10-K: Annual report [Section 13 and 15(d), not S-K Item 405]
Published on November 25, 2008
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, 2008
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
Securities
registered pursuant to Section 12(b) of the Act:
|
Title of each class
|
|
Name of each exchange on
which registered
|
|
Common Stock
of $0.50 par value per share
|
|
New
York Stock Exchange
Chicago
Stock Exchange
|
|
Preferred
Stock Purchase Rights
|
|
New
York Stock Exchange
Chicago
Stock Exchange
|
Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined
in
Rule 405 of the Securities Act. Yes x
No
¨
Indicate
by check mark if the registrant is not required to file reports pursuant
to
Section 13 or Section 15(d) of the Act. Yes ¨
No
x
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 (or for such shorter period that the registrant was required
to file such reports), 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 (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive proxy
or
information statements incorporated by reference in Part III of this Form
10-K
or any amendment to this Form 10-K. x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
|
Large
accelerated filer x
|
Accelerated
filer ¨
|
|
|
Non-accelerated filer ¨ (Do not check if a smaller reporting company)
|
Small
Reporting Company ¨
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).
Yes
¨ No
x
Aggregate
market value of the voting stock held by nonaffiliates of the registrant
as of
close of business on March 31, 2008: $40.1 billion.
Common
stock outstanding at October 31, 2008: 767,063,304 shares.
Documents
Incorporated by Reference
1. Portions
of Emerson Electric Co. 2008 Annual Report to Stockholders (Parts I and
II).
2. Portions
of Emerson Electric Co. Notice of 2009 Annual Meeting of Stockholders and
Proxy
Statement (Part III).
2
PART
I
Item
1. Business
Emerson
was incorporated in Missouri in 1890, and has grown from a regional manufacturer
of electric motors and fans into a diversified global technology company.
Having
expanded its product lines through internal growth and acquisition, Emerson
today is designing and supplying product technology and delivering engineering
services in a wide range of industrial, commercial and consumer markets
around
the world.
Emerson
is organized into the following business segments, based on the nature
of the
products and services rendered:
|
·
|
Process
Management, providing measurement, control and diagnostic capabilities
for
automated industrial processes producing items such as foods,
fuels,
medicines and power
|
|
·
|
Industrial
Automation, bringing integrated manufacturing solutions to diverse
industries worldwide
|
|
·
|
Network
Power, providing power and environmental conditioning and reliability
to
help keep telecommunication systems, data networks and critical
business
applications continuously operating
|
|
·
|
Climate
Technologies, enhancing household and commercial comfort as well
as food
safety and energy efficiency through air-conditioning and refrigeration
technology
|
|
·
|
Appliance
and Tools, providing uniquely designed motors for a broad range
of
applications, appliances and integrated appliance solutions,
and tools for
both homeowners and professionals, as well as home and commercial
storage
systems
|
Sales,
earnings before interest and income taxes, and total assets attributable
to each
segment for the three years ended September 30, 2008, are set forth in
Note 16
of Notes to Consolidated Financial Statements of the 2008 Annual Report,
which
note is hereby incorporated by reference. Sales by segment in 2008 were
Process
Management 26 percent, Industrial Automation 19 percent, Network Power
25
percent, Climate Technologies 15 percent, and Appliance and Tools 15 percent.
Sales by geographic destination in 2008 were United States 46 percent,
Europe 23
percent, Asia 18 percent and other regions 13 percent. Information with
respect
to acquisition and divestiture activities by Emerson is set forth in Note
3 of
Notes to Consolidated Financial Statements of the 2008 Annual Report, which
note
is hereby incorporated by reference.
PROCESS
MANAGEMENT
The
Process Management segment offers customers product technology as well
as
engineering and project management services for precision control, monitoring
and asset optimization of plants that produce power or that process or
treat
such items as oil, natural gas and petrochemicals; food and beverages;
pulp and
paper; pharmaceuticals; and municipal water supplies. This array of products
and
services helps customers optimize their process plant capabilities in the
areas
of plant safety and reliability, and product quality and output. In 2008,
sales
by geographic destination for this segment were United States 32 percent,
Europe
24 percent, Asia 21 percent and other regions 23 percent.
Process
Management Systems and Software
Emerson’s
Process Management systems and software control plant processes by collecting
and analyzing information from measurement devices in the plant, and
by using
that information to adjust valves, pumps, motors, drives and other control
hardware in the plant for maximum product quality and process efficiency.
Emerson’s process control systems can be extended wirelessly to support a mobile
workforce with handheld tools/communicators, provide site-wide location
tracking
of people and assets, enable video monitoring and communicate with wireless
field devices, increasing the information available to operations.
3
Measurement
and Analytical Instrumentation
Measurement
instrumentation measures the physical properties of liquids or gases
in a
process stream, such as pressure, temperature, level, or rate and amount
of
flow, and communicates this information to the control system. Measurement
technologies provided by Emerson include Coriolis direct mass flow, magnetic
flow, vortex flow, ultrasonic flow, differential pressure, ultralow-flow
fluid
measurement, temperature sensors and radar based tank gauging. Emerson
measurement products also are used in custody transfer applications,
such as the
transfer of gasoline from a storage tank to a tanker truck, where precise
metering of the amount of fluid transferred helps ensure accurate asset
management.
Analytical
instrumentation analyzes the chemical composition of process fluids
and
emissions to enhance quality and efficiency, as well as environmental
compliance. Emerson’s analytical technologies include process gas
chromatographs, in-situ oxygen analyzers, infrared gas and process
fluid
analyzers, combustion analyzers and systems, and analyzers that measure
pH,
conductivity and water quality.
Emerson
also provides these same technologies with wireless communication capability.
This allows customers to monitor processes or equipment that were previously
not
measurable (remote, moving/rotating) or not economical to measure due
to the
cost and difficulty of running wires in industrial process plants.
Valves,
Actuators and Regulators
Control
valves respond to commands from the control system by continuously
and precisely
modulating the flow of process fluids to provide maximum process efficiency
and
product quality. Emerson provides sliding stem valves, rotary valves,
butterfly
valves and related valve actuators and controllers. Emerson also provides
a line
of industrial and residential regulators, whose function is to reduce
the
pressure of fluids such as natural gas and liquid petroleum gas for
transfer
from high-pressure supply lines to lower pressure systems.
PlantWeb®
Digital
Plant Architecture
Emerson’s
PlantWeb digital
plant architecture combines the technologies described above with the
advantages
of “intelligent” plant devices (valves and measurement instruments that have
advanced diagnostic capabilities), open communication standards (non-proprietary
wired and wireless digital protocols allowing the plant devices and
the control
system to “talk” with one another) and integrated modular software, not only to
control the process better but also to collect and analyze valuable
information
about plant assets and processes. This capability gives customers the
ability to
detect or predict changes in equipment and process performance and
the impact
they can have on plant operations. The PlantWeb architecture
provides the insight to improve plant availability and safety, and
also
furnishes a platform to continually improve asset management and standards
compliance, and to reduce startup, operations and maintenance
costs.
Industry
Services and Solutions
Emerson’s
array of process automation and asset optimization services can improve
automation project implementation time and costs, increase process
availability
and productivity, and reduce total cost of ownership. Global industry
centers
offer engineering and project management services to help customers
extract
maximum performance and reliability from their process equipment
and automation
assets. These centers serve industries such as oil and gas, pulp
and paper,
chemical, power, food and beverage, and life sciences. They also
assist
customers in diagnosing equipment problems and plant
inefficiencies.
4
Distribution
The
principal worldwide distribution channel for the Process Management segment
is a
direct sales force, although a network of independent sales representatives,
and
to a lesser extent, independent distributors purchasing these products
for
resale are also utilized. The majority of sales in the United States
are made
through a direct sales force with the remainder primarily through independent
sales representatives. In Europe and Asia, sales are almost exclusively
made
through a direct sales force with the remainder split evenly between
independent
sales representatives and distributors.
