EMERSON ELECTRIC CO
10-Qs and 10-Ks
PROXIES
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM 10-Q
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 2017
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to __________________
Commission file number 1-278
EMERSON ELECTRIC CO.
(Exact name of registrant as specified in its charter)
|
Missouri
(State or other jurisdiction of
incorporation or organization)
|
|
43-0259330
(I.R.S. Employer
Identification No.)
|
|
8000 W. Florissant Ave.
P.O. Box 4100
St. Louis, Missouri
(Address of principal executive offices)
|
63136
(Zip Code)
|
|
Registrant's telephone number, including area code:
(314) 553-2000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
ý
No
¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes
ý
No
¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
|
Large accelerated filer
ý
|
Accelerated filer
¨
|
|
Non-accelerated filer
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
¨
|
|
Emerging growth company
¨
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
¨
No
ý
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common stock of
$0.50
par value per share outstanding at
April 30, 2017
:
644,480,132
shares.
1
FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
EMERSON ELECTRIC CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
THREE AND SIX MONTHS ENDED MARCH 31, 2016 AND 2017
(Dollars in millions, except per share amounts; unaudited)
|
|
Three Months Ended
March 31, |
Six Months Ended
March 31, |
||||||||||
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
||||
|
Net sales
|
$
|
3,579
|
|
3,574
|
|
6,916
|
|
6,790
|
|
|||
|
Costs and expenses:
|
||||||||||||
|
Cost of sales
|
2,037
|
|
2,017
|
|
3,960
|
|
3,868
|
|
||||
|
Selling, general and administrative expenses
|
878
|
|
868
|
|
1,757
|
|
1,690
|
|
||||
|
Other deductions, net
|
66
|
|
83
|
|
120
|
|
116
|
|
||||
|
Interest expense (net of interest income of $8, $9, $14 and $15, respectively)
|
46
|
|
41
|
|
93
|
|
87
|
|
||||
|
Earnings from continuing operations before income taxes
|
552
|
|
565
|
|
986
|
|
1,029
|
|
||||
|
Income taxes
|
177
|
|
181
|
|
304
|
|
275
|
|
||||
|
Earnings from continuing operations
|
375
|
|
384
|
|
682
|
|
754
|
|
||||
|
Discontinued operations, net of tax
|
2
|
|
(84
|
)
|
48
|
|
(139
|
)
|
||||
|
Net earnings
|
377
|
|
300
|
|
730
|
|
615
|
|
||||
|
Less: Noncontrolling interests in earnings of subsidiaries
|
8
|
|
8
|
|
12
|
|
14
|
|
||||
|
Net earnings common stockholders
|
$
|
369
|
|
292
|
|
718
|
|
601
|
|
|||
|
Earnings common stockholders:
|
||||||||||||
|
Earnings from continuing operations
|
$
|
367
|
|
376
|
|
670
|
|
740
|
|
|||
|
Discontinued operations, net of tax
|
2
|
|
(84
|
)
|
48
|
|
(139
|
)
|
||||
|
Net earnings common stockholders
|
$
|
369
|
|
292
|
|
718
|
|
601
|
|
|||
|
Basic earnings per share common stockholders:
|
||||||||||||
|
Earnings from continuing operations
|
$
|
0.57
|
|
0.58
|
|
1.04
|
|
1.14
|
|
|||
|
Discontinued operations
|
—
|
|
(0.13
|
)
|
0.07
|
|
(0.21
|
)
|
||||
|
Basic earnings per common share
|
$
|
0.57
|
|
0.45
|
|
1.11
|
|
0.93
|
|
|||
|
Diluted earnings per share common stockholders:
|
||||||||||||
|
Earnings from continuing operations
|
$
|
0.57
|
|
0.58
|
|
1.03
|
|
1.14
|
|
|||
|
Discontinued operations
|
—
|
|
(0.13
|
)
|
0.07
|
|
(0.21
|
)
|
||||
|
Diluted earnings per common share
|
$
|
0.57
|
|
0.45
|
|
1.10
|
|
0.93
|
|
|||
|
Cash dividends per common share
|
$
|
0.475
|
|
0.48
|
|
0.95
|
|
0.96
|
|
|||
See accompanying Notes to Consolidated Financial Statements.
2
FORM 10-Q
EMERSON ELECTRIC CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
THREE AND SIX MONTHS ENDED MARCH 31, 2016 AND 2017
(Dollars in millions; unaudited)
|
|
Three Months Ended March 31,
|
Six Months Ended March 31,
|
||||||||||||||
|
|
2016
|
|
|
2017
|
|
2016
|
|
2017
|
|
|||||||
|
Net earnings
|
$
|
377
|
|
300
|
|
730
|
|
615
|
|
|||||||
|
Other comprehensive income (loss), net of tax:
|
||||||||||||||||
|
Foreign currency translation
|
125
|
|
259
|
|
(28
|
)
|
156
|
|
||||||||
|
Pension and postretirement
|
27
|
|
65
|
|
53
|
|
120
|
|
||||||||
|
Cash flow hedges
|
5
|
|
17
|
|
11
|
|
32
|
|
||||||||
|
Total other comprehensive income
|
157
|
|
341
|
|
36
|
|
308
|
|
||||||||
|
Comprehensive income
|
534
|
|
641
|
|
766
|
|
923
|
|
||||||||
|
Less: Noncontrolling interests in comprehensive
income of subsidiaries
|
9
|
|
9
|
|
13
|
|
13
|
|
||||||||
|
Comprehensive income common stockholders
|
$
|
525
|
|
632
|
|
753
|
|
910
|
|
|||||||
See accompanying Notes to Consolidated Financial Statements.
3
FORM 10-Q
EMERSON ELECTRIC CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in millions, except per share amounts; unaudited)
|
|
Sept 30, 2016
|
Mar 31, 2017
|
||||
|
ASSETS
|
|
|
||||
|
Current assets
|
|
|
||||
|
Cash and equivalents
|
$
|
3,182
|
|
5,039
|
|
|
|
Receivables, less allowances of $92 and $112, respectively
|
2,701
|
|
2,479
|
|
||
|
Inventories
|
1,208
|
|
1,331
|
|
||
|
Other current assets
|
669
|
|
597
|
|
||
|
Current assets held-for-sale
|
2,200
|
|
—
|
|
||
|
Total current assets
|
9,960
|
|
9,446
|
|
||
|
Property, plant and equipment, net
|
2,931
|
|
2,880
|
|
||
|
Other assets
|
|
|
||||
|
Goodwill
|
3,909
|
|
3,891
|
|
||
|
Other intangible assets
|
902
|
|
869
|
|
||
|
Other
|
200
|
|
191
|
|
||
|
Noncurrent assets held-for-sale
|
3,830
|
|
—
|
|
||
|
Total other assets
|
8,841
|
|
4,951
|
|
||
|
Total assets
|
$
|
21,732
|
|
17,277
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
||
|
Current liabilities
|
|
|
|
|
||
|
Short-term borrowings and current maturities of long-term debt
|
$
|
2,584
|
|
252
|
|
|
|
Accounts payable
|
1,517
|
|
1,368
|
|
||
|
Accrued expenses
|
2,126
|
|
1,952
|
|
||
|
Income taxes
|
180
|
|
199
|
|
||
|
Current liabilities held-for-sale
|
1,601
|
|
—
|
|
||
|
Total current liabilities
|
8,008
|
|
3,771
|
|
||
|
Long-term debt
|
4,051
|
|
3,816
|
|
||
|
Other liabilities
|
1,729
|
|
1,633
|
|
||
|
Noncurrent liabilities held-for-sale
|
326
|
|
—
|
|
||
|
Equity
|
|
|
|
|
||
|
Common stock, $0.50 par value; authorized, 1,200,000,000 shares; issued, 953,354,012 shares; outstanding, 642,796,490 shares and 644,380,547 shares, respectively
|
477
|
|
477
|
|
||
|
Additional paid-in-capital
|
205
|
|
337
|
|
||
|
Retained earnings
|
21,716
|
|
21,696
|
|
||
|
Accumulated other comprehensive income (loss)
|
(1,999
|
)
|
(1,690
|
)
|
||
|
Cost of common stock in treasury, 310,557,522 shares and 308,973,465 shares, respectively
|
(12,831
|
)
|
(12,814
|
)
|
||
|
Common stockholders’ equity
|
7,568
|
|
8,006
|
|
||
|
Noncontrolling interests in subsidiaries
|
50
|
|
51
|
|
||
|
Total equity
|
7,618
|
|
8,057
|
|
||
|
Total liabilities and equity
|
$
|
21,732
|
|
17,277
|
|
|
See accompanying Notes to Consolidated Financial Statements.
