This is an exciting time for Emerson.

Through repositioning, we have strengthened our leadership in the fast-growing market for network power. We have continued to realize success in our major growth initiatives that now account for more than half of our revenues, including increasing sales in developing international markets, and expanding solutions and services for our customers. As a result, we have accelerated the Company's underlying growth rate to within our target range, reaching over 7 percent in 2000 - the highest level since fiscal 1995 - and we have momentum as we enter 2001.

We have reached new milestones of operational excellence, and we are utilizing Internet technologies to make our businesses even more efficient. We are introducing a new company logo. And for the third time in only 45 years, the Board of Directors, as part of a planned succession process, has elected a new chief executive officer.

Further, in fiscal 2000, we marked Emerson's 43rd consecutive year of increased earnings and earnings per share and 44th consecutive year of increased dividends per share. We all can be immensely proud of this record of performance, as it has enabled Emerson to deliver consistently strong, long-term total returns to stockholders - approximately 16 percent compound annual growth, whether the horizon is five, 10, 15, or 20 years.

Emerson's ability to deliver consistent performance is derived from the Company's management process. This process is not a rigid document that hangs on walls or resides in manuals. Rather, it is a reflection of our people and their ability to understand and capitalize on changes in market conditions and new technologies. It has been the efforts of people across the organization, working within the management process, that have enabled Emerson to create the opportunities we have today.

The foundation of the Emerson management process has been our commitment to planning and our ability to execute those plans. We have long had a strong profit planning process that has given Emerson a cost advantage relative to our competitors. Today we are taking operational excellence to new levels, with added focus on capital efficiency as well as productivity opportunities associated with e-business.

In the area of working capital, we have deployed lean manufacturing principles to reduce inventory and free up facilities. More than 1,000 people have completed lean training, and we now have over 150 plants actively engaged in this effort.

Relative to fixed capital, we are optimizing assets by outsourcing production where we can identify a more efficient supplier. While Emerson's Return on Total Capital is down slightly from recent highs due to the impact of major acquisitions, the 16.1 percent in 200o is excellent relative to both our competitors and other industries. More important, we see opportunities to raise this metric to even higher levels.

We have spent a great deal of time evaluating Emerson's business models and how Internet-based technologies can be best utilized to improve them. E-business offers many opportunities to be more connected and efficient, both externally with customers and suppliers as well as internally, and programs are under way throughout the Company to realize these benefits.

We also are implementing common standards across the Company to align our data and networks, utilizing exciting applications such as companywide customer data warehouses to better understand our total interaction with customers.

Our Materials Information Network has been completed after three years of intense effort, and we now have the ability in a single database to evaluate all materials we purchase. This allows us to examine suppliers and components item by item and to aggregate our purchases with key suppliers who are willing to make long-term strategic commitments on our behalf. This knowledge also enables our engineers to leverage cost opportunities associated with the design of new products.

Brand and Marketing Initiatives

We dedicated the past year to evaluating the brand identity of the Company and its divisions through the eyes of our customers and employees worldwide.

Excellence. Being connected. Commitment. Forward looking. Performance. Customer focused. These are the words that define Emerson today, a company at the forefront of technology and one of the world's best-managed organizations.

We are adopting "Emerson" as our name and introducing our first new brand image in more than 30 years. The new logo and brand architecture capture the energy and vision of the Company's future. The new brand does not signify a change in direction, but serves as a reflection of Emerson's continued progression and leadership in developing technology-driven solutions. Over the coming months, we will launch new brand platforms under this identity, focused on specific competencies such as Emerson Network Power.

Company Leadership

One of the most significant responsibilities of any board and chief executive is developing a process to identify new leadership to drive the Company forward. Emerson's board worked diligently in this area over the past four years, recently completing a seamless transition to an exceptional new leadership team.

In October, David N. Farr was elected by the board to serve as the new chief executive officer, only our third CEO in 45 years. In addition, James G. Berges, president; Walter J. Galvin, executive vice president and chief financial officer; and Charles A. Peters, senior executive vice president and e-business leader, were named to a newly created Office of the Chief Executive. David, Jim, Walter, and Charlie will serve as the Company's executive leadership team, and each is also now a board member. These individuals, along with the six most senior operating executives, average less than 50 years of age and have a total of 216 years of experience with Emerson. Each has a unique set of skills and experience that will help ensure our ability to deliver value for our stockholders.

Charles F. Knight, who served as chief executive officer since 1973, will continue to serve as chairman, providing counsel to this new team.

We also recognize the substantial contributions made by two departing executives. Robert W. Staley retired in February after 25 years as a senior executive in a number of vital capacities at Emerson, including chairman of Asia-Pacific. In November, Albert E. Suter, chief administrative officer, retired from the board. In more than 21 years in senior management, he has been particularly instrumental in the development of our profit planning process. These outstanding executives have served Emerson stockholders well over many years, and we wish them every good fortune.

I have been privileged to serve as CEO of Emerson over the past 27 years. Our success during this period has been the result of the outstanding efforts of our directors, managers, and tens of thousands of individuals whose dedication has made Emerson the truly great Company it is today. I am deeply thankful for all they have done, and I look forward to continuing to work with David and his team as they lead the organization to new achievements.

While we hope this letter communicates the extraordinary level of activity within Emerson, we also hope it conveys just how much opportunity lies ahead. Emerson is as well-positioned for continued growth and success as it has ever been. We are poised to capitalize on these opportunities, to the benefit of our employees and stockholders, in the coming years.

Charles F. Knight Chairman		David N. Farr Chief Executive Officer