Business Context and Reporting Period
Company: Emerson Electric Co.
Filing Type: Form 8-K (Current Report)
Date of Report: May 4, 2004
Reporting Period: Second quarter of fiscal 2004 ended March 31, 2004.
Purpose: Disclosure of quarterly results via press release (Exhibit 99.1) and Regulation FD disclosure regarding underlying orders.
Key Financial Metrics
The filing text does not provide specific GAAP values for revenue, profit, cash flow, margins, debt, or liquidity. These figures are contained within the referenced press release (Exhibit 99.1) but are not detailed in the body of this 8-K document.
Underlying Orders (Percent Change vs. Prior Year - Trailing 3-Month Average):
| Segment | Jan '04 | Feb '04 | Mar '04 |
|---|---|---|---|
| Process Control | +10 to +15% | +10 to +15% | +5 to +10% |
| Industrial Automation | +10 to +15% | +10 to +15% | +10% |
| Electronics and Telecom | +15 to +20% | +15% | +15 to +20% |
| HVAC | +5 to +10% | +5 to +10% | +15% |
| Appliance and Tools | +5 to +10% | +5 to +10% | +10 to +15% |
| Total Emerson | +10 to +15% | +10 to +15% | +10 to +15% |
Material Changes and Segment Commentary
- Currency Impact: Favorable currency exchange rates positively affected March orders by approximately 5%. Management notes this favorable impact will diminish going forward as comparisons are made to last year's already weakened dollar rates.
- Process Control: Growth driven by measurement products (oil and gas markets), valves, regulators, and expansion in Asia and the Middle East.
- Industrial Automation: Order changes attributed to the Euro weakening versus the dollar and a slight softening of growth rates in Europe. Positive trends noted in industrial equipment, motors, controls, and power generation.
- Electronics and Telecom: Strength driven by improvements in OEM and systems businesses, with continued growth in Asia.
- HVAC: Continued worldwide gains with specific strength in the U.S. market.
- Appliance and Tools: Improvements observed across nearly every business in both consumer and professional markets.
Guidance, Outlook, and Risks
Outlook: Management indicates that while underlying orders improved, the favorable currency impact seen in March will be less significant in future periods due to the baseline of last year's dollar rates.
Non-GAAP Measures: The filing references non-GAAP financial measures in the accompanying press release. Management states these are supplemental and should not be considered a substitute for GAAP financial information.
Risks/Contingencies: No specific legal contingencies or unusual items are detailed in this text, though currency fluctuation is highlighted as a variable affecting order growth.
Investor Verification Checklist
- Verify specific GAAP revenue, net income, and earnings per share figures in the attached Exhibit 99.1 (Press Release).
- Confirm the reconciliation between GAAP and non-GAAP financial measures referenced in the press release.
- Monitor future quarters for the reduction in currency tailwinds as noted by management.
- Assess the sustainability of growth in the Process Control and Electronics segments given the specific market drivers cited (oil/gas, Asia).