Brands
Service/trademarks
and trade names within the Process Management segment include Emerson
Process
Management, AMS Suite, Baumann, Bettis, Bristol, CSI, Damcos, Daniel,
DeltaV,
El-O-Matic, Fisher, Guardian, Micro Motion, Ovation, PlantWeb, ROC, Rosemount,
Smart Process, SureService, Tescom and TopWorx.
INDUSTRIAL
AUTOMATION
The
Industrial Automation segment provides integrated manufacturing solutions
to our
customers at the source of manufacturing their own products. Products
include
motors, transmissions, alternators, fluid controls and materials joining
equipment. Through these offerings, Emerson brings technology and enhanced
quality to the customer’s final product. In 2008, sales by geographic
destination for this segment were United States 39 percent, Europe 42
percent,
Asia 11 percent and other regions 8 percent.
Motors
and Drives
Emerson
provides a broad line of drives and electric motors that are used in
a wide
variety of manufacturing operations and products, from production assembly
lines
to escalators in shopping malls or supermarket checkout stations. Products
in
this category include alternating current (AC) and direct current (DC)
electronic variable speed drives, servo motors, pump motors, drive control
systems, integral horsepower motors (1 HP and above), fractional horsepower
motors (less than 1 HP) and gear drives.
Power
Transmission
Emerson’s
power transmission products include belt and chain drives, helical and
worm
gearing, gear motors, motor sheaves, pulleys, mounted and unmounted bearings,
couplings, chains and sprockets. They are used to transmit power mechanically
in
a wide range of manufacturing and material handling operations and products.
Our
design and application experience enable us to provide both standard
and
customized automation and power transmission solutions to our
customers.
Power
Generation
Emerson
provides alternators (low, medium and high voltage) for use in diesel
or gas
powered generator sets, as well as high frequency alternators, AC
motor/generator sets, traction generators and wind power
generators.
Fluid
Power and Fluid Control
Products
in this category control and power the flow of fluids (liquids and
gases) in
manufacturing operations such as automobile assembly, food processing,
textile
manufacturing and petrochemical processing. They include solenoid and
pneumatic
valves, valve position indicators, pneumatic cylinders, air preparation
equipment, and pressure, vacuum and temperature switches.
5
Materials
Joining and Precision Cleaning
Emerson
supplies both plastics joining technologies and equipment, and metal
welding and
joining processes to a diversified manufacturing customer base, including
automotive, medical devices and toys. We also provide precision cleaning
and
liquid processing solutions to industrial and commercial manufacturers.
Products
include ultrasonic joining and cleaning equipment, linear and orbital
vibration
welding equipment, systems for hot plate welding, spin welding, and
laser
welding, and aqueous, semi-aqueous and vapor cleaning systems.
Electrical
Distribution
Emerson’s
majority-owned EGS Electrical Group joint venture with SPX Corporation
manufactures a broad line of components for current- and noncurrent-carrying
electrical distribution devices. These products include conduit and
cable
fittings, plugs and receptacles, industrial lighting, and enclosures
and
controls. Products in this category are used in hazardous, industrial,
commercial and construction environments, such as oil and gas drilling
and
production sites, pulp and paper mills and petrochemical plants.
Distribution
On
a
worldwide basis, the primary distribution channel for the Industrial
Automation
segment is through direct sales forces. Most products sold worldwide
to original
equipment manufacturers are through a direct sales force. Independent
distributors constitute the next significant sales channel, mostly
to reach end
users; and, to a lesser extent, independent sales representatives are
utilized,
particularly for electrical distribution products in the United States.
Brands
Service/trademarks
and trade names within the Industrial Automation segment include
Emerson
Industrial Automation, Appleton, ASCO, ASCO Joucomatic, Branson Ultrasonics,
Browning, Control Techniques, Emerson Power Transmission, Kato Engineering,
Kop-Flex, Leroy Somer, McGill, Morse, Numatics and O-Z/Gedney.
NETWORK
POWER
Emerson’s
Network Power segment designs, manufactures, installs and maintains
products
providing “grid to chip” electric power conditioning, power reliability and
environmental control for telecommunications networks, data centers
and other
critical applications. Products in this segment include power systems,
embedded
power supplies, precision cooling and inbound power systems, along
with 24-hour
service. In 2008, sales by geographic destination for this segment
were United
States 41 percent, Europe 20 percent, Asia 28 percent and other regions
11
percent.
Power
Systems
Emerson
supplies uninterruptible AC and DC power systems, which provide reliable,
conditioned power to telecommunication networks, data centers and
other critical
equipment in the event of a blackout or line surges and spikes. Power
Systems’
products range from stand-alone units to complete systems incorporating
rectifiers, distribution units, surge protection, batteries and system
supervision.
Embedded
Power
Embedded
power supplies are installed by original equipment manufacturers
to convert or
condition power for microprocessors and peripherals in a wide range
of
telecommunication, health care, computer and industrial applications
using
standard or custom AC/DC or DC/DC designs. They are also used in
consumer
products, in the form of power adaptors for ink jet printers and
in chargers for
mobile phones.
6
Embedded
Computing
Embedded
Computing designs and develops embedded computer systems for original
equipment
manufacturers and systems integrators serving telecommunications,
defense,
aerospace, medical and industrial automation end markets. Products
range from
communication platforms, blades and modules to enabling software
and
professional services.
Precision
Cooling
Emerson’s
precision cooling products provide temperature and humidity control
for
computers, telecommunications and other sensitive equipment. These
products
range from 14,000 to 4 million BTUs in capacity and are available
in up flow,
down flow and overhead configurations.
Inbound
Power Systems
Emerson
inbound power technology provides reliable power systems which automatically
transfer critical application loads from a utility to emergency backup
generators in the event of a blackout or brownout. Products include
automatic
transfer switches, paralleling and synchronizing gear and related
distribution
equipment and control systems.
Connectivity
Solutions
Emerson’s
connectivity products serve the needs of the wireless communications,
telephony
and data network, CATV, defense, security systems and health care
industries and
other industrial customers globally with a broad range of radio frequency,
microwave and fiber optic interconnect components and assemblies.
Service
and Site Operations
Emerson
staffs Energy Operation Centers in more than 30 countries, and deploys
field
service personnel worldwide to assist customers in managing their
network
support systems. Our services include on-site operations management,
energy
consumption monitoring, preventive maintenance, electrical testing,
remote
monitoring and management, and 24-hour service capability.
Distribution
The
Network Power segment sells primarily through worldwide direct sales
force
networks, particularly in Europe and Asia. The remainder of sales
is handled by
independent sales representatives, particularly in the United States,
and
independent distributors.
Brands
Service/trademarks
and trade names within the Network Power segment include Emerson
Network Power,
Aperture, Artesyn, ASCO Power Technologies, Astec, Engineered Endeavors,
Knürr,
Liebert, Liebert Services, Netsure, Netspan, Semflex, Stratos and
Trompeter.
CLIMATE
TECHNOLOGIES
The
Climate Technologies segment provides products and services for all
areas of the
climate control industry, including residential, commercial and industrial
heating and air conditioning, and commercial refrigeration. Our technology
enables homeowners and businesses to better manage their heating,
air-
conditioning, and refrigeration systems for improved control and
lower energy
bills. This segment also digitally controls and remotely monitors
refrigeration
units in grocery stores and other food distribution outlets to enhance
freshness
and food safety. In 2008, sales by geographic destination for this
segment were
United States 55 percent, Europe 16 percent, Asia 18 percent and
other regions
11 percent.
