Emerson 2010 Annual Report Download - page 28

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2009 vs. 2008 - Climate Technologies sales were
$3.2 billion for 2009, a 16 percent decrease from 2008,
reflecting declines across all businesses, especially for
compressors, temperature sensors and heater controls.
Underlying sales decreased approximately 15 percent,
foreign currency translation had a 2 percent ($92 million)
unfavorable impact and acquisitions added 1 percent
($38 million). The underlying sales decrease reflects
an approximate 17 percent decline from lower volume
and an estimated 2 percent positive impact from higher
selling prices. Sales declines in the compressor business
reflected the worldwide slowdown in air conditioning and
refrigeration markets, particularly in the United States
and Asia. The underlying sales decrease reflected a
15 percent decrease in both the United States and inter-
nationally, including declines of 18 percent in Asia,
10 percent in Europe and 15 percent in Latin America.
Earnings decreased 28 percent to $411 million compared
with $569 million in 2008, primarily due to lower sales
volume, higher rationalization costs of $26 million,
a $15 million commercial litigation charge and a
$12 million negative impact from foreign currency
transactions in 2009 versus prior year, partially offset
by savings from cost reduction actions. The margin
decrease reflects deleverage on lower sales volume
(approximately 2 points), as well as higher material costs,
which were only partially offset by price increases.
TOOLS AND STORAGE
CHANGE CHANGE
(DOLLARS IN MILLIONS) 2008 2009 2010 ‘08 - ‘09 ‘09 - ‘10
Sales $2,248 1,725 1,755 (23)% 2%
Earnings $ 421 276 357 (34)% 29%
Margin 18.7% 16.0% 20.3%
2010 vs. 2009 - Sales for Tools and Storage were
$1.8 billion in 2010, a 2 percent increase from 2009.
Strong growth in the tools and disposer businesses was
partially offset by declines in the storage business, due to
the continued weakness in the U.S. residential construc-
tion markets. The sales increase reflects a 1 percent
decrease in underlying sales on lower volume, due to the
Company outsourcing its freight operations, with favor-
able impacts from acquisitions of 2 percent ($34 million)
and foreign currency translation of 1 percent ($14 million).
Underlying sales in the United States decreased 1 percent
while underlying international sales increased 4 percent.
Earnings for 2010 were $357 million, an increase of
29 percent compared to 2009, and margin increased
over 4 percentage points, reflecting earnings growth in
the tools, appliances and storage businesses, benefits of
cost reduction and restructuring actions in 2009, product
mix, lower restructuring expense of $11 million and
savings from material cost containment.
2009 vs. 2008 - Sales for Tools and Storage were
$1.7 billion in 2009, a 23 percent decrease from 2008.
Declines in the storage, tools and appliance businesses
were due to the continued downturn in the U.S. residen-
tial and nonresidential markets, while a decline in the
appliance solutions business reflected major customers
reducing inventory and production levels due to the diffi-
cult economic conditions. The sales decrease reflected a
22 percent decline in underlying sales and an unfavorable
impact from foreign currency translation of 1 percent
($30 million). Underlying sales in the United States were
down 23 percent while underlying international sales
decreased 19 percent. The underlying sales decrease
reflects an estimated 25 percent decline in volume and
an approximate 3 percent positive impact from pricing.
Earnings for 2009 were $276 million, a 34 percent
decrease from 2008, reflecting deleverage on lower sales
volume and higher rationalization costs of $9 million,
which were partially offset by savings from cost reduc-
tions and higher selling prices.
OPERATING CASH FLOW AS A PERCENT
OF SALES
Operating cash flow was $3.3 billion, 15.6 percent of sales
in 2010.
Financial Position, Capital Resources
and Liquidity
The Company continues to generate substantial cash
from operations, is in a strong financial position with
total assets of $23 billion and common stockholders’
equity of $10 billion and has the resources available to
reinvest in existing businesses, pursue strategic acquisi-
tions and manage its capital structure on a short- and
long-term basis.
15.6%
14.8%
13.3%
13.4%
12.5%
20102006 2008