent in 1996 and 36.4 percent in 1995,
reflecting acquisitions.
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
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 which decreased
1995 net earnings and earnings per common share by $21.3 million and $.05,
respectively. The adoption of the statement does not have a material impact on
the Company's ongoing results of operations.
NET EARNINGS AND RETURN ON EQUITY
Net earnings for 1997 were a record $1.1 billion, up 10.2 percent from $1.0
billion in 1996. Net earnings as a percent of sales was 9.1 percent in 1997 and
1996. Earnings per common share were a record $2.52 in 1997, up 11.0 percent
from $2.27 in 1996. Emerson achieved a return on average stockholders' equity of
20.8 percent compared to 19.9 percent and 19.7 percent in 1996 and 1995,
respectively. Net earnings for 1996 were up 12.2 percent from $908 million in
1995. Earnings per common share in 1996 were up 12.1 percent from $2.03 in 1995.
The Company consummated a two-for-one stock split in March 1997. All per share
amounts included in this discussion have been restated to give effect to the
split.
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
on a short- and long-term basis.
CASH FLOW
Emerson generated record operating cash flow of $1.5 billion in 1997, an
increase of 14 percent compared to 1996. Operating cash flows were $1.3 billion
and $1.1 billion in 1996 and 1995, respectively. Operating working capital was
approximately 17 percent of sales in 1997 and 18 percent of sales in 1996 and
1995. Increases in total assets, debt and other liabilities reflect sales
growth and acquisitions.
Capital expenditures were $575 million in 1997, up 12 percent from $514 million
in 1996. In 1996, capital expenditures increased 22 percent from $421 million in
1995. These funds increase the Company's global capacity to leverage
opportunities within the heating, ventilating and air conditioning and stand-by
power generation industries, as well as improve manufacturing productivity in a
number of our businesses. In addition, the Company began work on a $200 million
project focused on a new compressor and motor plant in Suzhou, China. Cash
paid in connection with Emerson's purchase acquisitions was $319 million, $300
million and $236 million in 1997, 1996 and 1995, respectively.
Dividends were a record $481 million ($1.08 per share) in 1997, compared with
$439 million ($.98 per share) in 1996 and $398 million ($.89 per share) in 1995.
In November 1997, the Board of Directors voted to increase the quarterly cash
dividend 9.3 percent to an annualized rate of $1.18 per share.
23
<PAGE>
LEVERAGE/CAPITALIZATION
Total debt increased to $2.0 billion in 1997 from $1.7 billion in 1996,
reflecting the impact of acquisitions and the Company's share repurchase
program, which authorizes the repurchase of up to 40 million shares of the
Company's outstanding common stock. Net purchases of treasury stock totaled
approximately $377 million in 1997. In 1996, total debt increased to $1.7
billion from $1.6 billion, reflecting the impact of acquisitions. See notes 2, 3
and 4 for additional information.
The total debt-to-capital ratio was 27.1 percent at year-end 1997, compared to
24.5 percent in 1996 and 24.7 percent in 1995. At September 30, 1997, net debt
(total debt less cash and equivalents and short-term investments) was 24.9
percent of net capital, compared to 22.9 percent in 1996 and 23.3 percent in
1995. The Company's interest coverage ratio (income before income taxes, non-
recurring items and interest expense divided by interest expense) increased to
15.8 times in 1997, compared to 13.7 times in 1996 and 13.9 times in 1995, as a
result of earnings growth and a reduction in interest rates.
At year-end 1997, the Company and its subsidiaries maintained lines of credit
amounting to $1.3 billion to support commercial paper and had available non-U.S.
bank credit facilities of $455 million to support non-U.S. operations. Lines of
credit totaling $660 million are effective until 2002, with the remainder
through various dates in 1998. These lines of credit and bank credit facilities
assure the availability of funds at prevailing interest rates. In addition, as
of September 30, 1997, the Company could issue up to $750 million of additional
debt securities under its shelf registration with the Securities and Exchange
Commission.
FINANCIAL INSTRUMENTS
The Company is exposed to market risk related to changes in interest rates and
European and other foreign currency exchange rates, and selectively uses
derivative financial instruments to manage these risks. The Company does not
hold derivatives for trading purposes. The value of market risk sensitive
derivative and other financial instruments is subject to change as a result of
movements in market rates and prices. Sensitivity analysis is one technique used
to evaluate these impacts. Based on a hypothetical one-percentage-point increase
in interest rates or ten-percent weakening in the U.S. dollar across all
currencies, the potential losses in future earnings, fair value and cash flows
are immaterial. This methodology has limitations; for example, a weaker U.S.
dollar would benefit future earnings through favorable translation of non-U.S.
operating results. See notes 1, 3, 4 and 5.
24
<PAGE>
Consolidated Statements of Earnings
EMERSON ELECTRIC CO. AND SUBSIDIARIES
Years ended September 30
(Dollars in millions except per share amounts)
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Net sales $ 12,298.6 11,149.9 10,012.9
---------- ---------- ----------
Costs and expenses:
Cost of sales 7,865.6 7,165.0 6,480.4
Selling, general and administrative expenses 2,450.9 2,192.0 1,933.2
Interest expense 120.9 126.9 110.6
Other deductions, net 77.6 57.0 28.8
---------- ---------- ----------
Total costs and expenses 10,515.0 9,540.9 8,553.0
---------- ---------- ----------
Income before income taxes and cumulative
effect of change in accounting principle 1,783.6 1,609.0 1,459.9
Income taxes 661.7 590.5 530.9
---------- ---------- ----------
Income before cumulative effect of change
in accounting principle 1,121.9 1,018.5 929.0
Cumulative effect of change in accounting principle,
$.05 per common share -- -- (21.3)
---------- ---------- ----------
Net earnings $ 1,121.9 1,018.5 907.7
========== ========== ==========
Earnings per common share $ 2.52 2.27 2.03
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
25
<PAGE>
Consolidated Balance Sheets
EMERSON ELECTRIC CO. AND SUBSIDIARIES
September 30
(Dollars in millions except per share amounts)
ASSETS
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Current assets
Cash and equivalents $ 221.1 149.0
Receivables, less allowances of $54.0 in 1997
and $50.3 in 1996 2,200.2 1,979.8
Inventories:
Finished products 789.6 720.7
Raw materials and work in process 1,092.0 1,023.2
---------- ----------
Total inventories 1,881.6 1,743.9
Other current assets 413.9 314.5
---------- ----------
Total current assets 4,716.8 4,187.2
---------- ----------
Property, plant and equipment
Land 167.0 166.2
Buildings 1,066.0 1,043.2
Machinery and equipment 3,928.9 3,391.1
Construction in progress 271.8 265.1
---------- ----------
5,433.7 4,865.6
Less accumulated depreciation 2,698.3 2,414.8
---------- ----------
Property, plant and equipment, net 2,735.4 2,450.8
---------- ----------
Other assets
Excess of cost over net assets of purchased businesses,
less accumulated amortization of $509.5 in 1997 and $443.7 in 1996 3,116.0 2,779.2
Other 895.1 1,063.8
---------- ----------
Total other assets 4,011.1 3,843.0
---------- ----------
$ 11,463.3 10,481.0
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
26
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Current liabilities
Short-term borrowings and current
maturities of long-term debt $ 1,445.1 967.0
Accounts payable 942.1 791.3
Accrued expenses 1,241.9 1,063.3
Income taxes 213.3 199.5
---------- ----------
Total current liabilities 3,842.4 3,021.1
---------- ----------
Long-term debt 570.7 772.6
---------- ----------
Other liabilities 1,629.5 1,333.9
---------- ----------
Stockholders' equity
Preferred stock of $2.50 par value per share.
