Avocent Acquisition. David N. Farr October 6, 2009

Transcription

1 Avocent Acquisition David N. Farr October 6, 2009 Safe Harbor Statement: Our commentary and responses to your questions may contain forward-looking statements 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 the most recent Annual Reports on Form 10-K as filed by Emerson and Avocent with the SEC. Non-GAA Measures: In this call we will discuss some non-gaa measures (denoted with *) in talking about Avocent s performance, and the reconciliation of those measures to the most comparable GAA measures is contained within this presentation.

2 Emerson Network ower rofile 2008 Sales $6.3B Other Outside lant DC ower Systems Service Emerson Data Center Sales by Market Other Commercial Education Healthcare recision Cooling Web Hosting/ Colocation AC ower Telecom Government rofessional Services Embedded Computing & ower Financial $2.6B ~40% of our Network ower Business Serves the Data Center Market 2

3 Emerson Network ower resence within the Data Center $2.6B Extreme Density recision Cooling Surge Suppression System Uninterruptible ower Systems & Batteries ower Distribution Units recision Cooling ROOM Generator Enterprise Monitoring System Cable Switch Gear Rack Cooling RACK 4 Automatic Transfer Switch Managed ower Strip Control Room US Server ower Supplies Board Level ower Supplies Environmental Sensors 3

4 Data Center Issues and Emerging Strategies Global Server Shipments 12% CAGR Virtual Servers 5.6% CAGR Data Center Energy Consumption Communication Equipment Storage Other Electrical Computing Other rocessors US recision Cooling Embedded ower Supplies ISSUES Availability % Technology Advances Energy Efficiency Dynamic Infrastructure Shift to Efficient Hardware Servers, Storage and Network ower and Cooling Infrastructure Design Data Center for Efficiency Arrange Room Configure Racks Shift Loads Real Time Use Most Efficient Hardware Operate at Optimum Efficient Load Turn Off EMERGING STRATEGIES Retire Idle or Excess Devices Manage Hardware and Space Inventory Avoid Capacity Additions Asset Utilization Emerson Technologies Impact 57+% of Data Center Energy Consumption 4

5 Data Center Users Group Survey Results May 2005 Nov 2007 May 2009 Heat / ower Density Availability Space Constraints Technology Changes Monitoring Security Justifying Expenditures Data Center Consolidations Hardware Reliability Regulatory Compliance Service Delivery Staffing, Other 23% 18% 17% 14% 13% 13% 10% 7% 7% 39% 78% 57% Heat Density ower Density Energy Efficiency Availability Space Constraints Monitoring Technology Changes Security Data Center Consolidations Storage Other Regulatory Compliance 39% 33% 29% 27% 15% 10% 10% 6% 5% 4% 55% 64% Heat Density Energy Efficiency Monitoring / Availability ower Density Space Constraints Technology Changes Storage Security Data Center Consolidations Other Regulatory Compliance 11% 11% 8% 7% 5% 3% 55% 47% 46% 41% 35% 29% Energy Efficiency Focus Continues to Intensify, and It s One of Emerson s Core Technologies and Capabilities 5

6 Data Center Infrastructure Four Categories Of IT End User Needs Input from IT End Users Optimization Of Energy Usage & Related Operating Costs redictive Diagnostics of Support Infrastructure Remote Monitoring & Analysis of Critical Infrastructure Capacity Tools of ower, Cooling, Connectivity & Space Based on IT Device Load Workflow (Add, Change, Decommission) rocess Tools Capabilities Needed erformance Optimization Asset Visualization & Mapping Tools for Data Center Environment Configurator Tools that Recommend Support Infrastructure Designs Based on IT Device Inputs Room & Rack Layout Tools Symbol Library of IT & Support Infrastructure Devices Configuration Real-Time Monitoring of US, recision Cooling, ower Distribution Unit, ower Strip, Rack & Environmental Devices Real-Time Monitoring 6

