Lynne Maxeiner – Director IR David Farr – President & CEO Walter Galvin - CFO

Scott Davis – Morgan Stanley John Inch - Merrill Lynch Steven Winoker - Sanford Bernstein Deane Dray - FBR Capital Markets Jeff Sprague – Citi Bob Cornell - Barclays Capital Rich Kwas - Wells Fargo Securities Steve Tusa - JPMorgan Nigel Coe – Deutsche Bank Terry Darling – Goldman Sachs Michael Schneider - Robert W. Baird Eli Lustgarten - Longbow Securities

Welcome to the Emerson first quarter fiscal 2010 results conference call. (Operator Instructions) Emerson's commentary and responses to your questions may contain forward-looking statements, including the company's outlook for the remainder of the year. Information on factors that could cause actual results to vary materially from those discussed today is available in Emerson's most recent Annual Report on Form 10-K as filed with the SEC. In this call, Emerson management will discuss some non-GAAP measurements in talking about the company's performance and the reconciliation of those measures to the most comparable GAAP measures is contained within a presentation that is posted in the Investor Relations area of Emerson's website at www.emerson.com. I would now like to turn the conference over to our host, Lynne Maxeiner, Director of Investor Relations.

Thank you. I am joined today by David Farr and Walter Galvin, Today's call will summarize Emerson's first quarter 2010 results. A conference call slide presentation will accompany my comments and is available in the Investor Relations section of Emerson's corporate website. A replay of this conference call and slide presentation will be available on the website after the call for the next three months. I will start with the highlights for the quarter, as shown on page two of the conference call slide presentation. First quarter sales were down 7% to $5 billion. Underlying sales declined 13%. We did see growth resume in the quarter in climate technologies segment. Emerging markets were down 4% and mature markets declined 18%. Gross profit margin of 38%, up 110 basis points despite a decline in sales. Operating profit margin was even with the prior year at 14.8%. Earnings per share of $0.56 down 7% compared to $0.60 in the prior year quarter. Operating cash flow was very strong at $687 million, up 115%. Good asset management in the quarter with trade working capital as a percent of sales improving to 18% from 19.9% in the prior year quarter. Slide three, the P&L, sales in the quarter of $5.011 billion again down 7%, underlying sales were down 13% and currency and acquisitions each added three points. Operating profit margin was equal to the prior year at 14.8%. Our aggressive cost reduction efforts and restructuring actions are working. Earnings from continuing operations in the quarter were $422 million, diluted average shares outstanding of 755.5 million, no shares were repurchased in the first quarter of 2010 which leaves you with an EPS of $0.56. Next slide underlying sales by geography, in Q1 sales in the US declined 12%. Total international was down 15% with Europe down 27%, Middle East/Africa down 20% and Latin America down 13%. Asia was up 4% in the quarter which includes China, which was up 14% in the quarter. Again the total underlying sales declined 13% with currency and acquisition each adding three points which gets you to a consolidated sales down 7%. Next slide more income statement details, gross profit of $1.903 billion or 38% of sales, the improvement driven by cost reductions, rationalization benefits, and materials cost containment. SG&A was 23.2% of sales, getting you to operating profit of $742 million or 14.8% of sales which was flat to the prior year period. Other deductions of $93 million which includes a $12 million increase in amortization expense for recent acquisitions. Interest expense of $65 million, this gets you to the pre-tax line of $584 million or 11.7% of sales. Taxes in the quarter were $150 million for a tax rate of 25.7%. We had a tax benefit in the quarter from the reorganization of foreign subsidiaries. The full year tax rate is still expected to be approximately 30%. Slide six the cash flow and balance sheet, operating cash flow is strong and up 115% in the quarter to $687 million. Capital expenditures of $89 million gets you to a free cash flow of $598 million, up 219%. Our free cash flow conversion was 141% in Q1. The trade working capital balances are at the bottom of the chart, trade working capital as a percent of sales again were 18% in the quarter, a nice improvement from the prior year quarter. Slide seven, the business segment P&L, business segment EBIT of $731 million or 14.2% of sales, a 70 basis point improvement from prior year. We saw benefits from cost reductions, restructuring initiatives, and effective price cost management. Difference in accounting methods of $46 million, corporate and other of $128 million, an increase of $54 million. We had higher incentive comp of $38 million due to the overlap of the two incentive plans which we’ve talked above and the increase in the stock price. We also have Avocent transaction costs and purchase accounting charges of $22 million in the quarter. Interest expense of $65 million, the increase driven by our change in debt mix, we did issue $1.85 billion in long-term debt in the last 12 months as well as lower interest income gets you to the pre-tax earnings of $584 million. Next we’ll go through the individual businesses starting with process management, sales in the quarter of $1.382 billion down 9%. Underlying sales were down 17%, acquisitions added five points and currency added three points. By region, the US was down 17%, Asia was down 11%, Europe down 19%, and Middle East/Africa down 7%. We’ve seen broad declines across the segment, offset by growth in the power and water business. EBIT dollars of $216 million or 15.6% of sales. Margin was negatively impacted by volume deleverage and product mix. We did realize significant cost reduction and restructuring benefits in the quarter. The underlying order trends excluding currency for process management have started to modestly improve and our industry leadership continues as evidenced by our 31 first place awards by Control Magazine. Emerson process management had three times more number one products than the nearest competitor. Slide nine industrial automation, sales in the quarter of $876 million down 21%. Underlying sales declined 28%, currency added four points and acquisitions added three points. By region the US was down 30%, Europe down 29%, and Asia was down 14%. While broad based weakness continued in the segment we did see modest growth in the drives business. EBIT dollars of $85 million or 9.8% of sales impacted by volume deleverage and increased restructuring of $15 million which was partially offset by cost reductions. Orders have bottomed for industrial automation and we continue our aggressive restructuring to improve our competitive positioning. We completed the acquisition of SSB Wind Systems, a leading global supplier of electrical pitch control for wind turbines, which further strengthens Emerson’s position in the global wind turbine market. Slide 10, network power, sales in the quarter of $1.381 billion down 5%. Underlying sales were down 10%, currency added three points and acquisitions added two points. By region the US was down 10%, Asia was up 7%, and Europe was down 33%. We continue to see data center and telecom strength in the emerging markets. EBIT performance in the quarter was strong, EBIT dollars of $206 million or 14.9% of sales, up 35% positively impacted by cost reductions, and restructuring benefits, material cost containment and lower restructuring of $13 million. Our aggressive restructuring in 2009 provides a strong global cost position for network power. The Avocent acquisition was completed in the quarter on December 11, 2009. This acquisition positions Emerson to provide unique and comprehensive data center infrastructure solutions. Next slide, slide 11, climate technologies, sales in the quarter of $784 million up 13%. Underlying sales were up 7% and currency and acquisitions each added three points. By region the US was up 7%, Europe declined 33% and Asia was up 52%. We saw growth across all businesses in the quarter. The China stimulus programs and R-410A conversion in the US benefited sales. EBIT dollars of $113 million or 14.5% of sales, a nice improvement from the prior year driven by volume leverage, cost reduction savings, lower restructuring and materials cost containment. Global responsible energy regulation will continue to drive opportunity for climate technologies and we see this business segment having positive sales growth in fiscal 2010. Slide 12, appliance and tools, sales here of $731 million down 5%. Underlying sales declined 7% and currency and acquisitions each added one point. By region the US was down 6%, Europe was down 12%, and Asia was up 1%. EBIT of $111 million or 15.2% of sales, we had nice margin improvement driven by cost reductions and materials cost containment which partially offset by volume deleverage, and lower prices. We’ve seen improvement in some of our earlier cycle residential businesses, however customers continue to maintain low inventory and production levels given the uncertainty in the US economy. Next slide the summary and outlook, a good start to the year for Emerson. The underlying sales declines are moderating and we’ve seen improving underlying order trends across all of our businesses. Cash flow generation was strong in the quarter and we are realizing margin improvement driven by our aggressive best cost restructuring and permanent cost reduction efforts. Based on that we expect full year underlying sales to decline 3% to 6% and reported sales to be flat to up 3%. We expect operating margin flat to up 50 basis points to 15.1% to 15.6%. And full year earnings per share in the range of $2.20 to $2.40 which includes approximately $0.06 dilution from the Avocent acquisition. Avocent’s LANDesk business is classified as discontinued operations and is expected to be sold within six months. We expect full year operating cash flow of $2.7 to $3 billion and as a reminder we will review our 2010 expectations and long-term growth initiatives at Emerson’s Annual Investor Conference on February 5. So with that I’ll turn it over to David Farr.

