emerson electricl electrical products group conference

Electrical Products Electrical Products GroupGroupDavid N. FarrChairman, Chief Executive Officer & PresidentMay 21, 2008

Non-GAAP Measures

In this presentation we will discuss some non-GAAP measures (denoted with an *) in talking about our company’s performance, and the reconciliation of those measures to the most comparable GAAP measures is contained within this presentation or is available at our website www.emerson.comunder the investor relations tab.

Safe Harbor Statement

Our commentary and responses to your questions may contain forward-looking statements, including our outlook for the remainder of the year and Emerson undertakes no obligation to update any such statement to reflect later developments. Information on factors that could cause actual results to vary materially from those discussed today is available in our most recent Annual Report on Form 10-K as filed with the SEC.

Emerson Business SummaryEmerson Business SummaryEmerson Business Summary

14%$1.2012.5%$1.05 $0.89 $0.83DPS

-25.2%

18.3%

17.4%

-16.7%14.4%CAGR

~21%

$3.00-$3.10

~$2.4B

~$3.2B

+50 to 70 bps-

~$25B2008E

-$3.0B$2.5B$2.2BOperating Cash Flow

20.1%

$2.65

$2.3B

15.8%$3.5B$22.1B2007

-13–17%

-

--

11-13%CAGR

18.4%

$2.23

$1.9B

15.5%$3.1B$19.7B2006

15.5%

$1.69

$1.7B

15.2%$2.6B$16.9B2005

ROTC

EPS(1)

Free Cash Flow *

OP %*(1)

OP $*(1)

Sales(1)

2005-07 2007-08

Strong Performance Continuing Into 2008, April Three-Month Trailing Average Orders Trending at

+10 to +15%

(Continuing Ops)

(5-7% Underlying)*

(1) European appliance motor & pump business reclassified as discontinued operations.

Emerson Global Presence 20071st Half 2008 Sales Growth -- 12% Reported / 7% Underlying*

Emerson Global Presence 2007Emerson Global Presence 200711stst Half 2008 Sales Growth Half 2008 Sales Growth ---- 12% Reported / 7% Underlying*12% Reported / 7% Underlying*

Total Sales 2007 $22.1BTotal Employees 142KLocations 265

US & Canada2007 Sales $11.7B Employees 43,000

Locations 1031st Half Growth

2008 vs. 2007: 5%

Latin America2007 Sales $1.0BEmployees 21,000


2008 vs. 2007: 19%

Western Europe2007 Sales $4.1BEmployees 17,000


2008 vs. 2007: 17%

Eastern Europe & Russia2007 Sales $0.7B Employees 8,000


2008 vs. 2007: 24%

Middle East & Africa2007 Sales $1.0BEmployees 500


2008 vs. 2007: 27%

Asia-Pacific2007 Sales $3.6BEmployees 52,000


2008 vs. 2007: 22%

Process Management SummaryProcess Management SummaryProcess Management Summary

24%

31%

45%

2007 Sales by Product

2007 Sales by Geography

20%24%

34%22%

Measurement Devices

Valves & Regulators

Systems, Solutions &

Services

United States

Europe

Asia

ROW

+40 to 60 bps18.7%18.0%% of Sales$1.07B$0.88BEarnings

+15 to 17%$5.7B$4.9BSales2008E20072006Profile

Market Dynamics• Growing demand for energy is driving

capacity expansion in power plants, LNG facilities and upgrades to existing facilities

• Current level of oil price drives spending in customer base

• PlantWeb Wireless launch is going well• Continued aggressive investment in

new products and expanding global position

• April three-month trailing average order trend at +15 to +20%

10%8%

41%

41%

Industrial Automation SummaryIndustrial Automation SummaryIndustrial Automation Summary