7 IT Infrastructure Becoming Increasingly Critical Area of Data Centers erformance Optimization Asset Building Mngmt Co s Solutions Opportunity NOW! IT Companies & Server OEMs Configuration EMERSON Avocent (Liebert, Aperture, Knurr) Real-Time Monitoring Building Room Rack IT Device Software (Gensets, (US, Cooling) (ower Strip, (Servers, (Applications) HVAC) KVM Switch) Storage) There is an Unmet Need to Deliver a Comprehensive (Highly Integrated) Solution Set for Infrastructure Emerson is Well ositioned to Do this with the Addition of Avocent 7

8 Rack Building Blocks & Terminology 33 U Rack 33 U U Device Function Manufacturer Rack Secure Devices Emerson ower Strip ower Distribution Emerson KVM Switch Infrastructure Control Avocent US Reliable ower Emerson Router Data Routing & Delivery Cisco, Juniper, Alcatel Network Switch Network Connection Netgear, Cisco Drawer Local Access/Control Emerson Server Computing H, Dell, IBM, Sun, Others Storage Memory EMC, Seagate, Western Digital recision Cooling Temperature & Humidity Emerson Extends Data Center Hardware Visibility with Access to IT Device Operating and erformance Information 8

9 Typical KVM Switch Application 4 4 Switch Switch Switch nd Remote Site 3 rd Remote Site A single KVM Switch can control from 1 to 64 Servers IT Admin. Multiple KVM Switches used in Combination can control 1000 s of Servers, Enterprise Wide Rack #1 Rack #2 Rack #3 A KVM Switch rovides IT Administrators with Remote Visibility, Access & Control of Connected IT Devices 9

10 Avocent rofile Headquarters: Huntsville, Alabama roduct ortfolio KVM Switch Service rocessor Manager 2008 Geographic Sales Distribution Int l 48% US 52% DSView Financial Information ($ in millions) '04-'09 (12/31 Year End) CAGR Sales* $365 $370 $521 $603 $657 $ % Gross rofit* % of Sales* 58.3% 59.2% 63.0% 65.2% 65.3% Operating Income* % % of Sales* 24.4% 20.0% 24.2% 19.1% 18.0% 16.9% 1 I/B/E/S Consensus Estimates as of 9/30/2009 Source: Avocent Company ublic Filings Suite 2008 Business Segmentation by Sales LANDesk 22% Systems 78% *Note: Non-GAA operational results which exclude the effects of amortization related to purchase accounting adjustments, stock-based compensation, restructuring, retirement and integration, and acquired in-process R&D. Note: Does not include Corporate or Other Segment Revenues 10

11 Avocent Summary Avocent System Division (MSD) is a rofitable Market Leader in a Well Structured Industry Segment Acquisition Significantly Enhances Emerson s Data Center Solutions Increases Customer and Channel resence Avocent s resence With Several Marquee Accounts Strengthens Our Existing Relationships 11

12 2008 Total KVM Market articipation by Geography 100% Total = = $1,229M $1.2B $0.7B $738M $320M $0.3B $171M $0.2B Other Other Other Aten Rose Electronics Belkin MRV Minicom Aten Adder Rose Electronics Belkin Aten Rose Raritan Raritan Raritan Avocent Avocent Avocent 0 Americas Europe Asia 12

13 Avocent Summary Avocent System Division (MSD) is a rofitable Market Leader in a Well Structured Industry Segment Acquisition Significantly Enhances Emerson s Data Center Solutions A Comprehensive Software ackage Allows Visibility to the Entire Data Center Infrastructure to Better Control Energy Consumption and to Manage the Costs and Complexity of Operations Combination of Data Center Room Infrastructure and IT Device Knowledge Facilitates the Development of a Unique Solutions Business Increases Customer and Channel resence Avocent s resence With Several Marquee Accounts Strengthens Our Existing Relationships 13

14 Data Center and Operations Support Configuration Change Release Incident roblem Service Desk IT Service (ITSM) Orchestrating Task IT Infrastructure Library Configuration Delivery Availability Continuity Capacity Service Level Emerson Network ower will Collect, Monitor and Send Key Operating Information for ITSM Optimization erformance Optimization KVM Server Storage Asset KVM & Network Connections KVM Server Storage Configuration Real-Time Monitoring KVM Server Storage RACK Infrastructure Transfer Switches US DUs Fire Surge Suppression Battery recision Cooling Intelligent Racks Security ROOM Electric Utility Generators Cool Air Chilled Water 14