Authorized 5,400,000 shares; issued - none -- --
Common stock of $.50 par value per share. Authorized
1,200,000,000 shares; issued 476,677,006 shares in
1997 and 1996 238.3 238.3
Additional paid-in capital 3.3 12.3
Retained earnings 6,348.9 5,707.7
Cumulative translation adjustments (205.9) (29.2)
---------- ----------
6,384.6 5,929.1
Less cost of common stock in treasury, 35,873,321
shares in 1997 and 29,237,152 shares in 1996 963.9 575.7
---------- ----------
Total stockholders' equity 5,420.7 5,353.4
---------- ----------
$ 11,463.3 10,481.0
========== ==========
</TABLE>
27
<PAGE>
Consolidated Statements of Stockholders' Equity
EMERSON ELECTRIC CO. AND SUBSIDIARIES
Years ended September 30
(Dollars in millions except per share amounts)
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Common stock $ 238.3 238.3 238.3
-------- -------- --------
Additional paid-in capital
Beginning balance 12.3 15.0 --
Stock plans (2.8) .1 (4.7)
Treasury stock issued for acquisitions and other (6.2) (2.8) 19.7
-------- -------- --------
Ending balance 3.3 12.3 15.0
-------- -------- --------
Retained earnings
Beginning balance 5,707.7 5,128.3 4,619.1
Net earnings 1,121.9 1,018.5 907.7
Cash dividends (per share: 1997, $1.08;
1996, $.98; 1995, $.89) (480.7) (439.1) (398.5)
-------- -------- --------
Ending balance 6,348.9 5,707.7 5,128.3
-------- -------- --------
Cumulative translation adjustments
Beginning balance (29.2) 17.0 8.7
Translation adjustments (176.7) (46.2) 8.3
-------- -------- --------
Ending balance (205.9) (29.2) 17.0
-------- -------- --------
Treasury stock
Beginning balance (575.7) (527.8) (524.3)
Acquired (427.2) (99.5) (81.1)
Issued under stock plans 18.3 14.2 17.5
Issued for acquisitions and other 20.7 37.4 60.1
-------- -------- --------
Ending balance (963.9) (575.7) (527.8)
-------- -------- --------
Total stockholders' equity $5,420.7 5,353.4 4,870.8
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
28
<PAGE>
Consolidated Statements of Cash Flows
EMERSON ELECTRIC CO. AND SUBSIDIARIES
Years ended September 30
(Dollars in millions)
<TABLE>
<CAPTION> 1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Operating activities
Net earnings $1,121.9 1,018.5 907.7
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 511.6 464.6 408.9
Changes in operating working capital (42.6) (131.6) (190.9)
Other (92.3) (34.2) 16.7
-------- -------- --------
Net cash provided by operating activities 1,498.6 1,317.3 1,142.4
-------- -------- --------
Investing activities
Capital expenditures (575.4) (513.5) (420.7)
Purchases of businesses, net of cash and equivalents acquired (319.2) (299.8) (235.5)
Divestiture of business interests and other, net 34.0 272.3 28.9
-------- -------- --------
Net cash used in investing activities (860.6) (541.0) (627.3)
-------- -------- --------
Financing activities
Net increase (decrease) in short-term borrowings 321.8 (363.8) 149.0
Proceeds from long-term debt 5.8 249.9 2.4
Principal payments on long-term debt (13.1) (77.0) (217.2)
Net purchases of treasury stock (376.6) (120.3) (51.3)
Dividends paid (480.7) (439.1) (398.5)
-------- -------- --------
Net cash used in financing activities (542.8) (750.3) (515.6)
-------- -------- --------
Effect of exchange rate changes on cash and equivalents (23.1) 5.7 4.5
-------- -------- --------
Increase in cash and equivalents 72.1 31.7 4.0
Beginning cash and equivalents 149.0 117.3 113.3
-------- -------- --------
Ending cash and equivalents $ 221.1 149.0 117.3
======== ======== ========
Changes in operating working capital
Receivables $ (117.3) (124.3) (85.2)
Inventories (64.4) (18.0) (100.2)
Other current assets (19.5) 7.8 (32.1)
Accounts payable 28.0 43.7 47.2
Accrued expenses 88.6 (16.5) (47.3)
Income taxes 42.0 (24.3) 26.7
-------- -------- --------
$ (42.6) (131.6) (190.9)
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
29
<PAGE>
Notes To Consolidated Financial Statements
EMERSON ELECTRIC CO. AND SUBSIDIARIES
(Dollars in millions except per share amounts)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its controlled affiliates. All significant intercompany transactions, profits
and balances are eliminated in consolidation. Other 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 to other deductions over the periods estimated to be benefited, not
exceeding 40 years. Long-lived assets are reviewed for impairment whenever
events and changes in business circumstances indicate the carrying value of the
assets may not be recoverable. Impairment losses are recognized if expected
future cash flows of the related assets are less than their carrying values.
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 agreement as a separate component of interest
expense. Gains and losses on purchased currency option and forward exchange
contracts that qualify for deferral accounting are recognized in income with the
underlying hedged transactions; otherwise, the contracts are recorded in the
balance sheet and changes in fair value are recognized immediately in other
deductions, net. 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 $750 at September 30, 1997), primarily because
retention of a significant portion of these earnings is considered essential for
continuing operations. In those cases in which 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 (in thousands) was 445,020
shares, 448,095 shares, and 447,506 shares in 1997, 1996 and 1995, respectively.
Financial Statement Presentation
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts and related disclosures. Actual results
could differ from those estimates. Certain prior year amounts have been
reclassified to conform to the current year presentation.
30
<PAGE>
(2) ACQUISITIONS AND DIVESTITURES
Cash paid in connection with the Company's purchase acquisitions, which include
several smaller businesses, follows:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Fair value of assets acquired.................................. $359.4 402.1 855.7
Less liabilities assumed....................................... 38.2 79.3 227.0
Less notes and common stock issued to sellers.................. 2.0 23.0 393.2
------ ------ ------
Cash paid (net of cash and equivalents acquired)............. $319.2 299.8 235.5
====== ====== ======
</TABLE>
During the second quarter of 1997, Emerson acquired a majority interest in Astec
(BSR) Plc through additional share purchases and began consolidating its
results. Astec had annual sales of approximately $600 in calendar 1996. During
the fourth quarter of 1997, the Company purchased InterMetro Industries for
approximately $275 and acquired Clairson International Corporation. These two
companies produce free-standing and wall-mounted ventilated shelving and
specialty storage products. Emerson previously owned a controlling interest in
Clairson through Vermont American Corporation ("V.A."), the Company's joint
venture with Robert Bosch GmbH. InterMetro and Clairson have combined annual
sales of more than $300. Several smaller businesses were also purchased or sold
in 1997.