4
FORM 10-Q
EMERSON ELECTRIC CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MARCH 31, 2016 AND 2017
(Dollars in millions; unaudited)
|
Six Months Ended
|
|||||||
|
March 31,
|
|||||||
|
|
2016
|
|
2017
|
|
|||
|
Operating activities
|
|
|
|||||
|
Net earnings
|
$
|
730
|
|
615
|
|
||
|
(Earnings) Loss from discontinued operations, net of tax
|
(48
|
)
|
139
|
|
|||
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|||||||
|
Depreciation and amortization
|
286
|
|
283
|
|
|||
|
Changes in operating working capital
|
(100
|
)
|
(126
|
)
|
|||
|
Other, net
|
148
|
|
100
|
|
|||
|
Cash from continuing operations
|
1,016
|
|
1,011
|
|
|||
|
Cash from discontinued operations
|
190
|
|
(601
|
)
|
|||
|
Cash provided by operating activities
|
1,206
|
|
410
|
|
|||
|
Investing activities
|
|||||||
|
Capital expenditures
|
(210
|
)
|
(194
|
)
|
|||
|
Purchases of businesses, net of cash and equivalents acquired
|
(11
|
)
|
(16
|
)
|
|||
|
Other, net
|
71
|
|
(50
|
)
|
|||
|
Cash from continuing operations
|
(150
|
)
|
(260
|
)
|
|||
|
Cash from discontinued operations
|
(38
|
)
|
5,051
|
|
|||
|
Cash provided by (used in) investing activities
|
(188
|
)
|
4,791
|
|
|||
|
Financing activities
|
|||||||
|
Net increase (decrease) in short-term borrowings
|
357
|
|
(2,228
|
)
|
|||
|
Proceeds from short-term borrowings greater than three months
|
1,174
|
|
—
|
|
|||
|
Payments of short-term borrowings greater than three months
|
(827
|
)
|
(90
|
)
|
|||
|
Payments of long-term debt
|
(253
|
)
|
(252
|
)
|
|||
|
Dividends paid
|
(616
|
)
|
(621
|
)
|
|||
|
Purchases of common stock
|
(555
|
)
|
(120
|
)
|
|||
|
Other, net
|
(5
|
)
|
29
|
|
|||
|
Cash used in financing activities
|
(725
|
)
|
(3,282
|
)
|
|||
|
Effect of exchange rate changes on cash and equivalents
|
(25
|
)
|
(62
|
)
|
|||
|
Increase in cash and equivalents
|
268
|
|
1,857
|
|
|||
|
Beginning cash and equivalents
|
3,054
|
|
3,182
|
|
|||
|
Ending cash and equivalents
|
$
|
3,322
|
|
5,039
|
|
||
|
Changes in operating working capital
|
|||||||
|
Receivables
|
$
|
312
|
|
190
|
|
||
|
Inventories
|
(78
|
)
|
(137
|
)
|
|||
|
Other current assets
|
—
|
|
11
|
|
|||
|
Accounts payable
|
(125
|
)
|
(100
|
)
|
|||
|
Accrued expenses
|
(168
|
)
|
(98
|
)
|
|||
|
Income taxes
|
(41
|
)
|
8
|
|
|||
|
Total changes in operating working capital
|
$
|
(100
|
)
|
(126
|
)
|
||
See accompanying Notes to Consolidated Financial Statements.
5
|
EMERSON ELECTRIC CO. AND SUBSIDIARIES
|
FORM 10-Q
|
|||
Notes to Consolidated Financial Statements
|
1.
|
In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary for a fair presentation of operating results for the interim periods presented. Adjustments consist of normal and recurring accruals. The consolidated financial statements are presented in accordance with the requirements of Form 10-Q and consequently do not include all disclosures required for annual financial statements presented in conformity with U.S. generally accepted accounting principles (GAAP). For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30,
2016
. Certain prior year amounts have been reclassified to conform to current year presentation.
|
In connection with the strategic portfolio repositioning actions undertaken over the last eighteen months to transform the Company into a more focused enterprise, its businesses and organization were realigned. Beginning in fiscal 2017, the Company now reports three segments:
Automation Solutions
, and
Climate Technologies
and
Tools & Home Products
which together comprise the
Commercial & Residential Solutions
business. The Automation Solutions segment includes the former Process Management segment and the remaining businesses in the former Industrial Automation segment, except for the hermetic motors business, which is now included in the Climate Technologies segment. The new Tools & Home Products segment consists of the businesses previously reported in the Commercial & Residential Solutions segment in fiscal 2016. See Notes 10 and 12.
In the first quarter of 2017, the Company adopted updates to ASC Subtopic 835-30,
Interest-Imputation of Interest
, which require presentation of debt issuance costs as a deduction from the related debt liability rather than within other assets. This update was adopted on a retrospective basis and did not materially impact the Company’s financial statements.
2. Reconciliations of weighted-average shares for basic and diluted earnings per common share follow (in millions). Earnings allocated to participating securities were inconsequential.
|
Three Months Ended
March 31, |
Six Months Ended
March 31, |
||||||||||
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
|||
|
Basic shares outstanding
|
642.0
|
|
643.6
|
|
646.0
|
|
643.2
|
|
|||
|
Dilutive shares
|
2.7
|
|
1.2
|
|
2.6
|
|
1.3
|
|
|||
|
Diluted shares outstanding
|
644.7
|
|
644.8
|
|
648.6
|
|
644.5
|
|
|||
3. Other Financial Information (in millions):
|
|
Sept 30,
2016
|
Mar 31,
2017
|
||||||
|
Inventories
|
||||||||
|
Finished products
|
$
|
382
|
|
434
|
|
|||
|
Raw materials and work in process
|
826
|
|
897
|
|
||||
|
Total
|
$
|
1,208
|
|
1,331
|
|
|||
|
Property, plant and equipment, net
|
|
|
||||||
|
Property, plant and equipment, at cost
|
$
|
7,327
|
|
7,405
|
|
|||
|
Less: Accumulated depreciation
|
4,396
|
|
4,525
|
|
||||
|
Total
|
$
|
2,931
|
|
2,880
|
|
|||
|
Goodwill by business segment
|
||||||||
|
Automation Solutions
|
$
|
3,160
|
|
3,146
|
|
|||
|
Climate Technologies
|
553
|
|
550
|
|
||||
|
Tools & Home Products
|
196
|
|
195
|
|
||||
|
Commercial & Residential Solutions
|
749
|
|
745
|
|
||||
|
Total
|
$
|
3,909
|
|
3,891
|
|
|||
6
|
EMERSON ELECTRIC CO. AND SUBSIDIARIES
|
FORM 10-Q
|
|||
|
Sept 30,
2016
|
Mar 31,
2017 |
|||||||
|
Accrued expenses include the following
|
||||||||
|
Employee compensation
|
$
|
431
|
|
375
|
|
|||
|
Customer advanced payments
|
$
|
433
|
|
471
|
|
|||
|
Product warranty
|
$
|
106
|
|
97
|
|
|||
|
Sept 30,
2016
|
Mar 31,
2017 |
|||||||
|
Other liabilities
|
|
|
||||||
|
Pension liabilities
|
$
|
844
|
|
762
|
|
|||
|
Deferred income taxes
|
210
|
|
182
|
|
||||
|
Postretirement liabilities, excluding current portion
|
193
|
|
190
|
|
||||
|
Other
|
482
|
|
499
|
|
||||
|
Total
|
$
|
1,729
|
|
1,633
|
|
|||
|
4.
|
Following is a discussion regarding the Company’s use of financial instruments:
|
Hedging Activities
– As of
March 31, 2017
, the notional amount of foreign currency hedge positions was approximately
$1.1 billion
, and commodity hedge contracts totaled approximately
$85 million
(primarily
41 million
pounds of copper and aluminum). All derivatives receiving deferral accounting are cash flow hedges. The majority of hedging gains and losses deferred as of
March 31, 2017
are expected to be recognized over the next 12 months as the underlying forecasted transactions occur. Gains and losses on foreign currency derivatives reported in other deductions, net reflect hedges of balance sheet exposures that do not receive deferral accounting. The following gains and losses are included in earnings and other comprehensive income (OCI) for the
three and six months ended
March 31, 2017
and
2016
(in millions):
|
Into Earnings
|
Into OCI
|
||||||||||||||||||||||||||
|
2nd Quarter
|
Six Months
|
2nd Quarter
|
Six Months
|
||||||||||||||||||||||||
|
Gains (Losses)
|
Location
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
||||||||||
|
Commodity
|
Cost of sales
|
$
|
(12
|
)
|
4
|
|
(20
|
)
|
2
|
|
1
|
|
5
|
|
(10
|
)
|
15
|
|
|||||||||
|
Foreign currency
|
Sales, cost of sales
|
(9
|
)
|
(7
|
)
|
(15
|
)
|
(17
|
)
|
(13
|
)
|
20
|
|
(7
|
)
|
22
|
|
||||||||||
|
Foreign currency
|
Other deductions, net
|
(10
|
)
|
(6
|
)
|
(7
|
)
|
—
|
|
||||||||||||||||||
|
Total
|
|
$
|
(31
|
)
|
(9
|
)
|
(42
|
)
|
(15
|
)
|
(12
|
)
|
25
|
|
(17
|
)
|
37
|
|
|||||||||
Regardless of whether derivatives receive deferral accounting, the Company expects hedging gains or losses to be essentially offset by losses or gains on the related underlying exposures. The amounts ultimately recognized will differ from those presented above for open positions, which remain subject to ongoing market price fluctuations until settlement. Derivatives receiving deferral accounting are highly effective and no amounts were excluded from the assessment of hedge effectiveness. Hedge ineffectiveness was immaterial for the
three and six months ended
March 31, 2017
and
2016
.