22%7%

13%

18%

22%

18%Fluid Automation

Power Generation

Power Distribution

Motors & Drives

Mechanical Power

Transmission



UnitedStates

ROWAsia

Europe

Industrial Equipment

-50 to -30 bps(1)15.6%15.1%% of Sales$0.67B$0.57BEarnings


Market Dynamics• Global capital goods markets remain

healthy• Increasing worldwide demand for

reliable primary and standby power driving alternator sales

• Infrastructure investment in emerging markets supporting demand for drives and motors

• Increased focus on technology, new products and emerging markets will expand growth opportunities

• April three-month trailing average order trend at +20%

(1) Includes impact of anti-dumping duties

27%

10%

20%

43%

Network Power SummaryNetwork Power SummaryNetwork Power Summary


Europe

AsiaUnited States

ROW

10%14%

17%

15%

7%

28%

9%


Service

Other

AC Power Systems

Precision Cooling

OSP & Racks

DC Power Systems

Embedded Computing

& Power

+0 to 20 bps(1)12.5%11.1%% of Sales$0.65B$0.48BEarnings


Market Dynamics• Greater power in smaller packages

throughout wireless & wireline networks• Distributed fiber initiatives driving

wireline spending• Data center consolidation efforts

continue. Strong demand for AC Power & Precision Cooling Systems

• Business Continuity & Network Reliability needs extending into emerging markets

• April three-month trailing average order trend at +15 to +20%

(1) Includes impact of Motorola Embedded Computing Acquisition.

Climate Technologies SummaryClimate Technologies Summary

7%

7%

7%

73%

6%

57%17%

16%

10%


Compressors

Flow Controls

UnitedStates

Asia

Europe

ROW

HeatingControls

Temperature Sensors

Other2007 Sales by Product



Market Dynamics• U.S. housing market softness

continues• Energy responsible product demand

continues to benefit our higher value products and solutions

• Growing usage of electronics in HVACR opens new products and services opportunities

• China’s need for higher efficiency and improved heating technology will drive future scroll demand

• April three-month trailing average order trend at 0 to +5%

85%

5%2%

8%

Appliance And Tools SummaryAppliance And Tools SummaryAppliance And Tools Summary

21%

11%

15%

28%

25%

2007 Sales by Product(1)

2007 Sales by Geography(1)

Appliance Solutions

Commercial Motors

Tools

United States

Europe

ROWAsia

Appliance

Storage


-4 to -2%$4.0B$3.9BSales2008E(1)2007(1)2006(1)Profile

Market Dynamics• Consumer businesses environment

remains challenging due to falling home prices, high levels of consumer debt and rising food and oil prices

• Decline in housing sector continues, non-residential construction has remained positive -- but positive trends are weakening

• Focus on costs and asset management to create value -- also sale of non-strategic assets

• April three-month trailing average order trend at -5 to 0%

(1) European appliance motor & pump business reclassified as discontinued operations.

Key EPG MessagesKey EPG MessagesKey EPG MessagesStrategic Focus Has Not Changed

– It’s All About Consistent / Intense / Flexible Execution

International Investments and Emerging Markets Remain Central to Our Growth Strategy

– Our Global Growth Continues– Emerging Markets Are Driving Emerson Growth– We Continue to Leverage Our Global Infrastructure

Emerson Leverages Technology to Solve Customer Problems -- Investing for a Competitive Advantage

– Emerson Continues to Invest in Global Engineering & Product Development to Drive Growth

– Emerson is Uniquely Positioned to Help Our Customers Deliver on Energy Responsibility

- Aggressively invest in next generation technology leadership

- Develop more game-changing products and technologies through efficient Portfolio Management and proper allocation of resources.

- Meet sales and profit objectives of new products.- Customer involvement throughout the entire process is essential.

2. Pursue Technology Leadership

- Brand Platforms are being valued globally.- We are positioned to benefit from the favorable industry dynamics.

- Major Growth Initiatives, acquisitions, and divestitures will help keep us within the 5-7% zone.

- Today, some regional key accounts will grow to become Global Marquees.

- Expand Solution and Service offerings to enhance customer value and MRO sales.

- Collaboration among business groups yields new market opportunities.

