Emerson Reports Third-Quarter Sales of $3.6 Billion and Earnings Per Share of $0.85.Business Editors ST. LOUIS--(BUSINESS WIRE)--Aug. 5, 2003 Emerson (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. ): -- Net Earnings of $360 Million, up 28 Percent from Prior-Year Period -- Net Gain of $82 Million from Discontinued Operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. -- Reported Sales up Slightly from Favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. Currency -- $275 Million Voluntary Pension Contribution Made During Quarter -- Cash Flow on Track with Yearly Targets Emerson (NYSE: EMR) announced that 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 third quarter ended June June: see month. 30, 2003, were $3,573 million, a slight increase over net sales of $3,550 million for the third quarter ended June 30, 2002. Net earnings were $360 million and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of were $0.85 for the three months ended June 30, 2003, compared to net earnings and earnings per share of $281 million and $0.67, respectively, for the three months ended June 30, 2002. The increase in net earnings for the third quarter reflects the $82 million, or $0.19 per share, net gain from discontinued operations related to the sale 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 stock, including its Dura-Line operations. Income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the third quarter of 2003 was $0.66 per share, compared to $0.68 per share for the third quarter of 2002, reflecting lower gains from divestitures and other items. Third-quarter 2003 sales increases in 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. and industrial automation businesses were largely offset by declines in the electronics and telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. and appliance A stand-alone hardware device or software environment dedicated to a specific task. See hardware appliance and software appliance. and tools businesses. Sales reflect a 5-percentage point favorable currency impact and a less than 1-percentage point negative impact from divestitures, net of acquisitions. Underlying sales, which are adjusted to remove the impact of exchange rates, acquisitions and divestitures, for the third quarter decreased almost 4 percent, reflecting declines 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. 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. , partially offset by a strong increase in Asia and a modest increase in 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). compared to the prior year.
"Demand in the United States was down significantly during the quarter in many of the markets we serve, which adversely affects our overall margins," Chief Executive Officer David N. Farr FARR Find and Run Robot FARR Friedreich Ataxia with Retained Reflexes FARR Forward Area Alerting Radar Receiver FARR Focused Area Risk Reduction (Air Force) FARR Forward Area Refueling and Rearming said. "I am pleased that even with underlying sales down, our focus on cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. , restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). , and key new products allowed us to improve our segment earnings in the third quarter versus the prior year period. "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 third quarter of 2003 was $210 million and free cash flow (operating cash flow minus capital expenditures) was $128 million. Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. operating cash flow was $891 million versus $1,178 million in the prior-year period, and free cash flow decreased to $678 million from $927 million, reflecting a $130 million higher pension contribution made during the current quarter and changes in working capital. "Emerson's commitment to fund its employee pension plans was demonstrated during the quarter by the voluntary contribution of $275 million to fully fund the primary plan, so that the fair value of plan assets exceeds the accumulated benefit obligation Accumulated Benefit Obligation (ABO) An approximate measure of the liability of a pension plan in the event of a termination at the date the calculation is performed. Related: Projected benefit obligation. (ABO ABO See: Accumulated Benefit Obligation ). Over the past three years Emerson has contributed more than $600 million to the pension plan, strengthening its financial position. The level of future funding needed for the pension plans should be significantly less over the next several years. "We continued to deliver high levels of operating cash flow and free cash flow during the quarter. Our cash flow continues to be on track with our full-year targets, but will be slightly affected by the higher incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. pension contribution made during the quarter. We continue to improve our trade working capital performance, and our 'days in the cash cycle' performance measurement improved to 86 days in the third quarter of 2003 from 99 days in the prior-year period. Additionally, Emerson continues to pay down debt, driving the ratio of net debt to net capital to 37.8 percent from 44.5 percent, a reduction in net debt of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $600 million during the past year. "Project activity has been strong, and we continue to strengthen our lead over the competition through our technology investment and by expanding our worldwide position in services and solutions, sales and marketing, engineering and development, and manufacturing. 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. continues to be weak, but there are signs of sequential One after the other in some consecutive order such as by name or number. improvement in some of the end markets that we serve. Underlying orders for the trailing three months were down slightly, but did turn positive for the month of June. We will continue to pursue restructuring initiatives until the current economic environment strengthens, and maintain our intense focus on costs." Operating Highlights Heating, ventilating and air conditioning business sales increased almost 6 percent to $733 million, compared to $693 million in the third quarter in the prior year, driven by continued penetration The successful unauthorized breach of a security perimeter. See penetration test. gains, market growth and a 3-percentage point favorable impact from currency. A 3 percent increase in third quarter underlying sales (excluding acquisitions, divestitures and currency) reflects strong growth in Latin America, Asia and the European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. commercial market, and slight growth in the United States. Heating, ventilating and air conditioning earnings before interest and taxes In financial and business accounting, earnings before interest and taxes (EBIT) is a measure of a firm's profitability that excludes interest and income tax expenses.