Notes to Consolidated Financial Statements
EMERSON ELECTRIC CO. & SUBSIDIARIES
(Dollars and shares in millions, except per share amounts or where noted)
(1) BASIS OF PRESENTATION
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, 2019. Certain prior year amounts have been reclassified to conform to current year presentation.
On October 1, 2019, the Company adopted ASC 842, Leases, which requires rights and obligations related to lease arrangements to be recognized on the balance sheet, using the optional transition method under which prior periods were not adjusted. The Company elected the package of practical expedients for leases that commenced prior to the adoption date, which included carrying forward the historical lease classification as operating or finance. The adoption of ASC 842 resulted in the recognition of operating lease right-of-use assets and related lease liabilities of approximately $500 as of October 1, 2019, but did not materially impact the Company's earnings or cash flows for the three and six months ended March 31, 2020.
On October 1, 2019, the Company adopted updates to ASC 815, Derivatives and Hedging, which permit hedging certain contractually specified risk components. Additionally, the updates eliminate the requirement to separately measure and report hedge ineffectiveness and simplify hedge documentation and effectiveness assessment requirements. These updates were adopted using a modified retrospective approach and were immaterial to the Company's financial statements for the three and six months ended March 31, 2020.
(2) REVENUE RECOGNITION
Emerson is a global manufacturer that combines technology and engineering to provide innovative solutions to its customers, largely in the form of tangible products. The vast majority of the Company's revenues relate to a broad offering of manufactured products which are recognized at the point in time when control transfers, while a smaller portion is recognized over time or relates to sales arrangements with multiple performance obligations. See Note 13 for additional information about the Company's revenues.
The following table summarizes the balances of the Company's unbilled receivables (contract assets), which are reported in Other current assets, and its customer advances (contract liabilities), which are reported in Accrued expenses.
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Sept 30, 2019
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Mar 31, 2020
|
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Unbilled receivables (contract assets)
|
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$
|
456
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|
|
|
397
|
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Customer advances (contract liabilities)
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(519)
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|
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(587)
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Net contract liabilities
|
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$
|
(63)
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|
|
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(190)
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|
The majority of the Company's contract balances relate to arrangements where revenue is recognized over time and payments from customers are made according to a contractual billing schedule. The increase in net contract liabilities was due to customer billings which exceeded revenue recognized for performance completed during the period. Revenue recognized for the three and six months ended March 31, 2020 included approximately $56 and $326, respectively, that was included in the beginning contract liability balance. Other factors that impacted the change in net contract liabilities were immaterial. Revenue recognized for the six months ended March 31, 2020 for performance obligations that were satisfied in previous periods, including cumulative catchup adjustments on the Company's long-term contracts, was not material.
As of March 31, 2020, the Company's backlog relating to unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was approximately $5.7 billion. The Company expects to recognize approximately 85 percent of its remaining performance obligations as revenue over the next 12 months, with the remainder substantially over the subsequent two years thereafter.
(3) WEIGHTED-AVERAGE COMMON SHARES
Reconciliations of weighted-average shares for basic and diluted earnings per common share follow. Earnings allocated to participating securities were inconsequential.
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Three Months Ended
March 31,
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Six Months Ended
March 31,
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2019
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2020
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2019
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2020
|
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Basic shares outstanding
|
614.0
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|
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607.4
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|
|
619.0
|
|
|
608.7
|
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Dilutive shares
|
4.1
|
|
|
3.6
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|
|
3.9
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|
|
3.9
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|
Diluted shares outstanding
|
618.1
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|
|
611.0
|
|
|
622.9
|
|
|
612.6
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(4) ACQUISITIONS AND DIVESTITURES
During the first six months of 2020, the Company's acquisition spending totaled $96, net of cash acquired.
The Company acquired eight businesses in 2019, all in the Automation Solutions segment, for $469, net of cash acquired. These eight businesses had combined annual sales of approximately $300. The Company recognized goodwill of $213 ($158 of which is expected to be tax deductible) and other identifiable intangible assets of $155, primarily customer relationships and intellectual property with a weighted-average life of approximately nine years.
Valuations of certain acquired assets and liabilities are in-process and subject to refinement for transactions completed after March 31, 2019.
