Emerson 2005 Annual Report Download - page 6

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“ A legacy of
performance...” “ The world today faces several fundamental
challenges that impact every individual and
every business. Emerson has long monitored
these challenges and opportunities, and we
stand prepared to help the world meet them.”
David N. Farr
Chairman, Chief Executive Officer, and President
“What’s next ...”
cash flow allowed us to return significant cash to
shareholders in the form of share repurchases. Emerson
repurchased approximately 10 million shares during
2005, which means that between dividend payments
and share repurchases, Emerson returned more than
62 percent of 2005 operating cash flow to shareholders.
This slightly exceeded the stated target of returning
50 to 60 percent of operating cash flow to shareholders.
The company’s strong cash position also allows
us to make strategic acquisitions that strengthen
existing businesses and generate long-term
returns for shareholders. Process Management and
Industrial Automation purchased companies that
bring complementary product offerings and expand
Emerson’s offering of key technologies to the industrial
marketplace. Network Power acquired businesses that
serve the telecom and data center markets, and an
acquisition in the consumer storage business continues
the drive to build a billion dollar storage business. In
total these acquisitions are expected to add approximately
$500 million of revenue to Emerson in 2006.
Investment in leading technologies remains one of
Emerson’s top priorities — it allows us to create best-
in-class products and solutions to meet customers’
toughest challenges, anywhere in the world. Emerson’s
engineering and development investment in 2005
was $634 million, which includes customer solution
engineering. This investment encompasses a global
approach that has allowed us to increase engineering
and development headcount by 20 percent since 2003
while the associated costs as a percent of sales have
been held flat. This approach continues to increase
innovative capacity, evidenced by the 31 percent of
2005 sales that were generated by new products.
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