<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to __________________
Commission file number 1-278
EMERSON ELECTRIC CO.
(Exact name of registrant as specified in its charter)
Missouri 43-0259330
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8000 W. Florissant Ave.
P.O. Box 4100
St. Louis, Missouri 63136
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 553-2000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days. Yes (X) No ( )
Common stock outstanding at March 31, 1998: 442,711,369 shares.
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PART I. FINANCIAL INFORMATION FORM 10-Q
Item 1. Financial Statements.
EMERSON ELECTRIC CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
THREE MONTHS AND SIX MONTHS ENDED MARCH 31, 1998 AND 1997
(Dollars in millions except per share amounts; unaudited)
Three Months Six Months
-------------------- -------------------
1998 1997 1998 1997
--------- -------- -------- --------
Net sales $ 3,382.4 3,103.5 6,553.9 5,934.1
--------- -------- -------- --------
Costs and expenses:
Cost of sales 2,159.7 1,987.4 4,189.5 3,792.8
Selling, general and
administrative expenses 673.3 612.2 1,319.7 1,195.5
Interest expense 39.7 29.8 75.5 57.3
Other deductions, net 29.1 28.4 47.5 37.5
--------- -------- -------- --------
Total costs and expenses 2,901.8 2,657.8 5,632.2 5,083.1
Income before income taxes 480.6 445.7 921.7 851.0
Income taxes 173.0 165.3 331.8 315.7
--------- -------- -------- --------
Net earnings $ 307.6 280.4 589.9 535.3
========= ======== ======== ========
Basic earnings per common share $ .70 .63 1.34 1.20
========= ======== ======== ========
Diluted earnings per common share $ .69 .62 1.33 1.19
========= ======== ======== ========
Cash dividends per common share $ .295 .27 .59 .54
========= ======== ======== ========
See accompanying notes to consolidated financial statements.
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EMERSON ELECTRIC CO. AND SUBSIDIARIES FORM 10-Q
CONSOLIDATED BALANCE SHEETS
(Dollars in millions except per share amounts; unaudited)
March 31, September 30,
ASSETS 1998 1997
------ --------- --------
CURRENT ASSETS
Cash and equivalents $ 426.5 221.1
Receivables, less allowances of $58.8 and $54.0 2,385.9 2,200.2
Inventories 1,877.3 1,881.6
Other current assets 405.6 413.9
--------- --------
Total current assets 5,095.3 4,716.8
--------- --------
PROPERTY, PLANT AND EQUIPMENT, NET 2,806.8 2,735.4
--------- --------
OTHER ASSETS
Excess of cost over net assets of purchased
businesses 3,317.4 3,116.0
Other 891.1 895.1
--------- --------
Total other assets 4,208.5 4,011.1
--------- --------
$12,110.6 11,463.3
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Short-term borrowings and current maturities
of long-term debt $ 1,921.0 1,445.1
Accounts payable 725.7 942.1
Accrued expenses 1,171.2 1,241.9
Income taxes 256.9 213.3
--------- --------
Total current liabilities 4,074.8 3,842.4
--------- --------
LONG-TERM DEBT 601.9 570.7
--------- --------
OTHER LIABILITIES 1,703.0 1,629.5
--------- --------
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 238.3 238.3
Additional paid in capital 34.9 3.3
Retained earnings 6,677.9 6,348.9
Cumulative translation adjustments (230.1) (205.9)
Cost of common stock in treasury, 33,965,637
shares and 35,873,321 shares (990.1) (963.9)
--------- --------
Total stockholders' equity 5,730.9 5,420.7
--------- --------
$12,110.6 11,463.3
========= ========
See accompanying notes to consolidated financial statements.
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EMERSON ELECTRIC CO. AND SUBSIDIARIES FORM 10-Q
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MARCH 31, 1998 AND 1997
(Dollars in millions; unaudited)
1998 1997
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 586.7 412.9
-------- --------
INVESTING ACTIVITIES
Capital expenditures (265.2) (227.1)
Purchases of businesses, net of cash and
equivalents acquired (107.7) (22.7)
Other, net 1.0 .9
-------- --------
Net cash used in investing activities (371.9) (248.9)
-------- --------
FINANCING ACTIVITIES
Net increase in short-term borrowings 479.0 384.3
Proceeds from long-term debt 3.4 5.9
Principal payments on long-term debt (7.6) (9.3)
Dividends paid (260.9) (241.3)
Net purchases of treasury stock (210.9) (152.4)
-------- --------
Net cash provided by (used in) financing activities 3.0 (12.8)
-------- --------
Effect of exchange rate changes on cash and equivalents (12.4) (16.0)
-------- --------
INCREASE IN CASH AND EQUIVALENTS 205.4 135.2
Beginning cash and equivalents 221.1 149.0
-------- --------
ENDING CASH AND EQUIVALENTS $ 426.5 284.2
======== ========
See accompanying notes to consolidated financial statements.
