Document and Company Informatio
| Document and Company Information (USD $) | ||
| In Billions, except Share data | 9 Months Ended
Jun. 30, 2009 | Mar. 31, 2008
|
| Document and Company Information [Abstract] | ||
| Entity Registrant Name | Rockwell Automation, Inc. | |
| Entity Central Index Key | 0001024478 | |
| Document Type | 10-Q | |
| Document Period End Date | 2009-06-30 | |
| Amendment Flag | false | |
| Current Fiscal Year End Date | --09-30 | |
| Entity Well-known Seasoned Issuer | Yes | |
| Entity Voluntary Filers | No | |
| Entity Current Reporting Status | Yes | |
| Entity Filer Category | Large Accelerated Filer | |
| Entity Public Float | 8.4 | |
| Entity Common Stock, Shares Outstanding | 141,956,745 |
Condensed Consolidated Balance
| Condensed Consolidated Balance Sheet (USD $) | ||
| In Millions | Jun. 30, 2009
| Sep. 30, 2008
|
| Current assets: | ||
| Cash and cash equivalents | 580.5 | 582.2 |
| Receivables | 740.7 | 959.9 |
| Inventories | 460.3 | 575.5 |
| Deferred income taxes | 177.6 | 190 |
| Other current assets | 147.1 | 129 |
| Total current assets | 2106.2 | 2436.6 |
| Property, net | 525.8 | 553.8 |
| Goodwill | 905.6 | 915 |
| Other intangible assets, net | 231.6 | 250.8 |
| Deferred income taxes | 110.5 | 120.1 |
| Prepaid pension | 145.1 | 138.4 |
| Other assets | 139.2 | 178.9 |
| TOTAL | 4,164 | 4593.6 |
| Current liabilities: | ||
| Short-term debt | 0 | 100.1 |
| Accounts payable | 287.6 | 437.3 |
| Compensation and benefits | 146.5 | 210 |
| Income taxes payable | 20.2 | 39.4 |
| Other current liabilities | 502.1 | 516.3 |
| Total current liabilities | 956.4 | 1303.1 |
| Long-term debt | 904.8 | 904.4 |
| Retirement benefits | 389.1 | 386.8 |
| Other liabilities | 306.2 | 310.5 |
| Shareowners' equity: | ||
| Common stock (shares issued: 216.4) | 216.4 | 216.4 |
| Additional paid-in capital | 1296.7 | 1280.9 |
| Retained earnings | 4498.1 | 4486.1 |
| Accumulated other comprehensive loss | -403.5 | (319) |
| Common stock in treasury, at cost (shares held: June 30, 2009, 74.4; September 30, 2008, 73.2) | -4000.2 | -3975.6 |
| Total shareowners' equity | 1607.5 | 1688.8 |
| TOTAL | $4,164 | 4593.6 |
1_Condensed Consolidated Balanc
| Condensed Consolidated Balance Sheet (Parenthetical) (USD $) | ||
| Share data in Millions | Jun. 30, 2009
| Sep. 30, 2008
|
| Common stock, shares issued | 216.4 | 216.4 |
| Common stock in treasury, shares | 74.4 | 73.2 |
Condensed Consolidated Statemen
| Condensed Consolidated Statement of Operations (USD $) | ||||
| In Millions, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 9 Months Ended
Jun. 30, 2009 | 9 Months Ended
Jun. 30, 2008 |
| Sales | ||||
| Products and solutions | $906 | 1335.7 | 2925.4 | 3817.3 |
| Services | 104.8 | 139.3 | 332.7 | 396.2 |
| Total Sales | 1010.8 | 1,475 | 3258.1 | 4213.5 |
| Cost of sales | ||||
| Products and solutions | -570.7 | -771.3 | -1819.6 | (2,188) |
| Services | -69.9 | -98.1 | -234.3 | -273.1 |
| Total cost of sales | -640.6 | -869.4 | -2053.9 | -2461.1 |
| Gross profit | 370.2 | 605.6 | 1204.2 | 1752.4 |
| Selling, general and administrative expenses | (305) | -377.6 | -911.2 | -1084.5 |
| Other income (expense) | 0.4 | 2.1 | -2.2 | 16.4 |
| Interest expense | -15.4 | -16.6 | -45.7 | -52.1 |
| Income from continuing operations before income taxes | 50.2 | 213.5 | 245.1 | 632.2 |
| Income tax provision | -17.4 | -60.9 | -56.1 | -180.2 |
| Income from continuing operations | 32.8 | 152.6 | 189 | 452 |
| Income from discontinued operations, net of tax | 0 | 0 | 2.8 | 0 |
| Net income | 32.8 | 152.6 | 191.8 | $452 |
| Basic earnings per share: | ||||
| Continuing operations | 0.23 | 1.04 | 1.33 | 3.07 |
| Discontinued operations | $0 | $0 | 0.02 | $0 |
| Net income | 0.23 | 1.04 | 1.35 | 3.07 |
| Diluted earnings per share: | ||||
| Continuing operations | 0.23 | 1.03 | 1.33 | 3.03 |
| Discontinued operations | $0 | $0 | 0.02 | $0 |
