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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2004

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)

        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, and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No (  )

Common stock outstanding at July 31, 2004: 420,142,121 shares.

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FORM 10-Q

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.

EMERSON ELECTRIC CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
THREE MONTHS AND NINE MONTHS ENDED JUNE 30, 2003 AND 2004
(Dollars in millions except per share amounts; unaudited)

See accompanying notes to consolidated financial statements.

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                                    EMERSON ELECTRIC CO. AND SUBSIDIARIES                     FORM 10-Q
CONSOLIDATED BALANCE SHEETS
(Dollars in millions except per share amounts; unaudited)

See accompanying notes to consolidated financial statements. 

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FORM 10-Q

EMERSON ELECTRIC CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 2003 AND 2004
(Dollars in millions; unaudited)

See accompanying notes to consolidated financial statements.

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Notes to Consolidated Financial Statements

4.     Comprehensive income is summarized as follows (dollars in millions):

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5. Other Financial Information
(Dollars in millions; unaudited)

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        The Company expects to pay benefits of $45 million related to its postretirement plans in 2004.

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8.     Other deductions, net are summarized as follows (dollars in millions):

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        Rationalization of operations by business segment is summarized as follows (dollars in millions):      

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10.     Business Segment Information

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Items 2 and 3. Management’s Discussion and Analysis of Results of Operations and Financial Condition. 

OVERVIEW

The third quarter and first nine months of fiscal 2004 were strong, with sales for all of the business segments up over the prior year. The HVAC and appliance and tools businesses drove U.S. gains as domestic manufacturing continued to recover in the third quarter due to an increase in consumer-related spending and an upturn in U.S. commercial and industrial fixed investment. International sales growth was driven by the process control, industrial automation and electronics and telecommunications businesses. Strong growth in Asia, the United States and Latin America, moderate gains in Europe and favorable exchange rates contributed to these three- and nine-month results. The Company’s profit margins improved primarily due to leverage on higher sales volume and benefits from previous rationalization actions. These benefits were partially offset by competitive pressure on price. Emerson’s financial position remains strong and the Company continues to generate substantial cash flow.

THREE MONTHS ENDED JUNE 30, 2004, COMPARED WITH THREE MONTHS ENDED JUNE 30, 2003

RESULTS OF OPERATIONS

Net sales for the quarter ended June 30, 2004, were $4,036 million, an increase of $463 million, or 13 percent, over net sales of $3,573 million for the quarter ended June 30, 2003. Both U.S. and international sales contributed to this growth. The consolidated results were balanced, reflecting strong sales increases in each of the business segments, with an increase in underlying sales (which exclude acquisitions, divestitures and the impact of translation of non-U.S. currencies to the U.S. dollar) of 11 percent ($405 million), a 2 percentage point ($65 million) favorable impact from the strengthening Euro and other currencies and a slight negative impact from divestitures, net of acquisitions. The components of the underlying sales increase of 11 percent for the third quarter were the United States increasing 12 percent and total international sales increasing 11 percent, primarily reflecting growth of 24 percent in Asia, 16 percent in Latin America and nearly 4 percent in Europe. The Company estimates that the underlying growth reflects the net result of an approximate 9 percentage point gain from volume and an approximate 3 percentage point impact from market penetration gains, partially offset by an approximate 1 percentage point negative impact from price.

Cost of sales for the third quarter of fiscal 2004 and 2003 were $2,597 million and $2,323 million, respectively. Cost of sales as a percent of net sales was 64.4 percent in the third quarter of 2004, compared with 65.0 percent in the third quarter of 2003. The increase in the gross profit margin from 35.0 percent in the prior year to 35.6 percent in the third quarter of 2004 primarily reflects increased volume and leverage on the higher sales, as well as benefits from prior rationalization and other cost reduction efforts. These improvements were partially offset by negative impacts from lower sales prices and higher wages and benefits (including higher pension costs).

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Selling, general and administrative expenses for the third quarter of 2004 were $824 million, or 20.4 percent of sales, compared with $734 million, or 20.6 percent of sales, for the third quarter of 2003. The benefits from leverage on higher sales and cost reductions from prior rationalization and other efforts were partially offset by higher costs for wages and benefits.

Other deductions, net were $66 million for the third quarter of 2004, a $61 million decrease from the $127 million for the same period in the prior year. The prior year quarter included a $54 goodwill impairment charge associated with the electronics and telecommunications segment. For the three months ended June 30, 2004, ongoing costs for the rationalization of operations were $31 million, compared to $43 million in the prior year, primarily reflecting lower costs in the process control segment. See notes 8 and 9 for further details regarding other deductions, net and rationalization costs.

