Emerson Electric Co. Reports Record Results For Second Quarter; EPS Up 11 Percent.Business Editors ST. LOUIS--(BUSINESS WIRE)--May 2, 2000 Underlying Sales Growth Of 8 Percent Is Highest In Over 3 Years, Driven By Strong Demand In Electronics And Telecom Sales, earnings and earnings per share of Emerson Electric Co. (NYSE NYSE See: New York Stock Exchange :EMR (ElectroMagnetic Radiation) The emanation of energy from everything in the universe. Although the EMR from electrical and electronic devices is typically measured for practical, every-day situations, every object, including humans, emanates energy. ) for the second quarter and first six months of fiscal 2000 were the highest for any second quarter and first half in the Company's history, Charles F. Knight Charles F. Knight is chairman emeritus of Emerson Electric Co., a manufacturer of electrical, electromechanical and electronic products and systems. He served as chairman of Emerson Electric from 1974 to 2004 and as chief executive officer from 1973 to 2000. , chairman and chief executive officer, announced today. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the three months ended March 31, 2000, were $3,894,634,000, an increase of 9 percent over net sales of $3,588,682,000 for the comparable 1999 period. Underlying sales, which excludes the impacts of currency translation, acquisitions and divestitures, grew 8 percent. Net earnings for the second quarter of fiscal 2000 were $352,791,000, an increase of 8 percent over net earnings of $325,922,000 for the second quarter of fiscal 1999. Earnings per share for the three months ended March 31, 2000, were $0.82 per share, an increase of 11 percent over earnings per share of $0.74 for the same period a year ago. Earnings per share excluding goodwill amortization for the quarter increased to $0.90, up 11 percent over $0.81 for the second quarter of 1999. Emerson's reported sales for the first six months of fiscal 2000 were $7,437,975,000, an increase of 6 percent over sales of $7,015,424,000 in the 1999 period. Net earnings for the first half were $677,667,000, an increase of 8 percent compared with $628,279,000 for the first half of 1999. Earnings per share for the first six months of 2000 were $1.57, an increase of 10 percent over the $1.43 reported a year ago. Earnings per share excluding goodwill amortization for the period were $1.72, an increase of 10 percent over $1.56 for the first half of fiscal 1999. Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. for the first half of the year was $689,634,000, an increase of 7 percent over operating cash flow of $646,274,000 for the first half of 1999. This performance was achieved despite the investment of additional working capital to support underlying sales growth. In announcing the results, Knight said, "We are extremely pleased with the record second quarter, which included a strong increase in earnings per share. More important for the future, the Company's underlying sales grew 8 percent, the highest level we have achieved in over three years. The success of our major internal growth initiatives and rapid recent expansion of our electronics and telecom business are evident now that our international and capital markets, which have been soft for some time, are improving." Discussing the impact of Emerson's accelerated repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. of the Company into higher growth areas, Knight said, "We recently completed two additional faster growth telecom-focused acquisitions, Jordan Telecom Jordan Telecom is a privatised company, now belonging to the Jordan Telecom Group (JTG). History The history of Telecommunications in Jordan can be traced back to early 1921. and the Ericsson Er·ics·son , John 1803-1889. American engineer and inventor who built the first ironclad warship, the Monitor (1862), which engaged the Confederate Merrimack in a famous naval battle of the Civil War (March 9, 1862). Energy Systems business, which total more than $1 billion in annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. sales. These acquisitions, along with the recently announced divestitures of three slower growth operations, Vermont Vermont (vərmŏnt`) [Fr.,=green mountain], New England state of the NE United States. It is bordered by New Hampshire, across the Connecticut R. American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of , BI Technologies and Krautkramer, which total nearly $600 million in sales, increased our pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma underlying growth to approximately 9 percent. This provides another indication of the impact of our repositioning strategy." Operating Highlights Regarding the