Emerson 2009 Annual Report Download - page 34

Emerson 200932
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Other deductions, net are summarized as follows:
     2007  2008  2009
Rationalization of operations $ 75 92 295
Amortization of intangibles (intellectual property and customer relationships) 63 81 108
Other 111 194 166
Gains, net (74) (64) (39)
Total $175 303 530
Other is composed of several items that are individually immaterial, including minority interest expense, foreign
currency gains and losses, bad debt expense, equity investment income and losses, as well as one-time items such as
litigation and disputed matters, insurance recoveries and interest refunds. Other decreased in 2009 primarily because
of a $31 impairment charge in 2008 and $27 of lower minority interest expense, partially offset by $30 of incremental
losses on foreign currency exchange transactions.
Other increased from 2007 to 2008 primarily because of an incremental $12 loss on foreign currency exchange transac-
tions, an approximate $12 charge to write off in-process research and development in connection with the Embedded
Computing acquisition and a $31 goodwill impairment charge related to the North American appliance control busi-
ness due to a slow economic environment for consumer appliance and residential end-markets and a major customer’s
strategy to diversify suppliers and internalize the production of electronic controls. Subsequent to the impairment,
these operations were restructured and integrated with the North American appliance motors business.
Gains, net for 2009 includes the sale of an asset in which the Company received $41 and recognized a gain of $25 ($17
after-tax). In scal 2008, the Company received $54 and recognized a gain of $39 ($20 after-tax) on the sale of an equity
investment in Industrial Motion Control Holdings, a manufacturer of motion control components for automation
equipment, and also recorded a pretax gain of $18 related to the sale of a facility. Gains, net for 2007 includes a pretax
gain of approximately $32 related to the sale of the Company’s remaining 4.5 million shares of MKS Instruments and a
pretax gain of approximately $24 for payments received under the U.S. Continued Dumping and Subsidy Offset Act.
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Rationalization of operations expense reects costs associated with the Company’s efforts to continuously improve
operational efciency and expand globally, in order to remain competitive on a worldwide basis. Given the difcult
economic environment, the Company incurred costs of $295 in 2009 for actions to rationalize its businesses to the
level appropriate for current economic conditions and to improve its cost structure in preparation for the ultimate
recovery. Rationalization expenses result from numerous individual actions implemented across the Company’s various
operating divisions on an ongoing basis and include costs for moving facilities to best-cost locations, starting up plants
after relocation or geographic expansion to serve local markets, exiting certain product lines, curtailing/downsizing
operations because of changing economic conditions and other costs resulting from asset redeployment decisions.
The change in the liability for the rationalization of operations during the years ended September 30 follows. Shutdown
costs include severance, benets, stay bonuses, lease and contract terminations and asset write-downs. In addition to
the costs of moving xed assets, start-up and moving costs include employee training and relocation. Vacant facility
costs include security, maintenance, utility and other costs.
    2008 e x p e n s e p A i d /ut i l i z ed2009
Severance and benefits $33 234 155 112
Lease/contract terminations 5 9 7 7
Fixed asset write-downs – 14 14 –
Vacant facility and other shutdown costs 1 13 12 2
Start-up and moving costs 1 25 25 1
$40 295 213 122