Thank you very much Lynne, first of all I want to welcome everybody here today and thank you for joining us. I am looking forward to meeting and being with the investors and the shareholders this coming Friday in New York as we have our annual session. We’ve had two days of Board meetings, we’ve had some great discussion here as we look at what’s going on around the world. We had an excellent shareholders meeting lasting 27 minutes today. Everyone got reelected, the Board and the shareholders have actually decided to keep me for 12 extra months which is good for me. I’m pleased to hear that but we had a good session today with the Board and the shareholders. As you can see its clear to me that in September and October this time period, we reached bottom. We bottomed out and now we’re pivoting. We’re pivoting for growth. We’re going to start growing within the next three to four months. That will be the theme of what we talk about on Friday. Clearly with what’s been going on for the last 18 months have been a lot of restructuring, a major investment, and our repositioning around the world, major investment in new product innovation, the launches are happening. We’ve done a lot of restructuring our facilities from the standpoint of just costs, but also inventory and we’ve had an excellent management in the price cost area for the last 12 to 18 months and we are in a good position. I want to thank the business leaders and the employees, the corporate employees, the divisional people around the world for all the work undertaken in the last 18 months. It has not been easy. As a global company we have seen significant down draft in sales. At times we were losing a billion dollars a quarter. And there’s a lot of things that happen to you when you lose a billion dollars a quarter when you’re a $25 billion company and I want to thank the business leaders and the presidents and all the people around the world and the corporate people here, getting the job done and making some very difficult issues. As I see it, we bottomed, employment level, we’ve reached bottom. We are actually hiring people these days around the world and it will be I think a very slow gradual recovery. And we’ll talk more about that on Friday but clearly its going to be a mixed recovery but its happening and we are in very good shape. Again, I want to thank the people for making these things happen and executing, the quarter shows that. The quality of the earnings, the quality of the margins, both at the gross profit line, the operating line, the net line, the quality of the cash flow, the strategic acquisitions we brought on board late in last year’s fiscal year and again this first fiscal quarter. These things are really challenging to do and at the same time we’re delivering the improved margins and improved cash flow. So I’m extremely pleased about that. The acquisition of Avocent which we got done in the second week of December is going well. I want to thank the Avocent organization for all that they’re doing right now. As they’re quickly learning Emerson is a very detailed, hands on, engaging company and I know they’re engaged right now working with us around the world with Avocent trying to understand what we could do together and to really integrate within our whole network power and infrastructure business and its going well and I’m very pleased and I want to thank the employees at Avocent for what they’ve been doing with us and hopefully they’ll tolerate all our attention and probing that we do for a little bit longer as we learn more about their business. You also will see today that we have made the decision to sell the LANDesk business within Avocent. It will be sold within six months hopefully. We’re engaged right now. We’re in the process and its going well and its not strategic to us and it wasn’t from day one and that was always our desire to do this and so we’ll get that done within this fiscal year and hopefully sooner. But as I look at where we are right now the organization is engaged for growth. We’re engaged to launch our new products. We are engaged to take it to the marketplace. As you know I talk about this constantly, I look at the first 18 months of a recovery as the time you make the most hay. The time you make the difference. The time you get the horses running and we’re running. And it’s a time we get things going our way and we create that new momentum from where we were going backwards to reversing it. The company is in great shape from a cost standpoint. We have some more restructuring we have to get done this year. Its not significant compared to what we did the last 18 months, but it still needs to get done and we will get it done. I look at our facilities right now, the inventory is in great shape from the standpoint there was very little inventory added this quarter other than what was added through the acquisitions. And from my perspective we’re going to keep that inventory really tight until I see the strength of this recovery. It is recovering but I don’t know what the pace will look at. But as I look at today, executing and all the areas within four to five months, our underlying sales will start to be positive. The growth, the orders are coming, you saw that in the most recent report that came out today. The December underlying orders were slightly positive for the month and as you can see in the chart you’ll see in this Friday’s chart, you’ll see the underlying trends for all the businesses are turning up and they’ll take their time as we go forward and go positive. The climate has definitely gone positive and will continue to stay positive for the rest of this year. Across the company I want to, on behalf of the [OCE] and the Board, I want to thank the organization for the work they got done the last 18 months, again that was not easy. We took some very permanent actions, we took the restructuring necessary to strengthen this company, we shut down our facilities to get the inventory out and with that today the company is far better shape to go forward and I feel very good at where we are today and I want to thank everybody for that. As you saw from the forecast that we put out both in the press release and what Lynne reviewed here a few minutes ago, I think we’re going to have a very exciting session on Friday as we get into more details. I’ll be presenting myself along with Ed Monser, along with Charlie Peters, and then we’re going to have four of the business leaders talk about what’s going on in their companies and talking about the growth and innovation that we’re driving because you’re going to need to do that to get growth versus what we saw the last five or six years. So with that I’ll leave it to open the lines for Q&A and again I want to thank everyone for joining us today. I’m looking forward to seeing everybody on Friday and I hope you will come and join us live in New York, thank you very much.

