Emerson 2006 Annual Report Download - page 56

Notes to Consolidated Financial Statements
Changes in awards outstanding but not yet earned under the Incentive Shares Plans during the year ended September 30, 2006, follow:
      averagegrantdate
(sharesinthousands)    shares fairvaluepershare
Beginning of year 5,027 $63.16
Granted 233 $73.46
Earned/vested (1,770) $65.88
Canceled (92) $63.16
End of year 3,398 $62.45
The total fair value of shares earned/vested was $123, $5 and $24 under the Incentive Shares Plans of which $55, $2 and $9 was paid
in cash, primarily for tax withholding, in 2006, 2005 and 2004, respectively. As of September 30, 2006, approximately 10.7 million
shares remained available for award under the Incentive Shares Plans.
In addition to the stock option and incentive share plans, the Company issued 11,882 shares of restricted stock in 2006 under the
Restricted Stock Plan for Non-Management Directors and 0.2 million shares remained available for issuance as of September 30, 2006.
Compensation cost for the stock option and incentive share plans was $81, $100 and $66, for 2006, 2005 and 2004, respectively.
Total income tax benet recognized in the income statement for these compensation arrangements during 2006, 2005 and 2004
were $22, $33 and $22, respectively. As of September 30, 2006, there was $113 of total unrecognized compensation cost related to
nonvested awards granted under these plans, which is expected to be recognized over a weighted-average period of 1.7 years.

At September 30, 2006, 28,976,471 shares of common stock were reserved, primarily for issuance under the Company’s stock-based
compensation plans. During 2006, 10,725,600 treasury shares were acquired and 2,420,935 treasury shares were issued.
Approximately 1.2 million preferred shares are reserved for issuance under a Preferred Stock Purchase Rights Plan. Under certain
conditions involving the acquisition of or an offer for 20 percent or more of the Company’s common stock, all holders of Rights,
except an acquiring entity, would be entitled (i) to purchase, at an exercise price of $260, common stock of the Company or an
acquiring entity with a value twice the exercise price, or (ii) at the option of the Board, to exchange each Right for one share of
common stock. The Rights remain in existence until November 1, 2008, unless earlier redeemed (at one-half cent per Right),
exercised, or exchanged under the terms of the plan.

The Company designs and supplies product technology and delivers engineering services in a wide range of industrial, commercial
and consumer markets around the world. The divisions of the Company are organized primarily by the nature of the products and
services provided. The Process Management segment includes systems and software, measurement and analytical instrumentation,
valves, actuators and regulators, and services and solutions for automated industrial processes. The Industrial Automation segment
includes industrial motors and drives, power transmission equipment, alternators, materials joining and precision cleaning, uid
power and control, and electrical distribution equipment. The Network Power segment consists of uninterruptible power supplies,
power conditioning and electrical switching equipment, and precision cooling and site monitoring systems. The Climate Technologies
segment consists of compressors, temperature sensors and controls, thermostats, ow controls, and remote monitoring services.
The Appliance and Tools segment includes general and special purpose motors and controls, appliances and appliance components,
plumbing tools, and storage products.
The primary income measure used for assessing performance and making operating decisions is earnings before interest and
income taxes. Intersegment sales approximate market prices. Accounting method differences between segment reporting and the
consolidated nancial statements include primarily management fees allocated to segments based on a percentage of sales and the
accounting for pension and other retirement plans. Gains and losses from divestitures of businesses are included in Corporate and
other. Corporate assets include primarily cash and equivalents, investments, pensions, deferred charges, and certain xed assets.