Emerson 2008 Annual Report Download - page 29

[ 22 ] Emerson 2008
tion contributed 7 percent ($278 million). Underlying
sales grew 8 percent in the United States and 6 percent
internationally. The U.S. growth particularly reects
the alternator business, which was driven by increased
demand for backup generators. The international sales
growth primarily reects increases in Europe (4 percent)
and Asia (17 percent). The underlying growth reects
6 percent from volume, as well as an approximate
1 percent positive impact from price. Earnings increased
9 percent to $727 million for 2008, compared with
$665 million in 2007, reecting higher sales volume and
the benet from foreign currency translation. The margin
decrease reects a lower payment received by the power
transmission business from dumping duties related to the
Offset Act. A $24 million payment was received in scal
2007, while only a $3 million payment was received in
scal 2008. The Company does not expect to receive any
signicant payments in the future. The margin was posi-
tively impacted by leverage on the higher sales volume
and benets from prior cost reductions efforts. Higher
sales prices were substantially offset by higher mate-
rial and wage costs, as well as unfavorable product mix,
which negatively impacted the margin.
 The Industrial Automation segment
increased sales by 13 percent to $4.3 billion in 2007,
compared with $3.8 billion in 2006. Nearly all of the
businesses reported higher sales in 2007, with particular
strength in the power generating alternator, the electrical
distribution and the electronic drives businesses, as
the favorable economic environment for capital goods
continued. The very strong growth in the U.S. and
European alternator businesses was driven by increased
demand for backup generators and alternative power
sources, such as wind turbines. The underlying sales
growth of 10 percent and the favorable impact from
foreign currency translation of 4 percent ($143 million)
was slightly offset by an unfavorable impact of 1 percent
from divestitures, net of acquisitions. Underlying sales
grew 13 percent internationally and 5 percent in the
United States. The international sales growth primarily
reects increases in Europe (12 percent) and Asia
(19 percent). The underlying growth reects approxi-
mately 7 percent from volume, including slight
penetration gains, caused by increased global industrial
demand and an approximate 3 percent positive impact
from price. Earnings increased 17 percent to $665 million
for 2007, compared with $569 million in 2006, reecting
leverage from higher sales volume and benets from
cost containment, as nearly all of the businesses reported
higher earnings. The margin increase was primarily
due to leverage on higher sales volume. The earnings
increase was also aided by an approximate $24 million
payment received by the power transmission business
from dumping duties related to the Offset Act in 2007,
compared with an $18 million payment received in 2006.
Sales price increases were offset by higher material and
wage costs, as well as unfavorable product mix.

n Process Management n Climate Technologies
n Industrial Automation n Appliance and Tools
n Network Power

    C h A n G e c h a n g e 
(d o l l A R s inm i l l i o n s ) 2006 2007 2008 ‘06-‘07 ‘07 - ‘08
Sales $4,350 5,150  18% 
Earnings $ 484 645  33% 
Margin 11.1% 12.5% 
 Sales in the Network Power segment
increased 23 percent to $6.3 billion in 2008 compared
with $5.2 billion in 2007. The increase in sales reects
continued very strong growth in the precision cooling,
global services, uninterruptible power supply and
inbound power businesses, as well as growth in the power
systems businesses. Underlying sales grew 11 percent,
while the Embedded Computing and Stratos acquisitions
contributed approximately 9 percent ($449 million) and
favorable foreign currency translation had a 3 percent
($156 million) favorable impact. The underlying sales
increase of 11 percent reects higher volume, which
includes an approximate 4 percent impact from penetra-
tion gains. Geographically, underlying sales reect a
17 percent increase in Asia, an 8 percent increase in the
United States, a 14 percent increase in Latin America, a
55 percent increase in Middle East/Africa and a 2 percent
increase in Europe. The U.S. growth reects continued
demand for data room construction and non-residential
computer equipment as well as in the telecommuni-
cations power market. Internationally, the Company
continues to penetrate the Chinese, Indian and other
Asian markets. Earnings increased 23 percent, or
$149 million, to $794 million, compared with $645 million
in 2007, primarily because of the higher sales volume and
savings from cost reduction actions. The margin increase
reects these savings and leverage on the higher volume,
partially offset by a nearly 1 percentage point dilution
from the Embedded Computing acquisition and higher
wage costs.
           
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