(5) PENSION & POSTRETIREMENT PLANS
Total periodic pension and postretirement (income) expense is summarized below:
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Three Months Ended March 31,
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Six Months Ended March 31,
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2019
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|
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2020
|
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2019
|
|
|
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2020
|
|
Service cost
|
|
$
|
18
|
|
|
|
22
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|
|
|
$
|
36
|
|
|
|
44
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|
Interest cost
|
|
50
|
|
|
|
40
|
|
|
|
100
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|
|
|
80
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Expected return on plan assets
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|
(88)
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|
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(84)
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|
|
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(176)
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|
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(168)
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Net amortization
|
|
16
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|
|
|
38
|
|
|
|
33
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|
|
|
75
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Total
|
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$
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(4)
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|
|
16
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|
|
|
$
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(7)
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|
|
|
31
|
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(6) OTHER DEDUCTIONS, NET
Other deductions, net are summarized below:
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Three Months Ended
March 31,
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|
Six Months Ended
March 31,
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|
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|
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2019
|
|
|
|
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2020
|
|
|
|
2019
|
|
|
|
2020
|
|
|
|
|
|
|
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|
|
|
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|
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Amortization of intangibles (intellectual property and customer
relationships)
|
|
$
|
60
|
|
|
|
59
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|
|
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$
|
117
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|
|
|
118
|
|
Restructuring costs
|
|
10
|
|
|
|
31
|
|
|
|
20
|
|
|
|
128
|
|
Special advisory fees
|
|
—
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|
|
—
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|
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—
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|
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13
|
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Other
|
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(13)
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|
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(48)
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|
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(30)
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|
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(39)
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Total
|
|
$
|
57
|
|
|
|
42
|
|
|
|
$
|
107
|
|
|
|
220
|
|
In the second quarter of fiscal 2020, the change in Other included favorable impacts from foreign currency transactions of $36 and supplemental retirement plans of $16, partially offset by an unfavorable impact from pensions of $16. On a year-to-date basis, the change in Other reflects a favorable impact from foreign currency transactions of $22 and lower litigation costs, partially offset by an unfavorable impact from pensions of $30.
(7) RESTRUCTURING COSTS
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 costs incurred in the first half of fiscal 2020 largely relate to the Company's initiatives to improve operating margins that began in the third quarter of fiscal 2019 and include workforce reductions of approximately 1,800 employees. The Company expects fiscal 2020 restructuring expense and related costs to be approximately $280, an increase of $65 compared to its previous estimate, including costs to complete actions initiated in the first half of the year.
Restructuring expense by business segment follows:
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|
Three Months Ended
March 31,
|
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|
|
Six Months Ended
March 31,
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|
|
|
|
|
2019
|
|
|
|
2020
|
|
|
|
2019
|
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Automation Solutions
|
|
$
|
6
|
|
|
|
23
|
|
|
|
11
|
|
|
|
106
|
|
|
|
|
|
|
|
|
|
|
|
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Climate Technologies
|
|
1
|
|
|
|
2
|
|
|
|
4
|
|
|
|
9
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Tools & Home Products
|
|
2
|
|
|
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5
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|
|
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4
|
|
|
|
8
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Commercial & Residential Solutions
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3
|
|
|
|
7
|
|
|
|
8
|
|
|
|
17
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|
|
|
|
|
|
|
|
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|
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Corporate
|
|
1
|
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|
|
1
|
|
|
|
1
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total
|
|
$
|
10
|
|
|
|
31
|
|
|
|
20
|
|
|
|
128
|
|
Details of the change in the liability for restructuring costs during the six months ended March 31, 2020 follow:
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|
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|
|
Sept 30, 2019
|
|
|
|
Expense
|
|
|
|
Utilized/Paid
|
|
|
|
Mar 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and benefits
|
|
$
|
62
|
|
|
|
105
|
|
|
|
57
|
|
|
|
110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
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|
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|
|
|
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|
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|
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Other
|
|
7
|
|
|
|
23
|
|
|
|
26
|
|
|
|
4
|
|
Total
|
|
$
|
69
|
|
|
|
128
|
|
|
|
83
|
|
|
|
114
|
|
The tables above do not include $9 of costs related to these restructuring actions incurred in the second quarter of fiscal 2020 that U.S. GAAP requires to be reported in cost of sales.
