Process Management reported very strong sales and earnings growth on continued demand in global oil and gas, chemicals, and power end markets and the weak prior year comparisons due to the supply chain disruption. Solid demand in U.S. residential end markets supported underlying sales growth in Commercial & Residential Solutions. Sales and earnings increased for Climate Technologies reflecting strong U.S. and Asia air conditioning sales growth, partially offset by a decrease in refrigeration. Sales and earnings in Industrial Automation decreased on overall weakness, particularly in the U.S. and Europe. Network Power results reflected weakness in telecommunications and information technology markets.

RESULTS OF OPERATIONS

Following is an analysis of the Company's operating results for the first
quarter ended December 31, 2012, compared with the first quarter ended December
31, 2011.

Three Months Ended December 31                     2011      2012     Change
(dollars in millions, except per share amounts)

Net sales                                       $ 5,309     5,553          5 %
Gross profit                                    $ 2,055     2,207          7 %
Percent of sales                                   38.7 %    39.7 %
SG&A                                            $ 1,354     1,394
Percent of sales                                   25.5 %    25.1 %
Other deductions, net                           $    90        86
Interest expense, net                           $    58        54
Earnings before income taxes                    $   553       673         22 %
Percent of sales                                   10.4 %    12.1 %
Net earnings common stockholders                $   371       454         22 %
Percent of sales                                    7.0 %     8.2 %

Diluted EPS - Net earnings                      $  0.50      0.62         24 %

2013 first quarter sales increased 5 percent ($244 million), to $5,553 million, compared with $5,309 million in 2012. Results reflect a 6 percent ($294 million) increase in underlying sales, which includes favorable comparisons due to the supply chain disruption in the prior year. Underlying sales exclude acquisitions, divestitures and foreign currency translation. Foreign currency translation had a negative 0.5 percent ($28 million) impact and divestitures subtracted 0.5 percent ($22 million). The increase in underlying sales reflects volume growth. Sales increased 6 percent in the U.S. and 5 percent internationally. Asia was up 6 percent, including China up 2 percent, Latin America was up 19 percent, Middle East/Africa was up 22 percent and Canada was up 6 percent. Sales in Europe declined 2 percent. Segment results were mixed as sales grew $369 million in Process Management and $19 million in Climate Technologies, but decreased $92 million in Industrial Automation, $36 million in Network Power and $4 million in Commercial & Residential Solutions.

Cost of sales in 2013 were $3,346 million, resulting in gross profit of $2,207 million and gross margin of 39.7 percent. Cost of sales in 2012 were $3,254 million, resulting in gross profit of $2,055 million and gross margin of 38.7 percent. The increases in gross profit and margin primarily reflect higher volume with associated leverage and savings from cost reduction actions. Product mix was unfavorable. Gross margin in 2012 was negatively impacted by the supply chain disruption.

Selling, general and administrative (SG&A) expenses of $1,394 million increased $40 million compared with prior year. SG&A as a percent of sales was 25.1 percent in 2013, a 0.4 percentage point decrease versus 25.5 percent in 2012. The increase in SG&A primarily reflects costs associated with higher volume. An increase in incentive stock compensation from the overlap of two performance shares plans was essentially offset by the effect of a 2012 charge related to retiree medical benefits. SG&A as a percent of sales benefited from volume leverage and savings from cost reduction actions.

Other deductions, net were $86 million in 2013, a decrease of $4 million versus prior year. See Notes 5 and 6 for further details regarding other deductions, net and rationalization costs.

Pretax earnings of $673 million increased $120 million, or 22 percent, on the strength of volume and leverage gains in Process Management. Earnings reflect a $143 million increase in Process Management, partially offset by small decreases in Industrial Automation and Network Power.

Income taxes were $207 million for 2013 and $172 million for 2012, resulting in effective tax rates of 31 percent for both periods. The effective tax rate is estimated at approximately 31 percent to 32 percent for full year 2013.

