Document and Entity Information
Document and Entity Information | 9 Months Ended |
Jun. 30, 2016shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | ROCKWELL AUTOMATION INC. |
Entity Central Index Key | 1,024,478 |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2016 |
Amendment Flag | false |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | Q3 |
Current Fiscal Year End Date | --09-30 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 129,400,073 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheet (Unaudited) - USD ($) $ in Millions | Jun. 30, 2016 | Sep. 30, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 1,509.3 | $ 1,427.3 |
Short-term investments | 923.4 | 721.9 |
Receivables | 1,022.5 | 1,041 |
Inventories | 556.3 | 535.6 |
Other current assets | 142.4 | 171 |
Total current assets | 4,153.9 | 3,896.8 |
Property, net of accumulated depreciation of $1,385.8 and $1,299.1, respectively | 567 | 605.6 |
Goodwill | 1,016.1 | 1,028.8 |
Other intangible assets, net | 213.4 | 229.5 |
Deferred income taxes | 512.7 | 494.8 |
Other assets | 392.6 | 149.2 |
Total | 6,855.7 | 6,404.7 |
Current liabilities: | ||
Short-term debt | 354 | 0 |
Accounts payable | 532.6 | 521.7 |
Compensation and benefits | 143.8 | 225 |
Advance payments from customers and deferred revenue | 214.7 | 200.8 |
Customer returns, rebates and incentives | 160.3 | 172.2 |
Other current liabilities | 293.9 | 208 |
Total current liabilities | 1,699.3 | 1,327.7 |
Long-term debt | 1,521.8 | 1,500.9 |
Retirement benefits | 1,104.4 | 1,116.6 |
Other liabilities | 408.9 | 202.7 |
Commitments and contingent liabilities (Note 10) | ||
Shareowners' equity: | ||
Common stock ($1.00 par value, shares issued: 181.4) | 181.4 | 181.4 |
Additional paid-in capital | 1,576.9 | 1,552.1 |
Retained earnings | 5,482.8 | 5,316.9 |
Accumulated other comprehensive loss | (1,328.3) | (1,334.6) |
Common stock in treasury, at cost (shares held: June 30, 2016, 52.0; September 30, 2015, 49.0) | (3,791.5) | (3,459) |
Total shareowners' equity | 2,121.3 | 2,256.8 |
Total | $ 6,855.7 | $ 6,404.7 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheet (Unaudited) (Parenthetical) - USD ($) shares in Millions, $ in Millions | Jun. 30, 2016 | Sep. 30, 2015 |
Statement of Financial Position [Abstract] | ||
Accumulated depreciation | $ 1,385.8 | $ 1,299.1 |
Common stock, par value per share | $ 1 | $ 1 |
Common stock, shares issued | 181.4 | 181.4 |
Treasury stock, shares | 52 | 49 |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Sales | ||||
Products and solutions | $ 1,316.3 | $ 1,410.5 | $ 3,870.6 | $ 4,214.8 |
Services | 157.7 | 164.7 | 470.3 | 485.6 |
Total sales | 1,474 | 1,575.2 | 4,340.9 | 4,700.4 |
Cost of sales | ||||
Products and solutions | (748.9) | (782.2) | (2,195.8) | (2,327.6) |
Services | (108.3) | (114.8) | (321.5) | (333.9) |
Total cost of sales | (857.2) | (897) | (2,517.3) | (2,661.5) |
Gross profit | 616.8 | 678.2 | 1,823.6 | 2,038.9 |
Selling, general and administrative expenses | (346.7) | (376.4) | (1,065.3) | (1,145.7) |
Other income (expense) | 0.3 | (0.8) | 1 | 2.4 |
Interest expense | (18.1) | (16.4) | (53.1) | (47) |
Income before income taxes | 252.3 | 284.6 | 706.2 | 848.6 |
Income tax provision | (61.3) | (78.5) | (161.7) | (222.3) |
Net income | $ 191 | $ 206.1 | $ 544.5 | $ 626.3 |
Basic earnings per share: | ||||
Basic | $ 1.47 | $ 1.53 | $ 4.16 | $ 4.64 |
Diluted earnings per share: | ||||
Diluted | 1.46 | 1.52 | 4.13 | 4.60 |
Cash dividends per share | $ 1.45 | $ 1.30 | $ 2.90 | $ 2.60 |
Weighted average outstanding shares: | ||||
Basic | 129.8 | 134.3 | 130.7 | 134.9 |
Diluted | 130.8 | 135.5 | 131.6 | 136.1 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Comprehensive income | ||||
Net income | $ 191 | $ 206.1 | $ 544.5 | $ 626.3 |
Other comprehensive income (loss), net of tax: | ||||
Pension and other postretirement benefit plan adjustments (net of tax expense of $9.8, $9.0, $29.4 and $27.4) | 18.5 | 17.4 | 55.3 | 52.2 |
Currency translation adjustments | (18.3) | 27.4 | (35.3) | (133.2) |
Net change in unrealized gains and losses on cash flow hedges (net of tax (benefit) expense of ($1.3), ($2.6), ($5.4) and $5.0) | (2.8) | (19.5) | (13.7) | 13.6 |
Other comprehensive income (loss) | (2.6) | 25.3 | 6.3 | (67.4) |
Comprehensive income | $ 188.4 | $ 231.4 | $ 550.8 | $ 558.9 |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Other Comprehensive Income (Loss), Tax, Parenthetical Disclosures [Abstract] | ||||
Tax expense from pension and other postretirement benefit plan adjustments | $ 9.8 | $ 9 | $ 29.4 | $ 27.4 |
Tax (benefit) expense from net change in unrealized gains and losses on cash flow hedges | $ (1.3) | $ (2.6) | $ (5.4) | $ 5 |
Condensed Consolidated Stateme7
Condensed Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Operating activities: | ||
Net income | $ 544.5 | $ 626.3 |
Adjustments to arrive at cash provided by operating activities: | ||
Depreciation | 107.2 | 99.6 |
Amortization of intangible assets | 22 | 21.3 |
Share-based compensation expense | 30.4 | 31.4 |
Retirement benefit expense | 117.5 | 106.4 |
Pension contributions | (31.8) | (30.9) |
Net loss (gain) on disposition of property | 0.8 | (1) |
Excess income tax benefit from share-based compensation | (2.4) | (12.2) |
Changes in assets and liabilities, excluding effects of acquisitions and foreign currency adjustments: | ||
Receivables | 17 | 60.7 |
Inventories | (23.8) | (45) |
Accounts payable | 28.9 | 53.4 |
Advance payments from customers and deferred revenue | 13.8 | 26.2 |
Compensation and benefits | (81.1) | (58.1) |
Income taxes | (54.8) | (12.7) |
Other assets and liabilities | (12.9) | (25.7) |
Cash provided by operating activities | 675.3 | 839.7 |
Investing activities: | ||
Capital expenditures | (79.4) | (83.2) |
Acquisition of businesses, net of cash acquired | (21.2) | (21.2) |
Purchases of short-term investments | (801.5) | (470.8) |
Proceeds from maturities of short-term investments | 596.2 | 501.8 |
Proceeds from sale of property | 0.4 | 2 |
Cash used for investing activities | (305.5) | (71.4) |
Financing activities: | ||
Net issuance (repayment) of short-term debt | 354 | (325) |
Issuance of long-term debt, net of discount and issuance costs | 0 | 594.3 |
Cash dividends | (284.7) | (263.3) |
Purchases of treasury stock | (374.1) | (404.8) |
Proceeds from the exercise of stock options | 28 | 55.5 |
Excess income tax benefit from share-based compensation | 2.4 | 12.2 |
Other financing activities | 0 | (1.6) |
Cash used for financing activities | (274.4) | (332.7) |
Effect of exchange rate changes on cash | (13.4) | (59.7) |
Increase in cash and cash equivalents | 82 | 375.9 |
Cash and cash equivalents at beginning of period | 1,427.3 | 1,191.3 |
Cash and cash equivalents at end of period | $ 1,509.3 | $ 1,567.2 |
Basis of Presentation and Accou
