Emerson 2011 Annual Report Download - page 35

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(2) Weighted Average Common Shares
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 4.6 million, 3.9 million and 7.6 million shares of common stock were excluded from the computation of
diluted earnings per share in 2011, 2010 and 2009, respectively, as the effect would have been antidilutive. Earnings
allocated to participating securities were inconsequential for all years presented. Reconciliations of weighted average
shares for basic and diluted earnings per common share follow:
(shares in millions) 2009 2010 2011
Basic shares outstanding 753.7 750.7 748.5
Dilutive shares 5.0 6.3 5.0
Diluted shares outstanding 758.7 757.0 753.5
(3) Acquisitions and Divestitures
The Company acquired several small businesses during 2011, mainly in the Process Management and Climate Tech-
nologies segments. Total cash paid for all businesses was approximately $232, net of cash acquired of $2. Annualized
sales for businesses acquired in 2011 were approximately $100. Goodwill of $125 (none of which is expected to be
deductible for tax purposes) and identifiable intangible assets of $75, primarily customer relationships and patents
and technology with a weighted-average life of approximately 12 years, were recognized from these transactions. All
of these acquisitions were complementary to the existing business portfolio and none was individually significant.
In the fourth quarter of 2011, the Company sold its heating elements unit, which was previously included in the Tools
and Storage segment, for $73, resulting in an after-tax gain of $21 ($30 of income taxes). Heating elements had 2011
fourth quarter sales of $12 and net earnings of $1. Only the gain on divestiture and fourth quarter operating results
for heating elements, and the impact of finalizing the 2010 Motors and LANDesk divestitures, have been classified as
discontinued operations for 2011; prior fiscal 2011 quarters and prior year results of operations for heating elements
were inconsequential and have not been reclassified.
The Company acquired one-hundred percent of Chloride Group PLC during the fourth quarter of 2010 and Avocent
Corporation during the first quarter of 2010. Chloride provides commercial and industrial uninterruptible power supply
systems and services, which significantly strengthened the Company’s Network Power business in Europe, and is
included in the Network Power segment. Avocent products enhance companies’ integrated data center management
capabilities, which strongly positions Emerson for the growth of infrastructure management in data centers worldwide,
and is included in the Network Power segment.
The purchase price of Avocent and Chloride was allocated to assets and liabilities as follows:
Accounts receivable $ 197
Inventory 155
Property, plant & equipment and other assets 148
Intangibles 1,071
Goodwill 1,509
Assets held for sale, including deferred taxes 278
Total assets 3,358
Accounts payable and accrued expenses 183
Debt assumed 165
Deferred taxes and other liabilities 395
Cash paid, net of cash acquired $2,615
Results of operations for 2010 included combined sales of $373 and a combined net loss of $73 from Avocent and
Chloride, including intangible asset amortization, interest, first year acquisition accounting charges and deal costs.
Pro forma sales and net earnings common stockholders of the Company including full year results of operations for
Avocent and Chloride were approximately $21.6 billion and $2.1 billion in 2010, and $21.0 billion and $1.6 billion in
2009, respectively. These pro forma results include intangible asset amortization and interest cost in both periods,
and first year acquisition accounting charges and deal costs in 2009.