|
|
 | | | |
- close
- close
- close
- close
| |||||||||
ROCKWELL AUTOMATION 10-Q 2011 Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2011
Commission file number 1-12383
Rockwell Automation, Inc.
(Exact name of registrant as specified in its charter)
Registrant’s telephone number, including area code (414) 382-2000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files).
Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
Yes o No
þ
143,209,513 shares of registrant’s Common Stock, $1.00 par value, were outstanding on June 30,
2011.
ROCKWELL AUTOMATION, INC.
INDEX
Table of Contents
PART I. FINANCIAL INFORMATION
ROCKWELL AUTOMATION, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited) (in millions)
See Notes to Condensed Consolidated Financial Statements.
2
Table of Contents
ROCKWELL AUTOMATION, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited) (in millions, except per share amounts)
See Notes to Condensed Consolidated Financial Statements.
3
Table of Contents
ROCKWELL AUTOMATION, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) (in millions)
See Notes to Condensed Consolidated Financial Statements.
4
Table of Contents
ROCKWELL AUTOMATION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) 1. Basis of Presentation and Accounting Policies
In the opinion of management of Rockwell Automation, Inc. (the Company or Rockwell Automation), the
unaudited Condensed Consolidated Financial Statements contain all adjustments necessary to present
fairly the financial position, results of operations, and cash flows for the periods presented and,
except as otherwise indicated, such adjustments consist only of those of a normal recurring nature.
These statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal
year ended September 30, 2010. The results of operations for the three and nine month periods
ended June 30, 2011 are not necessarily indicative of the results for the full year. All date
references to years and quarters herein refer to our fiscal year and fiscal quarter unless
otherwise stated.
Receivables
Receivables are stated net of allowances for doubtful accounts of $23.8 million at June 30, 2011
and $17.9 million at September 30, 2010. In addition, receivables are stated net of an allowance
for certain customer returns, rebates and incentives of $8.6 million at June 30, 2011 and $16.4
million at September 30, 2010.
Earnings Per Share
The following table reconciles basic and diluted earnings per share (EPS) amounts (in millions,
except per share amounts):
For the three and nine months ended June 30, 2011, share-based compensation awards for 1.1 million
and 1.9 million shares, respectively, were excluded from the diluted EPS calculation because they
were antidilutive. For the three and nine months ended June 30, 2010, share-based compensation
awards for 3.7 million and 5.0 million shares, respectively, were excluded from the diluted EPS
calculation because they were antidilutive.
5
Table of Contents
ROCKWELL AUTOMATION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) 1. Basis of Presentation and Accounting Policies — (Continued)
Recent Accounting Pronouncements
In June 2011, the Financial Accounting Standards Board (FASB) issued new accounting guidance
related to the presentation of comprehensive income that eliminates the current option to report
other comprehensive income and its components in the statement of changes in equity. Under this
guidance, an entity can elect to present items of net income and other comprehensive income in one
continuous statement or two consecutive statements. This guidance is effective for us beginning
October 1, 2012. We do not believe the adoption of this guidance will have a material effect on
our consolidated financial statements and related disclosures.
In May 2011, the FASB issued updated accounting guidance related to fair value measurements and
disclosures that result in common fair value measurements and disclosures between accounting
principles generally accepted in the United States (U.S. GAAP) and International Financial
Reporting Standards. This guidance includes amendments that clarify the application of existing
fair value measurements and disclosures, in addition to other amendments that change principles or
requirements for fair value measurements or disclosures. This guidance is effective for us
beginning January 1, 2012. We do not believe the adoption of this guidance will have a material
effect on our consolidated financial statements and related disclosures.
2. Share-Based Compensation
We recognized $10.1 million and $29.3 million of pre-tax share-based compensation expense during
the three and nine months ended June 30, 2011, respectively. We recognized $9.2 million and $27.1
million of pre-tax share-based compensation expense during the three and nine months ended June 30,
2010, respectively.
Our annual grant of share-based compensation takes place during the first quarter of each fiscal
year. The number of shares granted to all employees and non-employee directors and the weighted
average fair value per share during the periods presented were (in thousands except per share
amounts):
6
Table of Contents
ROCKWELL AUTOMATION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) 3. Acquisitions
In April 2011, we acquired certain assets and assumed certain liabilities of Hiprom (Pty)
Ltd and its affiliates (Hiprom), a process control and automation systems integrator for the mining and mineral processing
industry in South Africa. In May 2011, we purchased a majority stake in the equity of Lektronix
Limited and its affiliate (Lektronix), an independent industrial automation repairs and service provider in Europe
and Asia. The terms of this acquisition included mirroring put and call options for a fixed price
in December 2011 with respect to the remaining minority shares. Accordingly, we recorded the
Lektronix share purchase as an acquisition of all outstanding equity interests with a corresponding
liability of $11.1 million related to the put/call option as of the acquisition date. The
aggregate purchase price of the Hiprom and Lektronix acquisitions was $58.8 million.
We recorded goodwill of $34.0 million attributable to intangible assets that do not meet the
criteria for separate recognition, including an assembled workforce with industry-wide technical
expertise and customer service capabilities. We assigned the full amount of goodwill for Hiprom
and Lektronix to our Control Products & Solutions segment. None of the goodwill recorded is
expected to be deductible for tax purposes.
Purchase price allocations may be subsequently adjusted to reflect final valuation studies. The
fair values and weighted average useful lives that have been preliminarily assigned to the acquired
identifiable intangible assets of these two acquisitions are:
The results of operations of the acquired businesses have been included in our Condensed
Consolidated Statement of Operations since the dates of acquisition. Pro forma financial
information and allocation of the purchase price are not presented as the effects of these
acquisitions are not material to our results of operations or financial position.
4. Inventories
Inventories consist of (in millions):
We report inventories net of the allowance for excess and obsolete inventory of $49.1 million at
June 30, 2011 and $46.3 million at September 30, 2010.