1. Strengthen Business Platforms

ActionsStrategic Imperatives

Emerson’s Strategic Focus Has Not ChangedEmersonEmerson’’s Strategic Focus Has Not Changeds Strategic Focus Has Not Changed

- Price actions must stay ahead of material inflation.- Global best cost sourcing – adopt a cross-functional, sharing approach to integrate the supply chain.

- Improve on-time delivery performance to exceed customer expectations.

- Continue to improve Trade Working Capital, generate strong Operating Cash Flow, and manage Capital Expenditures -- asset efficiency.

- ROTC improvement will continue to be a key value driver.

4. Drive Business Efficiency

- Geographic mix and presence allows continued growth.

- Take care of mature markets, but emerging markets play an ever increasing role in success.

- We will reach new milestones by the end of this five year period and must invest accordingly.

- Reposition assets to drive profitabilityimprovements and to better serve customers.

3. Globalize Assets

ActionsStrategic Imperatives

Emerson’s Strategic Focus Has Not ChangedEmersonEmerson’’s Strategic Focus Has Not Changeds Strategic Focus Has Not Changed

0.0

1.0

2.0

3.0

4.0

India Latin America China

200220072010T

High Growth In Emerging Markets Continues to Drive Sales – Latin America and Middle East & Africa Reached $1B Zone in 2007

High Growth In Emerging Markets Continues to High Growth In Emerging Markets Continues to Drive Sales Drive Sales –– Latin America and Middle East & Latin America and Middle East & Africa Reached $1B Zone in 2007Africa Reached $1B Zone in 2007

$B

Eastern Europe & Russia

Middle East & Africa

Asia Pacific Sales Expected To Reach ~$4B In 2008 – 2 Years Ahead of Our Target

T

T

T T

T

International52%

$11.7B

United States48%

$10.9B

2007

0%

25%

50%

75%

100%

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

United States Sales %

International Sales %28%

~54%

55%

2010T

Emerging Markets % ~30%32+%

International Sales Have Grown Steadily and Surpassed The United States For The First Time In 2007

International Sales Have Grown Steadily International Sales Have Grown Steadily and Surpassed The United States For The First and Surpassed The United States For The First Time In 2007Time In 2007

2008E

2008E Sales Are Pushing Towards 54% International, With~30% of Sales from Emerging Markets. We Should Exceed our 2010 Targets.

~45% of Growth From Emerging

Markets, And Will Be ~50% Over

The Next 3 Years

The Importance Of Emerson’s Investment in Emerging Markets Is Really Paying Off in Our Sales Growth And Strong Market Presence

The Importance Of EmersonThe Importance Of Emerson’’s Investment in s Investment in Emerging Markets Is Really Paying Off in Our Emerging Markets Is Really Paying Off in Our Sales Growth And Strong Market PresenceSales Growth And Strong Market Presence

~$25B~$7B

~$18B2008E

$13BTotal Emerson Sales$2BEmerging Markets

$11BMature Markets2010T1998

~$5B~$7BΔ Mature Markets

Δ Emerging Markets

$28-$31B

$19-21B$9-10B

Emerging Markets Will Continue to Outgrow Mature Markets Over The Next 3 Years. We Target Growth of +1% More Than GFI Growth in

Mature Markets and 2x GFI Growth for Emerging Markets

Emerging Markets Sales Growth Emerging Markets Sales Growth Emerging Markets Sales Growth

*Excluding: Australia/NZ, China, Japan, and India

Emerson Target is to Grow Emerging Market Sales at ~2x the Gross Fixed Investment (GFI) Rate

19%

81%

2003 Sales

2008E Sales

Emerging markets

Rest of World

Emerging markets

Rest of World

2007-08 2003-08Sales ($B) 2008E CAGR CAGRChina $2.1 24% 24%India 0.6 23% 40%Rest of Asia* 1.1 13% 15%Eastern Europe 0.5 21% 20%Russia 0.4 19% 33%Latin America 1.2 20% 20%Middle East 0.9 20% 25%Africa 0.3 37% 20%TOTAL $7+B 21% 23%GFI Growth 11% 11%