Net earnings common stockholders in 2013 were $454 million, an increase of 22 percent. Net earnings per share were $0.62, an increase of 24 percent. The increases in earnings and earnings per share reflect improved operating results for Process Management and the repurchase of common shares.

BUSINESS SEGMENTS
Following is an analysis of operating results for the Company's business
segments for the first quarter ended December 31, 2012, compared with the first
quarter ended December 31, 2011. The Company defines segment earnings as
earnings before interest and taxes.

Process Management
Three Months Ended December 31    2011      2012     Change
(dollars in millions)

Sales                          $ 1,527     1,896         24 %
Earnings                       $   190       333         75 %
Margin                            12.4 %    17.6 %

Process Management sales increased $369 million, up 24 percent on both a reported and underlying basis, as robust growth across the segment benefited from global energy investment and favorable comparisons from the supply chain disruption in the prior year. Underlying growth was strong in all regions, including 26 percent in the U.S., 25 percent in Asia, 44 percent in Latin America, 36 percent in Middle East/Africa, 11 percent in Europe and 21 percent in Canada. Earnings increased $143 million and margin expanded 520 basis points, benefiting from higher volume, significant leverage and the weak prior year results.

EMERSON ELECTRIC CO. AND SUBSIDIARIES       FORM 10-Q



Industrial Automation
Three Months Ended December 31    2011      2012     Change
(dollars in millions)

Sales                          $ 1,229     1,137         (7 )%
Earnings                       $   182       164        (10 )%
Margin                            14.8 %    14.4 %

Industrial Automation sales decreased $92 million on declines in most businesses reflecting weakness in capital goods end markets. The sales decrease was most pronounced in the power generating alternators and industrial motors, and electrical drives businesses. Strong growth in the hermetic motors business was driven by HVAC compressor demand. Underlying sales were down 6 percent on lower volume. Foreign currency translation deducted 1 percent ($18 million). Underlying sales decreased 9 percent in Europe, 7 percent in the U.S. and 7 percent in Asia. Sales were up 9 percent in Latin America and 4 percent in Middle East/Africa. Earnings decreased $18 million and margin decreased 40 basis points on lower volume and related deleverage. Savings from cost reduction actions and materials cost containment partially offset the earnings decline.

Network Power
Three Months Ended December 31    2011      2012     Change
(dollars in millions)

Sales                          $ 1,495     1,459         (2 )%
Earnings                       $   122       105        (14 )%
Margin                             8.2 %     7.2 %

Sales for Network Power decreased $36 million reflecting weakness in global telecommunications and information technology end markets. Overall, underlying sales decreased 2 percent, reflecting 1 percent each from lower volume and price. Sales were flat in embedded computing and power, compared with a weak prior year. The network power systems business was down modestly. Strong growth in North America and Latin America uninterruptible power supplies and Asia power systems was offset by declines in the solutions and software business and in Europe. Underlying sales for the segment were flat in the U.S. and grew 8 percent in Latin America. Sales were down 8 percent in Europe, and down 3 percent in Asia on a decrease in embedded computing and power. Earnings decreased $17 million and the margin contracted 1 percentage point. Lower volume, deleverage and unfavorable product mix were partially offset by savings from cost reduction actions. Lower prices were offset by materials cost containment.

Climate Technologies
Three Months Ended December 31  2011     2012     Change
(dollars in millions)

Sales                          $ 733      752          2 %
Earnings                       $ 100      101          1 %
Margin                          13.6 %   13.4 %

Climate Technologies sales increased $19 million as a moderate increase in the compressors business was partially offset by decreases in temperature controls and sensors. Global air conditioning sales growth was strong, particularly in the U.S. and Asia. Europe air conditioning was up slightly. Refrigeration sales declined sharply, although Europe was positive. Underlying sales increased 3 percent on volume growth and foreign currency translation deducted 1 percent ($4 million). Underlying sales increased 7 percent in Asia, 2 percent in Europe, 1 percent in the U.S. and 32 percent in Middle East/Africa. Sales declined 4 percent in Latin America. Earnings increased $1 million on higher volume in the compressors business. Margin was down 20 basis points as unfavorable product mix was partially offset by savings from cost containment actions.

