Emerson 2006 Annual Report Download - page 25

       
Emerson achieved record sales, earnings and earnings per share
in the scal year ended September 30, 2006. All of the business
segments generated higher sales and earnings compared to the
prior year. The Network Power, Process Management and Indus-
trial Automation businesses drove gains in a favorable economic
environment as gross xed investment expanded moderately
during 2006. Strong growth in the United States and Asia, solid
growth in Europe and acquisitions contributed to these results.
Prot margins remained strong primarily due to leverage on
higher sales volume and benets derived from previous cost
reduction actions. Emerson’s nancial position remains strong
and the Company continues to generate substantial cash ow.
        
Net sales for scal 2006 were a record $20.1 billion, an increase
of approximately $2.8 billion, or 16 percent, over scal 2005,
with both U.S. and international sales contributing to this
growth. The consolidated results reect increases in all ve
business segments with an underlying sales (which exclude
acquisitions, divestitures and foreign currency translation)
increase of more than 12 percent ($2,119 million), an approxi-
mate 4 percent ($766 million) contribution from acquisitions
and a slightly unfavorable impact ($57 million) from foreign
currency translation. The underlying sales increase of more than
12 percent was driven by 12 percent growth in the United States
and a total international sales increase of 13 percent. The U.S.
market growth was very strong in the rst half of 2006 and began
to moderate toward the end of the scal year, while Europe
grew stronger as the year progressed and nished very strong
in the fourth quarter. The international sales increase primarily
reects growth in Asia (20 percent) and Europe (7 percent). The
Company estimates that the underlying sales growth primarily
reects a nearly 9 percent gain from volume, an approximate
3 percent impact from market penetration gains and a less than
1 percent impact from higher sales prices.
Net sales for scal 2005 were $17.3 billion, an increase of approx-
imately $1.7 billion, or 11 percent, over scal 2004, with growth
in both the U.S. and international markets. Continued strength
in commercial and industrial demand and increases in all of
the business segments drove the consolidated results, with an
underlying sales increase of 6 percent ($895 million), a 2 percent
($257 million) favorable impact from a stronger Euro and other
currencies, and an over 3 percent ($552 million) positive impact
from acquisitions. The underlying sales increase of 6 percent
was driven by 6 percent growth in the United States (including
a strong nish to the year with 10 percent growth in the fourth
quarter) and a total international sales growth of 6 percent,
which primarily reects 11 percent growth in Asia. The Company
estimates that the underlying sales growth primarily reects an
approximate 4 percent gain from volume, an approximate
1 percent impact from market penetration gains and an
approximate 1 percent impact from higher sales prices.
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Years ended September 30 | Dollars in millions, except per share amounts
     changechange
  2004 2005 2006 ‘04-‘05 ‘05-‘06
Net sales $15,615 17,305  11% 
Gross profit $ 5,566 6,183  11% 
Percent of sales 35.6% 35.7% 35.6%
SG&A $ 3,281 3,595 
Percent of sales 21.0% 20.7%20.4%
Other deductions, net $ 223 230 
Interest expense, net $ 210 209 
Earnings before income taxes $ 1,852 2,149  16% 
Net earnings $ 1,257 1,422  13% 
Percent of sales 8.1% 8.2% 9.2%
Earnings per share $ 2.98 3.40  14% 
Net earnings and earnings per share for 2005 include a $63 million tax expense ($0.15 per share) for repatriation under the American Jobs Creation Act.