Basis of Presentation and Accounting Policies | 9 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Accounting Policies | Basis of Presentation and Accounting Policies In the opinion of management of Rockwell Automation, Inc. ("Rockwell Automation" or "the Company"), 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, 2015 . The results of operations for the three and nine -month periods ended June 30, 2016 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 an allowance for doubtful accounts of $23.3 million at June 30, 2016 and $22.0 million at September 30, 2015 . In addition, receivables are stated net of an allowance for certain customer returns, rebates and incentives of $8.9 million at June 30, 2016 and $9.2 million at September 30, 2015 . Earnings Per Share The following table reconciles basic and diluted earnings per share (EPS) amounts (in millions, except per share amounts): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Net income $ 191.0 $ 206.1 $ 544.5 $ 626.3 Less: Allocation to participating securities (0.2 ) (0.3 ) (0.6 ) (0.5 ) Net income available to common shareowners $ 190.8 $ 205.8 $ 543.9 $ 625.8 Basic weighted average outstanding shares 129.8 134.3 130.7 134.9 Effect of dilutive securities Stock options 0.9 1.1 0.9 1.1 Performance shares 0.1 0.1 — 0.1 Diluted weighted average outstanding shares 130.8 135.5 131.6 136.1 Earnings per share: Basic $ 1.47 $ 1.53 $ 4.16 $ 4.64 Diluted $ 1.46 $ 1.52 $ 4.13 $ 4.60 For the three and nine months ended June 30, 2016 , share-based compensation awards for 1.8 million and 2.6 million shares, respectively, were excluded from the diluted EPS calculation because they were antidilutive. For the three and nine months ended June 30, 2015 , share-based compensation awards for 1.2 million shares and 1.5 million shares, respectively, were excluded from the diluted EPS calculation because they were antidilutive. Non-Cash Investing and Financing Activities Capital expenditures of $19.3 million and $10.2 million were accrued within accounts payable and other current liabilities at June 30, 2016 and 2015 , respectively. At June 30, 2016 and 2015 , there were $8.4 million and $9.7 million , respectively, of outstanding common stock share repurchases recorded in accounts payable that did not settle until the next fiscal quarter. These non-cash investing and financing activities have been excluded from cash used for capital expenditures and treasury stock purchases in the Condensed Consolidated Statement of Cash Flows. Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (FASB) issued a new standard on share-based compensation. Among other changes to the existing guidance, this standard requires entities to record the excess income tax benefit or deficiency from share-based compensation within the income tax provision rather than within additional paid-in capital. This guidance is effective for us for reporting periods beginning no later than October 1, 2017. We are currently evaluating the impact the adoption of this guidance will have on our consolidated financial statements and related disclosures. In February 2016, the FASB issued a new standard on accounting for leases which requires lessees to recognize right-of-use assets and lease liabilities for most leases, among other changes to existing lease accounting guidance. The new standard also requires additional qualitative and quantitative disclosures about leasing activities. This guidance is effective for us for reporting periods beginning October 1, 2019. We are currently evaluating the impact the adoption of this guidance will have on our consolidated financial statements and related disclosures. In November 2015, the FASB issued new guidance that requires all deferred income taxes to be classified on the balance sheet as noncurrent assets or liabilities rather than separating current and noncurrent deferred income taxes based on the classification of the related assets and liabilities. This requirement is effective for us no later than October 1, 2017; however, we elected to adopt earlier as of December 31, 2015. Upon adoption of this guidance we retrospectively reclassified $151.2 million of deferred income taxes from current assets to noncurrent assets at September 30, 2015. In May 2014, the FASB issued a new standard on revenue recognition related to contracts with customers. This standard supersedes nearly all existing revenue recognition guidance and involves a five-step approach to recognizing revenue based on individual performance obligations in a contract. The new standard will also require additional qualitative and quantitative disclosures about contracts with customers, significant judgments made in applying the revenue guidance, and assets recognized from the costs to obtain or fulfill a contract. This guidance is effective for us for reporting periods beginning October 1, 2018. We are currently evaluating the impact the adoption of this guidance will have on our consolidated financial statements and related disclosures. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Share-Based Compensation We recognized $9.8 million and $30.4 million of pre-tax share-based compensation expense during the three and nine months ended June 30, 2016 , respectively. We recognized $10.2 million and $31.4 million of pre-tax share-based compensation expense during the three and nine months ended June 30, 2015 , respectively. Our annual grant of share-based compensation takes place during the first quarter of each fiscal year. The number of shares granted to employees and non-employee directors and the weighted average fair value per share during the periods presented were (in thousands, except per share amounts): Nine Months Ended June 30, 2016 2015 Grants Wtd. Avg. Share Fair Value Grants Wtd. Avg. Share Fair Value Stock options 1,140 $ 21.20 1,038 $ 26.70 Performance shares 96 87.64 87 103.70 Restricted stock and restricted stock units 64 105.19 51 115.10 Unrestricted stock 10 98.79 7 111.43 |
Inventories
Inventories | 9 Months Ended |
Jun. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consist of (in millions): June 30, September 30, Finished goods $ 227.5 $ 225.7 Work in process 177.3 157.5 Raw materials 151.5 152.4 Inventories $ 556.3 $ 535.6 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Changes in the carrying amount of goodwill for the nine months ended June 30, 2016 are (in millions): Architecture & Software Control Products & Solutions Total Balance as of September 30, 2015 $ 388.0 $ 640.8 $ 1,028.8 Acquisition of business 8.1 — 8.1 Translation (6.1 ) (14.7 ) (20.8 ) Balance as of June 30, 2016 $ 390.0 $ 626.1 $ 1,016.1 On March 18, 2016, we acquired MagneMotion, Inc., a leading manufacturer of intelligent conveying systems. As a result, we recognized goodwill of $8.1 million and intangible assets of $8.3 million . We assigned the full amount of goodwill related to MagneMotion, Inc. to our Architecture & Software segment. Other intangible assets consist of (in millions): June 30, 2016 Carrying Amount Accumulated Amortization Net Amortized intangible assets: Computer software products $ 182.4 $ 100.8 $ 81.6 