(Operator Instructions) Your first question comes from the line of Scott Davis – Morgan Stanley Scott Davis – Morgan Stanley: You sound substantially more encouraged if not downright bullish on this call versus last, I think for obvious reasons, but can we just narrow down a process a little bit. At one point I think you were concerned that process may not turn up until as late as 2012. What’s your view now on when process is going to turn up.

I think you’ll see, I’m still in the forecast you’ll see on Friday is still negative for this year underlying sales will still be negative. I think the orders will continue to trend upwards. The question is when will they go positive. My gut tells me orders will probably go positive late in 2010. My current feel on that and I think they’ll be into early to mid 2011 before you see underlying sales. Obviously comps will be a little bit easier but the momentum kicking back and I don't think, it’ll be into the middle of 2011 but its going the right way. The trend line is not surprising to me right now. Its probably trending a little bit stronger than I thought originally. That’s the way the world is. Scott Davis – Morgan Stanley: My follow-up question is on China, it turned up nicely for you this quarter and the data coming out of China is pretty encouraging for sure, but last quarter you had a tougher quarter in China, what changed quarter to quarter for your specific businesses there. Was it just timing issues or something else.

A couple of things happened, I think that their stimulus program really kicked in and in particular in our market it was very targeted. It was actually going into something that built something rather than transfer payments that we saw in this country. And so I think that we saw some of that stimulus kicking in from the government. We saw some of consumers starting to spend and the company spending. That’s what we saw and it started to happen and I think we’ll have a very good year in China. We’ll have a good year in Asia too. And we had a little bit of inventory build in China relative to the climate technology. I don't expect that to continue but even that, the markets have continued to be pretty good for the last couple 30 days too.

Your next question comes from the line of John Inch - Merrill Lynch John Inch - Merrill Lynch: Just a quick question, the $0.06 of dilution from Avocent does that include the LANDesk disposition, the expected proceeds thereof and—

That’s a zero effect. We’re going to buy LANDesk this year and we’re going to sell LANDesk. There’s not going to be any impact on the total year, it might have a little bit of impact in a quarter because we have the interest expense of it but we’re assuming that we’re going to sell LANDesk and its not included in that $0.06. There’s not going to be any gain or loss from selling LANDesk. John Inch - Merrill Lynch: So the $22 million that was in the corporate and other, that’s about $0.02 is that part of the $0.06 so you take basically $0.04 and spread it like a penny into the next four quarters or three quarters.