Fair Value Measurement
– Valuations for all derivatives and the Company's long-term debt fall within Level 2 of the GAAP valuation hierarchy. As of
March 31, 2017
, the fair value of long-term debt was
$4,375 million
, which exceeded the carrying value by
$307 million
. At
March 31, 2017
, the fair values of commodity contracts and foreign currency contracts were reported in other current assets and accrued expenses. Valuations of derivative contract positions are summarized below (in millions):
|
|
September 30, 2016
|
March 31, 2017
|
|||||||||||
|
Assets
|
Liabilities
|
Assets
|
Liabilities
|
||||||||||
|
Foreign Currency
|
$
|
7
|
|
49
|
|
20
|
|
14
|
|
||||
|
Commodity
|
$
|
2
|
|
4
|
|
12
|
|
—
|
|
||||
7
|
EMERSON ELECTRIC CO. AND SUBSIDIARIES
|
FORM 10-Q
|
|||
Counterparties to derivatives arrangements are companies with investment-grade credit ratings. The Company has bilateral collateral arrangements with counterparties with credit rating-based posting thresholds that vary depending on the arrangement. If credit ratings on the Company's debt fall below preestablished levels, counterparties can require immediate full collateralization of all derivatives in net liability positions. The maximum amount that could potentially have been required was
$3 million
. The Company also can demand full collateralization of derivatives in net asset positions should any counterparty credit ratings fall below certain thresholds.
No
collateral was posted with counterparties and
none
was held by the Company as of
March 31, 2017
.
|
5.
|
The change in equity for the first
six months
of
2017
is shown below (in millions):
|
|
|
Common
Stockholders'
Equity
|
Noncontrolling
Interests in Subsidiaries
|
Total Equity
|
|||||||||
|
Balance at September 30, 2016
|
$
|
7,568
|
|
50
|
|
7,618
|
|
|||||
|
Net earnings
|
601
|
|
14
|
|
615
|
|
||||||
|
Other comprehensive income (loss)
|
309
|
|
(1
|
)
|
308
|
|
||||||
|
Cash dividends
|
(621
|
)
|
(12
|
)
|
(633
|
)
|
||||||
|
Stock plans
|
149
|
|
—
|
|
149
|
|
||||||
|
Balance at March 31, 2017
|
$
|
8,006
|
|
51
|
|
8,057
|
|
|||||
|
6.
|
Activity in accumulated other comprehensive income (loss) for the
three and six months ended
March 31, 2017
and
2016
is shown below (in millions):
|
|
Three Months Ended March 31,
|
Six Months Ended
March 31, |
|||||||||||||||
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
|||||||||
|
Foreign currency translation
|
||||||||||||||||
|
Beginning balance
|
$
|
(775
|
)
|
(913
|
)
|
(622
|
)
|
(812
|
)
|
|||||||
|
Other comprehensive income (loss) before reclassifications
|
124
|
|
139
|
|
(29
|
)
|
(228
|
)
|
||||||||
|
Reclassified to gain/loss on sale of businesses
|
—
|
|
119
|
|
—
|
|
385
|
|
||||||||
|
Ending balance
|
(651
|
)
|
(655
|
)
|
(651
|
)
|
(655
|
)
|
||||||||
|
Pension and postretirement
|
||||||||||||||||
|
Beginning balance
|
(926
|
)
|
(1,107
|
)
|
(952
|
)
|
(1,162
|
)
|
||||||||
|
Amortization of deferred actuarial losses into earnings
|
27
|
|
35
|
|
53
|
|
70
|
|
||||||||
|
Reclassified to gain/loss on sale of businesses
|
—
|
|
30
|
|
—
|
|
50
|
|
||||||||
|
Ending balance
|
(899
|
)
|
(1,042
|
)
|
(899
|
)
|
(1,042
|
)
|
||||||||
|
Cash flow hedges
|
||||||||||||||||
|
Beginning balance
|
(37
|
)
|
(10
|
)
|
(43
|
)
|
(25
|
)
|
||||||||
|
Deferral of gains (losses) arising during the period
|
(8
|
)
|
15
|
|
(11
|
)
|
23
|
|
||||||||
|
Reclassification of realized (gains) losses to sales and cost of sales
|
13
|
|
2
|
|
22
|
|
9
|
|
||||||||
|
Ending balance
|
(32
|
)
|
7
|
|
(32
|
)
|
7
|
|
||||||||
|
Accumulated other comprehensive income (loss)
|
$
|
(1,582
|
)
|
(1,690
|
)
|
(1,582
|
)
|
(1,690
|
)
|
|||||||
|
Activity above is shown net of income taxes for the three and six months ended March 31, 2017 and 2016, respectively, as follows: amortization of pension and postretirement deferred actuarial losses: $(18), $(14), $(36) and $(28); pension and postretirement divestiture: $(15), $ - , $(22) and $ -; deferral of cash flow hedging gains (losses): $(10), $4, $(14) and $6; reclassification of realized cash flow hedging (gains) losses: $(1), $(8), $(6) and $(13).
|
||||||||||||||||
8
|
EMERSON ELECTRIC CO. AND SUBSIDIARIES
|
FORM 10-Q
|
|||
|
7.
|
Total periodic pension and postretirement expense is summarized below (in millions):
|
|
|
Three Months Ended March 31,
|
Six Months Ended
March 31, |
||||||||||||||
|
|
2016
|
2017
|
2016
|
|
2017
|
|
||||||||||
|
Service cost
|
$
|
23
|
|
21
|
|
45
|
|
42
|
|
|||||||
|
Interest cost
|
49
|
|
42
|
|
99
|
|
84
|
|
||||||||
|
Expected return on plan assets
|
(88
|
)
|
(86
|
)
|
(176
|
)
|
(172
|
)
|
||||||||
|
Net amortization
|
41
|
|
53
|
|
81
|
|
106
|
|
||||||||
|
Total
|
$
|
25
|
|
30
|
|
49
|
|
60
|
|
|||||||
|
8.
|
Other deductions, net are summarized below (in millions):
|
|
|
Three Months Ended
March 31, |
Six Months Ended
March 31, |
||||||||||||||
|
|
2016
|
2017
|
|
2016
|
|
2017
|
|
|||||||||
|
Amortization of intangibles
|
$
|
22
|
|
21
|
|
44
|
|
43
|
|
|||||||
|
Restructuring costs
|
11
|
|
13
|
|
18
|
|
24
|
|
||||||||
|
Other
|
33
|
|
49
|
|
58
|
|
49
|
|
||||||||
|
Total
|
$
|
66
|
|
83
|
|
120
|
|
116
|
|
|||||||
Other includes higher acquisition/divestiture costs of
$11 million
in the second quarter and
$21 million
year-to-date, and an increase in bad debt expense of
$13 million
and
$11 million
, respectively. The comparative impact of foreign currency transactions was favorable by
$12 million
in the second quarter and
$46 million
year-to-date.
|
9.
|
Restructuring expense reflects costs associated with the Company’s ongoing efforts to improve operational efficiency and deploy assets globally in order to remain competitive on a worldwide basis. The Company expects full year
2017
restructuring expense to be approximately
$50 million
. This includes
$24 million
incurred to date, as well as costs to complete actions initiated before the end of the
second
quarter and actions anticipated to be approved and initiated during the remainder of the year. Costs for the
three and six months ended
March 31, 2017
largely relate to restructuring of the global cost structure consistent with the current level of economic activity, as well as the redeployment of resources for future growth.
|
Restructuring expense by business segment follows (in millions):
|
|
Three Months Ended March 31,
|
Six Months Ended
March 31, |
||||||||||||||
|
|
2016
|
2017
|
2016
|
2017
|
||||||||||||
|
Automation Solutions
|
$
|
8
|
|
9
|
|
13
|
|
15
|
|
|||||||
|
Climate Technologies
|
2
|
|
3
|
|
3
|
|
7
|
|
||||||||
|
Tools & Home Products
|
1
|
|
—
|
|
2
|
|
1
|
|
||||||||
|
Commercial & Residential Solutions
|
3
|
|
3
|
|
5
|
|
8
|
|
||||||||
|
Corporate
|
—
|
|
1
|
|
—
|
|
1
|
|
||||||||
|
Total
|
$
|
11
|
|
13
|
|
18
|
|
24
|
|
|||||||
9
|
EMERSON ELECTRIC CO. AND SUBSIDIARIES
|
FORM 10-Q
|
|||
Details of the change in the liability for restructuring costs during the
six months ended
March 31, 2017
follow (in millions):
|
|
Sept 30, 2016
|
Expense
|
Utilized/Paid
|
Mar 31, 2017
|
||||||||||||
|
Severance and benefits
|
$
|
44
|
|
13
|
|
35
|
|
22
|
|
|||||||
|
Lease and other contract terminations
|
5
|
|
1
|
|
1
|
|
5
|
|
||||||||
|
Asset write-downs
|
—
|
|
1
|
|
1
|
|
—
|
|
||||||||
|
Vacant facility and other shutdown costs
|
3
|
|
2
|
|
3
|
|
2
|
|
||||||||
|
Start-up and moving costs
|
2
|
|
7
|
|
5
|
|
4
|
|
||||||||
|
Total
|
$
|
54
|
|
24
|
|
45
|
|
33
|
|
|||||||
|
10.