15 Capabilities to Address Data Center Needs erformance Optimization Asset Configuration Real-Time Monitoring Major Needs / Opportunities Optimize Energy Consumption Load Most Efficient Devices redictive Diagnostics to Optimize IT Devices Equipment and Device Inventory Turn Off Idle Devices Repair vs. Replace Map ower Schematic Map Network Connections Retire Underutilized Devices Layout and opulate IT Device arameters Optimize and Track Equipment/Layout Changes Monitor and Verify Capacity and Loading Determine Device Efficiency rofile Emerson + Avocent 15

16 Quantity Data Center Solutions Value otential Mega ,000 > 10K sq. ft. Solutions Opportunities in One Large Data Center erformance Optimization Value Driver Typical Spend (000 s) Energy $2,000 - $4,000 Availability/Reliability $400 - $900 Emerson Opportunity 10-25% 35,000 > 5K sq. ft. Asset Inventory Mgmt $200 - $400 Maintenance Mgmt $300 - $ % 135k Configuration Capacity lanning $1,400 - $2,800 roject Mgmt $400 - $ % 140,000 > 1K sq. ft. Real-Time Monitoring Verify System Status Tool to Enable the Above Opportunities 0k Size and Quantity of Data Centers Data Center Solutions Represent a $1+ Billion Opportunity Space 16

17 Avocent Summary Avocent System Division (MSD) is a rofitable Market Leader in a Well Structured Industry Segment Acquisition Significantly Enhances Emerson s Data Center Solutions Increases Customer and Channel resence Avocent s resence With Several Marquee Accounts Strengthens Our Existing Relationships 17

18 Emerson Network ower 2008 Marquee Accounts Emerson Avocent Avocent Extends Emerson s osition with Several Marquee Accounts 18

19 Acquisition of Avocent Transaction is Expected to Close around January 1 st, 2010 Avocent Will Be Integrated into Network ower Over the Next 9-12 Months, with Relevant Liebert roducts/solutions Business Avocent sales would be approximately $400 million for 9 months of FY2010 Emerson estimates FY2010 dilution to ES of $0.10 Includes inventory write-up, amortization of intangibles and acquisition costs, and historical stock awards Assumes conservative amortization of $350 million intangibles over 6 years 2011 cash flow ES accretive Key Future Development of Software Solution to Open up Expanded Market Capabilities to Work with Key Computer OEMs IBM, H, Dell 19

20 Reconciliation of Non-GAA Financial Measures ($ in millions) GAA Financial Measures Stock-Based Compensation urchase Accounting Adjustments Restructuring, Integration and Retirement Expenses Non-GAA Operational Measures* Y-E 12/31/2008 Net Sales $ $ 657 Gross rofit $ $ 429 Operating Income $ $ 118 Y-E 12/31/2007 Net Sales $ $ 603 Gross rofit $ $ 393 Operating Income $ $ 115 Y-E 12/31/2006 Net Sales $ $ 521 Gross rofit $ $ 328 Operating Income $ $ 126 Y-E 12/31/2005 Net Sales $ $ 370 Gross rofit $ $ 219 Operating Income $ $ 74 Y-E 12/31/2004 Net Sales $ $ 365 Gross rofit $ $ 213 Operating Income $ $ 89 *Note: Non-GAA operational results which exclude the effects of amortization related to purchase accounting, adjustments, stock-based compensation, restructuring, retirement and integration, and acquired in-process R&D. 20

21 Additional Information and Where to Find It This presentation is for informational purposes only and does not constitute an offer to purchase or solicitation of an offer to sell Avocent common stock. The solicitation and offer to buy Avocent common stock will only be made pursuant to an offer to purchase and related materials. Investors and security holders are urged to read these materials carefully when they become available since they will contain important information, including the terms and conditions of the offer. The offer to purchase and related materials will be filed by Emerson with the Securities and Exchange Commission (SEC), and investors and security holders may obtain a free copy of these materials (when available) and other documents filed by Emerson with the SEC at the website maintained by the SEC at The offer to purchase and related materials may also be obtained (when available) for free by contacting Emerson at 8000 W. Florissant Avenue, St. Louis, Missouri 63136, (314)