Emerson 2008 Annual Report Download - page 24

A Powerful Force for Innovation [ 17 ]

Years ended September 30 | Dollars in millions, except per share amounts
    C h A n G e c h a n g e 
  2006 2007 2008 2006-2007 2007 - 2008
Net sales $19,734 22,131  12% 
Gross profit $ 7,129 8,065  13% 
Percent of sales 36.1% 36.4% 36.8%
SG&A $ 4,076 4,569 
Percent of sales 20.6% 20.6% 20.3%
Other deductions, net $ 173 175 
Interest expense, net $ 207 228 
Earnings from continuing operations
before income taxes $ 2,673 3,093  16% 
Earnings from continuing operations $ 1,839 2,129  16% 
Net earnings $ 1,845 2,136  16% 
Percent of sales 9.4% 9.7% 9.7%
EPS – Continuing operations $ 2.23 2.65  19% 
EPS – Net earnings $ 2.24 2.66  19% 
Return on equity 23.7% 25.2% 
Return on total capital 18.4% 20.1% 

Emerson achieved record sales, earnings and earnings
per share in the scal year ended September 30, 2008.
For scal 2008 net sales were $24.8 billion, an increase
of 12 percent; earnings from continuing operations and
earnings from continuing operations per share were
$2.5 billion and $3.11, increases of 15 percent and
17 percent, respectively; net earnings and net earnings
per share were $2.4 billion and $3.06, increases of
13 percent and 15 percent, respectively, over scal 2007.
Four of the ve business segments generated higher sales
and earnings compared with the prior year. The Process
Management, Network Power and Industrial Automa-
tion businesses drove gains, while growth in the Climate
Technologies and Appliance and Tools businesses was
moderated by weakness in the U.S. consumer appliance
and residential end-markets. Strong growth in Asia,
Latin America and Middle East/Africa, favorable foreign
currency translation, and acquisitions contributed to
these results. Prot margins remained at high levels,
primarily because of leverage on higher sales volume and
benets derived from previous rationalization actions.
Emerson’s nancial position remains strong and the
Company generated substantial operating cash ow in
2008 of $3.3 billion, an increase of 9 percent, and free cash
ow (operating cash ow less capital expenditures) of
$2.6 billion, an increase of 10 percent. Emerson maintains
a conservative nancial structure to provide the strength
and exibility necessary to achieve our strategic objectives.

Net sales for scal 2008 were a record $24.8 billion, an
increase of approximately $2.7 billion, or 12 percent, over
scal 2007, with international sales leading the overall
growth. The Network Power, Process Management and
Industrial Automation businesses drove sales growth,
while the Appliance and Tools and Climate Technologies
businesses continued to be impacted by the U.S. consumer
slowdown. The consolidated results reect increases in
four of the ve business segments with an approximate
7 percent ($1,523 million) increase in underlying sales
(which exclude acquisitions, divestitures and foreign
currency translation), a 4 percent ($809 million) favor-
able impact from foreign currency translation and a
1 percent ($344 million) contribution from acquisitions,
net of divestitures. The underlying sales increase for the
scal 2008 year was driven by a total international sales
increase of more than 10 percent and a 3 percent increase
in the United States. The international sales increase
primarily reects growth in Asia (17 percent), Latin
America (18 percent), Middle East/Africa (17 percent)
and Europe (3 percent). The Company estimates that
the underlying sales growth of approximately 7 percent
primarily reects an approximate 6 percent gain from
volume, which includes an approximate 2 percent impact
from penetration gains, and an approximate 1 percent
impact from higher sales prices.