10Q-2qtr03

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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, 2003

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
(State or other jurisdiction of
incorporation or organization)

 

43-0259330
(I.R.S. Employer
Identification No.)

8000 W. Florissant Ave.
P.O. Box 4100
St. Louis, Missouri
(Address of principal executive offices)

 



63136
(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 ( )

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes (X) No ( )

Common stock outstanding at March 31, 2003: 420,952,549 shares.

 

 

  

1

<PAGE>                  PART I. FINANCIAL INFORMATION               FORM 10-Q
                        Item 1. Financial Statements.

EMERSON ELECTRIC CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
THREE MONTHS AND SIX MONTHS ENDED MARCH 31, 2002 AND 2003
(Dollars in millions except per share amounts; unaudited)

 

Three Months
Ended March 31,

 

Six Months
Ended March 31,

 

2002 

2003 

 

2002 

2003 

Net Sales

Costs and expenses:
  Cost of sales
  Selling, general and administrative     expenses
  Other deductions (income), net
  Interest expense, net

    Total costs and expenses

$ 3,421 


2,232 
  
724 

     58 

  3,016 

  3,478 


2,265 
 
734 
74 
     57 

  3,130 

 

 6,716 


4,357 
 
1,472 
(9)
   123 

 5,943 

 6,719 


4,360 
 
1,454 
121 
   115 

 6,050 

Income before income taxes and
  cumulative effect of change
  in accounting principle



405 



348 

 



773 



669 

Income taxes

    130 

    112 

 

   243 

   216 

Earnings before cumulative effect of
  change in accounting principle

Cumulative effect of change
  in accounting principle


275 
 

     -  


236 


     -  

 


530 


  (938)


453 


    -  

Net earnings

$   275 

    236 

 

  (408)

   453 

Basic earnings per common share:
  Before cumulative effect of change
    in accounting principle
  Cumulative effect of change
    in accounting principle



$  0.65 

     - 
 



0.56 

     -  

 



1.26 

 (2.24
)



1.08 

    - 
 

Basic earnings per common share

$  0.65 

   0.56 

 

 (0.98)

  1.08 

Diluted earnings per common share:
  Before cumulative effect of change
    in accounting principle
  Cumulative effect of change
    in accounting principle



$  0.65 

     - 
 



0.56 

     -  

 



1.26 

 (2.23
)



  1.08 

    - 
 

Diluted earnings per common share

$  0.65 

   0.56 

 

 (0.97)

  1.08 

Cash dividends per common share

$0.3875 

 0.3925 

 

 0.775 

 0.785 


See accompanying notes to consolidated financial statements.
                                        2   
                                 
<PAGE>               EMERSON ELECTRIC CO. AND SUBSIDIARIES          FORM 10-Q
                          CONSOLIDATED BALANCE SHEETS
           (Dollars in millions except per share amounts; unaudited)

 

September 30,
    2002    

 

March 31,
    2003    

      ASSETS
CURRENT ASSETS
  Cash and equivalents
  Receivables, less allowances of $90 and $95
  Inventories
  Other current assets

 

$   381  
2,513  
1,624  
    443  

 

 

606  
2,547  
1,679  
    450  

     Total current assets

  4,961  

 

  5,282  

PROPERTY, PLANT AND EQUIPMENT, NET

  3,116  

 

  3,022  

OTHER ASSETS
  Goodwill
  Other


4,910  
   1,558  

 


4,960  
  1,540  

     Total other assets

  6,468  
$14,545  

 

  6,500  
 14,804  

      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Short-term borrowings and current maturities
    of long-term debt
  Accounts payable
  Accrued expenses
  Income taxes

 


 $ 1,560  
1,268  
1,448  
     124  

 

 


1,045  
1,222  
1,460  
    138  

     Total current liabilities

  4,400  

 

  3,865  

LONG-TERM DEBT

OTHER LIABILITIES

  2,990  

  1,414  

 

  3,486  

  1,414  

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
  Additional paid in capital
  Retained earnings
  Accumulated other comprehensive income
  Cost of common stock in treasury, 55,967,097
    shares and 55,724,457 shares


   
-   


238  
52  
8,461  
(647) 

 (2,363

 


   
-   


238  
56  
8,583  
(485) 

 (2,353

     Total stockholders' equity

  5,741  
$14,545  

 