In addition, in the fourth quarter of 1997, the Company and General Signal
Corporation formed a joint venture combining Emerson's Appleton Electric
operations and General Signal's Electrical Group. Emerson holds a controlling
interest in this venture, and the transaction resulted in a pretax gain of
approximately $80, which was substantially offset by costs arising from
relocation of several production facilities, asset impairments and litigation.
Emerson began consolidating V.A. in the second quarter of 1996 as a result of an
agreement in which Emerson acquired control over the venture. At September 30,
1997, Emerson had guaranteed V.A.'s indebtedness of approximately $255. If
required to perform under the guarantee, the Company will be indemnified for up
to approximately $90 by Bosch. In addition, the Company purchased Kop-Flex,
Inc., a manufacturer of flexible couplings, and Dieterich Standard, a
manufacturer of flow measurement sensors, along with several smaller businesses
in 1996.
In the fourth quarter of 1996, Emerson received $200 from the disposition of its
fifty-percent interest in the S-B Power Tool Company joint venture. The
transaction resulted in a pretax gain of $78 in 1996, which was substantially
offset by costs arising from divestiture of operations, write-off of
discontinued product line assets and relocation of several production
facilities.
The Company purchased United Kingdom-based manufacturer F.G. Wilson
(Engineering) Ltd. in 1995 for approximately $274, and Caterpillar Inc.
subsequently took an equity position in F.G. Wilson. 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 1995 for approximately $227.
The results of operations of these businesses have been included in the
Company's consolidated results of operations since the respective dates of the
acquisitions and prior to the dates of divestiture.
(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:
<TABLE>
<CAPTION>
United States Non-U.S.
-------------- --------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Borrowings at year end................................. $907.1 479.0 411.1 475.5
Weighted average interest rate at year end............. 5.9% 5.6% 4.1% 4.1%
</TABLE>
In 1997, the Company entered into a five-year interest rate swap which fixed the
rate on $250 of commercial paper at 6.1 percent. The 1995 F.G. Wilson and
Control Techniques acquisitions were partially financed by issuing notes to the
sellers totaling 203 million British pounds, of which 163 million British pounds
remain outstanding at September 30, 1997. The Company had swapped 163 million
and 141 million British pounds with a weighted average interest rate of 6.7
percent and 6.0 percent to $260 and $221 at U.S. commercial paper rates at
September 30, 1997 and 1996, respectively.
31
<PAGE>
The Company and its subsidiaries maintained lines of credit amounting to $1,320
with various banks at September 30, 1997, to support commercial paper and to
assure availability of funds at prevailing market interest rates. Lines of
credit totaling $660 are effective until 2002 with the remainder through various
dates in 1998. 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 $615 ($455 unused) at September
30, 1997. In some instances, borrowings against these credit facilities have
been guaranteed by the Company to assure availability of funds at favorable
interest rates. In addition, as of September 30, 1997, the Company could issue
up to $750 of additional debt securities under its shelf registration with the
Securities and Exchange Commission.
(4) LONG-TERM DEBT
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Commercial paper with a weighted average interest rate of
5.6 percent at September 30, 1997........................ $255.5 336.3
6.3% notes due 2006........................................ 250.0 250.0
7-7/8% Eurodollar notes due 1998.......................... 100.0 100.0
8% convertible subordinated debentures due through 2011.... 14.0 26.8
Other...................................................... 78.1 72.0
------ ------
697.6 785.1
Less current maturities.................................... 126.9 12.5
------ ------
Total.................................................... $570.7 772.6
====== ======
</TABLE>
The Company has the ability to refinance commercial paper on a long-term basis
through its credit lines, and the obligation is included in long-term debt.
The 7-7/8% Eurodollar notes and $55 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 4.7 percent and
4.3 percent at September 30, 1997 and 1996, 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 1998 is $10.2, $4.2,
$6.3 and $257.6, respectively. Total interest paid related to short-term
borrowings and long-term debt was approximately $108, $120 and $121 in 1997,
1996 and 1995, 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 purchased 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 $575 and $280 of contracts (primarily options)
outstanding at September 30, 1997 and 1996, 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, 1997 and 1996, respectively, the market
value of the Company's convertible debentures was $60 and $89, compared to the
related carrying value of $14 and $27. 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, 1997 and 1996, and the
estimated fair value of each of the Company's other classes of financial
instruments approximated the related carrying value at September 30, 1997 and
1996.
32
<PAGE>
(6) RETIREMENT PLANS
The Company sponsors retirement plans covering substantially all employees.
Benefits are provided to employees under defined benefit pay-related and flat-
dollar plans which are primarily noncontributory. Annual contributions to
retirement plans equal or exceed the minimum funding requirements of the
Employee Retirement Income Security Act or applicable local regulations.
The Company also sponsors defined contribution plans and participates in
multiemployer plans for certain union employees. Benefits are determined and
funded annually based on terms of the plans or as stipulated in collective
bargaining agreements.
Retirement plan expense for the years ended September 30, 1997, 1996 and 1995,
follows:
<TABLE>
<CAPTION>
U.S. Plans Non-U.S. Plans
------------------------------ ------------------------------
1997 1996 1995 1997 1996 1995
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Defined benefit plans:
Service cost (benefits earned during the period).. $ 31.7 30.1 28.0 8.0 8.3 7.7
Interest cost..................................... 94.3 88.1 80.8 16.3 15.9 15.2
Actual return on plan assets...................... (182.3) (185.0) (221.6) (37.8) (25.4) (18.4)
Net amortization and deferral..................... 44.1 60.1 113.5 19.7 9.2 5.1
-------- -------- -------- -------- -------- --------
Net periodic pension expense (income)........... (12.2) (6.7) .7 6.2 8.0 9.6
Defined contribution and multiemployer plans....... 48.5 43.4 39.4 8.1 7.4 7.5
-------- -------- -------- -------- -------- --------
Total retirement plan expense..................... $ 36.3 36.7 40.1 14.3 15.4 17.1
======== ======== ======== ======== ======== ========
</TABLE>
The actuarial present value of benefit obligations and the funded status of the
Company's defined benefit pension plans as of September 30, 1997 and 1996,
follow:
<TABLE>
<CAPTION>
U.S. Plans Non-U.S. Plans
------------------- -------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Accumulated benefit obligation........................................ $1,065.1 991.9 199.0 196.5
-------- -------- -------- --------
Vested benefits included in accumulated benefit obligation............ $1,003.9 931.0 167.6 165.9
-------- -------- -------- --------
Projected benefit obligation.......................................... $1,248.4 1,173.4 231.1 229.0
Plan assets at fair value (primarily corporate equity
and fixed income securities)......................................... 1,544.1 1,410.5 205.3 183.3
-------- -------- -------- --------
Plan assets in excess of (less than) projected benefit obligation.. 295.7 237.1 (25.8) (45.7)
Unamortized transition amount......................................... (36.4) (43.6) (2.4) (2.2)
Unrecognized net loss (gain).......................................... (143.3) (96.5) (31.4) (17.4)
Unrecognized prior service costs...................................... 20.2 20.6 1.9 1.2
-------- -------- -------- --------
Pension asset (liability) recognized in the balance sheet............ $ 136.2 117.6 (57.7) (64.1)
======== ======== ======== ========
</TABLE>
For 1997, 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 7.4 percent, 4.1 percent and 8.7 percent for non-
U.S. plans. For 1996, 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 7.5 percent, 4.1 percent and 8.8 percent for non-U.S. plans.