7
Table of Contents
ROCKWELL AUTOMATION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) 5. Goodwill and Other Intangible Assets
Changes in the carrying amount of goodwill for the nine months ended June 30, 2011 are (in millions):
Other intangible assets consist of (in millions):
The Allen-Bradley® trademark has an indefinite life, and therefore is not subject to amortization.
Estimated amortization expense is $35.6 million in 2011, $33.9 million in 2012, $27.3 million
in 2013, $22.1 million in 2014 and $17.4 million in 2015.
We performed the annual evaluation of our goodwill and indefinite life intangible assets for
impairment as required by U.S. GAAP during the second quarter of 2011 and concluded these assets
are not impaired. We did not identify any impairment indicators during the third quarter of 2011
that would require further impairment analysis.
8
Table of Contents
ROCKWELL AUTOMATION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) 6. Other Current Liabilities
Other current liabilities consist of (in millions):
7. Product Warranty Obligations
We record a liability for product warranty obligations at the time of sale to a customer based
upon historical warranty experience. Most of our products are covered under a warranty period that
runs for twelve months from either the date of sale or from installation to an end-user or Original
Equipment Manufacturer (OEM) customer. We also record a liability for specific warranty matters
when they become probable and reasonably estimable. Our product warranty obligations are included
in other current liabilities in the Condensed Consolidated Balance Sheet.
Changes in the product warranty obligations for the nine months ended June 30, 2011 and 2010 are (in millions):
9
Table of Contents
ROCKWELL AUTOMATION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) 8. Derivative Instruments and Fair Value Measurement
We use foreign currency forward exchange contracts to manage certain foreign currency risks. We
enter into these contracts to offset changes in the amount of future cash flows associated with
certain third-party and intercompany transactions denominated in foreign currencies expected to
occur within the next two years (cash flow hedges). Certain of our locations have assets and
liabilities denominated in currencies other than their functional currencies resulting from
intercompany loans and other transactions with third parties denominated in foreign currencies. We
also enter into foreign currency forward exchange contracts that we do not designate as hedging
instruments to offset the transaction gains or losses associated with some of these assets and
liabilities.
We value our forward exchange contracts using a market approach. We use an internally developed
valuation model based on inputs including forward and spot prices for currency and interest rate
curves. We have not changed our valuation techniques during the nine months ended June 30, 2011.
The notional values of our forward exchange contracts outstanding at June 30, 2011 were $869.7
million, of which $533.4 million were designated as cash flow hedges. Contracts with the most
significant notional values relate to transactions denominated in the United States dollar, euro
and Canadian dollar.
We also use foreign currency denominated debt obligations to hedge portions of our net investments
in non-US subsidiaries. The currency effects of the debt obligations are reflected in accumulated
other comprehensive loss within shareholders’ equity where they offset gains and losses recorded on
our net investments globally. At June 30, 2011 we had $14.4 million of foreign currency
denominated debt designated as net investment hedges.
U.S. GAAP defines fair value as the price that would be received for an asset or paid to transfer a
liability (exit price) in an orderly transaction between market participants in the principal or
most advantageous market for the asset or liability. U.S. GAAP also classifies the inputs used to
measure fair value into the following hierarchy:
Assets and liabilities measured at fair value on a recurring basis and their location in our
Condensed Consolidated Balance Sheet were (in millions):
10
Table of Contents
ROCKWELL AUTOMATION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) 8. Derivative Instruments and Fair Value Measurement — (Continued)
The pre-tax amount of gains (losses) recorded in other comprehensive income related to hedges that
would have been recorded in the Condensed Consolidated Statement of Operations had they not been so
designated as cash flow hedges was (in millions):
Approximately $3.9 million ($2.4 million net of tax) of net unrealized gains on cash flow hedges as
of June 30, 2011 will be reclassified into earnings during the next 12 months. We expect that
these net unrealized gains will be offset when the hedged items are recognized in earnings.
The pre-tax amount of gains (losses) reclassified from accumulated other comprehensive loss into
the Condensed Consolidated Statement of Operations related to derivative forward exchange contracts
designated as cash flow hedges, which offset the related losses and gains on the hedged items
during the periods presented was:
The amount recognized in earnings as a result of ineffective hedges was not significant.
The pre-tax amount of gains (losses) from forward exchange contracts not designated as hedging
instruments recognized in the Condensed Consolidated Statement of Operations during the periods
presented was:
We also hold financial instruments consisting of cash, accounts receivable, accounts payable and
long-term debt. The carrying value of our cash, accounts receivable and accounts payable as
reported in our Condensed Consolidated Balance Sheet approximates fair value. We base the fair
value of long-term debt upon quoted market prices for the same or similar issues. The following is
a summary of the carrying value and fair value of our long-term debt (in millions):
11
Table of Contents
ROCKWELL AUTOMATION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) 9. Retirement Benefits
The components of net periodic benefit cost in income from continuing operations are (in millions):
10. Comprehensive Income
Comprehensive income consists of (in millions):
12
Table of Contents
ROCKWELL AUTOMATION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) 11. Commitments and Contingent Liabilities
Various lawsuits, claims and proceedings have been or may be instituted or asserted against us
relating to the conduct of our business, including those pertaining to product liability,
environmental, safety and health, intellectual property, employment and contract matters. Although
the outcome of litigation cannot be predicted with certainty and some lawsuits, claims or
proceedings may be disposed of unfavorably to us, we believe the disposition of matters that are
pending or have been asserted will not have a material adverse effect on our business or financial
condition.
We (including our subsidiaries) have been named as a defendant in lawsuits alleging personal injury
as a result of exposure to asbestos that was used in certain components of our products many years
ago. Currently there are a few thousand claimants in lawsuits that name us as defendants, together
with hundreds of other companies. In some cases, the claims involve products from divested
businesses, and we are indemnified for most of the costs. However, we have agreed to defend and
indemnify asbestos claims associated with products manufactured or sold by our former Dodge
mechanical and Reliance Electric motors and motor repair services businesses prior to their
divestiture by us, which occurred on January 31, 2007. We are also responsible for half of the
costs and liabilities associated with asbestos cases against the former Rockwell International
Corporation’s (RIC’s) divested measurement and flow control business. But in all cases, for those
claimants who do show that they worked with our products or products of divested businesses for
which we are responsible, we nevertheless believe we have meritorious defenses, in substantial part
due to the integrity of the products, the encapsulated nature of any asbestos-containing
components, and the lack of any impairing medical condition on the part of many claimants. We
defend those cases vigorously. Historically, we have been dismissed from the vast majority of
these claims with no payment to claimants.