Customer relationships 85.5 51.6 33.9 Technology 86.0 47.5 38.5 Trademarks 30.5 17.0 13.5 Other 11.0 8.8 2.2 Total amortized intangible assets 395.4 225.7 169.7 Allen-Bradley ® trademark not subject to amortization 43.7 — 43.7 Total $ 439.1 $ 225.7 $ 213.4 September 30, 2015 Carrying Amount Accumulated Amortization Net Amortized intangible assets: Computer software products $ 182.4 $ 91.9 $ 90.5 Customer relationships 87.2 50.1 37.1 Technology 83.4 44.1 39.3 Trademarks 32.3 16.3 16.0 Other 11.5 8.6 2.9 Total amortized intangible assets 396.8 211.0 185.8 Allen-Bradley ® trademark not subject to amortization 43.7 — 43.7 Total $ 440.5 $ 211.0 $ 229.5 Estimated amortization expense is $28.8 million in 2016 , $26.1 million in 2017 , $20.4 million in 2018 , $17.7 million in 2019 and $15.1 million in 2020 . We performed the annual evaluation of our goodwill and indefinite life intangible assets for impairment as required by accounting principles generally accepted in the United States (U.S. GAAP) during the second quarter of 2016 and concluded that these assets are not impaired. |
Short-term Debt
Short-term Debt | 9 Months Ended |
Jun. 30, 2016 | |
Short-term Debt [Abstract] | |
Short-term Debt | Short-term Debt Our short-term debt obligations primarily consist of commercial paper borrowings. Commercial paper borrowings outstanding were $354.0 million at June 30, 2016 . The weighted average interest rate of the commercial paper outstanding was 0.49 percent at June 30, 2016 . There were no commercial paper borrowings outstanding at September 30, 2015 . |
Other Current Liabilities
Other Current Liabilities | 9 Months Ended |
Jun. 30, 2016 | |
Other Liabilities Disclosure [Abstract] | |
Other Current Liabilities | Other Current Liabilities Other current liabilities consist of (in millions): June 30, September 30, Unrealized losses on foreign exchange contracts $ 19.3 $ 16.4 Product warranty obligations 27.0 27.9 Taxes other than income taxes 41.6 34.9 Accrued interest 16.2 16.9 Dividends payable 93.8 — Income taxes payable 38.7 50.9 Other 57.3 61.0 Other current liabilities $ 293.9 $ 208.0 |
Product Warranty Obligations
Product Warranty Obligations | 9 Months Ended |
Jun. 30, 2016 | |
Product Warranties Disclosures [Abstract] | |
Product Warranty Obligations | 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 installation. We also record a liability for specific warranty matters when they become probable and reasonably estimable. Changes in product warranty obligations for the nine months ended June 30, 2016 and 2015 are (in millions): Nine Months Ended 2016 2015 Balance at beginning of period $ 27.9 $ 34.1 Accruals for warranties issued during the current period 18.7 20.0 Adjustments to pre-existing warranties (0.2 ) (2.7 ) Settlements of warranty claims (19.4 ) (20.9 ) Balance at end of period $ 27.0 $ 30.5 |
Retirement Benefits
Retirement Benefits | 9 Months Ended |
Jun. 30, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Retirement Benefits | Retirement Benefits The components of net periodic benefit cost (income) are (in millions): Pension Benefits Three Months Ended Nine Months Ended 2016 2015 2016 2015 Service cost $ 22.1 $ 21.3 $ 66.0 $ 64.5 Interest cost 42.5 41.7 127.2 125.6 Expected return on plan assets (54.8 ) (55.7 ) (163.9 ) (167.6 ) Amortization: Prior service credit (0.7 ) (0.7 ) (2.1 ) (2.0 ) Net actuarial loss 31.2 29.6 93.4 89.2 Net periodic benefit cost $ 40.3 $ 36.2 $ 120.6 $ 109.7 Other Postretirement Benefits Three Months Ended Nine Months Ended 2016 2015 2016 2015 Service cost $ 0.4 $ 0.4 $ 1.0 $ 1.2 Interest cost 0.8 1.0 2.5 3.1 Amortization: Prior service credit (2.8 ) (3.7 ) (8.5 ) (11.1 ) Net actuarial loss 0.6 1.2 1.9 3.5 Net periodic benefit income $ (1.0 ) $ (1.1 ) $ (3.1 ) $ (3.3 ) |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Jun. 30, 2016 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive loss by component were (in millions): Three Months Ended June 30, 2016 Pension and other postretirement benefit plan adjustments, net of tax Accumulated currency translation adjustments, net of tax Net unrealized gains (losses) on cash flow hedges, net of tax Total accumulated other comprehensive loss, net of tax Balance as of March 31, 2016 $ (1,060.3 ) $ (269.4 ) $ 4.0 $ (1,325.7 ) Other comprehensive loss before reclassifications — (18.3 ) (1.7 ) (20.0 ) Amounts reclassified from accumulated other comprehensive loss 18.5 — (1.1 ) 17.4 Other comprehensive income (loss) 18.5 (18.3 ) (2.8 ) (2.6 ) Balance as of June 30, 2016 $ (1,041.8 ) $ (287.7 ) $ 1.2 $ (1,328.3 ) Nine Months Ended June 30, 2016 Pension and other postretirement benefit plan adjustments, net of tax Accumulated currency translation adjustments, net of tax Net unrealized gains (losses) on cash flow hedges, net of tax Total accumulated other comprehensive loss, net of tax Balance as of September 30, 2015 $ (1,097.1 ) $ (252.4 ) $ 14.9 $ (1,334.6 ) Other comprehensive loss before reclassifications — (35.3 ) (1.0 ) (36.3 ) Amounts reclassified from accumulated other comprehensive loss 55.3 — (12.7 ) 42.6 Other comprehensive income (loss) 55.3 (35.3 ) (13.7 ) 6.3 Balance as of June 30, 2016 $ (1,041.8 ) $ (287.7 ) $ 1.2 $ (1,328.3 ) Three Months Ended June 30, 2015 Pension and other postretirement benefit plan adjustments, net of tax Accumulated currency translation adjustments, net of tax Net unrealized gains (losses) on cash flow hedges, net of tax Total accumulated other comprehensive loss, net of tax Balance as of March 31, 2015 $ (874.6 ) $ (213.1 ) $ 47.0 $ (1,040.7 ) Other comprehensive income (loss) before reclassifications — 27.4 (6.1 ) 21.3 Amounts reclassified from accumulated other comprehensive loss 17.4 — (13.4 ) 4.0 Other comprehensive income (loss) 17.4 27.4 (19.5 ) 25.3 Balance as of June 30, 2015 $ (857.2 ) $ (185.7 ) $ 27.5 $ (1,015.4 ) Nine Months Ended June 30, 2015 Pension and other postretirement benefit plan adjustments, net of tax Accumulated currency translation adjustments, net of tax Net unrealized gains (losses) on cash flow hedges, net of tax Total accumulated other comprehensive loss, net of tax Balance as of September 30, 2014 $ (909.4 ) $ (52.5 ) $ 13.9 $ (948.0 ) Other comprehensive (loss) income before reclassifications — (133.2 ) 37.5 (95.7 ) Amounts reclassified from accumulated other comprehensive loss 52.2 — (23.9 ) 28.3 Other comprehensive income (loss) 52.2 (133.2 ) 13.6 (67.4 ) Balance as of June 30, 2015 $ (857.2 ) $ (185.7 ) $ 27.5 $ (1,015.4 ) 9 . Accumulated Other Comprehensive Loss (continued) The reclassifications out of accumulated other comprehensive loss to the Condensed Consolidated Statement of Operations were (in millions): Three Months Ended Nine Months Ended Affected Line in the Condensed Consolidated Statement of Operations 2016 2015 2016 2015 Pension and other postretirement benefit plan adjustments: Amortization of prior service credit $ (3.5 ) $ (4.4 ) $ (10.6 ) $ (13.1 ) (a) Amortization of net actuarial loss 31.8 30.8 95.3 92.7 (a) 28.3 26.4 84.7 79.6 Income before income taxes (9.8 ) (9.0 ) (29.4 ) (27.4 ) Income tax provision $ 18.5 $ 17.4 $ 55.3 $ 52.2 Net income Net unrealized losses (gains) on cash flow hedges: Forward exchange contracts $ 1.0 $ 2.0 $ 5.1 $ 5.6 Sales Forward exchange contracts (2.0 ) (16.1 ) (21.0 ) (29.7 ) Cost of sales (1.0 ) (14.1 ) (15.9 ) (24.1 ) Income before income taxes (0.1 ) 0.7 3.2 0.2 Income tax provision $ (1.1 ) $ (13.4 ) $ (12.7 ) $ (23.9 ) Net income Total reclassifications $ 17.4 $ 4.0 $ 42.6 $ 28.3 Net income (a) Reclassified from accumulated other comprehensive loss into cost of sales and selling, general and administrative expenses. These components are included in the computation of net periodic benefit cost (income). See Note 8 for further information. |