performance of Emerson's businesses, Knight said, "Sales in the electronics and telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. business increased dramatically, driven by very strong underlying growth and the recent acquisition of Jordan Jordan, country, Asia Jordan, officially Hashemite Kingdom of Jordan, kingdom (2005 est. pop. 5,760,000), 35,637 sq mi (92,300 sq km), SW Asia. It borders on Israel and the West Bank in the west, on Syria in the north, on Iraq in the northeast, and on Saudi Industries' Telecommunication telecommunication Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. Products business. Continued high worldwide demand for our reliable power and networking products is driving this growth. We have continued to accelerate Emerson's repositioning into this market, and on April 3, Emerson closed the Ericsson Energy Systems acquisition. Renamed Emerson Energy Systems, this business adds another $500 million of annualized sales to the electronics segment, making this one of Emerson's largest business units with sales of over $3.5 billion, and a key driver of Emerson's future growth. "The heating, ventilating ventilating Natural or mechanically induced movement of fresh air into or through an enclosed space. The hazards of poor ventilation were not clearly understood until the early 20th century. Expired air may be laden with odors, heat, gases, or dust. and air conditioning air conditioning, mechanical process for controlling the humidity, temperature, cleanliness, and circulation of air in buildings and rooms. Indoor air is conditioned and regulated to maintain the temperature-humidity ratio that is most comfortable and healthful. business continued to achieve solid sales growth, driven by continuing overall improvement in international markets. Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , Asia and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. each achieved very strong growth. Sales of our Copeland Copeland may refer to: Places
"The process business experienced a modest increase in sales, reflecting the continued weakness in capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. by our customers and the contribution of recent acquisitions. Despite the challenging end markets, demand for Fisher-Rosemount's PlantWeb(TM) products and systems continued to increase, with the total number of PlantWeb projects reaching 895 during March. In January January: see month. , our innovative www.testdriveplantweb.com Web site was awarded the prestigious Web Marketing Association "WebAward," for its outstanding design, content and ease of use. "Also in January, DeltaV, the control element of PlantWeb, was again recognized by a CONTROL magazine customer survey as a leading full-scale distributed control system A distributed control system (DCS) refers to a control system usually of a manufacturing system, process or any kind of dynamic system, in which the controller elements are not central in location (like the brain) but are distributed throughout the system with each component . Across all categories in the survey, Emerson's process group received 18 first-place awards for product leadership, more than the three next competitors combined. This product and systems leadership, along with the increasing level of intelligence that we are designing into our products, is playing an important role in positioning Emerson as a full solutions and services provider to our customers. To accelerate growth in this area, we recently announced the consolidation of Emerson's 2,000 process and industrial service professionals into one organization, Emerson Performance Solutions. The Performance Solutions organization acts as a single point of contact for Emerson's capabilities, merging our Industry Centers of Excellence with an exceptionally broad offering of performance-related services. "Industrial automation experienced a strong sales increase, driven by the continued improvement in capital goods Capital Goods Any goods used by an organization to produce other goods. Notes: Examples of capital goods include office buildings, equipment, and machinery. See also: Capital Expenditure, Disinvestment Capital goods markets and the recent Kato and Magnetek alternator alternator: see generator. alternator Source of direct electric current in modern vehicles for ignition, lights, fans, and other uses. The electric power is generated by an alternator mechanically coupled to the engine, with a rotor field coil acquisitions. All geographic regions achieved underlying sales increases when excluding the impact of currency exchange, reflecting the global nature of the market improvement. During the quarter, we announced our U.S. Electrical