Emerson 2011 Annual Report Download - page 36

34 | 2011 Emerson
In addition to Chloride and Avocent, the Company acquired SSB, a designer and manufacturer of electrical pitch
systems and controls used in wind turbine generators which is reported in the Industrial Automation segment,
and other smaller businesses during 2010 reported mainly in the Process Management and Industrial Automation
segments. Total cash paid for all businesses was approximately $2,843, net of cash acquired of $150. Additionally, the
Company assumed debt of $169. Annualized sales for businesses acquired in 2010 were approximately $1.1 billion.
Identifiable intangible assets of $1,166, primarily customer relationships and intellectual property with a weighted-
average life of approximately 10 years, were recognized along with goodwill of $1,633, of which only a small amount
is tax deductible.
In the fourth quarter 2010, the Company sold the LANDesk business unit, which was acquired as part of Avocent and
was not a strategic fit with Emerson, for $230, resulting in an after-tax gain of $12 ($10 of income taxes). Additionally,
LANDesk incurred operating losses of $19. This business was classified as discontinued operations throughout 2010.
Also in the fourth quarter of 2010, the Company sold its appliance motors and U.S. commercial and industrial motors
businesses (Motors) which had slower growth profiles and were formerly reported in the Tools and Storage segment.
Proceeds from the sale were $622 resulting in an after-tax gain of $155 ($126 of income taxes). The Motors disposition
included working capital of $98, property, plant and equipment of $152, goodwill of $44, and other of $47. The Motors
businesses had total annual sales of $827 and $813 and net earnings (excluding the divestiture gain) of $38 and $9 in
2010 and 2009, respectively. Results of operations for Motors have been reclassified into discontinued operations for
2010 and earlier periods.
The Company acquired one-hundred percent of Roxar ASA during the third quarter of 2009, Trident Powercraft Private
Limited during the second quarter of 2009 and System Plast S.p.A. during the first quarter of 2009. Roxar is a global
supplier of measurement solutions and software for reservoir production optimization, enhanced oil and gas recovery
and flow assurance and is included in the Process Management segment. Trident Power is a manufacturer and supplier
of power generating alternators and other products and is included in the Industrial Automation segment. System Plast
is a manufacturer of engineered modular belts and custom conveyer components for the food processing and pack-
aging industries and is included in the Industrial Automation segment. In addition to Roxar, Trident Power and System
Plast, the Company acquired other smaller businesses during 2009, mainly in the Climate Technologies, Tools and
Storage and Process Management segments. Total cash paid for all businesses was approximately $776, net of cash
acquired of $31. Additionally, the Company assumed debt of $230. Annualized sales for businesses acquired in 2009
were approximately $530. Goodwill of $541 ($34 of which is expected to be deductible for tax purposes) and identifi-
able intangible assets of $365, primarily customer relationships and patents and technology with a weighted-average
life of 12 years, were recognized from these transactions in 2009.
The results of operations of the businesses discussed above have been included in the Company’s consolidated results
of operations since the respective dates of acquisition.
(4) Other Deductions, Net
Other deductions, net are summarized as follows:
2009 2010 2011
Amortization of intangibles (intellectual property and customer relationships) $108 176 261
Rationalization of operations 284 126 81
Other 121 71 57
Gains, net (39) (4) (24)
Total $474 369 375
Other deductions, net increased for 2011 primarily due to higher amortization expense on acquired intangible assets,
partially offset by lower rationalization expense and higher gains. Other is composed of several items that are indi-
vidually immaterial, including 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 and insurance recoveries. Other decreased in
2011 primarily because of lower acquisition-related costs, partially offset by a $19 impairment charge related to the
Industrial Automation wind turbine pitch control business, reflecting a slowdown in investment for alternative energy
in the current economic environment. Other decreased in 2010 primarily because of $45 of lower foreign currency
transaction losses compared with 2009. Gains, net for 2011 include $15 related to the acquisition of full ownership of
a Process Management joint venture in India. Gains, net for 2009 included $25 ($17 after-tax) related to the sale of an
asset for which the Company received $41.