Emerson Electric Co. 10-K Summary (Fiscal Year Ended Sept 30, 2001)
Business Context and Reporting Period
This Form 10-K covers the fiscal year ended September 30, 2001, for Emerson Electric Co., a Missouri-incorporated global manufacturer of electrical, electromechanical, and electronic products. The company operates through five segments: Process Control, Industrial Automation, Electronics and Telecommunications, Heating, Ventilating and Air Conditioning (HVAC), and Appliance and Tools. Emerson employs approximately 124,500 people and operates roughly 360 manufacturing locations worldwide.
Key Financial Metrics
| Metric | 2001 | 2000 |
|---|---|---|
| Net Sales | $15,479.6 million | $15,544.8 million |
| Net Earnings | $1,031.8 million | $1,422.4 million |
| Diluted EPS | $2.40 | $3.30 |
| Long-term Debt | $2,255.6 million | $2,247.7 million |
| Total Assets | $15,046.4 million | $15,164.3 million |
| Order Backlog | $2,135 million | $2,838 million |
| International Sales | $6,189 million | $5,894 million |
| R&D Costs | $593.9 million | $593.9 million |
Note: Cash flow and specific margin percentages are not explicitly detailed in the provided text; detailed financial statements are incorporated by reference.
Material Changes vs. Prior Period
- Revenue Decline: Net sales decreased slightly by approximately $65 million (0.4%) compared to 2000.
- Earnings Drop: Net earnings fell significantly by $390.6 million (27.5%), resulting in a diluted EPS decline from $3.30 to $2.40.
- Backlog Contraction: The consolidated order backlog decreased by $703 million (24.8%) to $2,135 million. The most significant drop occurred in the Electronics and Telecommunications segment, which fell from $1,078 million to $414 million.
- Debt Increase: Long-term debt increased marginally by $7.9 million.
- International Growth: Despite the overall sales decline, international sales increased by $295 million year-over-year.
Outlook, Risks, and Management Commentary
Management notes that the company competes on product performance, quality, service, and price, with a strategy focused on manufacturing high-quality products at the lowest relevant global cost. The filing incorporates by reference the "Results of Operations" and "Financial Position, Capital Resources and Liquidity" sections for detailed management commentary and guidance.
Risks and Contingencies:
- Legal Proceedings: Emerson is involved in several pending legal proceedings claiming substantial damages, though management does not believe any will be material to the company's financial position.
- Foreign Operations: Risks include nationalization of facilities, currency fluctuations, and fund movement restrictions, though these have not materially affected the financial position to date.
- Competition: The business environment is highly competitive with companies possessing substantially greater sales and assets.
- Environment: Compliance with environmental laws has not had a material effect on capital expenditures or earnings.
Investor Verification Checklist
- Verify the specific reasons for the 27.5% decline in net earnings despite relatively stable sales.
- Review the detailed segment performance in the "Electronics and Telecommunications" division, which saw a massive backlog reduction.
- Examine the "Results of Operations" section (incorporated by reference) for details on cost structures and margin compression.
- Confirm the status of pending legal proceedings and potential liability estimates.
- Assess the impact of the $703 million backlog reduction on future revenue recognition.