Emerson 2010 Annual Report Download - page 25

2010 Annual Report
23
NET EARNINGS, RETURN ON EQUITY
AND RETURN ON TOTAL CAPITAL
Net earnings common stockholders were $2.2 billion
and net earnings per share common stockholders were
$2.84 for 2010, increases of 26 percent and 25 percent
compared with 2009, respectively, due to the same
factors discussed previously, including the gain on the
sale of the Motors businesses. Net earnings common
stockholders as a percent of net sales were 10.3 percent
and 8.6 percent in 2010 and 2009. Return on common
stockholders’ equity (net earnings common stockholders
divided by average common stockholders’ equity) was
23.6 percent in 2010 compared with 19.5 percent in
2009. Return on total capital was 18.9 percent in 2010
compared with 16.2 percent in 2009, and is computed as
net earnings common stockholders excluding after-tax
net interest expense, divided by average common stock-
holders’ equity plus short- and long-term debt less cash
and short-term investments.
Net earnings common stockholders were $1.7 billion and
net earnings per share common stockholders were $2.27
for 2009, decreases of 29 percent and 26 percent, respec-
tively, compared with $2.4 billion and $3.06, respectively,
in 2008. Net earnings common stockholders as a percent
of net sales were 8.6 percent and 10.2 percent in 2009
and 2008. Return on common stockholders’ equity was
19.5 percent in 2009 compared with 27.0 percent in
2008. Return on total capital was 16.2 percent in 2009
compared with 21.8 percent in 2008. Net earnings
common stockholders in all years included the
aforementioned results from discontinued operations.
EARNINGS PER SHARE FROM
CONTINUING OPERATIONS
Earnings per share from continuing operations common
stockholders were $2.60 in 2010, a 15 percent increase over
the prior year.
Business Segments
Following is a summary of segment results for 2010
compared with 2009, and 2009 compared with 2008.
The Company defines segment earnings as earnings
before interest and income taxes. Prior year segment
results reflect the presentation of noncontrolling interests
in conjunction with the adoption of ASC 810, the reclas-
sification of the Motors businesses to discontinued
operations and movement of the retained hermetic
motors business from Tools and Storage (formerly
Appliance and Tools) to Industrial Automation.
PROCESS MANAGEMENT
CHANGE CHANGE
(DOLLARS IN MILLIONS) 2008 2009 2010 ‘08 - ‘09 ‘09 - ‘10
Sales $6,548 6,135 6,022 (6)% (2)%
Earnings $1,301 1,060 1,093 (18)% 3 %
Margin 19.9% 17.3% 18.1%
2010 vs. 2009 - Process Management sales were
$6.0 billion in 2010, a decrease of $113 million, or
2 percent, from 2009. The segment sales decrease
reflects a 7 percent decline in underlying sales on lower
volume, a 3 percent ($178 million) favorable impact
primarily from the Roxar acquisition and a 2 percent
($121 million) favorable impact from foreign currency
translation. The valves business reported lower sales
primarily as a result of weakness in the chemical,
refining and marine markets. Sales for the systems and
solutions and measurement and flow businesses were
down slightly, while sales for the regulators business
was up slightly. Regionally, underlying sales declined in
all geographic areas, including 1 percent in the United
States, 9 percent each in Asia, Europe and Middle East/
Africa, 11 percent in Canada and 10 percent in Latin
America. Earnings increased 3 percent, to $1,093 million
from $1,060 million in the prior year, and margin
increased, reflecting savings from significant cost
reduction actions, materials cost containment, lower
restructuring costs of $20 million and a $17 million favor-
able impact from foreign currency transactions, partially
offset by deleverage on lower sales volume and higher
wage costs. Sales and earnings improved throughout
the year, with second half results much stronger versus
prior year as capital intensive end markets served by this
segment are recovering.
$2.60
$2.26
$3.10
$2.60
$2.19
20102006 2008