  6,039  
 14,804  

See accompanying notes to consolidated financial statements.
                                         3

<PAGE>               EMERSON ELECTRIC CO. AND SUBSIDIARIES          FORM 10-Q
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 SIX MONTHS ENDED MARCH 31, 2002 AND 2003
                       (Dollars in millions; unaudited)

Six Months    
 Ended March 31, 

 

2002

2003

OPERATING ACTIVITIES
  Net earnings
  Adjustments to reconcile net earnings to net cash
    provided by operating activities:
      Cumulative effect of change in accounting principle
      Depreciation and amortization
      Changes in operating working capital
      Gains on divestitures and other

        Net cash provided by operating activities


$ (408) 


938  
269  
(7) 
 (102

  690  


453  


-  
264  
(67) 
   31  

  681  

INVESTING ACTIVITIES
  Capital expenditures
  Purchases of businesses, net of cash and
    equivalents acquired
  Divestitures of businesses and other, net

        Net cash used in investing activities


(172) 

(718) 
  133  

 (757


(131) 

(1) 
   36  

  (96

FINANCING ACTIVITIES
  Net increase (decrease) in short-term borrowings
  Proceeds from long-term debt
  Principal payments on long-term debt
  Dividends paid
  Treasury stock, net

        Net cash provided by (used in) financing activities


6  
501  
(10) 
(326) 
   (7

  164  


(532) 
493  
(7) 
(330) 
    4  

 (372

Effect of exchange rate changes on cash and equivalents

   (5

   12  

INCREASE IN CASH AND EQUIVALENTS

92  

225  

Beginning cash and equivalents

  356  

  381  

ENDING CASH AND EQUIVALENTS

$ 448  

  606  

CHANGES IN OPERATING WORKING CAPITAL
  Receivables
  Inventories
  Other current assets
  Accounts payable
  Accrued expenses
  Income taxes


$  72  
107  
(9) 
(97) 
(126) 
   46  
$  (7


25  
   (14) 
1  
(83) 
(7) 
   11  
  (67

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, 2002.

2.

Reconciliations of weighted average common shares for basic earnings per
common share and diluted earnings per common share follow (shares in millions):

 

 

Three Months Ended
  March 31,

Six Months Ended
  March 31,

 

 

2002  

2003  

2002  

2003   

 

Basic
Dilutive shares
Diluted

419.0 
   2.4 
 421.4 

419.1 
   1.5 
 420.6 

418.7  
   2.2  
 420.9
  

419.0  
   1.6  
 420.6  

3. 

Other Financial Information
(Dollars in millions; unaudited)

 

 

Three Months Ended
  March 31,

Six Months Ended
  March 31,

 

 

2002 

2003 

2002  

2003  

 

Other deductions (income), net
Gains from divestitures of   businesses
Rationalization of operations
Amortization of intangibles
Other



$ (93)
55 

   33 
$   2 



    - 
36 

  34 
  74 



(178) 
108  
14  
  47  
  (9



(15) 
65  
9  
  62  
 121
  

 

Interest expense, net
Interest expense
Interest income


$  61 
   (3)
$  58 


   61 
  (4)
  57 


131  
  (8
 123  


123  
  (8

 115
  

 

  

5

<PAGE>
EMERSON ELECTRIC CO. AND SUBSIDIARIES                               FORM 10-Q

 

 

September 30,
    2002    

March 31,
   2003   

 

Inventories
Finished products
Raw materials and work in process


$   662  
    962  
$ 1,624  


697   
  982   
1,679   

 

Property, plant and equipment, net
Property, plant and equipment, at cost
Less accumulated depreciation


$ 6,649  
  3,533  
$ 3,116  


6,787   
3,765   
3,022   

 

Goodwill
Process Control
Industrial Automation
Electronics and Telecommunications
HVAC
Appliance and Tools


$ 1,591  
788  
1,590  
377  
    564  
$ 4,910  


1,583   
821   
1,612   
377   
  567   
4,960   

 

Other assets, other
Retirement plans
Equity and other investments
Leveraged leases
Capitalized software
Intellectual property
Other


$   636  
326  
145  
147  
113  
    191  
$ 1,558  


628   
321   
142   
144   
114   
  191   
1,540   

 


Product warranty liability

         
$   138  

        
  136   

 

Other liabilities
Deferred taxes
Postretirement plans, excl. current portion
Minority interest
Other


$   514  
306  
104  
    490  
$ 1,414  


489   
310   
110   
  505   
1,414   

4.

