Emerson 2008 Annual Report Download - page 30

A Powerful Force for Innovation [ 23 ]
 Sales in the Network Power segment
increased 18 percent to $5.2 billion in 2007 compared
with $4.4 billion in 2006. The sales increase was driven by
continued strong demand in the uninterruptible power
supply, precision cooling and inbound power businesses
and the full year impact of the Artesyn and Knürr acquisi-
tions. Underlying sales grew 9 percent, while acquisitions,
net of divestitures, contributed approximately 7 percent
($332 million) and favorable foreign currency transla-
tion had a 2 percent ($98 million) favorable impact. The
underlying sales increase of 9 percent reects an esti-
mated 9 percent gain from higher volume, which includes
3 percent from penetration gains, partially offset by a
slight decline in sales prices. Geographically, underlying
sales reect a 20 percent increase in Asia, a 7 percent
increase in the United States, while sales in Europe were
at compared with the prior year. The Company’s market
penetration gains in China and other Asian markets
continued. The U.S. growth reects strong demand for
data room and non-residential computer equipment.
Earnings increased 33 percent, or $161 million, to
$645 million, compared with $484 million in 2006,
primarily because of the Artesyn and Knürr acquisitions
and the higher sales volume. The margin increase reects
leverage on higher sales volume, savings from integrating
acquisitions and improvement over the prior year in the
DC power business. These benets were partially offset by
higher material and wage costs.

    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 $3,424 3,614  6% 
Earnings $ 523 538  3% 
Margin 15.3% 14.9% 
 The Climate Technologies segment
reported sales of $3.8 billion for 2008, representing a
6 percent increase over 2007. Underlying sales increased
approximately 3 percent and foreign currency transla-
tion had a 3 percent ($110 million) favorable impact.
The underlying sales increase of 3 percent reects an
approximate 2 percent positive contribution from sales
price increases and an approximate 1 percent gain from
higher volume, which includes a 2 percent impact from
penetration gains. The underlying sales increase was led
by the water-heater controls business, which primarily
reects penetration in the U.S. water-heater market.
The compressors business grew modestly, primarily in
the refrigeration and the U.S. and Asian air-conditioning
markets; while the temperature sensors and ow controls
businesses declined. The growth in refrigeration was
driven by the transport container market. The underlying
sales increase reects a 2 percent increase in the United
States and 4 percent growth internationally. Asia grew
9 percent and Europe declined 6 percent. Earnings
increased 2 percent to $551 million in 2008 compared
with $538 million in 2007. The margin was diluted as
higher sales prices were more than offset by material
ination and higher restructuring costs of $13 million.
The Company continued its capacity expansion begun
in 2006 in Mexico where the next generation scroll
compressor design and hermetic motors for the North
American market will be produced.
 The Climate Technologies segment
reported sales of $3.6 billion for 2007, representing a
6 percent improvement over 2006. Underlying sales
increased approximately 1 percent, while acquisitions
contributed 3 percent ($86 million) and foreign currency
translation had a 2 percent ($53 million) favorable
impact. Lower sales volume of approximately less than
2 percent, which includes a positive 2 percent from pene-
tration gains, was more than offset by an approximate
3 percent positive impact from sales price increases. The
underlying sales growth reects a 16 percent increase in
international sales, led by growth in Europe (18 percent)
and Asia (17 percent). This growth was partially offset by
a 7 percent decline in U.S. sales, which is primarily attrib-
utable to difcult comparisons to a very strong prior year
for the air-conditioning compressor business, as well as
an impact from the downturn in the U.S. housing market.
The volume decline in the U.S. air-conditioning business
was only partially offset by a modest increase in U.S.
refrigeration sales. The very strong growth in Europe and
Asia reects overall favorable market conditions, penetra-
tion in the European heat pump market, and penetration
gains in Asia, particularly in digital scroll compressor prod-
ucts. Earnings increased 3 percent to $538 million in 2007
compared with $523 million in 2006, primarily because
of savings from cost reduction efforts and lower restruc-
turing costs of $5 million. The prot margin declined
as the result of deleverage on the lower volume and an
acquisition, while higher sales prices were offset by higher
material and wage costs.

    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 $3,914 4,006  2% 
Earnings $ 539 564  5% 
Margin 13.8% 14.1% 
 Sales in the Appliance and Tools segment
were $3.9 billion in 2008, a 4 percent decrease from
2007. The results of 2008 were mixed reecting the
different sectors served by these businesses. The profes-
sional tools, commercial storage and hermetic motor
businesses showed strong increases, while the residen-
tial storage, appliance components, and appliance and