|
Business Segments
– The Company designs and manufactures products and delivers services that bring technology and engineering together to provide innovative solutions for customers in a wide range of industrial, commercial and consumer markets around the world.
|
The
Automation Solutions
segment provides measurement, control, diagnostic capabilities and integrated manufacturing solutions for automated industrial processes, and serves oil and gas, refining, chemical, power generation, pharmaceutical, food and beverage, automotive and other end markets. The segment's major product offerings are described below.
|
•
|
Measurement & Analytical Instrumentation
products measure the physical properties of liquids or gases in a process stream and communicate this information to a process control system, and analyze the chemical composition of process fluids and emissions to enhance quality and efficiency, as well as environmental compliance.
|
|
•
|
Valves, Actuators & Regulators
consists of control valves which respond to commands from a control system to continuously and precisely modulate the flow of process fluids, valve actuators and controllers, and industrial and residential regulators that reduce the pressure of fluids moving from high-pressure supply lines into lower pressure systems.
|
|
•
|
Industrial Solutions
provides fluid power and control mechanisms, electrical distribution equipment, and materials joining and precision cleaning products which are used in a variety of manufacturing operations to provide integrated manufacturing solutions to customers.
|
|
•
|
Process Control Systems & Solutions
includes digital plant architecture that controls plant processes by communicating with and adjusting the "intelligent" plant devices described above to provide precision measurement, control, monitoring, asset optimization, and plant safety and reliability for plants that produce power, or process fluids or other items.
|
The
Commercial & Residential Solutions
business consists of the Climate Technologies and Tools & Home Products segments. This business provides products and solutions that promote energy efficiency, enhance household and commercial comfort, and protect food quality and sustainability through heating, air conditioning and refrigeration technology, as well as a broad range of tools and appliance solutions.
The
Climate Technologies
segment provides products and services for all areas of the climate control industry, including residential heating and cooling, commercial air conditioning, and commercial and industrial refrigeration. Products include compressors, temperature sensors and controls, thermostats, flow controls and remote monitoring technology and services that enable homeowners and businesses to better manage their heating, air conditioning and refrigeration systems for improved control and comfort, and lower energy costs.
The
Tools & Home Products
segment offers tools for professionals and homeowners, residential storage products and appliance solutions. Products include professional pipe-working tools, residential and commercial food waste disposers, wet-dry vacuums, and home shelving and closet organization systems.
10
|
EMERSON ELECTRIC CO. AND SUBSIDIARIES
|
FORM 10-Q
|
|||
Summarized information about the Company's results of operations by business segment follows (in millions):
|
|
Three Months Ended March 31,
|
Six Months Ended March 31,
|
||||||||||||||||||||||
|
|
Sales
|
Earnings
|
Sales
|
Earnings
|
||||||||||||||||||||
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
||||||||
|
Automation Solutions
|
$
|
2,194
|
|
2,117
|
|
342
|
|
328
|
|
4,356
|
|
4,084
|
|
683
|
|
654
|
|
|||||||
|
Climate Technologies
|
993
|
|
1,058
|
|
226
|
|
249
|
|
1,779
|
|
1,917
|
|
359
|
|
410
|
|
||||||||
|
Tools & Home Products
|
394
|
|
402
|
|
92
|
|
96
|
|
786
|
|
795
|
|
177
|
|
184
|
|
||||||||
|
Commercial & Residential Solutions
|
1,387
|
|
1,460
|
|
318
|
|
345
|
|
2,565
|
|
2,712
|
|
536
|
|
594
|
|
||||||||
|
Differences in accounting methods
|
47
|
|
35
|
|
91
|
|
68
|
|
||||||||||||||||
|
Corporate and other
|
(109
|
)
|
(102
|
)
|
(231
|
)
|
(200
|
)
|
||||||||||||||||
|
Eliminations/Interest
|
(2
|
)
|
(3
|
)
|
(46
|
)
|
(41
|
)
|
(5
|
)
|
(6
|
)
|
(93
|
)
|
(87
|
)
|
||||||||
|
Total
|
$
|
3,579
|
|
3,574
|
|
552
|
|
565
|
|
6,916
|
|
6,790
|
|
986
|
|
1,029
|
|
|||||||
Corporate and other in 2017 includes lower incentive stock compensation of
$17 million
for the second quarter and
$43 million
year-to-date, which reflects the impact of changes in the Company's stock price. Corporate and other also includes higher acquisition/divestiture costs of
$11 million
for the second quarter and
$21 million
year-to-date.
Automation Solutions
sales by major product offering are summarized below (in millions):
|
|
Three Months Ended March 31,
|
Six Months Ended March 31,
|
||||||||||||||
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
||||||||
|
Measurement & Analytical Instrumentation
|
$
|
766
|
|
736
|
|
1,523
|
|
1,418
|
|
|||||||
|
Valves, Actuators & Regulators
|
532
|
|
497
|
|
1,030
|
|
946
|
|
||||||||
|
Industrial Solutions
|
398
|
|
419
|
|
783
|
|
786
|
|
||||||||
|
Process Control Systems & Solutions
|
498
|
|
465
|
|
1,020
|
|
934
|
|
||||||||
|
Total
|
$
|
2,194
|
|
2,117
|
|
4,356
|
|
4,084
|
|
|||||||
|
11.
|
On April 28, 2017, the Company completed the acquisition of Pentair's valves & controls business for
$3.15 billion
, subject to certain post-closing adjustments. This business, with sales of approximately
$1.6 billion
for the trailing twelve months ended March 2017, is a manufacturer of control, isolation and pressure relief valves and actuators, and complements the Valves, Actuators & Regulators product offering within Automation Solutions. The initial accounting and pro forma disclosures will be provided in the Company's Form 10-Q for the third quarter of 2017 as the timing of the closure has not afforded the Company sufficient time to fully incorporate the impact of this business.
|
|
12.
|
Discontinued Operations
– The Company previously announced strategic actions to streamline its portfolio, drive growth and accelerate value creation for shareholders. On November 30, 2016, the Company completed the sale of its network power systems business for
$4 billion
in cash, subject to certain post-closing adjustments, and retained a subordinated interest in distributions, contingent upon the equity holders first receiving a threshold return on their initial investment. This business comprised the former Network Power segment. Additionally, on January 31, 2017, the Company completed the sale of its power generation, motors and drives business for approximately
$1.2 billion
, subject to post-closing adjustments. This business was previously reported in the former Industrial Automation segment. The results of operations for these businesses were reclassified into discontinued operations, and the assets and liabilities were reflected as held-for-sale.
|
11
|
EMERSON ELECTRIC CO. AND SUBSIDIARIES
|
FORM 10-Q
|
|||
The financial results of the network power systems and power generation, motors and drives businesses reported as discontinued operations for the three and six months ended March 31, 2017 and 2016 were as follows:
|
Three Months Ended March 31,
|
|||||||||||||||||||
|
Network Power Systems
|
Power Generation, Motors and Drives
|
Total
|
|||||||||||||||||
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
||||||||
|
Net sales
|
$
|
1,015
|
|
—
|
|
341
|
|
97
|
|
1,356
|
|
97
|
|
||||||
|
Cost of sales
|
639
|
|
—
|
|
263
|
|
75
|
|
902
|
|
75
|
|
|||||||
|
SG&A
|
270
|
|
—
|
|
71
|
|
21
|
|
341
|
|
21
|
|
|||||||
|
Other (income) deductions, net
|
44
|
|
—
|
|
11
|
|
4
|
|
55
|
|
4
|
|
|||||||
|
Earnings (Loss) before income taxes
|
62
|
|
—
|
|
(4
|
)
|
(3
|
)
|
58
|
|
(3
|
)
|
|||||||
|
Income taxes
|
56
|
|
(14
|
)
|
—
|
|
95
|
|
56
|
|
81
|
|
|||||||
|
Earnings (Loss), net of tax
|
$
|
6
|
|
14
|
|
(4
|
)
|
(98
|
)
|
2
|
|
(84
|
)
|
||||||
In the second quarter of 2017, the loss of
$(84) million
consists of income tax expense of
$134 million
recognized on completion of the sale of the power generation, motors and drives business, an income tax benefit of
$41 million
for planned repatriation of sales proceeds and cash from the business, an additional after-tax gain of
$14 million
related to the divestiture of the network power systems business, lower expense of
$3 million
due to ceasing depreciation and amortization for the discontinued business held-for-sale, and a loss from operations of
$8 million
. In 2016, earnings of
$2 million
included net earnings from operations of
$58 million
,
$28 million
of income tax expense for repatriation of cash, and
$28 million
after-tax for professional fees and other costs.