33
<PAGE>
(7) POSTRETIREMENT PLANS AND POSTEMPLOYMENT BENEFITS
The Company sponsors unfunded postretirement benefit plans (primarily health
care) for U.S. retirees and their dependents. Net postretirement plan expense
for the years ended September 30, 1997, 1996 and 1995 follows:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Service cost................... $ 3.6 4.0 4.1
Interest cost.................. 19.0 18.4 19.6
Net amortization and deferral.. (4.2) (4.4) (3.5)
------ ------ ------
$ 18.4 18.0 20.2
====== ====== ======
</TABLE>
The actuarial present value of accumulated postretirement benefit obligations as
of September 30, 1997 and 1996 follows:
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Retirees.............................................................. $167.0 152.1
Fully eligible active plan participants............................... 18.7 17.2
Other active plan participants........................................ 74.3 68.4
------ ------
Accumulated postretirement benefit obligation....................... 260.0 237.7
Unrecognized net gain................................................. 39.9 61.1
Unrecognized prior service benefit.................................... 9.6 11.0
------ ------
Postretirement benefit liability recognized in the balance sheet.... $309.5 309.8
====== ======
</TABLE>
The assumed discount rate used in measuring the obligation as of September 30,
1997, was 7.75 percent; the initial assumed health care cost trend rate was 8.0
percent, declining to 5.0 percent in the year 2004. The assumed discount rate
used in measuring the obligation as of September 30, 1996, was 7.75 percent; the
initial assumed health care cost trend rate was 8.5 percent, declining to 5.0
percent in the year 2004. A one-percentage-point increase in the assumed health
care cost trend rate for each year would increase the obligation as of September
30, 1997, by approximately 5 percent and increase the 1997 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 (net
of $13.7 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
In February 1997, stockholders approved increasing the authorized common stock
from 400 million to 1.2 billion shares and decreasing the par value from $1 to
$.50 per share. On March 10, 1997, the Company consummated a two-for-one split,
and stockholders received one additional share of common stock for each share
held. The accompanying financial statements and notes thereto have been
restated to give effect to the split.
The Company has various stock option plans which permit certain officers and
employees to purchase common stock at specified prices. Options are granted at
100% of the market value of the Company's common stock on the date of grant,
vest one-third each year and expire ten years from the date of grant. At
September 30, 1997, 1,038,504 options were available for grant under these
plans. Changes in the number of shares subject to option during 1997, 1996 and
1995 follow (shares in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
---------------- ---------------- ----------------
Average Average Average
Price Shares Price Shares Price Shares
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Beginning of year..................... $25.47 4,523 $22.39 4,483 $21.80 4,061
Options granted...................... 45.09 3,398 38.54 791 29.12 816
Assumed options of acquired company.. -- -- -- -- 8.16 417
Options exercised.................... 22.55 (794) 19.60 (662) 17.65 (712)
Options canceled..................... 41.02 (429) 30.20 (89) 27.90 (99)
------- ------- -------
End of year........................... 34.77 6,698 25.47 4,523 22.39 4,483
------- ------- -------
Exercisable at year end............... 2,727 2,614 2,370
======= ======= =======
</TABLE>
34
<PAGE>
Summarized information regarding stock options outstanding and exercisable at
September 30, 1997 follows (shares in thousands):
<TABLE>
<CAPTION>
Outstanding Exercisable
----------------------------------- ---------------
Range of Average Average Average
Exercise Prices Shares Contractual Life Price Shares Price
- --------------- ------ ---------------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
up to $20............. 1,070 3.6 years $ 13.70 917 $ 14.93
$21 to 40............. 2,233 6.5 29.30 1,752 28.42
$41 to 60............. 3,395 9.0 45.02 58 43.43
------ ------
Total............. 6,698 7.3 34.77 2,727 24.21
====== ======
</TABLE>
The 1993 and 1997 Incentive Shares Plans each authorize the distribution of a
maximum of 6 million shares of common stock to key management personnel. At
September 30, 1997, 714,000 shares had been issued under the 1993 plan with
restriction periods of three to ten years, including 70,000 shares issued in
1997. In addition, 4,893,802 rights to receive common shares had been awarded,
including 2,181,960 shares awarded in 1997 which are contingent upon
accomplishing certain objectives by 2001. Rights awarded prior to 1997 will be
distributed in 1998, with certain shares subject to a three-year restriction
period.
The Company applies Accounting Principles Board Opinion No. 25 in accounting for
its stock plans. The compensation expense charged against income for the
Company's incentive shares plans is immaterial. Had compensation expense for
the Company's stock plans been determined in accordance with Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," net earnings and earnings per common share would not materially
differ from reported amounts.
At September 30, 1997, 14,197,711 shares of common stock were reserved,
including 13,158,734 shares for issuance under the Company's stock plans and
1,038,977 shares for conversion of the outstanding 8% convertible subordinated
debentures at a price of $13.49 per share. During 1997, 8,278,440 treasury
shares were acquired and 1,642,271 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
The principal components of income tax expense follow:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Federal:
Current................................................................................... $447.8 393.0 301.5
Deferred.................................................................................. 10.1 7.4 46.3
State and local.............................................................................. 48.2 53.0 49.8
Non-U.S...................................................................................... 155.6 137.1 133.3
------ ------ ------
Income tax expense........................................................................ $661.7 590.5 530.9
====== ====== ======
</TABLE>
The federal corporate statutory rate is reconciled to the Company's effective
income tax rate as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Federal corporate statutory rate............................................................. 35.0% 35.0% 35.0%
State and local taxes, less federal tax benefit........................................... 1.8 2.1 2.2
Other..................................................................................... .3 (.4) (.8)
------ ------ ------
Effective income tax rate.................................................................... 37.1% 36.7% 36.4%
====== ====== ======
</TABLE>
35
<PAGE>
The principal components of deferred tax assets (liabilities) follow:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Property, plant and equipment and intangibles................ $(321.3) (281.7)
Leveraged leases............................................. (191.1) (194.9)
Pension...................................................... (62.2) (53.5)
Accrued liabilities.......................................... 237.6 226.0
Postretirement and postemployment benefits................... 128.9 130.4
Employee compensation and benefits........................... 108.8 101.8
Other........................................................ 92.7 75.0
------- -------
Total deferred tax assets (liabilities).................. $ (6.6) 3.1
======= =======
</TABLE>
At September 30, 1997 and 1996, respectively, net current deferred tax assets
were $268.3 and $230.0, and net noncurrent deferred tax liabilities were $274.9
and $226.9. Total income taxes paid were approximately $645, $575 and $485 in
1997, 1996 and 1995, respectively.
(10) OTHER FINANCIAL DATA
Items charged to earnings during the years ended September 30, 1997, 1996 and
1995, included the following:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Research, new product development and product improvement costs............ $445.1 398.7 354.2
Rent expense............................................................... 156.9 144.8 129.2
Amortization of intangibles................................................ 114.0 104.1 86.5
</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 $78 in 1998 and decline substantially
thereafter.
Other assets at September 30, 1997 and 1996, included the following:
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Equity investments.......................... $128.3 276.2
Investment in leveraged leases.............. 190.9 194.0
</TABLE>
The market value of the Company's equity investments in publicly traded
companies exceeded the related carrying value by approximately $215 at September
30, 1996.