7
Residential,
Commercial and Industrial Heating and Air Conditioning
Emerson
provides a full range of heating and air-conditioning products that
help reduce
operational and energy costs and create comfortable environments
in all types of
buildings. These products include reciprocating and scroll air-conditioning
compressors, including an ultra-efficient residential scroll compressor
with two
stages of cooling capacity which runs at full capacity only during
the hottest
time periods; standard and programmable thermostats; monitoring equipment
and
electronic controls for gas and electric heating systems; gas valves
for
furnaces and water heaters; nitride ignition systems for furnaces;
sensors and
thermistors for home appliances; and temperature sensors and
controls.
Commercial
Refrigeration
Emerson’s
technology is incorporated into equipment to refrigerate food and
beverages in
supermarkets, convenience stores, food service operations and refrigerated
trucks and transport containers. Our refrigeration products are also
used in
industrial applications, such as environmental test chambers, and
in medical
applications, such as magnetic resonance imaging (MRI) machines.
These products
include compressors; precision flow controls; system diagnostics
and controls
that provide precise temperature management; and environmental control
systems.
Services
and Solutions
Emerson’s
services in this segment assist customers in improving their climate
control
systems for better control and efficiency relating to new refrigerants,
energy
efficiency standards, indoor air quality and food safety. We also
provide remote
monitoring of food refrigeration control systems, 24-hour energy
supervision and
service dispatch, and a process that audits food store mechanical
systems to
identify potential energy savings.
Distribution
Climate
Technologies segment sales, primarily to original equipment manufacturers
and
end users, are made predominately through worldwide direct sales
force networks.
The remaining sales are primarily through independent distributor
networks
throughout the world.
Brands
Service/trademarks
and trade names within the Climate Technologies segment include Emerson
Climate
Technologies, Alco Controls, Clive Samuels & Associates, Computer Process
Controls, Copeland, Design Services Network, Emerson Climate Technologies
Distribution Services, Emerson Climate Technologies Educational Services,
Emerson Climate Technologies Flow Controls, Emerson Climate Technologies
Retail
Services, Fusite, Therm-O-Disc and White-Rodgers.
APPLIANCE
AND TOOLS
Emerson’s
Appliance and Tools segment includes a broad range of products
and solutions in
motors, appliances and components, tools and storage. In 2008,
sales by
geographic destination for this segment were United States 82 percent,
Europe 5
percent, Asia 3 percent and other regions 10 percent.
Motors
Emerson
provides a broad range of electric motors, controls and assemblies
from
fractional to several thousand horsepower output. Each of these
products is
designed to give our customers the quality, reliability, and energy
efficiency
needed in their specific applications. Emerson’s electric motors are used in a
variety of home appliances. They include variable, fixed and multi-speed
motors
used in horizontal and vertical axis washers, dryers, and dishwashers.
Our
motors are also used in residential and commercial pumps, such
as those provided
in spas, pools and golf course irrigation equipment; in HVAC equipment,
such as
furnaces, compressors, condenser fans, heat pumps, cooling towers
and commercial
air handlers; and in industrial, farming and mining applications,
where we offer
products such as explosion-proof motors, paint-free washdown motors
and
industrial severe duty motors.
8
Appliances
and Appliance Components
Emerson
provides a number of appliances and appliance technology solutions,
ranging from
water valves and controls to heating elements and switches. Our
appliance
offering includes residential and commercial garbage disposers
and ceiling fans,
instant hot-water dispensers, and compact electric water heaters.
Our appliance
solutions provide integrated systems, sub-systems and components
for appliances
that include electronic and electromechanical controls for washers,
dryers,
dishwashers, refrigerators and other home appliances as well as
heating elements
for dishwashers, electric ovens and water heaters.
Professional
and Do-It-Yourself Tools
Our
pipe-working tools are used by plumbing and mechanical professionals
to install
and repair piping systems. These tools include pipe wrenches, pipe
cutters, pipe
threading and roll grooving equipment; a time-saving system that
joins tubing
through mechanical crimping; drain cleaners; diagnostic systems
including
closed-circuit television pipe inspection and locating equipment;
and tubing
tools. Other professional tools include water jetters, wet-dry
vacuums, rolling
storage boxes, truck work boxes, bolt cutters, and van and truck
ladder racks.
Do-it-yourself tools, available at home improvement retail outlets,
include
drain cleaning equipment, pipe and tube working tools, and wet-dry
vacuums.
Storage
Solutions
Emerson
provides a wide variety of freestanding, fixed and mobile storage
products for
residential, commercial, healthcare and food service applications.
Our products
for the home include wall-mounted and freestanding shelving systems,
cabinet and
closet organizers, home office storage, and drawer systems and
containers,
available in wire, stainless steel and laminate. Our storage solutions
also help
commercial customers utilize space in the most efficient manner.
These solutions
include storage and display shelving, stock-picking and kitting
carts, cabinets,
totes, bins, workstations, and merchandising and inventory storage
racks.
Products provided to the healthcare industry assist in medical
response and
treatment; they include emergency and operating room carts, medication
carts,
polymer and wire shelving systems, and sterile worktables. Our
food service
equipment helps meet the storage needs of the food service and
hospitality
industries, such as restaurants and hotels. This equipment includes
polymer and
wire storage systems, busing carts, pan and tray racks, transport
carts and
workstations.
Distribution
The
principal worldwide distribution channel for the Appliance and
Tools segment is
direct sales forces. Motors and appliance components and solutions
for original
equipment manufacturers are sold almost exclusively worldwide
through direct
sales force networks. Independent distributors constitute the
next most
significant sales channel, with professional tools sold almost
exclusively
worldwide through distributors; and, to a lesser extent, independent
sales
representatives are utilized, particularly for storage solutions.
Brands
Service/trademarks
and trade names within the Appliance and Tools segment include
Emerson Appliance
Solutions, Emerson Heating Products, Emerson Motor Technologies,
Emerson
Professional Tools, Emerson Storage Solutions, ClosetMaid, Digital
Appliance
Controls, Emerson, Flo Healthcare, InSinkErator, Knaack, Lionville,
Mallory,
METRO, RIDGID, U.S. Electrical Motors and Weather Guard.
9
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 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
Emerson's
major requirements for basic raw materials include steel, copper,
cast iron,
electronics, aluminum and brass and, to a lesser extent, plastics
and other
petroleum-based chemicals. Emerson has multiple sources of supply
for each of
its major requirements and is not significantly dependent on
any one or a few
suppliers. Although recent high prices for some raw materials
have caused
pricing pressures to some of our businesses, the raw materials
and various
purchased components required for its products have generally
been available in
sufficient quantities.
PATENTS,
TRADEMARKS AND LICENSES
The
Company has a number of patents, trademarks and licenses, obtained
over a number
of years and expiring at various times. While proprietary intellectual
property
is important to the Company, management believes the loss or
expiration of any
intellectual property right would not materially impact the Company
or any of
its segments.
BACKLOG
The
estimated consolidated order backlog of the Company was $5,518
million and
$4,917 million at September 30, 2008 and 2007, respectively.
Nearly all of the
September 30, 2008 consolidated backlog amount is expected to
be shipped within
one year. The estimated backlog by business segment at September
30, 2008 and
2007 follows:
|
(dollars
in millions)
|
2007
|
2008
|
|||||
|
Process
Management
|
$
|
2,531
|
2,897
|
||||
|
Industrial
Automation
|
599
|
760
|
|||||
|
Network
Power
|
1,093
|
1,230
|
|||||
|
Climate
Technologies
|
375
|
396
|
|||||
|
Appliance
and Tools
|
319
|
235
|
|||||
|
Consolidated
Order Backlog
|
$
|
4,917
|
5,518
|
||||
10
COMPETITION
Emerson's
businesses operate in markets that are highly competitive, and
Emerson competes
on product performance, quality, service and/or price across
the industries and
markets served. A significant element of the Company's competitive
strategy is
to deliver solutions to our customers by manufacturing high quality
products at
the best relevant global cost. 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, and Emerson also competes with many
smaller companies.