| Net income | 0.23 | 1.03 | 1.35 | 3.03 |
| Cash dividends per share | 0.58 | 0.58 | 1.16 | 1.16 |
| Weighted average outstanding shares: | ||||
| Basic | 141.7 | 146.3 | 141.6 | 147.3 |
| Diluted | 142.4 | 148.1 | 142.2 | 149.3 |
2_Condensed Consolidated Statem
| Condensed Consolidated Statement of Cash Flows (USD $) | ||
| In Millions | 9 Months Ended
Jun. 30, 2009 | 9 Months Ended
Jun. 30, 2008 |
| Operating Activities: | ||
| Net income | 191.8 | $452 |
| Income from discontinued operations | -2.8 | 0 |
| Income from continuing operations | 189 | 452 |
| Adjustments to arrive at cash provided by operating activities: | ||
| Depreciation | 74.4 | 74.1 |
| Amortization of intangible assets | 24.4 | 26.8 |
| Share-based compensation expense | 20 | 24.6 |
| Retirement benefits expense | 36.4 | 33.5 |
| Pension trust contributions | -22.7 | -31.6 |
| Net loss (gain) on disposition of securities and property | 1.5 | -5.8 |
| Income tax benefit from the exercise of stock options | 0 | 0.2 |
| Excess income tax benefit from share-based compensation | -1.3 | -3.9 |
| Changes in assets and liabilities, excluding effects of foreign currency adjustments: | ||
| Receivables | 196.5 | -21.7 |
| Inventories | 99.7 | -86.3 |
| Accounts payable | -123.8 | (42) |
| Compensation and benefits | -56.8 | (2) |
| Income taxes | -5.8 | -30.4 |
| Other assets and liabilities | -22.9 | -35.2 |
| Cash Provided by Operating Activities | 408.6 | 352.3 |
| Investing Activities: | ||
| Capital expenditures | -67.5 | -102.8 |
| Acquisition of businesses, net of cash acquired | -30.1 | -112.4 |
| Proceeds from sales of available for sale securities | 0 | 36.3 |
| Proceeds from sale of property | 3 | 6.9 |
| Purchase of short-term investments | -8.4 | 0 |
| Other investing activities | -4.1 | -2.9 |
| Cash Used for Investing Activities | -107.1 | -174.9 |
| Financing Activities: | ||
| Net (repayments) issuance of short-term debt | (100) | 160.9 |
| Issuance of long-term debt | 0 | 493.5 |
| Repayments of long-term debt | 0 | -351.3 |
| Cash dividends | -123.3 | -128.4 |
| Purchases of treasury stock | -53.5 | -226.9 |
| Proceeds from the exercise of stock options | 7.4 | 12.2 |
| Excess income tax benefit from share-based compensation | 1.3 | 3.9 |
| Other financing activities | (3) | -0.3 |
| Cash Used for Financing Activities | -271.1 | -36.4 |
| Effect of exchange rate changes on cash | -31.6 | 46.8 |
| Cash (Used for) Provided by Continuing Operations | -1.2 | 187.8 |
| Discontinued Operations: | ||
| Cash Used for Discontinued Operating Activities | -0.5 | -6.1 |
| Cash Used for Discontinued Operations | -0.5 | -6.1 |
| (Decrease) Increase in Cash and Cash Equivalents | -1.7 | 181.7 |
| Cash and Cash Equivalents at Beginning of Period | 582.2 | 624.2 |
| Cash and Cash Equivalents at End of Period | 580.5 | 805.9 |
Basis of Presentation and Accou
| Basis of Presentation and Accounting Policies | |
| 9 Months Ended
Jun. 30, 2009 USD / shares | |
| Basis of Presentation and Accounting Policies [Abstract] | |
| Basis of Presentation and Accounting Policies | 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, consisting solely of adjustments of a normal recurring nature, necessary to present fairly the financial position, results of operations, and cash flows for the periods presented. These statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended September30, 2008. The results of operations for the three- and nine-month periods ended June30, 2009 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. We have evaluated subsequent events through the date and time of issuance of these financial statements on August4, 2009. Revenue Product and solution revenues consist of industrial automation power, control, information and custom-engineered hardware and software products and systems. Service revenues include multi-vendor customer technical support and repair, asset management and optimization consulting and training. Cash and Cash Equivalents Cash and cash equivalents include time deposits and certificates of deposit with original maturities of three months or less at the time of purchase. Receivables Receivables are stated net of allowances for doubtful accounts of $18.5million at June30, 2009 and $17.4million at September30, 2008. In addition, receivables are stated net of an allowance for certain customer returns, rebates and incentives of $11.0million at June30, 2009 and $13.2 million at September30, 2008. 