4
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EMERSON ELECTRIC CO. AND SUBSIDIARIES FORM 10-Q
Notes to Consolidated Financial Statements
1. The accompanying unaudited consolidated financial statements, in
the opinion of management, include all adjustments necessary for
a fair presentation of the results for the interim periods presented.
These adjustments consist of normal recurring accruals. The
consolidated financial statements are presented in accordance
with the requirements of Form 10-Q and consequently do not include
all the disclosures required by generally accepted accounting
principles. For further information refer to the consolidated
financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended September 30, 1997.
2. Other Financial Information
(Dollars in millions; unaudited)
March 31, September 30,
Inventories 1998 1997
----------- --------- -------
Finished products $ 783.9 789.6
Raw materials and work in process 1,093.4 1,092.0
--------- -------
$ 1,877.3 1,881.6
========= =======
March 31, September 30,
Property, plant and equipment, net 1998 1997
---------------------------------- --------- -------
Property, plant and equipment, at cost $ 5,676.1 5,433.7
Less accumulated depreciation 2,869.3 2,698.3
--------- -------
$ 2,806.8 2,735.4
========= =======
3. In December 1997, the Company purchased Computational Systems, Inc.
(CSI) for approximately $160 million, primarily in common stock. CSI
is a supplier of condition monitoring and diagnostic products and
services for motors and other rotational equipment.
5
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EMERSON ELECTRIC CO. AND SUBSIDIARIES FORM 10-Q
4. In the quarter ended December 31, 1997, the Company adopted Statement
of Financial Accounting Standards No. 128, "Earnings per Share," (SFAS
128) which establishes standards for computing and presenting earnings
per share. Basic earnings per common share considers only the weighted
average of common shares outstanding while diluted earnings per common
share considers the dilutive effects of stock options, incentive shares
and convertible securities. Previously reported earnings per share
amounts have been restated to conform to SFAS 128 requirements.
Reconciliations of basic earnings per common share and diluted earnings
per common share follow (dollars and shares in millions except per share
amounts):
1998 1997
---------------------------- ----------------------------
Weighted- Earnings Weighted- Earnings
Average Per Average Per
Earnings Shares Share Earnings Shares Share
-------- -------- -------- -------- -------- --------
Three Months Ended
March 31,
- ------------------
Basic $ 307.6 440.8 $ .70 $ 280.4 446.1 $ .63
======== ========
Convertible debt .1 1.0 .2 1.5
Stock plans 4.4 3.0
-------- -------- -------- --------
Diluted $ 307.7 446.2 $ .69 $ 280.6 450.6 $ .62
======== ======== ======== ======== ======== ========
Six Months Ended
March 31,
- ----------------
Basic $ 589.9 440.0 $ 1.34 $ 535.3 446.8 $ 1.20
======== ========
Convertible debt .3 1.0 .5 1.5
Stock plans 4.0 2.8
-------- -------- -------- --------
Diluted $ 590.2 445.0 $ 1.33 $ 535.8 451.1 $ 1.19
======== ======== ======== ======== ======== ========
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EMERSON ELECTRIC CO. AND SUBSIDIARIES FORM 10-Q
Items 2 and 3. Management's Discussion and Analysis of Results
of Operations and Financial Condition.
Results of Operations
Sales, net earnings and earnings per share for the second quarter and
first six months of fiscal 1998 were the highest for any quarter and
first six-month period in the Company's history.
Net sales were $3,382.4 million for the quarter ended March 31, 1998,
up 9.0 percent (12 percent at constant currency) over net sales of
$3,103.5 million for the quarter ended March 31, 1997, and $6,553.9
million for the six months ended March 31, 1998, up 10.4 percent (14
percent at constant currency) over net sales of $5,934.1 million for the
same period a year ago. The second quarter results reflect strong U.S.
and Latin American growth, solid European performance and the
contribution of acquisitions. Excluding the negative impact of currency,
underlying international subsidiary sales showed solid improvement.
Continued weakness in Asia-Pacific limited export sales, particularly
those of the heating, ventilating and air-conditioning business.
In the Commercial and Industrial segment, the electronics business
achieved very strong underlying sales growth, driven by contributions
from all product lines and service offerings. Excluding the impact of
the strengthening dollar, the process business achieved strong sales
growth, reflecting very strong domestic demand and solid international
demand. Sales of the industrial motors and drives business were solid
before the effects of unfavorable currency due to strong international
demand and recent acquisitions. Excluding the impact of currency
translation, the industrial components and equipment business achieved
moderate underlying domestic and international sales growth.