~30%

~70%

Emerson’s Major Shared FacilitiesEmersonEmerson’’s Major Shared Facilitiess Major Shared Facilities

ShanghaiSuzhou

Manila

Hong KongShenzhen

Xi’an

Pune

Dubai

Cluj

Nove Mesto

Mexico City

ServicesManufacturingEngineering

~6,400 Best Cost Headcount Involved in Engineering & Development and Providing Support Globally

Support Resource Expansion Accelerating with Four Emerson Centers Support Resource Expansion Accelerating with Four Emerson Centers

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2002 2003 2004 2005 2006 2007

6,400

4,800

Romania vs. West Europe4:1 Salary Advantage

120 People

Xi’an vs. Eastern China2 ½:1 Salary Advantage

100 People

India vs. United States5:1 Salary Advantage

1350 People Manila vs. United States7:1 Salary Advantage

2,500 People

Total Best Cost CountrySupport Headcount

Engineering & DesignSupport Resources

1,7002,000

2,8003,600

We Continue to Build Global Engineering and Technology Capacity To Drive Innovation / New Products

We Continue to Build Global Engineering and We Continue to Build Global Engineering and Technology Capacity Technology Capacity To Drive Innovation / To Drive Innovation / New ProductsNew Products

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2002 2003 2004 2005 2006 2007 2008E

High Cost

Rapid Expansion

Best Cost6,000

7,2007,700

8,500

5,5005,000

Number of engineers

5,000

422

191

613

135

478

2003 Growth 2020 Efficiency 2020 Potential

70% of Global Energy Growth Could Potentially be Offset with Aggressive Efficiency Efforts70% of Global Energy Growth Could Potentially 70% of Global Energy Growth Could Potentially be Offset with Aggressive Efficiency Effortsbe Offset with Aggressive Efficiency Efforts

Demand - QBTU

Efficiency Potential (QBTU)

PowerRefining

SteelChemicals

Air transportRoad transport

CommercialResidential 32

13130

250

421

Total potential energy efficiency opportunity = 135 QBTU

Emerson Participation

We Are Investing for Energy Efficiency:Our Products Are Reducing OurCustomers’ Energy Consumption

We Are Investing for Energy Efficiency:We Are Investing for Energy Efficiency:Our Products Are Reducing OurOur Products Are Reducing OurCustomersCustomers’’ Energy ConsumptionEnergy Consumption

Hot water tank sensors / controlsReduces energy consumption and lowers associated carbon dioxide emissions

Appliance and Tools

Expected to realize savings of 4,000 gigawatthours by 2012Equivalent to a reduction of 100 million metric tons of CO2

Industrial Automation

Network Power

Climate Technology

Process Management

“Teamwork” mode prevents units from fighting (humidifying and dehumidifying)Up to a 7% energy savings

Annual energy and maintenance expenses can be reduced by 15% or moreEstimated savings of 7B kilowatt hours of electricity annually

Reduce emissions for the chemical, oil and gas, and pulp and paper industriesWireless monitoring solutions reduce emissions

Customers are Experiencing the Benefits of Process Management Wireless: Major Oil RefineryCustomers are Experiencing the Benefits of Process Management Wireless: Major Oil Refinery

The customer had cases where the crude storage tanks were overfilled as the oil was offloaded from bargesClean up and environmental fines could cost upwards of $1M– A Wired solution had estimated installation

costs of $500K

A wireless transmitter was installed with mechanical switches to monitor the tank levels and prevent overfilling without the prohibited wiring costsRefinery improved environmental compliance and reduced costs with Smart Wireless Solution

We Offer the Widest and Fastest Growing Portfolio of Wireless Products in the IndustryWe Offer the Widest and Fastest Growing We Offer the Widest and Fastest Growing Portfolio of Wireless Products in the IndustryPortfolio of Wireless Products in the Industry

