Emerson Electric Co. Reports Record Results for Fourth Quarter and Fiscal 1999.ST. LOUIS--(BUSINESS WIRE)--Nov. 2, 1999-- 42nd Consecutive Year of Increased Earnings and Earnings Per Share; 43rd Consecutive Year of Increased Dividends 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 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. ), announced today that the company achieved record earnings per share, net earnings, and sales for the fourth quarter and fiscal year 1999. This marks the 42nd consecutive year of increased earnings and earnings per share, and the 43rd consecutive year of increased cash dividends, a record unmatched by any other publicly traded company publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. based in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Earnings per share for the three months ended September September: see month. 30, 1999, were $0.78 per share, an increase of 10 percent over earnings per share of $0.71 for the same period a year ago. Net earnings for the fourth quarter of fiscal 1999 were $340,231,000, versus $313,913,000 for the fourth quarter of fiscal 1998. 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 September 30, 1999, were $3,620,199,000, an increase of 6 percent over net sales of $3,428,121,000 for the comparable 1998 period. Emerson's earnings per share for fiscal 1999 were $3.00, an increase of 8 percent over the $2.77 reported a year ago. Net earnings for the year were $1,313,612,000, compared with $1,228,616,000 for the prior year. Net sales for the twelve-month period were $14,269,549,000, an increase of 6 percent over sales of $13,447,203,000 in 1998. Excluding divestitures, revenues increased 8 percent. 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 year was $1,810,528,000, an increase of 10 percent over $1,651,573,000 for the same period a year ago. In announcing the results, Mr. Knight said, "We are pleased to deliver another record year to our stockholders. Despite challenges in the industrial automation market and international areas of some businesses, we achieved solid increases in sales ann's market space and competitiveness, along wieliminated soon. Should this occur, we anticings per share, earnings per share excludinannual total return of 19 percent. -- "On anurn on total capital increased 0.4 points. After the impact of recent acquisitions, our consolida in 1999 that contributed to the year's profitability, and that raised the bar on Emerson's ability to generate continued efficiencies. For example, we created a procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. organization based in Asia-Pacific The term Asia-Pacific generally applies to littoral East Asia, Southeast Asia and Australasia near the Pacific Ocean, plus the states in the ocean itself (Oceania). to identify and implement savings opportunities associated with sourcing materials from this region. We are also implementing a new Material Information Network, which will allow us to more easily aggregate our materials purchases across divisions for maximum volume leverage. -- "In 1999, we also embarked on a major program to free up $1 billion of 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 , primarily through the introduction 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. into our factories. We now have 70 of our manufacturing facilities in various stages of implementation, and early results are encouraging." Operating Highlights Regarding the 1999 results, Mr. Knight said, "We are excited by the progress we are making on new initiatives, including PlantWeb, telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. and distributed power generation. Across the company, new products continued to increase as a percentage of sales, reaching our previous goal of 35 percent. Our engineering and development spending remains among the highest of our peers, and we are confident of reaching our revised new products target of 40 percent within five years." Discussing individual businesses, Mr. Knight said, "We have expanded the level of our financial reporting to reflect our five key segments: Process Control; 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. ; Electronics and Communications; Industrial Automation; and Appliance A stand-alone hardware device or software environment dedicated to a specific task. See hardware appliance and software appliance. and Tools. This increased visibility will help our investors to better understand the drivers and dynamics of the company's performance. "The Process Control business achieved a solid sales increase, driven by the strong growth in our PlantWeb (www.testdriveplantweb.com) initiative, and