Discontinued operations for the remainder of fiscal 2017 will reflect the impact of any post-closing adjustments, and professional fees and other costs.
|
Six Months Ended March 31,
|
|||||||||||||||||||
|
Network Power Systems
|
Power Generation, Motors and Drives
|
Total
|
|||||||||||||||||
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
||||||||
|
Net sales
|
$
|
2,063
|
|
630
|
|
679
|
|
407
|
|
2,742
|
|
1,037
|
|
||||||
|
Cost of sales
|
1,289
|
|
394
|
|
524
|
|
307
|
|
1,813
|
|
701
|
|
|||||||
|
SG&A
|
549
|
|
180
|
|
137
|
|
83
|
|
686
|
|
263
|
|
|||||||
|
Other (income) deductions, net
|
92
|
|
(461
|
)
|
23
|
|
44
|
|
115
|
|
(417
|
)
|
|||||||
|
Earnings (Loss) before income taxes
|
133
|
|
517
|
|
(5
|
)
|
(27
|
)
|
128
|
|
490
|
|
|||||||
|
Income taxes
|
80
|
|
540
|
|
—
|
|
89
|
|
80
|
|
629
|
|
|||||||
|
Earnings (Loss), net of tax
|
$
|
53
|
|
(23
|
)
|
(5
|
)
|
(116
|
)
|
48
|
|
(139
|
)
|
||||||
In 2017, the loss of
$(139) million
consists of an after-tax loss of
$172 million
(
$38 million
pretax loss) on the divestiture of the power generation, motors and drives business, an after-tax gain on the divestiture of the network power systems business of
$100 million
(
$465 million
pretax), income tax expense of
$103 million
for repatriation of sales proceeds and cash from the businesses, lower expense of
$30 million
due to ceasing depreciation and amortization for the discontinued businesses held-for-sale, and net earnings from operations of
$6 million
. In 2016, earnings of
$48 million
included net earnings from operations of
$126 million
,
$28 million
of income tax expense for repatriation of cash, and
$50 million
after-tax for professional fees and other costs.
12
|
EMERSON ELECTRIC CO. AND SUBSIDIARIES
|
FORM 10-Q
|
|||
The aggregate carrying amounts of the major classes of assets and liabilities classified as held-for-sale as of September 30, 2016 are summarized as follows:
|
Network Power Systems
|
Power Generation,
Motors and Drives |
Total
|
|||||||||||||
|
Sept 30, 2016
|
Sept 30, 2016
|
Sept 30, 2016
|
|||||||||||||
|
Assets
|
|||||||||||||||
|
Receivables
|
$
|
1,202
|
|
290
|
|
1,492
|
|
||||||||
|
Inventories
|
381
|
|
197
|
|
578
|
|
|||||||||
|
Other current assets
|
108
|
|
22
|
|
130
|
|
|||||||||
|
Property plant & equipment, net
|
352
|
|
259
|
|
611
|
|
|||||||||
|
Goodwill
|
2,111
|
|
580
|
|
2,691
|
|
|||||||||
|
Other noncurrent assets
|
473
|
|
55
|
|
528
|
|
|||||||||
|
Total assets held-for-sale
|
$
|
4,627
|
|
1,403
|
|
6,030
|
|
||||||||
|
Liabilities
|
|||||||||||||||
|
Accounts payable
|
$
|
664
|
|
176
|
|
840
|
|
||||||||
|
Other current liabilities
|
620
|
|
141
|
|
761
|
|
|||||||||
|
Deferred taxes and other noncurrent liabilities
|
227
|
|
99
|
|
326
|
|
|||||||||
|
Total liabilities held-for-sale
|
$
|
1,511
|
|
416
|
|
1,927
|
|
||||||||
Net cash from operating and investing activities for the network power systems and power generation, motors and drives businesses for the six months ended March 31, 2017 and 2016 were as follows:
|
Network Power Systems
|
Power Generation,
Motors and Drives |
Total
|
|||||||||||||||||
|
Mar 31, 2016
|
Mar 31, 2017
|
Mar 31, 2016
|
Mar 31, 2017
|
Mar 31, 2016
|
Mar 31, 2017
|
||||||||||||||
|
Cash from operating activities
|
$
|
163
|
|
(572
|
)
|
27
|
|
(29
|
)
|
190
|
|
(601
|
)
|
||||||
|
Cash from investing activities
|
$
|
(15
|
)
|
5,063
|
|
(23
|
)
|
(12
|
)
|
(38
|
)
|
5,051
|
|
||||||
Cash used for operating activities was
$601 million
for the six months ended March 31, 2017, which primarily includes payments for income taxes on completion of the divestitures and repatriation of cash, and professional fees and other costs. Cash from operations for the six months ended March 31, 2016 of
$190 million
included operating cash flow of the divested businesses, net of income taxes, and professional fees and other costs paid related to the transactions of
$57 million
.
The Company expects total discontinued operations cash used for operating activities in fiscal 2017 to be approximately
$750 million
, which primarily consists of income tax payments related to the divestitures.
13
|
EMERSON ELECTRIC CO. AND SUBSIDIARIES
|
FORM 10-Q
|
|||
Items 2 and 3.
Management's Discussion and Analysis of Financial Condition and Results of Operations
OVERVIEW
The Company's previously announced strategic repositioning actions resulted in the sale of the network power systems business which closed in the first quarter of 2017, and the sale of the power generation, motors and drives business which closed in the second quarter of 2017. These businesses have been reported within discontinued operations for all periods presented. Additionally, on April 28, 2017, the Company completed the acquisition of Pentair's valves & controls business.
Second quarter results reflected continued improvement in served markets across the Company's businesses. Sales from continuing operations were
$3,574 million
, flat compared with the prior year, as spending in energy related markets remained at low levels but improved compared to the first quarter, while demand was favorable in HVAC, refrigeration and construction related markets.
Earnings from continuing operations common stockholders were
$376 million
, up
2 percent
, and diluted earnings per share from continuing operations were
$0.58
, up
2 percent
. Net earnings common stockholders were
$292 million
, down
21 percent
, and diluted earnings per share were
$0.45
, down
21 percent
, reflecting the impact of discontinued operations.
RESULTS OF OPERATIONS
Following is an analysis of the Company’s operating results for the
second quarter ended March 31, 2017
, compared with the
second quarter ended March 31, 2016
.
|
Three Months Ended Mar 31
|
2016
|
2017
|
Change
|
||||||
|
(dollars in millions, except per share amounts)
|
|
|
|
|
|
||||
|
Net sales
|
$
|
3,579
|
|
3,574
|
|
—
|
%
|
||
|
Gross profit
|
$
|
1,542
|
|
1,557
|
|
1
|
%
|
||
|
Percent of sales
|
43.1
|
%
|
43.6
|
%
|
|
|
|||
|
SG&A
|
$
|
878
|
|
868
|
|
|
|
||
|
Percent of sales
|
24.6
|
%
|
24.3
|
%
|
|
|
|||
|
Other deductions, net
|
$
|
66
|
|
83
|
|
|
|
||
|
Interest expense, net
|
$
|
46
|
|
41
|
|
|
|
||
|
Earnings from continuing operations before income taxes
|
$
|
552
|
|
565
|
|
2
|
%
|
||
|
Percent of sales
|
15.4
|
%
|
15.8
|
%
|
|
|
|||
|
Earnings from continuing operations common stockholders
|
$
|
367
|
|
376
|
|
2
|
%
|
||
|
Net earnings common stockholders
|
$
|
369
|
|
292
|
|
(21
|
)%
|
||
|
Percent of sales
|
10.3
|
%
|
8.2
|
%
|
|
|
|||
|
Diluted EPS - Earnings from continuing operations
|
$
|
0.57
|
|
0.58
|
|
2
|
%
|
||
|
Diluted EPS - Net earnings
|
$
|
0.57
|
|
0.45
|
|
(21
|
)%
|
||
Net sales for the second quarter of 2017 were
$3,574 million
, essentially flat (down
$5 million
) compared with
$3,579 million
in 2016. Underlying sales were also flat (up
$5 million
) as 1 percent higher volume was offset by 1 percent lower price. Foreign currency translation subtracted
$17 million
and acquisitions added
$7 million
. Underlying sales increased
2 percent
in the U.S. and decreased
1 percent
internationally. Asia was up
3 percent
(China up
13 percent
) and Europe increased
2 percent
. Latin America, Canada and Middle East/Africa all decreased 8 to 9 percent. Sales decreased
$77 million
in Automation Solutions as capital spending in energy related markets continued to reflect the impact of low oil prices, while general industrial markets showed improvement. Commercial & Residential Solutions sales increased
$73 million
, reflecting favorable conditions in global HVAC, refrigeration and construction related markets.