In the Appliance and Construction-Related segment, sales of the
underlying fractional motors and appliance components business were
strong, benefiting from robust domestic markets and new products.
The tools business achieved modest underlying sales growth, while the
heating, ventilating and air-conditioning business reported a moderate
decrease in sales as weakness in Asia-Pacific severely limited export
sales.
Cost of sales for the second quarter was $2,159.7 million or 63.9
percent of sales, compared with $1,987.4 million, or 64.0 percent of
sales, for the second quarter of 1997. Cost of sales for the six months
ended March 31, 1998, was $4,189.5 million or 63.9 percent of sales,
compared to $3,792.8 million or 63.9 percent of sales for the same period
a year ago. Selling, general and administrative expenses for the three
months ended March 31, 1998, were $673.3 million, or 19.9 percent of
sales, compared to $612.2 million, or 19.8 percent of sales for the same
period a year ago. For the first six months of 1998, selling, general
and administrative expenses were $1,319.7 million or 20.2 percent of
sales, compared to $1,195.5 million or 20.2 percent of sales for the same
period in 1997. Consolidated profit margins remained at high levels
despite the inclusion of lower margin acquisitions. Underlying operating
margins showed solid improvement, reflecting both domestic and
international gains, as a result of continuing cost reduction efforts
and productivity improvement programs.
7
<PAGE>
EMERSON ELECTRIC CO. AND SUBSIDIARIES FORM 10-Q
Financial Condition
A comparison of key elements of the Company's financial condition at
the end of the second quarter as compared to the end of the prior
fiscal year follows:
March 31, September 30,
1998 1997
-------- --------
Working capital (in millions) $1,020.5 874.4
Current ratio 1.3 to 1 1.2 to 1
Total debt to total capital 30.6% 27.1%
Net debt to net capital 26.8% 24.9%
The Company's interest coverage ratio (earnings before income taxes
and interest expense, divided by interest expense) was 13.2 times for the
six months ended March 31, 1998, compared to 15.9 times for the same
period one year earlier. The decrease in the interest coverage ratio
reflects higher average borrowings resulting from share repurchases
and acquisitions, partially offset by earnings growth. In the first
quarter of fiscal 1998, the Company entered into an interest rate
agreement which caps the rate on $250 million of commercial paper at
6.0 percent through September 1999.
Cash and equivalents increased by $205.4 million during the six months
ended March 31, 1998. Cash flow provided by operating activities of
$586.7 million and a net increase in borrowings of $474.8 million were
used primarily to pay dividends of $260.9 million, fund capital
expenditures of $265.2 million, fund net purchases of treasury stock of
$210.9 million and fund purchases of businesses of $107.7 million.
The Company is in a strong financial position, continues to generate
strong operating cash flows, and has the resources available for
reinvestment in existing businesses, strategic acquisitions and managing
the capital structure on a short- and long-term basis.
Statements in this report that are not strictly historical may be
"forward-looking" statements which involve risks and uncertainties.
These include economic and currency conditions, market demand, pricing,
and competitive and technological factors, among others which are set
forth in the Company's Annual Report on Form 10-K for the year ended
September 30, 1997.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Stockholders on February 3, 1998, two
matters described in the Notice of Annual Meeting of Stockholders dated
December 12, 1997, were voted upon.
1. The directors listed below were elected for terms ending in 2001
with voting for each as follows:
8
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EMERSON ELECTRIC CO. AND SUBSIDIARIES FORM 10-Q
DIRECTOR FOR WITHHELD
------------------- ----------- ----------
J. G. Berges 368,146,384 5,916,643
R. L. Ridgway 368,807,865 5,255,162
A. E. Suter 368,097,528 5,965,499
W. M. Van Cleve 363,369,644 10,693,383
E. E. Whitacre, Jr. 368,889,905 5,173,122
2. The proposal to approve the 1998 Stock Option Plan was approved by
a vote of 349,790,759 in favor to 16,758,486 against, with
3,605,774 abstaining.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits (Listed by numbers corresponding to the Exhibit Table
of Item 601 in Regulation S-K).
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, incorporated by reference to Emerson Electric Co. 1997
Form 10-K, Exhibit 3(b).
10(l) Fourth Amendment to the Supplemental Executive Savings
Investment Plan, filed herewith.
10(o) 1998 Stock Option Plan, incorporated by reference to Emerson
Electric Co. 1998 Proxy Statement dated December 12, 1997,
Appendix A.
27 Financial Data Schedules
(b) Reports on Form 8-K. The Company did not file any reports on
Form 8-K during the quarter ended March 31, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
EMERSON ELECTRIC CO.