Yes. The rules for acquisitions have changed. We only report one number. I don’t give you guys acquisitions, not GAAP. A lot of guys love to do that, oh its accretive if you exclude this, this, this, this and 20 things later it becomes accretive. We charge off what we pay for. So you have inventory, you have amortization, we have interest costs, we have deal costs, there’s only one number in Emerson. Its called GAAP, okay. John Inch - Merrill Lynch: No names.

I’m not putting names, I’m just telling you the facts. A lot of companies will say, this thing will be accretive if you exclude 25 things and my underwear. John Inch - Merrill Lynch: I’m in your camp, I agree with you.

Okay, I just want to make sure you understand that. John Inch - Merrill Lynch: No I get it. Let me ask you, at last call you talked about sort of $500 to $600 more in M&A I think outside of Avocent, what’s your thoughts there.

Five or $600 more. John Inch - Merrill Lynch: Coming over the next three quarters you think.

Yes I think that we want to do some more this year. We’ve done $1.3 billion and we’ll do probably $500 or $600 million more and as Walter reminds me, net so it could be a little bit higher than that because we’re going to get some proceeds from LANDesk too. John Inch - Merrill Lynch: How did network power do a 14.9 margin, have you ever done a, especially with still the core down, have you ever done a margin that high in your first quarter.

We had a, first of all my hat is off to the imbedded power and computing guys, they did an enormous restructuring last year and that’s really paying off from the standpoint of now starting to make some money and on lower sales and clearly we had a strong quarter in China and we’ve never done a margin that high before. We’ve talked about getting up to 15%. I fundamentally believe that we’re going to have a pretty good margin. The one thing that will hurt us this year is that you’ll see this in New York, is that now Avocent is coming in and then we’ll be having the amortization of the intangibles so our margin will be impacted by that but we’ll still have a nice margin improvement in the whole sector. It won’t be as good as this first quarter. You’ve got to keep that in mind. I always love debating you John.

Your next question comes from the line of Steven Winoker - Sanford Bernstein Steven Winoker - Sanford Bernstein: Good afternoon, I can only hope to solicit as great a response as the last one.

Depends what kind of question you’re asking. He accused me of not reporting GAAP numbers or something like that. Steven Winoker - Sanford Bernstein: On such a strong quarter one of the things that obviously comes out is trying to understand restocking versus underlying demand. And I’m sure you’re going to get into it more on Friday, but just as you look at it now by business unit, can you give us just more color for what you’re seeing in the channels and your customers and a sense for replenishment versus them in fact ordering for their own customers.

I think what we’re seeing is the same thing you saw in the GDP numbers that were reported last week. If you look at Emerson we stopped the destocking and so that has an impact. We saw customers continue to work throughout the month of December, our end customers, so you’ve been seeing that in the reported sales and quarters coming out of the other people in this industry. So we saw our customers continue to buy. I am not seeing a whole lot of inventory going in. We saw a little bit in climate both in China as they got ready for the season in China and the new higher efficiency product. And then we also saw a little bit of the R22 and refrigerant transition at Copeland in North America so there’s a little bit of that. But there’s not a whole lot of what I would say restocking. I think you’re seeing stopping and you’re seeing underlying demand now which is good. Steven Winoker - Sanford Bernstein: And then if you look at your pricing cost gap in terms of how that’s played out and to what extent you’re in green can you give us some more color around how those dynamics.

Right now as I look at our net material inflation and our pricing we’re slightly green at this point in time. Our net material inflation is negative which is good news. As things came down last year we, work some contracts and get our material costs down I think that will reverse as the year goes on. And you’re going to start seeing inflation start increasing and our net material inflation will be coming less and less negative and move towards that zero line. Our pricing right now is slightly negative and I think it will stay slightly negative for the next couple of quarters and then turn back up to positive. Right now we’re in balance, we’re slightly green as you refer to it and what we refer to it but its not a big swing. Our price cost relationship right now is in pretty good shape and it’s a dynamic thing and we’ll talk a little bit it about Friday because we’re going to go from a period of negative net material inflation into I think as the year proceeds, to less negative and the pricing will follow right behind it. Steven Winoker - Sanford Bernstein: And then not trying to steal Friday’s thunder but just the seasonality assumptions you’re making for the year as I look at the numbers on the quarter which are very strong, how were you thinking about it as you played out the rest of the year, just at a high level.

At the highest level typically as I told the Board today, it was very difficult for us to understand as we dropped, how far the bottom was going to be. Now its equally more challenging for us as we come back up but typically in a recovery mode each quarter in recovery will be on a top line basis will be slightly better, slightly higher. So we would expect our sales to be slightly higher in the second quarter, slightly higher in the third quarter, slightly higher in the fourth quarter. And therefore why, we think our margin will improve as we go along. The timing issue relative to the quarter is as you know I don't give quarterly forecasts but you’ve got to watch out because we may have more restructuring in the second quarter. We may have more things flow in the second quarter but typically our quarters now will sequentially get better as the year proceeds.

