Summary
Emerson Electric Co. (EMR) filed an 8-K on November 2, 2011, reporting several key corporate governance and operational updates. The most significant event for investors is the disclosure of the impact of flooding in Thailand on the company's business. Management estimates a first-quarter sales impact of approximately $300-$400 million, primarily affecting the Process Management segment, due to supply disruptions. However, the company anticipates a minimal impact on the full-year results and is actively implementing contingency plans to mitigate these disruptions, which are expected to last for three to four months. In addition to the operational update, the filing details a change in the Board of Directors' composition and an amendment to the company's bylaws. Carlos Fernandez G. resigned from the Board and was immediately re-elected to a different class. Furthermore, the bylaws were amended to allow two directors, Rozanne L. Ridgway and August A. Busch III, to serve for additional one-year terms beyond the previous age restriction. These governance changes are presented as adjustments to maintain board class balance and accommodate continued director service.
Key Highlights
- 1Thailand flooding is expected to impact EMR's first quarter sales by an estimated $300-$400 million, primarily in the Process Management segment.
- 2Despite the first quarter impact, the full-year financial impact from the Thailand flooding is expected to be minimal.
- 3EMR is implementing aggressive contingency plans and working with suppliers/customers to mitigate supply chain disruptions from the flooding.
- 4Supply disruptions due to Thailand flooding are expected to persist for approximately three to four months.
- 5Carlos Fernandez G. resigned from the Board of Directors and was immediately re-elected to a different class.
- 6Bylaws were amended to allow two directors, Rozanne L. Ridgway and August A. Busch III, to serve additional one-year terms beyond the previous age-related restriction.
- 7The amendment regarding director age limits is intended to maintain equal balance among board classes as required by Missouri law.