Motors business is entering into a joint venture agreement with TECO (Text Editor and COrrector) A text editor written in 1963 by Dan Murphy at MIT for editing paper tape on a Digital PDP-1 computer (it was originally called "Tape Editor and Corrector"). Electric and Machinery Co. of Taiwan. This partnership will create significant operational synergies for the business, and also provide a valuable entry point into the growing Asia motor markets. Also during the quarter, we announced an agreement to sell our Krautkramer non-destructive testing business to Agfa-Gevaert of Belgium. Agfa's strategic focus on testing will provide significant new growth opportunities for this business. "The appliance A stand-alone hardware device or software environment dedicated to a specific task. See hardware appliance and software appliance. and tools business achieved solid increases in underlying and reported sales, benefiting from strong demand in the tools portion of this segment. All tools operations, with the exception of the Vermont American joint venture, realized strong increases, and our partnership with Home Depot The Home Depot (NYSE: HD) is an American retailer of home improvement and construction products and services. Headquartered in Vinings, just outside Atlanta in unincorporated Cobb County, Georgia, Home Depot employs more than 355,000 people and operates 2,164 big-box for RIDGID brand products continued to flourish. We have announced that we are divesting our interest in the Vermont American venture to our partner, Robert Bosch GmbH Robert Bosch GmbH [1] is a German corporation which was started in 1886 by Robert Bosch in Stuttgart, Germany. [2] Bosch businesses include:
Financial Highlights "Emerson finished the quarter in a strong financial position," Knight continued. "Solid underlying profit improvement and the rapid integration of recent acquisitions enabled the Company to improve consolidated operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: by 0.2 points. Our focus on reducing materials costs, particularly through a companywide Intranet-based consolidation of our purchases and other e-business activities, continues to drive improvement. "Net debt to net capital was approximately 42 percent at the end of the quarter, with interest coverage at 9.6 times for the first half. We are very comfortable with this level of debt, and have historically increased our borrowing levels for the right acquisition opportunities. Because of the amount of working capital required to support our significant acceleration of sales in the quarter, operating cash flow increased at a slower pace than earnings. However, on an efficiency basis, our inventory turnover and days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). performances continued to improve, and our program to free up $1 billion in operating capital Noun 1. operating capital - capital available for the operations of a firm (e.g. manufacturing or transportation) as distinct from financial transactions and long-term improvements capital, working capital - assets available for use in the production of further assets is on target. A key driver of this improvement has been the implementation of lean manufacturing Lean manufacturing is the production of goods using less of everything compared to mass production: less human effort, less manufacturing space, less investment in tools, and less engineering time to develop a new product. techniques in our factories, with the goal to increase inventory turnover by approximately 50 percent over current levels. "During the quarter, we continued to execute our stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program, purchasing 4.5 million shares. We will modulate To insert a data signal into a carrier wave or direct current. See modulation. repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. as needed as needed prn. See prn order. to support acquisition activity." Outlook Discussing the remainder of fiscal 2000, Knight said, "The second quarter's underlying sales results exceeded our expectations, due primarily to strong demand for our electronics products. Our optimism is somewhat tempered by the slower than expected recovery of the process automation market and the continued devaluation devaluation, decreasing the value of one nation's currency relative to gold or the currencies of other nations. It is usually undertaken as a means of correcting a deficit in the balance of payments. of the euro. Nevertheless, we remain comfortable that fiscal 2000 is on track to meet our earlier expectations, and be another record year for Emerson." Statements in this release 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, as set forth in the Company's SEC filings.
