Emerson Electric Co. (NYSE:EMR)

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Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).

Emerson Electric Co., adjusted total assets

US$ in millions

	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017	Sep 30, 2016	Sep 30, 2015	Sep 30, 2014
As Reported
Total assets	20,497)	20,390)	19,589)	21,743)	22,088)	24,177)
Adjustments
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)¹	470)	592)	481)	550)	782)	810)
Add: Allowances	112)	113)	91)	92)	128)	114)
Less: Current deferred tax assets, net²	—)	—)	—)	400)	353)	354)
Less: Noncurrent deferred tax assets³	97)	74)	86)	—)	—)	62)
After Adjustment
Adjusted total assets	20,982)	21,021)	20,075)	21,985)	22,645)	24,685)

¹ Operating lease right-of-use asset (before adoption of FASB Topic 842). See details »

² Current deferred tax assets, net. See details »

³ Noncurrent deferred tax assets. See details »

An examination of the asset base between 2014 and 2019 reveals a general contraction followed by a period of stabilization. Both reported total assets and adjusted total assets followed a similar trajectory, decreasing steadily from 2014 through 2017 before experiencing a modest recovery in the final two years of the period.

Asset Trend Analysis: Total assets declined from US$ 24,177 million in 2014 to a low of US$ 19,589 million in 2017. This represents a significant reduction in the reported asset base over a three-year span. A partial reversal occurred in 2018 and 2019, with total assets ending the period at US$ 20,497 million.
Adjusted Asset Variance: Adjusted total assets consistently exceeded reported total assets throughout the entire observation period. The adjustment values fluctuated annually, with the largest positive variance occurring in 2018, where adjusted assets were US$ 631 million higher than reported assets. The smallest variance was observed in 2016, with a difference of US$ 242 million.
Correlation of Metrics: A high degree of correlation is evident between the reported and adjusted figures. The synchronized movement of both metrics suggests that the adjustments applied to the total assets were not driven by volatile one-time events, but rather by consistent accounting treatments or systematic adjustments that scaled alongside the overall size of the balance sheet.

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Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).

Emerson Electric Co., adjusted current liabilities

US$ in millions

	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017	Sep 30, 2016	Sep 30, 2015	Sep 30, 2014
As Reported
Current liabilities	5,976)	6,164)	5,045)	8,008)	7,800)	8,454)
Adjustments
Less: Current product warranty	140)	124)	120)	106)	167)	193)
After Adjustment
Adjusted current liabilities	5,836)	6,040)	4,925)	7,902)	7,633)	8,261)

The financial data for the period ending September 30, 2014, through September 30, 2019, indicates a fluctuating trend in current liabilities, characterized by a significant reduction in the middle of the period followed by a partial recovery.

Current Liabilities Trajectory: A general downward trend was observed from 2014 to 2017, where current liabilities decreased from 8,454 million US$ to a low of 5,045 million US$. Following this trough, liabilities increased to 6,164 million US$ in 2018 before stabilizing slightly at 5,976 million US$ in 2019.
Analysis of Adjustments: Adjusted current liabilities consistently track below the reported nominal current liabilities throughout the entire six-year period. The adjustments are relatively stable in absolute terms, with the difference between the nominal and adjusted figures ranging from a high of 193 million US$ in 2014 to a low of 106 million US$ in 2016.
Correlation and Variance: There is a strong positive correlation between reported current liabilities and adjusted current liabilities, as both metrics move in tandem. The adjustment represents a small fraction of the total liability balance, suggesting that the factors necessitating the adjustment do not significantly alter the overall short-term debt profile or the primary drivers of the liability fluctuations.

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Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).

Emerson Electric Co., adjusted total liabilities

US$ in millions

	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017	Sep 30, 2016	Sep 30, 2015	Sep 30, 2014
As Reported
Total liabilities	12,224)	11,400)	10,819)	14,125)	13,960)	14,010)
Adjustments
Add: Operating lease liability (before adoption of FASB Topic 842)¹	470)	592)	481)	550)	782)	810)
Less: Noncurrent deferred tax liabilities²	327)	484)	425)	174)	362)	572)
Less: Product warranty	140)	124)	120)	106)	167)	193)
Less: Liability for restructuring costs	69)	52)	65)	54)	70)	17)
After Adjustment
Adjusted total liabilities	12,158)	11,332)	10,690)	14,341)	14,143)	14,038)

¹ Operating lease liability (before adoption of FASB Topic 842). See details »

² Noncurrent deferred tax liabilities. See details »

The trajectory of total liabilities between 2014 and 2019 is characterized by a period of relative stability, a significant contraction, and a subsequent gradual increase. Total liabilities remained within a narrow range between 13,960 million and 14,125 million from 2014 to 2016 before experiencing a sharp decline to 10,819 million in 2017. Following this contraction, a consistent upward trend was observed, with total liabilities rising to 12,224 million by September 30, 2019.