We have maintained insurance coverage that we believe covers indemnity and defense costs, over and
above self-insured retentions, for claims arising from our former Allen-Bradley subsidiary.
Following litigation against Nationwide Indemnity Company (Nationwide) and Kemper Insurance
(Kemper), the insurance carriers that provided liability insurance coverage to Allen-Bradley, we
entered into separate agreements on April 1, 2008 with both insurance carriers to further resolve
responsibility for ongoing and future coverage of Allen-Bradley asbestos claims. In exchange for a
lump sum payment, Kemper bought out its remaining liability and has been released from further
insurance obligations to Allen-Bradley. Nationwide entered into a cost share agreement with us to
pay the substantial majority of future defense and indemnity costs for Allen-Bradley asbestos
claims. We believe that this arrangement with Nationwide will continue to provide coverage for
Allen-Bradley asbestos claims throughout the remaining life of the asbestos liability.
The uncertainties of asbestos claim litigation make it difficult to predict accurately the ultimate
outcome of asbestos claims. That uncertainty is increased by the possibility of adverse rulings or
new legislation affecting asbestos claim litigation or the settlement process. Subject to these
uncertainties and based on our experience defending asbestos claims, we do not believe these
lawsuits will have a material adverse effect on our financial condition.
We have, from time to time, divested certain of our businesses. In connection with these
divestitures, certain lawsuits, claims and proceedings may be instituted or asserted against us
related to the period that we owned the businesses, either because we agreed to retain certain
liabilities related to these periods or because such liabilities fall upon us by operation of law.
In some instances, the divested business has assumed the liabilities; however, it is possible that
we might be responsible to satisfy those liabilities if the divested business is unable to do so.
In connection with the spin-offs of our former automotive component systems business, semiconductor
systems business and Rockwell Collins avionics and communications business, the spun-off companies
have agreed to indemnify us for substantially all contingent liabilities related to the respective
businesses, including environmental and intellectual property matters.
In connection with the sale of our Dodge mechanical and Reliance Electric motors and motor repair
services businesses, we agreed to indemnify the purchaser, Baldor Electric Company, for costs and
damages related to certain legal, legacy environmental and asbestos matters of these businesses,
arising before January 31, 2007, for which the maximum exposure would be capped at the amount
received for the sale. Federal Pacific Electric, a non-operating entity that had been retained
following the sale of our Dodge mechanical and Reliance Electric motors and motor repair services
businesses, dissolved pursuant to Delaware law on March 31, 2011.
13
Table of Contents
ROCKWELL AUTOMATION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
11. Commitments and Contingent Liabilities — (Continued)
In many countries we provide a limited intellectual property indemnity as part of our terms and
conditions of sale. We also at times provide limited intellectual property indemnities in other
contracts with third parties, such as contracts concerning the development and manufacture of our
products, the divestiture of businesses and the licensing of intellectual property. Due to the
number of agreements containing such provisions, we are unable to estimate the maximum potential
future payments.
12. Income Taxes
At the end of each interim period, we estimate a base effective tax rate that we expect for the
full fiscal year based on our most recent forecast of pre-tax income, permanent book and tax
differences and global tax planning strategies. We use this base rate to provide for income taxes
on a year-to-date basis, excluding the effect of significant unusual or extraordinary items and
items that are reported net of their related tax effects. We record the tax effect of significant
unusual or extraordinary items and items that are reported net of their tax effects in the period
in which they occur.
The effective tax rate for the nine months ended June 30, 2011 was 19.0 percent. The effective
rate was lower than the U.S. statutory rate of 35 percent because we benefited from lower non-U.S.
tax rates, the utilization of foreign tax credits and net discrete tax benefits of $21.0 million
related to the favorable resolution of worldwide tax matters and the retroactive extension of the
U.S. federal research tax credit.
The amount of unrecognized tax benefits was $75.2 million ($35.9 million net of $39.3 million of
offsetting tax benefits) at June 30, 2011 and $66.3 million ($15.2 million net of $51.1 million of
offsetting tax benefits) at September 30, 2010. The amount of unrecognized tax benefits that would
reduce our effective tax rate if recognized was $66.7 million ($30.4 million net of $36.3 million
of offsetting tax benefits) at June 30, 2011. Offsetting tax benefits primarily consist of tax
receivables and deposits that are recorded in other assets.
There was no material change in the amount of unrecognized tax benefits in the first nine months of
2011. We believe it is reasonably possible that the amount of unrecognized tax benefits could be
reduced by up to $4.9 million and the amount of offsetting tax benefits could be increased by up to
$10.5 million during the next 12 months as a result of the resolution of worldwide tax matters and
the lapses of statutes of limitations.
We recognize interest and penalties related to tax matters in tax expense. Accrued interest and
penalties were $16.5 million and $1.2 million at June 30, 2011 and $24.9 million and $1.7 million
at September 30, 2010, respectively.
We conduct business globally and are routinely audited by the various tax jurisdictions in which we
operate. We are no longer subject to U.S. federal income tax examinations for years before 2009 and
are no longer subject to state, local and foreign income tax examinations for years before 2003.
14
Table of Contents
ROCKWELL AUTOMATION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) 13. Segment Information
The following tables reflect the sales and operating results of our reportable segments (in millions):
Among other considerations, we evaluate performance and allocate resources based upon segment
operating earnings before income taxes, interest expense, costs related to corporate offices,
certain nonrecurring corporate initiatives, gains and losses from the disposition of businesses and
incremental acquisition related expenses resulting from purchase accounting adjustments such as
intangible asset amortization, depreciation, inventory and purchased research and development
charges. Depending on the product, intersegment sales that are within a single legal entity are
recorded either at cost or cost plus a mark-up, which does not necessarily represent a market
price. Sales between legal entities are at an appropriate transfer price. We allocate costs
related to shared segment operating activities to the segments using a methodology consistent with
the expected benefit.