(8) INCOME TAXES
Income taxes were $165 in the second quarter of fiscal 2020 and $150 in 2019, resulting in effective tax rates of 24 percent and 22 percent, respectively. The current year rate included unfavorable discrete items, which increased the rate 1 percentage point, while the prior year rate included favorable discrete tax items, which reduced the rate 2 percentage points.
Income taxes were $259 for the first six months of 2020 and $274 for 2019, resulting in effective tax rates of 23 percent and 22 percent, respectively. The prior year rate included favorable discrete items, which reduced the rate 2 percentage points.
On March 27, 2020, the CARES Act (the "Act") was enacted in response to the COVID-19 pandemic, and among other things, provides tax relief to businesses. Tax provisions of the Act include the deferral of certain payroll taxes, relief for retaining employees, and other provisions. The Company is evaluating the impact of the Act and currently expects to benefit from the deferral of certain payroll taxes through the end of calendar year 2020.
(9) LEASES
The Company leases offices; manufacturing facilities and equipment; and transportation, information technology and office equipment under operating lease arrangements. Finance lease arrangements are immaterial. The Company determines whether an arrangement is, or contains, a lease at contract inception. An arrangement contains a lease if the Company has the right to direct the use of and obtain substantially all of the economic benefits of an identified asset. Right-of-use assets and lease liabilities are recognized at lease commencement based on the present value of lease payments over the lease term. Leases with an initial term of 12 months or less are not recognized on the balance sheet and are recorded as short-term lease expense. The discount rate used to calculate present value is the Company's incremental borrowing rate based on the lease term and the economic environment of the applicable country or region.
Certain leases contain renewal options or options to terminate prior to lease expiration, which are included in the measurement of right-of-use assets and lease liabilities when it is reasonably certain they will be exercised. The Company has elected to account for lease and non-lease components as a single lease component for its offices and manufacturing facilities. Some lease arrangements include payments that are adjusted periodically based on actual charges incurred for common area maintenance, utilities, taxes and insurance, or changes in an index or rate referenced in the lease. The fixed portion of these payments is included in the measurement of right-of-use assets and lease liabilities at lease commencement, while the variable portion is recorded as variable lease expense. The Company's leases typically do not contain material residual value guarantees or restrictive covenants.
The components of lease expense for the three and six months ended March 31, 2020 were as follows:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
March 31, 2020
|
|
|
|
|
|
|
|
|
|
|
Operating lease expense
|
|
$
|
53
|
|
|
|
106
|
|
Variable lease expense
|
|
$
|
5
|
|
|
|
10
|
|
Short-term lease expense and sublease income were immaterial for the three and six months ended March 31, 2020. Cash paid for operating leases is classified within operating cash flows and was $101 for the six months ended March 31, 2020. Operating lease right-of-use asset additions were $123 for the six months ended March 31, 2020.
The following table summarizes the balances of the Company's operating lease right-of-use assets and operating lease liabilities as of March 31, 2020, the vast majority of which relates to offices and manufacturing facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mar 31, 2020
|
|
Right-of-use assets (Other assets)
|
|
|
|
|
$
|
496
|
|
Current lease liabilities (Accrued expenses)
|
|
|
|
|
$
|
148
|
|
Noncurrent lease liabilities (Other liabilities)
|
|
|
|
|
$
|
353
|
|
The weighted-average remaining lease term for operating leases was 5.2 years and the weighted-average discount rate was 2.8 percent as of March 31, 2020.
Future maturities of operating lease liabilities as of March 31, 2020 are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mar 31, 2020
|
|
Remainder of 2020
|
|
|
|
|
$
|
84
|
|
2021
|
|
|
|
|
132
|
|
2022
|
|
|
|
|
100
|
|
2023
|
|
|
|
|
73
|
|
2024
|
|
|
|
|
51
|
|
Thereafter
|
|
|
|
|
94
|
|
Total lease payments
|
|
|
|
|
534
|
|
Less: Interest
|
|
|
|
|
33
|
|
Total lease liabilities
|
|
|
|
|
$
|
501
|
|
Lease commitments that have not yet commenced were immaterial as of March 31, 2020.
