Emerson 2008 Annual Report Download - page 27

[ 20 ] Emerson 2008
of additional losses on foreign exchange transactions
compared with 2007, lower gains of $10 million and
other items. Gains in 2008 included the following items.
The Company received $54 million and recognized a gain
of $39 million ($20 million after-tax) on the sale of an
equity investment in Industrial Motion Control Holdings,
LLC, a manufacturer of motion control components for
automation equipment. The Company also recorded a
gain of $18 million related to the sale of a facility.
Other deductions, net were $175 million in 2007, a
$2 million increase from the $173 million in 2006. Gains
in 2007 included approximately $32 million related to
the sale of the Company’s remaining shares in MKS
Instruments, Inc. and approximately $24 million related
to a payment received under the U.S. Continued
Dumping and Subsidy Offset Act (Offset Act). Ongoing
costs for the rationalization of operations were $75 million
in 2007, compared with $80 million in 2006. The higher
gains and lower other costs were more than offset by
higher amortization of intangibles related to acquisitions.
See Notes 4 and 5 for further details regarding other
deductions, net and rationalization costs.

Interest expense, net was $188 million, $228 million and
$207 million in 2008, 2007 and 2006, respectively. The
decrease of $40 million from 2007 to 2008 was primarily
due to lower interest rates and lower average borrowings.

Income taxes were $1,137 million, $964 million and
$834 million for 2008, 2007 and 2006, respectively,
resulting in effective tax rates of 32 percent, 31 percent
and 31 percent.
                       

Earnings from continuing operations were $2.5 billion
and earnings from continuing operations per share were
$3.11 for 2008, increases of 15 percent and 17 percent,
respectively, compared with $2.1 billion and $2.65 for
2007. These earnings results reect increases in four of
the ve business segments, including $240 million in
Process Management, $149 million in Network Power
and $62 million in Industrial Automation. The higher
earnings also reect leverage from higher sales, benets
realized from cost containment, and higher sales prices,
partially offset by higher raw material and wage costs.
See Business Segments discussion that follows for
additional information.
Earnings from continuing operations were $2.1 billion
and earnings from continuing operations per share were
$2.65 for 2007, increases of 16 percent and 19 percent,
respectively, compared with $1.8 billion and $2.23 for
2006. These earnings results reect increases in all ve
business segments, including $188 million in Process
Management, $161 million in Network Power and
$96 million in Industrial Automation. The higher earnings
also reect leverage from higher sales, benets realized
from cost containment, and higher sales prices, partially
offset by higher raw material and wage costs.
                        
(dollars in billions)
Earnings from continuing operations were a record
$2.5 billion in 2008, a 15 percent increase over the prior year.

The loss from discontinued operations of $42 million,
or $0.05 per share, in scal 2008 included a gain of
$42 million related to the divestiture of the Brooks unit,
a loss of $92 million related to the divestiture of the
European appliance motor and pump business, as well as
$8 million of operating results related to these divesti-
tures. Discontinued operations for scal 2007 and 2006
related to the European appliance motor and pump busi-
ness were $7 million, or $0.01 per share, and $6 million,
or $0.01 per share, respectively. See previous discussion
under Acquisitions and Divestitures and Note 3 for addi-
tional information regarding discontinued operations.
                             

Net earnings were a record $2.4 billion and earnings per
share were a record $3.06 per share for 2008, increases of
13 percent and 15 percent, respectively, compared with
net earnings and earnings per share of $2.1 billion and
$2.66, respectively, in 2007. Net earnings as a percent
of net sales were 9.7 percent in 2008 and 2007. Net
earnings in 2008 included a net loss from discontinued
operations of $42 million, or $0.05 per share, related
to the divestitures of the Brooks unit and the European
appliance motor and pump business. The 15 percent
increase in earnings per share also reects the purchase of
treasury shares. Return on stockholders’ equity (net earn-
ings divided by average stockholders’ equity) reached
2003 2008
$1.0
$1.2
$1.4
$1.8
$2.1
$2.5