Commitments and Contingent Liab
Commitments and Contingent Liabilities | 9 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingent Liabilities | 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 effect on our business, financial condition or results of operations. 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 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. Our insurance carrier 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 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 effect on our financial condition or results of operations. 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 business, semiconductor systems business and 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 conjunction with the sale of our Dodge mechanical and Reliance Electric motors and motor repair services businesses, we agreed to indemnify 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. 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. As of June 30, 2016 , we were not aware of any material indemnification claims where an unfavorable outcome was probable or reasonably possible. Historically, claims that have been made under the indemnification agreements have not had a material impact on our operating results, financial position or cash flows; however, to the extent that valid indemnification claims arise in the future, future payments by us could be significant and could have a material adverse effect on our results of operations or cash flows in a particular period. |
Income Taxes
Income Taxes | 9 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 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 items and items that are reported net of their related tax effects. We record the tax effect of significant unusual items and items that are reported net of their tax effects in the period in which they occur. The effective tax rate was 24.3 percent and 22.9 percent in the three and nine months ended June 30, 2016 , respectively, compared to 27.6 percent and 26.2 percent in the three and nine months ended June 30, 2015 , respectively. The effective tax rate was lower than the U.S. statutory rate of 35 percent in each period primarily because we benefited from lower non-U.S. tax rates. In the three months ended June 30, 2016 we also realized a benefit from a discrete tax item. In the nine months ended June 30, 2016 our effective tax rate was favorably impacted by the retroactive and permanent extension of the U.S. federal research and development tax credit during the first quarter of 2016 and discrete tax items. The amount of gross unrecognized tax benefits was $27.3 million and $43.9 million at June 30, 2016 and September 30, 2015 , respectively, of which the entire amount would reduce our effective tax rate if recognized. The amount of unrecognized tax benefits decreased in the nine months ended June 30, 2016 primarily due to the resolution of prior period tax matters. Accrued interest and penalties related to unrecognized tax benefits were $4.5 million and $5.1 million at June 30, 2016 and September 30, 2015 , respectively. We recognize interest and penalties related to unrecognized tax benefits in the income tax provision. We believe it is reasonably possible that the amount of gross unrecognized tax benefits could be reduced by up to $1.5 million in the next 12 months as a result of the resolution of tax matters in various global jurisdictions and the lapses of statutes of limitations. 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 2014 and are no longer subject to state, local and foreign income tax examinations for years before 2003 . |
Business Segment Information
Business Segment Information | 9 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Business Segment Information | Business Segment Information The following tables reflect the sales and operating results of our reportable segments (in millions): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Sales Architecture & Software $ 666.4 $ 683.5 $ 1,938.8 $ 2,065.6 Control Products & Solutions 807.6 891.7 2,402.1 2,634.8 Total $ 1,474.0 $ 1,575.2 $ 4,340.9 $ 4,700.4 Segment operating earnings Architecture & Software $ 184.2 $ 199.9 $ 515.0 $ 622.1 Control Products & Solutions 126.8 143.8 369.4 402.6 Total 311.0 343.7 884.4 1,024.7 Purchase accounting depreciation and amortization (4.7 ) (5.2 ) (13.9 ) (15.8 ) General corporate – net (17.0 ) (21.9 ) (54.5 ) (66.1 ) Non-operating pension costs (18.9 ) (15.6 ) (56.7 ) (47.2 ) Interest expense (18.1 ) (16.4 ) (53.1 ) (47.0 ) Income before income taxes $ 252.3 $ 284.6 $ 706.2 $ 848.6 Among other considerations, we evaluate performance and allocate resources based upon segment operating earnings before income taxes, interest expense, costs related to corporate offices, non-operating pension costs, certain nonrecurring corporate initiatives, gains and losses from the disposition of businesses and purchase accounting depreciation and amortization. Depending on the product, intersegment sales within a single legal entity are 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. |
Rocky Flats Settlement
Rocky Flats Settlement | 9 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Matters and Contingencies | 13 . Rocky Flats Settlement From 1975 to 1989, Rockwell International Corporation (RIC) operated the Rocky Flats facility in Colorado for the U.S. Department of Energy (DoE). In 1990, a class of landowners near Rocky Flats sued RIC and Dow Chemical, another former operator of the facility. In May 2016, the parties agreed to settle this case and the DoE authorized the settlement. Under the settlement agreement, which is subject to court approval, we and Dow Chemical will pay $375.0 million in the aggregate to resolve the claims. Under RIC’s contract with the DoE and federal law, RIC is entitled to indemnification by the DoE for the settlement amount. When RIC was acquired by Boeing in 1996, we agreed to indemnify Boeing for RIC’s liabilities related to Rocky Flats and received the benefits of RIC’s corresponding indemnity rights against the DoE. We expect to be fully reimbursed by the DoE for our obligation of $243.75 million under the settlement, either before or after we pay the amounts due. We expect to pay up to $7.75 million within the next 12 months, with the remaining balance due in July 2017. We will promptly pursue reimbursement from the DoE; however, it is uncertain whether the government indemnification and reimbursement process will be completed by the time payment is due. At June 30, 2016 , the current and noncurrent portions of the liability are included within other current liabilities and other liabilities, respectively, in the Condensed Consolidated Balance Sheet. An indemnification receivable of $243.75 million at June 30, 2016 is also included within other assets in the Condensed Consolidated Balance Sheet. |