Accrued expenses include employee compensation of $344.2 and $259.9, and other
liabilities include minority interests in consolidated subsidiaries of $523.1
and $274.8 at September 30, 1997 and 1996, respectively.
(11) CONTINGENT LIABILITIES AND COMMITMENTS
At September 30, 1997, there were no known contingent liabilities (including
guarantees, pending litigation, taxes and other claims) that management believes
will be material in relation to the Company's financial position, nor were there
any material commitments outside the normal course of business.
36
<PAGE>
(12) INDUSTRY SEGMENT INFORMATION
The Company is engaged principally in the worldwide 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. Products of this segment are sold to commercial and industrial
distributors and end-users for manufacturing and commercial applications. The
Appliance and Construction-Related segment consists of fractional motors and
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. Summarized information
about the Company's operations in each industry segment and geographic area
follows:
Industry Segments
(See note 2)
<TABLE>
<CAPTION> Net Sales to Income Before Income
Unaffiliated Customers Taxes and Accounting Change Total Assets
---------------------------- ---------------------------- ----------------------------
1997 1996 1995 1997 1996 1995 1997 1996 1995
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial and Industrial........... $ 7,365 6,635 6,012 1,013 910 820 6,879 6,336 5,998
Appliance and Construction-
Related........................... 4,934 4,515 4,001 813 742 652 4,100 3,544 2,671
Corporate and other items........... -- -- -- 79 84 99 484 601 730
Interest expense.................... -- -- -- (121) (127) (111) -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total............................. $ 12,299 11,150 10,013 1,784 1,609 1,460 11,463 10,481 9,399
======== ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Depreciation and Capital
Amortization Expense Expenditures
---------------------------- ----------------------------
1997 1996 1995 1997 1996 1995
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Commercial and Industrial............................................. $ 300 280 254 252 236 214
Appliance and Construction-Related.................................... 206 179 149 305 246 195
Corporate and other items............................................. 6 6 6 18 32 12
-------- -------- -------- -------- -------- --------
Total............................................................... $ 512 465 409 575 514 421
======== ======== ======== ======== ======== ========
</TABLE>
Geographic Areas
(By origin)
<TABLE>
<CAPTION>
Net Sales to Income Before Income
Unaffiliated Customers Taxes and Accounting Change Total Assets
---------------------------- ---------------------------- ----------------------------
1997 1996 1995 1997 1996 1995 1997 1996 1995
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States....................... $ 8,108 7,168 6,395 1,342 1,193 1,064 7,147 6,159 4,994
Europe.............................. 2,951 2,919 2,668 318 316 274 2,947 3,023 2,974
Other areas......................... 1,240 1,063 950 166 143 134 1,199 913 886
Corporate and other items........... -- -- -- 79 84 99 484 601 730
Interest expense.................... -- -- -- (121) (127) (111) -- -- --
Eliminations........................ -- -- -- -- -- -- (314) (215) (185)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total............................. $ 12,299 11,150 10,013 1,784 1,609 1,460 11,463 10,481 9,399
======== ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
37
<PAGE>
(13) QUARTERLY FINANCIAL INFORMATION (Unaudited)
Financial Results
<TABLE>
<CAPTION>
Net Sales Gross Profit Net Earnings
---------------------- ---------------------- ----------------------
1997 1996 1997 1996 1997 1996
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
First Quarter............... $ 2,830.6 2,565.8 1,025.2 915.4 254.9 230.5
Second Quarter.............. 3,103.5 2,819.8 1,116.1 998.7 280.4 254.9
Third Quarter............... 3,208.4 2,896.8 1,141.4 1,037.0 296.6 266.9
Fourth Quarter.............. 3,156.1 2,867.5 1,150.3 1,033.8 290.0 266.2
---------- ---------- ---------- ---------- ---------- ----------
Fiscal Year............ $ 12,298.6 11,149.9 4,433.0 3,984.9 1,121.9 1,018.5
========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Earnings Per Dividends Per
Common Share Common Share
---------------- ----------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
First Quarter............................................... $ .57 .51 .27 .245
Second Quarter.............................................. .63 .57 .27 .245
Third Quarter............................................... .67 .60 .27 .245
Fourth Quarter.............................................. .65 .59 .27 .245
------ ------ ------ ------
Fiscal Year............................................ $2.52 2.27 1.08 .98
====== ====== ====== ======
</TABLE>
All per share data reflect the 1997 two-for-one stock split.
See Note 2 for information regarding non-recurring items and the Company's
acquisition and divestiture activities.
- --------------------------------------------------------------------------------
Stock Prices
<TABLE>
<CAPTION>
Price Range Per Common Share
--------------------------------------------
1997 1996
-------------------- --------------------
High Low High Low
-------- -------- -------- --------
<S> <C> <C> <C> <C>
First Quarter............................................... $51 3/4 43 3/4 40 7/8 34 5/16
Second Quarter.............................................. 52 5/8 45 43 3/8 38 7/8
Third Quarter............................................... 57 1/2 45 45 3/16 38 3/4
Fourth Quarter.............................................. 60 3/8 52 5/16 45 13/16 39 3/8
Fiscal Year............................................ $60 3/8 43 3/4 45 13/16 34 5/16
</TABLE>
Emerson Electric Co. common stock (Symbol EMR) is listed on the New York Stock
Exchange and Chicago Stock Exchange.
38
<PAGE>
Independent Auditors' Report
The Board of Directors and Stockholders
Emerson Electric Co.:
We have audited the accompanying consolidated balance sheets of Emerson Electric
Co. and subsidiaries as of September 30, 1997 and 1996, 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, 1997. 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, 1997 and 1996, and the results of their
operations and their cash flows for each of the years in the three-year period
ended September 30, 1997, in conformity with generally accepted accounting
principles.
As discussed in Note 7 to the consolidated financial statements, effective
October 1, 1994, the Company changed its method of accounting for postemployment
benefits.
/s/ KPMG Peat Marwick LLP
St. Louis, Missouri
November 3, 1997
39
<PAGE>
Safe Harbor Statement
This Annual Report contains various forward-looking statements and includes
assumptions concerning Emerson's operations, future results and prospects.
These forward-looking statements are based on current expectations and are
subject to risk and uncertainties. In connection with the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995, Emerson
provides the following cautionary statement identifying important economic,
political and technological factors, among others, the absence of which could
cause the actual results or events to differ materially from those set forth
in or implied by the forward-looking statements and related assumptions.
Such factors include the following: (i) continuation of the current and
projected future business environment, including interest rates and capital
and consumer spending; (ii) competitive factors and competitor responses to
Emerson initiatives; (iii) successful development and market introductions of
anticipated new products; (iv) stability of government laws and regulations,
including taxes; (v) stable governments and business conditions in emerging
economies; (vi) successful penetration of emerging economies; (vii) con-
tinuation of the favorable environment to make acquisitions, domestic and
foreign, including regulatory requirements and market values of candidates.
48
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF EMERSON ELECTRIC CO.
SEPTEMBER 30, 1997
Jurisdiction
of
Legal Name Incorporation
- ---------- -------------
ADI Control Techniques Drives, Inc. California
Alco Controls S.A. de C.V. Mexico
Applied Concepts, Inc. Pennsylvania
Astec (BSR) PLC U.K.
Stourbridge Holdings (UK) Limited U.K.