The future minimum annual rentals under noncancelable long-term leases as of September 30, 2019 were as follows: $159 in 2020, $112 in 2021, $82 in 2022, $57 in 2023, $38 in 2024 and $63 thereafter.
(10) OTHER FINANCIAL INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sept 30, 2019
|
|
|
Mar 31, 2020
|
|
Inventories
|
|
|
|
|
|
Finished products
|
|
$
|
578
|
|
|
|
641
|
|
Raw materials and work in process
|
|
1,302
|
|
|
|
1,417
|
|
Total
|
|
$
|
1,880
|
|
|
|
2,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
|
|
|
Property, plant and equipment, at cost
|
|
$
|
8,671
|
|
|
|
8,734
|
|
Less: Accumulated depreciation
|
|
5,029
|
|
|
|
5,181
|
|
Total
|
|
$
|
3,642
|
|
|
|
3,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill by business segment
|
|
|
|
|
|
Automation Solutions
|
|
$
|
5,467
|
|
|
|
5,404
|
|
|
|
|
|
|
|
Climate Technologies
|
|
668
|
|
|
|
726
|
|
Tools & Home Products
|
|
401
|
|
|
|
390
|
|
Commercial & Residential Solutions
|
|
1,069
|
|
|
|
1,116
|
|
|
|
|
|
|
|
Total
|
|
$
|
6,536
|
|
|
|
6,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other intangible assets
|
|
|
|
|
|
Gross carrying amount
|
|
$
|
4,872
|
|
|
|
4,916
|
|
Less: Accumulated amortization
|
|
2,257
|
|
|
|
2,418
|
|
Net carrying amount
|
|
$
|
2,615
|
|
|
|
2,498
|
|
Other intangible assets include customer relationships of $1,305 and $1,391 as of March 31, 2020 and September 30, 2019, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sept 30, 2019
|
|
|
Mar 31, 2020
|
|
Other assets include the following:
|
|
|
|
|
|
Operating lease right-of-use assets
|
|
$
|
—
|
|
|
|
496
|
|
Pension assets
|
|
164
|
|
|
|
230
|
|
Asbestos-related insurance receivables
|
|
115
|
|
|
|
105
|
|
Deferred income taxes
|
|
97
|
|
|
|
83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses include the following:
|
|
|
|
|
|
Customer advances (contract liabilities)
|
|
$
|
519
|
|
|
|
587
|
|
Employee compensation
|
|
606
|
|
|
|
512
|
|
Operating lease liabilities (current)
|
|
—
|
|
|
|
148
|
|
Product warranty
|
|
140
|
|
|
|
134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other liabilities include the following:
|
|
|
|
|
|
Pension and postretirement liabilities
|
|
$
|
775
|
|
|
|
770
|
|
Operating lease liabilities (noncurrent)
|
|
—
|
|
|
|
353
|
|
Deferred income taxes
|
|
327
|
|
|
|
339
|
|
Asbestos litigation
|
|
313
|
|
|
|
305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11) FINANCIAL INSTRUMENTS
Following is a discussion regarding the Company’s use of financial instruments:
Hedging Activities – As of March 31, 2020, the notional amount of foreign currency hedge positions was approximately $2.2 billion, and commodity hedge contracts totaled approximately $122 (primarily 50 million pounds of copper and aluminum). All derivatives receiving hedge accounting are cash flow hedges. The majority of hedging gains and losses deferred as of March 31, 2020 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 hedge accounting.
Net Investment Hedge – In fiscal 2019, the Company issued euro-denominated debt of €1.5 billion. The euro notes reduce foreign currency risk associated with the Company's international subsidiaries that use the euro as their functional currency and have been designated as a hedge of a portion of the investment in these operations. Foreign currency gains or losses associated with the euro-denominated debt are deferred in accumulated other comprehensive income (loss) and will remain until the hedged investment is sold or substantially liquidated.