[1] EBIT = Operating Revenue – Operating Expenses + Non-operating Income increased 2 percent compared to the prior year primarily due to higher sales. The combination of new wins, market dynamics, and higher efficiency regulations is driving long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. scroll To continuously move forward, backward or sideways through the text and images on screen or within a window. Scrolling implies continuous and smooth movement, a line, character or pixel at a time, as if the data were on a paper scroll being rolled behind the screen. See auto scroll. technology penetration and growth. Emerson Climate Technologies is uniquely positioned to benefit from these trends with unmatched global engineering and manufacturing capability as well as the broadest offering of integrated solutions in the industry. This year, four major residential air-conditioning air-conditioning Control of temperature, humidity, purity, and motion of air in an enclosed space, independent of outside conditions. In a self-contained air-conditioning unit, air is heated in a boiler unit or cooled by being blown across a refrigerant-filled coil and then suppliers in the United States have launched Emerson Climate Technologies UltraTech(TM) Home Series products that integrate best-in-class See best-of-class. technology and performance, driving Emerson's market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" higher. Process control sales of $850 million in the third quarter of 2003 were in line with sales of $851 million for the same period a year ago. Sales include a positive impact from currency of 6 percentage points, which was partially offset by a 3-percentage point negative impact from the 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. Valve valve, device for controlling the flow of fluids (liquids and gases). Valves vary in construction and size depending upon their function. Some are classified according to their method of operation or design, e.g. and Intellution divestitures. Underlying sales declined 3 percent due to weakness in the United States and Latin America, partially offset by strong growth in Asia and solid growth in Europe. Process control continued its market penetration and geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. expansion despite the ongoing weakness in the U.S. market. Third-quarter earnings in the process control business of $94 million were down 3 percent compared to $97 million in the prior year, reflecting higher costs for the rationalization rationalization, in psychology: see defense mechanism. of operations during the quarter. Emerson Process Management continues to drive double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. growth in its systems, services, and solutions businesses with strong new project activity and by displacing competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. in the market. During the quarter, project activity was up over 10 percent as the success of Emerson's 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. (R) and PlantWeb(R) (www.EmersonProcess.com/PlantWeb) digital plant architecture continues to gain momentum. The growing importance of Emerson's role as the "main automation contractor contractor n. 1) a person or entity that enters into a contract. 2) commonly, a person or entity that agrees to construct a building or to provide or install specialized portions of the construction. " can be seen in a number of recent wins such as the $16 million contract to modernize mod·ern·ize v. mo·dern·ized, mo·dern·iz·ing, mo·dern·iz·es v.tr. To make modern in appearance, style, or character; update. v.intr. To accept or adopt modern ways, ideas, or style. the Ataka Thermal Power Station A thermal power station comprises all of the equipment and systems required to produce electricity by using a steam generating boiler fired with fossil fuels or biofuels to drive an electrical generator. in the Suez Suez (s  ĕz`), city (1996 pop. 417,610), NE Egypt, at the northern end of the Gulf of Suez and at the southern terminus of the Suez Canal. region of Egypt Egypt (ē`jĭpt), Arab. Misr, biblical Mizraim, officially Arab Republic of Egypt, republic (2005 est. pop. 77,506,000), 386,659 sq mi (1,001,449 sq km), NE Africa and SW Asia. . Emerson will serve as the main automation
contractor for instrumentation instrumentation, in music: see orchestra and orchestration. instrumentation In technology, the development and use of precise measuring, analysis, and control equipment. and control modernization modernization Transformation of a society from a rural and agrarian condition to a secular, urban, and industrial one. It is closely linked with industrialization. As societies modernize, the individual becomes increasingly important, gradually replacing the family, of Ataka's two 150-megawatt units and two 300-megawatt units that supply power to four million residents. Emerson's responsibilities include design, installation, commissioning and start-up Start-up The earliest stage of a new business venture. of the new control systems. Emerson's PlantWeb(R), a powerful, information-rich digital plant architecture, serves as the technology foundation for both asset optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. and process automation, combining smart field instrumentation and analytic an·a·lyt·ic or an·a·lyt·i·cal adj. 1. Of or relating to analysis or analytics. 2. Expert in or using analysis, especially one who thinks in a logical manner. 