Your next question comes from the line of Deane Dray - FBR Capital Markets Deane Dray - FBR Capital Markets: Question in industrial automation and the SSB Wind System acquisition its interesting that there’s a niche within pitch control, are there other applications where you can get bigger in this market.

Within wind pitch that is their niche. I don’t see us, at this point we haven’t had that line, I can’t think of anything, it’s a big market because wind is going to continue to grow and there’s three blades on a windmill and you have to have a pitch control for every blade so the market is quite large and the pitch controls are going from mechanical [nomadic] type of things to electronic and we are involved in electronics. So from my perspective we have a pretty strong package. We’ll talk about this on Friday but we’re going to be creating a package sales, that’s going to be approaching $0.50 billion here the next five or six years. So its going to be a good market for awhile. Is wind the ultimate answer, no. But wind has a niche in the energy needs of the world for quite some time. Deane Dray - FBR Capital Markets: And within industrial automation you called out electronic drives as having modest growth. What would have been the end markets that those would have been going into.

Off the top of my head I would say you’re starting to see China pick back up in drives and therefore you would start seeing elevators, you’d start seeing buildings, and you start seeing some industrial. I would say that would be the key place for us to see drives at this point in time. Deane Dray - FBR Capital Markets: So its not a market specific its very broad application.

Our [garage] business is very broad its not a one market. If you look at where, we’re very very broad. We’re also involved in HVAC, so if HVAC recovers you’ll see our drive business recover in that space too. Deane Dray - FBR Capital Markets: And then just on CapEx, just the year over year it looked like that was a decline, was there a reason that came up short, or what’s the plan for the year.

The plan for the year I think we’ve indicated something between $500 million and $550 million for the year. Initially we wanted to be closer to the $500. Obviously there’s a little more strength in the quarter and a little more strength in the year than what we had first thought so therefore you’re going to have slightly higher capital expenditures. But still down from what it was a couple of years ago and probably approximately the same level as last year. Deane Dray - FBR Capital Markets: Any special projects you’d want to call out.

No.

There’s nothing huge or big that is worth, you still have some restructuring going on, you have some shared services going on, its nothing of a huge basis that’s it’s a new plan in a new city or a new country. So nothing major.

Our volumes are still down. Remember last year our volumes were down 14% or something like that, for the year so there’s plenty of capacity out there.

Your next question comes from the line of Jeff Sprague – Citi Jeff Sprague – Citi: First just on the idea of the sequential pattern moving out even if we kind of took up the tax rate in Q1 to what you’re saying for the year, if you stay anywhere near the normal convention of Q1 being roughly 20% of the year, you’re in the 270 range or better pretty easily. I think it may go if you could, you did make the comment about things flowing back in that’s been an issue for a few companies is there—

Not an issue. Jeff Sprague – Citi: No, there’s no 401K or merits or other things like that that are coming back on you.

Nope. We build in our plan, the only thing we have this year, we take permanent actions. I look at things we have to do to change the cost structure of the company and I do not cancel 401K because we’re having a tough year. If we were going to go bankrupt I might do something like that but I don’t cancel 401Ks. I think that’s a ludicrous thing to do, that’s my opinion. But you’ve got a couple of things, we’re doubling up this year we had an overlap as we talked about on our performance share plans. We have an overlap on that this year. So that’s going on. Each quarter so there’ll be this quarter the number is around $38 million, I would expect that number to be around $38 million. The restructuring is going to kick up, we did not have what I would say a strong start. Walter and I are planning on $150 to $175 million of restructuring, I would say the first quarter disappointed that we didn’t get it done, and the, we just had a very good mix. And the other thing you have going on with you right now, we only had Avocent for 20 days. That’s a good 20 days to own them and now that will start hurting us a little bit as the year progresses. So we have three quarters and we’re going to have $0.05 more of dilution. I think our range is still pretty good at this point in time. I wouldn’t get carried away. We’ll have improved profitability but I wouldn’t get carried away like what you just said there. Jeff Sprague – Citi: And just to be clear, the $22 million of purchase accounting that’s in OIOD, does that somehow flow through the network power margin or that’s outside of what we’re seeing in the headline margin at network power.

That would be in corporate, what its referring to is the two components, you had a change in accounting rules this year so merger fee must be expensed when incurred so we had all the merger fees that we used to capitalize on the balance sheet and they went into goodwill. That was expensed in the first quarter. That was about say $8 million. You also had within the first quarter about, because of accounting rules you write up inventory to quote fair market value and then you amortize it over one inventory turn because they turn relatively fast they shipped a lot out in the 20 days we owned them. We absorbed at corporate another roughly $14 million in that component in inventory write up in the quarter. Jeff Sprague – Citi: And to an earlier question I’m just looking back, the only 14.9 I see for network power is actually Q4 1999—

The only thing I’ll say to you is when I ran the process business, did I ever have a point to OP margins. We can restructure companies to improve profitability. We’ve told you that we thought we could get that business up. It will come back down, I’ll say it again because Avocent will be in there now and we’ll be starting to amortize the intangibles of Avocent and that will pull the margin down. We will have a nice margin improvement in that segment this year, but we work to try to figure out how to improve the businesses and that cycle and those guys have done a great job getting the cost out. Jeff Sprague – Citi: And then just finally on climate in the US, I assume that’s mostly resi and transport or is there something else going on.