14
|
EMERSON ELECTRIC CO. AND SUBSIDIARIES
|
FORM 10-Q
|
|||
Cost of sales for the second quarter of 2017 were
$2,017 million
, a decrease of
$20 million
compared with
$2,037 million
in 2016 primarily due to cost reduction actions and the impact of foreign currency translation. Gross profit margin of
43.6 percent
increased 0.5 percentage points compared with
43.1 percent
in 2016, as savings from cost reduction actions more than offset lower price.
Selling, general and administrative (SG&A) expenses of
$868 million
decreased
$10 million
compared with the prior year and SG&A as a percent of sales of
24.3 percent
improved
0.3
percentage points, primarily due to savings from cost reduction actions and lower incentive stock compensation of
$17 million
, partially offset by deleverage on lower volume in the Automation Solutions segment.
Other deductions, net were
$83 million
in 2017, an increase of
$17 million
due to higher acquisition/divestiture costs of
$11 million
and an increase in bad debt expense of
$13 million
, partially offset by a favorable foreign currency transactions impact of
$12 million
. See Note 8.
Pretax earnings from continuing operations of
$565 million
increased
$13 million
, or
2 percent
. Earnings increased
$27 million
in Commercial & Residential Solutions and decreased
$14 million
in Automation Solutions. See Note 10 and the following Business Segments discussion.
Income taxes were
$181 million
for 2017 and
$177 million
for 2016, resulting in effective tax rates of
32 percent
for both years. The tax rate for full year 2017 is estimated at 30 percent, which reflects a $47 million tax benefit from restructuring a foreign subsidiary in the first quarter of 2017.
Earnings from continuing operations attributable to common stockholders were
$376 million
, up
2 percent
, and diluted earnings per share were
$0.58
, up
2 percent
.
Net earnings common stockholders in the second quarter of 2017 were
$292 million
, down
21 percent
, compared with
$369 million
in the prior year, and earnings per share were
$0.45
, down
21 percent
compared with
$0.57
in 2016. These results include the impact of discontinued operations which is discussed below.
Discontinued Operations
Discontinued operations for the second quarter of 2017 includes a net loss of
$(84) million
($0.13 per share), consisting of separation costs of
$76 million
, primarily for income taxes related to the divestiture of the power generation, motors and drives business, and a loss from operations of
$8 million
. In 2016, discontinued operations included net earnings of
$2 million
, which consisted of earnings from operations of
$58 million
and separation costs related to the divestitures of
$56 million
. See Note 12.
BUSINESS SEGMENTS
Following is an analysis of operating results for the Company’s business segments for the
second quarter ended March 31, 2017
, compared with the
second quarter ended March 31, 2016
. The Company defines segment earnings as earnings before interest and taxes. See Notes 1 and 10 for a discussion of the Company's business segments.
15
|
EMERSON ELECTRIC CO. AND SUBSIDIARIES
|
FORM 10-Q
|
|||
Automation Solutions
|
Three Months Ended Mar 31
|
2016
|
2017
|
Change
|
||||||
|
(dollars in millions)
|
|
|
|
||||||
|
Sales
|
$
|
2,194
|
|
2,117
|
|
(3
|
)%
|
||
|
Earnings
|
$
|
342
|
|
328
|
|
(4
|
)%
|
||
|
Margin
|
15.6
|
%
|
15.5
|
%
|
|
|
|||
|
Sales by Major Product Offering
|
|||||||||
|
Measurement & Analytical Instrumentation
|
$
|
766
|
|
736
|
|
(4
|
)%
|
||
|
Valves, Actuators & Regulators
|
532
|
|
497
|
|
(7
|
)%
|
|||
|
Industrial Solutions
|
398
|
|
419
|
|
5
|
%
|
|||
|
Process Control Systems & Solutions
|
498
|
|
465
|
|
(6
|
)%
|
|||
|
Total
|
$
|
2,194
|
|
2,117
|
|
(3
|
)%
|
||
Automation Solutions sales were
$2.1 billion
in the second quarter, a decrease of
$77 million
, or
3 percent
. Underlying sales also decreased
3 percent
(
$67 million
) on 2 percent lower volume and approximately 1 percent lower price. Foreign currency translation had a
$10 million
unfavorable impact. Sales for Measurement & Analytical Instrumentation, Valves, Actuators & Regulators and Process Control Systems & Solutions decreased
$98 million
, or
5 percent
compared with the prior year as capital spending by global oil and gas customers continued to be impacted by low oil prices, but improved compared to the first quarter. Downstream markets, including power and life sciences, and MRO activity in energy related markets were favorable. Industrial Solutions sales increased
$21 million
, or
5 percent
, as general industrial end markets improved, especially automotive, while upstream oil and gas markets remained under pressure. Underlying sales decreased
1 percent
in the U.S. and were flat in Europe. Sales decreased
2 percent
in Asia (China up
10 percent
), while Latin America decreased
16 percent
, Canada decreased
11 percent
and Middle East/Africa was down
9 percent
. Earnings were
$328 million
, a decrease of
$14 million
, and margin decreased 0.1 percentage points due to deleverage on lower volume and higher bad debt expense of $12 million, largely offset by savings from cost reduction actions. Slightly lower price was substantially offset by materials cost containment. Based on current and expected order trends, results are expected to continue to improve in the second half of the fiscal year with underlying sales turning positive driven by MRO and small project activity.
Commercial & Residential Solutions
|
Three Months Ended Mar 31
|
2016
|
2017
|
Change
|
||||||
|
(dollars in millions)
|
|
|
|
||||||
|
Sales:
|
|||||||||
|
Climate Technologies
|
$
|
993
|
|
1,058
|
|
7
|
%
|
||
|
Tools & Home Products
|
394
|
|
402
|
|
2
|
%
|
|||
|
Total
|
$
|
1,387
|
|
1,460
|
|
5
|
%
|
||
|
Earnings:
|
|||||||||
|
Climate Technologies
|
$
|
226
|
|
249
|
|
10
|
%
|
||
|
Tools & Home Products
|
92
|
|
96
|
|
6
|
%
|
|||
|
Total
|
$
|
318
|
|
345
|
|
9
|
%
|
||
|
Margin
|
22.9
|
%
|
23.7
|
%
|
|
||||
Commercial & Residential Solutions sales were
$1.5 billion
in the second quarter, an increase of
$73 million
, or
5 percent
, reflecting favorable conditions in global HVAC, refrigeration and construction related markets. Underlying sales were also up
5 percent
(
$73 million
) on 6 percent higher volume, partially offset by approximately 1 percent lower price. Foreign currency translation deducted
1 percent
(
$7 million
) and acquisitions added
1 percent
(
$7 million
). Climate Technologies sales were
$1,058 million
in the second quarter, an increase of
$65 million
, or
7 percent
. Global air conditioning sales were solid on steady growth in the U.S. and strength in Asia, particularly China, while Europe was down moderately. Global refrigeration sales were up moderately led by robust growth in China and modest growth in the U.S. and Europe. Sensors and solutions had strong growth, while temperature
16
|
EMERSON ELECTRIC CO. AND SUBSIDIARIES
|
FORM 10-Q
|
|||
controls was up moderately. Tools & Home Products sales were
$402 million
in the second quarter (up
$8 million
). Sales for professional tools were up modestly on favorable demand from oil and gas customers. Food waste disposers were up modestly and the storage business was up slightly, reflecting favorable demand from big box retailers. The wet/dry vacuums business was down slightly. Overall, underlying sales increased
4 percent
in the U.S.,
6 percent
in Europe and
13 percent
in Asia (China up
20 percent
). Sales increased
7 percent
in Latin America, decreased
4 percent
in Canada and were down
3 percent
in Middle East/Africa. Earnings were
$345 million
, an increase of
$27 million
including
$23 million
in Climate Technologies, and margin improved 0.8 percentage points due to increased volume and resulting leverage. Earnings were also aided by savings from cost reduction actions and lower customer accommodation costs of $8 million compared with the prior year. Slightly lower price and higher materials costs partially offset the increase. A favorable outlook for global demand within the Company's served markets supports the expectation for mid-single digit growth in fiscal 2017.
