Emerson 2006 Annual Report Download - page 47

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various industrial and hermetic motor manufacturing facilities for operational efciency. Severance costs in this segment also related
to shifting certain appliance control operations from the United States to Mexico and China in order to consolidate facilities and
improve protability.
During 2004, rationalization of operations primarily related to the exit of approximately 20 production, distribution, or ofce facilities,
including the elimination of more than 2,000 positions, as well as costs related to facilities exited in previous periods. Rationalization
actions during 2004 include the following. Process Management included severance and plant closure costs related to the closing
of a valve plant due to consolidating operations within North America in response to weak market demand, severance costs related
to the consolidation of European measurement operations in order to obtain operational synergies and several other reduction and
consolidation actions. Network Power included severance and lease termination costs related to certain power systems operations in
Western Europe shifting to China and Eastern Europe in order to leverage product platforms and lower production and engineering
costs to remain competitive on a global basis. Climate Technologies included severance costs related to workforce reductions in the
European temperature sensors and controls operations due to weakness in market demand. Appliance and Tools included severance
and start-up and moving costs related to shifting certain motor manufacturing primarily from the United States to Mexico and China
in order to consolidate facilities and improve protability, and severance related to consolidating manufacturing operations in the
professional tools business for operational efciency.

Acquisitions are accounted for under the purchase method, with substantially all goodwill assigned to the reporting unit that acquires
the business. Under the annual impairment test, if a reporting unit’s carrying amount exceeds its estimated fair value, a goodwill
impairment is recognized to the extent that the reporting unit’s carrying amount of goodwill exceeds the implied fair value of the
goodwill. Fair values of reporting units are estimated using discounted cash ows and market multiples.
The change in goodwill by business segment follows:
  process industrial network climate appliance 
  management automation  power technologies andtools total
Balance, September 30, 2004 $1,638 880 1,770 380 591 5,259
Acquisitions 67 121 15 33 236
Foreign currency translation and other (6) (4) (5) (1) (16)
Balance, September 30, 2005 $1,699 997 1,780 380 623 5,479
Acquisitions 58 27 351 25 20 481
Divestitures (24) (3) (27)
Impairment (5) (5)
Foreign currency translation and other 21 16 39 3 6 85
 $1,778  1,016  2,162  408  649  6,013
The gross carrying amount and accumulated amortization of intangibles (other than goodwill) by major class follow:
  grosscarryingamountaccumulatedamortizationnetcarryingamount
  2005  2006  2005  2006  2005  2006
Intellectual property and customer relationships $ 589 794 279 324 310 470
Capitalized software 600 647 443 484  157  163
$1,189 1,441 722 808  467  633
Total intangible amortization expense for 2006, 2005 and 2004 was $107, $90 and $79, respectively. Based on intangible assets as of
September 30, 2006, amortization expense will approximate $106 in 2007, $94 in 2008, $77 in 2009, $62 in 2010 and $59 in 2011.