Emerson 2010 Annual Report Download - page 29

2010 Annual Report
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CASH FLOW
(DOLLARS IN MILLIONS) 2008 2009 2010
Operating Cash Flow $3,293 3,086 3,292
Percent of sales 13.3% 14.8% 15.6%
Capital Expenditures $ 714 531 524
Percent of sales 2.9% 2.6% 2.5%
Free Cash Flow (Operating Cash
Flow less Capital Expenditures) $2,579 2,555 2,768
Percent of sales 10.4% 12.2 % 13.1%
Operating Working Capital $2,202 1,714 1,402
Percent of sales 8.9% 8.2% 6.7%
Emerson generated operating cash flow of $3.3 billion in
2010, a 7 percent increase from 2009 reflecting higher
net earnings in 2010 and continued improvements in
working capital management. The operating cash flow
of $3.1 billion in 2009 was a 6 percent decrease from
$3.3 billion in 2008, due to lower net earnings and
increased pension funding, partially offset by significant
savings from improvements in operating working capital
management. At September 30, 2010, operating working
capital as a percent of sales was 6.7 percent, compared
with 8.2 percent and 8.9 percent in 2009 and 2008,
respectively. Pension contributions were $247 million,
$303 million and $135 million in 2010, 2009 and 2008,
respectively. Operating cash flow fully funded capital
expenditures, dividends and share repurchases in all years
presented and contributed funding toward acquisitions.
Capital expenditures were $524 million, $531 million
and $714 million in 2010, 2009 and 2008, respectively.
Free cash flow (operating cash flow less capital expendi-
tures) was $2.8 billion in 2010, compared with
$2.6 billion in 2009 and 2008, reflecting higher net
earnings in 2010, and both lower earnings and capital
expenditures in 2009. The decline in capital spending
in 2009 was primarily due to the overall decline in world-
wide business. In 2011, the Company is targeting capital
spending of approximately $600 million. Net cash paid
in connection with acquisitions was $2,843 million,
$776 million and $561 million in 2010, 2009 and 2008,
respectively. Proceeds from divestitures in those years
were $846 million, $4 million and $201 million,
respectively.
DIVIDENDS PER SHARE
Annual dividends increased to a record $1.34 per share in
2010, representing the 54th consecutive year of increases.
Dividends were $1,009 million ($1.34 per share) in 2010,
compared with $998 million ($1.32 per share) in 2009
and $940 million ($1.20 per share) in 2008. In November
2010, the Board of Directors voted to increase the
quarterly cash dividend 3 percent to an annualized rate of
$1.38 per share. In 2008, the Board of Directors approved
a program for the repurchase of up to 80 million common
shares. Under the 2008 authorization, 2.1 million shares
and 21.0 million shares were repurchased in 2010 and
2009, respectively; and in 2008, 22.4 million shares
were repurchased under the 2002 and 2008 authoriza-
tions; 49.3 million shares remain available for repurchase
under the 2008 authorization and zero remain available
under the 2002 authorization. Purchases of Emerson
common stock totaled $100 million, $695 million and
$1,128 million in 2010, 2009 and 2008, respectively, at
an average price paid per share of $48.15, $33.09 and
$50.31, respectively.
LEVERAGE/CAPITALIZATION
(DOLLARS IN MILLIONS) 2008 2009 2010
Total Assets $21,040 19,763 22,843
Long-term Debt $ 3,297 3,998 4,586
Common Stockholders’ Equity $ 9,113 8,555 9,792
Total Debt-to-Capital Ratio 33.1% 34.8% 34.1%
Net Debt-to-Net Capital Ratio 22.7% 25.7% 26.2%
Operating Cash Flow-to-Debt Ratio 72.9% 67.5% 65.0%
Interest Coverage Ratio 15.9X 11.0X 11.3X
$1.34
$1.32
$1.20
$1.05
$0.89
20102006 2008