In the United States and Canada, we sell our products primarily through independent distributors.
We sell large systems and service offerings principally through a direct sales force, though
opportunities are sometimes identified through distributors. Outside the United States and Canada,
we sell products through a combination of direct sales and sales through distributors. Sales to our
largest distributor in the three and nine months ended June 30, 2011 and 2010, were approximately
10 percent of our total sales.
14. Discontinued Operations
In the three and nine months ended June 30, 2011, we recorded a net $0.7 million benefit from the
settlement of an indemnification of Baldor Electric Company and certain tax matters related to
divested businesses, partially offset by a change in estimate for an environmental matter
pertaining to a discontinued business.
In the nine months ended June 30, 2010, we recorded a $21.3 million tax benefit as a result of the
resolution of a domestic tax matter relating to the January 2007 sale of our Dodge mechanical and
Reliance Electric motors and motor repair services businesses. We also recorded a net $2.6 million
after-tax benefit relating to changes in estimate for environmental and legal matters of our
divested businesses.
15
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareowners of
Rockwell Automation, Inc. Milwaukee, Wisconsin:
We have reviewed the accompanying condensed consolidated balance sheet of Rockwell Automation, Inc.
and subsidiaries (the “Company”) as of June 30, 2011, and the related condensed consolidated
statements of operations for the three-month and nine-month periods ended June 30, 2011 and 2010,
and cash flows for the nine-month periods ended June 30, 2011 and 2010. These condensed
consolidated interim financial statements are the responsibility of the Company’s management.
We conducted our reviews in accordance with the standards of the Public Company Accounting
Oversight Board (United States). A review of interim financial information consists principally of
applying analytical procedures and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in accordance with
the standards of the Public Company Accounting Oversight Board (United States), the objective of
which is the expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should be made to such
condensed consolidated interim financial statements for them to be in conformity with accounting
principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheet of Rockwell Automation, Inc. and
subsidiaries as of September 30, 2010, and the related consolidated statements of operations, cash
flows, shareowners’ equity and comprehensive income (loss) for the year then ended (not presented
herein); and in our report dated November 18, 2010, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of September 30, 2010 is fairly stated, in all material
respects, in relation to the consolidated balance sheet from which it has been derived.
/s/ DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
August 4, 2011
16
Table of Contents
ROCKWELL AUTOMATION, INC.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Results of Operations
Forward-Looking Statement
This Quarterly Report contains statements (including certain projections and business trends)
that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of
1995. Words such as “believe”, “estimate”, “project”, “plan”, “expect”, “anticipate”, “will”,
“intend” and other similar expressions may identify forward-looking statements. Actual results may
differ materially from those projected as a result of certain risks and uncertainties, many of
which are beyond our control, including but not limited to:
These forward-looking statements reflect our beliefs as of the date of filing this report. We
undertake no obligation to update or revise any forward-looking statement, whether as a result of
new information, future events or otherwise. See Item 1A, Risk Factors of our Annual Report on Form
10-K for the fiscal year ended September 30, 2010 for more information.
Non-GAAP Measures
The following discussion includes organic sales and free cash flow, which are non-GAAP
measures. See Supplemental Sales Information for a reconciliation of reported sales to organic
sales and a discussion of why we believe this non-GAAP measure is useful to investors. See
Financial Condition for a reconciliation of cash flows from operating activities to free cash flow
and a discussion of why we believe this non-GAAP measure is useful to investors.
17
Table of Contents
ROCKWELL AUTOMATION, INC.
Overview
We are a leading global provider of industrial automation power, control and information
solutions that help manufacturers achieve a competitive advantage for their businesses. Overall
demand for our products and services is driven by:
Long-term Strategy
Our strategic framework incorporates our vision of being the most valued global provider of
innovative industrial automation and information products, services and solutions, and our growth
and performance strategy, which seeks to:
By implementing the strategy above, we seek to achieve our long-term financial goals that
include revenue growth of 6-8 percent, double-digit EPS growth and 60 percent of our revenue
outside the U.S.
18
Table of Contents
ROCKWELL AUTOMATION, INC.
U.S. Industrial Economic Trends
In the third quarter of 2011, sales to U.S. customers accounted for 48 percent of our total
sales. The various indicators we use to gauge the direction and momentum of our served U.S.
markets include:
The table below depicts the trends in these indicators since the quarter ended September 2009.
Industrial production has continued to increase, but at a moderating rate. Consistent with that,
capacity utilization and the PMI were lower than the most recent quarter, but continued to indicate
expansion of manufacturing activity.
Note: Economic indicators are subject to revisions by the issuing organizations.
19
Table of Contents
ROCKWELL AUTOMATION, INC.
Non-U.S. Regional Trends
In the third quarter of 2011, sales to non-U.S. customers accounted for 52 percent of our
total sales. These customers include both indigenous companies and multinational companies with
expanding global presence. In addition to the global factors previously mentioned, international
demand, particularly in emerging markets, has historically been driven by the strength of the
industrial economy in each region, investments in infrastructure and expanding consumer markets.
We use changes in Gross Domestic Product (GDP) as one indicator of the growth opportunities in
each region where we do business. Positive macroeconomic trends and forecasts make us optimistic
that the global recovery will continue throughout fiscal 2011. Growth in emerging markets
continues to exceed global GDP growth rates.
Revenue by Geographic Region
The table below presents our sales for the quarter ended June 30, 2011 by geographic region
and the change in sales from the quarter ended June 30, 2010 (in millions, except percentages):
The table below presents our sales for the nine months ended June 30, 2011 by geographic
region and the change in sales from the nine months ended June 30, 2010 (in millions, except
percentages):
20
Table of Contents
ROCKWELL AUTOMATION, INC.
