Emerson 2005 Annual Report Download - page 5

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Emerson had an
outstanding year in 2005, as we delivered the second
consecutive year of double-digit growth in sales and
earnings per share. Sales were a record $17.3 billion,
up 11 percent from $15.6 billion in 2004. The growth
was led by strength in the industrial and technology
markets we serve and was also the result of Emerson’s
continued focus on eight key growth initiatives,
which as a group increased by 15 percent in 2005.
Earnings per share increased 19 percent to $3.55 for
2005, excluding the tax impact of repatriating foreign
earnings under the American Jobs Creation Act (AJCA).
Reported earnings per share were $3.40, a 14 percent
increase from the $2.98 per share in 2004.
Emerson’s cash flow performance in 2005
demonstrates the company’s strong commitment
to capital efficiency as a means of creating value for
shareholders. Operating cash flow was $2.2 billion
in 2005, a slight decrease compared with last year’s
record cash flow. Free cash flow (operating cash flow
less capital expenditures) in 2005 was $1.7 billion, an
8 percent decrease from 2004 as we made strategic
capital investments throughout the company. Free
cash flow was higher than net income for the fifth
consecutive year, a testament to Emerson’s continued
high quality of earnings and efficient working capital
management. Return on total capital excluding the
AJCA impact increased to 16.1% (15.5% including
the impact of AJCA) from 14.2% in 2004, the
fourth consecutive annual improvement.
Emerson’s commitment to generating returns
for shareholders continues with 2005 marking the
49th consecutive year of increased dividends. Dividends
in 2005 were $1.66 per share, and in November 2005
the board of directors increased the dividend to an
annualized rate of $1.78 per share. Additionally, strong
“ A legacy of
performance...”
Dear Shareholders,