Business Context and Reporting Period
Company: Emerson Electric Co.
Filing Type: Form 8-K (Current Report)
Report Date: March 17, 2005
Event Date: March 11, 2005
Context: The filing discloses the entry into a material definitive agreement regarding the creation of a direct financial obligation. Specifically, the Company established a new revolving credit facility and amended an existing one to support general corporate purposes, including commercial paper borrowings.
Key Financial Metrics
This filing does not report revenue, profit, cash flow, margins, or liquidity ratios. It focuses exclusively on debt facility structures.
- New Facility (2005 Facility): $1.0 billion five-year revolving credit facility.
- Existing Facility (2004 Facility): $1.83 billion revolving credit facility (amended).
- Replaced Facility: Prior short-term facility of approximately $917 million.
- Outstanding Borrowings: $0 (No outstanding loans or letters of credit under either facility).
- Security Status: Unsecured.
Material Changes Versus Prior Period
The primary material change is the restructuring of the Company's credit facilities:
- Replacement: The new $1.0 billion 2005 Facility replaces a prior short-term facility of approximately $917 million.
- Amendment: The existing $1.83 billion 2004 Facility was amended on March 11, 2005, to conform to the terms of the new 2005 Facility.
- Maturity Dates: The 2005 Facility expires on March 10, 2010. The 2004 Facility expires on March 12, 2009.
Guidance, Outlook, Risks, and Contingencies
Management Commentary: The Company states it has not previously incurred borrowings under these or prior similar facilities and has no current intention to do so now or in the foreseeable future. The facilities are maintained to support general corporate purposes.
Risks and Covenants:
- Costs: The Company must pay facility fees on the aggregate amounts available.
- Events of Default: Include failure to pay material debt, insolvency, bankruptcy, ERISA events, material unpaid judgments, or a change in control of 50% or more of outstanding common stock.
- Termination: Breaches of customary representations, warranties, and covenants may be grounds for termination.
Important Facts for Investor Verification
- Verify the specific facility fees and interest rate alternatives detailed in the attached credit agreements (Exhibits 10.1, 10.2, and 10.3).
- Confirm the total aggregate credit availability is now $2.83 billion ($1.0 billion + $1.83 billion).
- Note that despite the large credit lines, the Company currently has zero outstanding debt under these specific facilities.
- Review the "change in control" clause, which defines a trigger as a 50% or greater change in outstanding common stock.