Date: May 12, 1998 By /s/ Walter J. Galvin
-----------------------
Walter J. Galvin
Senior Vice President - Finance
and Chief Financial Officer
(on behalf of the registrant and
as Chief Financial Officer)
9
Exhibit 10 (l)
FOURTH AMENDMENT TO THE
EMERSON ELECTRIC CO.
SUPPLEMENTAL EXECUTIVE
SAVINGS INVESTMENT PLAN
WHEREAS, Emerson Electric Co. ("Company") previously adopted the
Supplemental Executive Savings Investment Plan ("Plan") effective as of August
1, 1989, in order to attract and retain selected executives; and
WHEREAS, the Company desires to amend and restate the Plan effective as of
January 1, 1998 (except as specified in Section VIII(A));
NOW, THEREFORE, effective as of January 1, 1998 (except as specified in
Section VIII(A)), the Plan is amended and restated to read as follows:
SECTION I
DEFINITIONS
A. "Account" means the book entry account established for each Participant
under Section IV.
B. "Basic ESIP Contribution" means the Participant's contribution to the
ESIP with respect to which the Participant's Employer makes a matching
contribution.
C. "Beneficiary" means the Beneficiary designated to receive a death
benefit under the Plan.
D. "Change of Control" means any of the following: (i) the purchase or
other acquisition (other than from the Company) by any person, entity or group
of persons, within the meaning of Section 13(d) or 14(d) of the Exchange Act
(excluding, for this purpose, the Company or its subsidiaries or any employee
benefit plan of the Company or its subsidiaries) of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent
(20%) or more of the then-outstanding shares of common stock of the Company or
the combined voting power of the Company's then-outstanding voting securities
1
entitled to vote generally in the election of directors; (ii) individuals who,
as of August 1, 1989, constituted the Board of Directors of the Company (the
"Board" and, as of the date the "Incumbent Board") cease for any reason to
constitute at least the majority of the Board, provided that any person who
becomes a director subsequent to said date whose election or nomination for
election by the Company's stockholders was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board (other than an
individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of directors of the
Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) shall be, for purposes of this Section, considered as
though such person were a member of the Incumbent Board; or (iii) approval by
the stockholders of the Company of a reorganization, merger or consolidation, in
each case with respect to which persons who were the stockholders of the Company
immediately prior to such reorganization, merger or consolidation do not,
immediately thereafter, own more than fifty percent (50%) of, respectively, the
common stock and the combined voting power entitled to vote generally in the
election of directors of the reorganized, merged or consolidated corporation's
then-outstanding voting securities, or of a liquidation or dissolution of the
Company or of the sale of all or substantially all of the assets of the Company.
E. "Code" means the Internal Revenue Code of 1986, as amended.
F. "Committee" means the Compensation and Human Resources Committee of the
Board of Directors of the Company.
G. "Company" means Emerson Electric Co., a Missouri Corporation.
H. "Compensation" means, for any calendar year, all cash pay for such year
received by an Employee from the Employer plus amounts contributed through a
salary reduction arrangement to a qualified Plan which meets the requirements of
Section 401(k) of the Code or to a cafeteria plan which meets the requirements
of Section 125 of the Code, excluding any reimbursed item, any payment under any
Emerson Electric Co. Performance Share Bonus Plan or Incentive Shares Plan, any
2
payment for a stock appreciation right, any payment deferred for more than one
year and any severance pay. Compensation shall also include amounts deferred by
the Employee under this Plan.
I. "Employee" means any person employed by an Employer.
J. "Employer" means the Company and any of its subsidiaries or affiliates
which has, with the consent of the Board of Directors of the Company, adopted
the Plan.
K. "Employment" means employment with an Employer.
L. "ESIP" means the Emerson Electric Co. Employee Savings Investment Plan.
M. "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
N. "Participant" means an Employee eligible to participate in the Plan
pursuant to Section II.
O. "Plan" means this Emerson Electric Co. Supplemental Executive Savings
Investment Plan.
P. "Reporting Person" means an Employee who is required to file reports
with the Securities and Exchange Commission pursuant to Section 16(a) of the
Exchange Act.
Q. "Total and Permanent Disability" shall have the same meaning as set
forth in the ESIP.
R. "Years of Service" means the most recent consecutive full years of
Employment (commencing with the first day of an individual's Employment and each
anniversary thereof).
3
SECTION II
ELIGIBILITY
Participation in the Plan shall be limited each calendar year to those
Employees who have been selected by the Committee from time to time and who have
completed a form provided by the Committee.
SECTION III
DEFERRAL OF COMPENSATION
A. Any Participant who elects to make either the maximum pre-tax
contribution to the ESIP for the calendar year permitted by Section 402(g) of
the Code, or the maximum contribution to the ESIP for the ESIP plan year
permitted by Sections 401(a)(17) or 415 of the Code, may elect to defer up to
the excess of five percent (5%) of his Compensation over his Basic ESIP
Contribution for such calendar year.