the Westinghouse Process Control (WPC WPC (in Britain) woman police constable WPC (Brit) n abbr (= woman police constable) → Polizistin f WPC n abbr (BRIT ) and Daniel Daniel, book of the Bible Daniel, book of the Bible. It combines "court" tales, perhaps originating from the 6th cent. B.C., and a series of apocalyptic visions arising from the time of the Maccabean emergency (167–164 B.C. Industries acquisitions. PlantWeb, a revolutionary process control architecture combining our DeltaV For other uses, see Delta-v (disambiguation). The DeltaV digital process control system and distributed control system is widely used in many industries around the world. control system with intelligent Fieldbus (1) A control network used in process control and industrial automation. Fieldbuses are bi-directional, digital serial networks that offer services at layers 1 and 2 of the OSI model (physical and data link). Some fieldbuses offer services at layer 7 as well. devices, is enabling customers to realize savings that have never been possible with the traditional 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 solutions. PlantWeb is now capable of addressing the entire market for process control needs, and customers are quickly embracing this technology. As of September, we have won 460 contracts for PlantWeb, versus 83 at the end of January January: see month. . Major customers in all industries, including AstraZeneca and Bayer in pharmaceuticals and Mobil and Shell in oil and gas, are choosing PlantWeb. "WPC has enabled Emerson to establish a strong presence in control systems for the power, water and wastewate synergies as these organizations are integrated. These acquisitions, along with others in the pulp and paper and oil and gas industries, continue to strengthen our ability to provide customized solutions to our customers. "Underlying sales of the Heating, Ventilating and Aisport refrigeration refrigeration, process for drawing heat from substances to lower their temperature, often for purposes of preservation. Refrigeration in its modern, portable form also depends on insulating materials that are thin yet effective. , microturbines and other min early fiscal 2000, and together with our Thai. Our power protection and environmental equipment, which play a key role in ensuring that the expanding computer data center and telecommunications infrastructure remain operational, is experiencing rapid growth, as is our service business that monitors and maintains this equipment. We also benefited from a significant recovery in the market for power supply products, driven by recovery in Asia and robust growth in the computing computing - computer and telecommunications sectors. Our Astec division is a global leader in this area, and we are excited about the opportunities that can be pursued now that this operation is wholly owned. "Over the past couple of years, we have utilized internal growth and acquisitions to establish a strong presence in the telecommunications marketplace. The acquisitions of Nortel's Advanced Power Systems operations, Hiross environmental systems in Europe, and the outstanding equity in Astec all supported this effort. We are now taking this initiative to the next level by creating a new organization to bundle our product offerings and interact with customers as a single Emerson entity. Our total capability to provide a complete power, environmental and service solution to customers will further differentiate Emerson in this marketplace. "Despite widespread softness in our end markets, the industrial automation segment realized a small increase in sales due to the contribution of acquisitions. This increase does not reflect the loss of sales associated with the F.G. Wilson divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). . The global 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. , largely due to weak oil pricing earlier this year, has had a substantial impact on this business. "One area of this business that did realize strong sales growth was our Leroy-Somer generator generator, in electricity, machine used to change mechanical energy into electrical energy. It operates on the principle of electromagnetic induction, discovered (1831) by Michael Faraday. products, which serve the distributed power generation market. Over the past year, we completed a series of agreements that strengthened our position as a leader in electrical components for this emerging market, including acquiring the generator operations of both Caterpillar caterpillar (kăt`əpĭl'ər, kăt`ər–), common name for the larva of a moth or butterfly. Caterpillars have distinct heads and are segmented