Basis of Presentation and Acc21
Basis of Presentation and Accounting Policies (Policies) | 9 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Receivables | Receivables Receivables are stated net of an allowance for doubtful accounts of $23.3 million at June 30, 2016 and $22.0 million at September 30, 2015 . In addition, receivables are stated net of an allowance for certain customer returns, rebates and incentives of $8.9 million at June 30, 2016 and $9.2 million at September 30, 2015 . |
Recent accounting pronouncements | Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (FASB) issued a new standard on share-based compensation. Among other changes to the existing guidance, this standard requires entities to record the excess income tax benefit or deficiency from share-based compensation within the income tax provision rather than within additional paid-in capital. This guidance is effective for us for reporting periods beginning no later than October 1, 2017. We are currently evaluating the impact the adoption of this guidance will have on our consolidated financial statements and related disclosures. In February 2016, the FASB issued a new standard on accounting for leases which requires lessees to recognize right-of-use assets and lease liabilities for most leases, among other changes to existing lease accounting guidance. The new standard also requires additional qualitative and quantitative disclosures about leasing activities. This guidance is effective for us for reporting periods beginning October 1, 2019. We are currently evaluating the impact the adoption of this guidance will have on our consolidated financial statements and related disclosures. In November 2015, the FASB issued new guidance that requires all deferred income taxes to be classified on the balance sheet as noncurrent assets or liabilities rather than separating current and noncurrent deferred income taxes based on the classification of the related assets and liabilities. This requirement is effective for us no later than October 1, 2017; however, we elected to adopt earlier as of December 31, 2015. Upon adoption of this guidance we retrospectively reclassified $151.2 million of deferred income taxes from current assets to noncurrent assets at September 30, 2015. In May 2014, the FASB issued a new standard on revenue recognition related to contracts with customers. This standard supersedes nearly all existing revenue recognition guidance and involves a five-step approach to recognizing revenue based on individual performance obligations in a contract. The new standard will also require additional qualitative and quantitative disclosures about contracts with customers, significant judgments made in applying the revenue guidance, and assets recognized from the costs to obtain or fulfill a contract. This guidance is effective for us for reporting periods beginning October 1, 2018. We are currently evaluating the impact the adoption of this guidance will have on our consolidated financial statements and related disclosures. |
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 installation. We also record a liability for specific warranty matters when they become probable and reasonably estimable. |
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 items and items that are reported net of their related tax effects. We record the tax effect of significant unusual items and items that are reported net of their tax effects in the period in which they occur. |
Basis of Presentation and Acc22
Basis of Presentation and Accounting Policies (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table reconciles basic and diluted earnings per share (EPS) amounts (in millions, except per share amounts): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Net income $ 191.0 $ 206.1 $ 544.5 $ 626.3 Less: Allocation to participating securities (0.2 ) (0.3 ) (0.6 ) (0.5 ) Net income available to common shareowners $ 190.8 $ 205.8 $ 543.9 $ 625.8 Basic weighted average outstanding shares 129.8 134.3 130.7 134.9 Effect of dilutive securities Stock options 0.9 1.1 0.9 1.1 Performance shares 0.1 0.1 — 0.1 Diluted weighted average outstanding shares 130.8 135.5 131.6 136.1 Earnings per share: Basic $ 1.47 $ 1.53 $ 4.16 $ 4.64 Diluted $ 1.46 $ 1.52 $ 4.13 $ 4.60 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Share-based Compensation, Activity | The number of shares granted to employees and non-employee directors and the weighted average fair value per share during the periods presented were (in thousands, except per share amounts): Nine Months Ended June 30, 2016 2015 Grants Wtd. Avg. Share Fair Value Grants Wtd. Avg. Share Fair Value Stock options 1,140 $ 21.20 1,038 $ 26.70 Performance shares 96 87.64 87 103.70 Restricted stock and restricted stock units 64 105.19 51 115.10 Unrestricted stock 10 98.79 7 111.43 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current | Inventories consist of (in millions): June 30, September 30, Finished goods $ 227.5 $ 225.7 Work in process 177.3 157.5 Raw materials 151.5 152.4 Inventories $ 556.3 $ 535.6 |
Goodwill and Other Intangible25
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Changes in the carrying amount of goodwill for the nine months ended June 30, 2016 are (in millions): Architecture & Software Control Products & Solutions Total Balance as of September 30, 2015 $ 388.0 $ 640.8 $ 1,028.8 Acquisition of business 8.1 — 8.1 Translation (6.1 ) (14.7 ) (20.8 ) Balance as of June 30, 2016 $ 390.0 $ 626.1 $ 1,016.1 |
Schedule of Finite Lived and Indefinite Lived Intangible Assets by Major Class | Other intangible assets consist of (in millions): June 30, 2016 Carrying Amount Accumulated Amortization Net Amortized intangible assets: Computer software products $ 182.4 $ 100.8 $ 81.6 Customer relationships 85.5 51.6 33.9 Technology 86.0 47.5 38.5 Trademarks 30.5 17.0 13.5 Other 11.0 8.8 2.2 Total amortized intangible assets 395.4 225.7 169.7 Allen-Bradley ® trademark not subject to amortization 43.7 — 43.7 Total $ 439.1 $ 225.7 $ 213.4 September 30, 2015 Carrying Amount Accumulated Amortization Net Amortized intangible assets: Computer software products $ 182.4 $ 91.9 $ 90.5 Customer relationships 87.2 50.1 37.1 Technology 83.4 44.1 39.3 Trademarks 32.3 16.3 16.0 Other 11.5 8.6 2.9 Total amortized intangible assets 396.8 211.0 185.8 Allen-Bradley ® trademark not subject to amortization 43.7 — 43.7 Total $ 440.5 $ 211.0 $ 229.5 |