The number of Emerson's competitors varies by product line, and
management
believes that Emerson has a market leadership position in many
of these product
lines.
RESEARCH
AND DEVELOPMENT
Costs
associated with Company-sponsored research and development activities
were $458
million, $397 million and $356 million in 2008, 2007 and 2006,
respectively.
ENVIRONMENT
The
Company's manufacturing locations generate waste, the treatment,
storage,
transportation and disposal of which are subject to federal,
state and/or 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.
EMPLOYEES
Emerson
and its subsidiaries had an average of approximately 140,700
employees during
2008. Management believes that the Company's employee relations
are favorable.
Some of the Company's employees are represented under collective
bargaining
agreements, but none of these agreements is considered significant.
DOMESTIC
AND FOREIGN OPERATIONS
International
sales were $13,479 million in 2008, $11,219 million in 2007 and
$9,166 million
in 2006, including U.S. exports of $1,537 million, $1,277 million
and $1,127
million in 2008, 2007 and 2006, respectively. Although there
are additional
risks attendant to foreign operations, such as possible 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 16 of Notes to Consolidated Financial Statements of
the 2008 Annual
Report, which note is hereby incorporated by reference, for further
information
with respect to foreign operations.
INTERNET
ACCESS
Emerson's
Forms 10-K, 10-Q, 8-K and all amendments to those reports are
available without
charge through Emerson's web site on the Internet as soon as
reasonably
practicable after they are electronically filed with, or furnished
to, the
Securities and Exchange Commission. They may be accessed as follows:
www.emerson.com, Investor Relations, SEC Filings. Information
on Emerson’s web
site does not constitute part of this Form 10-K.
11
The
information set forth under, “Item 1A. Risk Factors” is hereby incorporated by
reference.
Item
1A. Risk Factors
Investing
in our securities involves risks. We may amend or supplement
the risk factors
described below from time to time by other reports we file with
the SEC in the
future.
We
Operate In Businesses That Are Subject To Competitive Pressures
That Could
Affect Prices Or Demand For Our Products
Our
businesses operate in markets that are highly competitive, and
we compete on the
basis of product performance, quality, service and/or price across
the
industries and markets served. A significant element of our competitive
strategy
is to deliver solutions to our customers by manufacturing high
quality products
at the best relevant global cost. Some of our competitors have
greater sales,
assets and financial resources than our Company. Competitive
pressures could
affect prices or customer demand for our products, impacting
our profit margins
and/or resulting in a loss of market share.
Our
Operating Results Depend In Part On Continued Successful Research,
Development
And Marketing Of New And/Or Improved Products And Services, And
There Can Be No
Assurance That We Will Continue To Successfully Introduce New
Products And
Services
The
success of new and improved products and services depends on
their initial and
continued acceptance by our customers. Our businesses are affected
by varying
degrees of technological change and corresponding shifts in customer
demand,
which result in unpredictable product transitions, shortened
life cycles and
increased importance of being first to market with new products
and services. We
may experience difficulties or delays in the research, development,
production
and/or marketing of new products and services which may negatively
impact our
operating results and prevent us from recouping or realizing
a return on the
investments required to bring new products and services to market.
We
Engage In Acquisitions, And May Encounter Difficulties In Integrating
These
Businesses And Therefore We May Not Realize The Anticipated Benefits
Of The
Acquisitions
We
are a
company that, from time to time, seeks to grow through strategic
acquisitions.
In the past several years, we have made various acquisitions
and entered into
joint venture arrangements intended to complement or expand our
business, and
may continue to do so in the future. The success of these transactions
will
depend on our ability to integrate assets and personnel acquired
in these
transactions and to cooperate with our strategic partners. We
may encounter
difficulties in integrating acquisitions with our operations,
and in managing
strategic investments. Furthermore, we may not realize the degree,
or timing, of
benefits we anticipate when we first enter into a transaction.
Any of the
foregoing could adversely affect our business and results of
operations.
Access
To Funding Through The Capital Markets Is Essential To The Execution
Of Our
Business Plan And If We Are Unable To Maintain Such Access We
Could Experience A
Material Adverse Effect On Our Business And Financial Results
Our
ability to invest in our businesses, make strategic acquisitions
and refinance
maturing debt obligations requires access to the capital markets
and sufficient
bank credit lines to support short-term borrowings. If we are
unable to continue
to access the capital markets, we could experience a material
adverse effect on
our business and financial results.
12
We
Use A Variety Of Raw Materials And Components In Our Businesses,
And Significant
Shortages Or Price Increases Could Increase Our Operating Costs
And Adversely
Impact The Competitive Positions Of Our Products
Our
major
requirements for raw materials include steel, copper, cast iron,
electronics,
aluminum and brass and, to a lesser extent, plastics and other
petroleum-based
chemicals. Emerson has multiple sources of supply for each of
its major
requirements and is not significantly dependent on any one or
a few suppliers.
Significant shortages or price increases could affect the prices
our affected
businesses charge, their operating costs and the competitive
position of their
products and services, which could adversely affect our results
of
operations.
Our
Operations Depend On Production Facilities Throughout The World,
A Majority Of
Which Are Located Outside The United States And Subject To Increased
Risks Of
Disrupted Production Causing Delays In Shipments And Loss Of
Customers And
Revenue
We
manage
businesses with manufacturing facilities worldwide, a majority
of which are
located outside the United States. Serving a global customer
base requires that
we place more production in emerging markets to capitalize on
market
opportunities and maintain our best-cost position. Our international
production
facilities and operations could be disrupted by a natural disaster,
labor
strike, war, political unrest, terrorist activity or public health
concerns,
particularly in emerging countries that are not well-equipped
to handle such
occurrences.
Our
manufacturing facilities abroad also may be more susceptible
to changes in laws
and policies in host countries and economic and political upheaval
than our
domestic facilities. Any such disruption could cause delays in
shipments of
products and the loss of sales and customers, and insurance proceeds
may not
adequately compensate us.
Our
Substantial Sales Abroad Subject Us To Economic Risk As Our Results
Of
Operations May Be Adversely Affected By Foreign Currency Fluctuations
And
Changes In Local Government Regulations And Policies
We
sell,
manufacture, engineer, and purchase products in overseas markets.
A significant
portion of our sales is outside the United States, and we expect
sales from non
- U.S. markets to continue to represent a significant portion
of our total
sales. International sales and operations are subject to changes
in local
government regulations and policies, including those related
to tariffs and
trade barriers, investments, taxation, exchange controls, and
repatriation of
earnings. Changes in the relative values of currencies occur
from time to time
and could affect our operating results. While we monitor our
exchange rate
exposures and attempt to reduce this exposure through hedging
activities, this
risk could adversely affect our operating results.
Downturns
In The End Markets That We Serve May Negatively Impact Our Segment
Revenues And
Profitability
Our
segment revenues, operating results and profitability have varied
in the past
and may vary significantly from quarter to quarter in the future.
Profitability
can be negatively impacted by volatility in the end markets that
we serve.
Future downturns in any of the markets that we serve could adversely
affect our
overall sales and operating results.
We
Are Subject To Litigation And Environmental Regulations That
Could Adversely
Impact Our Operating Results
We
are,
and may in the future be, a party to a number of legal proceedings
and claims,
including those involving product liability and environmental
matters, several
of which claim, or may in the future claim, significant damages.
Given the
inherent uncertainty of litigation, we can offer no assurance
that existing
litigation or a future adverse development will not have a material
adverse
impact. We also are subject to various laws and regulations relating
to
environmental protection and the discharge of materials into
the environment,
and we could incur substantial costs as a result of the noncompliance
with or
liability for cleanup or other costs or damages under environmental
laws.
Item
1B. Unresolved Staff Comments
None.