I would say residential and transport in the US, the non-res business continues to be weaker as you, if you saw the other guys reporting their non-res business was not that good.

Your next question comes from the line of Bob Cornell - Barclays Capital Bob Cornell - Barclays Capital: If you can finish the process question you started out with today, you said it was a little bit better, you previously have said looking down 12 to 14% this year and margins down a couple hundred basis points clearly you’re looking at a little bit better than that, but what would be the comparable comment today.

You’re going to hear on Friday for process, I think the process is going to be down I think somewhere between the 9 to 11%, 9 to 12% underlying and margins on an EBIT basis will be in the low 16. There are a couple of things going our way right now, there’s the [inaudible] that we didn’t see last year is starting to flow in North America which is good news. And we have continued to have very good progress with our wireless programs and some of our new innovations so that business could be volatile, we’ll see what happens here but they’ve had a very good start to the year and they’re doing better than I thought they would. Bob Cornell - Barclays Capital: The SG&A line was a little higher than I might have thought and as a percent of sales, you got the strong gross profit margin, the SG&A was a little higher than I would have thought for Emerson, what’s going on there.

You’re going to see us continue to mix in some of the businesses that are growing that have higher GP margins and higher SG&As, that’s what happens when you shift into the higher technology businesses. We have more R&D and stuff like that. So and the other thing is Walter pointed out the incentive comp. We had that double up in incentive comp this year too. Our stock is doing well and we obviously are, the incentive comp double up this year as we overlap, the final year, the last one’s this year and the new one starts at the beginning of the year. Bob Cornell - Barclays Capital: The implication from all of the comments around margins and various areas of the businesses is for higher peak margins when we get out a couple of years, what’s your thought about that in terms of peak margins on sales and returns on capital, return on equity. David Farr We’ll talk about it Friday assuming you get healthier I’m not going to let you near me if you don’t get healthier. We’ll talk to you Friday because I think we have more to come here. Get better dammit.

Your next question comes from the line of Rich Kwas - Wells Fargo Securities Rich Kwas - Wells Fargo Securities: Could you comment on your suppliers right now and with the pick up in demand are you seeing any incremental costs or any incremental working capital in terms of supporting the suppliers.

No, the only thing we’re seeing right now would be I would say there’s some shortage in the electronic world. You’ve seen a pretty good surge in the electronic business. You’ve seen a lot of new products coming out in the electronic world. The capacity had been taken offline very rapidly and shifting around and some of the changes and so that’s the only place we see right now from the standpoint and you would see a little bit of [inaudible] type of stuff and premiums here but nothing major. Our overall price costs structure is in very good shape right now. We’re in a good window where our net material inflation that we laid in on a negative downside is coming through, and our pricing is fairly stable but we do know inflation is coming back up as the year progresses and we have to be very careful there. So don’t think there’s any big issues right now. Rich Kwas - Wells Fargo Securities: And just following up on process how do you think pricing plays out, what are you seeing right now and how do you see that progresses from a competitive standpoint for the rest of the year.

I think from the standpoint of our instrumentation and technology base pricing is very good. Our cost position is obviously very good in those things too because of our best cost actions and getting our capacity in the right places. On the global large projects we’re going after because there’s fewer of them right now because the market is a little bit slower and down. The pricing is definitely tougher and we would expect our whole systems and solutions profitability to be challenged this year as we go through that but at the same time I think the investments we’ve been making in the other area will more than offset that but I think we can deal with it and be within that 16 to 16.5% EBIT margin I’m talking about. So I feel pretty comfortable, there will definitely be aggressive pricing on the large projects. Rich Kwas - Wells Fargo Securities: And what percentage of process does that really make up.

If you look at our, if you look at the pie chart I want to say its around 25% of our sales in systems and solutions. Now the large projects aren’t only a part of that because we have other parts of the business which you don’t have a lot of bidding going on but in the large projects you won’t even see the pricing come into play for this year’s P&L, it will be more like 2011 P&L because those are projects that will be out in the future. So its not a big issue to me. I’m not trying to, its not a scapegoat for me, its not an issue that we can’t deal, we always have to deal with it and we manage it and from my perspective I expect my team to manage it and we do.

Your next question comes from the line of Steve Tusa - JPMorgan Steve Tusa - JPMorgan: Great quarter, just wanted to ask about climate can you just talk about what you’re hearing on the market outlook for next year, I think there’s kind of a range of expectations, some guys are calling for kind of 5% plus, others are calling for high teens, what’s your latest and greatest on the US resi market in 2010.

I think we’re going to be saying its going to be in the 5 to 10, but we’ll talk about that Friday, I think its 5 to 10. Its definitely turned, yes, there’s a little bit of R22 but there’s not much. Inventories were low as you know in the channel. I think this one’s turned and we’ll be up pretty reasonable level of growth this year and just like us its hard to call how the shape of that turn as you well know. Steve Tusa - JPMorgan: When you look at price cost in climate could you just maybe talk about price cost throughout the various businesses, are there some guys that are going to be a little bit red, some guys are going to be a little bit green, or is it all kind of around the neutral area for the year in price cost.