Other Current Liabilities (Tabl
Other Current Liabilities (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Other Liabilities Disclosure [Abstract] | |
Other Current Liabilities | Other current liabilities consist of (in millions): June 30, September 30, Unrealized losses on foreign exchange contracts $ 19.3 $ 16.4 Product warranty obligations 27.0 27.9 Taxes other than income taxes 41.6 34.9 Accrued interest 16.2 16.9 Dividends payable 93.8 — Income taxes payable 38.7 50.9 Other 57.3 61.0 Other current liabilities $ 293.9 $ 208.0 |
Product Warranty Obligations (T
Product Warranty Obligations (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Product Warranties Disclosures [Abstract] | |
Schedule of Product Warranty Liability | Changes in product warranty obligations for the nine months ended June 30, 2016 and 2015 are (in millions): Nine Months Ended 2016 2015 Balance at beginning of period $ 27.9 $ 34.1 Accruals for warranties issued during the current period 18.7 20.0 Adjustments to pre-existing warranties (0.2 ) (2.7 ) Settlements of warranty claims (19.4 ) (20.9 ) Balance at end of period $ 27.0 $ 30.5 |
Retirement Benefits (Tables)
Retirement Benefits (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Schedule of Net Benefit Costs | The components of net periodic benefit cost (income) are (in millions): Pension Benefits Three Months Ended Nine Months Ended 2016 2015 2016 2015 Service cost $ 22.1 $ 21.3 $ 66.0 $ 64.5 Interest cost 42.5 41.7 127.2 125.6 Expected return on plan assets (54.8 ) (55.7 ) (163.9 ) (167.6 ) Amortization: Prior service credit (0.7 ) (0.7 ) (2.1 ) (2.0 ) Net actuarial loss 31.2 29.6 93.4 89.2 Net periodic benefit cost $ 40.3 $ 36.2 $ 120.6 $ 109.7 Other Postretirement Benefits Three Months Ended Nine Months Ended 2016 2015 2016 2015 Service cost $ 0.4 $ 0.4 $ 1.0 $ 1.2 Interest cost 0.8 1.0 2.5 3.1 Amortization: Prior service credit (2.8 ) (3.7 ) (8.5 ) (11.1 ) Net actuarial loss 0.6 1.2 1.9 3.5 Net periodic benefit income $ (1.0 ) $ (1.1 ) $ (3.1 ) $ (3.3 ) |
Accumulated Other Comprehensi29
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | Changes in accumulated other comprehensive loss by component were (in millions): Three Months Ended June 30, 2016 Pension and other postretirement benefit plan adjustments, net of tax Accumulated currency translation adjustments, net of tax Net unrealized gains (losses) on cash flow hedges, net of tax Total accumulated other comprehensive loss, net of tax Balance as of March 31, 2016 $ (1,060.3 ) $ (269.4 ) $ 4.0 $ (1,325.7 ) Other comprehensive loss before reclassifications — (18.3 ) (1.7 ) (20.0 ) Amounts reclassified from accumulated other comprehensive loss 18.5 — (1.1 ) 17.4 Other comprehensive income (loss) 18.5 (18.3 ) (2.8 ) (2.6 ) Balance as of June 30, 2016 $ (1,041.8 ) $ (287.7 ) $ 1.2 $ (1,328.3 ) Nine Months Ended June 30, 2016 Pension and other postretirement benefit plan adjustments, net of tax Accumulated currency translation adjustments, net of tax Net unrealized gains (losses) on cash flow hedges, net of tax Total accumulated other comprehensive loss, net of tax Balance as of September 30, 2015 $ (1,097.1 ) $ (252.4 ) $ 14.9 $ (1,334.6 ) Other comprehensive loss before reclassifications — (35.3 ) (1.0 ) (36.3 ) Amounts reclassified from accumulated other comprehensive loss 55.3 — (12.7 ) 42.6 Other comprehensive income (loss) 55.3 (35.3 ) (13.7 ) 6.3 Balance as of June 30, 2016 $ (1,041.8 ) $ (287.7 ) $ 1.2 $ (1,328.3 ) Three Months Ended June 30, 2015 Pension and other postretirement benefit plan adjustments, net of tax Accumulated currency translation adjustments, net of tax Net unrealized gains (losses) on cash flow hedges, net of tax Total accumulated other comprehensive loss, net of tax Balance as of March 31, 2015 $ (874.6 ) $ (213.1 ) $ 47.0 $ (1,040.7 ) Other comprehensive income (loss) before reclassifications — 27.4 (6.1 ) 21.3 Amounts reclassified from accumulated other comprehensive loss 17.4 — (13.4 ) 4.0 Other comprehensive income (loss) 17.4 27.4 (19.5 ) 25.3 Balance as of June 30, 2015 $ (857.2 ) $ (185.7 ) $ 27.5 $ (1,015.4 ) Nine Months Ended June 30, 2015 Pension and other postretirement benefit plan adjustments, net of tax Accumulated currency translation adjustments, net of tax Net unrealized gains (losses) on cash flow hedges, net of tax Total accumulated other comprehensive loss, net of tax Balance as of September 30, 2014 $ (909.4 ) $ (52.5 ) $ 13.9 $ (948.0 ) Other comprehensive (loss) income before reclassifications — (133.2 ) 37.5 (95.7 ) Amounts reclassified from accumulated other comprehensive loss 52.2 — (23.9 ) 28.3 Other comprehensive income (loss) 52.2 (133.2 ) 13.6 (67.4 ) Balance as of June 30, 2015 $ (857.2 ) $ (185.7 ) $ 27.5 $ (1,015.4 ) |
Reclassification out of Accumulated Other Comprehensive Income | The reclassifications out of accumulated other comprehensive loss to the Condensed Consolidated Statement of Operations were (in millions): Three Months Ended Nine Months Ended Affected Line in the Condensed Consolidated Statement of Operations 2016 2015 2016 2015 Pension and other postretirement benefit plan adjustments: Amortization of prior service credit $ (3.5 ) $ (4.4 ) $ (10.6 ) $ (13.1 ) (a) Amortization of net actuarial loss 31.8 30.8 95.3 92.7 (a) 28.3 26.4 84.7 79.6 Income before income taxes (9.8 ) (9.0 ) (29.4 ) (27.4 ) Income tax provision $ 18.5 $ 17.4 $ 55.3 $ 52.2 Net income Net unrealized losses (gains) on cash flow hedges: Forward exchange contracts $ 1.0 $ 2.0 $ 5.1 $ 5.6 Sales Forward exchange contracts (2.0 ) (16.1 ) (21.0 ) (29.7 ) Cost of sales (1.0 ) (14.1 ) (15.9 ) (24.1 ) Income before income taxes (0.1 ) 0.7 3.2 0.2 Income tax provision $ (1.1 ) $ (13.4 ) $ (12.7 ) $ (23.9 ) Net income Total reclassifications $ 17.4 $ 4.0 $ 42.6 $ 28.3 Net income (a) Reclassified from accumulated other comprehensive loss into cost of sales and selling, general and administrative expenses. These components are included in the computation of net periodic benefit cost (income). See Note 8 for further information. |
Business Segment Information (T
Business Segment Information (Tables) | 9 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following tables reflect the sales and operating results of our reportable segments (in millions): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Sales Architecture & Software $ 666.4 $ 683.5 $ 1,938.8 $ 2,065.6 Control Products & Solutions 807.6 891.7 2,402.1 2,634.8 Total $ 1,474.0 $ 1,575.2 $ 4,340.9 $ 4,700.4 Segment operating earnings Architecture & Software $ 184.2 $ 199.9 $ 515.0 $ 622.1 Control Products & Solutions 126.8 143.8 369.4 402.6 Total 311.0 343.7 884.4 1,024.7 Purchase accounting depreciation and amortization (4.7 ) (5.2 ) (13.9 ) (15.8 ) General corporate – net (17.0 ) (21.9 ) (54.5 ) (66.1 ) Non-operating pension costs (18.9 ) (15.6 ) (56.7 ) (47.2 ) Interest expense (18.1 ) (16.4 ) (53.1 ) (47.0 ) Income before income taxes $ 252.3 $ 284.6 $ 706.2 $ 848.6 |