Effective October 1, 2001, Emerson adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets." Emerson completed the transitional impairment test and recorded a cumulative effect of a change in accounting principle in the first quarter of fiscal 2002. The consolidated statements of earnings and cash flows for the six months ended March 31, 2002 have been restated to reflect the cumulative effect of a change in accounting principle.

5.

Emerson enters into indemnification agreements in the ordinary course of business in which the indemnified party is held harmless and is reimbursed for losses incurred from claims by third parties. In connection with

 

6

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EMERSON ELECTRIC CO. AND SUBSIDIARIES                               FORM 10-Q

divestitures of certain assets or businesses, the Company often provides indemnities to the buyer with respect to certain matters including, for example, environmental liabilities and unidentified tax liabilities related to periods prior to the disposition. Due to the uncertain nature of the indemnities, the maximum liability cannot be quantified. Liabilities for obligations are recorded where appropriate and when they can be reasonably estimated. Historically, the Company has not made significant payments for these obligations.

The Company's product warranties vary by each of its product lines and are competitive for the markets in which it operates. Warranty generally extends for a period of one to two years from the date of sale or installation. Provisions for warranty are primarily determined based on historical warranty cost as a percentage of sales or a fixed amount per unit sold based on failure rates, adjusted for specific problems that may arise. Product warranty expense is less than one percent of sales.

6.

As of March 31, 2003, the Company estimates that the accumulated benefit obligation for the primary defined benefit pension plans exceeded the fair value of plan assets by $325 million. If the equity markets continue the trend experienced subsequent to the last measurement date (June 30, 2002), the Company estimates that a charge to stockholders' equity of approximately $900 million ($600 million after-tax) could be required.

7.

Comprehensive income is summarized as follows (dollars in millions):

Three Months Ended
March 31,

Six Months Ended
March 31,

2002 

2003 

2002 

2003 

Net earnings
Foreign currency translation   adjustments and other

$275 

    -  
$275 

236 

 81 
317 

(408)

(14)
(422)

453 

161 
614 

8.

Effective October 1, 2002, Emerson adopted the fair value method provisions of FAS 123. Options granted after September 30, 2002, are expensed based on their fair value at date of grant over the vesting period, generally three years. Previously, the Company accounted for options pursuant to APB 25 and no expense was recognized. During the six months ended March 31, 2003, 303 thousand options were granted which will result in approximately $1 million of compensation expense for fiscal year 2003. Stock options granted over the last three years have averaged less than 0.5 percent of average outstanding shares and if the fair value method had been utilized for all options granted, earnings per share would have been reduced approximately one cent per quarter over that period. Earnings per share for the three months ended March 31, 2002 and 2003, would have been $0.64 and $0.55, respectively. Earnings per share for the six months ended March 31, 2002 and 2003, would have been $1.24 (before FAS 142) and $1.06, respectively.

7

 

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EMERSON ELECTRIC CO. AND SUBSIDIARIES                               FORM 10-Q

9.

Business Segment Information

Summarized information about the Company's operations by business segment for the three and six months ended March 31, 2002 and 2003, follows (dollars in millions):

 


Three months ended March 31,

Sales      
2002      2003 

Earnings
 2002     2003

 

Process Control
Industrial Automation
Electronics and Telecommunications
HVAC
Appliance and Tools

Differences in accounting methods
Corporate and other Eliminations/Interest

Net sales/Income before
  income taxes

$  837 
601 
591 
640 
   847 
3,516 


   (95)


$3,421
 

819 
646 
554 
693 
   870 
3,582 


  (104)


 3,478
 

95 
67 
19 
95 
 116 
392 
33 
38 
 (58)


 405
 

89 
81 
21 
104 
 121 
416 
33 
(44)
 (57)


 348
 

   

 


Six months ended March 31,

Sales      
2002      2003 

Earnings
 2002     2003

 

Process Control
Industrial Automation
Electronics and Telecommunications
HVAC
Appliance and Tools

Differences in accounting methods
Corporate and other Eliminations/Interest

Net sales/Income before
 income taxes

$1,633 
1,257 
1,226 
1,099 
 1,678 
6,893 


  (177)


$6,716
 

1,591 
1,269 
1,123 
1,205 
 1,722 
6,910 


  (191)


 6,719 

180 
152 
51 
154 
 219 
756 
72 
68 
(123)


 773
 

164 
163 
58 
173 
 239 
797 
64 
(77)
(115)


 669
 

 

 

 

 

 

 

 

Intersegment sales of the Appliance and Tools segment for the three months ended March 31, 2002 and 2003, respectively, were $81 million and $95 million. Intersegment sales of the Appliance and Tools segment for the six months ended March 31, 2002 and 2003, respectively, were $147 million and $168 million.


