Emerson 2012 Annual Report Download - page 29

2012 Annual Report | 27
Emerson generated operating cash flow of $3.1 billion in
2012, a 6 percent decrease compared to 2011, primarily
reflecting an increase in operating working capital. Oper-
ating cash flow of $3.2 billion in 2011 was a 2 percent
decrease compared to $3.3 billion in 2010, reflecting an
increase in operating working capital partially offset by
higher net earnings. At September 30, 2012, operating
working capital as a percent of sales was 8.7 percent,
compared with 7.0 percent and 6.7 percent in 2011
and 2010, respectively. Operating working capital as a
percent of sales increased in 2012 amidst the challenging
operating environment due to volatility of served markets
and the supply chain disruption. Pension contributions
were $163 million, $142 million and $247 million in
2012, 2011 and 2010, respectively. Operating cash flow
fully funded capital expenditures, dividends and share
repurchases in all years presented and also fully funded
acquisitions in 2012 and 2011.
Capital expenditures were $665 million, $647 million and
$524 million in 2012, 2011 and 2010, respectively. The
increase in capital expenditures in 2011 was primarily
due to capacity expansion in the Process Management
and Industrial Automation segments. Free cash flow
decreased 8 percent to $2.4 billion in 2012, reflecting an
increase in operating working capital and slightly higher
capital expenditures. Free cash flow was $2.6 billion
in 2011, compared with $2.8 billion in 2010, primarily
reflecting the higher capital expenditures in 2011. The
Company is targeting capital spending of approximately
$700 million in 2013. Net cash paid in connection with
acquisitions was $187 million, $232 million and
$2,843 million in 2012, 2011 and 2010, respectively.
Proceeds from divestitures in those years were
$125 million, $103 million and $846 million, respectively.
Dividends were $1,171 million ($1.60 per share) in
2012, compared with $1,039 million ($1.38 per share)
in 2011 and $1,009 million ($1.34 per share) in 2010. In
November 2012, the Board of Directors voted to increase
the quarterly cash dividend 3 percent to an annualized
rate of $1.64 per share. In 2008, the Board of Directors
approved a program for the repurchase of up to
80 million common shares, under which 16.4 million
shares, 18.7 million shares and 2.1 million shares were
repurchased in 2012, 2011 and 2010, respectively;
14.2 million shares remain available for repurchase under
the 2008 authorization. Purchases of Emerson common
stock totaled $787 million, $958 million and $100 million
in 2012, 2011 and 2010, respectively, at an average per
share price of $47.94, $51.31 and $48.15, respectively.
LEVERAGE/CAPITALIZATION
(DOLLARS IN MILLIONS) 2010 2011 2012
Total Assets $22,843 23,861 23,818
Long-term Debt $ 4,586 4,324 3,787
Common Stockholders’ Equity $ 9,792 10,399 10,295
Total Debt-to-Capital Ratio 34.1% 33.3% 34.0%
Net Debt-to-Net Capital Ratio 26.2% 23.2% 22.1%
Operating Cash Flow-to-Debt Ratio 65.0% 62.2% 57.7%
Interest Coverage Ratio 11.3X 15.8X 13.9X
Total debt, which includes long-term debt, current
maturities of long-term debt, commercial paper and
other short-term borrowings, was $5.3 billion, $5.2 billion
and $5.1 billion for 2012, 2011 and 2010, respectively.
During 2012, the Company repaid $250 million of 5.75%
notes that matured in November 2011.
The total debt-to-capital ratio and the net (less cash
and short-term investments) debt-to-capital ratio were
essentially unchanged in 2012. The operating cash flow-
to-debt ratio decreased in 2012 on lower operating cash
flow and slightly higher debt. The interest coverage ratio
is computed as earnings before income taxes plus interest
expense, divided by interest expense. The decrease in
interest coverage in 2012 compared to 2011 reflects
lower earnings, while the increase in 2011 compared to
2010 reflects higher earnings and lower average borrow-
ings. See Notes 8 and 9 for additional information.
$1.20
08 12111009
$1.32 $1.34 $1.38
$1.60 56
CONSECUTIVE
YEARS OF
INCREASED
DIVIDENDS
PER SHARE
DIVIDENDS PER SHARE