Emerson 2014 Annual Report Download - page 42

2014 Emerson > 38
cash of $376 ($308, after tax provided for in fiscal 2013) was repatriated from this business. In fiscal 2013, the
Company initiated the purchase of $600 of Emerson common stock in anticipation of the sale proceeds and the cash
repatriation. The purchase of shares was completed in the first quarter of 2014. The Company recorded goodwill
impairment charges in both 2013 and 2012, and income tax charges in 2013, related to this business. See Note 6.
In the fourth quarter of 2014, the Company sold its connectivity solutions business for $99 in cash, and recognized
a slight gain. This business reported sales of $63 and net earnings of $3 in 2014. Connectivity solutions offered
industry-leading fiber optic, radio-frequency and microwave-coaxial technologies that safeguard network reliability.
In connection with its longer-term strategy to divest selected slower-growth businesses, management is
considering strategic alternatives for the power transmission solutions business, and in the fourth quarter of
2014 received several nonbinding indications of interest. This business designs and manufactures market-leading
couplings, bearings, conveying components and gearing and drive components, and provides supporting services
and solutions. In 2014, this business contributed sales of $605 and earnings of $87 in Industrial Automation. As of
September 30, 2014, this business had working capital of $155 and net other assets of $366, including net property,
plant and equipment of $122 and goodwill of $223. The Company expects to make a decision and announce plans
for this business within the next three months.
The Company acquired 100 percent of Avtron Loadbank and a marine controls business during the second quarter
of 2012. Avtron is a designer and manufacturer of high-quality load banks and testing systems for power equipment
industries and is included in Network Power. The marine controls business supplies controls and software solutions
for optimal operation of refrigerated sea containers and marine boilers and is included in Climate Technologies.
In addition, the Company acquired two smaller businesses during 2012 in Process Management and Network
Power. Total cash paid for all businesses was approximately $187, net of cash acquired of $5. Annualized sales
for businesses acquired in 2012 were approximately $115. Goodwill of $94 (approximately $36 of which is tax
deductible) and identifiable intangible assets of $82, primarily customer relationships and patents and technology
with a weighted-average life of approximately 9 years, were recognized from these transactions.
In the fourth quarter of 2012, the Company sold its Knaack business unit for $114, resulting in an after-tax loss
of $5 ($3 income tax benefit). Knaack had 2012 sales of $95 and net earnings of $7. Knaack, a leading provider
of premium secure storage solutions for job sites and work vehicles, was reported in Commercial &
Residential Solutions.
The results of operations of the acquired 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:
2012 2013 2014
Amortization of intangibles (intellectual property and customer relationships) $241 220 225
Rationalization of operations 119 78 55
Other 91 65 113
Gains, net (50) (1) —
Total $401 362 393
Other is composed of several items that are individually immaterial, including foreign currency transaction gains
and losses, bad debt expense, equity investment income and losses, litigation and other items. Other increased
in 2014 primarily due to the Company’s $34 share of losses from its equity investment in Artesyn (principally
restructuring costs), the impact of a $13 China research credit in 2013 and several other items. Reduced foreign
currency transaction losses of $20 partially offset the increase. Other decreased in 2013 due to the research credit,
lower foreign currency transaction losses and the comparative impact from a loss on the sale of the Knaack business
in 2012. Gains, net in 2012 includes dumping duties of $43 collected from U.S. Customs.