Earnings from continuing operations before income taxes for the third quarter of 2004 increased $170 million, or 51 percent, to $499 million, compared to $329 million for the third quarter of 2003. These earnings results reflect increases for all of the business segments, particularly in the electronics and telecommunications, and heating, ventilating and air conditioning businesses. The higher earnings also reflect increased volume and leverage from the higher sales as well as savings from cost reduction efforts, partially offset by lower sales prices and other items during the quarter. The increase also reflects the decreases in other deductions, net discussed above and interest expense.

Income taxes for the third quarter were $158 million compared to $51 million for the prior year. Prior year income taxes were reduced $68 million and the effective tax rate for the three months ended June 30, 2003, was reduced 16 percentage points by the tax benefits from the restructuring of the Emerson Telecommunication Products (“ETP”) business net of the impairment charge. Excluding these items, the prior year rate is comparable to the approximate 32 percent effective tax rate in the current year.

Earnings from continuing operations for the third quarter of 2004 were $341 million, or $0.81 per share, compared to $278 million, or $0.66 per share, for the third quarter of 2003, an increase of 23 percent. The increase in continuing operations reflects the earnings increases in all business segments, partially offset by a $14 million ($0.03 per share) contribution in the prior year from the tax benefits of the restructuring of the ETP business net of the impairment charge.

Net earnings were $341 million and diluted earnings per common share were $0.81 for the three months ended June 30, 2004, decreases of 5 percent compared to net earnings and earnings per share of $360 million and $0.85, respectively, for the three months ended June 30, 2003. Net earnings in the prior year include the net gain from discontinued operations related to the sale of Jordan stock including its Dura-Line operations of $82 million (including income tax benefit of $170 million), or $0.19 per share.

BUSINESS SEGMENTS

Process Control

Process control segment sales of $925 million in the third quarter of fiscal 2004 were up 9 percent from $850 million for the same period a year ago, as this segment continues to grow in international markets and to win large projects and displace competitors. Underlying sales increased 7 percent, excluding the impact of divestitures, net of acquisitions, and a 2 percentage point ($17 million) positive impact from currency translation. Underlying results reflect growth in almost all businesses, particularly measurement and analytical

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instrumentation, and power and water and systems/solutions. The underlying sales gain also reflects 26 percent growth in Asia, 1 percent growth in Europe and very strong gains in Latin America, as well as a nearly 3 percent increase in U.S. sales compared with the prior year. Increased volume and leverage from these higher sales, $6 million of lower rationalization costs, as well as savings from prior cost reduction actions, partially offset by higher costs for wages and benefits, resulted in an increase in earnings of 27 percent to $119 million from $94 million in the prior year.

Industrial Automation

Industrial automation segment sales increased 13 percent to $744 million for the three months ended June 30, 2004, with underlying sales increasing 9 percent and currency translation having an almost 4 percentage point ($24 million) favorable impact during the quarter. The 9 percent increase in underlying sales reflects a 13 percent increase in the United States and almost 7 percent international sales growth, with 31 percent growth in Asia and 2 percent growth in Europe. The underlying sales increase was due to growth in all of the businesses, with particular strength in power generating alternators, as well as in the power transmission and fluid power and control businesses, reflecting the rebound in the U.S. industrial production and manufacturing construction. Earnings increased 16 percent over the prior year quarter to $99 million, primarily reflecting benefits from prior cost reduction efforts and increased volume and leverage from higher sales.

Electronics and Telecommunications

Electronics and telecommunications segment sales of $670 million were up 17 percent over the prior year period. Underlying sales improved nearly 18 percent, excluding a more than 1 percentage point favorable impact from currency and a more than 2 percentage point negative impact from the Dura-Line divestiture in the prior year. Penetration gains, particularly in the OEM power business, are estimated to have contributed approximately 2 percentage points of the underlying sales growth in the quarter. Sales also benefited from the underlying gains in the climate and power systems business; however, these benefits were partially offset by an estimated 5 percentage point impact from lower prices, due in part to the introduction of next-generation products at lower price points. Underlying sales also reflect a 29 percent increase in Asia (primarily China), a 15 percent increase in Europe and a 13 percent increase in the United States. Three distinct trends continued in this market: strong sales of servers and network equipment drove demand for embedded power modules; continued spending by telecommunications providers in Asia drove the DC power systems business; and increased investment in data computing systems, primarily in the United States and Europe, boosted demand for uninterruptible power supplies and precision air-conditioning. Earnings of $78 million increased $38 million, or 97 percent, over the prior year quarter, primarily reflecting higher sales volume and leverage on the lower cost structure from rationalization over the past three years. The savings from lower material costs and benefits from prior cost reduction efforts were offset by the impact from lower sales prices.

