1. A Powerful Force for Innovation [ 29 ]
ConsolIdAted s tAtements o F e A r nIngs
EmErsoN ElEctric co. & suBsiDiariEs
Years ended September 30 | Dollars in millions, except per share amounts
2006 2007 2008
Net sales $19,734 22,131 24,807
Costs and expenses:
Cost of sales 12,605 14,066 15,668
selling, general and administrative expenses 4,076 4,569 5,057
other deductions, net 173 175 303
Interest expense (net of interest income: 2006, $18; 2007, $33; 2008, $56) 207 228 188
Earnings from continuing operations before income taxes 2,673 3,093 3,591
Income taxes 834 964 1,137
Earnings from continuing operations $ 1,839 2,129 2,454
discontinued operations, net of tax 6 7 (42)
Net earnings $ 1,845 2,136 2,412
Basic earnings per common share:
earnings from continuing operations $ 2.25 2.68 3.14
discontinued operations 0.01 0.01 (0.05)
Basic earnings per common share $ 2.26 2.69 3.09
Diluted earnings per common share:
earnings from continuing operations $ 2.23 2.65 3.11
discontinued operations 0.01 0.01 (0.05)
Diluted earnings per common share $ 2.24 2.66 3.06
See accompanying Notes to Consolidated Financial Statements.

2. [ 30 ] emerson 2008
ConsolIdAted BA l A nCe shee ts
EmErsoN ElEctric co. & suBsiDiariEs
September 30 | Dollars in millions, except per share amounts
ASSETS 2007 2008
current assets
Cash and equivalents $ 1,008 1,777
receivables, less allowances of $86 in 2007 and $90 in 2008 4,260 4,618
Inventories:
Finished products 884 884
raw materials and work in process 1,343 1,464
total inventories 2,227 2,348
other current assets 570 588
total current assets 8,065 9,331
Property, plant and equipment
land 199 201
Buildings 1,683 1,737
machinery and equipment 6,138 6,296
Construction in progress 414 457
8,434 8,691
less accumulated depreciation 5,003 5,184
Property, plant and equipment, net 3,431 3,507
other assets
goodwill 6,412 6,562
other 1,772 1,640
total other assets 8,184 8,202
$19,680 21,040
See accompanying Notes to Consolidated Financial Statements.

3. A Powerful Force for Innovation [ 31 ]
LIABILITIES AND STOCKHOLDERS’ EQUITY 2007 2008
current liabilities
short-term borrowings and current maturities of long-term debt $ 404 1,221
Accounts payable 2,501 2,699
Accrued expenses 2,337 2,480
Income taxes 304 173
total current liabilities 5,546 6,573
long-term debt 3,372 3,297
other liabilities 1,990 2,057
stockholders’ equity
Preferred stock of $2.50 par value per share
Authorized 5,400,000 shares; issued - none – –
Common stock of $0.50 par value per share
Authorized 1,200,000,000 shares; issued 953,354,012 shares;
outstanding 788,434,076 shares in 2007 and 771,216,037 shares in 2008 477 477
Additional paid-in capital 31 146
retained earnings 12,536 14,002
Accumulated other comprehensive income 382 141
13,426 14,766
less cost of common stock in treasury, 164,919,936 shares in 2007 and
182,137,975 shares in 2008 4,654 5,653
total stockholders’ equity 8,772 9,113
$19,680 21,040

4. [ 32 ] emerson 2008
ConsolIdAted s tAtements o F s toCk holder s’ eq u It y
EmErsoN ElEctric co. & suBsiDiariEs
Years ended September 30 | Dollars in millions, except per share amounts
2006 2007 2008
common stock
Beginning balance $ 238 238 477
Adjustment for stock split – 239 –
ending balance 238 477 477
additional paid-in capital
Beginning balance 120 161 31
stock plans and other 41 31 115
Adjustment for stock split – (161) –
ending balance 161 31 146
retained earnings
Beginning balance 10,199 11,314 12,536
net earnings 1,845 2,136 2,412
Cash dividends (per share: 2006, $0.89; 2007, $1.05; 2008, $1.20) (730) (837) (940)
Adjustment for stock split – (77) –
Adjustment for adoption of FIn 48 – – (6)
ending balance 11,314 12,536 14,002
accumulated other comprehensive income
Beginning balance (65) 306 382
Foreign currency translation 175 459 (30)
Pension and postretirement adjustments (net of tax of: 2006,
$(71); 2007, $(1); 2008, $51) 121 2 (144)
Cash flow hedges and other (net of tax of: 2006, $(43); 2007, $29; 2008, $51) 75 (56) (67)
Adjustment for adoption of FAs 158 (net of tax of: 2007, $193) – (329) –
ending balance 306 382 141
treasury stock
Beginning balance (3,092) (3,865) (4,654)
Acquired (871) (849) (1,128)
Issued under stock plans and other 98 60 129
ending balance (3,865) (4,654) (5,653)
total stockholders’ equity $ 8,154 8,772 9,113
comprehensive income
net earnings $ 1,845 2,136 2,412
Foreign currency translation 175 459 (30)
Pension and postretirement adjustments 121 2 (144)
Cash flow hedges and other 75 (56) (67)
total $ 2,216 2,541 2,171
See accompanying Notes to Consolidated Financial Statements.

5. A Powerful Force for Innovation [ 33 ]
ConsolIdAted s tAtements o F C A sh Flows
EmErsoN ElEctric co. & suBsiDiariEs
Years ended September 30 | Dollars in millions
2006 2007 2008
operating activities
net earnings $ 1,845 2,136 2,412
Adjustments to reconcile net earnings to net cash provided by operating activities:
depreciation and amortization 607 656 707
Changes in operating working capital (152) 137 (22)
Pension funding (124) (136) (135)
other 336 223 331
net cash provided by operating activities 2,512 3,016 3,293
investing activities
Capital expenditures (601) (681) (714)
Purchases of businesses, net of cash and equivalents acquired (752) (295) (561)
other 137 106 203
net cash used in investing activities (1,216) (870) (1,072)
Financing activities
net increase (decrease) in short-term borrowings 89 (800) 521
Proceeds from long-term debt 6 496 400
Principal payments on long-term debt (266) (5) (261)
dividends paid (730) (837) (940)
Purchases of treasury stock (862) (853) (1,120)
other 32 5 (54)
net cash used in financing activities (1,731) (1,994) (1,454)
effect of exchange rate changes on cash and equivalents 12 46 2
increase (decrease) in cash and equivalents (423) 198 769
Beginning cash and equivalents 1,233 810 1,008
Ending cash and equivalents $ 810 1,008 1,777
changes in operating working capital
receivables $ (246) (349) (293)
Inventories (274) 96 (90)
other current assets 36 36 19
Accounts payable 324 104 199
Accrued expenses 71 200 154
Income taxes (63) 50 (11)
$ (152) 137 (22)
See accompanying Notes to Consolidated Financial Statements.