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Financial Review
      (dollarsinbillions)
Emerson achieved record sales of $20.1 billion in 2006. All of the
business segments generated higher sales over the prior year.
                  
International destination sales, including U.S. exports, increased
approximately 17 percent, to $9.5 billion in 2006, representing
47 percent of the Company’s total sales. U.S. exports were up
13 percent compared to 2005, at $1,127 million. International
subsidiary sales, including shipments to the United States, were
$8.7 billion in 2006, up 17 percent over 2005. Excluding the
net 1 percent unfavorable impact from acquisitions and foreign
currency translation, international subsidiary sales increased
18 percent compared to 2005. Underlying destination sales grew
20 percent in Asia during the year, driven mainly by 19 percent
growth in China, and 21 percent in Latin America and the Middle
East, while sales grew 7 percent in Europe.
International destination sales, including U.S. exports, increased
approximately 11 percent, to $8.2 billion in 2005, representing
47 percent of the Company’s total sales. U.S. exports were up
6 percent compared to 2004, at $998 million. International
subsidiary sales, including shipments to the United States, were
$7.4 billion in 2005, up 12 percent over 2004. Excluding the net
4 percent impact from acquisitions and favorable foreign
currency translation, international subsidiary sales increased
8 percent compared to 2004. Underlying destination sales grew
11 percent in Asia during the year, driven mainly by 14 percent
growth in China, while sales grew 15 percent in Latin America
and 10 percent in the Middle East and sales in Europe were at
compared to 2004.
                            
The Company acquired Artesyn Technologies, Inc. (Artesyn),
Knürr AG (Knürr) and Bristol Babcock (Bristol), as well as several
smaller businesses during 2006. Artesyn is a global manufac-
turer of advanced power conversion equipment and board-level
computing solutions for infrastructure applications in tele-
communication and data-communication systems. Knürr is a
manufacturer of indoor and outdoor enclosure systems and
cooling technologies for telecommunications, electronics and
computing equipment. Bristol is a manufacturer of control and
measurement equipment for oil and gas, water and wastewater,
and power industries. Total cash paid for these businesses (net of
cash and equivalents acquired of approximately $120 million and
debt assumed of approximately $90 million) was approximately
$752 million. Annualized sales for acquired businesses were
$920 million in 2006.
In 2006, the Company divested or had plans to divest several small
business units, including the materials testing business. These
businesses had total annual sales of $171 million, $174 million
and $204 million for scal years 2006, 2005 and 2004, respec-
tively, and earnings were approximately break-even. The
Company recorded an after-tax gain of $22 million from the sale
of the materials testing business in the fourth quarter of 2006.
The sales of the other businesses are expected to close in 2007.
These businesses were not reclassied as discontinued operations
due to immateriality.
During 2005, the Company acquired Do+Able, a manufac-
turer of ready-to-assemble storage products, and Numatics, a
manufacturer of pneumatic and motion control products, and
several smaller businesses. Total cash paid for these businesses
(including assumed debt of approximately $100 million, which
was repaid in October 2005) was approximately $466 million.
During 2004, the Company acquired the North American
outside plant and power systems business of Marconi Corpora-
tion PLC, as well as several other smaller businesses for a total of
approximately $414 million in cash. Annualized sales for acquired
businesses were $430 million in both 2005 and 2004. See Note 3
for additional information regarding acquisitions and divestitures.
Financial Review