Price cost will be pretty neutral and we’re in pretty good shape across the board. We put Charlie, and he’s focusing on working the pricing all year long, we have a procurement organization that works the cost issue. Ed Walter work extremely hard every month, this is not something that sneaks up on us, we are well in tune with what’s going on. We know what’s going to happen, we know what’s going to happen as the year progresses so I feel very comfortable and this is, its not an issue for us this year. Steve Tusa - JPMorgan: Will you give longer-term targets for the segments for either margins or gross on Friday.

No, from a profitability standpoint no. And we will talk a little bit about the underlying growth rates of the segments but we’re not going to talk about margin segments on Friday, no.

Your next question comes from the line of Nigel Coe – Deutsche Bank Nigel Coe – Deutsche Bank: So just on that last point, you’ve gone down on record saying that the growth in the next cycle could be materially lower than previous cycles, are you seeing anything in the last three months or so to make you maybe think that this cycle could be just like the last one.

I think its worse. I think the last couple of months are worse. I think I just say the Administration, I just saw the President on TV a second ago, he’s on every day, I think the last time I saw his budget he’s talking about running a deficit of $1.6 trillion. He’s talking about running a deficit for the next 10 years. He’s talking about taking our debt to over $25 trillion in the United States. I think the UK, Europe is the same, Japan, I think the growth rate is going to be lower. We’ll talk about it Friday. I haven’t seen anything that makes me feel better. Nigel Coe – Deutsche Bank: I just wanted to clarify that.

Yes just in case. Did you see the deficit, did it come down. Nigel Coe – Deutsche Bank: I think its still about $1.4 trillion. And then just on the tax rate, does that include the R&D tax credit renewal or would that be beneficial if that comes through.

That’s all reflected in the expectations for the approximate 30% tax rate for the year. Nigel Coe – Deutsche Bank: And then just on the minority line coming in below taxes, is that meaning EGS [inaudible].

Yes.

Your next question comes from the line of Terry Darling – Goldman Sachs Terry Darling – Goldman Sachs: Just a couple of points of clarification, first on Avocent the dilution at $0.06 we’re at I think $0.10 before and that’s just pulling LANDesk out or underneath the core Avocent business you’ve got a little bit more positive view of either synergies or the end market.

Definitely on synergies, definitely end market. There’s only so much you can do in the preliminary work relative to what we saw there. Our interest costs we’re a little bit lower because we got to borrow the money at the lower level and the company and the cycle is going well and its going to improve well and we’ve got an extra month on it so I think that just underlying business is a little bit better. It had nothing to do with LANDesk because we assumed in our plans that we were going to get rid of LANDesk anyway so, that’s why I made the comments I did about the organization, the integration is going well and I feel very good about this acquisition. Terry Darling – Goldman Sachs: And then on just make sure we get the message synthesized on the improvement in your base organic growth outlook versus November, it sounds like a little bit from everywhere with an extra helping of climate is that the short version.

I would say that’s a very accurate version. Terry Darling – Goldman Sachs: And then the commercial markets non res overall, can you calibrate us on your latest view there, is that an area you’re still concerned about from a downside perspective or do you like the trends in terms of finding a bottom there particularly in climate but in other areas of your business as well.

I think its forming the bottom right now. I expect, I think I’ll discuss the US non-res forecast on Friday, I still think it will be negative for the year. But its less negative and so the bottom is forming right now and it will start coming up and we’ll start, the wind will turn to our back sometime in mid 2010.

Your next question comes from the line of Michael Schneider - Robert W. Baird Michael Schneider - Robert W. Baird: Just on process, and if this was stated I apologize they’re going to cut off the call but the comment about—

We did that on purpose. Michael Schneider - Robert W. Baird: I figure but I got back on.

Because you’re a Milwaukee Brewers fan and you signed Jim Edmonds into the minor league. Michael Schneider - Robert W. Baird: We’re picking up talent. In process you called out power and water as areas of actual growth and I guess that contradicts at least some of the other players in the space, I’m wondering if there’s unique projects internationally that you booked that prompted the growth or just any color there would be helpful.

Its global, we’ve not had an issue anywhere. Its around the world. As Walter pointed out too he says its backlog. We have backlog. The orders have continued to be pretty good. We have a very unique technology and you leverage it with our whole plant web structure. We have a unique offering versus anyone else we compete against. So be it Asia, I was just in the Middle East and there’s a huge project going on there that hopefully we’re going to win here. There’s a lot going on in the United States. We need power and we need clean water and I feel good about this industry right now. Michael Schneider - Robert W. Baird: In addition to backlog have those two markets been strong in the incoming orders as well relative to the other markets.

I can’t, let me look over the next couple days and tell you Friday, my gut tells me right now our orders have been still pretty good and what I refer to the old Westinghouse business. And so its called PWS and so it has started to weaken here. So its off the backlog. So it has started to weaken. Lynne just pointed out to me. Michael Schneider - Robert W. Baird: And the margins in process at 15.6 I don’t know if you’re able to quantify just how much under absorption is impacting that right now because of the inventory reductions.