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HVAC

Sales of the heating, ventilating and air conditioning segment increased 19 percent to $873 million, with gains in all of the businesses. Continued penetration gains are estimated to have contributed approximately 11 percentage points of the underlying growth of nearly 18 percent. Sales also benefited from solid underlying market growth and a more than 1 percentage point favorable impact from currency translation. The underlying sales growth of 18 percent was driven by 22 percent growth in the United States and 10 percent growth in international sales, reflecting more than 12 percent growth in Asia and very strong growth in the Middle East/Africa regions. This increase in third quarter U.S. sales was primarily due to air conditioning compressors from the continued strong residential market, while international sales primarily reflect growth in China and the Middle East. The underlying sales increase also reflects volume and penetration gains in the temperature sensor and controls business. Earnings from HVAC operations increased 33 percent during the quarter to $149 million, primarily reflecting higher sales volume and leverage. Earnings also reflect benefits from prior cost reduction efforts and material cost containment partially offset by sales price pressures.

Appliance and Tools

Appliance and tools segment sales increased 10 percent to $955 million in the third quarter. This increase reflects a 10 percent increase in underlying sales and a 1 percentage point favorable impact from currency, partially offset by a less than 1 percentage point negative impact related to exiting the manufacturing of bench top and stationary power tools. Underlying sales grew in all of the businesses, with continued growth in the residential-related businesses and in the professional tools, storage and motor businesses. Disposer increases reflected a strong U.S. residential construction market and higher demand at major retailers. The increase in sales of hermetic motors was primarily due to demand for residential air conditioning units. The professional tools business benefited from the upturn in U.S. industrial production and manufacturing construction. Sales in the United States grew 11 percent while total international sales grew nearly 6 percent. Earnings of the appliance and tools segment increased 20 percent to $137 million, primarily due to increased volume and leverage from higher sales, partially offset by higher raw material costs. Rationalization costs of $14 million in the third quarter included severance and start-up and moving costs related to shifting certain industrial motor manufacturing primarily from the United States to Mexico and China in order to consolidate facilities and improve profitability, and severance related to consolidating manufacturing operations in the professional tools business for operational efficiency.

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NINE MONTHS ENDED JUNE 30, 2004, COMPARED WITH NINE MONTHS ENDED JUNE 30, 2003

RESULTS OF OPERATIONS

Net sales for the nine months ended June 30, 2004, were $11,495 million, an increase of $1,231 million, or 12 percent, over net sales of $10,264 million for the nine months ended June 30, 2003, with both U.S. and international sales contributing to this growth. The consolidated results reflect improving markets and increases in all five business segments, with an underlying sales increase of 9 percent ($895 million) and an approximate 4 percentage point ($393 million) favorable impact from the strengthening Euro and other currencies, partially offset by a nearly 1 percentage point negative impact from divestitures, net of acquisitions. The elements of the underlying sales increase of 9 percent for the first nine months were the United States increasing 8 percent and total international sales increasing 9 percent, primarily reflecting 4 percent growth in Europe and 21 percent growth in Asia. The Company estimates that the underlying growth reflects the net result of an approximate 8 percentage point gain from volume and an approximate 2 percentage point impact from market penetration gains, partially offset by an approximate 1 percentage point negative impact from price.

Cost of sales for the first nine months of fiscal 2004 and 2003 were $7,418 million and $6,660 million, respectively. Cost of sales as a percent of net sales was 64.5 percent for the first nine months of 2004, compared with 64.9 percent in the prior year period. The increase in the gross profit margin from 35.1 percent in the prior year to 35.5 percent for the first nine months of 2004 primarily reflects increased volume and leverage on higher sales, as well as benefits realized from prior rationalization and other cost reduction efforts. These improvements, however, were partially offset by negative impacts from lower sales prices, wages and benefits (including higher pension costs) and the higher mix of international businesses contributing to the growth. The absence of leverage on foreign currency translation dilutes the margin improvement resulting from real growth in volume over prior periods. Additionally, when products are manufactured in the United States but sold through foreign subsidiaries, a substantial portion of the profit is captured and reported in the United States. Certain international businesses also have slightly lower profit margins due to the nature of their business mix.

