EX-99 2 c03744exv99.htm EXHIBIT 99 Exhibit 99

Exhibit 99

1201 S. Second Street
Milwaukee, WI 53204
USA
Fax: 414.382.5560

News Release

(ROCKWELL LOGO)

         
Contact
  John Bernaden   Rondi Rohr-Dralle
 
   Media Relations   Investor Relations
 
   Rockwell Automation   Rockwell Automation
 
   414.382.2555   414.382.8510

Rockwell Automation Reports Third Quarter 2010 Results

  •   Revenue up 25 percent year over year and up 9 percent sequentially

  •   Diluted EPS from continuing operations of $0.83

  •   Company raises fiscal 2010 EPS guidance to $2.95 to $3.05

MILWAUKEE (July 28, 2010) – Rockwell Automation, Inc. (NYSE: ROK) today reported fiscal 2010 third quarter revenue of $1,268.1 million, up 25 percent compared to $1,010.8 million in the third quarter of fiscal 2009. The year-over-year impact from currency translation was negligible in the quarter. Fiscal 2010 third quarter revenue was up
9 percent sequentially compared to the second quarter of fiscal 2010. Fiscal 2010 third quarter net income was $119.4 million ($0.83 per share), compared to $32.8 million ($0.23 per share) in the third quarter of fiscal 2009.

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Total segment operating earnings were $198.0 million in the third quarter of fiscal 2010, up from $86.3 million in the same period of 2009. Total segment operating margin in the third quarter of fiscal 2010 increased to 15.6 percent from 8.5 percent a year ago, primarily due to higher segment operating margin in the Architecture & Software segment.

Free cash flow was $116.7 million in the third quarter of fiscal 2010. Return on invested capital was 17.7 percent.

Organic sales, total segment operating earnings, total segment operating margin, free cash flow and return on invested capital are non-GAAP measures that are reconciled to GAAP measures in the attachments to this release.

Commenting on the results, Keith D. Nosbusch, chairman and chief executive officer, said, “I am pleased with the strong revenue and earnings performance this quarter. Our revenue growth was broad-based across all regions. China had an exceptional quarter with 42 percent year-over-year organic growth and Latin America rebounded strongly. Operating margin expanded and we increased spending to fuel future growth.”

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Outlook
Commenting on the outlook, Nosbusch added, “We expect fourth quarter revenue to grow sequentially on the strength of our solutions and services business and emerging markets. Based on our third quarter results and this outlook, we are raising our full-year fiscal 2010 guidance to earnings per share of $2.95 to $3.05 on revenue of approximately $4.8 billion.”

Nosbusch continued, “We have performed very well in the early part of the recovery. Although macroeconomic conditions are uncertain, we are optimistic that the global recovery will continue. I am confident in our strategy and our ability to execute. We are well-positioned to take advantage of improving market conditions as we proceed through the cycle.”

Following is a discussion of third quarter results for both segments.

Architecture & Software
Architecture & Software fiscal 2010 third quarter sales were $553.9 million, an increase of 39 percent from $399.5 million in the third quarter of fiscal 2009. Fiscal 2010 third quarter sales were up 7 percent sequentially from the second quarter of fiscal 2010. Segment operating earnings were $125.4 million in the third quarter of fiscal 2010, up from $43.3 million in the third quarter of fiscal 2009. Architecture & Software segment operating margin was 22.6 percent in the third quarter of fiscal 2010 compared to 10.8 percent a year ago. Segment operating margin increased primarily due to volume leverage.

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Control Products & Solutions
Control Products & Solutions fiscal 2010 third quarter sales were $714.2 million, an increase of 17 percent from $611.3 million in the third quarter of fiscal 2009. Currency translation contributed less than 1 percentage point to the increase. Fiscal 2010 third quarter sales were up 10 percent sequentially from the second quarter of fiscal 2010. Segment operating earnings were $72.6 million in the third quarter of fiscal 2010, up from $43.0 million in the third quarter of fiscal 2009. Control Products & Solutions segment operating margin was 10.2 percent in the third quarter of fiscal 2010 compared to 7.0 percent a year ago. Segment operating margin increased primarily due to volume leverage.

