8-KEarnings & ResultsMaterial AgreementsFinancial Events+2

EMERSON ELECTRIC CO 8-K Report, Material Agreement (May 2, 2006)

Filed May 2, 2006For Securities:EMR

Summary

Emerson Electric Co. (EMR) filed an 8-K report on May 2, 2006, detailing significant corporate actions and financial updates. A key event was the establishment of a new $2.8 billion, five-year revolving credit facility on April 28, 2006. This facility, which replaces prior credit lines, is unsecured and intended to support general corporate purposes, including commercial paper borrowings. While currently undrawn, it provides substantial financial flexibility for the company. The filing also incorporates by reference Emerson's press release on its second quarter 2006 financial results, issued on May 2, 2006. Additionally, the report provides a "Regulation FD Disclosure" summarizing "Emerson GAAP Underlying Orders" on a trailing three-month average basis. This data indicates a healthy double-digit order growth for the total company in the first quarter of 2006, driven by strong performance in key segments like Network Power, Process Management, and Industrial Automation.

Key Highlights

  • 1Emerson Electric entered into a new $2.8 billion, five-year revolving credit facility on April 28, 2006, enhancing its financial flexibility.
  • 2The new credit facility replaces two previous credit agreements, consolidating and increasing available borrowing capacity.
  • 3The facility is unsecured and intended for general corporate purposes, including supporting commercial paper issuance.
  • 4The report incorporates by reference Emerson's Q2 2006 earnings press release, providing investors with timely financial results.
  • 5Underlying order growth for the three months ending March 2006 was robust, showing a double-digit increase for Emerson overall.
  • 6Key segments driving order growth included Network Power, Process Management, and Industrial Automation, indicating strength in core industrial and technology markets.
  • 7Despite overall growth, Climate Technologies experienced a slowdown due to industry-specific factors related to higher efficiency unit conversions.

Frequently Asked Questions

The new credit facility provides Emerson Electric with substantial financial flexibility and liquidity. It replaces older, smaller credit lines with a larger, more modern facility that can support general corporate needs, including potential commercial paper borrowings. Although currently undrawn, it signals the company's preparedness to manage its financial obligations and capital needs.

The order growth for the period leading up to March 2006 was primarily driven by Emerson's Network Power, Process Management, and Industrial Automation segments. These segments benefited from strong demand in key markets like computing, telecommunications, and general industrial activity, particularly in the United States and Asia.

No, the report states that as of April 28, 2006, there were no outstanding loans or letters of credit under the new $2.8 billion facility, and the company had no current intention to draw on it. The facility is described as being kept in place to support general corporate purposes and provide liquidity, rather than indicating immediate debt issuance.

Emerson experienced double-digit order growth overall, led by Network Power, Process Management, and Industrial Automation. Climate Technologies saw a slowdown due to industry shifts towards higher efficiency units, while Appliance and Tools showed solid growth driven by non-residential construction markets, though some components within this segment saw a modest decline.