Emerson 2008 Annual Report Download - page 47

[ 40 ] Emerson 2008
The gross carrying amount and accumulated amortization of intangibles (other than goodwill) by major class follow:
 G R o s s C A R R y i n G A m o u n t A C C u m u l A t e d A m o R t i z A t i o n n e t C A R R y i n G A m o u n t
  2007 2008 2007 2008 2007 2008
Intellectual property and
customer relationships $ 925 985 381 358 544 627
Capitalized software 729 805 558 613 171 192
$1,654 1,790 939 971 715 819
Total intangible amortization expense for 2008, 2007 and 2006 was $150, $131 and $107, respectively. Based on
intangible assets as of September 30, 2008, amortization expense will approximate $148 in 2009, $130 in 2010,
$112 in 2011, $87 in 2012 and $62 in 2013.

The Company selectively uses derivative nancial instruments to manage interest costs, commodity prices and
currency exchange risk. The Company does not hold derivatives for trading purposes. No credit loss is anticipated as
the counterparties to these agreements are major nancial institutions with high credit ratings.
To efciently manage interest costs, the Company utilizes interest rate swaps as cash ow hedges of variable rate debt
or fair value hedges of xed rate debt. Also as part of its hedging strategy, the Company utilizes purchased option and
forward exchange contracts and commodity swaps as cash ow or fair value hedges to minimize the impact of currency
and commodity price uctuations on transactions, cash ows, fair values and rm commitments. Hedge ineffective-
ness during 2008, 2007 and 2006 was immaterial. At September 30, 2008, substantially all of the contracts for the sale
or purchase of European and other currencies and the purchase of copper and other commodities mature within two
years; contracts with a fair value of approximately $56 of losses mature in 2009 and $6 of losses mature in 2010.
Notional transaction amounts and fair values for the Company’s outstanding derivatives, by risk category and instru-
ment type, as of September 30, 2008 and 2007, are summarized as follows. Fair values of the derivatives do not
consider the offsetting underlying hedged item.
  2007 2008
   n o t i o n A l f A i R v A l u e n o t i o n a l f a i r v a l u e 
   A m o u n t G A i n (l o s s )  a m o u n t g a i n (l o s s )
Foreign currency:
Forwards $1,922 35 1,835 (24)
Options $ 266 2 243 8
Interest rate swaps $ 113 (3) 122 (2)
Commodity contracts $ 509 45 324 (44)
Fair values of the Company’s nancial instruments are estimated by reference to quoted prices from market sources
and nancial institutions, as well as other valuation techniques. The estimated fair value of long-term debt (including
current maturities) was in excess of (less than) the related carrying value by ($12) and $2 at September 30, 2008 and
2007, respectively. The estimated fair value of each of the Company’s other classes of nancial instruments approxi-
mated the related carrying value at September 30, 2008 and 2007.

Short-term borrowings and current maturities of long-term debt are summarized as follows:
      2007 2008
Current maturities of long-term debt $251 467
Commercial paper 113 665
Payable to banks 19 17
Other 21 72
Total $404 1,221
Weighted-average short-term borrowing interest rate at year-end 3.2% 2.6%