Other Information
Fiscal 2010 third quarter general corporate net expense was $23.1 million, up from $16.3 million in the third quarter of fiscal 2009, primarily due to performance-based compensation.

The effective tax rate for the third quarter of fiscal 2010 was 23.2 percent; the Company now expects the full-year tax rate to be in the range of 19 to 20 percent.

During the third quarter of 2010, the Company repurchased 1.2 million shares of its common stock at a cost of $67.7 million. The Company had $528.1 million available at June 30, 2010 under its $1.0 billion share repurchase authorization.

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Conference Call
A conference call to discuss our financial results will take place at 8:30 A.M. Eastern Time on July 28. The call and related financial charts will be webcast and accessible via the Rockwell Automation website (www.rockwellautomation.com).

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This news release contains statements (including certain projections and business trends) that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Words such as “believe”, “estimate”, “project”, “plan”, “expect”, “anticipate”, “will”, “intend” and other similar expressions may identify forward-looking statements. Actual results may differ materially from those projected as a result of certain risks and uncertainties, many of which are beyond our control, including but not limited to:

  •   macroeconomic factors, including global and regional business conditions, the availability and cost of capital, and the cyclical nature of our customers’ capital spending, all of which may affect demand for our offerings, and currency exchange rates;

  •   laws, regulations and governmental policies affecting our activities in the countries where we do business;

  •   successful development of advanced technologies and demand for and market acceptance of new and existing products;

  •   the availability, effectiveness and security of our information technology systems;

  •   competitive product and pricing pressures;

  •   disruption of our operations due to natural disasters, acts of war, strikes, terrorism or other causes;

  •   intellectual property infringement claims by others and the ability to protect our intellectual property;

  •   our ability to successfully address claims by taxing authorities in the various jurisdictions where we do business;

  •   our ability to attract and retain qualified personnel;

  •   the uncertainties of litigation;

  •   disruption of our distribution channels;

  •   the availability and price of components and materials;

  •   successful execution of our cost productivity, restructuring and globalization initiatives; and

  •   other risks and uncertainties, including but not limited to those detailed from time to time in our Securities and Exchange Commission filings.

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

Rockwell Automation, Inc. (NYSE: ROK), the world’s largest company dedicated to industrial automation and information, makes its customers more productive and the world more sustainable. Headquartered in Milwaukee, Wis., Rockwell Automation employs about 19,000 people serving customers in more than 80 countries.

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ROCKWELL AUTOMATION, INC.
SALES AND EARNINGS INFORMATION
(in millions, except per share amounts)
                                 
    Three Months Ended     Nine Months Ended  
    June 30,     June 30,  
    2010     2009     2010     2009  
Sales
                                
Architecture & Software (a)
   $ 553.9     $ 399.5     $ 1,539.1     $ 1,299.4  
Control Products & Solutions (b)
     714.2       611.3       1,961.0       1,958.7  
 
                        
Total sales (c)
   $ 1,268.1     $ 1,010.8     $ 3,500.1     $ 3,258.1  
 
                        
 
                                
Segment operating earnings
                                
Architecture & Software (d)
   $ 125.4     $ 43.3     $ 347.0     $ 186.1  
Control Products & Solutions (e)
     72.6       43.0       165.1       164.0  
 
                        
Total segment operating earnings1 (f)
     198.0       86.3       512.1       350.1  
 
                                
Purchase accounting depreciation and amortization
     (4.6 )     (4.4 )     (14.2 )     (14.2 )
General corporate — net
     (23.1 )     (16.3 )     (66.2 )     (49.1 )
Interest expense
     (14.8 )     (15.4 )     (45.3 )     (45.7 )
Special items
     —       —       —       4.0  
 
                        
Income from continuing operations before income taxes
     155.5       50.2       386.4       245.1  
Income tax provision
     (36.1 )     (17.4 )     (77.3 )     (56.1 )
 
                        
Income from continuing operations
     119.4       32.8       309.1       189.0  
Income from discontinued operations
     —       —       23.9       2.8  
 