3. Psychoanalytic. software with a strong 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 to optimize optimize - optimisation plant operations. The new system will provide optimum control across all four Ataka units, and the capability to streamline streamline, path of a fluid flowing steadily and without appreciable turbulence. A body is said to be streamlined if its shape offers the least possible resistance to a current of air, water, or other fluid. maintenance functions and perform remote calibration calibration /cal·i·bra·tion/ (kal?i-bra´shun) determination of the accuracy of an instrument, usually by measurement of its variation from a standard, to ascertain necessary correction factors. and diagnostics (1) Software routines that test hardware components (memory, keyboard, disks, etc.). Diagnostics are often stored in ROM chips and activated on startup. (2) Error messages in a programmer's source code that refer to statements or syntax that the compiler or assembler . The industrial automation business reported third-quarter sales of $660 million, up 7 percent from $619 million for the third quarter in the prior year, the result of a 9-percentage point favorable impact from currency. A 2 percent decline in underlying sales reflects a decline in the United States, which was partially offset by a moderate increase in international sales, led by Europe. Most end markets have been stable, while the "wind-power" markets have experienced significant increases that have helped the 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. business. Higher sales and lower rationalization costs led to an increase in earnings of the industrial automation business of 19 percent to $85 million. Sales in the electronics and telecommunications business declined almost 7 percent to $574 million for the third quarter from $614 million for the same period in the prior year, including an almost 4-percentage point favorable impact from currency. There were significant declines in most major geographic regions, except for Asia, which declined only moderately. Although the systems business continues to experience declines, the embedded Inserted into. See embedded system. power business increased sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen . Electronics and telecommunications business earnings were $40 million, an increase of 33 percent over the prior year, despite lower sales, reflecting lower costs for rationalization. During the quarter, the Jordan business was restructured whereby all but one of its businesses would be retained by Emerson (and will continue to do business as ETP ETP Eligible Termination Payment (Australian finance) ETP Equivalent Temps Plein (French: Full Time Equivalent) ETP European Technology Platform ETP Employment Training Panel ), and the Jordan stock, including its Dura-Line fiber-optic See fiber optics. conduit conduit /con·du·it/ (kon´doo-it) channel. ileal conduit the surgical anastomosis of the ureters to one end of a detached segment of ileum, the other end being used to form a stoma on the business was subsequently sold. The net gain from sale and Dura-Line's operating results are reported as discontinued operations of $82 million (including $170 million of income tax benefits), or $0.19 per share. The current and prior period Dura-Line results have been reclassified to discontinued operations. Also during the quarter, all of the businesses in the electronics and telecommunications segment were reviewed for impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. , and a goodwill impairment of $54 million was recorded in the third quarter, the majority of which related to the retained ETP business. Additional income tax benefits of $68 million from the restructuring of the ETP business net of the impairment charge contributed $14 million, or $0.03 per share, to continuing operations. Sales of $869 million for the third quarter in the appliance and tools business reflect a decline in underlying sales compared to the prior year. The 3 percent decrease in sales also includes a more than 2-percentage point favorable impact from currency and a nearly 1-percentage point impact from acquisitions. The motors and appliance component business declined significantly, while the construction and tools business declined modestly, partially resulting from exiting the manufacturing of power woodworking tools businesses. The ClosetMaid consumer storage business continued with strong growth. Appliance and tools business earnings were down 13 percent over the prior year due to lower sales and higher rationalization costs during the quarter. Outlook David N. Farr continued, "When the economy rebounds, Emerson has positioned itself to benefit from our market leading business positions, restructuring actions, and capital efficiency improvements. Although underlying orders turned slightly positive in June and the overall pace of business appears to be strengthening, the underlying trends are mixed, providing an unclear signal for a recovery in demand. "We remain focused on what we can control: improving our competitive position, delivering the benefits from restructuring, and driving capital efficiency and cash flow performance. Our earnings guidance for fiscal year 2003 has not changed; we expect reported net earnings per share to be slightly above the $2.52 reported last fiscal year." Upcoming Investor Events On Tuesday Tuesday: see week. , August 5, 2003 at 2 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT (1 p.m. CDT CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT ), Emerson senior management will discuss the quarterly results during an investor conference call. All interested parties may listen to the live conference call via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the by going to the Investor Relations Investor relations The process by which the corporation communicates with its investors. area of Emerson's Web site at www.gotoemerson.com/financial and completing a brief registration form. A replay of the conference call will be available for the next three months at the same location on the Web site. Details of upcoming events will be posted as they occur in the Investor Relations Calendar of Events on the corporate Web site. Forward-Looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and Cautionary Statements 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 most recent form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed with the SEC.