8

 

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EMERSON ELECTRIC CO. AND SUBSIDIARIES                               FORM 10-Q

      Rationalization of operations by business segment is summarized as       follows (dollars in millions):  

 

Three Months Ended
March 31,

Six Months Ended
March 31,

 

 

2002       2003  

2002       2003  

 

Process Control
Industrial Automation
Electronics and Telecommunications
HVAC
Appliance and Tools
Corporate

$   8  
6  
15  
5  
9  
   12  
$  55  

7  
4  
18  
7  
6  
   (6
   36  

    15  
12  
27  
13  
19  
   22  
  108  

12  
9  
25  
11  
12  
   (4
   65  

10.

The Company is evaluating strategies to maximize the value of its Emerson Telecommunication Products (Jordan) business that had a goodwill impairment of $647 million in 2002. The carrying value of this business is approximately $270 million (including $175 million of goodwill). In May 2003, the Board of Directors approved a plan to divest a portion of this business. Due to current challenging market conditions, a loss is reasonably possible on the sale of Dura-Line, the Company's fiber-optic conduit business, and an appraisal is being completed to determine possible impairment of the remaining business. The Company estimates it will realize income tax benefits of approximately $200 million to $275 million as the tax basis significantly exceeds the carrying value of this business. A majority of the tax benefits would be received in cash in 2004, with the remainder expected to be realized in later years through utilization against future capital gains. The current tax benefit to be recognized is expected to exceed any loss resulting from the sale and impairment review.


Items 2 and 3. Management's Discussion and Analysis of Results of Operations
               and Financial Condition.

Net sales for the quarter ended March 31, 2003, were $3,478 million, an increase of almost 2 percent over net sales of $3,421 million for the quarter ended March 31, 2002. Net sales were $6,719 million for the six months ended March 31, 2003, compared to net sales of $6,716 million for the same period a year ago. Solid growth in the heating, ventilating and air conditioning business and a consolidated 4 percentage point favorable impact from currency were partially offset by declines in process control and electronics and telecommunications. Acquisitions and divestitures had a negative impact of less than 1 percentage point on reported second quarter sales. Underlying sales (which exclude acquisitions, divestitures and currency) for the second quarter decreased 2 percent, reflecting a moderate decline in the United States and modest declines in Europe and Latin America which were partially offset by a strong increase in Asia compared to the prior year. 

9

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EMERSON ELECTRIC CO. AND SUBSIDIARIES                               FORM 10-Q

The process control business reported sales of $819 million in the second quarter of 2003, a decline of 2 percent compared to $837 million for the same period a year ago, with weaker maintenance and repair spending and delayed long-cycle projects. Sales include a positive impact from currency of 5 percentage points, which was partially offset by a 3 percentage point impact from the Daniel Valve and Intellution divestitures. Excluding acquisitions, divestitures and currency, underlying sales declined 4 percent due to weakness in the United States and Latin America, partially offset by modest growth in Asia. Process control continued its market penetration and geographic expansion despite the ongoing weakness in the U.S. market.

The industrial automation business reported second quarter sales of $646 million, up nearly 8 percent from $601 million for the second quarter in the prior year, the result of an 8 percentage point favorable impact from currency. Flat underlying sales reflect the emerging stability in the industrial goods markets, with a moderate decline in industrial activity in the United States offset by an increase in international sales, led by strength in Asia. Sales of motors and drives were down slightly, while industrial sales activity was flat for the quarter.

Sales in the electronics and telecommunications business were $554 million for the second quarter, a decrease of 6 percent from $591 million for the same period in the prior year. Second quarter sales include a 3 percentage point favorable impact from currency and significant declines in most major geographic regions, except for Asia, which declined only modestly. The traditional environmental and power systems businesses were flat to slightly down, and the OEM power electronics business experienced a decline in sales versus the prior year.