                        
 
                                
Net income
   $ 119.4     $ 32.8     $ 333.0     $ 191.8  
 
                        
 
                                
Diluted earnings per share
                                
Continuing operations
   $ 0.83     $ 0.23     $ 2.14     $ 1.33  
Discontinued operations
     —       —       0.17       0.02  
 
                        
Net income
   $ 0.83     $ 0.23     $ 2.31     $ 1.35  
 
                        
 
                                
Average diluted shares
     144.3       142.3       144.1       142.1  
 
                        
 
                                
Segment operating margin
                                
Architecture & Software (d/a)
     22.6 %     10.8 %     22.5 %     14.3 %
Control Products & Solutions (e/b)
     10.2 %     7.0 %     8.4 %     8.4 %
Total segment operating margin1 (f/c)
     15.6 %     8.5 %     14.6 %     10.7 %
     
1   Total segment operating earnings and total segment operating margin are non-GAAP financial measures. We believe that these measures are useful to investors as measures of operating performance. We use these measures to monitor and evaluate the profitability of our operating segments. Our measure of total segment operating earnings may be different from that used by other companies.

 

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ROCKWELL AUTOMATION, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in millions)
                                 
    Three Months Ended     Nine Months Ended  
    June 30,     June 30,  
    2010     2009     2010     2009  
 
                                
Sales
   $ 1,268.1     $ 1,010.8     $ 3,500.1     $ 3,258.1  
Cost of sales
     (760.8 )     (640.6 )     (2,092.9 )     (2,053.9 )
 
                        
Gross profit
     507.3       370.2       1,407.2       1,204.2  
 
                                
Selling, general and administrative expenses
     (333.3 )     (305.0 )     (969.0 )     (911.2 )
Other (expense) income
     (3.7 )     0.4       (6.5 )     (2.2 )
Interest expense
     (14.8 )     (15.4 )     (45.3 )     (45.7 )
 
                        
Income from continuing operations before income taxes
     155.5       50.2       386.4       245.1  
Income tax provision
     (36.1 )     (17.4 )     (77.3 )     (56.1 )
 
                        
 
                                
Income from continuing operations
     119.4       32.8       309.1       189.0  
 
                                
Income from discontinued operations
     —       —       23.9       2.8  
 
                        
 
                                
Net income
   $ 119.4     $ 32.8     $ 333.0     $ 191.8  
 
                        

 

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ROCKWELL AUTOMATION, INC.
CONDENSED BALANCE SHEET INFORMATION
(in millions)
                 
    June 30,     September 30,  
    2010     2009  
Assets
                
Cash and cash equivalents
   $ 826.0     $ 643.8  
Receivables
     826.4       726.3  
Inventories
     576.5       436.4  
Property, net
     513.0       532.5  
Goodwill and intangibles
     1,096.3       1,144.1  
Other assets
     776.3       822.6  
 
            
 
                
Total
   $ 4,614.5     $ 4,305.7  
 
            
 
                
Liabilities and Shareowners’ Equity
                
Accounts payable
     398.4     $ 313.3  
Long-term debt
     904.8       904.7  
Other liabilities
     1,935.3       1,771.3  
Shareowners’ equity
     1,376.0       1,316.4  
 
            
 
                
Total
   $ 4,614.5     $ 4,305.7  
 
            

 

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ROCKWELL AUTOMATION, INC.
CONDENSED CASH FLOW INFORMATION
(in millions)
                 
    Nine Months Ended  
    June 30,  
    2010     2009  
Continuing operations:
                
 
                
Operating activities:
                
Income from continuing operations
   $ 309.1     $ 189.0  
Depreciation and amortization
     94.2       98.8  
Retirement benefits expense
     66.6       36.4  
Pension trust contributions
     (21.9 )     (22.7 )
Receivables/inventories/payables
     (197.8 )     172.4  
Compensation and benefits
     115.0       (56.8 )
Income taxes
     22.2       (5.8 )
Other
     46.0       (2.7 )
 
            
 