EMERSON ELECTRIC CO. AND SUBSIDIARIES       FORM 10-Q



Commercial & Residential Solutions
Three Months Ended December 31  2011     2012     Change
(dollars in millions)

Sales                          $ 457      453         (1 )%
Earnings                       $  97       97          -  %
Margin                          21.2 %   21.5 %

Underlying sales for Commercial & Residential Solutions grew 4 percent ($18 million) on volume increases. Reported sales decreased 1 percent ($4 million) as the prior year Knaack storage business divestiture had a negative 5 percent ($22 million) impact. Sales growth in storage and food waste disposers was solid. The professional tools business was down slightly. Underlying sales increased 7 percent in the U.S. and decreased 4 percent internationally. Earnings were flat and margin increased 30 basis points. Earnings from higher volume were offset by the Knaack divestiture and other costs.

FINANCIAL CONDITION
Key elements of the Company's financial condition for the three months ended
December 31, 2012 as compared to the year ended September 30, 2012.
                                Sept 30, 2012     Dec 31, 2012
Working capital (in millions) $         2,993            2,883
Current ratio                        1.4 to 1         1.4 to 1
Total debt-to-total capital              34.0 %           34.2 %
Net debt-to-net capital                  22.1 %           21.8 %
Interest coverage ratio                 13.9X            12.6X

The Company's interest coverage ratio (earnings before income taxes plus interest expense, divided by interest expense) was 12.6X for the first quarter of 2013 compared to 9.9X in the prior year. The increase is primarily due to higher earnings.
Cash provided by operating activities of $554 million increased $220 million, or 66 percent, compared with $334 million in the prior year period, primarily due to higher earnings and lower working capital growth. Operating cash flow plus an increase in short-term borrowings of $424 million funded capital expenditures of $115 million, dividends of $297 million, treasury stock purchases of $113 million and long-term debt payments of $264 million. For the first three months of 2013, free cash flow of $439 million (operating cash flow of $554 million less capital expenditures of $115 million) was up $235 million from free cash flow of $204 million (operating cash flow of $334 million less capital expenditures of $130 million) in the first quarter of 2012. Overall, cash and equivalents increased $160 million during the first three months of 2013. Emerson maintains a conservative financial structure which provides the strength and flexibility necessary to achieve its strategic objectives. The Company has been able to readily meet all its funding requirements and currently believes that sufficient funds will be available to meet the Company's needs in the foreseeable future through ongoing operations, existing resources, short- and long-term debt capacity or backup credit lines. These resources allow Emerson to reinvest in existing businesses, pursue strategic acquisitions and manage its capital structure on a short- and long-term basis.

FISCAL 2013 OUTLOOK
Business investment remains slow and cautious globally. The Company generally expects steady demand in the near term, led by solid global energy investment and improving telecommunications and residential end markets. Demand in Europe remains mixed and uncertain, and the power generating alternators business is weak. Based on current market conditions, reported and underlying sales in 2013 are expected to grow 2 percent to 5 percent. EBIT margin is expected to improve 10 to 20 basis points (which excludes 240 basis points for goodwill impairment in 2012) and reported pretax earnings margin would improve 250 to 260 basis points. Earnings per share are expected to be $3.53 to $3.63, with the continued expectation that 70 to 80 percent of the improvement (excluding the impairment) will occur in the first half of the year, due in large part to the quarterly impact of the supply chain disruption from Thailand flooding in 2012. The Company is targeting operating cash flow of approximately $3.3 billion to $3.4 billion and capital expenditures of approximately $0.7 billion.

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 Exhibit 13, to the Company's Annual Report on Form 10-K for the year ended September 30, 2012, which are hereby incorporated by reference.