B. In addition to deferrals permitted under Paragraph A, each Participant
may elect to defer up to ten percent (10%) of his Compensation for a calendar
year.
C. Such deferrals may be made on either a pre-tax basis, an after-tax
basis, or a combination of pre-tax and after-tax bases, as selected by the
Participant, and must be made by filing a written notice with the Committee.
Notwithstanding the preceding, a deferral under Paragraph A must be either one
hundred percent (100%) pre-tax or one hundred percent (100%) after-tax and a
deferral under Paragraph B must be either one hundred percent (100%) pre-tax or
one hundred percent (100%) after-tax.
D. An election to defer Compensation and the manner in which such deferrals
are to be made must be made by the December 1 prior to the calendar year for
which such Compensation would otherwise be earned.
E. The maximum amount which may be deferred for any calendar year for any
Participant is fifteen percent (15%) of his Compensation, minus his contribution
for such calendar year to the ESIP.
4
SECTION IV
ESTABLISHMENT OF ACCOUNTS
A. The Committee will establish an Account for the benefit of each
Participant. As of each payroll date, the Account of each Participant will be
credited with the amount by which the Participant elected to defer his
Compensation pursuant to Section III.
B. The Account will also be credited, as of each payroll date, with fifty
percent (50%) (but not in excess of 2.5% of a Participant's Compensation minus
the matching amounts contributed by the Company for such Participant to the ESIP
on account of the Participant's Basic ESIP Contribution for such calendar year)
of the amount by which the Participant elected to defer his Compensation
pursuant to Section III(a).
C. The Account will be reduced by any payments made under Section VIII.
SECTION V
INVESTMENT INDICES
The value of each Participant's Account shall be measured as follows: (a)
all amounts invested in the Plan prior to January 1, 1998 shall be measured
against the underlying investment funds of the ESIP in the proportions reflected
in the Company's records for such Participant's Account; and (b) all amounts
invested in the Plan on or after January 1, 1998 shall be measured against the
underlying investment funds of the ESIP in the proportions that the
Participant's ESIP accounts are invested in the underlying funds of the ESIP.
SECTION VI
CREDITING OF INVESTMENT GAINS AND LOSSES
As of the end of each calendar quarter, the Committee shall credit or debit
each Participant's Account, as the case may be, with the appropriate amount of
gain or loss assuming such Account had been invested in the underlying funds in
the ESIP in the manner set forth under Section V.
5
SECTION VII
VESTING
A. A Participant shall be fully vested in the portion of his Account
attributable to amounts credited under Section IV.A. A Participant shall be
vested in the portion of his Account attributable to amounts credited under
Section IV.B pursuant to the following schedule:
Years of Service Percent Vesting
---------------- ---------------
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 100%
B. Notwithstanding the foregoing, the Participant shall be fully vested in
his Accounts in the event of any of the following: (i) retirement with the
approval of the Committee on or after attainment of age fifty-five (55); (ii)
death or Total and Permanent Disability of the Participant; (iii) termination of
the Plan; or (iv) a Change of Control.
SECTION VIII
PAYMENT OF BENEFITS
A. A Participant shall be paid, within sixty (60) days following his
termination of Employment, a single lump cash sum equal to the vested portion of
his Account based upon the last valuation under Section V coincident with or
immediately preceding such termination of Employment; provided, however, that
effective October 1, 1997, a Participant may elect, at least twelve (12) months
prior to his termination of Employment, to receive his vested Account in ten
(10) or fewer substantially equal annual installments in lieu of a lump sum.
Such installments, if elected, shall commence on or before March 1 of the
calendar year following the Participant's termination. If the Participant is a
Reporting Person and makes the installment election permitted above, such
election is subject to the approval of the Committee.
6
In the event of the Participant's death, his Beneficiary shall be paid,
within sixty (60) days following such death, the vested portion of the
Participant's unpaid Account (if any) based upon the value as of the last
valuation under Section V coincident with or immediately preceding the
Participant's death.
Notwithstanding the preceding, the Committee, in its discretion, may
(i) value the Participant's Account as of any other date for purposes
of determining the amount of payment; and
(ii) direct that the Participant (or the Participant's Beneficiary)
shall be paid all or a portion of the vested portion of his Account as of
any other date designated by the Committee.
B. Notwithstanding the preceding, in the event of a Change of Control, all
future deferrals shall cease and each Participant shall be paid a single lump
cash sum equal to the vested portion of his Account as of the last day of the
month coincident with or immediately preceding the Change of Control. Such
payment shall be made, at such Participant's election, (i) upon the Change of
Control, or (ii) upon the Participant's termination of Employment after the
Change of Control. If the Participant is a Reporting Person, such election (and
any change in such election) is subject to the approval of the Committee.