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 pretax 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. See Note 14 for further details regarding income taxes. We account for uncertain tax positions in accordance with Financial Accounting Standards Board (FASB)Interpretation No.48, Accounting for Uncertainty in Income Taxes (FIN 48). We determine whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. For tax positions that meet the more-likely-than-not recognition threshold, we determine the amount of benefit to recognize in the financial statements. Earnings Per Share We present basic and diluted earnings per share (EPS)amounts. Basic EPS is calculated by dividing net income by the weighted average number of common shares outstanding during the applicable period. Diluted EPS amounts are based upon the weighted average numb |
Share Based Compensation
| Share Based Compensation | |
| 9 Months Ended
Jun. 30, 2009 USD / shares | |
| Share-Based Compensation [Abstract] | |
| Share-Based Compensation | 2. Share-Based Compensation We recognized $7.7million and $20.0million in share-based compensation expense in income from continuing operations before income taxes during the three- and nine-months ended June30, 2009, respectively. We recognized $8.7million and $24.6million in share-based compensation expense in income from continuing operations before income taxes during the three- and nine- months ended June 30, 2008, 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 was (in thousands except per share amounts): Nine Months Ended June 30, 2009 2008 Wtd. Avg. Wtd. Avg. Share Share Grants Fair Value Grants Fair Value Stock options 2,802 $ 7.75 1,578 $ 17.58 Performance shares 192 31.82 121 70.32 Restricted stock and restricted stock units 92 29.38 71 66.67 |
Acquisitions
| Acquisitions | |
| 9 Months Ended
Jun. 30, 2009 USD / shares | |
| Acquisitions [Abstract] | |
| Acquisitions | 3. Acquisitions In January2009, we acquired the assets and assumed certain liabilities of Xian Hengsheng Science Technology Company Limited (Hengsheng). Hengsheng delivers automation solutions to the electrical power and other heavy process industries in central and western China. In March2009, we acquired a majority of the assets and assumed certain liabilities of the automation business of Rutter Hinz Inc. (Hinz). Hinz offers industrial control systems engineering and related support, with domain expertise in industrial automation, process control and power distribution, specifically for the oil and gas industry, as well as other resource-based industries. We recorded goodwill of $16.2 million, customer relationships of $2.8million and other intangible assets of $2.9million resulting from the preliminary purchase price allocations of Hengsheng and Hinz. We expect $5.6 million of the goodwill to be deductible for tax purposes. In November2007, our Architecture Software segment acquired Pavilion Technologies, Inc. (Pavilion), a privately held company that engages in advanced process control, production optimization and environmental compliance solutions for process and hybrid industries. In May 2008, our Architecture Software segment acquired CEDES Safety Automation AG (CEDES)and Incuity Software, Inc. (Incuity). Swiss-based CEDES is a supplier of safety and measuring light curtains, as well as other