Selling, general and administrative expenses for the first nine months of 2004 were $2,421 million, or 21.1 percent of sales, compared with $2,182 million, or 21.2 percent of sales, for the nine months ending June 30, 2003. The decreases in these costs as a percent of sales primarily reflect leverage on higher sales and the benefits realized from prior rationalization efforts that improved the Company’s cost structure. These improvements, however, were partially offset by higher costs for wages and other items.

Other deductions, net were $174 million for the first nine months of 2004, a $65 million decrease from the $239 million for the same period in the prior year. The decrease in other deductions, net was primarily due to the $54 million goodwill impairment charge in the prior year. Also, the nine months ended June 30, 2004, included gains totaling $27 million related to the sale of shares in MKS Instruments and the Louisville Ladder investment, while the nine months ended June 30, 2003, included gains of $24 million from divestitures. For the nine months

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ended June 30, 2004, ongoing costs for the rationalization of operations were $92 million, down from $100 million in the prior year, primarily reflecting lower costs in the electronics and telecommunications segment. See notes 8 and 9 for further details regarding other deductions, net and rationalization costs.

Earnings from continuing operations before income taxes for the nine months ended June 30, 2004, increased $314 million, or 31 percent, to $1,322 million, compared to $1,008 million for the nine months ended June 30, 2003. These earnings results reflect increases for all of the business segments, particularly in the electronics and telecommunications, and heating, ventilating and air conditioning businesses. The higher earnings also reflect increased volume and leverage from the higher sales and savings from cost reduction efforts, partially offset by lower sales prices and other items. The increase also reflects the decreases in other deductions, net discussed above and interest expense.

Income taxes for the nine months ended June 30, 2004, were $419 million compared to $271 million for the prior year. Prior year income taxes were reduced $68 million and the effective tax rate for the nine months ended June 30, 2003, was reduced 5 percentage points by the tax benefits from the restructuring of the ETP business net of the impairment charge. Excluding these items, the prior year rate is comparable to the approximate 32 percent effective tax rate in the current year.

Earnings from continuing operations for the nine months ended June 30, 2004, were $903 million, or $2.14 per share, compared to $737 million, or $1.75 per share, for the nine months ended June 30, 2003, an increase of 22 percent. The increase in continuing operations reflects the earnings increases in all business segments, partially offset by a $14 million ($0.03 per share) contribution in the prior year from the tax benefits of the restructuring of the ETP business net of the impairment charge.

Net earnings were $903 million and diluted earnings per common share were $2.14 for the nine months ended June 30, 2004, increases of 11 percent compared to net earnings and earnings per share of $813 million and $1.93, respectively, for the nine months ended June 30, 2003. Net earnings in the prior year include the impact from discontinued operations of $76 million, or $0.18 per share.

BUSINESS SEGMENTS

Process Control

Process control segment sales of $2,679 million in the first nine months of fiscal 2004 were up $238 million, or 10 percent, over sales for the same period a year ago, as this segment continues to grow internationally and to win large projects and gain market share. Underlying sales increased 6 percent, excluding a 1 percentage point negative impact from divestitures, net of acquisitions, and a 5 percentage point ($109 million) positive impact from currency translation. The increase in underlying sales reflects 22 percent growth in Asia, 13 percent growth in Latin America and 3 percent growth in Europe, while sales in the United States decreased 1 percent compared with the prior year. The decline in the United States reflects customers shifting production to lower cost areas. Underlying results were also driven by sales increases in most businesses, particularly the measurement business, and the systems/solutions business due to increased project activity in Asia and the Middle East. Leverage from these higher sales during the quarter as well as savings from prior cost reduction efforts drove an increase in earnings of 19 percent, from $258 million in the prior year to $309 million for the nine months ended June 30, 2004.

