10-KPeriod: FY2010

EMERSON ELECTRIC CO Annual Report, Year Ended Sep 30, 2010

Filed November 23, 2010For Securities:EMR

Summary

Emerson Electric Co.'s 2010 10-K filing reveals a diversified global technology and engineering company organized into five key segments: Process Management, Industrial Automation, Network Power, Climate Technologies, and Tools and Storage. The company's strategy focuses on delivering solutions through high-quality products and engineering services across various industrial, commercial, and consumer markets. Despite operating in highly competitive environments, Emerson aims to maintain market leadership through continuous innovation and a strong global presence, with significant sales in the United States, Europe, and Asia. The filing indicates a robust order backlog of $5.6 billion as of September 29, 2010, up from $4.6 billion the previous year, suggesting positive future sales momentum. Management expressed optimism for fiscal year 2011, forecasting underlying sales growth of 7-10% and net sales growth of 12-15%, driven by anticipated economic improvements and strategic acquisitions. The company is committed to research and development, with substantial investment in innovation across its segments, and manages its global operations with a focus on cost-efficiency and market responsiveness, while navigating risks associated with international operations and currency fluctuations.

Financial Statements
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Key Highlights

  • 1Emerson Electric Co. operates a diversified business model across five segments: Process Management, Industrial Automation, Network Power, Climate Technologies, and Tools & Storage, serving a wide array of industrial, commercial, and consumer markets globally.
  • 2The company reported a consolidated order backlog of $5.6 billion as of September 29, 2010, a significant increase from $4.6 billion in the prior year, signaling strong demand and expected future revenue.
  • 3Emerson forecasts robust growth for fiscal year 2011, projecting underlying sales to increase by 7-10% and net sales to grow by 12-15%, reflecting confidence in improving economic conditions and strategic initiatives.
  • 4Research and development spending remained consistent, with $473 million invested in 2010, underscoring Emerson's commitment to innovation and new product development across its diverse segments.
  • 5The company's global footprint is substantial, with approximately 127,700 employees and manufacturing facilities in about 240 locations worldwide, with a majority situated outside the United States.
  • 6Emerson actively repurchased shares, acquiring 577,000 shares for approximately $27.5 million during the three months ended September 30, 2010, indicating a commitment to returning value to shareholders.
  • 7The company proactively manages market risks, including competitive pressures, raw material price fluctuations, foreign currency exchange rates, and potential disruptions in global operations, through strategic sourcing, hedging activities, and diversified operations.

Frequently Asked Questions

Emerson Electric's business is divided into five segments: Process Management (28% of 2010 sales), Industrial Automation (20%), Network Power (27%), Climate Technologies (17%), and Tools and Storage (8%). These segments provide a diverse range of products and engineering services to industrial, commercial, and consumer markets worldwide.

Emerson projects strong growth for fiscal year 2011, expecting underlying sales to increase by 7-10% and net sales to grow by 12-15% compared to 2010. This optimistic outlook is driven by improving economic conditions and strategic acquisitions, with an operating cash flow forecast of $3.4 to $3.5 billion.

Emerson acknowledges risks associated with its extensive international operations, including foreign currency fluctuations, changes in local regulations, and potential disruptions to production facilities, many of which are located outside the U.S. The company manages these risks by diversifying its supply sources for raw materials, not being overly dependent on any single supplier, and employing hedging activities to mitigate currency exposure. They also have multiple sources for raw materials and components, reducing dependency on any one supplier.

As of September 29, 2010, Emerson's consolidated order backlog was $5.616 billion, a notable increase from $4.615 billion in the previous year. The company expects nearly the entire September 2010 backlog to be shipped within one year, indicating strong immediate demand and positive revenue visibility for the upcoming fiscal year.