EMERSON ELECTRIC CO. AND SUBSIDIARIES
CONSOLIDATED OPERATING RESULTS
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
Quarter Ended March 31, Percent
2000 1999 Increase
Net sales $3,894.7 $3,588.7 8.5%
Less: Costs and expenses
Cost of sales 2,514.3 2,309.8
SG&A expenses 743.3 698.7
Interest expense 69.0 44.8
Other deductions, net 29.5 31.1
Income before income taxes 538.6 504.3 6.8%
Income taxes 185.8 178.4
Net earnings $ 352.8 $ 325.9 8.2%
Basic earnings per common share $0.83 $0.75 10.7%
Diluted earnings per common share $0.82 $0.74 10.8%
Diluted earnings per common share,
excluding goodwill amortization $0.90 $0.81 11.1%
Six Months March 31, Percent
Ended 1999 Increase
2000
Net sales $7,438.0 $7,015.4 6.0%
Less: Costs and expenses
Cost of sales 4,803.1 4,521.4
SG&A expenses 1,445.2 1,390.1
Interest expense 121.0 89.7
Other deductions, net 34.1 37.5
Income before income taxes 1,034.6 976.7 5.9%
Income taxes 356.9 348.4
Net earnings $ 677.7 $ 628.3 7.9%
Basic earnings per common share $1.58 $1.44 9.7%
Diluted earnings per common share $1.57 $1.43 9.8%
Diluted earnings per common share,
excluding goodwill amortization $1.72 $1.56 10.3%
EMERSON ELECTRIC CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
March 31,
2000 1999
Assets
Cash and equivalents $ 373.4 $ 305.6
Receivables, net 2,647.3 2,566.1
Inventories 2,023.6 1,926.2
Other current assets 436.4 392.3
Total current assets 5,480.7 5,190.2
Property, plant & equipment, net 3,237.2 3,048.2
Goodwill 5,090.6 4,004.1
Other 1,134.1 1,013.3
$14,942.6 $13,255.8
Liabilities and Stockholders' Equity
Short-term borrowings and current
maturities of long-term debt $3,382.2 $2,046.0
Accounts payable 1,001.1 872.3
Accrued expenses 1,233.2 1,242.9
Income taxes 245.8 229.5
Total current liabilities 5,862.3 4,390.7
Long-term debt 1,444.5 1,286.3
Other liabilities 1,505.8 1,631.7
Stockholders' equity 6,130.0 5,947.1
$14,942.6 $13,255.8
EMERSON ELECTRIC CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
Six Months Ended March 31,
2000 1999
Operating Activities
Net earnings $ 677.7 $ 628.3
Depreciation and amortization 335.6 317.2
Changes in operating working capital (277.9) (263.6)
Other (45.8) (35.6)
Net cash provided by operating activities 689.6 646.3
Investing Activities
Capital expenditures (297.4) (267.0)
Purchases of businesses, net of cash and
equivalents acquired (1,165.3) (536.5)
Other, net 31.5 (27.3)
Net cash used in investing activities (1,431.2) (830.8)
Financing Activities
Net increase in short-term borrowings 1,466.8 570.7
Proceeds from long-term debt 106.8 426.6
Principal payments on long-term debt (16.7) (216.0)
Dividends paid (307.9) (284.1)
Net purchases of treasury stock (391.8) (216.6)
Net cash (used in) provided by financing
activities 857.2 280.6
Effect of exchange rate changes on cash and
equivalents (8.3) (.2)
Increase (decrease) in cash and equivalents 107.3 95.9
Beginning cash and equivalents 266.1 209.7
Ending cash and equivalents $ 373.4 $ 305.6
EMERSON ELECTRIC CO. AND SUBSIDIARIES
SEGMENT SALES AND PROFITS
(DOLLARS IN MILLIONS)
Quarter Ended March 31,
2000 1999
Sales
Process Control $ 730.4 $ 722.4
Industrial Automation 889.8 830.7
Electronics and Telecommunications 729.9 454.3
Heating, Ventilating and Air Conditioning 670.8 649.9
Appliance and Tools 970.3 903.1
3,991.2 3,560.4
Divested businesses --- 125.8
Eliminations (96.5) (97.5)
Total Emerson $3,894.7 $3,588.7
Quarter Ended March 31,
2000 1999
Earnings
Process Control $ 55.9 $ 74.0
Industrial Automation 119.9 111.8
Electronics and Telecommunications 97.3 42.9
Heating, Ventilating and Air Conditioning 106.7 101.1
Appliance and Tools 157.7 145.8
537.5 475.6
Divested businesses --- 9.1
Interest, corporate and other 1.1 19.6
Income before income taxes $ 538.6 $ 504.3
EMERSON ELECTRIC CO. AND SUBSIDIARIES
SEGMENT SALES AND PROFITS
(DOLLARS IN MILLIONS)
Six Months Ended March 31,
2000 1999
Sales
Process Control $1,442.7 $1,356.1
Industrial Automation 1,748.7 1,678.4
Electronics and Telecommunications 1,313.4 940.5
Heating, Ventilating and Air Conditioning 1,211.7 1,175.1
Appliance and Tools 1,880.8 1,777.9
7,597.3 6,928.0
Divested businesses 24.5 277.1
Eliminations (183.8) (189.7)
Total Emerson $7,438.0 $7,015.4
Six Months Ended March 31,
2000 1999
Earnings
Process Control $ 112.2 $ 144.0
Industrial Automation 231.2 221.1
Electronics and Telecommunications 169.0 85.1
Heating, Ventilating and Air Conditioning 185.7 175.8
Appliance and Tools 304.6 288.2
1,002.7 914.2
Divested businesses 0.4 18.2
Interest, corporate and other 31.5 44.3
Income before income taxes $1,034.6 $ 976.7
SOURCE: Emerson Electric Co. |
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