safety and non-safety optoelectronics, control units and related accessories for industrial applications. Incuity is a supplier of Enterprise Manufacturing Intelligence (EMI) software, which provides real-time intelligence for business decision support to improve operations and reduce production waste by providing valuable management insight into a companys operations. We recorded intangible assets of $43.1million and goodwill of $69.3million resulting from the final purchase price allocations of the Pavilion, CEDES and Incuity acquisitions. Intangible assets assigned include $34.0million to technology (15-year weighted average useful life), $6.6 million to customer relationships (9-year weighted average useful life) and $2.5million to other intangible assets (4-year weighted average useful life). None of the goodwill recorded is expected to be deductible for tax purposes. We assigned the full amount of goodwill for Hengsheng and Hinz to our Control Products Solutions segment and the full amount of goodwill for Pavilion, CEDES and Incuity to our Architecture Software segment. 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 individual effects of these acquisitions are not material to our results of operations and financial position. |
Inventories
| Inventories | |
| 9 Months Ended
Jun. 30, 2009 USD / shares | |
| Inventories [Abstract] | |
| Inventories | 4. Inventories Inventories consist of (in millions): June 30, September 30, 2009 2008 Finished goods $ 171.2 $ 237.0 Work in process 116.9 125.9 Raw materials, parts, and supplies 172.2 212.6 Inventories $ 460.3 $ 575.5 We report inventories net of the allowance for excess and obsolete inventory of $49.4million at June30, 2009 and $39.7million at September30, 2008. |
Property
| Property | |
| 9 Months Ended
Jun. 30, 2009 USD / shares | |
| Property [Abstract] | |
| Property | 5. Property Property consists of (in millions): June 30, September 30, 2009 2008 Land $ 4.7 $ 5.2 Buildings and improvements 279.0 273.6 Machinery and equipment 1,101.5 1,089.8 Internal use software 319.8 300.0 Construction in progress 26.1 46.8 Total 1,731.1 1,715.4 Less accumulated depreciation (1,205.3 ) (1,161.6 ) Property, net $ 525.8 $ 553.8 |
Goodwill and Other Intangible A
| Goodwill and Other Intangible Assets | |
| 9 Months Ended
Jun. 30, 2009 USD / shares | |
| Goodwill and Other Intangible Assets [Abstract] | |
| Goodwill and Other Intangible Assets | 6.Goodwill and Other Intangible Assets Changes in the carrying amount of goodwill for the nine months ended June30, 2009 are (in millions): Control Architecture Products Software Solutions Total Balance as of September30, 2008 $ 396.6 $ 518.4 $ 915.0 Acquisition of businesses 16.2 16.2 Translation and other (10.3 ) (15.3 ) (25.6 ) Balance as of June30, 2009 $ 386.3 $ 519.3 $ 905.6 Other intangible assets consist of (in millions): June 30, 2009 Carrying Accumulated Amount Amortization Net Amortized intangible assets: Computer software products $ 136.6 $ (89.9 ) $ 46.7 Customer relationships 56.2 (9.2 ) 47.0 Technology 83.1 (30.3 ) 52.8 Other 34.8 (17.4 ) 17.4 Total amortized intangible assets 310.7 (146.8 ) 163.9 Intangible assets not subject to amortization 67.7 67.7 Total $ 378.4 $ (146.8 ) $ 231.6 September 30, 2008 Carrying Accumulated Amount Amortization Net Amortized intangible assets: Computer software products $ 126.6 $ (77.9 ) $ 48.7 Customer relationships 52.7 (5.6 ) 47.1 Technology 84.9 (25.4 ) 59.5 Other 50.8 (26.0 ) 24.8 Total amortized intangible assets 315.0 (134.9 ) 180.1 Intangible assets not subject to amortization 70.7 70.7 Total $ 385.7 $ (134.9 ) $ 250.8 The Allen-Bradley and ICS TriplexTM trademarks have been determined to have an indefinite life, and therefore are not subject to amortization. Estimated amortization expense is $34.7million in 2009, $29.0million in 2010, $25.9million in 2011, $22.4million in 2012 and $15.6million in 2013. We performed the annual evaluation of our goodwill and indefinite life intangible assets for impairment as required by SFAS No.142, Goodwill and Other Intangible Assets, during the second quarter of 2009 and concluded that no impairments exist. We did not identify any impairment indicators during the third quarter of 2009 that would require a further impairment analysis. |