TABLE 1
----------------------------------------------------------------------
EMERSON AND SUBSIDIARIES
CONSOLIDATED OPERATING RESULTS
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
Quarter Ended
June 30,
--------------- Percent
2002 2003 Change
------- ------- -------
Net sales $3,550 $3,573 0.6%
Less: Costs and expenses
Cost of sales 2,324 2,323
SG&A expenses 712 734
Other deductions, net 29 127
Interest expense, net 57 60
------- -------
Total costs and expenses 3,122 3,244
------- -------
Income from continuing operations
before income taxes 428 329 (23.0%)
Income taxes 142 51
------- -------
Income from continuing operations 286 278 (2.9%)
Net gain (loss) from discontinued
Operations (5) 82
------- -------
Net earnings $281 $360 27.8%
======= =======
Diluted earnings per common share:
Income from continuing operations $0.68 $0.66
Discontinued operations (0.01) 0.19
------- -------
Diluted earnings per common share $0.67 $0.85 26.9%
======= =======
------------------------------------------------------ ------- -------
Quarter Ended
June 30,
---------------
2002 2003
------- -------
Other deductions, net
Gains from divestitures $(46) $(9)
Impairment - 54
Rationalization of operations 44 43
Amortization of intangibles 7 4
Other 24 35
------- -------
Total $29 $127
======= =======
Note: The current and prior period Dura-Line results have been
reclassified to discontinued operations, including gain on sale.
TABLE 2
----------------------------------------------------------------------
EMERSON AND SUBSIDIARIES
CONSOLIDATED OPERATING RESULTS
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
Nine Months Ended
June 30,
----------------- Percent
2002 2003 Change
-------- -------- -------
Net sales $10,226 $10,264 0.4%
Less: Costs and expenses
Cost of sales 6,649 6,660
SG&A expenses 2,175 2,182
Other deductions, net 15 239
Interest expense, net 180 175
-------- --------
Total costs and expenses 9,019 9,256
-------- --------
Income from continuing operations
before income taxes 1,207 1,008 (16.4%)
Income taxes 388 271
-------- --------
Income from continuing operations 819 737 (10.1%)
Net gain (loss) from discontinued
operations (8) 76
Cumulative effect of change in
accounting principle, net of tax (938) -
-------- --------
Net earnings $(127) $813
======== ========
Diluted earnings per common share:
Income from continuing operations $1.95 $1.75 (10.3%)
Discontinued operations (0.02) 0.18
Cumulative effect of change in
accounting principle (2.23) -
-------- --------
Diluted earnings per common share $(0.30) $1.93
======== ========
----------------------------------------------------- -------- -------
Nine Months Ended
June 30,
-----------------
2002 2003
-------- --------
Other deductions, net
Gains from divestitures $(224) $(24)
Impairment - 54
Rationalization of operations 149 100
Amortization of intangibles 19 12
Other 71 97
-------- --------
Total $15 $239
======== ========
Note: The current- and prior-period Dura-Line results have been
reclassified to discontinued operations, including gain on sale.
TABLE 3
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EMERSON AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
June 30,
------------------
2002 2003
--------- --------
Assets
Cash and equivalents $548 $709
Receivables, net 2,604 2,668
Inventories 1,698 1,656
Other current assets 451 581
--------- --------
Total current assets 5,301 5,614
Property, plant & equipment, net 3,108 2,993
Goodwill 4,876 4,956
Other 1,612 1,820
--------- --------
$14,897 $15,383
========= ========
Liabilities and Stockholders' Equity
Short-term borrowings and current
maturities of long-term debt $2,344 $936
Accounts payable 1,176 1,214
Accrued expenses 1,471 1,522
Income taxes 173 61
--------- --------
Total current liabilities 5,164 3,733
Long-term debt 2,749 3,735
Other liabilities 1,327 1,431
Stockholders' equity 5,657 6,484
--------- --------
$14,897 $15,383
========= ========
TABLE 4
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EMERSON AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(DOLLARS IN MILLIONS)
Nine Months Ended
June 30,
------------------
2002 2003
--------- --------
Operating Activities
Net earnings $(127) $813
Cumulative effect of change in accounting
Principle 938 -
Depreciation and amortization 409 406
Changes in operating working capital 216 (89)
Pension funding (160) (286)
Gains from divestitures and other (98) 47
--------- --------
Net cash provided by operating activities 1,178 891
--------- --------
Investing Activities
Capital expenditures (251) (213)
Purchases of businesses, net of cash and
equivalents acquired (731) (1)