RESULTS OF OPERATIONS
Following is an analysis of the Company’s operating results for the
six months ended
March 31, 2017
, compared with the
six months ended
March 31, 2016
.
|
Six Months Ended Mar 31
|
2016
|
2017
|
Change
|
||||||
|
(dollars in millions, except per share amounts)
|
|
|
|
|
|
||||
|
Net sales
|
$
|
6,916
|
|
6,790
|
|
(2
|
)%
|
||
|
Gross profit
|
$
|
2,956
|
|
2,922
|
|
(1
|
)%
|
||
|
Percent of sales
|
42.7
|
%
|
43.0
|
%
|
|
|
|||
|
SG&A
|
$
|
1,757
|
|
1,690
|
|
|
|
||
|
Percent of sales
|
25.4
|
%
|
24.8
|
%
|
|
|
|||
|
Other deductions, net
|
$
|
120
|
|
116
|
|
|
|
||
|
Interest expense, net
|
$
|
93
|
|
87
|
|
|
|
||
|
Earnings from continuing operations before income taxes
|
$
|
986
|
|
1,029
|
|
4
|
%
|
||
|
Percent of sales
|
14.3
|
%
|
15.2
|
%
|
|
|
|||
|
Earnings from continuing operations common stockholders
|
$
|
670
|
|
740
|
|
10
|
%
|
||
|
Net earnings common stockholders
|
$
|
718
|
|
601
|
|
(16
|
)%
|
||
|
Percent of sales
|
10.4
|
%
|
8.8
|
%
|
|
|
|||
|
Diluted EPS - Earnings from continuing operations
|
$
|
1.03
|
|
1.14
|
|
11
|
%
|
||
|
Diluted EPS - Net earnings
|
$
|
1.10
|
|
|
0.93
|
|
|
(15
|
)%
|
Net sales for the first six months of 2017 were
$6,790 million
, a decrease of
$126 million
, or
2 percent
compared with
$6,916 million
in 2016. Underlying sales were down
1 percent
(
$83 million
) on slightly lower volume and price. Foreign currency translation deducted
1 percent
(
$57 million
) while acquisitions added
$14 million
. Underlying sales decreased
1 percent
in the U.S. and
2 percent
internationally. Europe was flat and Asia increased
5 percent
(China up
15 percent
), while Latin America was down
13 percent
. Canada decreased
14 percent
and Middle East/Africa was down
6 percent
. Sales decreased
$272 million
in Automation Solutions due to lower capital spending in energy related markets, primarily reflecting the impact of low oil prices. Commercial & Residential Solutions sales increased
$147 million
reflecting favorable conditions in HVAC, refrigeration and construction related markets.
Cost of sales for 2017 were
$3,868 million
, a decrease of
$92 million
versus
$3,960 million
in 2016, primarily due to cost reduction actions and the impact of foreign currency translation. Gross profit margin was
43.0 percent
in 2017 compared with
42.7 percent
in 2016, as savings from cost reduction and containment actions more than offset deleverage on the lower volume and lower price.
SG&A expenses of
$1,690 million
decreased
$67 million
and SG&A as a percent of sales of
24.8 percent
improved 0.6 percentage points compared with the prior year, primarily due to savings from cost reduction actions, lower incentive stock compensation of
$43 million
and the impact of foreign currency translation, partially offset by deleverage on lower volume.
17
|
EMERSON ELECTRIC CO. AND SUBSIDIARIES
|
FORM 10-Q
|
|||
Other deductions, net were
$116 million
in 2017, a decrease of
$4 million
primarily due to a favorable foreign currency transactions impact of
$46 million
, partially offset by higher acquisition/divestiture costs of
$21 million
, an increase in bad debt expense of
$11 million
and higher restructuring expense of
$6 million
. See Note 8.
Pretax earnings from continuing operations of
$1,029 million
increased
$43 million
, or
4 percent
. Earnings increased
$58 million
in Commercial & Residential Solutions and decreased
$29 million
in Automation Solutions.
Income taxes were
$275 million
for 2017 and
$304 million
for 2016, resulting in effective tax rates of
27 percent
and
31 percent
, respectively. The 4 percentage point decrease versus the prior year is largely due to a $47 million tax benefit from restructuring a foreign subsidiary.
Earnings from continuing operations attributable to common stockholders for 2017 were
$740 million
, up
10 percent
, and diluted earnings per share were
$1.14
, up
11 percent
.
Net earnings common stockholders in 2017 were
$601 million
, down
16 percent
, compared with
$718 million
in the prior year, and earnings per share were
$0.93
, down
15 percent
compared with
$1.10
in 2016. These results include the impact of discontinued operations which is discussed below.
Discontinued Operations
Discontinued operations for 2017 includes a net loss of
$(139) million
(
$0.21
per share), consisting of an after-tax loss of
$172 million
on the divestiture of the power generation, motors and drives business and an after-tax gain on the divestiture of the network power systems business of
$100 million
, income tax expense of
$103 million
for repatriation of sales proceeds and cash from the businesses, lower expense of
$30 million
due to ceasing depreciation and amortization for the discontinued businesses held-for-sale, and earnings from operations of
$6 million
. In 2016, discontinued operations included net earnings of
$48 million
(
$0.07
per share), which consisted of earnings from operations of
$126 million
and separation costs related to the divestitures of
$78 million
. See Note 12.
BUSINESS SEGMENTS
Following is an analysis of operating results for the Company’s business segments for the
six months ended
March 31, 2017
, compared with the
six months ended
March 31, 2016
. The Company defines segment earnings as earnings before interest and taxes.
Automation Solutions
|
Six Months Ended Mar 31
|
2016
|
2017
|
Change
|
||||||
|
(dollars in millions)
|
|
|
|
||||||
|
Sales
|
$
|
4,356
|
|
4,084
|
|
(6
|
)%
|
||
|
Earnings
|
$
|
683
|
|
654
|
|
(4
|
)%
|
||
|
Margin
|
15.7
|
%
|
16.0
|
%
|
|
|
|||
|
Sales by Major Product Offering
|
|||||||||
|
Measurement & Analytical Instrumentation
|
$
|
1,523
|
|
1,418
|
|
(7
|
)%
|
||
|
Valves, Actuators & Regulators
|
1,030
|
|
946
|
|
(8
|
)%
|
|||
|
Industrial Solutions
|
783
|
|
786
|
|
—
|
%
|
|||
|
Process Control Systems & Solutions
|
1,020
|
|
934
|
|
(8
|
)%
|
|||
|
Total
|
$
|
4,356
|
|
4,084
|
|
(6
|
)%
|
||
Automation Solutions sales were
$4.1 billion
in the first six months of 2017, a decrease of
$272 million
, or
6 percent
. Underlying sales decreased
5 percent
(
$234 million
) on 4 percent lower volume and 1 percent lower price. Foreign currency translation had a
1 percent
(
$38 million
) unfavorable impact. Sales for Measurement & Analytical Instrumentation, Valves, Actuators & Regulators, and Process Control Systems & Solutions decreased
$275 million
, or
8 percent
compared with the prior year on lower capital and operational spending by global oil and gas customers, reflecting the impact of low oil prices. Industrial Solutions sales increased
$3 million
, flat compared with the prior year, on improving conditions in general industrial end markets, offset by weakness in upstream oil and gas markets. Chemical, power and life sciences markets remained favorable. Underlying sales decreased
5 percent
in
18
|
EMERSON ELECTRIC CO. AND SUBSIDIARIES
|
FORM 10-Q
|
|||
the U.S. and
2 percent
in Europe. Sales decreased
2 percent
in Asia (China up
7 percent
) while sales declined
22 percent
in Latin America,
19 percent
in Canada and
4 percent
in Middle East/Africa. Earnings were
$654 million
, a decrease of
$29 million
due to the decline in volume and higher bad debt expense of $10 million. Margin improved 0.3 percentage points reflecting savings from cost reduction actions and favorable foreign currency transactions comparisons of $37 million (unfavorable in the prior year), partially offset by significant deleverage on the lower volume. Lower price was partially offset by materials cost containment.
Commercial & Residential Solutions
|
Six Months Ended Mar 31
|
2016
|
2017
|
Change
|
||||||
|
(dollars in millions)
|
|
|
|
||||||
|
Sales:
|
|||||||||
|
Climate Technologies
|
$
|
1,779
|
|
1,917
|
|
8
|
%
|
||
|
Tools & Home Products
|
786
|
|
795
|
|
1
|
%
|
|||
|
Total
|
$
|
2,565
|
|
2,712
|
|
6
|
%
|
||
|
Earnings:
|
|||||||||
|
Climate Technologies
|
$
|
359
|
|
410
|
|
14
|
%
|
||
|
Tools & Home Products
|
177
|
|
184
|
|
4
|
%
|
|||
|
Total
|
$
|
536
|
|
594
|
|
11
|
%
|
||
|
Margin
|
20.9
|
%
|
21.9
|
%
|
|
||||
Commercial & Residential Solutions sales were
$2.7 billion
in the first six months of 2017, an increase of
$147 million
, or
6 percent
, reflecting favorable conditions in HVAC, refrigeration and U.S. and Asian construction markets. Underlying sales were up
6 percent
(
$152 million
) on 7 percent higher volume, partially offset by 1 percent lower price. Foreign currency translation deducted
1 percent
(
$19 million
) and acquisitions added
1 percent
(
$14 million
). Climate Technologies sales were
$1,917 million
in the first six months of 2017, an increase of
$138 million
, or
8 percent
. Global air conditioning sales were strong, led by strength in the U.S. and Asia and robust growth in China partially due to easier comparisons, while sales in Europe were flat and Middle East/Africa declined sharply. Global refrigeration sales were up moderately, reflecting robust growth in China on increased adoption of energy-efficient solutions and slight growth in the U.S., while sales decreased modestly in Europe. Sensors and solutions had strong growth, while temperature controls was up moderately. Tools & Home Products sales were
$795 million
in the first six months of 2017, up
$9 million
compared to the prior year. Professional tools sales were up moderately and wet/dry vacuums had modest growth as favorable conditions continued in U.S. construction markets. Sales were up slightly for food waste disposers while the storage business declined moderately. Overall, underlying sales increased
4 percent
in the U.S.,
6 percent
in Europe and
19 percent
in Asia (China up
31 percent
). Sales increased
5 percent
in Latin America, decreased
2 percent
in Canada and were down
15 percent
in Middle East/Africa. Earnings were
$594 million
, an increase of
$58 million
including
$51 million
in Climate Technologies, and margin improved 1 percentage point due to increased volume and resulting leverage, savings from cost reduction actions and lower customer accommodation costs of $13 million compared with the prior year. Lower price and unfavorable mix partially offset the increase.