Other Current Liabilities
| Other Current Liabilities | |
| 9 Months Ended
Jun. 30, 2009 USD / shares | |
| Other Current Liabilities [Abstract] | |
| Other Current Liabilities | 7.Other Current Liabilities Other current liabilities consist of (in millions): June 30, September 30, 2009 2008 Advance payments from customers and deferred revenue $ 177.6 $ 161.6 Customer returns, rebates and incentives 103.7 124.6 Unrealized losses on foreign exchange contracts 13.0 16.2 Product warranty obligations 28.5 33.5 Taxes other than income taxes 26.2 39.1 Accrued interest 15.0 15.6 Dividends payable 41.2 Restructuring and special items 36.5 66.5 Other 60.4 59.2 Other current liabilities $ 502.1 $ 516.3 |
Product Warranty Obligations
| Product Warranty Obligations | |
| 9 Months Ended
Jun. 30, 2009 USD / shares | |
| Product Warranty Obligations [Abstract] | |
| Product Warranty Obligations | 8.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 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 June30, 2009 and 2008 are (in millions): Nine Months Ended June 30, 2009 2008 Balance at beginning of period $ 33.5 $ 34.9 Warranties recorded at time of sale 20.9 30.7 Adjustments to pre-existing warranties (0.5 ) Settlements of warranty claims (25.4 ) (31.2 ) Balance at end of period $ 28.5 $ 34.4 |
Long term and Short term Debt
| Long term and Short term Debt | |
| 9 Months Ended
Jun. 30, 2009 USD / shares | |
| Long Term And Short Term Debt [Abstract] | |
| Long-term and Short-term Debt | 9. Long-term and Short-term Debt Long-term debt consists of (in millions): June 30, September 30, 2009 2008 5.65% notes, payable in 2017 $ 250.0 $ 250.0 6.70% debentures, payable in 2028 250.0 250.0 6.25% debentures, payable in 2037 250.0 250.0 5.20% debentures, payable in 2098 200.0 200.0 Unamortized discount and other (45.2 ) (45.6 ) Long-term debt $ 904.8 $ 904.4 In December2007, we issued an aggregate of $500million principal amount of our 5.65% notes due 2017 and 6.25% debentures due 2037. The debt offering yielded approximately $493.5million of proceeds, which were used to repay at maturity our 6.15% notes due January15, 2008 and for general corporate purposes. We issued an aggregate of $800million principal amount of our 6.15% notes, 6.70% debentures and 5.20% debentures in January1998. The debt offering yielded approximately $750.0million of proceeds. We issued the 5.20% debentures at a discount, and the 6.15% notes and 6.70% debentures at par. On March16, 2009, we replaced our former five-year $600.0million unsecured revolving credit facility with two new unsecured revolving credit facilities totaling $535.0million. The new facilities have borrowing limits of $267.5million each. One facility has a three-year term and the other facility has a 364-day term. Our 364-day credit facility includes a term-out option that allows us to borrow, on March15, 2010, up to $267.5million as a term loan for one year. We have not drawn down under any of these credit facilities at June30, 2009 or September30, 2008. 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 60percent. We were in compliance with all covenants under these credit facilities at June 30, 2009 and September30, 2008. In addition to our two $267.5million credit facilities, short-term unsecured credit facilities of approximately $164.2million at June30, 2009 were available to non-U.S. subsidiaries. There were no significant commitment fees or compensating balance requirements under any of our credit facilities. Borrowings under our credit facilities during the three- and nine-months ended June30, 2009 and 2008 were not significant. Our short-term debt obligations consist primarily of commercial paper borrowings. At June30, 2009, we had no commercial paper borrowings outstanding. Commercial paper borrowings outstanding were $100.0million at September30, 2008. The weighted average interest rate and maturity period of the commercial paper outstanding at September30, 2008 were 2.25percent and six days, respectively. |