The following gains and losses are included in earnings and other comprehensive income (OCI) for the three and six months ended March 31, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Into Earnings
|
|
|
|
|
|
|
|
Into OCI
|
|
|
|
|
|
|
|
|
|
|
2nd Quarter
|
|
|
|
Six Months
|
|
|
|
2nd Quarter
|
|
|
|
Six Months
|
|
|
Gains (Losses)
|
|
Location
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
Commodity
|
|
Cost of sales
|
|
$
|
(3)
|
|
|
(1)
|
|
|
(6)
|
|
|
(4)
|
|
|
10
|
|
|
(23)
|
|
|
3
|
|
|
(16)
|
|
Foreign currency
|
|
Sales
|
|
(1)
|
|
|
(1)
|
|
|
(3)
|
|
|
(3)
|
|
|
(1)
|
|
|
(8)
|
|
|
(2)
|
|
|
(5)
|
|
Foreign currency
|
|
Cost of sales
|
|
5
|
|
|
4
|
|
|
9
|
|
|
11
|
|
|
23
|
|
|
(66)
|
|
|
12
|
|
|
(49)
|
|
Foreign currency
|
|
Other deductions, net
|
|
29
|
|
|
13
|
|
|
40
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Investment Hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Euro denominated debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
57
|
|
|
6
|
|
|
31
|
|
Total
|
|
|
|
$
|
30
|
|
|
15
|
|
|
$
|
40
|
|
|
25
|
|
|
38
|
|
|
(40)
|
|
|
19
|
|
|
(39)
|
|
Regardless of whether derivatives and non-derivative financial instruments receive hedge 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 hedge accounting are highly effective and no amounts were excluded from the assessment of hedge effectiveness.
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, 2020, the fair value of long-term debt was $4.5 billion, which exceeded the carrying value by $280. The fair values of commodity and foreign currency contracts were reported in Other current assets and Accrued expenses and did not materially change since September 30, 2019.
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 pre-established levels, counterparties can require immediate full collateralization of all derivatives in net liability positions. The maximum amount that could potentially have been required was $53. 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, 2020.
(12) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Activity in Accumulated other comprehensive income (loss) for the three and six months ended March 31, 2020 and 2019 is shown below, net of income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
Six Months Ended March 31,
|
|
|
|
|
|
|
2019
|
|
|
|
2020
|
|
|
|
2019
|
|
|
|
2020
|
|
Foreign currency translation
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
(635)
|
|
|
|
(695)
|
|
|
|
(600)
|
|
|
|
(794)
|
|
Other comprehensive income (loss), net of tax of $(1), $(13), $(1)
and $(7), respectively
|
|
87
|
|
|
|
(282)
|
|
|
|
52
|
|
|
|
(183)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
(548)
|
|
|
|
(977)
|
|
|
|
(548)
|
|
|
|
(977)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and postretirement
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
(407)
|
|
|
|
(900)
|
|
|
|
(420)
|
|
|
|
(928)
|
|
Amortization of deferred actuarial losses into earnings, net of tax
of $(4), $(8), $(8) and $(17), respectively
|
|
12
|
|
|
|
30
|
|
|
|
25
|
|
|
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
(395)
|
|
|
|
(870)
|
|
|
|
(395)
|
|
|
|
(870)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
(10)
|
|
|
|
19
|
|
|
|
5
|
|
|
|
—
|
|
Deferral of gains (losses) arising during the period, net of tax
of $(8), $23, $(3) and $17, respectively
|
|
24
|
|
|
|
(74)
|
|
|
|
10
|
|
|
|
(53)
|
|
Reclassification of realized (gains) losses to sales and cost of
sales, net of tax of $0, $1, $0 and $1, respectively
|
|
1
|
|
|
|
(1)
|
|
|
|
—
|
|
|
|
(3)
|
|
Ending balance
|
|
15
|
|
|
|
(56)
|
|
|
|
15
|
|
|
|