13
Item
2. Properties
At
September 30, 2008, Emerson had approximately 255 manufacturing
locations
worldwide, of which approximately 165 were located outside the
United States,
primarily in Europe and to a lesser extent in Asia, Canada and
Latin America.
The approximate numbers of manufacturing locations by business
segment are:
Process Management, 60; Industrial Automation, 75; Network Power,
40; Climate
Technologies, 40; and Appliance and Tools, 40. The majority of
the locations are
owned, with the remainder occupied under operating or capital
leases. The
Company considers its facilities suitable and adequate for the
purposes for
which they are used.
Item
3. Legal Proceedings
The
information regarding legal proceedings set forth in Note 12
of Notes to
Consolidated Financial Statements of the 2008 Annual Report is
hereby
incorporated by reference.
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, 2008.
_____________________________________________________________
Executive
Officers of the Registrant
The
following sets forth certain information as of November 2008
with respect to
Emerson's executive officers. Fiscal Year column indicates the
first year the
executive served as an officer of the Company. These officers
have been elected
or appointed to terms which will expire February 3, 2009:
|
Name
|
Position
|
Age
|
Fiscal Year
|
|||
|
D.
N. Farr*
|
Chairman
of the Board, Chief Executive Officer and President
|
53
|
1985
|
|||
|
C.
W. Ashmore
|
Senior
Vice President - Planning and Development
|
46
|
2001
|
|||
|
W.
J. Galvin
|
Senior
Executive Vice President and Chief Financial Officer
|
62
|
1984
|
|||
|
E.
L. Monser
|
Chief
Operating Officer
|
58
|
2002
|
|||
|
C.
A. Peters
|
Senior
Executive Vice President
|
53
|
1990
|
|||
|
R.
J. Schlueter
|
Vice
President and Chief Accounting Officer
|
54
|
1992
|
|||
|
F.
L. Steeves
|
Senior
Vice President, Secretary and General Counsel
|
54
|
2007
|
*Also
chairman of the Executive Committee of the Board of Directors.
There
are
no family relationships among any of the executive officers and
directors.
14
David
N.
Farr has been Chief Executive Officer since October 2000 and
was also appointed
Chairman of the Board in September 2004 and appointed President
in November
2005. Craig W. Ashmore has been Senior Vice President - Planning
and Development
since October 2004. Prior to his current position, Mr. Ashmore
was Group Vice
President from 2003 to 2004 and Vice President - Profit Planning
from 2001 to
2003. Walter J. Galvin was appointed Senior Executive Vice President
in October
2004 and has been Chief Financial Officer since 1993. Prior to
his current
position, Mr. Galvin was Executive Vice President from February
2000 to October
2004. Edward L. Monser was appointed Chief Operating Officer
in November
2001. Charles A. Peters has been Senior Executive Vice President since
October 2000. Richard J. Schlueter has been Vice President Accounting
since 1999
and was also appointed Chief Accounting Officer in February 2003.
Frank
L.
Steeves was appointed Senior Vice President, Secretary and General
Counsel in
March 2007, prior to which he was Vice Chairman of the Milwaukee-based
law firm
of von Briesen & Roper, S.C., which has provided legal services to the
Company since 2001. Mr. Steeves joined von Briesen and Roper
as a partner in
2001, and became Vice Chairman of the firm in 2004.
PART
II
Item
5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer
Purchases of Equity Securities
The
information regarding the market for the Company's common stock,
quarterly
market price ranges and dividend payments set forth in Note
18 of Notes to
Consolidated Financial Statements of the 2008 Annual Report
is hereby
incorporated by reference. There were approximately 26,445
stockholders of
record at September 30, 2008.
Repurchases
of equity securities during the fourth quarter of 2008 are
listed in the
following table.
|
Period
|
(a) Total Number
of Shares
Purchased (000s)
|
|
(b) Average
Price Paid
per Share
|
|
(c) Total Number of
Shares Purchased
as Part of Publicly
Announced Plans or
Programs (000s)
|
|
(d) Maximum Number
of Shares That May
Yet Be Purchased
Under the Plans or
Programs (000s)
|
||||||
|
July
2008
|
2,460
|
|
$49.54
|
2,460
|
78,542
|
||||||||
|
August
2008
|
2,580
|
|
$48.03
|
2,580
|
75,962
|
||||||||
|
September
2008
|
3,570
|
|
$42.65
|
3,570
|
72,392
|
||||||||
|
Total
|
8,610
|
|
$46.23
|
8,610
|
72,392
|
||||||||
The
Company’s Board of Directors authorized the repurchase of up to 80
million
shares under the November 2001 program, as adjusted for the
Company’s December
2006 two-for-one stock split. The Board of Directors approved
a new program on
May 6, 2008, for the repurchase of up to 80 million additional
shares. The
maximum number of shares that may yet be purchased under the
2008 program was
72.4 million and no shares remain under the November 2001
program.
15
Item
6. Selected Financial Data
Years
ended September 30
(dollars
in millions, except per share amounts)
|
2004
|
2005
(a)
|
2006
|
2007
|
2008
|
||||||||||||
|
Net
sales
|
$
|
15,226
|
16,902
|
19,734
|
22,131
|
24,807
|
||||||||||
|
Earnings
from continuing operations
|
$
|
1,246
|
1,413
|
1,839
|
2,129
|
2,454
|
||||||||||
|
Earnings
from continuing operations per common share (basic)
|
$
|
1.49
|
1.70
|
2.25
|
2.68
|
3.14
|
||||||||||
|
Earnings
from continuing operations per common share (diluted)
|
$
|
1.48
|
1.69
|
2.23
|
2.65
|
3.11
|
||||||||||
|
Cash
dividends per common share
|
$
|
0.80
|
0.83
|
0.89
|
1.05
|
1.20
|
||||||||||
|
Long-term
debt
|
$
|
3,136
|
3,128
|
3,128
|
3,372
|
3,297
|
||||||||||
|
Total
assets
|
$
|
16,361
|
17,227
|
18,672
|
19,680
|
21,040
|
||||||||||
Information
presented in the selected financial data reflects the December
2006 two-for-one
stock split. The
European appliance motor and pump business for all periods
presented and the
Brooks Instrument flow meters and flow controls unit for 2008
only are
classified as discontinued operations. See Note 3 of Notes
to Consolidated
Financial Statements of the 2008 Annual Report, which note
is hereby
incorporated by reference, for information regarding the Company's
acquisition
and divestiture activities.
(a)
Fiscal
2005 includes tax expense of $63 million ($0.07 per share)
related to the
repatriation of foreign earnings under the American Jobs Creation
Act of 2004.
Item
7. Management's Discussion and Analysis of Financial Condition
and Results of
Operations
Information
appearing under “Results of Operations,” “Financial Position, Capital Resources
and Liquidity,” “Critical Accounting Policies” and the "Safe Harbor Statement"
in the 2008 Annual Report are hereby incorporated by reference.
Fiscal
2009 Outlook
Fiscal
year 2008 was a record year and Emerson is well positioned
moving into an
uncertain 2009 recessionary environment. Reported sales are
forecast to be in
the range of $23.5 billion to $25.5 billion, or negative 5
percent to positive 3
percent compared to 2008 sales of $24.8 billion. Underlying sales growth is
expected to be in the range of negative 4 percent to positive
4 percent, which
excludes an estimated 5 percent unfavorable impact of foreign
currency
translation at current exchange rates, and a favorable impact
from completed and
assumed future acquisitions of approximately 4 percent. Based on this level
of sales, the Company forecasts 2009 earnings per share in
the range of $2.80 to
$3.20. There can be no assurance when and if future acquisitions
will be
completed, and what impact future exchange rates will have.
