Emerson 2008 Annual Report Download - page 43

[ 36 ] Emerson 2008

Basic earnings per common share consider only the weighted average of common shares outstanding while diluted
earnings per common share consider the dilutive effects of stock options and incentive shares. Options to purchase
approximately 3.6 million, 1.1 million and 1.0 million shares of common stock were excluded from the computation
of diluted earnings per share in 2008, 2007 and 2006, respectively, because their effect would have been antidilutive.
Reconciliations of weighted average common shares for basic earnings per common share and diluted earnings per
common share follow:
(s h A R e s inm i l l i o n s )    2006 2007 2008
Basic 816.5 793.8 780.3
Dilutive shares 8.0 10.1 9.1
Diluted 824.5 803.9 789.4

The Company acquired Motorola Inc.’s Embedded Computing business (Embedded Computing) during the rst
quarter of 2008. Embedded Computing provides communication platforms and enabling software used by manufac-
turers of equipment for telecommunications, medical imaging, defense and aerospace, and industrial automation
markets and is included in the Network Power segment. In addition to Embedded Computing, the company acquired
several smaller businesses during 2008 mainly in the Process Management and Network Power segments. Total cash
paid for these businesses was approximately $561 (net of cash and equivalents acquired of approximately $2) and
their annualized sales were approximately $665. Goodwill of $273 ($214 of which is expected to be deductible for tax
purposes) and identiable intangible assets (primarily technology and customer relationships) of $191, which are being
amortized on a straight-line basis over a weighted-average life of eight years, were recognized from these transactions
in 2008. Third-party valuations of assets are in-process; purchase price allocations are subject to renement for scal
year 2008 acquisitions.
In the rst quarter of 2008, the Company divested the Brooks Instrument ow meters and ow controls unit (Brooks),
which had sales for the rst quarter of 2008 of $21 and net earnings of $1. The Company received $100 from the sale
of Brooks, resulting in a pretax gain of $63 ($42 after-tax). The net gain and results of operations for scal 2008 were
classied as discontinued operations; prior year results of operations were inconsequential. This business was previ-
ously included in the Process Management segment. In scal 2008, the Company completed the divestiture of the
European appliance motor and pump business and received approximately $101 from the sale, resulting in a total loss
of $92. In connection with a long-term strategy to divest selective slower-growth businesses, the Company had been
actively pursuing the sale of this business. The forecast for this business was lower than originally planned due to a
slow economic environment for the consumer appliance market, increasing competition from Asia, higher commodity
costs, and loss of a customer. As a result, the carrying value of this business exceeded its estimated realizable value, and
a loss of $52 was recorded for goodwill impairment in the second quarter of 2008. The Company entered into a deni-
tive agreement to sell the business which resulted in an additional loss of $36 (including goodwill of $31) during the
third quarter of 2008. A $4 loss was recorded when the transaction closed in the fourth quarter of 2008. The European
appliance motor and pump business had total annual sales of $453, $441 and $399 and net earnings, excluding the
loss, of $7, $7, and $6, in 2008, 2007 and 2006, respectively. The results of operations were classied as discontinued
operations for all periods presented. This business was previously included in the Appliance and Tools segment.
The Company acquired Damcos Holding AS (Damcos) during the second quarter of scal 2007, and Stratos Interna-
tional, Inc. (Stratos) during the fourth quarter of scal 2007. Damcos supplies valve remote control systems and tank
monitoring equipment to the marine and shipbuilding industries and is included in the Process Management segment.
Stratos is a designer and manufacturer of radio-frequency and microwave interconnect products and is included in the
Network Power segment. In addition to Damcos and Stratos, the Company acquired several smaller businesses during
2007 mainly in the Process Management and Appliance and Tools segments. Total cash paid for these businesses was
approximately $295 (net of cash and equivalents acquired of approximately $40 and debt assumed of approximately
$56) and their annualized sales were $240. Goodwill of $189 (none of which is expected to be deductible for tax
purposes) and identiable intangible assets (primarily technology and customer relationships) of $106, which are being
amortized on a straight-line basis over a weighted-average life of nine years, were recognized from these transactions
in 2007.