Basis of Presentation and Acc31
Basis of Presentation and Accounting Policies (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Reconciled Basic and Diluted EPS | ||||
Net income | $ 191 | $ 206.1 | $ 544.5 | $ 626.3 |
Less: Allocation to participating securities | (0.2) | (0.3) | (0.6) | (0.5) |
Net income available to common shareowners | $ 190.8 | $ 205.8 | $ 543.9 | $ 625.8 |
Basic weighted average outstanding shares | 129.8 | 134.3 | 130.7 | 134.9 |
Effect of dilutive securities | ||||
Stock options | 0.9 | 1.1 | 0.9 | 1.1 |
Performance shares | 0.1 | 0.1 | 0 | 0.1 |
Diluted weighted average outstanding shares | 130.8 | 135.5 | 131.6 | 136.1 |
Basic earnings per share: | ||||
Basic | $ 1.47 | $ 1.53 | $ 4.16 | $ 4.64 |
Diluted earnings per share: | ||||
Diluted | $ 1.46 | $ 1.52 | $ 4.13 | $ 4.60 |
Basis of Presentation and Acc32
Basis of Presentation and Accounting Policies (Details Textual) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Sep. 30, 2015 | |
Accounting Policies [Abstract] | |||||
Allowance for doubtful accounts | $ 23.3 | $ 23.3 | $ 22 | ||
Allowance for certain customer returns, rebates and incentives | $ 8.9 | $ 8.9 | 9.2 | ||
Antidilutive share-based compensation awards | 1.8 | 1.2 | 2.6 | 1.5 | |
Capital expenditures in accounts payable or other current liabilities at period end | $ 19.3 | $ 10.2 | |||
Outstanding purchase of common stock recorded in accounts payable | $ 8.4 | $ 9.7 | |||
Scenario, Previously Reported [Member] | |||||
New Accounting Pronouncement, Early Adoption [Line Items] | |||||
Current deferred tax assets retrospectively reclassified to noncurrent | $ 151.2 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Share-Based Compensation (Textual) [Abstract] | ||||
Pre-tax share-based compensation expense | $ 9.8 | $ 10.2 | $ 30.4 | $ 31.4 |
Stock options [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Grants | 1,140 | 1,038 | ||
Wtd. Avg. Share Fair Value | $ 21.20 | $ 26.70 | ||
Performance shares [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Grants | 96 | 87 | ||
Wtd. Avg. Share Fair Value | $ 87.64 | $ 103.70 | ||
Restricted stock and restricted stock units [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Grants | 64 | 51 | ||
Wtd. Avg. Share Fair Value | $ 105.19 | $ 115.10 | ||
Unrestricted stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Grants | 10 | 7 | ||
Wtd. Avg. Share Fair Value | $ 98.79 | $ 111.43 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Sep. 30, 2015 |
Inventories | ||
Finished goods | $ 227.5 | $ 225.7 |
Work in process | 177.3 | 157.5 |
Raw materials | 151.5 | 152.4 |
Inventories | $ 556.3 | $ 535.6 |
Goodwill and Other Intangible35
Goodwill and Other Intangible Assets (Details) $ in Millions | 9 Months Ended |
Jun. 30, 2016USD ($) | |
Goodwill | |
Balance as of September 30, 2015 | $ 1,028.8 |
Acquisition of business | 8.1 |
Translation | (20.8) |
Balance as of June 30, 2016 | 1,016.1 |
Architecture & Software [Member] | |
Goodwill | |
Balance as of September 30, 2015 | 388 |
Acquisition of business | 8.1 |
Translation | (6.1) |
Balance as of June 30, 2016 | 390 |
Control Products & Solutions [Member] | |
Goodwill | |
Balance as of September 30, 2015 | 640.8 |
Acquisition of business | 0 |
Translation | (14.7) |
Balance as of June 30, 2016 | $ 626.1 |
Goodwill and Other Intangible36
Goodwill and Other Intangible Assets (Details 1) - USD ($) $ in Millions | 9 Months Ended | |
Jun. 30, 2016 | Sep. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Total, carrying amount | $ 439.1 | $ 440.5 |
Total, net | 213.4 | 229.5 |
Finite-lived intangible assets acquired | 8.3 | |
Other intangible assets | ||
Amortized intangible assets, carrying amount | 395.4 | 396.8 |
Amortized intangible assets, accumulated amortization | 225.7 | 211 |
Amortized intangible assets, net | 169.7 | 185.8 |
Goodwill and Other Intangible Assets (Textual) [Abstract] | ||
Estimated amortization expense in 2016 | 28.8 | |
Estimated amortization expense in 2017 | 26.1 | |
Estimated amortization expense in 2018 | 20.4 | |
Estimated amortization expense in 2019 | 17.7 | |
Estimated amortization expense in 2020 | 15.1 | |
Trademarks [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Allen-Bradley® trademark not subject to amortization | 43.7 | 43.7 |
Computer software products [Member] | ||
Other intangible assets | ||
Amortized intangible assets, carrying amount | 182.4 | 182.4 |
Amortized intangible assets, accumulated amortization | 100.8 | 91.9 |
Amortized intangible assets, net | 81.6 | 90.5 |
Customer relationships [Member] | ||
Other intangible assets | ||
Amortized intangible assets, carrying amount | 85.5 | 87.2 |
Amortized intangible assets, accumulated amortization | 51.6 | 50.1 |
Amortized intangible assets, net | 33.9 | 37.1 |
Technology [Member] | ||
Other intangible assets | ||
Amortized intangible assets, carrying amount | 86 | 83.4 |
Amortized intangible assets, accumulated amortization | 47.5 | 44.1 |
Amortized intangible assets, net | 38.5 | 39.3 |
Trademarks [Member] | ||
Other intangible assets | ||
Amortized intangible assets, carrying amount | 30.5 | 32.3 |
Amortized intangible assets, accumulated amortization | 17 | 16.3 |
Amortized intangible assets, net | 13.5 | 16 |
Other [Member] | ||
Other intangible assets | ||
Amortized intangible assets, carrying amount | 11 | 11.5 |
Amortized intangible assets, accumulated amortization | 8.8 | 8.6 |
Amortized intangible assets, net | $ 2.2 | $ 2.9 |
Short-term Debt (Details)
Short-term Debt (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Sep. 30, 2015 |
Short-term Debt [Abstract] | ||
Commercial paper borrowings outstanding | $ 354 | $ 0 |
Weighted average interest rate of commercial paper outstanding | 0.49% |
Other Current Liabilities (Deta
Other Current Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Sep. 30, 2015 | Jun. 30, 2015 | Sep. 30, 2014 |
Other current liabilities | ||||
Unrealized losses on foreign exchange contracts | $ 19.3 | $ 16.4 | ||
Product warranty obligations | 27 | 27.9 | $ 30.5 | $ 34.1 |
Taxes other than income taxes | 41.6 | 34.9 | ||
Accrued interest | 16.2 | 16.9 | ||
Dividends payable | 93.8 | 0 | ||
Income taxes payable | 38.7 | 50.9 | ||
Other | 57.3 | 61 | ||
Other current liabilities | $ 293.9 | $ 208 |
Product Warranty Obligations (D
Product Warranty Obligations (Details) - USD ($) $ in Millions | 9 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Changes in product warranty obligations | ||
Balance at beginning of period | $ 27.9 | $ 34.1 |
Accruals for warranties issued during the current period | 18.7 | 20 |
Adjustments to pre-existing warranties | (0.2) | (2.7) |
Settlements of warranty claims | (19.4) | (20.9) |
Balance at end of period | $ 27 | $ 30.5 |
Retirement Benefits (Details)
Retirement Benefits (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Pension Benefits [Member] | ||||
Components of net periodic benefit cost (income) | ||||