16
Non-GAAP
Financial Measures
To
supplement Emerson’s financial information presented in accordance with
generally accepted accounting principles (GAAP), management
uses additional
measures, including non-GAAP financial measures as such term
is defined in
Regulation G under the rules of the Securities and Exchange
Commission, to
clarify and enhance understanding of past performance and prospects
for the
future. Generally, a non-GAAP financial measure is a numerical
measure of a
company’s financial performance, financial position or cash flows that
exclude
(or include) amounts that are included in (or excluded from)
the most directly
comparable measure calculated and presented in accordance with
GAAP. For
example, these financial measures may exclude the impact of
certain unique items
such as acquisitions, divestitures, one-time gains and losses
or items outside
of management’s control (e.g., foreign currency exchange rates). Management
believes that the following non-GAAP financial measures provide
investors and
analysts useful insight into Emerson’s financial position and
performance.
Underlying
sales, which exclude the impact of acquisitions and divestitures
during the
periods presented, and fluctuations in foreign currency exchange
rates, are
provided to facilitate relevant period-to-period comparisons
of sales growth by
excluding these unique items that impact the overall comparability.
Underlying
sales should be viewed in addition to, and not as an alternative
to net sales as
determined in accordance with U.S. GAAP.
Operating
profit (defined as net sales less cost of sales and selling,
general and
administrative expenses) and operating profit margin (defined
as operating
profit divided by net sales) are indicative of short-term
operational
performance and ongoing profitability. Management closely
monitors operating
profit and operating profit margin of each business to evaluate
past performance
and actions required to improve profitability. Operating
profit and operating
profit margin should be viewed in addition to, and not as
an alternative to
pretax earnings or profit margin as determined in accordance
with U.S.
GAAP.
Earnings,
earnings per share, return on equity and return on total
capital excluding
one-time gains and losses provide additional insight into
the underlying,
ongoing operating performance of the Company and facilitate
period-to-period
comparisons by excluding the earnings impact of these items.
Given the unique
nature of these items, management believes that presenting
earnings, earnings
per share, return on equity and return on total capital excluding
them is more
representative of the Company’s operational performance and may be more useful
for investors. However, these financial measures are not
intended to replace
earnings, earnings per share, return on equity or return
on total capital as
determined in accordance with U.S. GAAP.
Free
cash
flow (operating cash flow less capital expenditures) is an
indicator of the
Company’s cash generating capabilities after considering investments
in capital
assets which are necessary to maintain and enhance existing
operations.
Operating cash flow adds back non-cash depreciation expense
to earnings and
thereby does not reflect a charge for necessary capital expenditures.
Although management
believes that free cash flow is useful to both management
and investors as a
measure of the Company’s ability to generate cash, it is not intended to replace
operating cash flow as determined in accordance with U.S.
GAAP.
Overall,
while Emerson believes these non-GAAP financial measures
are useful in
evaluating the Company, this information should be considered
as supplemental in
nature and not as a substitute for or superior to the related
financial
information prepared in accordance with GAAP. Further, the
calculation of these
non-GAAP financial measures may differ from the calculation
of similarly titled
financial measures presented by other companies, and therefore
they may not be
comparable among companies.
Item
7A. Quantitative and Qualitative Disclosures about Market
Risk
Information
appearing under "Financial Instruments" in the 2008 Annual
Report is hereby
incorporated by reference.
Item
8. Financial Statements and Supplementary Data
The
consolidated financial statements of the Company and its
subsidiaries and the
report thereon of KPMG LLP in the 2008 Annual Report are
hereby incorporated by
reference.
17
Item
9. Changes in and Disagreements with Accountants on Accounting
and Financial
Disclosure
None.
Item
9A. Controls and Procedures
Emerson
maintains a system of disclosure controls and procedures
which are designed to
ensure that information required to be disclosed by the Company
in the reports
filed or submitted under the Securities Exchange Act of 1934
is recorded,
processed, summarized and reported within the time periods
specified in the
SEC's rules and forms and is accumulated and communicated
to management,
including the Company’s certifying officers, as appropriate to allow timely
decisions regarding required disclosure. Based on an evaluation
performed, the
Company's certifying officers have concluded that the disclosure
controls and
procedures were effective as of September 30, 2008, to provide
reasonable
assurance of the achievement of these objectives.
Notwithstanding
the foregoing, there can be no assurance that the Company's
disclosure controls
and procedures will detect or uncover all failures of persons
within the Company
and its consolidated subsidiaries to report material information
otherwise
required to be set forth in the Company's reports.
There
was
no change in the Company's internal control over financial
reporting during the
quarter ended September 30, 2008, that has materially affected,
or is reasonably
likely to materially affect, the Company's internal control
over financial
reporting.
Management’s
report on internal control over financial reporting, and
the related report of
the Company’s auditor, KPMG LLP, an independent registered public accounting
firm, appearing in the 2008 Annual Report are hereby incorporated
by reference.
Item
9B. Other Information
None.
PART
III
Item
10. Directors, Executive Officers and Corporate
Governance
Information
regarding nominees and directors appearing under "Nominees
and Continuing
Directors" in the Emerson Electric Co. Notice of Annual Meeting
of Stockholders
and Proxy Statement for the February 2009 annual stockholders'
meeting (the
"2009 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
2009 Proxy Statement is hereby incorporated by reference.
Information regarding
the Audit Committee and Audit Committee Financial Expert
appearing under "Board
of Directors and Committees" in the 2009 Proxy Statement
is hereby incorporated
by reference.
Emerson
has adopted a Code of Ethics that applies to the Company's
chief executive
officer, chief financial officer, chief accounting officer
and controller; has
posted such Code of Ethics on its Internet web site; and
intends to satisfy the
disclosure requirement under Item 5.05 of Form 8-K by posting
such information
on its Internet web site. Emerson has adopted Charters for
its Audit Committee,
Compensation Committee and Corporate Governance and Nominating
Committee and a
Code of Business Ethics for directors, officers and employees,
which are
available on its Internet web site and are available in print
to any shareholder
who requests them. Emerson has also adopted Corporate Governance
Principles and
Practices, which are available on its Internet web site and
are available in
print to any shareholder who requests them. The Company's
Internet web site may
be accessed as follows: www.emerson.com, Investor Relations,
Corporate
Governance.
18
Item
11. Executive Compensation
Information
appearing under “Board of Directors and Committees—Compensation Committee,”
“Board of Directors and Committees—Corporate Governance and Nominating
Committee,” “Director Compensation,” “Executive Compensation” (including, but
not limited to, the information set forth under “Compensation Discussion and
Analysis,” “Compensation Committee Report” and “Summary Compensation Table”) and
“Compensation Committee Interlocks and Insider Participation” in the 2009 Proxy
Statement is hereby incorporated by reference.
The
information contained in “Compensation Committee Report” shall not be deemed to
be “filed” with the Securities and Exchange Commission or subject to
the
liabilities of Section 18 of the Securities Exchange Act
of 1934 (the “Exchange
Act”), except to the extent that Emerson specifically incorporates
such
information into future filings, under the Securities Act
of 1933 or the
Exchange Act.
Item
12. Security Ownership of Certain Beneficial Owners and Management
and Related
Stockholder Matters
The
information regarding beneficial ownership of shares by nominees
and continuing
directors, named executive officers and by all directors
and executive officers
as a group appearing under "Stock Ownership of Directors
and Executive Officers"
in the 2009 Proxy Statement is hereby incorporated by reference.
