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Rockwell Automation Reports Third Quarter 2012 Results

Conference Call

A conference call to discuss our financial results will take place at 8:30 A.M. Eastern Time on July 25, 2012. The call and related financial charts will be webcast and accessible via the Rockwell Automation website ( http://www.rockwellautomation.com/investors/ ).

This news release 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:

  • macroeconomic factors, including global and regional business conditions, the availability and cost of capital, the cyclical nature of our customers' capital spending, sovereign debt concerns and currency exchange rates;
  • laws, regulations and governmental policies affecting our activities in the countries where we do business;
  • the successful development of advanced technologies and demand for and market acceptance of new and existing products;
  • the availability, effectiveness and security of our information technology systems;
  • competitive product and pricing pressures;
  • a disruption of our operations due to natural disasters, acts of war, strikes, terrorism, social unrest or other causes;
  • intellectual property infringement claims by others and the ability to protect our intellectual property;
  • our ability to successfully address claims by taxing authorities in the various jurisdictions where we do business;
  • our ability to attract and retain qualified personnel;
  • our ability to manage costs related to employee retirement and health care benefits;
  • the uncertainties of litigation;
  • a disruption of our distribution channels;
  • the availability and price of components and materials;
  • the successful execution of our cost productivity and globalization initiatives; and
  • other risks and uncertainties, including but not limited to those detailed from time to time in our Securities and Exchange Commission filings.

These forward-looking statements reflect our beliefs as of the date of filing this release. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Rockwell Automation, Inc. (NYSE: ROK), the world’s largest company dedicated to industrial automation and information, makes its customers more productive and the world more sustainable. Headquartered in Milwaukee, Wis., Rockwell Automation employs over 21,000 people serving customers in more than 80 countries.

       
ROCKWELL AUTOMATION, INC.
SALES AND EARNINGS INFORMATION
(in millions, except per share amounts)
 
Three Months Ended Nine Months Ended
June 30, June 30,
2012 2011 2012 2011
Sales
Architecture & Software (a) $ 663.8 $ 672.9 $ 1,979.1 $ 1,911.0
Control Products & Solutions (b) 896.6   843.3   2,616.3   2,435.1  
Total sales (c) $ 1,560.4   $ 1,516.2   $ 4,595.4   $ 4,346.1  
 
Segment operating earnings
Architecture & Software (d) $ 182.3 $ 175.9 $ 536.3 $ 481.2
Control Products & Solutions (e) 101.7   87.4   299.8   248.3  
Total segment operating earnings 1 (f) 284.0 263.3 836.1 729.5
 
Purchase accounting depreciation and amortization (5.0 ) (5.1 ) (14.9 ) (14.6 )
General corporate—net (19.0 ) (22.3 ) (65.0 ) (58.5 )
Interest expense (15.2 ) (14.7 ) (45.2 ) (44.9 )
Income from continuing operations before income taxes 244.8 221.2 711.0 611.5
Income tax provision (54.1 ) (42.4 ) (169.2 ) (116.2 )
Income from continuing operations $ 190.7 $ 178.8 $ 541.8 $ 495.3
Income from discontinued operations   0.7     0.7  
 
Net income $ 190.7   $ 179.5   $ 541.8   $ 496.0  
 
Diluted earnings per share
Continuing operations $ 1.33 $ 1.22 $ 3.76 $ 3.40
Discontinued operations   0.01      
Net income $ 1.33   $ 1.23   $ 3.76   $ 3.40  
 
Average diluted shares 143.5   145.9   144.0   145.5  
 
Segment operating margin
Architecture & Software (d/a) 27.5 % 26.1 % 27.1 % 25.2 %
Control Products & Solutions (e/b) 11.3 % 10.4 % 11.5 % 10.2 %
Total segment operating margin 1 (f/c) 18.2 % 17.4 % 18.2 % 16.8 %
1   Total segment operating earnings and total segment operating margin are non-GAAP financial measures. We believe that these measures are useful to investors as measures of operating performance. We use these measures to monitor and evaluate the profitability of our operating segments. Our measure of total segment operating earnings may be different from that used by other companies.
   