C. A Participant may, at any time upon thirty (30) days' written notice to
the Committee, elect to be paid all or any portion of the aggregate amounts of
his after-tax deferrals under the Plan, reduced by (i) any prior payments of
such deferrals and (ii) any reduction in value of the Participant's Accounts
under Section V. If the Participant is a Reporting Person, such election is
subject to the approval of the Committee and must be made at least six (6)
months after the date of the Participant's most recent election, with respect to
any plan of the Company, that effected a "discretionary transaction" that was an
"acquisition," as those terms are defined in Rule 16b-3 under the Exchange Act.
7
D. The Committee may direct, upon the request of a Participant and a
showing of an emergency beyond the Participant's control which results in severe
financial hardship, that all or a portion of the value of such Participant's
Account be distributed to him. If the Participant is a Reporting Person, such
request must be made at least six (6) months after the date of the Participant's
most recent election, with respect to any plan of the Company, that effected a
"discretionary transaction" that was an "acquisition," as those terms are
defined in Rule 16b-3 under the Exchange Act.
SECTION IX
ADMINISTRATION AND CLAIMS PROCEDURE
A. The Committee shall construe, interpret and administer all provisions of
the Plan and a decision of a majority of the members of the Committee shall
govern.
B. A decision of the Committee may be made by a written document signed by
a majority of the members of the Committee or by a meeting of the Committee. The
Committee may authorize any of its members to sign documents or papers on its
behalf.
C. The Committee may appoint such agents, who need not be members of the
Committee, as it may deem necessary for the effective exercise of its duties,
and may, to the extent not inconsistent herewith, delegate to such agents any
powers and duties, both ministerial and discretionary, as the Committee may deem
expedient and appropriate.
D. A Participant who believes that he or she is being denied a benefit to
which he or she is entitled (hereinafter referred to as "Claimant") may file a
written request for such benefit with the Committee setting forth his claim. The
request must be addressed to: Compensation and Human Resources Committee,
Emerson Electric Co., 8000 West Florissant, St. Louis, Missouri 63136.
E. Upon receipt of a claim the Committee shall advise the Claimant that a
reply will be forthcoming within ninety (90) days and shall in fact deliver such
reply in writing within such period. The Committee may, however, extend the
reply period for an additional ninety (90) days for reasonable cause. If the
8
claim is denied in whole or in part, the Committee will adopt a written opinion
using language calculated to be understood by the Claimant setting forth:
(i) the specific reason or reasons for denial,
(ii) the specific references to pertinent Plan provisions on which the
denial is based,
(iii) a description of any additional material or information
necessary for the Claimant to perfect the claim and an explanation why such
material or such information is necessary,
(iv) appropriate information as to the steps to be taken if the
Claimant wishes to submit the claim for review, and
(v) the time limits for requesting a review under Subsections F and G.
F. Within sixty (60) days after the receipt by the Claimant of the written
opinion described above, the Claimant may request in writing that the Chief
Executive Officer of the Company review the determination of the Committee. Such
request must be addressed to: Chief Executive Officer, Emerson Electric Co.,
8000 West Florissant, St. Louis, Missouri 63136. The Claimant or his or her duly
authorized representative may, but need not, review the pertinent documents and
submit issues and comments in writing for consideration by the Chief Executive
Officer. If the Claimant does not request a review of the Committee's
determination by the Chief Executive Officer within such sixty-day period, he or
she shall be barred and estopped from challenging the Committee's determination.
G. Within sixty (60) days after the Chief Executive Officer's receipt of a
request for review, the Chief Executive Officer will review the Committee's
determination. After considering all materials presented by the Claimant, the
Chief Executive Officer will render a written opinion, written in a manner
calculated to be understood by the Claimant, setting forth the specific reasons
for the decision and containing specific references to the pertinent Plan
9
provisions on which the decision is based. If special circumstances require that
the sixty-day time period be extended, the Chief Executive Officer will so
notify the Claimant and will render the decision as soon as possible but not
later than one hundred twenty (120) days after receipt of the request for
review.
SECTION X
MISCELLANEOUS
A. Plan Year. The Plan Year shall be the calendar year.
B. Spendthrift. No Participant or beneficiary shall have the right to
assign, transfer, encumber or otherwise subject to lien any of the benefits
payable or to be payable under this Plan.
C. Incapacity. If, in the opinion of the Committee, a person to whom a
benefit is payable is unable to care for his affairs because of illness,
accident or any other reason, any payment due the person, unless prior claim
therefor shall have been made by a duly qualified guardian or other duly
appointed and qualified representative of such person, may be paid to some
member of the person's family, or to some party who, in the opinion of the
Committee, has incurred expense for such person. Any such payment shall be a
payment for the account of such person and shall be a complete discharge of any
liability.