Equity
Compensation Plan Information
The
following table sets forth aggregate information regarding
the Company’s equity
compensation plans as of September 30, 2008:
|
Number of Securities
|
||||||||||
|
Remaining Available for
|
||||||||||
|
Number of Securities
|
Weighted-Average
|
Future Issuance under
|
||||||||
|
to be Issued upon
|
Exercise Price of
|
Equity Compensation
|
||||||||
|
Exercise of
|
Outstanding
|
Plans (Excluding
|
||||||||
|
Outstanding Options,
|
Options, Warrants
|
Securities Reflected in
|
||||||||
|
Warrants and Rights
|
and Rights
|
Column (a))
|
||||||||
|
Plan Category
|
(a)
|
(b)
|
(c)
|
|||||||
|
Equity
compensation plans approved by security holders(1)
|
19,359,953
|
|
$36.31
|
27,729,440
|
||||||
|
Equity
compensation plans not approved by security holders
|
-
|
-
|
-
|
|||||||
|
Total
|
19,359,953
|
|
$36.31
|
27,729,440
|
||||||
| (1) |
Includes
the Company’s Stock Option and previously approved Incentive
Shares Plans.
Included in column (a) are 5,008,800 shares reserved
for performance share
awards (awarded in 2007), which will be distributed
primarily in shares of
common stock and partially in cash contingent upon
the Company achieving
the financial objective through 2010 and performance
of services by the
employees. As provided by the Company’s Incentive Shares Plans,
performance share awards represent a commitment
to issue such shares
without cash payment by the employee, contingent
upon achievement of the
objective and the performance of services by the
employee. The price in
column (b) represents the weighted-average exercise
price for outstanding
options. Included in column (c) are 15,958,094
shares remaining available
for award under the previously approved 2006 Incentive
Shares Plan and
410,254 shares remaining available under the previously
approved
Restricted Stock Plan for Non-Management
Directors.
|
19
Information
regarding stock option plans and incentive shares plans set
forth in Note 14 of
Notes to Consolidated Financial Statements of the 2008 Annual
Report is hereby
incorporated by reference.
Item
13. Certain Relationships and Related Transactions, and Director
Independence
Information
appearing under “Director Independence” in the 2009 Proxy Statement is hereby
incorporated by reference.
Item
14. Principal Accounting Fees and Services
Information
appearing under "Fees Paid to KPMG LLP" in the 2009 Proxy
Statement is hereby
incorporated by reference.
PART
IV
Item
15. Exhibits and Financial Statement Schedules
| A) |
Documents
filed as a part of this report:
|
| 1. |
The
consolidated financial statements of the Company
and its subsidiaries and
the report thereon of KPMG LLP in the 2008 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 2008 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, 2001, File No. 1-278, Exhibit 3(a); Termination
of Designated Shares
of Stock and Certificate of Designation, Preferences
and Rights of Series
B Junior Participating Preferred Stock, incorporated
by reference to
Emerson Electric Co. 1998 Form 10-K, File No. 1-278,
Exhibit
3(a).
|
| 3(b) |
Bylaws
of Emerson Electric Co., as amended through February
5, 2008, incorporated
by reference to Emerson Electric Co. Form 10-Q
for the quarter ended March
31, 2008, File No. 1-278, Exhibit
3.1.
|
| 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.
|
| 4(b) |
Indenture
dated as of December 10, 1998, between Emerson
Electric Co. and The Bank
of New York, Trustee, incorporated by reference
to Emerson Electric Co.
1998 Form 10-K, File No. 1-278, Exhibit
4(b).
|
20
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(c) |
Rights
Agreement dated as of November 1, 1998, between
Emerson Electric Co. and
ChaseMellon Shareholder Services, L.L.C., incorporated
by reference to
Emerson Electric Co. Form 8-A, dated October 6,
1998, File No. 1-278,
Exhibit 1.
|
| 10(a)* |
1991
Stock Option Plan, as amended, incorporated
by reference to Emerson
Electric Co. 1997 Form 10-K, File No. 1-278,
Exhibit 10(e) and Amendment
No. 1 thereto, incorporated by reference to
Emerson Electric Co. 2000 Form
10-K, File No. 1-278, Exhibit
10(c).
|
| 10(b)* |
Third
Amendment to the Emerson Electric Co. 1993 Incentive
Shares Plan, as
restated, incorporated by reference to Emerson
Electric Co. 1996 Form
10-K, File No. 1-278, Exhibit 10(g), and Fourth
Amendment thereto,
incorporated by reference to Emerson Electric Co.
2001 Form 10-K, File No.
1-278, Exhibit 10(d).
|
| 10(c)* |
Amended
and Restated Emerson Electric Co. Continuing Compensation
Plan for
Non-Management Directors, incorporated by reference
to Emerson Electric
Co. 2007 Form 10-K, File No. 1-278, Exhibit
10(c).
|
| 10(d)* |
Amended
and Restated Deferred Compensation Plan for Non-Employee
Directors and
Forms of Payment Election Form, Initial Notice
of Election and Notice of
Election Change, incorporated by reference to Emerson
Electric Co. 2007
Form 10-K, File No. 1-278, Exhibit
10(d).
|
| 10(e)* |
First
Amendment to the Emerson Electric Co. Supplemental
Executive Retirement
Plan, incorporated by reference to Emerson Electric
Co. 1999 Form 10-K,
File No. 1-278, Exhibit 10(h), and Form of Change
of Control Election,
incorporated by reference to Emerson Electric Co.
Form 8-K dated October
1, 2004, Exhibit 10.9 (applicable only with respect
to benefits vested as
of December 31, 2004).
|
| 10(f)* |
Amended
and Restated Emerson Electric Co. Pension Restoration
Plan and Forms of
Participation Award Letter, Acceptance of Award
and Benefit Election Forms
(applicable only with respect to benefits after
January 1, 2005),
incorporated by reference to Emerson Electric
Co. 2007 Form 10-K, File No.
1-278, Exhibit 10(f).
|
| 10(g)* |
Fifth
Amendment to the Supplemental Executive Savings
Investment Plan,
incorporated by reference to Emerson Electric Co.
Form 10-Q for the
quarter ended March 31, 1999, File No. 1-278, Exhibit
10(j), and Form of
Participation Agreement and Form of Annual Election,
incorporated by
reference to Emerson Electric Co. Form 8-K dated
October 1, 2004, Exhibit
10.8 (applicable only with respect to benefits
vested as of December 31,
2004).
|
| 10(h)* |
Amended
and Restated Emerson Electric Co. Savings Investment
Restoration Plan and
Forms of Participation Agreement, Annual Election
Form and Payment
Election Form (applicable only with respect to
benefits after January 1,
2005), incorporated by reference to Emerson Electric
Co. 2007 Form 10-K,
File No. 1-278, Exhibit 10(h), and First Amendment
to Emerson Electric Co.
Savings Investment Restoration Plan, incorporated
by reference to Emerson
Electric Co. Form 10-Q for the quarter ended March
31, 2008, File No.
1-278, Exhibit 10.1.
|
21
| 10(i)* |
Amended
and Restated Emerson Electric Co. Annual Incentive
Plan and Form of
Acceptance of Award, incorporated by reference
to Emerson Electric Co.
2007 Form 10-K, File No. 1-278, Exhibit
10(i).
|
| 10(j)* |
1997
Incentive Shares Plan, incorporated by reference
to Emerson Electric Co.
1997 Proxy Statement dated December 6, 1996, File
No. 1-278, Exhibit A,
and First Amendment thereto, incorporated by reference
to Emerson Electric
Co. 2001 Form 10-K, File No. 1-278, Exhibit 10(j),
Amendment for 409A Compliance, incorporated by
reference to Emerson
Electric Co. 2007 Form 10-K, File No. 1-278, Exhibit
10(j), Form of
Performance Share Award Certificate, Forms of Acceptance
of Award and
Change of Control Election, incorporated by reference
to Emerson Electric
Co. Form 8-K dated October 1, 2004, Exhibit 10.5,
and Form of Restricted
Shares Award Agreement, incorporated by reference
to Emerson Electric Co.
Form 8-K dated October 1, 2004, Exhibit
10.6.
|
| 10(k)* |
1998
Stock Option Plan, incorporated by reference to
Emerson Electric Co. 1998
Proxy Statement dated December 12, 1997, File No.