Summary of Results of Operations
Sales in the third quarter of 2011 increased 20 percent compared to the third quarter of 2010.
Organic sales increased 14 percent, as the effects of currency translation contributed 6
percentage points to the total increase during the quarter. Sales in our solutions and services
businesses increased 16 percent year over year, and our backlog in these businesses continued to
increase. Product sales grew 21 percent year over year reflecting continued improvement in
customers’ spending and increased OEM demand. Sales related to our process initiative grew at a
rate above the company average.
Total sales in emerging markets increased 29 percent as compared to the third quarter of 2010.
Organic sales in emerging markets increased 19 percent year over year as the effects of currency
translation and acquisitions contributed 9 and 1 percentage points, respectively, to the total
increase. Emerging markets represented 22 percent of total company sales in the third quarter of
2011. Latin America was our best performing region as organic sales increased 21 percent as
compared to the same period in 2010. Organic sales to customers in mature markets were also strong
globally. Our Europe, Middle East and Africa (EMEA) region achieved 19 percent organic sales
growth year over year.
In our Architecture & Software segment, sales increased 21 percent in the third quarter of
2011 as compared to the third quarter of 2010. In our Control Products & Solutions segment, sales
in the third quarter of 2011 increased 18 percent from the third quarter of 2010.
The improvement in operating margin was primarily due to volume leverage, partially offset by
increased spending to support growth. Margin performance was particularly strong in the
Architecture & Software segment.
Our effective tax rate during the quarter was 19.2 percent, and declined 4 percentage points
year over year, primarily due to net discrete tax benefits from the favorable resolution of
worldwide tax matters.
21
Table of Contents
ROCKWELL AUTOMATION, INC.
Summary of Results of Operations — (Continued)
The following tables reflect the sales and operating results for the three and nine months
ended June 30, 2011 and 2010 (in millions, except per share amounts):
22
Table of Contents
ROCKWELL AUTOMATION, INC.
2011 Third Quarter Compared to 2010 Third Quarter
Sales
Our sales increased $248.1 million, or 20 percent, to $1,516.2 in the third quarter of 2011
from $1,268.1 million in the third quarter of 2010. Organic sales increased 14 percent,
substantially all of which was related to increases in volume due to current macroeconomic trends
in most regions, as the impact of pricing on revenues was immaterial.
We had strong growth in all regions globally. Organic sales increased in Latin America by 21
percent as compared to the third quarter of 2010. Organic sales increased 19 percent year over
year in EMEA. Asia-Pacific had year-over-year organic sales growth of 14 percent, led by strength
in India which had organic sales growth of 27 percent1
during the quarter. Organic sales in the United States and Canada increased 11
percent and 8 percent, respectively, compared to the third quarter of 2010.
During the third quarter of 2011, sales in all of our key end markets improved compared to the
same quarter in the prior year. The largest sales increases were to customers in the
transportation and mining industries, while the smallest increases were to customers in the
consumer industries.
Income from Continuing Operations before Income Taxes
Income from continuing operations before income taxes increased 42 percent to $221.2 in the
third quarter of 2011 from $155.5 million in the third quarter of 2010. Increased volume caused
the significant year-over-year income improvement, partially offset by increased spending to
support growth.
General corporate expenses were $22.3 million in the third quarter of 2011 down from $23.1
million in the third quarter of 2010. Selling, general and administrative expense as a percentage
of sales decreased 1.9 points to 24.4 percent, as volume increases outpaced spending increases.
23
Table of Contents
ROCKWELL AUTOMATION, INC.
2011 Third Quarter Compared to 2010 Third Quarter — (Continued)
Income Taxes
The effective tax rate for the third quarter of 2011 was 19.2 percent compared to 23.2 percent
in the third quarter of 2010. During the third quarter of 2011, we recognized net discrete tax
benefits of $12.1 million related to the favorable resolution of worldwide tax matters. During the
third quarter of 2010, we recognized net discrete tax expenses of $1.0 million.
Architecture & Software
Sales
Architecture & Software sales increased 21 percent to $672.9 million in the third quarter of
2011 compared to $553.9 million in the third quarter of 2010. Organic sales increased 15 percent
and currency translation contributed 6 percentage points to the total increase. Substantially all
of the organic sales increase resulted from increased volume due to current macroeconomic trends in
most regions and industries. Logix organic sales increased 26 percent in the third quarter of 2011
compared to the third quarter of 20102. Year-over-year sales increases in
Canada, EMEA, Asia-Pacific and Latin America were greater than the segment average rate of
increase, while year-over-year sales increases in the United States were below the
segment average rate of increase. Pricing had an immaterial impact on sales in the period.
Operating Margin
Architecture & Software segment operating earnings were $175.9 million in the third quarter of
2011, up 40 percent from $125.4 million in the same quarter of 2010. Operating margin increased
3.5 points to 26.1 percent in the third quarter of 2011 as compared to the third quarter of 2010.
The increase was predominantly due to volume increases, partially offset by increased spending to
support growth. Approximately half of the increased spending to support growth described earlier
applied to the Architecture & Software segment.
24
Table of Contents
ROCKWELL AUTOMATION, INC.
2011 Third Quarter Compared to 2010 Third Quarter — (Continued)
Control Products & Solutions
Sales
Control Products & Solutions sales were $843.3 million in the third quarter of 2011, up 18
percent from $714.2 million in the third quarter of 2010. Organic sales increased 12 percent as
the effects of currency translation and acquisitions contributed 5 and 1 percentage points,
respectively, to the total increase. The segment’s product businesses grew at rates similar to our
Architecture & Software segment, while our solutions and services businesses grew by 16 percent
year over year. EMEA, Asia-Pacific and Latin America reported above average year-over-year overall
segment growth. Year-over-year sales increases in the United States and Canada were below the
segment average rate of increase. Pricing had an immaterial impact on revenue during the period.