The heating, ventilating and air conditioning business reported sales of $693 million, an increase of 8 percent from the second quarter in the prior year, driven by continued penetration gains, market growth and an almost 3 percentage point impact from currency. Second quarter underlying sales reflect strong growth in Asia, solid growth in the European commercial market and modest growth in the United States.

A 3 percent increase in second quarter sales in the appliance and tools business compared to the prior year reflects a 2 percentage point favorable impact from currency and a 1 percentage point impact from acquisitions. Sales of $870 million for the second quarter also reflect a modest decline in underlying sales compared to the prior year, with results flat to slightly up across the tools and storage businesses, and a modest decline in the motors and appliance businesses. Although consumer housing-related markets have softened, Closetmaid growth remains strong.

Emerson has made the strategic business decision to discontinue the manufacture of bench top and stationary woodworking power tools and to license the RIDGID brand to top manufacturers in order to fulfill The Home Depot's future requirements. Emerson will remain a significant manufacturer of wet/dry vacuums, hand tools, and other products. This decision has no effect on RIDGID professional contractor and plumbing tools, which is a separate Emerson business.

10

<PAGE>

EMERSON ELECTRIC CO. AND SUBSIDIARIES                               FORM 10-Q

Cost of sales for the second quarter of fiscal 2003 and 2002 were $2,265 million and $2,232 million, respectively. Cost of sales as a percent of net sales was 65.1 percent and 65.2 percent in the first quarter of fiscal 2003 and 2002, respectively. For the six months ended March 31, 2003 and 2002, cost of sales were $4,360 million, or 64.9 percent of sales, and $4,357 million, or 64.9 percent of sales, respectively. Selling, general and administrative expenses for the second quarter of 2003 were $734 million, or 21.1 percent of sales, compared to $724 million, or 21.2 percent of sales, for the second quarter of 2002. For the six months ended March 31, 2003 and 2002, selling, general and administrative expenses were $1,454 million, or 21.6 percent of sales, compared with $1,472 million, or 21.9 percent of sales for the same period in the prior year. Emerson continues to leverage information technology to achieve operational efficiencies that make it easier for customers to do business with the company and to improve the cost structure.

Other deductions, net for the six months ended March 31, 2003, included a gain from the divestiture of Intellution of $15 million in the first quarter, and ongoing costs for the rationalization of operations (including severance, shut-down, start-up, asset writedowns and other costs) of $65 million. Other deductions, net for the six months ended March 31, 2002, included a $93 million pre-tax gain from the ENI transaction in the second quarter, an $85 million gain from the Chromalox divestiture in the first quarter, and ongoing costs for the rationalization of operations of $108 million. Higher levels of rationalization in the prior year related to cost structure improvements in response to the difficult economic environment.

Income before income taxes for the second quarter of 2003 was $348 million, a 14 percent decrease from the prior year, reflecting lower gains from divestitures, partially offset by lower levels of rationalization costs in the second quarter of 2003. Second quarter earnings in the process control business of $89 million were down 6 percent compared to the prior year, primarily reflecting the lower sales volume. Higher sales and benefits from recent restructuring initiatives led to an increase in earnings of the industrial automation business of 19 percent. Electronics and telecommunications business earnings were $21 million, an increase of 18 percent over the prior year, despite lower sales. This increase was driven by the benefits from restructuring actions initiated over a year ago. Earnings of the heating, ventilating and air conditioning, and appliance and tools businesses were up 9 percent and 5 percent, respectively, over the prior year, primarily due to higher sales during the quarter.

Net earnings were $236 million and diluted earnings per common share were $0.56 for the three months ended March 31, 2003, decreases of 14 percent compared to the prior year period. Net earnings and earnings per share of $275 million and $0.65, respectively, for the three months ended March 31, 2002, include the impact of a pre-tax gain of $93 million from the ENI transaction. For the six months ended March 31, 2003, net earnings were $453 million and earnings per share were $1.08, decreases of 14 percent compared to net earnings and earnings per share before accounting change of $530 million and $1.26, respectively, for the six months ended March 31, 2002.

11

<PAGE>

EMERSON ELECTRIC CO. AND SUBSIDIARIES                               FORM 10-Q

Gains from divestitures for the six months ended March 31, 2003, were down $163 million from the prior year period.