(56)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income (loss)
|
|
$
|
(928)
|
|
|
|
(1,903)
|
|
|
|
(928)
|
|
|
|
(1,903)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13) BUSINESS SEGMENTS
Summarized information about the Company's results of operations by business segment follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
|
Six Months Ended March 31,
|
|
|
|
|
|
|
|
Sales
|
|
|
|
Earnings
|
|
|
|
Sales
|
|
|
|
Earnings
|
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automation Solutions
|
$
|
3,010
|
|
|
2,709
|
|
|
444
|
|
|
391
|
|
|
5,809
|
|
|
5,561
|
|
|
851
|
|
|
701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Climate Technologies
|
1,092
|
|
|
1,026
|
|
|
226
|
|
|
217
|
|
|
1,972
|
|
|
1,899
|
|
|
372
|
|
|
368
|
|
Tools & Home Products
|
469
|
|
|
432
|
|
|
102
|
|
|
89
|
|
|
927
|
|
|
862
|
|
|
193
|
|
|
175
|
|
Commercial & Residential Solutions
|
1,561
|
|
|
1,458
|
|
|
328
|
|
|
306
|
|
|
2,899
|
|
|
2,761
|
|
|
565
|
|
|
543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation
|
|
|
|
|
(59)
|
|
|
38
|
|
|
|
|
|
|
(52)
|
|
|
(18)
|
|
Unallocated pension and
postretirement costs
|
|
|
|
|
27
|
|
|
12
|
|
|
|
|
|
|
54
|
|
|
25
|
|
Corporate and other
|
|
|
|
|
(17)
|
|
|
(22)
|
|
|
|
|
|
|
(61)
|
|
|
(68)
|
|
Eliminations/Interest
|
(1)
|
|
|
(5)
|
|
|
(48)
|
|
|
(36)
|
|
|
9
|
|
|
(9)
|
|
|
(91)
|
|
|
(71)
|
|
Total
|
$
|
4,570
|
|
|
4,162
|
|
|
675
|
|
|
689
|
|
|
8,717
|
|
|
8,313
|
|
|
1,266
|
|
|
1,112
|
|
The decrease in stock compensation expense reflects the decline in the Company's stock price in the current year.
Automation Solutions sales by major product offering are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
Six Months Ended March 31,
|
|
|
|
|
|
|
2019
|
|
|
|
2020
|
|
|
|
2019
|
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Measurement & Analytical Instrumentation
|
|
$
|
927
|
|
|
|
816
|
|
|
|
1,785
|
|
|
|
1,646
|
|
Valves, Actuators & Regulators
|
|
937
|
|
|
|
854
|
|
|
|
1,811
|
|
|
|
1,767
|
|
Industrial Solutions
|
|
574
|
|
|
|
494
|
|
|
|
1,116
|
|
|
|
1,001
|
|
Process Control Systems & Solutions
|
|
572
|
|
|
|
545
|
|
|
|
1,097
|
|
|
|
1,147
|
|
Automation Solutions
|
|
$
|
3,010
|
|
|
|
2,709
|
|
|
|
5,809
|
|
|
|
5,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization (includes intellectual property, customer relationships and capitalized software) by business segment are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
Six Months Ended March 31,
|
|
|
|
|
|
2019
|
|
|
2020
|
|
|
|
2019
|
|
|
2020
|
|
Automation Solutions
|
|
$
|
131
|
|
|
138
|
|
|
|
$
|
260
|
|
|
277
|
|
|
|
|
|
|
|
|
|
|
|
Climate Technologies
|
|
45
|
|
|
45
|
|
|
|
90
|
|
|
89
|
|
Tools & Home Products
|
|
17
|
|
|
19
|
|
|
|
36
|
|
|
38
|
|
Commercial & Residential Solutions
|
|
62
|
|
|
64
|
|
|
|
126
|
|
|
127
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and other
|
|
11
|
|
|
9
|
|
|
|
20
|
|
|
18
|
|
Total
|
|
$
|
204
|
|
|
211
|
|
|
|
$
|
406
|
|
|
422
|
|
Sales by geographic destination are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
|
|
|
2020
|
|
|
|
|
|
Automation Solutions
|
|
Commercial & Residential Solutions
|
|
Total
|
|
Automation Solutions
|
|
Commercial & Residential Solutions
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
$
|
1,523
|
|
|
1,082
|
|
|
2,605
|
|
|
1,346
|
|
|
1,037
|
|
|
2,383
|
|
Asia, Middle East & Africa
|
910
|
|
|
285
|
|
|
1,195
|
|
|
830
|
|
|
235
|
|
|
1,065
|
|
Europe
|
577
|
|
|
194
|
|
|
771
|
|
|
533
|
|
|
186
|
|
|
719
|
|
Total
|
$
|
3,010
|
|
|
1,561
|
|
|
4,571
|
|
|
2,709
|
|
|
1,458
|
|
|
4,167
|
|
|
|
|
|