Emerson 2008 Annual Report Download - page 51

[ 44 ] Emerson 2008
The reconciliations of the actuarial present value of accumulated postretirement benet obligations follow:
      2007  2008
Benefit obligation, beginning $516 501
Service cost 6 5
Interest cost 29 29
Actuarial loss (gain) (16) (24)
Benefits paid (37) (39)
Acquisition/divestitures and other 3 (7)
Benefit obligation, ending, recognized in balance sheet $501 465
Approximately $5 of losses netted within the $1 of accumulated credits included in accumulated other comprehensive
income at September 30, 2008, will be amortized into earnings in 2009. The assumed discount rates used in measuring
the obligations as of September 30, 2008, 2007 and 2006, were 6.50 percent, 6.00 percent and 5.75 percent,
respectively. The assumed health care cost trend rate for 2009 was 9.0 percent, declining to 5.0 percent in the year
2017. The assumed health care cost trend rate for 2008 was 9.5 percent, declining to 5.0 percent in the year 2017. A
one-percentage-point increase or decrease in the assumed health care cost trend rate for each year would increase or
decrease the obligation as of September 30, 2008 and the 2008 postretirement plan expense by less than 5 percent.
The Company estimates that future benet payments will be as follows: $42 in 2009, $46 in 2010, $53 in 2011, $53 in
2012, $53 in 2013 and $238 in total over the ve years 2014 through 2018.

Emerson is a party to a number of pending legal proceedings and claims, including those involving general and product
liability and other matters, several of which claim substantial amounts of damages. The Company accrues for such
liabilities when it is probable that future costs (including legal fees and expenses) will be incurred and such costs can be
reasonably estimated. Such accruals are based on developments to date, management’s estimates of the outcomes of
these matters, the Company’s experience in contesting, litigating and settling other similar matters, and any related
insurance coverage.
Although it is not possible to predict the ultimate outcome of the matters discussed above, historically, the Company
has been successful in defending itself against claims and suits that have been brought against it. The Company will
continue to defend itself vigorously in all such matters. While the Company believes a material adverse impact is
unlikely, given the inherent uncertainty of litigation, a remote possibility exists that a future adverse development
could have a material adverse impact on the Company.
The Company enters into indemnication agreements in the ordinary course of business in which the indemnied
party is held harmless and is reimbursed for losses incurred from claims by third parties. In connection with divestitures
of certain assets or businesses, the Company often provides indemnities to the buyer with respect to certain matters
including, for example, environmental liabilities and unidentied tax liabilities related to periods prior to the disposi-
tion. Because of the uncertain nature of the indemnities, the maximum liability cannot be quantied. Liabilities for
obligations are recorded when probable and when they can be reasonably estimated. Historically, the Company has
not made signicant payments for these obligations.
At September 30, 2008, there were no known contingent liabilities (including guarantees, pending litigation, taxes and
other claims) that management believes will be material in relation to the Company’s nancial statements, nor were
there any material commitments outside the normal course of business.

Earnings from continuing operations before income taxes consist of the following:
     2006 2007 2008
United States $1,518 1,550 1,691
Non-U.S. 1,155 1,543 1,900
Earnings from continuing operations before income taxes $2,673 3,093 3,591