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Industrial Automation

Sales increases in most businesses drove a 12 percent increase in sales of the industrial automation segment to $2,162 million for the nine months ended June 30, 2004, and an earnings increase of 13 percent. The 5 percent increase in underlying sales, excluding a 7 percentage point ($128 million) favorable impact from currency, reflects 7 percent international sales growth, led by Europe with 4 percent and Asia with 22 percent, and a 3 percent increase in the United States. The results reflect improved sales in most businesses in this segment, particularly very strong growth in European generators and the ultrasonic plastic joining business worldwide. The U.S. increase reflects growth in the capital goods markets in the second and third quarters. Earnings increased 13 percent to $280 million for the first nine months, compared with $248 million in the prior year, reflecting benefits from prior cost reduction efforts and increased volume and leverage from higher sales, partially offset by higher litigation costs related to the electrical products business.

Electronics and Telecommunications

Electronics and telecommunications segment sales of $1,955 million were up 15 percent compared to the prior year nine-month period. An underlying sales increase of 14 percent helped drive the increase in sales and a 110 percent increase in segment earnings. The underlying sales increase includes penetration gains, particularly in the OEM power business, which are estimated to have contributed approximately 2 percentage points of the sales growth, more than offset by an estimated 5 percentage point impact from lower prices, due in part to the introduction of next generation products at lower price points. Underlying sales, excluding a 3 percentage point favorable impact from currency and a 2 percentage point negative impact from the Dura-Line divestiture in the prior year, improved 14 percent as a result of increases in all major geographic regions, led by a 27 percent increase in Asia, a 10 percent increase in the United States and an 11 percent increase in Europe. Emerson continues to build upon its Emerson Network Power China (Avansys) acquisition by increasing the Company’s penetration in China and Asia. Improvements in capital spending in nearly all of this segment’s served markets also helped drive increased sales in the climate and power systems business. Earnings increased $108 million to $206 million, compared with $98 million in the prior year period, primarily reflecting increased volume and leverage from higher sales. Earnings also reflect lower material costs, benefits from prior cost reduction efforts, and an $11 million reduction in rationalization costs, partially offset by the impact from lower sales prices. Rationalization costs during the first nine months of 2004 included severance and lease termination costs related to certain Emerson Energy Systems operations in Western Europe shifting to China and Eastern Europe in order to leverage product platforms and lower production and engineering costs to remain competitive on a global basis.

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HVAC

Sales of the heating, ventilating and air conditioning segment increased 16 percent for the first nine months of 2004 compared to the prior year period, due to penetration gains, which are estimated to have contributed approximately 8 percentage points of the sales growth, underlying growth and a 3 percentage point favorable impact from currency. Sales of $2,239 million for the first nine months, compared with $1,938 million in the prior year, reflect an underlying sales increase of 13 percent driven by 18 percent growth in the United States and 12 percent growth in Asia, and increases in all of the businesses. In particular, increased demand in the North American and Asian residential markets led to very strong sales growth in the compressor business in these regions. In addition, the temperature sensor and controls, thermostat and valves businesses all had very strong growth for the first nine months. HVAC earnings increased 24 percent to $354 million compared to $285 million in the prior year period, primarily due to increased volume and leverage from higher sales. Earnings also reflect benefits from prior cost reduction efforts and material cost containment, partially offset by pricing pressures, particularly in Asia.

Appliance and Tools

The appliance and tools segment sales increased 8 percent to $2,806 million for the nine months ended June 30, 2004. Underlying sales increased 8 percent, excluding a more than 2 percentage point favorable impact from currency and a negative impact of nearly 2 percentage points related to exiting the manufacturing of bench top and stationary power tools. The improved underlying sales results reflect gains for all of the businesses within the appliance and tools segment, particularly very strong growth in residential storage, motors and disposers. The residential storage and disposers increases were due to a strong construction market and higher demand at major retailers. The increase in motors was due to penetration gains in European appliance motors and underlying growth in hermetic motors. Earnings for the first nine months of 2004 of $399 million were up 13 percent from $354 million in the same period in 2003 primarily due to increased volume and leverage from higher sales. Rationalization costs of $31 million during the first nine months of 2004 included severance and start-up and moving costs related to shifting certain industrial motor manufacturing primarily from the United States to Mexico and China in order to consolidate facilities and improve profitability, and severance related to consolidating manufacturing operations in the professional tools business for operational efficiency.

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FINANCIAL CONDITION

A comparison of key elements of the Company’s financial condition at the end of the third quarter as compared to the end of the prior fiscal year follows:

The ratio of total debt to total capital has been reduced to 36.5 percent, or 5.4 percentage points below the 41.9 percent ratio for the prior year third quarter. The Company’s long-term debt is rated A2 by Moody’s Investors Service and A by Standard and Poor’s. The Company’s interest coverage ratio (earnings from continuing operations before income taxes and interest expense, divided by interest expense) was 8.4 times for the nine months ended June 30, 2004, compared to 6.4 times for the same period in the prior year primarily due to higher earnings. During the first quarter, the Company swapped $600 million of 7 7/8% notes due June 2005 to a floating rate based on 3-month LIBOR.