Mirroware Manufacturing Limited U.K.
Astec Europe Ltd. U.K.
Astec International PLC U.K.
Astec France S.A.R.L. France
BI Technologies S.A.R.L. France
BI Technologies Limited U.K.
Brandenburg Limited U.K.
Astec America Inc. Delaware
BI Technologies Corporation Delaware
BI Technologies S.A. de C.V. Mexico
Semiconductor Circuits Inc. California
ENI Technology Inc. Delaware
AAI Export Inc. Barbados
Astec America de Mexico, S.A. de C.V. Mexico
Astec Germany GmbH Germany
Astec Electronics (Malaysia) Sdn Bhd Malaysia
Astec International Limited Hong Kong
Astec (M) Sdn Bhd Malaysia
Astec Pekan Sdn Bhd Malaysia
Astec Custom Power (Hong Kong) Limited Hong Kong
Astec Agencies Limited Hong Kong
ENI Taiwan Limited Taiwan
Astec Custom Power (Singapore) Pte Ltd Singapore
BI Technologies Pte Ltd. Singapore
Astec Custom Power (Philippines) Inc. Philippines
Astec Electronics Company Limited China
Astec Power Supply (Shenzhen) Co. Ltd. China
Astec Electronics (Luoding) Co. Ltd. China
Astec Japan Limited Japan
Astec Power Inc. B.V.I.
BI Technologies GmbH Germany
BI Technologies S.r.l. Italy
BI Technologies Japan Limited Japan
ENI Japan Limited Japan
Branson Ultrasonic S.A. Switzerland
Buehler Ltd. Illinois
Buehler Holdings Delaware
Wirtz-Buehler Corporation Delaware
1
<PAGE>
Clairson International Corp. Florida
Clairson, Inc. Delaware
Clairson de Mexico, S.A. de C.V. Mexico
Clairson (Hong Kong) Limited Hong Kong
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
Control Techniques (USA) Inc. Delaware
Control Techniques Drives, Inc. Delaware
Control Techniques Drives Limited Canada
Copeland Electric Corporation Delaware
Digital Appliance Controls Manufacturing (Singapore) Pte Ltd. Singapore
DACM SDN BHD Malaysia
Digital Appliance Controls (UK) Limited U.K.
EECO, Inc. Delaware
Apple JV Holding Corp. Delaware
EGS Electrical Group LLC Delaware
GSEG LLC Delaware
O-Z Gedney Delaware
Appleton Electric LLC Delaware
Appleton Electric, S.A. de C.V. Mexico
Appleton Holding Corp. Delaware
Appleton Electric Canada Ltd. Canada
Conameter Corporation New Jersey
Copeland Corporation Delaware
CDP International, Inc. Delaware
Computer Process Controls, Inc. Georgia
Copeland Access +, Inc. Delaware
Copeland de Mexico S.A. de C.V. Mexico
Copeland International, Inc. Ohio
Copeland Redevelopment Corporation Missouri
El-O-Matic USA, Inc. Delaware
Emerson Electric (U.S.) Holding Corporation Delaware
Automatic Switch Company Delaware
Asco Investment Corp. New Jersey
Angar Scientific Company,Inc. New Jersey
Asco Controls A.G. Switzerland
Asco Controls B.V. Netherlands
Asco Mideast B.V. Netherlands
Asco GmbH Hungary
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
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 Ultrasonics S.A. Sweden
Branson Ultrasonidos S.A.E. Spain
Branson Ultrasons S.A. France
2
<PAGE>
Krautkramer France S.A. France
Chromalox GmbH Germany
Copeland GmbH Germany
Copeland France S.A. France
Copeland Corporation Limited U.K.
Copeland Italia S.a.R.l. Italy
Copeland Iberica CIB S.A. Spain
Copeland Refrigeration Europe S.A. Belgium
Copeland S.A. Belgium
El-O-Matic GmbH Germany
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. de C.V. Mexico
Emerson Technologies Verwaltungs-GmbH Germany
Emerson Technologies GmbH & Co. Germany
Fisher-Rosemount GmbH Germany
Fisher-Rosemount GmbH & Co. Germany
Heraeus Sensor GmbH Germany
Krautkramer GmbH Germany
Krautkramer GmbH & Co. Germany
Liebert GmbH Germany
Liebert A.G. Switzerland
Reglerwerk Dresden GmbH Germany
Ridge Tool GmbH Germany
Ridge Tool GmbH & Co. Germany
RIDGID Peddinghaus Werkzeug GmbH Germany
Rosemount Inc. Minnesota
Dieterich Standard, Inc. Delaware
Dieterich Technology Holding Corp. Delaware
Fisher-Rosemount AS (Norway) Norway
Fisher-Rosemount, S.A. Spain
Fisher-Rosemount Holding AG Switzerland
Fisher-Rosemount AG Switzerland
Rosemount Spo Czech Republic
Fisher-Rosemount A/S Denmark
Fisher-Rosemount Ges. M.B.H. Austria
Rosemount Poland Ltd. Poland
Fisher-Rosemount Instruments Pty. Ltd. Australia
Emerson Electric Co. Pty Ltd. Australia
Fisher-Rosemount Instruments Ltd. New Zealand
Fisher-Rosemount Instruments Taiwan, Ltd. Taiwan
Fisher-Rosemount Japan Co. Ltd. Japan
Fisher-Rosemount Korea Ltd. Korea
Fisher-Rosemount Middle East, Inc. Delaware
Fisher-Rosemount Singapore Private Limited Singapore
P I Components Corp. Texas
Rosemount AB Sweden
Rosemount Analytical Inc. Delaware
Rosemount China Inc. Minnesota
Rosemount Mexicana S.A. de C.V. Mexico
Rosemount Nuclear Instruments Delaware
ROSI Investment Corp. Minnesota
Tekmar Company Ohio
3
<PAGE>
PEPT Investment Corporation Delaware
Skil Europe Corporation Delaware
Tauandromeda Beteiligungs GmbH Germany
Wirtz-Buehler GmbH Germany
Xomox Corporation Ohio
Fisher-Rosemount do Brasil
Industria e Comerco Ltda. Brazil
Fisher-Rosemount S.A. de C.V. Mexico
Flow Technology, Inc. (Taiwan) Ohio
Flow Technology S.A. de C.V. Mexico
Inversiones Xomox Venezuela
Xomox France S.A. France
Xomox A.G. Switzerland
Xomox Chihuahua S.A. de C.V. Mexico
Xomox Corporation de Venezuela,C.A. Venezuela
Xomox South America S.A. Uruguay
Xomox Uruguay S.A. Uruguay
Xomox International GmbH Germany
Fisher-Gulde GmbH Germany
Fisher-Gulde GmbH & Co. Germany
Xomox International GmbH & Co. Germany
Emerson Power Transmission Corporation Delaware
Emerson Chain, Inc. Delaware
Emerson Electronic Motion Controls, Inc. Minnesota
Liebert Corporation Ohio
Atlas Asia Ltd. Hong Kong
Control Concepts Corporation Delaware
Edco, Inc. of Florida Florida
Emerson Computer Power (Thailand) Company Limited Thailand
Emersub XXV, Inc. Delaware
Computersite-Preparations, Inc. Ohio
Liebert Asia Ltd. Hong Kong
Liebert Corporation Australia Pty, Ltd. Australia
Atlas Air Australia Pty. Ltd. Australia
Rougemont Enterprises Pte. Ltd. Australia
Liebert Far East Pte. Ltd. Singapore
Atlas Air (S.E.A.) Pte Ltd. Singapore
Liebert (Malaysia) Sdn.Bhd. Malaysia
Liebert International B.V. Netherlands
Liebert Property Holdings, LLC Delaware
Liebert Tecnologia Ltda. Brazil
Southeast Electrical Testing, Inc. Delaware
Micro Motion, Inc. Colorado
The Sulton Company, Inc. Delaware
Ridge Tool Company Ohio
Emerson Electric SRL Italy
Ridge Tool (Australia) Pty., Ltd. Australia
Ridge Tool Manufacturing Company Delaware
Ridge 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
Electro-Test, Inc. California
4
<PAGE>
Electronic Control Systems, Inc. West Virginia
Fairmount Building and Investment Corp. U.S.A.