Operating Margin
Control Products & Solutions segment operating earnings were $87.4 million in the third
quarter of 2011, up 20 percent from $72.6 million in the same quarter of 2010. Operating margin
increased by 0.2 points to 10.4 percent in the third quarter of 2011 as compared to 10.2 percent in
the third quarter of 2010. The increase was predominantly due to volume increases, partially
offset by increased spending to support growth and somewhat lower margins in the solutions and
services businesses within this segment. The effect of currency, acquisitions and material and
fuel cost inflation had a more negative impact on this segment. Approximately half of the
increased spending to support growth described earlier applied to the Control Products & Solutions
segment.
25
Table of Contents
ROCKWELL AUTOMATION, INC.
Nine Months Ended June 30, 2011 Compared to Nine Months Ended June 30, 2010
Sales
Our sales increased $846.0 million, or 24 percent, to $4,346.1 million in the first nine
months of 2011 from $3,500.1 million in the first nine months of 2010. Broad-based revenue growth
included strong growth in every region and in both our products and solutions and services
businesses. Product sales grew 25 percent year over year, while sales in our solutions and
services businesses increased 22 percent year over year. Pricing contributed less than 1
percentage point to growth during the period.
Organic sales in the Asia-Pacific region increased 20 percent year over year, led by strength
in the emerging markets of Asia-Pacific, including China and India with 28 and 26 percent growth,
respectively3. Year-over-year organic sales increased in Latin America by 33 percent.
Organic sales to customers in mature markets were also strong globally. Year-over-year organic
sales increased 26 percent in EMEA, 19 percent in the United States and 16 percent in Canada.
In the nine months ended June 30, 2011, our largest year-over-year end market sales increases
were to customers in the transportation industry.
Income from Continuing Operations before Income Taxes
Income from continuing operations before income taxes increased 58 percent from $386.4 million
in the first nine months of 2010 to $611.5 million in the first nine months of 2011. Increased
volume caused the significant year-over-year income improvement, partially offset by cost increases
related to increased spending to support growth, increased employee compensation, and material and
fuel cost inflation.
The first quarter of 2010 was the last quarter to benefit from the temporary employee pay cuts
implemented in fiscal year 2009 during the economic downturn. The first quarter of 2010 was also
the last quarter prior to a wage and salary increase. The year-over-year effect of this
compensation increase was approximately $25 million.
Material and fuel costs had a negative effect of less than one point of total segment
operating margin.
General corporate expenses were $58.5 million in the first nine months of 2011 compared to
$66.2 million in the first nine months of 2010. The decline was primarily due to a sale of an
investment which resulted in a $3.8 million gain in 2011. Selling, general and administrative
expense as a percentage of sales decreased by 3.0 points to 24.7 percent, as volume increases
outpaced spending increases.
26
Table of Contents
ROCKWELL AUTOMATION, INC.
Nine Months Ended June 30, 2011 Compared to Nine Months Ended June 30, 2010 — (Continued)
Income Taxes
The effective tax rate for the first nine months of 2011 was 19.0 percent compared to 20.0
percent in the first nine months of 2010. During the first nine months of 2011, we recognized net
discrete tax benefits of $21.0 million related to the favorable resolution of worldwide tax matters
and the retroactive extension of the U.S. federal research tax credit. During the first nine
months of 2010, we recognized discrete tax benefits of $14.6 million related to the favorable
resolution of tax matters, partially offset by discrete tax expenses of $6.7 million primarily
related to the impact of a change in Mexican tax law and interest related to unrecognized tax
benefits.
Discontinued Operations
Income from discontinued operations was $0.7 million in the first nine months of 2011,
compared to $23.9 million in the first nine months of 2010. Income from discontinued operations in
the prior year included a $21.3 million tax benefit resulting from the resolution of a domestic tax
matter relating to the January 2007 sale of our Dodge mechanical and Reliance Electric motors and
motor repair services businesses.
Architecture & Software
Sales
Architecture & Software sales increased 24 percent to $1,911.0 million in the first nine
months of 2011 compared to $1,539.1 million in the first nine months of 2010. Organic sales
increased 22 percent, as the effects of currency translation contributed 2 percentage points to the
total increase. Substantially all of the organic sales increase resulted from increased volume due
to positive market conditions in most regions and industries, as product pricing remained
relatively stable. Canada, Asia-Pacific, EMEA and Latin America year-over-year sales grew above
the segment average rate of increase, while year-over-year sales increases in the United States
were slightly below the segment average rate of increase. Logix sales increased 30 percent in the
first nine months of 2011 compared to the first nine months of 2010.
Operating Margin
Architecture & Software segment operating earnings were $481.2 million in the first nine
months of 2011, up 39 percent from $347.0 million in the first nine months of 2010. Operating
margin increased 2.7 points to 25.2 percent in the first nine months of 2011 as compared to the
first nine months of 2010. The increase was predominantly due to volume increases, partially
offset by cost increases related to increased spending to support growth, increased employee costs,
and material and fuel cost inflation. Approximately half of the increased spending to support
growth and increased employee costs described earlier related to
the Architecture & Software segment.
27
Table of Contents
ROCKWELL AUTOMATION, INC.
Nine Months Ended June 30, 2011 Compared to Nine Months Ended June 30, 2010 — (Continued)
Control Products & Solutions
Sales
Control Products & Solutions sales were $2,435.1 million in the first nine months of 2011, up
24 percent from $1,961.0 million in the first nine months of 2010. Organic sales increased 21
percent, as currency translation contributed 3 percentage points to the total increase. The
segment’s sales increase resulted from growth in both products and solutions and services
businesses, which grew at rates similar to the segment average. Asia-Pacific and Latin America
reported year-over-year growth above the segment average. Year-over-year sales increases in the
United States and Canada were less than the segment average growth rate. Year-over-year sales in
EMEA were near the segment average rate of increase. Pricing had an immaterial impact on revenue
during the period.