Derivative Instruments and Fair
| Derivative Instruments and Fair Value Measurement | |
| 9 Months Ended
Jun. 30, 2009 USD / shares | |
| Derivative Instruments and Fair Value Measurement [Abstract] | |
| Derivative Instruments and Fair Value Measurement | 10. 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 recognize all derivative financial instruments as either assets or liabilities at fair value in the Condensed Consolidated Balance Sheet. We report in other comprehensive loss the effective portion of the gain or loss on derivative financial instruments that we designate and that qualify as cash flow hedges. We reclassify these gains or losses into earnings in the same periods when the hedged transactions affect earnings. Gains and losses on derivative financial instruments for which we do not elect hedge accounting are recognized in the Condensed Consolidated Statement of Operations in each period, based upon the change in the fair value of the derivative financial instruments. It is our policy to execute such instruments with global financial institutions that we believe to be creditworthy and not to enter into derivative financial instruments for speculative purposes. We diversify our forward exchange contracts among counterparties to minimize exposure to any one of these entities. All forward exchange contracts are denominated in currencies of major industrial countries. The notional values of our forward exchange contracts outstanding at June30, 2009 were $867.2million, of which $411.2million were designated as cash flow hedges. Contracts with the most significant notional values relate to transactions denominated in the British pound sterling, United States dollar, Euro and Canadian dollar. We adopted SFAS 157 for our financial assets and liabilities effective October1, 2008. SFAS 157 will become effective for our non-financial assets and liabilities in fiscal 2010. SFAS 157 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. SFAS 157 classifies the inputs used to measure fair value into the following hierarchy: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability. Level 3: Unobservable inputs for the asset or lia |
Retirement Benefits
| Retirement Benefits | |
| 9 Months Ended
Jun. 30, 2009 USD / shares | |
| Retirement Benefits [Abstract] | |
| Retirement Benefits | 11. Retirement Benefits The components of net periodic benefit cost in income from continuing operations are (in millions): Pension Benefits Three Months Ended Nine Months Ended June 30, June 30, 2009 2008 2009 2008 Service cost $ 14.9 $ 14.5 $ 42.5 $ 43.4 Interest cost 40.4 37.6 117.0 112.4 Expected return on plan assets (49.8 ) (48.6 ) (144.7 ) (145.3 ) Amortization: Prior service cost (1.1 ) (1.1 ) (3.4 ) (3.4 ) Net transition obligation 0.1 0.1 0.3 0.3 Net actuarial loss 4.4 4.8 12.7 14.5 Net periodic benefit cost $ 8.9 $ 7.3 $ 24.4 $ 21.9 Other Postretirement Benefits Three Months Ended Nine Months Ended June 30, June 30, 2009 2008 2009 2008 Service cost $ 1.0 $ 1.0 $ 2.8 $ 2.9 Interest cost 3.4 3.4 10.0 10.3 Amortization: Prior service cost (2.7 ) (3.7 ) (7.9 ) (11.0 ) Net actuarial loss 2.4 3.2 7.1 9.4 Net periodic benefit cost $ 4.1 $ 3.9 $ 12.0 $ 11.6 |
Comprehensive Income
| Comprehensive Income | |
| 9 Months Ended
Jun. 30, 2009 USD / shares | |
| Comprehensive Income [Abstract] | |