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 de Mexico S.A. de C.V. Mexico
Ascotech, S.A. de C.V. Mexico
Motores Reynosa, S.A. de C.V. Mexico
Emerson Electric Foreign Sales Corporation Virgin Islands
Emerson Electric International, Inc. Delaware
Emerson Electric Ireland Ltd. Bermuda
Emerson Electric Nederland B.V. Netherlands
Branson Ultrasonics B.V. Netherlands
Brooks Instrument B.V. Netherlands
Emerson Computer Power B.V. Netherlands
Capax Electrische Apparatenfabriek B.V. Netherlands
Crouzet Appliance Controls D.O.O. Slovenia
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
New-Tech Cuijk 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
INAG Industrielle Antriebssysteme GmbH Germany
Reta Anlagenbau GmbH Germany
Reta Elektronic GmbH Germany
Control Techniques Asia-Pacific Pte. Ltd. Singapore
Control Techniques Drives (Malaysia) Sdn Bhd Malaysia
Control Techniques Singapore Pte Limited Singapore
Control Techniques (Thailand) Limited Thailand
PT Kontroltek Indopratama Indonesia
Control Techniques Australia Pty Ltd. Australia
Control Techniques Bermuda Limited Bermuda
Control Techniques Drives Limited U.K.
K.T.K. (Newtown) Limited U.K.
5
<PAGE>
Control Techniques Dynamics Limited U.K.
Evershed Powerotor Limited U.K.
Moore Reed & Company Limited U.K.
Control Techniques Italia srl Italy
Control Techniques Precision Systems Limited U.K.
Control Techniques SpA Italy
Electric Drives Limited Ireland
Electric Drives Manufacturing Limited Ireland
CT Stafford Park 4 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 East Asia Pte Limited Hong Kong
Control Techniques Endustriyel Kontrol
Sistemleri Sanayii Ve Ticaret A.S. Turkey
Control Techniques GesmbH Austria
Control Techniques India Limited India
Control Techniques Elpro Automation Ltd.India
Control Techniques Vietnam Limited Vietnam
Control Techniques Vues s.r.o. Czech Republic
CTS Control Techniques Antriebsregelungen
GmbH Switzerland
SKS Arlacon Oy Finland
Styrkonsult Drives AB Sweden
Emersub XL, Inc. Delaware
Emersub XLI, Inc. Delaware
Emersub XLII, Inc. Pennsylvania
Emersub XLIII, Inc. Ohio
Emersub XLIV, Inc. Delaware
Emersub XLV, Inc. Delaware
Valycontrol, S.A. de C.V. Mexico
Filcore, Inc. Texas
Emersub XLVI, Inc. Nevada
Copesub, Inc. Delaware
Alliance Compressors Delaware
Emersub XLVIII, Inc. Delaware
Emersub L, Inc. Delaware
Emersub LII, Inc. Delaware
Emersub LIII, Inc. Delaware
Emersub LIV, Inc. Delaware
Emersub LVII, Inc. Delaware
EMR Holdings, Inc. Delaware
Branson de Mexico, S.A. de C.V. Mexico
Digital Appliance Controls, S.A. de C.V. Mexico
Emerson Electric (China) Holdings Ltd. China
Beijing Rosemount Far East Instrument Co., Ltd. China
Emerson Electric (Tianjin) Co., Ltd. China
Emerson Engineering System (Shanghai) Co., Limited China
Emerson Fusite Electric (Shenzhen) Co. Ltd. China
Emerson Machinery & Equipment (Shenzhen)Co. Ltd. China
Emerson White-Rodgers Electric (Xiamen) Co. Ltd. China
Emerson Trading Co. (Shanghai) Co. Ltd. China
6
<PAGE>
Hangzhou LiShi Ridge Tool Co. Ltd. China
Rosemount Shanghai Co. Ltd. China
Shanghai Branson Ultrasonics Co. Ltd. China
Shenyang Copeland Refrigeration Co., Ltd. China
Zhejiang-Emerson Motor Company Ltd. China
Emerson Electric Canada Ltd. Canada
Ascolectric Limited Canada
Fisher Controls Inc. (Controles Fisher Inc.) Canada
Rosemount Instruments Ltd. Canada
Therm-O-Disc (Canada) Limited Canada
Xomox Canada Ltd. Canada
Emerson Electric do Brasil Ltda. Brazil
Emerson Electric Hungary Ltd. Hungary
Emerson Electric Iberica S.A. Spain
Emerson Electric Korea Ltd. Korea
Emerson Electric (M) SDN BHD Malaysia
Emerson Electric (Mauritius) Ltd. India
Emerson Electric Company India Private Ltd. India
Emerson Electric (Thailand) Limited Thailand
Emerson Europe S.A. France
Asco Joucomatic S.A. France
Asco Joucomatic GmbH Germany
Asco Joucomatic GmbH & Co. Germany
Fluidocontrol S.A. Spain
Joucomatic Controls Ltd. New Zealand
Joucomatic Controls Pty. Limited Australia
Joucomatic S.p.A. Italy
Joucomatic N.V. Belgium
Sotrac S.r.l. Italy
Crouzet Appliance Controls S.A. France
Crouzet Appliance Controls SpA Italy
Ferco S.A. France
Francel 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
Electromecanique S.A.R.L. (LS 3E) France
M.I.S. Kerebel Provence S.A.R.L. France
M.I.S. Poitouraine S.A.R.L. France
M.I.S. Societe Peaucelle D'Installations
et Reparations Electriques S.A.R.L. France
Sud Bobinage 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
7
<PAGE>
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
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 A/S Denmark
Leroy-Somer Elektroantriebe GmbH Austria
Leroy-Somer Elektromotoren GmbH Germany
Leroy-Somer Finland OY Finland
Leroy-Somer Chile Chile
Leroy-Somer Pty. Ltd. South Africa
Bertrand Polico S.A. France
Constructions Electriques DeBeaucourt S.A. France
Leroy-Somer Iberica S.A. Spain
Leroy-Somer Italiana S.p.A. Italy
Leroy-Somer Ltd. U.K.
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
Societe Confolentaise de Metalurgie S.A. France
Societe Commerciale des Ateliers de
Constructions Electriques D'Orleans S.A. France
Societe de Mecanique et D'Electrothermie
des Pays de L'Adour S.A. France
Emerson Holding Company Limited U.K.
Asco Joucomatic Ltd. U.K.