Divestitures of businesses and other, net 197 40
--------- --------
Net cash used in investing activities (785) (174)
--------- --------
Financing Activities
Net decrease in short-term borrowings (207) (673)
Proceeds from long-term debt 509 746
Principal payments on long-term debt (23) (13)
Dividends paid (489) (496)
Treasury stock, net (4) 7
--------- --------
Net cash used in financing activities (214) (429)
--------- --------
Effect of exchange rate changes on cash and
equivalents 13 40
--------- --------
Increase in cash and equivalents 192 328
Beginning cash and equivalents 356 381
--------- --------
Ending cash and equivalents $548 $709
========= ========
TABLE 5
----------------------------------------------------------------------
EMERSON AND SUBSIDIARIES
SEGMENT SALES AND EARNINGS
(DOLLARS IN MILLIONS)
Quarter Ended
June 30,
--------------------
2002 2003
---------- ---------
Sales
Process Control $851 $850
Industrial Automation 619 660
Electronics and Telecommunications 614 574
Heating, Ventilating, and Air Conditioning 693 733
Appliance and Tools 898 869
---------- ---------
3,675 3,686
Discontinued operations (20) (13)
Eliminations (105) (100)
---------- ---------
Continuing operations $3,550 $3,573
========== =========
Quarter Ended
June 30,
--------------------
2002 2003
---------- ---------
Earnings
Process Control $97 $94
Industrial Automation 72 85
Electronics and Telecommunications 30 40
Heating, Ventilating, and Air Conditioning 110 112
Appliance and Tools 132 115
---------- ---------
441 446
Discontinued operations 7 2
Differences in accounting methods 39 32
Corporate and other (2) (91)
Interest expense, net (57) (60)
---------- ---------
Income from continuing operations
before income taxes $428 $329
========== =========
Quarter Ended
June 30,
--------------------
2002 2003
---------- ---------
Rationalization of operations
Process Control $5 $13
Industrial Automation 13 5
Electronics and Telecommunications 19 7
Heating, Ventilating, and Air Conditioning 1 6
Appliance and Tools 11 16
Corporate 1 (4)
Discontinued operations (6) -
---------- ---------
Total Emerson $44 $43
========== =========
Note: The electronics and telecommunications segment sales and
earnings include results of discontinued operations.
TABLE 6
----------------------------------------------------------------------
EMERSON AND SUBSIDIARIES
SEGMENT SALES AND EARNINGS
(DOLLARS IN MILLIONS)
Nine Months Ended
June 30,
----------------------
2002 2003
----------- ----------
Sales
Process Control $2,484 $2,441
Industrial Automation 1,876 1,929
Electronics and Telecommunications 1,840 1,697
Heating, Ventilating, and Air Conditioning 1,792 1,938
Appliance and Tools 2,576 2,591
----------- ----------
10,568 10,596
Discontinued operations (60) (41)
Eliminations (282) (291)
----------- ----------
Continuing operations $10,226 $10,264
=========== ==========
Nine Months Ended
June 30,
----------------------
2002 2003
----------- ----------
Earnings
Process Control $277 $258
Industrial Automation 224 248
Electronics and Telecommunications 81 98
Heating, Ventilating, and Air Conditioning 264 285
Appliance and Tools 351 354
----------- ----------
1,197 1,243
Discontinued operations 13 12
Differences in accounting methods 111 96
Corporate and other 66 (168)
Interest expense, net (180) (175)
----------- ----------
Income from continuing operations
before income taxes $1,207 $1,008
=========== ==========
Nine Months Ended
June 30,
----------------------
2002 2003
----------- ----------
Rationalization of operations
Process Control $20 $25
Industrial Automation 25 14
Electronics and Telecommunications 46 32
Heating, Ventilating, and Air Conditioning 14 17
Appliance and Tools 30 28
Corporate 23 (8)
Discontinued operations (9) (8)
----------- ----------
Total Emerson $149 $100
=========== ==========
Note: The electronics and telecommunications segment sales and
earnings include results of discontinued operations.
TABLE 7
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Reconciliations of Non-GAAP Financial Measures
---------------------------------------------------------------------
The following reconciles each non-GAAP measure with the most directly
comparable GAAP measure (dollars in millions):
2002 2003
-------- --------
Third-Quarter Cash Flow
Operating Cash Flow $210
Capital Expenditures 82
--------
Free Cash Flow (Non-GAAP) $128
Year-To-Date Cash Flow
Operating Cash Flow $1,178 $891
Capital Expenditures 251 213
-------- --------
Free Cash Flow (Non-GAAP) $927 $678
All amounts above are GAAP financial measures except as noted.
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