Emerson 2012 Annual Report Download - page 41

2012 Annual Report | 39
(3) Acquisitions and Divestitures
The Company acquired one-hundred 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 the Network Power segment. The marine controls business supplies controls
and software solutions for optimal operation of refrigerated sea containers and marine boilers and is included in the
Climate Technologies segment. In addition to Avtron and the marine controls business, the Company acquired two
smaller businesses during 2012 in the Process Management and Network Power segments. These small acquisitions
were complementary to the existing business portfolio and none was individually significant. 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 ($36 of which is expected to be 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 previously reported in the Commercial & Residential
Solutions business segment.
The Company acquired several small businesses during 2011 which were complementary to the existing business
portfolio and reported mainly in the Process Management and Climate Technologies 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 tax deductible) and identifiable intangible
assets of $75, primarily customer relationships and patents and technology with a weighted-average life of approxi-
mately 12 years, were recognized from these transactions.
In the fourth quarter of 2011, the Company sold its heating elements unit, which was previously included in the
Commercial & Residential Solutions segment, for $73, resulting in an after-tax gain of $21 (net of $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, plus the impact of finalizing the 2010 Motors and LANDesk divestitures
(see below), were 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. Avocent products enhance companies’ integrated data center management capabilities. Both of
these businesses are included in the Network Power segment.
The purchase price of Avocent and Chloride was allocated to assets and liabilities as follows:
2010
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, respectively. These pro forma results
include intangible asset amortization and interest cost.