ROCKWELL AUTOMATION, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in millions)
 
Three Months Ended Nine Months Ended
June 30, June 30,
2012   2011 2012   2011
Sales $ 1,560.4 $ 1,516.2 $ 4,595.4 $ 4,346.1
Cost of sales (928.9 ) (909.4 ) (2,726.9 ) (2,618.9 )
Gross profit 631.5 606.8 1,868.5 1,727.2
 
Selling, general and administrative expenses (369.8 ) (370.0 ) (1,105.3 ) (1,073.1 )
Other (expense) income (1.7 ) (0.9 ) (7.0 ) 2.3
Interest expense (15.2 ) (14.7 ) (45.2 ) (44.9 )
Income from continuing operations before income taxes 244.8 221.2 711.0 611.5
Income tax provision (54.1 ) (42.4 ) (169.2 ) (116.2 )
 
Income from continuing operations 190.7 178.8 541.8 495.3
Income from discontinued operations   0.7     0.7  
 
Net income $ 190.7   $ 179.5   $ 541.8   $ 496.0  
   
ROCKWELL AUTOMATION, INC.
CONDENSED BALANCE SHEET INFORMATION
(in millions)
 
June 30, September 30,
2012 2011
Assets
Cash and cash equivalents $ 805.6 $ 988.9
Short-term investments 350.0
Receivables 1,139.1 1,063.4
Inventories 634.8 641.7
Property, net 563.9 561.4
Goodwill and intangibles 1,143.7 1,170.6
Other assets 745.3   858.9
 
Total $ 5,382.4   $ 5,284.9
 
Liabilities and Shareowners’ Equity
Short-term debt $ 270.0 $
Accounts payable 486.3 455.1
Long-term debt 905.0 905.0
Other liabilities 1,798.6 2,176.8
Shareowners’ equity 1,922.5   1,748.0
 
Total $ 5,382.4   $ 5,284.9
 
ROCKWELL AUTOMATION, INC.
CONDENSED CASH FLOW INFORMATION
(in millions)
 
Nine Months Ended
June 30,
2012   2011
Continuing operations:
Operating activities:
Income from continuing operations $ 541.8 $ 495.3
Depreciation and amortization 102.9 96.6
Retirement benefits expense 78.6 75.6
Pension trust contributions (328.5 ) (23.3 )
Receivables/inventories/payables (78.7 ) (184.8 )
Advanced payments from customers and deferred revenue 42.6 10.5
Compensation and benefits (128.7 ) (73.7 )
Income taxes 79.6 67.5
Other 19.0   (1.2 )
 
Cash provided by operating activities 328.6   462.5  
 
Investing activities:
Capital expenditures (94.9 ) (76.0 )
Acquisition of businesses, net of cash acquired (16.2 ) (45.9 )
Purchases of short-term investments (400.0 )
Proceeds from maturities of short-term investments 50.0
Proceeds from sale of property and investments 2.4   4.3  
 
Cash used for investing activities (458.7 ) (117.6 )
 
Financing activities:
Net issuance of short-term debt 270.0
Cash dividends (181.5 ) (150.3 )
Purchases of treasury stock (168.3 ) (222.7 )
Proceeds from the exercise of stock options 44.4 170.8
Excess income tax benefit from share-based compensation 17.3 37.8
Other financing activities (0.3 ) (0.3 )
 
Cash used for financing activities (18.4 ) (164.7 )
 
Effect of exchange rate changes on cash (34.1 ) 31.6  
 
Cash (used for) provided by continuing operations (182.6 ) 211.8
 
Discontinued operations:
Cash used for discontinued operations (0.7 ) (3.4 )
 
(Decrease) increase in cash and cash equivalents $ (183.3 ) $ 208.4  

ROCKWELL AUTOMATION, INC.

OTHER SUPPLEMENTAL INFORMATION

(in millions)

Organic Sales

Our press release contains information regarding sales excluding the effect of changes in currency and organic sales, which we define as sales excluding the effect of changes in currency exchange rates and acquisitions. We believe these non-GAAP measures provide useful information to investors because they reflect regional performance from our activities without the effect of changes in currency exchange rates and/or acquisitions. We use organic sales and sales excluding the effect of changes in currency as two measures 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 currency exchange rates that were in effect during the prior year. When we acquire businesses, we exclude sales in the current year for which there are no comparable sales in the prior period. Organic sales growth is calculated by comparing organic sales to reported sales in the prior year. Sales are attributed to the geographic regions based on the country of destination.

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