Operating Margin
Control Products & Solutions segment operating earnings were $248.3 million in the first nine
months of 2011, up 50 percent from $165.1 million in the same period of 2010. Operating margin
increased 1.8 points to 10.2 percent in the first nine months of 2011 as compared to 8.4 percent
the first nine months of 2010. The increase was predominantly due to volume increases, partially
offset by increased spending to support growth and increased employee compensation. The effects of
currency, acquisitions and material and fuel cost increases had a more negative impact on this
segment. Approximately half of the increased spending to support growth and employee costs
described earlier related to the Control & Solutions segment.
28
Table of Contents
ROCKWELL AUTOMATION, INC.
Financial Condition
The following is a summary of our cash flows from operating, investing and financing
activities, as reflected in the Condensed Consolidated Statement of Cash Flows (in millions):
Our definition of free cash flow, which is a non-GAAP financial measure, takes into
consideration capital investments required to maintain the operations of our businesses and execute
our strategy. Cash provided by continuing operating activities adds back non-cash depreciation
expense to earnings and thus does not reflect a charge for necessary capital expenditures. Our
definition of free cash flow excludes the operating cash flows and capital expenditures related to
our discontinued operations. Operating, investing and financing cash flows of our discontinued
operations are presented separately in our statement of cash flows. Our accounting for share-based
compensation requires us to report the related excess income tax benefit as a financing cash flow
rather than as an operating cash flow. We have added this benefit back to our calculation of free
cash flow in order to generally classify cash flows arising from income taxes as operating cash
flows. In our opinion, free cash flow provides useful information to investors regarding our
ability to generate cash from business operations that is available for acquisitions and other
investments, service of debt principal, dividends and share repurchases. We use free cash flow as
one measure to monitor and evaluate performance. Our definition of free cash flow may be different
from definitions used by other companies.
Free cash flow was a source of $424.3 million for the nine months ended June 30, 2011,
compared to a source of $391.5 million for the nine months ended June 30, 2010. This increase in
free cash flow is primarily due to improvements in current year earnings and lower income tax
payments, partially offset by higher performance-based compensation payments in the first quarter
of 2011 as compared to the first quarter of 2010. The 2011 payments are for performance-based
compensation earned by our global employee population related to 2010 results.
We repurchased approximately 2.7 million shares of our common stock in the first nine months
of 2011. The total cost of these shares was $221.5 million. We paid $1.2 million in the first
quarter of 2011 for unsettled share purchases outstanding at September 30, 2010. We repurchased
approximately 1.7 million shares of our common stock in the first nine months of 2010. The total
cost of these shares was $93.1 million, of which $2.7 million was recorded in accounts payable at
June 30, 2010, related to 55,000 shares that did not settle until July 2010. Our decision to
repurchase additional stock in the remainder of 2011 will depend on business conditions, free cash
flow generation, other cash requirements and stock price. At June 30, 2011, we had approximately
$279.6 million remaining for stock repurchases under our existing board authorization. See Part
II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds, for additional information
regarding share repurchases.
We expect future uses of cash to include working capital requirements, capital expenditures,
additional contributions to our pension plans, acquisitions of businesses, dividends to
shareowners, repurchases of common stock and repayments of debt. We expect capital expenditures in
2011 to be about $120 million. We expect to fund these future uses of cash with a combination of
existing cash balances, cash generated by operating activities, commercial paper borrowings, or a
new issuance of debt or other securities.
29
Table of Contents
ROCKWELL AUTOMATION, INC.
Financial Condition — (Continued)
In addition to cash generated by operating activities, we have access to existing financing
sources, including the public debt markets and unsecured credit facilities with various banks.
Commercial paper is our principal source of short-term financing. At June 30, 2011 and September
30, 2010, we had no commercial paper borrowings outstanding. Our debt-to-total-capital ratio was
32.3 percent at June 30, 2011 and 38.3 percent at September 30, 2010.
On March 14, 2011, we replaced our former three-year $267.5 million unsecured revolving credit
facility expiring in March 2012 and our former 364-day $300.0 million unsecured revolving credit
facility expiring in March 2011 with a new four-year $750.0 million unsecured revolving credit
facility. We did not incur early termination penalties in connection with the termination of the
former credit facilities. We have not drawn down under any of these credit facilities at June 30,
2011 or September 30, 2010. Borrowings under these credit facilities bear interest based on
short-term money market rates in effect during the period the borrowings are outstanding. The
terms of these credit facilities contain covenants under which we would be in default if our
debt-to-total-capital ratio was to exceed 60 percent. We were in compliance with all covenants
under these credit facilities at June 30, 2011 and September 30, 2010. Separate short-term
unsecured credit facilities of approximately $139.2 million at June 30, 2011 were available to
non-U.S. subsidiaries.
The following is a summary of our credit ratings as of June 30, 2011:
Among other uses, we can draw on our credit facility as a standby liquidity facility to repay
our outstanding commercial paper as it matures. This access to funds to repay maturing commercial
paper is an important factor in maintaining the commercial paper ratings set forth in the table
above. Under our current policy with respect to these ratings, we expect to limit our other
borrowings under our credit facility, if any, to amounts that would leave enough credit available
under the facility so that we could borrow, if needed, to repay all of our then outstanding
commercial paper as it matures.
Our ability to access the commercial paper market and the related costs of these borrowings
are affected by the strength of our credit rating and market conditions. We have not experienced
any difficulty in accessing the commercial paper market to date. If our access to the commercial
paper market is adversely affected due to a change in market conditions or otherwise, we would
expect to rely on a combination of available cash and our unsecured committed credit facility to
provide short-term funding. In such event, the cost of borrowings under our unsecured committed
credit facility could be higher than the cost of commercial paper borrowings.
We regularly monitor the third-party depository institutions that hold our cash and cash
equivalents. Our emphasis is primarily on safety and liquidity of principal and secondarily on
maximizing yield on those funds. We diversify our cash and cash equivalents among counterparties
to minimize exposure to any one of these entities.