FINANCIAL CONDITION
Key elements of the Company's financial condition for the
six months ended
March 31, 2017
as compared to the year ended
September 30, 2016
follow.
|
|
Sept 30, 2016
|
|
Mar 31, 2017
|
|
||
|
Working capital (in millions)
|
$
|
1,353
|
|
5,675
|
|
|
|
Current ratio
|
1.2
|
|
2.5
|
|
||
|
Total debt-to-total capital
|
46.7
|
%
|
33.7
|
%
|
||
|
Net debt-to-net capital
|
31.3
|
%
|
(13.8
|
)%
|
||
|
Interest coverage ratio
|
11.8
|
X
|
11.1X
|
|
||
The Company's working capital, current ratio, and debt-to-capital improved due to $5.1 billion of proceeds received from the sale of the network power systems business and the power generation, motors and drives business. A
19
|
EMERSON ELECTRIC CO. AND SUBSIDIARIES
|
FORM 10-Q
|
|||
portion of these funds were used in April 2017 to complete the previously announced valves & controls acquisition. See Note 11. The interest coverage ratio (earnings before income taxes plus interest expense, divided by interest expense) of
11.1
X for the first
six months
of 2017 compares to
10.2
X for the first
six months
of 2016. The increase reflects higher pretax earnings and lower interest expense in 2017.
Operating cash flow from continuing operations for the first six months of 2017 was
$1,011 million
, a decrease of
$5 million
compared with
$1,016 million
in the prior year, reflecting an increase in working capital investment, offset by higher earnings. Free cash flow from continuing operations of
$817 million
(operating cash flow of
$1,011 million
less capital expenditures of
$194 million
) increased
$11 million
due to lower capital expenditures in 2017. Operating cash flow funded dividends of
$621 million
, capital expenditures and common stock purchases. Free cash flow from continuing operations was
$806 million
in 2016 (operating cash flow of
$1,016 million
less capital expenditures of
$210 million
).
Including the impact of discontinued operations, total cash provided by operating activities was
$410 million
compared with
$1,206 million
in the prior year. Total operating cash flow was reduced by $601 million of cash used for discontinued operations, which primarily includes payments for income taxes on completion of the divestitures and repatriation of cash, and professional fees and other costs.
The Company expects total discontinued operations cash used for operating activities in fiscal 2017 to be approximately $750 million, which primarily consists of income tax payments related to the divestitures.
Emerson's financial structure provides the flexibility necessary to achieve its strategic objectives. The Company has been successful in efficiently deploying cash where needed worldwide to fund operations, complete acquisitions and sustain long-term growth. The Company believes that sufficient funds will be available to meet the Company’s needs in the foreseeable future through operating cash flow, existing resources, short- and long-term debt capacity or backup credit lines.
FISCAL 2017 OUTLOOK
The Company's performance in the first half of the year and current order trends reflect positive momentum within its two business platforms. Improving economic conditions and positive trends in capital spending support the Company's outlook for the second half of the year. Considering these factors, the Company expects full-year fiscal 2017 net sales to be approximately flat, with underlying sales up 1 percent excluding unfavorable currency translation of approximately 1 percent. Earnings per share from continuing operations are expected to be $2.55 to $2.65. Automation Solutions net sales are expected to be down 3 to 4 percent, with underlying sales down 2 to 3 percent excluding unfavorable currency translation of approximately 1 percent. Commercial & Residential Solutions net and underlying sales are expected to be up 5 to 6 percent. The outlook contained herein reflects the Company’s expectations for its consolidated results from continuing operations, and excludes any impact related to the acquisition of Pentair's valves & controls business, which was completed on April 28th. The timing of the closure has not afforded the Company sufficient time to fully incorporate the impact of this business into its guidance. More detailed information on the valves & controls business and its impact on the Company's guidance will be provided in a subsequent period.
Statements in this report that are not strictly historical may be "forward-looking" statements, which involve risks and uncertainties, and Emerson undertakes no obligation to update any such statements to reflect later developments. These risks and uncertainties include economic and currency conditions, market demand, pricing, protection of intellectual property, and competitive and technological factors, among others, which are set forth in the “Risk Factors” of Part I, Item 1, and the "Safe Harbor Statement" of Part II, Item 7, to the Company's Annual Report on Form 10-K for the year ended September 30, 2016 and in subsequent reports filed with the SEC, which are hereby incorporated by reference.
Item 4. Controls and Procedures
The Company maintains a system of disclosure controls and procedures designed to ensure that information required to be disclosed in its reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported in a timely manner. This system also is designed to ensure information is accumulated and communicated to management, including the Company's certifying officers, to allow timely decisions regarding
20
|
EMERSON ELECTRIC CO. AND SUBSIDIARIES
|
FORM 10-Q
|
|||
required disclosure. Based on an evaluation performed, the certifying officers have concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report.
Notwithstanding the foregoing, there can be no assurance that the Company's disclosure controls and procedures will detect or uncover all failures of persons within the Company and its consolidated subsidiaries to report material information otherwise required to be set forth in the Company's reports.
There was no change in the Company's internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II. OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(c) Issuer Purchases of Equity Securities (shares in 000s).
|
Period
|
Total Number of Shares
Purchased
|
Average Price Paid Per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
|
|||
|
January 2017
|
—
|
$0.00
|
—
|
63,541
|
|||
|
February 2017
|
1,573
|
$63.56
|
1,573
|
61,968
|
|||
|
March 2017
|
375
|
$59.75
|
375
|
61,593
|
|||
|
Total
|
1,948
|
$62.83
|
1,948
|
61,593
|
|||
In November 2015, the Board of Directors authorized the purchase of up to 70 million shares, and
61.6 million
shares remain available.
Item 6. Exhibits
(a) Exhibits (Listed by numbers corresponding to the Exhibit Table of Item 601 in Regulation S-K).
|
12
|
|
Ratio of Earnings to Fixed Charges.
|
|
|
|
|
|
31
|
|
Certifications pursuant to Exchange Act Rule 13a-14(a).
|
|
|
|
|
|
32
|
|
Certifications pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350.
|
|
|
|
|
|
101
|
|
Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Earnings for the three and six months ended March 31, 2017 and 2016, (ii) Consolidated Statements of Comprehensive Income for the three and six months ended March 31, 2017 and 2016, (iii) Consolidated Balance Sheets as of September 30, 2016 and March 31, 2017, (iv) Consolidated Statements of Cash Flows for the six months ended March 31, 2017 and 2016, and (v) Notes to Consolidated Financial Statements for the three and six months ended March 31, 2017.
|
21
|
EMERSON ELECTRIC CO. AND SUBSIDIARIES
|
FORM 10-Q
|
|||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
EMERSON ELECTRIC CO.
|
|
|||
|
|
|
|
||
|
By
|
/s/ Frank J. Dellaquila
|
|
||
|
|
|
Frank J. Dellaquila
|
|
|
|
|
|
Senior Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
(on behalf of the registrant and as Chief Financial Officer)
|
|
|
|
May 4, 2017
|
||||
INDEX TO EXHIBITS
|
Exhibit No.
|
Exhibit
|
||
|
12
|
|
Ratio of Earnings to Fixed Charges.
|
|
|
|
|
||
|
31
|
|
Certifications pursuant to Exchange Act Rule 13a-14(a).
|
|
|
|
|
||
|
32
|
|
Certifications pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350.
|
|
|
|
|
||
|
101
|
|
Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Earnings for the three and six months ended March 31, 2017 and 2016, (ii) Consolidated Statements of Comprehensive Income for the three and six months ended March 31, 2017 and 2016, (iii) Consolidated Balance Sheets as of September 30, 2016 and March 31, 2017, (iv) Consolidated Statements of Cash Flows for the six months ended March 31, 2017 and 2016, and (v) Notes to Consolidated Financial Statements for the three and six months ended March 31, 2017.
|
|
22
TABLE OF CONTENTS