Service cost | $ 22.1 | $ 21.3 | $ 66 | $ 64.5 |
Interest cost | 42.5 | 41.7 | 127.2 | 125.6 |
Expected return on plan assets | (54.8) | (55.7) | (163.9) | (167.6) |
Amortization: | ||||
Prior service credit | (0.7) | (0.7) | (2.1) | (2) |
Net actuarial loss | 31.2 | 29.6 | 93.4 | 89.2 |
Net periodic benefit cost (income) | 40.3 | 36.2 | 120.6 | 109.7 |
Other Postretirement Benefits [Member] | ||||
Components of net periodic benefit cost (income) | ||||
Service cost | 0.4 | 0.4 | 1 | 1.2 |
Interest cost | 0.8 | 1 | 2.5 | 3.1 |
Amortization: | ||||
Prior service credit | (2.8) | (3.7) | (8.5) | (11.1) |
Net actuarial loss | 0.6 | 1.2 | 1.9 | 3.5 |
Net periodic benefit cost (income) | $ (1) | $ (1.1) | $ (3.1) | $ (3.3) |
Accumulated Other Comprehensi41
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Balance at beginning of period | $ (1,325.7) | $ (1,040.7) | $ (1,334.6) | $ (948) |
Other comprehensive (loss) income before reclassifications | (20) | 21.3 | (36.3) | (95.7) |
Amounts reclassified from accumulated other comprehensive loss | 17.4 | 4 | 42.6 | 28.3 |
Other comprehensive income (loss) | (2.6) | 25.3 | 6.3 | (67.4) |
Balance at end of period | (1,328.3) | (1,015.4) | (1,328.3) | (1,015.4) |
Pension and other postretirement benefit plan adjustments [Member] | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Balance at beginning of period | (1,060.3) | (874.6) | (1,097.1) | (909.4) |
Other comprehensive (loss) income before reclassifications | 0 | 0 | 0 | 0 |
Amounts reclassified from accumulated other comprehensive loss | 18.5 | 17.4 | 55.3 | 52.2 |
Other comprehensive income (loss) | 18.5 | 17.4 | 55.3 | 52.2 |
Balance at end of period | (1,041.8) | (857.2) | (1,041.8) | (857.2) |
Accumulated currency translation adjustments [Member] | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Balance at beginning of period | (269.4) | (213.1) | (252.4) | (52.5) |
Other comprehensive (loss) income before reclassifications | (18.3) | 27.4 | (35.3) | (133.2) |
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 | 0 | 0 |
Other comprehensive income (loss) | (18.3) | 27.4 | (35.3) | (133.2) |
Balance at end of period | (287.7) | (185.7) | (287.7) | (185.7) |
Net unrealized gains (losses) on cash flow hedges [Member] | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Balance at beginning of period | 4 | 47 | 14.9 | 13.9 |
Other comprehensive (loss) income before reclassifications | (1.7) | (6.1) | (1) | 37.5 |
Amounts reclassified from accumulated other comprehensive loss | (1.1) | (13.4) | (12.7) | (23.9) |
Other comprehensive income (loss) | (2.8) | (19.5) | (13.7) | 13.6 |
Balance at end of period | $ 1.2 | $ 27.5 | $ 1.2 | $ 27.5 |
Accumulated Other Comprehensi42
Accumulated Other Comprehensive Loss (Details 1) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Income before income taxes | $ 252.3 | $ 284.6 | $ 706.2 | $ 848.6 |
Income tax provision | (61.3) | (78.5) | (161.7) | (222.3) |
Net income | 191 | 206.1 | 544.5 | 626.3 |
Reclassification out of Accumulated Other Comprehensive Loss [Member] | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Net income | 17.4 | 4 | 42.6 | 28.3 |
Pension and other postretirement benefit plan adjustments [Member] | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Amortization of prior service credit | (3.5) | (4.4) | (10.6) | (13.1) |
Amortization of net actuarial loss | 31.8 | 30.8 | 95.3 | 92.7 |
Pension and other postretirement benefit plan adjustments [Member] | Reclassification out of Accumulated Other Comprehensive Loss [Member] | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Income before income taxes | 28.3 | 26.4 | 84.7 | 79.6 |
Income tax provision | (9.8) | (9) | (29.4) | (27.4) |
Net income | 18.5 | 17.4 | 55.3 | 52.2 |
Net unrealized gains (losses) on cash flow hedges [Member] | Reclassification out of Accumulated Other Comprehensive Loss [Member] | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Income before income taxes | (1) | (14.1) | (15.9) | (24.1) |
Income tax provision | (0.1) | 0.7 | 3.2 | 0.2 |
Net income | (1.1) | (13.4) | (12.7) | (23.9) |
Net unrealized gains (losses) on cash flow hedges [Member] | Foreign Exchange Forward [Member] | Sales [Member] | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Amounts reclassified from accumulated other comprehensive loss | 1 | 2 | 5.1 | 5.6 |
Net unrealized gains (losses) on cash flow hedges [Member] | Foreign Exchange Forward [Member] | Cost of sales [Member] | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Amounts reclassified from accumulated other comprehensive loss | $ (2) | $ (16.1) | $ (21) | $ (29.7) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |||||
Effective income tax rate | 24.30% | 27.60% | 22.90% | 26.20% | |
U.S. statutory rate | 35.00% | 35.00% | 35.00% | 35.00% | |
Gross unrecognized tax benefits | $ 27.3 | $ 27.3 | $ 43.9 | ||
Accrued interest and penalties related to unrecognized tax benefits | 4.5 | 4.5 | $ 5.1 | ||
Reasonably possible amount of reduction in gross unrecognized tax benefits for the next twelve months | $ 1.5 | $ 1.5 | |||
Earliest open year for income tax examinations, U.S. federal | 2,014 | ||||
Earliest open tax year for income tax examinations, state, local and non-U.S. | 2,003 |
Business Segment Information (D
Business Segment Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Sales and operating results of reportable segments | ||||
Sales | $ 1,474 | $ 1,575.2 | $ 4,340.9 | $ 4,700.4 |
Income before income taxes | 252.3 | 284.6 | 706.2 | 848.6 |
Interest expense | (18.1) | (16.4) | (53.1) | (47) |
Operating Segments [Member] | ||||
Sales and operating results of reportable segments | ||||
Income before income taxes | 311 | 343.7 | 884.4 | 1,024.7 |
Segment Reconciling Items [Member] | ||||
Sales and operating results of reportable segments | ||||
Purchase accounting depreciation and amortization | (4.7) | (5.2) | (13.9) | (15.8) |
Non-operating pension costs | (18.9) | (15.6) | (56.7) | (47.2) |
Corporate, Non-Segment [Member] | ||||
Sales and operating results of reportable segments | ||||
General corporate - net | (17) | (21.9) | (54.5) | (66.1) |
Interest expense | (18.1) | (16.4) | (53.1) | (47) |
Architecture & Software [Member] | ||||
Sales and operating results of reportable segments | ||||
Sales | 666.4 | 683.5 | 1,938.8 | 2,065.6 |
Income before income taxes | 184.2 | 199.9 | 515 | 622.1 |
Control Products & Solutions [Member] | ||||
Sales and operating results of reportable segments | ||||
Sales | 807.6 | 891.7 | 2,402.1 | 2,634.8 |
Income before income taxes | $ 126.8 | $ 143.8 | $ 369.4 | $ 402.6 |
Rocky Flats Settlement (Details
Rocky Flats Settlement (Details) - Rocky Flats [Member] $ in Thousands | 9 Months Ended |
Jun. 30, 2016USD ($) | |
Loss Contingencies [Line Items] | |
Settlement amount, in aggregate | $ 375,000 |
Settlement amount, total Rockwell obligation | 243,750 |
Settlement liability, current | 7,750 |
Settlement amount receivable from U.S. Department of Energy | $ 243,750 |