D. Employee Rights. The Employer, in adopting this Plan, shall not be held
to create or vest in any Employee or any other person any benefits other than
the benefits specifically provided herein, or to confer upon any Employee the
right to remain in the service of the Employer.
E. Service of Process and Plan Administrator.
(i) The Vice President-Law of the Company shall be the agent for
service of legal process.
(ii) The Company shall constitute the Plan Administrator.
10
F. Unfunded Plan. The Plan shall be unfunded. All payments to a Participant
(or the Participant's Beneficiary) under the Plan shall be made from the general
assets of the Employer. The rights of any Participant to payment shall be those
of an unsecured general creditor of the Employer.
G. Company Rights. The Company reserves the right to amend or terminate the
Plan. Each Employer may terminate its participation in the Plan at any time.
H. Reemployment. If a Participant is receiving benefits under the Plan and
is re-employed by an Employer, benefits shall cease until he is no longer
employed by an Employer.
I. Governing Law. The Plan shall be governed and construed according to the
laws of the State of Missouri.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its
duly authorized officer this 6th day of May, 1998.
EMERSON ELECTRIC CO.
By: /s/ Jo Ann Harmon
-------------------------------------
Name: Jo Ann Harmon
-------------------------------------
Title: Senior Vice President
------------------------------------
11
<TABLE> <S> <C>
<ARTICLE> 5 Exhibit 27 (a)
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE EMERSON
ELECTRIC CO. CONSOLIDATED STATEMENT OF EARNINGS AND CONSOLIDATED BALANCE SHEET
AS OF AND FOR THE SIX MONTHS ENDED MARCH 31, 1998, FILED WITH THE COMPANY'S
1998 SECOND QUARTER FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 426,500
<SECURITIES> 0
<RECEIVABLES> 2,444,700
<ALLOWANCES> 58,800
<INVENTORY> 1,877,300
<CURRENT-ASSETS> 5,095,300
<PP&E> 5,676,100
<DEPRECIATION> 2,869,300
<TOTAL-ASSETS> 12,110,600
<CURRENT-LIABILITIES> 4,074,800
<BONDS> 601,900
0
0
<COMMON> 238,300
<OTHER-SE> 5,492,600
<TOTAL-LIABILITY-AND-EQUITY> 12,110,600
<SALES> 6,553,900
<TOTAL-REVENUES> 6,553,900
<CGS> 4,189,500
<TOTAL-COSTS> 4,189,500
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 75,500
<INCOME-PRETAX> 921,700
<INCOME-TAX> 331,800
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 589,900
<EPS-PRIMARY> 1.34
<EPS-DILUTED> 1.33
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5 Exhibit 27 (b)
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE EMERSON
ELECTRIC CO. CONSOLIDATED STATEMENTS OF EARNINGS AND CONSOLIDATED BALANCE SHEETS
AS OF AND FOR THE PERIODS ENDED GIVEN BELOW, FILED WITH THE COMPANY'S FORM 10-K
AND FORMS 10-Q, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 9-MOS 6-MOS
<FISCAL-YEAR-END> SEP-30-1997 SEP-30-1997 SEP-30-1997
<PERIOD-END> SEP-30-1997 JUN-30-1997 MAR-31-1997
<CASH> 221,100 325,400 284,200
<SECURITIES> 0 0 0
<RECEIVABLES> 2,254,200 2,343,200 2,311,400
<ALLOWANCES> 54,000 58,600 56,800
<INVENTORY> 1,881,600 1,836,300 1,824,100
<CURRENT-ASSETS> 4,716,800 4,813,200 4,698,900
<PP&E> 5,433,700 5,274,800 5,162,600
<DEPRECIATION> 2,698,300 2,691,600 2,624,600
<TOTAL-ASSETS> 11,463,300 11,096,500 10,919,500
<CURRENT-LIABILITIES> 3,842,400 3,471,900 3,304,500
<BONDS> 570,700 654,700 783,800
0 0 0
0 0 0
<COMMON> 238,300 238,300 238,300
<OTHER-SE> 5,182,400 5,281,900 5,179,300
<TOTAL-LIABILITY-AND-EQUITY> 11,463,300 11,096,500 10,919,500
<SALES> 12,298,600 9,142,500 5,934,100
