Eme r s on 2013 Ann u al R e por t 19 Results of Operations Y e ar s e n d ed S e p t e mbe r 30 D o ll ar s in mi lli o ns e x c e p t p e r sh ar e am o un ts change change 2011 2012 2013 11 12 12 13 Net sales 24222 24412 24669 1 1 Gross profit 9557 9768 9952 2 2 Percent of sales 395 400 403 SGA 5328 5436 5648 Percent of sales 220 223 229 Goodwill impairment 19 592 528 Other deductions net 356 401 362 Interest expense net 223 224 218 Earnings from continuing operations before income taxes 3631 3115 3196 14 3 Percent of sales 150 128 130 Net earnings common stockholders 2480 1968 2004 21 2 Percent of sales 102 81 81 Diluted EPS Net earnings 327 267 276 18 3 Return on common stockholders equity 246 190 192 Return on total capital 196 158 164 Ove R v I ew Emersons sales increased to 247 billion in 2013 up 1 percent compared with prior year refecting mixed end markets and cautious levels of business investment amid a challenging global economic environment Underlying sales for 2013 increased 2 percent led by continued strong growth in Process Management and moderate growth in the Climate Technologies worldwide compressors business Foreign currency translation and a prior year divestiture had a combined 1 percent unfavorable impact Emerging markets growth exceeded that of mature economies Asia grew 2 percent the US was fat and Europe declined 3 percent Latin America and Middle EastAfrica grew 11 percent and 13 percent respectively Net earnings common stockholders were 20 billion in 2013 up 2 percent versus prior year Diluted earnings per share were 276 up 3 percent compared with 267 per share in 2012 Excluding impairment and income tax charges 2013 net earnings were 26 billion up 3 percent while earnings per share were 354 up 4 percent compared with 339 in 2012 These charges primarily related to the embedded computing and power business and totaled 566 million 078 per share in 2013 and 528 million 072 per share in 2012 See Goodwill Impairment in the discussion that follows and Notes 3 and 6 for additional information Process Management reported strong sales and earnings growth on continued demand in global energy and chemical end markets Climate Technologies sales and earnings increased on solid demand in the compressors business worldwide Strong demand in US residential end markets supported underlying sales and earnings growth in Commercial Residential Solutions Sales and earnings declined in the Industrial Automation businesses due to weakness in industrial goods end markets particularly Europe and the US Earnings comparisons in Industrial Automation were also unfavorably impacted by gains from dumping duties received in 2012 Network Power sales and earnings showed persistent weakness in telecommunications and information technology end markets The Company generated record operating cash fow of 36 billion an increase of 20 percent from 31 billion in 2012 Free cash fow operating cash fow less capital expenditures of 30 billion also reached record levels increasing 24 percent from prior year Emerson is well positioned moving into next year given its strong fnancial position global footprint in both mature and emerging markets and focus on products technology and customer solutions