North America 10/06Europe 1/07Singapore 6/07Malaysia 7/07Australia 8/07Venezuela 8/07NA (Phase 2) 9/07China 9/07Argentina 10/07EUR (Phase 2) 11/07Brazil 11/07Thailand 11/07India 12/07Mexico 12/07Middle East 3/08

Smart Wireless Global Launches

…

Shipping Now

Shipping 2008

Pressure Level Temperature

Wireless Gateway

Oil & Gas RemoteControl

Flow Density / Viscosity

Gas Specific Gravity

Radar Level

Field DeviceCommunicator

Gas & LiquidAnalysis

Level Switch Valve Positioners

Device ‘StrandedDiagnostics’

Discrete

Multi-pointTemperature

Asset Management

Software

Pressure Level Temperature

Wireless Gateway

Oil & Gas RemoteControl

Flow Density / Viscosity

Gas Specific Gravity

Radar Level

Field DeviceCommunicator

Gas & LiquidAnalysis

Level Switch Valve Positioners

Device ‘StrandedDiagnostics’

Discrete

Multi-pointTemperature

Asset Management

Software

Vibration

Lighting

Climate Technologies’ Intelligent Store™

Offers Many Opportunities for Delivering Improved Energy Efficiency to Customers

Climate TechnologiesClimate Technologies’’ Intelligent StoreIntelligent Store™™

Offers Many Opportunities for Delivering Offers Many Opportunities for Delivering Improved Energy Efficiency to CustomersImproved Energy Efficiency to Customers

Monitoring Service

Installation

Commissioning

Refrigeration Units

Refrigeration Racks

Condenser

A/C Units

Ventilation Units

Case Control

Self Contained

Ice Machine

Intelligent Store Electronics

Pull-Through Other Components

Services

Products

Recent Large Win in Australia – Initial Focus on Lighting and Display Cases. Worth ~$25M over 5 years.

Summary Of 2008 ExpectationsSummary Of 2008 ExpectationsSummary Of 2008 ExpectationsSolid First Half Of 2008 Delivered In A More Challenging Environment

– Strong Underlying Growth And Global Performance– Orders Continue At Double-digit Pace– More Challenging Environment The Second Half Of Year Vs. First Half– Must Continue to Offset Higher Material Inflation with Appropriate

Price Increase Actions – Tougher 2009 EnvironmentWe Will Continue To Make Strategic Investments –

– Key Technologies – Breakthrough Products– Globalizing Asset Base– Acquisitions And Divestitures Where And When Appropriate

Cash Is Key – Operating Cash Flow Up 34% First Half 08 Vs. 07– Strong Balance Sheet – Flexibility For The Future– Fuels Investment For Long Term Growth– Substantial Amounts Of Cash Returned To Shareholders Through

Dividends And Share Repurchase 50-60%– Very Focused Acquisition Strategy

Reconciliation of Non-GAAP Financial MeasuresReconciliation of NonReconciliation of Non--GAAP Financial GAAP Financial MeasuresMeasures

14.0%$3,094

(402)

15.8%$3,496

2007

% Sales Pretax Earnings

Other Deductions, NetInterest Expense and

% Sales *Operating Profit *

14.3 - 14.5%13.5%12.6%$3,500 - $3,620$2,673$2,132

(485) - (495)(380)(433)

16.3 - 16.5%15.5%15.2%$3,985 - $4,115$3,053$2,565

2008E20062005

The following reconciles each non-GAAP measure with the most directly comparable GAAP measure ($ M):

Note: Historical OP margins adjusted to exclude discontinued operations.

12%5%7%

1st Half 2008

11-13%Net Sales~6%Currency/Acq/Div

5-7%Underlying Sales*2008E

$2,335 (681)

$3,016 2007

~$2,400$1,911$1,669Free Cash Flow*~(800)(601)(518)Capital Expenditures

~$3,200$2,512$2,187Operating Cash Flow2008E20062005

emerson electricl electrical products group conference

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