Liability Variance Analysis: Adjusted total liabilities closely mirrored the general trend of reported total liabilities but exhibited a shift in the direction of the variance over the six-year period. Between 2014 and 2016, adjusted liabilities were consistently higher than reported liabilities, with the positive variance increasing from 28 million in 2014 to 216 million in 2016.
Structural Shift in 2017: A notable inflection point occurred in 2017, coinciding with a substantial reduction in overall debt levels. During this period, the relationship between reported and adjusted figures inverted; adjusted total liabilities became lower than reported liabilities, a trend that persisted through the end of the analyzed period in 2019.
Post-Contraction Growth Patterns: Following the 2017 minimum, both reported and adjusted liabilities showed steady growth. Reported total liabilities increased by approximately 13% between 2017 and 2019, while adjusted total liabilities grew from 10,690 million to 12,158 million during the same timeframe.

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Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).

Emerson Electric Co., adjusted common stockholders’ equity

US$ in millions

	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017	Sep 30, 2016	Sep 30, 2015	Sep 30, 2014
As Reported
Common stockholders’ equity	8,233)	8,947)	8,718)	7,568)	8,081)	10,119)
Adjustments
Less: Net deferred income tax asset (liability)¹	(230)	(410)	(339)	226)	(9)	(156)
Add: Allowances	112)	113)	91)	92)	128)	114)
Add: Product warranty	140)	124)	120)	106)	167)	193)
Add: Liability for restructuring costs	69)	52)	65)	54)	70)	17)
Add: Noncontrolling interests in subsidiaries	40)	43)	52)	50)	47)	48)
After Adjustment
Adjusted total equity	8,824)	9,689)	9,385)	7,644)	8,502)	10,647)

¹ Net deferred income tax asset (liability). See details »

The equity structure exhibits a period of volatility between 2014 and 2019, characterized by an initial contraction, a mid-period recovery, and a subsequent decline. Both common stockholders' equity and adjusted total equity follow a highly correlated trajectory, indicating that the factors influencing the core equity base also drove the adjusted figures.

Common Stockholders' Equity Trend: A significant decline is observed from 2014 to 2016, with equity dropping from 10,119 million USD to a period low of 7,568 million USD. A recovery phase followed in 2017 and 2018, peaking at 8,947 million USD before declining again to 8,233 million USD by September 30, 2019.
Adjusted Total Equity Analysis: Adjusted total equity mirrors the movements of common equity but maintains a consistently higher valuation. The value decreased from 10,647 million USD in 2014 to 7,644 million USD in 2016, followed by a rise to 9,689 million USD in 2018, and ending the period at 8,824 million USD in 2019.
Equity Adjustment Variance: A positive variance exists between common stockholders' equity and adjusted total equity throughout the entire period. This gap was most narrow in 2016, where the difference was only 76 million USD, and most pronounced in 2018, reaching 742 million USD, suggesting fluctuations in the specific adjustments applied to the equity base.

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Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).

Emerson Electric Co., adjusted capitalization table

US$ in millions

	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017	Sep 30, 2016	Sep 30, 2015	Sep 30, 2014
As Reported
Short-term borrowings and current maturities of long-term debt	1,444)	1,623)	862)	2,584)	2,553)	2,465)
Long-term debt, excluding current maturities	4,277)	3,137)	3,794)	4,062)	4,289)	3,559)
Total reported debt	5,721)	4,760)	4,656)	6,646)	6,842)	6,024)
Common stockholders’ equity	8,233)	8,947)	8,718)	7,568)	8,081)	10,119)
Total reported capital	13,954)	13,707)	13,374)	14,214)	14,923)	16,143)
Adjustments to Debt
Add: Operating lease liability (before adoption of FASB Topic 842)¹	470)	592)	481)	550)	782)	810)
Adjusted total debt	6,191)	5,352)	5,137)	7,196)	7,624)	6,834)
Adjustments to Equity
Less: Net deferred income tax asset (liability)²	(230)	(410)	(339)	226)	(9)	(156)
Add: Allowances	112)	113)	91)	92)	128)	114)
Add: Product warranty	140)	124)	120)	106)	167)	193)
Add: Liability for restructuring costs	69)	52)	65)	54)	70)	17)
Add: Noncontrolling interests in subsidiaries	40)	43)	52)	50)	47)	48)
Adjusted total equity	8,824)	9,689)	9,385)	7,644)	8,502)	10,647)
After Adjustment
Adjusted total capital	15,015)	15,041)	14,522)	14,840)	16,126)	17,481)

¹ Operating lease liability (before adoption of FASB Topic 842). See details »

² Net deferred income tax asset (liability). See details »

An analysis of the capitalization structure from 2014 to 2019 reveals a general contraction in total capital followed by a period of relative stabilization. Both reported and adjusted capital figures peaked in 2014 and reached their lowest points around 2017, after which a moderate recovery in total capital was observed.