and wormlike. and MagneTek. We continue to view distributed power generation as a key growth opportunity for Emerson. "Underlying sales of the appliance and tools segment grew slightly, with results varying by geography and product area. In the United States, strong construction activity drove growth in several consumer- related areas. During 1999, we also made substantial gains in home centers, such as 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 and Lowe's, which are experiencing dramatic growth. We now sell over $400 million in product through home centers, an increase of nearly 60 percent over the prior year. European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. sales declined due to weakness in appliance products. "Earlier this year, we contributed the Louisville Ladder Louisville Ladder is one of the largest American manufacturers of ladders. Founded in 1946 and headquartered in Louisville, Kentucky, Louisville Ladder is owned by Verzatec and is the result of the gradual merger several ladder manufacturers — Louisville, Davidson and operations into a joint venture with Grupo Imsa SA of Mexico. Louisville Ladder's strength in the industrial markets complements Grupo Imsa's strength in the residential and commercial markets, creating significant cost and distribution synergies for both partners." Organization Commenting on organization activities during the year, Mr. Knight said, "We took a numberation of senior management, three seasoned Emas promoted to senior executive vice president aiscussing the outlook for next year, Mr. Knight said, "We are confident that the higher oil prices and receending. Sales from our growth initiatives, inatements in this release that are not strictly hogical factors, among others, as set forth in the company's SEC filings. -0-
EMERSON ELECTRIC CO. AND SUBSIDIARIES
CONSOLIDATED OPERATINcome before income taxes
510.0 999 1998 Increase
Net sales $14,269.5 $13,447.2 6.1%
Less: Costs and expenses
Cost of sales 9,193.8 8,595.6
SG&A expenses 2,770.2 2,676.7
Interest expense 189.7 151.7
Other deductions, net 94.9 99.7
Income before income taxes 2,020.9 1,923.5 5.1%
Income taxes 707.3 694.9
Net earnings $1,313.6 $1,228.6 6.9%
Basic earnings per common share $3.03 $2.80 8.2%
Diluted earnings per common share
$3.00 $2.77 8.3%
EMERSON ELECTRIC CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
September 30,
1999 1998
Assets
Cash and equivalents $ 266.1 $ 209.7
Receivables, net 2,516.3 2,416.1
Inventories 1,921.1 1,996.5
Other current assets 420.9 379.0
Total current assets 5,124.4 5,001.3
Property, plant & equipment, net 3,154.4 3,011.6
Excess of cost over net assets of
purchased businesses 4,263.0 3,702.7
Other 1,081.7 944.2
$13,623.5 $12,659.8
Liabilities and Stockholders' Equity
Short-term borrowings and current
maturities of long-term debt $ 1,953.7 $ 1,524.4
Accounts payable 1,068.8 1,036.7
Accrued expenses 1,304.8 1,252.7
Income taxes 263.1 207.9
Total current liabilities 4,590.4 4,021.7
Long-term debt 1,317.1 1,056.6
Other liabilities 1,535.5 1,778.2
Stockholders' equity 6,180.5 5,803.3
$13,623.5 $12,659.8
EMERSON ELECTRIC CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
Fiscal Year Ended September 30,
1999 1998
Operating Activities
Net earnings $ 1,313.6 $ 1,228.6
Depreciation and amortization 637.5 562.5
Changes in operating working capital 35.7 (81.0)
Divestitures, other (176.3) (58.5)
Net cash provided by operating
Activities 1,810.5 1,651.6
Investing Activities
Capital expenditures (591.6) (602.6)
Purchases of businesses, net of cash
and equivalents acquired (1,202.0) (572.9)
Other, net 215.5 76.2
Net cash used in investing activities (1,578.1) (1,099.3)
Financing Activities
Net increase in short-term borrowings 503.5 145.4
Proceeds from long-term debt 470.9 452.0
Principal payments on long-term debt (257.0) (132.5)
Dividends paid (566.4) (521.0)
Net purchases of treasury stock (323.7) (499.4)
Net cash used in financing activities (172.7) (555.5)
Effect of exchange rate changes on
cash and equivalents (3.3) (8.2)
Increase (decrease) in cash and equivalents 56.4 (11.4)
Beginning cash and equivalents 209.7 221.1
Ending cash and equivalents $ 266.1 $ 209.7
EMERSON ELECTRIC CO. AND SUBSIDIARIES
SEGMENT SALES
(DOLLARS IN MILLIONS)
Fiscal Year Ended September 30,
1999 1998
Sales
Process Control $ 2,878.3 $ 2,683.9
Industrial Automation 3,380.4 3,345.8
Electronics and Communications 2,135.5 1,617.0
Heating, Ventilating and Air
Conditioning 2,385.1 2,149.3
Appliance and Tools 3,532.7 3,440.3
Divestitures, Eliminations (42.5) 210.9
Total Emerson $ 14,269.5 $ 13,447.2
SOURCE: Emerson Electric Co.
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