1-278, Appendix A, and
Amendment No. 1 thereto, incorporated by reference
to Emerson Electric Co.
2000 Form 10-K, File No. 1-278, Exhibit 10(l),
Form of Notice of Grant of Stock Options and Option
Agreement and Form of
Incentive Stock Option Agreement, incorporated
by reference to Emerson
Electric Co. Form 8-K dated October 1, 2004, Exhibit
10.1, and Form of
Notice of Grant of Stock Options and Option Agreement
and Form of
Nonqualified Stock Option Agreement, incorporated
by reference to Emerson
Electric Co. Form 8-K dated October 1, 2004, Exhibit
10.2.
|
| 10(l)* |
2001
Stock Option Plan, incorporated by reference to
Emerson Electric Co. 2002
Proxy Statement dated December 12, 2001, File No.
1-278, Appendix A, Form
of Notice of Grant of Stock Options and Option
Agreement and Form of
Incentive Stock Option Agreement, incorporated
by reference to Emerson
Electric Co. Form 8-K dated October 1, 2004, Exhibit
10.3, and Form of
Notice of Grant of Stock Options and Option Agreement
and Form of
Nonqualified Stock Option Agreement, incorporated
by reference to Emerson
Electric Co. Form 8-K dated October 1, 2004, Exhibit
10.4.
|
| 10(m)* |
Emerson
Electric Co. Description of Split Dollar Life Insurance
Program
Transition, incorporated by reference to Emerson
Electric Co. Form 8-K
dated August 31, 2005, Exhibit
10.1.
|
| 10(n)* |
Emerson
Electric Co. Restricted Stock Plan for Non-Management
Directors,
incorporated by reference to Emerson Electric
Co. 2005 Proxy Statement
dated December 8, 2004, Appendix B, and Form
of Award Letter under the
Emerson
Electric Co. Restricted
Stock Plan for Non-Management Directors,
incorporated by reference to
Emerson Electric Co. Form 8-K dated February
1, 2005, Exhibit
10.2.
|
| 10(o)* |
Description
of Non-Management Director Compensation, incorporated
by reference to
Emerson Electric Co. Form 10-Q for the quarter
ended March 31, 2007, File
No. 1-278, Exhibit 10.1, and Summary of Changes
to Compensation
Arrangements for Non-Management Directors, incorporated
by reference to
Emerson Electric Co. Form 10-Q for the quarter
ended June 30, 2008, File
No. 1-278, Exhibit 10.2.
|
| 10(p)* |
Description
of Named Executive Officer Compensation, incorporated
by reference to
Emerson Electric Co. Form 10-Q for the quarter
ended December 31, 2004,
Exhibit 10.1.
|
| 10(q)* |
Emerson
Electric Co. 2006 Incentive Shares Plan, incorporated
by reference to
Emerson Electric Co. 2006 Proxy Statement dated
December 16, 2005,
Appendix C, Amendment for 409A Compliance, incorporated
by reference to
Emerson Electric Co. 2007 Form 10-K, File No. 1-278,
Exhibit 10(q), Forms
of Performance Share Award Certificate, Acceptance
of Award and Restricted
Share Award Agreement, incorporated by reference
to Emerson Electric Co.
2007 Form 10-K, File No. 1-278, Exhibit 10(q),
and Amendment to Emerson
Electric Co. 2006 Incentive Shares Plan, incorporated
by reference to
Emerson Electric Co. Form 10-Q for the quarter
ended June 30, 2008, File
No. 1-278, Exhibit 10.1.
|
22
| 10(r) |
Long-Term
Credit Agreement dated as of April 28, 2006,
incorporated by reference to
Emerson Electric Co. Form 8-K dated May 2, 2006,
Exhibit
10.1.
|
| 10(s)* |
Letter
Agreement effective as of April 4, 2007, by and
between Emerson Electric
Co. and W. Wayne Withers, incorporated by reference
to Emerson Electric
Co. Form 8-K dated April 4, 2007, Exhibit
10.1.
|
| 10(t)* |
Consulting
Contract made and entered into as of April 4,
2007, by and between Emerson
Electric Co. and W. Wayne Withers, incorporated
by reference to Emerson
Electric Co. Form 8-K dated April 4, 2007, Exhibit
10.2.
|
| 12 |
Ratio
of Earnings to Fixed Charges.
|
| 13 |
Portions
of Emerson Electric Co. Annual Report to
Stockholders for the year ended
September 30, 2008, incorporated by reference
herein.
|
| 21 |
Subsidiaries
of Emerson Electric Co.
|
| 23 |
Consent
of Independent Registered Public Accounting
Firm.
|
| 24 |
Power
of Attorney.
|
| 31 |
Certifications
pursuant to Exchange Act Rule
13a-14(a).
|
| 32 |
Certifications
pursuant to Exchange Act Rule 13a-14(b) and 18
U.S.C. Section
1350.
|
*
Management contract or compensatory plan.
23
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
Executive Vice President
|
|
|
|
and
Chief Financial Officer
|
Date:
November 24, 2008
Pursuant
to the requirements of the Securities Exchange Act of 1934,
this report has been
signed below on November 24, 2008, by the following persons
on behalf of the
registrant and in the capacities indicated.
|
Signature
|
Title
|
||
|
/s/
D. N. Farr
|
Chairman
of the Board, Chief Executive Officer and President
|
||
|
D.
N. Farr
|
|||
|
/s/
W. J. Galvin
|
Senior
Executive Vice President, Chief Financial Officer
and
Director
|
||
|
W.
J. Galvin
|
|||
|
/s/
R. J. Schlueter
|
Vice
President and Chief Accounting Officer
|
||
|
R.
J. Schlueter
|
|||
|
*
|
Director
|
||
|
A.
A. Busch III
|
|||
|
*
|
Director
|
||
|
D.
C. Farrell
|
|||
|
*
|
Director
|
||
|
C.
Fernandez G.
|
|||
|
*
|
Director
|
||
|
A.
F. Golden
|
|||
|
*
|
Director
|
||
|
H.
Green
|
24
|
*
|
Director
|
|
|
R.
B. Horton
|
||
|
*
|
Director
|
|
|
W.
R. Johnson
|
||
|
*
|
Director
|
|
|
V.
R. Loucks, Jr.
|
||
|
*
|
Director
|
|
|
J.
B. Menzer
|
||
|
*
|
Director
|
|
|
C.
A. Peters
|
||
|
*
|
Director
|
|
|
J.
W. Prueher
|
||
|
*
|
Director
|
|
|
R.
L. Ridgway
|
||
|
*
|
Director
|
|
|
R.
L. Stephenson
|
|
* By
|
/s/
|
W.
J. Galvin
|
|
W.
J. Galvin
|
||
|
Attorney-in-fact
|
||
25
INDEX
TO EXHIBITS
Exhibits
are listed by numbers corresponding to the Exhibit Table
of Item 601 in
Regulation S-K.
|
Exhibit No.
|
Exhibit
|
|
|
12
|
Ratio
of Earnings to Fixed Charges
|
|
|
13
|
Portions
of Emerson Electric Co. Annual Report to Stockholders
for the year ended
September 30, 2008, incorporated by reference herein
|
|
|
21
|
Subsidiaries
of Emerson Electric Co.
|
|
|
23
|
Consent
of Independent Registered Public Accounting Firm
|
|
|
24
|
Power
of Attorney
|
|
|
31
|
Certifications
pursuant to Exchange Act Rule 13a - 14(a)
|
|
|
32
|
Certifications
pursuant to Exchange Act Rule 13a - 14(b) and 18
U.S.C. Section
1350
|
*Management
contract or compensatory plan.
See
Item 15(A) 3. for a list of exhibits incorporated by reference.
26