We enter into contracts to offset changes in the amount of future cash flows associated with
certain third-party sales and intercompany transactions denominated in foreign currencies
forecasted to occur within the next two years and to offset transaction gains or losses associated
with some of our assets and liabilities that are denominated in currencies other than their
functional currencies resulting from intercompany loans and other transactions with third parties
denominated in foreign currencies. Our foreign currency forward exchange contracts are denominated
in currencies of major industrial countries. We diversify our foreign currency forward exchange
contracts among counterparties to minimize exposure to any one of these entities.
Information with respect to our contractual cash obligations is contained in Item 7,
Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our
Annual Report on Form 10-K for the fiscal year ended September 30, 2010. We believe that at June
30, 2011, there has been no material change to this information.
30
Table of Contents
ROCKWELL AUTOMATION, INC.
Environmental
Information with respect to the effect on us and our manufacturing operations of compliance
with environmental protection requirements and resolution of environmental claims is contained in
Note 17 of the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary
Data, of our Annual Report on Form 10-K for the fiscal year ended September 30, 2010. We believe
that at June 30, 2011, there has been no material change to this information.
Supplemental Sales Information
We translate sales of subsidiaries operating outside of the United States using exchange rates
effective during the respective period. Therefore, changes in currency exchange rates affect our
reported sales. Sales by businesses we acquired also affect our reported sales. We believe that
organic sales, defined as sales excluding the effects of changes in currency exchange rates and
acquisitions, which is a non-GAAP financial measure, provides useful information to investors
because it reflects regional performance from the activities of our businesses without the effect
of changes in currency exchange rates and acquisitions. We use organic sales as one measure to
monitor and evaluate our regional performance. We determine the effect of changes in currency
exchange rates by translating the respective period’s sales using the same currency exchange rates
that were in effect during the prior year. We determine the effect of acquisitions by excluding
sales in the current period for which there are no sales in the comparable prior period. Organic
sales growth is calculated by comparing organic sales to reported sales in the prior year. We
attribute sales to the geographic regions based on the country of destination.
The following is a reconciliation of our reported sales to organic sales (in millions):
31
Table of Contents
ROCKWELL AUTOMATION, INC.
Supplemental Sales Information — (Continued)
The following is a reconciliation of our reported sales by operating segment to organic sales
(in millions):
Critical Accounting Policies and Estimates
We have prepared the Condensed Consolidated Financial Statements in accordance with accounting
principles generally accepted in the United States, which require us to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the Condensed
Consolidated Financial Statements and revenues and expenses during the periods reported. Actual
results could differ from those estimates. Information with respect to our critical accounting
policies that we believe could have the most significant effect on our reported results or require
subjective or complex judgments by management is contained in Item 7, Management’s Discussion and
Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for
the fiscal year ended September 30, 2010. We believe that at June 30, 2011, there has been no
material change to this information.
Recent Accounting Pronouncements
See Note 1 in the Condensed Consolidated Financial Statements regarding recent accounting
pronouncements.
32
Table of Contents
ROCKWELL AUTOMATION, INC.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Information with respect to our exposure to interest rate risk and foreign currency risk
is contained in Item 7A, Quantitative and Qualitative Disclosures About Market Risk, of
our Annual Report on Form 10-K for the fiscal year ended September 30, 2010. We believe
that at June 30, 2011, there has been no material change to this information.
Item 4. Controls and Procedures
Disclosure Controls and Procedures: We, with the participation of our Chief Executive
Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended (Exchange Act)) as of the end of the
fiscal quarter covered by this report. Based on that evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that, as of the end of the fiscal
quarter covered by this report, our disclosure controls and procedures were effective.
Internal Control Over Financial Reporting: There has not been any change in our internal
control over financial reporting (as such term is defined in Exchange Act Rule
13a-15(f)) during the fiscal quarter to which this report relates that has materially
affected, or is reasonably likely to materially affect, our internal control over
financial reporting.
As previously disclosed, we are in the process of developing and implementing common
global process standards and an enterprise-wide information technology system.
Additional implementations will occur at most locations of our company over a multi-year
period, with additional phases scheduled throughout fiscal 2011-2014.
33
Table of Contents
ROCKWELL AUTOMATION, INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Information with respect to our legal proceedings is contained in Item 3, Legal
Proceedings, of our Annual Report on Form 10-K for the fiscal year ended September 30,
2010, as updated by the information contained in Item 1, Legal Proceedings, of our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2011. We believe that at
June 30, 2011, there has been no material change to this information, except that the
following replaces the second paragraph under the section entitled “McGregor, Texas
NWIRP Facility Environmental Claim”:
On December 3, 2007, the United States Department of Justice (DOJ) notified Rockwell
International Corporation (RIC) that the United States Navy was seeking to recover
environmental cleanup costs incurred at the Naval Weapons Industrial Reserve Plant
(NWIRP). The DOJ asserted that it has incurred more than $50 million (excluding
interest, attorneys’ fees and other indirect costs) in environmental cleanup costs at
the NWIRP, and it believes that it may have a potential cause of action against RIC and
other former contractors at the NWIRP for recovery of those costs. In June 2011, RIC
and one other former contractor at the NWIRP reached a settlement with the DOJ and the
United States Navy to resolve all claims in exchange for payment of $14 million. RIC
will be responsible for half of the settlement amount. The parties are currently
negotiating the terms of a Consent Decree that will be filed in the U.S. District Court
for the Western District of Texas. We anticipate that the Consent Decree will be
finalized and filed within the next quarter, thereby completely resolving this claim.
Item 1A. Risk Factors
Information about our most significant risk factors is contained in Item 1A of our
Annual Report on Form 10-K for the fiscal year ended September 30, 2010. We believe that
at June 30, 2011 there has been no material change to this information.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Share Repurchases
The table below sets forth information with respect to purchases made by or on behalf of us of shares of our common
stock during the three months ended June 30, 2011:
34
Table of Contents
ROCKWELL AUTOMATION, INC.
Item 6. Exhibits
(a) Exhibits:
35
Table of Contents
ROCKWELL AUTOMATION, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
36
Table of Contents
INDEX TO EXHIBITS
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||