In March 2004, the Company renewed $2,750 million of credit lines with various banks to support short-term borrowings and to assure availability of funds at prevailing interest rates. Two-thirds of the credit lines ($1,833 million) are effective until March 2009, with the remainder effective until March 2005. The 364-day credit lines do not contain any financial covenants, while the five-year credit lines require the Company to maintain minimum stockholders’ equity of $4,000 million. The 364-day credit lines may be converted to a one-year term loan within 60 days prior to maturity in March 2005 at the Company’s option. The credit line agreements are not subject to termination based upon a change in credit ratings or a material adverse change.

During June 2004, the Company’s shelf registration filed with the Securities and Exchange Commission became effective. This registration allows the Company to periodically sell up to $2.5 billion in debt securities, preferred stock, common stock, warrants, share purchase contracts and share purchase units. The Company may sell securities in one or more separate offerings with the size, price and terms to be determined at the time of sale. The net proceeds from the sale of the securities will be used for general corporate purposes, which may include, but are not limited to, working capital, capital expenditures, financing acquisitions and the repayment of short or long-term borrowings. The net proceeds may be invested temporarily until they are used for their stated purpose.

Cash and equivalents increased by $690 million during the nine months ended June 30, 2004. Cash flow provided by operating activities of $1,490 million was up $599 million, or 67 percent, compared to $891 million in the prior year. This increase reflects the strong operational performance, as well as the $140 million tax refund from the Jordan transaction, and lower pension funding of $185 million in the current year. Operating cash flow of $1,490 million was used primarily to pay dividends of $506 million, fund capital expenditures of $230 million and to decrease borrowings by $89 million. For the nine months ended June 30, 2004, free cash flow of $1,260 million (operating cash flow of $1,490 million less capital expenditures of $230 million) was up 86 percent from free cash flow of $678 million (operating cash flow of $891 million less capital expenditures of $213 million) for the same period in the prior year, primarily due to higher net earnings.

The Company is in a strong financial position, with total assets of $16 billion and stockholders’ equity of $7 billion, and has the resources available for reinvestment in existing businesses, strategic acquisitions and managing the capital structure on a short- and long-term basis.

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OUTLOOK

The pace of customer orders and overall business activity remain favorable and on track for continued solid sales and earnings growth. Based on the performance this quarter in conjunction with continued strong order rates, earnings per share for fiscal 2004 is expected to be approximately $2.90. Rationalization of operations expense is estimated to be approximately $125 million for fiscal 2004. Operating cash flow is estimated to be $2 billion and capital expenditures are estimated to be approximately $0.4 billion for 2004.

Statements in this report that are not strictly historical may be “forward-looking” statements, which involve risks and uncertainties. These include economic and currency conditions, market demand, pricing, and competitive and technological factors, among others which are set forth in the “Safe Harbor Statement” of Exhibit 13 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2003, which is hereby incorporated by reference.

Item 4. Controls and Procedures 

Emerson maintains a system of disclosure controls and procedures which are designed to ensure that information required to be disclosed by the Company in the reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC’s rules and forms. Based on an evaluation performed, the Company’s certifying officers have concluded that the disclosure controls and procedures were effective as of June 30, 2004, to provide reasonable assurance of the achievement of these objectives.

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 disclose 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 quarter ended June 30, 2004, 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. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities.

The Company's Board of Directors authorized the repurchase of up to 40 million shares each under the November 1996 and November 2001 programs. The maximum number of shares that may yet be purchased under the Company's November 2001 program is 38,384 thousand.

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EMERSON ELECTRIC CO. AND SUBSIDIARIES                                                                               FORM 10-Q

Item 6. Exhibits and Reports on Form 8-K.

(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.

(b) Reports on Form 8-K. Pursuant to Items 7, 9 and 12, the Company filed a Report on Form 8-K dated May 4, 2004, to furnish the press release for the quarter ended March 31, 2004, and to furnish Regulation FD disclosures. Pursuant to Item 9, the Company filed Reports on Form 8-K dated May 24, 2004, and June 21, 2004, furnishing Regulation FD disclosures.

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.