Joucomatic Controls Ltd. U.K.
Copeland Ltd. N. Ireland
El-O-Matic Limited U.K.
Emerson Electric (U.K.) Limited U.K.
8
<PAGE>
Fisher-Rosemount Limited U.K.
Xomox U.K. Limited U.K.
Liebert Ltd. U.K.
Liebert Swindon Ltd. U.K.
Switched Reluctance Drives Ltd. (SDRL) U.K.
Reluctance Motors Ltd. U.K.
Emerson Laminaciones de Acero de Monterrey, S.A. de C.V. Mexico
F.G. Wilson L.L.C. Delaware
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 Inc. Delaware
F.G. Wilson (Proprietary) Limited South Africa
F.G. Wilson S.A. France
F.G. Wilson Singapore Pte Limited Singapore
F.G. Wilson Technology India Pvt. Ltd. India
Genrent Limited U.K.
F-R Tecnologias de Flujo, S.A. de C.V. Mexico
Fisher-Rosemount N.V./S.A. Belgium
Senpro N.V. Belgium
Fisher-Rosemount Hungary Ltd. Hungary
Fisher-Rosemount Manufacture Ltd. Hungary
Motoreductores U.S., S.A. de C.V. Mexico
Rotores S.A. de C.V. Mexico
Etirex S.A. France
Fisher Controls International, Inc. Delaware
Exac Corporation California
Fisher Controles Industria E Commercio 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-Rosemount China Limited Hong Kong
Fisher Controls Pty. Limited Australia
Fisher Service Company Delaware
Fisher-Rosemount Manufacturing (M) SDN BHD Malaysia
Fisher-Rosemount Systems, Inc. Delaware
Fisher-Rosemount de Venezuela S.A. Venezuela
Fro-Mex, S.A. de C.V. Mexico
H.D. Baumann Inc. Delaware
Nippon Fisher Company Ltd. Japan
Fisco Ltd.(Fisco Kabushiki Kaisha) Japan
Tianjin Fisher Controls Valve Company Limited China
Fisher-Rosemount S.A. France
Rosemount Portugal Instrumentos Lta. Portugal
Fusite Corporation Ohio
Emerson Japan, Ltd. Japan
Taiyo Emerson Ltd. Japan Japan
High Voltage Maintenance Corporation Ohio
Innoven III Corporation Delaware
Intellution, Inc. Massachusetts
Intellution GmbH Germany
Intellution International (I), Inc. Massachusetts
Intellution K.K. (Japan) Incorporated Japan
Intellution SARL France
Intellution U.K. Corporation Massachusetts
9
<PAGE>
Intellution Limited U.K.
Kop-Flex, Inc. Delaware
Kop-Flex Canada Limited Canada
Kop-Flex International, Inc. Virgin Islands
Krautkramer Branson, Incorporated Connecticut
Stresstel Corporation California
Lipe Rollway Corporation New York
Lipe Rollway International Ltd. Delaware
Lipe-Rollway Australia Pty. Ltd. Australia
Lipe-Rollway de Mexico, S.A. Mexico
Lipe-Rollway Deutschland GmbH Germany
Lipe-Rollway Ltd. Canada
Lipe-Rollway N.V. Belgium
Lipe-Rollway Technology, Inc. New York
Rollway Bearing Ltd. Delaware
Louisville Ladder Corp. Missouri
McGill Manufacturing Company Indiana
McGill International, Inc. Taiwan
Metaloy, Inc. Massachusetts
Metropolitan International, Inc. Nevada
InterMetro Industries Corporation Nevada
InterMetro Industries Corporation New York
Metro Industries, Inc. Nevada
Metro International Corporation Virgin Islands
Metropolitan Wire (Canada) Ltd. Canada
Metropolitan Wire Corporation Pennsylvania
Motores Hermeticos del Sur, S.A. de C.V. Mexico
Northeast Electrical Testing, Inc. Delaware
Ridge Tool Europe NV Belgium
Ridgid Scandinavia A/S Denmark
Ridge Tool Europe S.A. Belgium
Ridgid Vaerktoj A/S Denmark
Ridge Tool Pattern Company Delaware
Ridgid Ferramentas E. Maquinas, Ltda. Brazil
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 Delaware
Credo Tool Company Delaware
Carbide Blast Joints, Inc. Texas
DML Industrial Products, Inc. North Carolina
Vermont American Corporation, Fountain Inn Delaware
Primark DML, Inc. North Carolina
VAC Data Management, Inc. Delaware
VAC Services LP Kentucky
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
VA (Hong Kong) Limited Hong Kong
Vermont Westa Werkzeugbau GmbH Germany
Western Forge Corporation Delaware
Wiegand S.A. de C.V. Mexico
Wizdom Controls, Inc. Delaware
10
<PAGE>
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, 33-2739, 2-76653, 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 3, 1997, relating to the consolidated
balance sheets of Emerson Electric Co. and subsidiaries as of September
30, 1997 and 1996, 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, 1997, which report is incorporated by
reference in the September 30, 1997 annual report on Form 10-K of Emerson
Electric Co. Our report refers to change in accounting for postemployment
benefits.
/s/ KPMG PEAT MARWICK LLP
St. Louis, Missouri
December 17, 1997
<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, 1997.
Dated: October 7,1997.
-----------------
Signature Title
--------- -----
/s/C. F. Knight Chairman of the Board and Chief Executive
- ----------------------------- Officer and Director
C. F. Knight
/s/W. J. Galvin Senior Vice President of Finance and Chief
- ----------------------------- Financial Officer
W. J. Galvin
/s/J. G. Berges Director
- -----------------------------
J. G. Berges
/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
<PAGE>
/s/J. A. Frates Director
- -----------------------------
J. A. Frates
/s/R. B. Horton Director
- -----------------------------
R. B. Horton
/s/G. A. Lodge Director
- -----------------------------
G. A. Lodge
/s/R. B. Loynd Director
- -----------------------------
R. B. Loynd
/s/V. R. Loucks, Jr. Director
- -----------------------------
V. R. Loucks, Jr.
/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/G. W. Tamke Director
- -----------------------------
G. W. Tamke
/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 1997
EMERSON ELECTRIC CO. CONSOLIDATED STATEMENT OF EARNINGS AND CONSOLIDATED
BALANCE SHEET FILED WITH THE COMPANY'S 1997 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-30-1997
<PERIOD-END> SEP-30-1997
<CASH> 221,100
<SECURITIES> 0
<RECEIVABLES> 2,254,200
<ALLOWANCES> 54,000
<INVENTORY> 1,881,600
<CURRENT-ASSETS> 4,716,800
<PP&E> 5,433,700
<DEPRECIATION> 2,698,300
<TOTAL-ASSETS> 11,463,300
<CURRENT-LIABILITIES> 3,842,400
<BONDS> 570,700
<COMMON> 238,300
0
0
<OTHER-SE> 5,182,400
<TOTAL-LIABILITY-AND-EQUITY> 11,463,300
<SALES> 12,298,600
<TOTAL-REVENUES> 12,298,600
<CGS> 7,865,600
<TOTAL-COSTS> 7,865,600
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 120,900
<INCOME-PRETAX> 1,783,600
<INCOME-TAX> 661,700
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,121,900
<EPS-PRIMARY> 2.52
<EPS-DILUTED> 0
</TABLE>