Debt Obligations and Adjustments: Reported debt exhibited volatility, increasing from 6,024 million US$ in 2014 to a peak of 6,842 million US$ in 2015, followed by a significant reduction to 4,656 million US$ by September 30, 2017. A subsequent upward trend occurred through 2019, ending at 5,721 million US$. Adjusted total debt consistently exceeded reported debt across all periods, maintaining a positive variance that suggests the inclusion of additional liabilities not captured in the primary reported debt figures.
Equity Trends and Adjustments: Common stockholders' equity experienced a downward trend between 2014 and 2016, falling from 10,119 million US$ to 7,568 million US$. A recovery phase followed, with equity rising to 8,947 million US$ by 2018 before declining again to 8,233 million US$ in 2019. Adjusted total equity remained consistently higher than reported equity, mirroring the fluctuations of the reported values while providing a higher valuation baseline for the capital base.
Total Capitalization Analysis: The total reported capital declined from 16,143 million US$ in 2014 to 13,374 million US$ in 2017, representing a contraction in the overall financial base. Adjusted total capital followed a nearly identical trajectory, starting at 17,481 million US$ and reaching a low of 14,522 million US$ in 2017. The consistent gap between reported and adjusted capital indicates a systemic adjustment applied to both debt and equity components throughout the six-year period.

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Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).

Emerson Electric Co., adjusted net earnings common stockholders

US$ in millions

12 months ended:	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017	Sep 30, 2016	Sep 30, 2015	Sep 30, 2014
As Reported
Net earnings common stockholders	2,306)	2,203)	1,518)	1,635)	2,710)	2,147)
Adjustments
Add: Deferred income tax expense (benefit)¹	(48)	(250)	(42)	(13)	(29)	(153)
Add: Increase (decrease) in allowances	(1)	22)	(1)	3)	14)	11)
Add: Increase (decrease) in product warranty	16)	4)	14)	5)	(26)	10)
Add: Increase (decrease) in liability for restructuring costs	17)	(13)	11)	(16)	53)	17)
Less: Discontinued operations, net of tax	—)	—)	(125)	45)	—)	—)
Add: Other comprehensive income (loss)	(707)	4)	978)	(380)	(1,043)	(397)
Add: Comprehensive income (loss), net of tax, attributable to noncontrolling interest	22)	21)	30)	31)	22)	34)
After Adjustment
Adjusted net earnings	1,605)	1,991)	2,633)	1,220)	1,701)	1,669)

¹ Deferred income tax expense (benefit). See details »

The financial results between 2014 and 2019 exhibit significant volatility in both reported and adjusted net earnings. While reported net earnings experienced a notable decline in the middle of the period followed by a recovery, adjusted net earnings followed a divergent path, characterized by a substantial peak in 2017 and a subsequent decline.

Net Earnings Common Stockholders Trend: Reported net earnings demonstrated a fluctuating trajectory, reaching a period high of 2,710 million US$ in 2015. This was followed by a sharp contraction over the next two years, bottoming at 1,518 million US$ in 2017. A recovery trend emerged thereafter, with earnings rising to 2,203 million US$ in 2018 and further increasing to 2,306 million US$ by 2019.
Adjusted Net Earnings Trend: Adjusted net earnings showed a different pattern of volatility. After remaining relatively stable between 2014 and 2016, adjusted earnings spiked to a peak of 2,633 million US$ in 2017. However, this peak was not sustained, as figures declined to 1,991 million US$ in 2018 and further dropped to 1,605 million US$ in 2019, marking the lowest adjusted earnings level since 2016.
Analysis of Income Adjustments: A divergence between reported and adjusted figures is present in every year of the analysis. In 2014, 2015, 2016, 2018, and 2019, reported net earnings were higher than adjusted net earnings, suggesting the presence of non-recurring gains or items that management excluded from the adjusted performance metric. The most significant anomaly occurred in 2017, where adjusted net earnings exceeded reported earnings by 1,115 million US$, indicating a substantial one-time non-operating charge or impairment that negatively impacted the reported bottom line but was added back for adjusted calculations.

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