<TOTAL-REVENUES> 12,298,600 9,142,500 5,934,100
<CGS> 7,865,600 5,859,800 3,792,800
<TOTAL-COSTS> 7,865,600 5,859,800 3,792,800
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 120,900 87,300 57,300
<INCOME-PRETAX> 1,783,600 1,322,600 851,000
<INCOME-TAX> 661,700 490,700 315,700
<INCOME-CONTINUING> 0 0 0
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 1,121,900 831,900 535,300
<EPS-PRIMARY> 2.52 1.87 1.20
<EPS-DILUTED> 2.50 1.85 1.19
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5 Exhibit 27 (c)
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE EMERSON
ELECTRIC CO. CONSOLIDATED STATEMENTS OF EARNINGS AND CONSOLIDATED BALANCE SHEETS
AS OF AND FOR THE PERIODS ENDED GIVEN BELOW, FILED WITH THE COMPANY'S
FORM 10-K AND FORMS 10-Q, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 9-MOS 6-MOS 3-MOS
<FISCAL-YEAR-END> SEP-30-1996 SEP-30-1996 SEP-30-1996 SEP-30-1996
<PERIOD-END> SEP-30-1996 JUN-30-1996 MAR-31-1996 DEC-31-1995
<CASH> 149,000 213,100 194,600 227,900
<SECURITIES> 0 0 0 0
<RECEIVABLES> 2,030,100 2,110,700 2,107,800 1,900,700
<ALLOWANCES> 50,300 55,400 53,200 48,500
<INVENTORY> 1,743,900 1,671,700 1,684,200 1,650,000
<CURRENT-ASSETS> 4,187,200 4,250,200 4,248,900 4,022,900
<PP&E> 4,865,600 4,719,800 4,631,200 4,341,900
<DEPRECIATION> 2,414,800 2,363,800 2,305,900 2,167,400
<TOTAL-ASSETS> 10,481,000 10,445,600 10,376,800 9,733,200
<CURRENT-LIABILITIES> 3,021,100 3,160,100 3,254,200 3,231,700
<BONDS> 772,600 786,200 816,100 455,700
0 0 0 0
0 0 0 0
<COMMON> 238,300 238,300 238,300 238,300
<OTHER-SE> 5,115,100 4,972,500 4,854,400 4,753,800
<TOTAL-LIABILITY-AND-EQUITY> 10,481,000 10,445,600 10,376,800 9,733,200
<SALES> 11,149,900 8,282,400 5,385,600 2,565,800
<TOTAL-REVENUES> 11,149,900 8,282,400 5,385,600 2,565,800
<CGS> 7,165,000 5,331,300 3,471,500 1,650,400
<TOTAL-COSTS> 7,165,000 5,331,300 3,471,500 1,650,400
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 126,900 96,200 64,000 30,100
<INCOME-PRETAX> 1,609,000 1,186,100 764,300 361,900
<INCOME-TAX> 590,500 433,800 278,900 131,400
<INCOME-CONTINUING> 0 0 0 0
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 1,018,500 752,300 485,400 230,500
<EPS-PRIMARY> 2.27 1.68 1.08 .51
<EPS-DILUTED> 2.25 1.66 1.07 .51
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5 Exhibit 27 (d)
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1995
EMERSON ELECTRIC CO. CONSOLIDATED STATEMENT OF EARNINGS AND CONSOLIDATED BALANCE
SHEET FILED WITH THE COMPANY'S 1995 FORM 10-K AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 117,300
<SECURITIES> 0
<RECEIVABLES> 1,802,800
<ALLOWANCES> 45,200
<INVENTORY> 1,602,600
<CURRENT-ASSETS> 3,784,100
<PP&E> 4,230,500
<DEPRECIATION> 2,095,600
<TOTAL-ASSETS> 9,399,000
<CURRENT-LIABILITIES> 3,280,700
<BONDS> 208,600
0
0
<COMMON> 238,300
<OTHER-SE> 4,632,500
<TOTAL-LIABILITY-AND-EQUITY> 9,399,000
<SALES> 10,012,900
<TOTAL-REVENUES> 10,012,900
<CGS> 6,480,400
<TOTAL-COSTS> 6,480,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 110,600
<INCOME-PRETAX> 1,459,900<F1>
<INCOME-TAX> 530,900
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (21,300)<F2>
<NET-INCOME> 907,700
<EPS-PRIMARY> 2.03
<EPS-DILUTED> 2.01
<FN>
<F1>INCOME-PRETAX (BEFORE ACCOUNTING CHANGE) INCLUDES $34.3 MILLION IN
NON-RECURRING ITEMS. THE NET EARNINGS IMPACT OF THE NON-RECURRING ITEMS
WAS SUBSTANTIALLY OFFSET BY THE ACCOUNTING CHANGE.
<F2>CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR POSTEMPLOYMENT BENEFITS.
INCOME BEFORE ACCOUNTING CHANGE WAS $929.0 MILLION.
</FN>
</TABLE>
