Emerson 2008 Annual Report Download - page 28

A Powerful Force for Innovation [ 21 ]
27.0 percent in 2008 compared with 25.2 percent in
2007. The Company achieved return on total capital of
21.8 percent in 2008 compared with 20.1 percent in
2007 (net earnings excluding interest income and
expense, net of taxes, divided by average stockholders’
equity plus short- and long-term debt less cash and
short-term investments).
Net earnings were $2.1 billion and earnings per share
were $2.66 for 2007, increases of 16 percent and
19 percent, respectively, compared with net earnings and
earnings per share of $1.8 billion and $2.24, respectively,
in 2006. Net earnings as a percent of net sales were
9.7 percent in 2007 compared with 9.4 percent in 2006.
The 19 percent increase in earnings per share also reects
the purchase of treasury shares. Return on stockholders’
equity reached 25.2 percent in 2007 compared with
23.7 percent in 2006. The Company achieved return on
total capital of 20.1 percent in 2007 compared with
18.4 percent in 2006. The Company consummated a two-
for-one stock split in December 2006. All share and per
share data have been restated to reect this split.


    C h A n G e c h a n g e 
(d o l l A R s inm i l l i o n s ) 2006 2007 2008 ‘06-‘07 ‘07 - ‘08
Sales $4,875 5,699  17% 
Earnings $ 878 1,066  21% 
Margin 18.0% 18.7% 
 The Process Management segment sales
were $6.7 billion in 2008, an increase of $953 million,
or 17 percent, over 2007, reecting higher volume and
foreign currency translation. These results reect the
Company’s continued investment in next-generation
technologies and expanding the global reach of the
solutions and services businesses, as well as the strong
worldwide growth in energy and power markets. All of
the businesses reported higher sales, with sales particu-
larly strong for the valves, measurement and systems
businesses. Underlying sales increased approximately
14 percent, reecting 13 percent from volume, which
includes an estimated 3 percent from penetration gains,
and approximately 1 percent from higher sales prices.
Foreign currency translation had a 4 percent ($225 million)
favorable impact and the Brooks divestiture, net of
acquisitions, had an unfavorable impact of 1 percent
($35 million). The underlying sales increase reects
growth in all geographic regions, Asia (21 percent), the
United States (12 percent), Europe (7 percent), Latin
America (22 percent), Canada (13 percent) and Middle
East/Africa (14 percent), compared with the prior year.
Earnings (dened as earnings before interest and taxes for
the business segments discussion) increased 23 percent
to $1,306 million from $1,066 million in the prior year,
reecting the higher sales volume, savings from cost
reductions and material containment and the benet
from foreign currency translation. The margin increase
primarily reects leverage on the higher volume, increase
in sales prices and cost containment actions, which were
partially offset by higher wage costs, unfavorable product
mix and strategic investments to support the growth of
these businesses.
 The Process Management segment sales
were $5.7 billion in 2007, an increase of $824 million,
or 17 percent, over 2006, reecting higher volume and
acquisitions. Nearly all of the businesses reported higher
sales, with sales and earnings particularly strong for the
measurement, systems and valves businesses, reecting
very strong worldwide growth in oil and gas and power
projects, and expansion in the Middle East. Underlying
sales increased 11 percent, reecting approximately more
than 10 percent from volume, which includes approxi-
mately 3 percent from penetrating global markets, and
approximately less than 1 percent from slightly higher
sales prices. Foreign currency translation had a
4 percent ($169 million) favorable impact and the
Bristol and Damcos acquisitions contributed 2 percent
($120 million). The underlying sales increase reects
growth in nearly all of the major geographic regions,
including the United States (10 percent), Asia (12 percent),
Europe (6 percent) and Latin America (6 percent), as well
as the Middle East (63 percent), compared with the prior
year. Earnings increased 21 percent to $1,066 million
from $878 million in the prior year, primarily reecting
the higher sales volume and prices, as well as acquisitions.
The margin increase reects leverage on the higher sales
and cost containment actions, which were partially offset
by higher wages and an $11 million adverse commercial
litigation judgment.

    C h A n G e c h a n g e 
(d o l l A R s inm i l l i o n s ) 2006 2007 2008 ‘06-‘07 ‘07 - ‘08
Sales $3,767 4,269  13% 
Earnings $ 569 665  17% 
Margin 15.1% 15.6% 
 The Industrial Automation segment
increased sales by 14 percent to $4.9 billion in 2008,
compared with $4.3 billion in 2007. Sales growth was
strong across the businesses with increased global
demand for capital goods and foreign currency contrib-
uting to the increase. Sales grew in all of the businesses
and in nearly all of the geographic regions, reecting
the strength in the power generating alternator, uid
automation, electronic drives, electrical distribution and
materials joining businesses. Underlying sales growth
was 7 percent and favorable foreign currency transla-