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:

 

 

September 30,       2002     

 

March 31,      2003    

Working capital (in millions)
Current ratio
Total debt to total capital
Net debt to net capital

 

$        561 
1.1 to 1 
44.2% 
42.0% 

 

1,417 
1.4 to 1 
42.9% 
39.3% 

 

The Company's interest coverage ratio (earnings before income taxes and cumulative effect of change in accounting principle and interest expense, divided by interest expense) was 6.4 times for the six months ended March 31, 2003, compared to 6.9 times for the same period one year earlier. In the first quarter of fiscal 2003, the Company issued $250 million of 4.625%
10-year notes and $250 million of 5% 12-year notes. The increase in working capital includes the impact of these long-term debt issuances. In April 2003, the Company issued $250 million of 4 1/2% 10-year notes.

Cash and equivalents increased by $225 million during the six months ended March 31, 2003. Cash flow provided by operating activities of $681 million and the cash flow provided by divestitures of businesses and other, net of $36 million were used primarily to decrease net borrowings by $46 million, pay dividends of $330 million and fund capital expenditures of $131 million. For the six months ended March 31, 2003, free cash flow of $550 million (operating cash flow of $681 million less capital expenditures of $131 million) was up 6 percent over free cash flow of $518 million (operating cash flow of $690 million less capital expenditures of $172 million) for the same period in the prior year, driven by improvements in working capital and lower capital spending.

The Company is in a strong financial position 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 "Safe Harbor Statement" of Exhibit 13 to the Company's Annual Report on Form 10-K for the year ended September 30, 2002, which is hereby incorporated by reference.

 

12

<PAGE>
EMERSON ELECTRIC CO. AND SUBSIDIARIES                               FORM 10-Q

Item 4. Controls and Procedures 

Based on an evaluation performed within 90 days of the date of this report, the registrant's certifying officers have concluded that the Company's disclosure controls and procedures were effective.

There have been no significant changes in internal controls or other factors that significantly affect these controls subsequent to the date of the evaluation.

PART II. OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders.

At the Annual Meeting of Stockholders on February 4, 2003, matters described in the Notice of Annual Meeting of Stockholders dated December 16, 2003 were voted upon.

1.    The directors listed below were elected for terms ending in 2006       with voting for each as follows:

DIRECTOR

A. A. Busch III
A. F. Golden
G. A. Lodge
V. R. Loucks, Jr.
J. B. Menzer

FOR

333,440,598
329,157,391
328,376,386
352,413,259
333,661,286

WITHHELD

26,041,096
30,324,303
31,105,308
 7,068,435
25,820,408

 

2.    The stockholders' proposal on sexual orientation failed by a vote       of 29,404,770 in favor to 262,939,200 against, with 11,553,796       abstaining.

Item 5. Other Information

Emerson's Audit Committee of the Board of Directors is comprised of the following independent directors:

    A. A. Busch III, Chairman
    C. Fernandez G.
    J. B. Menzer
    R. L. Ridgway
    E. E. Whitacre, Jr.

 

 

 

 

 

13

<PAGE>
EMERSON ELECTRIC CO. AND SUBSIDIARIES                               FORM 10-Q

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).

    12   Ratio of Earnings to Fixed Charges.

    99   Certifications pursuant to 18 U.S.C. Section 1350, as adopted          pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K. Pursuant to Item 9, the Company filed Reports on     Form 8-K dated January 13, 2003, February 24, 2003 and March 27, 2003,     furnishing Regulation FD disclosures.

 

 

 

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, 2003             By /s/ Walter J. Galvin          
                                                                    
                                       Walter J. Galvin
                                       Executive Vice President
                                       and Chief Financial Officer

                                       (on behalf of the registrant and
                                       as Chief Financial Officer)

 

 

 

 

 

 

 

 

14

Certification
I, D. N. Farr, Chief Executive Officer, Emerson Electric Co., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Emerson Electric Co.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors:

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 12, 2003
                               /s/ D. N. Farr       
                                   D. N. Farr
                            Chief Executive Officer
                              Emerson Electric Co.

Certification
I, W. J. Galvin, Executive Vice President and Chief Financial Officer, Emerson Electric Co., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Emerson Electric Co.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors:

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 12, 2003
                             /s/ W. J. Galvin        
                                 W. J. Galvin
             Executive Vice President and Chief Financial Officer
                             Emerson Electric Co.