That’s very difficult in this quarter. We had a long discussion a couple of calls ago on that subject and rather then get into that level of detail again the basic issue is not the underlying absorption but just the volume decline and you see what the underlying decline was in the segment. Its not an inventory absorption issue. Michael Schneider - Robert W. Baird: Maybe put differently just as to what’s coming up do you expect inventory levels and under production levels to continue in process or are you now at the inventory levels you’re targeting within process.

Not in process, process has continued room to decline and inventories are getting closer but they still have inventory they have to get down. I would say industrial automation continues to have to get inventory down. And so the two late cycle guys still have to get their inventory down, the other guys have got their inventories in great shape and actually are starting to add a little bit of inventory. Michael Schneider - Robert W. Baird: In fact on industrial the alternator customers what’s your sense of their inventory levels globally because they’ve been behind the curve generally.

They’re in good shape right now. I think, my gut tells me that we’re going to start seeing that business turn back on and as we move into the March, April, May timeframe I think you’ll see our order pace pick back up because they shut it pretty hard and those inventories are being flushed out of the system. Michael Schneider - Robert W. Baird: On climate, R-410A did I hear you correctly you said there really wasn’t much boost in the quarter so the 7% growth in the US is primarily just the core HVAC business.

There was some pull up in R22, from the standpoint that R22 is the old refrigerant product that was being made. It was not I don't think significant from my scheme of things. You may be talking $20, $25 million, its extremely hard to measure that in a marketplace as large as we are in North America. It wasn’t anywhere close to the level of the pull up that we saw when we went to our 13th. There was some, and I think the inventories are extremely low out there already so I still think that as I look at North America, the 5 to 10 is a good number for growth rate for North America.

Your final question comes from the line of Eli Lustgarten - Longbow Securities Eli Lustgarten - Longbow Securities: Couple of follow-ups on climate, the implication of not much pull up is that the 14.4 margin is sustainable and then getting better in that business for the rest of the year.

I think that my gut there was a little bit of pull up, I’ll say it again, a little bit of pull up. It wasn’t the whole level of growth and I think the growth for climate will be in that 5 to 10% for the year. The profitability of climate is what we’ll talk about on Friday, will improve and will be I think in very good levels. And from my perspective the restructuring and the mix is going our way right now. And we feel pretty good about where we are relative to climate. I would say the second quarter growth rate might be a tad lower because of the pull up but not significant, its not going to go from 7 to minus 5. Eli Lustgarten - Longbow Securities: Can you talk about the same thing for appliances, Whirlpool is out [inaudible] bullish today, regarding the outlook, big margins in that business too and the demand looks like it’s a little bit stronger than people had expected on the appliance side.

I look at our appliance business, I think the recovery after many years of being down so far will start coming back in the second half of the year. I would expect the appliance tool segment to be the next segment that goes positive in the top line wouldn’t be surprised if that doesn’t happen here in the quarter we just started right now. I would not be saying bullish on the appliance components business, that’s not something I would ever use, those phrase for that business. Its been down for so long so I would expect a recovery. You think about how far housing has come down and how far consumer spending is coming down but I don't think the consumer is ready to go spend a lot of money. They’ve got a lot of debt out there and they don’t have jobs last time I looked. Eli Lustgarten - Longbow Securities: So will you expect more profitability to hold at these levels.

At the appliance component segment, I would expect the profitability to, what did we do for the quarter. Eli Lustgarten - Longbow Securities: Fifteen four, 15.2.

I think we’ll be in that range, could be a tad lower. Its going to be in that range, its going to be around 15%. Eli Lustgarten - Longbow Securities: Any share buyback plans this year at all.

Minimal, we reviewed that with the Board today. I would expect us to probably do as we forecasted somewhere between $50 and $100 million this year to offset any potential dilution from the standpoint, but not a lot this year and depending on what we do on acquisitions, that number may change. Eli Lustgarten - Longbow Securities: And of course the dividend will go up at some point, right.

We just increased it in November for the 53rd year and we approved it again this quarter so we’re working on 53.5 years.

There are no additional questions at this time; I would like to turn it back over to management for any additional or closing comments.

What I want to do first is I want to thank everybody. I appreciate everyone who joined us today. I’m looking forward to seeing you Friday. As you could tell I’m in pretty good spirits, I’m in a fighting mood. And being somewhat of an aggressive type of person as you all know I enjoy it and I’m also very opinionated in the way I think about things. One thing I would like to recognize right now is the Board decided today and made the decision that Walter will relinquish his CFO title. Walter is 63 now and Walter will be staying around and working with us as the Vice Chairman as we promoted him back in November to Vice Chairman and Frank Dellaquila who many of you may know, Frank’s been with us quite some time will become our CFO. That will be announced formerly this evening. It will be going out over the wire. Frank’s with us today, he’s sitting here listening to me and probably listening to the BS I put out there at times. But I want to thank Walter for everything he’s done over the years for me. I’ve know Walter for 30 years and he and I have worked a lot together. He’s not going away, he’s going to be working here but as he points out to me, he will not be signing the financial statements no longer. So Frank and I will be doing that. But you’ll see Walter on Friday so you may want to go up and give him a high five, or a kick or whatever you want to do about him and keep asking him about inventory and absorption because he knows a lot about it. Again Walter thank you very much for everything and Frank, looking forward to working with you and training another CFO about financials. With that I turn off and hopefully everyone is still out there and we’ll see you Friday, bye.