| Comprehensive Income | 12. Comprehensive Income Comprehensive income consists of (in millions): Three Months Ended Nine Months Ended June 30, June 30, 2009 2008 2009 2008 Net income $ 32.8 $ 152.6 $ 191.8 $ 452.0 Other comprehensive income (loss): Unrecognized pension and postretirement benefit plan liabilities 1.4 1.6 4.2 4.8 Currency translation adjustments 64.4 (12.9 ) (96.7 ) 95.3 Unrealized (losses)gains on cash flow hedges, net of tax (5.7 ) 6.3 7.8 (7.7 ) Other 0.1 0.2 (2.1 ) Other comprehensive income (loss) 60.2 (5.0 ) (84.5 ) 90.3 Comprehensive income $ 93.0 $ 147.6 $ 107.3 $ 542.3 |
Commitments and Contingent Liab
| Commitments and Contingent Liabilities | |
| 9 Months Ended
Jun. 30, 2009 USD / shares | |
| Commitments and Contingent Liabilities [Abstract] | |
| Commitments and Contingent Liabilities | 13. 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 thousands of 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 January31, 2007. We are also responsible for half of the costs and liabilities associated with asbestos cases against the former Rockwell International Corporations (RICs) 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 and Kemper Insurance, the insurance carriers that provided liability insurance coverage to Allen-Bradley, we entered into separate agreements on April1, 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 administers the Kemper buyout funds and has entered into a cost share agreement to pay the substantial majority of future defense and indemnity costs for Allen-Bradley asbestos claims once the Kemper buy-out funds are depleted. We believe that these arrangements will continue to provide coverage for Allen-Bradley asbestos claims throughout the remaining life of the asbestos liability. |
Income Taxes
| Income Taxes | |
| 9 Months Ended
Jun. 30, 2009 USD / shares | |
| Income Taxes [Abstract] | |
| Income Taxes | 14. Income Taxes The effective tax rate for the nine months ended June30, 2009 was 22.9percent. During the first nine months of 2009, we recognized discrete tax benefits totaling $11.1million related to the resolution of a contractual tax obligation and the retroactive extension of the U.S. federal research tax credit, partially offset by discrete tax expenses consisting primarily of a dividend related to the planned disposal of a non-U.S. subsidiary of $4.5million. The amount of unrecognized tax benefits was $125.6million ($75.0million net of $50.6million of indirect tax benefits) at June30, 2009 and $125.8million ($76.6million net of $49.2million of indirect tax benefits) at September30, 2008. The amount of unrecognized tax benefits that would reduce our effective tax rate if recognized was $83.9million ($41.6million net of $42.3million of indirect tax benefits) at June30, 2009 and $84.1million ($43.2million net of $40.9million of indirect tax benefits) at September30, 2008. The balance of $41.7million ($33.4million net of $8.3million of indirect tax benefits) at June30, 2009 and September30, 2008 was attributable to discontinued operations and would not impact the effective tax rate for continuing operations if recognized. We believe it is reasonably possible that the amount of unrecognized tax benefits could be reduced by up to $37.5million and the amount of indirect tax benefits could be increased by up to $0.7 million during the next 12months as a result of the resolution of worldwide tax matters and the lapses of statutes of limitations. There was no material change of the amount of unrecognized tax benefits in the first nine months of 2009. We recognize interest and penalties related to unrecognized tax benefits in tax expense. Accrued interest and penalties were $27.2million and $2.1million at June30, 2009 and $24.0million and $2.0million at September30, 2008, respectively. We conduct business globally and are routinely audited by the various tax jurisdictions in which we operate. Our U.S. federal tax returns for 2007 and 2008, Wisconsin tax returns for 2003 through 2008, and tax returns for other major states and countries for 1998 through 2008 remain subject to examinations by taxing authorities. |
