Summary
Emerson Electric Co. (EMR) reported its third-quarter results for fiscal year 2003, ending June 30, 2003. The company experienced a slight increase in net sales for both the quarter and the nine-month period compared to the prior year. Despite a challenging economic environment, Emerson demonstrated resilience across several business segments, with notable growth in HVAC and Industrial Automation, partially offset by declines in Electronics and Telecommunications, and Appliance and Tools. The company's financial position remains strong, with improved working capital and a healthy current ratio. A significant event impacting the results was the restructuring and sale of the Jordan business, which included a substantial gain from discontinued operations. This transaction, along with other divestitures and charges, influenced year-over-year comparisons in earnings. The adoption of the fair value method for stock options also impacted reported earnings per share. Emerson continues to focus on strategic reinvestment, potential acquisitions, and capital structure management.
Key Highlights
- 1Net sales for the third quarter increased slightly to $3,573 million from $3,550 million in the prior year, with nine-month sales reaching $10,264 million compared to $10,226 million.
- 2Income from continuing operations for the third quarter was $278 million ($0.66 per share), a decrease from $286 million ($0.68 per share) in the prior year, impacted by lower gains from divestitures and rationalization costs.
- 3Net earnings for the third quarter significantly increased to $360 million ($0.85 per share) from $281 million ($0.67 per share) in the prior year, primarily due to an $82 million net gain from discontinued operations related to the sale of the Jordan business.
- 4Working capital improved to $1,881 million from $561 million, and the current ratio strengthened to 1.5 to 1 from 1.1 to 1, indicating enhanced short-term liquidity.
- 5The company adopted the fair value method for stock options effective October 1, 2002, impacting reported earnings per share for periods thereafter.
- 6A goodwill impairment charge of $54 million was recorded, primarily related to the retained ETP business from the Jordan restructuring.
- 7Cash and equivalents increased by $328 million for the nine months ended June 30, 2003, with free cash flow of $678 million, down from $927 million in the prior year, partly due to higher pension contributions.