Emerson 2008 Annual Report Download - page 46

A Powerful Force for Innovation [ 39 ]
related to the shifting of certain production from Canada to the United States and severance related to the closure
of certain motor production in Europe to remain competitive on a global basis. The Company expects rationalization
expense for 2009 to be approximately $125 to $150, including the costs to complete actions initiated before the end of
2008 and actions anticipated to be approved and initiated during 2009.
During 2007, rationalization of operations primarily related to the exit of approximately 25 production, distribution, or
ofce facilities, including the elimination of approximately 2,200 positions, as well as costs related to facilities exited
in previous periods. Noteworthy rationalization actions during 2007 are as follows. Process Management included
start-up costs related to capacity expansion in China to serve the Asian market, as well as severance and start-up and
moving costs related to the movement of certain operations in Western Europe to Eastern Europe and Asia to improve
protability. Industrial Automation included severance and start-up and moving costs related to the consolidation of
certain power transmission facilities in Asia and North America to obtain operational efciencies and serve Asian and
North American markets. Network Power included severance related to the closure of certain power conversion facili-
ties acquired with Artesyn, as well as severance and start-up and moving costs related to the shifting of certain power
systems production from the United States and Europe to Mexico to remain competitive on a global basis. Climate
Technologies included start-up costs related to capacity expansion in Mexico and Eastern Europe to improve prot-
ability and to serve these markets, and start-up and moving costs related to the consolidation of certain production
facilities in the United States to obtain operational efciencies. Appliance and Tools included severance and start-up
and moving costs related to the consolidation of certain North American production, and severance related to the
closure of certain motor production in Europe to remain competitive on a global basis.
During 2006, rationalization of operations primarily related to the exit of approximately 10 production, distribution, or
ofce facilities, including the elimination of approximately 1,700 positions, as well as costs related to facilities exited
in previous periods. Noteworthy rationalization actions during 2006 are as follows. Process Management included
severance related to the shifting of certain regulator production from Western Europe to Eastern Europe. Industrial
Automation included start-up and moving costs related to shifting certain motor production in Western Europe to
Eastern Europe, China and Mexico to leverage costs and remain competitive on a global basis and to serve these
markets. Network Power included severance related to the closure of certain power conversion facilities acquired with
Artesyn, severance, start-up and vacant facility costs related to the consolidation of certain power systems operations
in North America and the consolidation of administrative operations in Europe to obtain operational synergies. Climate
Technologies included severance related to the movement of temperature sensors and controls production from
Western Europe to China and start-up and moving costs related to a new plant in Eastern Europe in order to improve
protability. Appliance and Tools included primarily severance and start-up and moving costs related to the shifting of
certain tool and motor manufacturing operations from the United States and Western Europe to China and Mexico in
order to consolidate facilities and improve protability.

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:
 p R o C e s s i n d ust R i Al n e t w o R k C l i m A t e A p p l i A n C e 
 m A n A G e m e n t A u t o m A t i o n p o w e R t e C h n o l o G i e s A n d t o o l s t o t A l
Balance, September 30, 2006 $1,778 1,016 2,162 408 649 6,013
Acquisitions 146 1 26 3 13 189
Divestitures (5) (5)
Impairment (7) (7)
Foreign currency translation and other 61 60 76 9 16 222
Balance, September 30, 2007 $1,985 1,070 2,259 420 678 6,412
Acquisitions 87 24 162 273
Divestitures (83) (83)
Impairment (31) (31)
Foreign currency translation and other (29) 13 11 (8) 4 (9)
 $2,043 1,107 2,432 412 568 6,562
See Notes 3 and 4 for further discussion of changes in goodwill related to acquisitions, divestitures and impairment.