Restructuring Charges and Speci
| Restructuring Charges and Special Items | |
| 9 Months Ended
Jun. 30, 2009 USD / shares | |
| Restructuring Charges and Special Items [Abstract] | |
| Restructuring Charges and Special Items | 15. Restructuring Charges and Special Items During 2009, we recorded restructuring charges of $27.3million related to actions designed to better align our cost structure with current economic conditions. The majority of the charges relate to severance benefits recognized pursuant to SFAS No.112, Employers Accounting for Postemployment Benefits An Amendment of FASB Statements No.5 and 43. In the Condensed Consolidated Statement of Operations for the nine months ended June30, 2009, we recorded $5.3 million of the restructuring charges in cost of sales, and we recorded $22.0million in selling, general and administrative expenses. We expect total cash expenditures associated with these actions to be approximately $26.4million. We paid $10.4million related to these actions during the nine months ended June30, 2009. Accruals remaining under these restructuring actions after currency translation and other items are $17.9million at June30, 2009. In the fourth quarter of 2008, we recorded special items of $50.7million related to restructuring actions designed to better align resources with growth opportunities and to reduce costs as a result of current and anticipated market conditions. During 2007, we recorded special items of $43.5million related to various restructuring actions designed to execute on our cost productivity initiatives and to advance our globalization strategy. We paid $41.2million related to the 2008 and 2007 restructuring actions during the nine months ended June30, 2009 and $12.8million during the nine months ended June30, 2008. Accruals remaining under these restructuring actions after currency translation and other items are $18.6million at June30, 2009. |
Segment Information
| Segment Information | |
| 9 Months Ended
Jun. 30, 2009 USD / shares | |
| Segment Information [Abstract] | |
| Segment Information | 16. Segment Information The following tables reflect the sales and operating results of our reportable segments (in millions): Three Months Ended Nine Months Ended June 30, June 30, 2009 2008 2009 2008 Sales Architecture Software $ 399.5 $ 625.7 $ 1,299.4 $ 1,802.6 Control Products Solutions 611.3 849.3 1,958.7 2,410.9 Total $ 1,010.8 $ 1,475.0 $ 3,258.1 $ 4,213.5 Segment Operating Earnings Architecture Software $ 43.3 $ 154.7 $ 186.1 $ 443.1 Control Products Solutions 43.0 103.6 164.0 313.0 Total 86.3 258.3 350.1 756.1 Purchase accounting depreciation and amortization (4.4 ) (6.3 ) (14.2 ) (19.1 ) General corporate net (16.3 ) (21.9 ) (49.1 ) (52.7 ) Interest expense (15.4 ) (16.6 ) (45.7 ) (52.1 ) Special items 4.0 Income tax provision (17.4 ) (60.9 ) (56.1 ) (180.2 ) Income from continuing operations $ 32.8 $ 152.6 $ 189.0 $ 452.0 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. Costs incurred related to shared segment operating activities are allocated 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 third quarter and first nine months of 2009 were approximately 9percent of our total sales, compared to approximately 9 and 10percent in the third quarter and first nine months of 2008, respectively. |
Discontinued Operations
| Discontinued Operations | |
| 9 Months Ended
Jun. 30, 2009 USD / shares | |
| Discontinued Operations [Abstract] | |
| Discontinued Operations | 17. Discontinued Operations In the nine months ended June30, 2009, we recorded a benefit of $4.5million ($2.8million net of tax) related to a change in estimate for legal contingencies associated with RICs operation of the Rocky Flats facility for the U.S. Department of Energy. |