                
Cash provided by operating activities
     433.4       408.6  
 
            
 
                
Investing activities:
                
Capital expenditures
     (54.2 )     (67.5 )
Acquisition of businesses, net of cash acquired
     —       (30.1 )
Proceeds from sale of property and short-term investments
     4.5       3.0  
Purchases of short-term investments
     —       (8.4 )
Other investing activities
     —       (4.1 )
 
            
 
                
Cash used for investing activities
     (49.7 )     (107.1 )
 
            
 
                
Financing activities:
                
Net repayment of debt
     —       (100.0 )
Cash dividends
     (124.0 )     (123.3 )
Purchases of treasury stock
     (90.4 )     (53.5 )
Proceeds from the exercise of stock options
     28.7       7.4  
Excess income tax benefit from share-based compensation
     12.3       1.3  
Other financing activities
     (0.3 )     (3.0 )
 
            
 
                
Cash used for financing activities
     (173.7 )     (271.1 )
 
            
 
                
Effect of exchange rate changes on cash
     (27.6 )     (31.6 )
 
            
 
                
Cash provided by (used for) continuing operations
     182.4       (1.2 )
 
                
Discontinued operations:
                
Cash used for discontinued operations
     (0.2 )     (0.5 )
 
            
 
                
Increase (decrease) in cash and cash equivalents
   $ 182.2     $ (1.7 )
 
            

 

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ROCKWELL AUTOMATION, INC.
OTHER SUPPLEMENTAL INFORMATION
(in millions)
Organic Sales
Our press release contains information regarding sales excluding the effect of changes in currency and organic sales, which we define as sales excluding the effect of changes in currency exchange rates and acquisitions. We believe these non-GAAP measures provide useful information to investors because they reflect regional performance from our activities without the effect of changes in currency exchange rates and/or acquisitions. We use organic sales and sales excluding the effect of changes in currency as two measures to monitor and evaluate our regional performance. We determine the effect of changes in currency exchange rates by translating the respective period’s sales using the currency exchange rates that were in effect during the prior year. When we acquire businesses, we exclude sales in the current year for which there are no comparable sales in the prior period. Organic sales growth is calculated by comparing organic sales to reported sales in the prior year. Sales are attributed to the geographic regions based on the country of destination.
The following is a reconciliation of reported sales to organic sales for the three and nine months ended June 30, 2010 compared to sales for the three and nine months ended June 30, 2009:
                                                 
    Three Months Ended June 30,  
    2010     2009  
                    Sales                    
                    Excluding                    
            Effect of     Effect of                    
            Changes in     Changes in     Effect of     Organic        
    Sales     Currency     Currency     Acquisitions     Sales     Sales  
 
                                                
United States
   $ 658.7     $ (1.6 )   $ 657.1     $ —     $ 657.1     $ 518.2  
Canada
     88.2       (9.8 )     78.4       —       78.4       60.3  
Europe, Middle East, Africa
     240.3       14.6       254.9       —       254.9       219.3  
Asia-Pacific
     186.1       (8.7 )     177.4       —       177.4       144.7  
Latin America
     94.8       0.6       95.4       —       95.4       68.3  
 
                                    
Total
   $ 1,268.1     $ (4.9 )   $ 1,263.2     $ —     $ 1,263.2     $ 1,010.8  
 
                                    
                                                 
    Nine Months Ended June 30,  
    2010     2009  
                    Sales                    
                    Excluding                    
            Effect of     Effect of                    
            Changes in     Changes in     Effect of     Organic        
    Sales     Currency     Currency     Acquisitions     Sales     Sales  
 
                                                
United States
   $ 1,778.3     $ (5.9 )   $ 1,772.4     $ (1.5 )   $ 1,770.9     $ 1,697.7  
Canada
     239.2       (30.5 )     208.7       (12.2 )     196.5       188.6  
Europe, Middle East, Africa
     714.6       (25.4 )     689.2       —       689.2       712.5  
Asia-Pacific
     512.3       (36.6 )     475.7       (2.7 )     473.0       420.3  
Latin America
     255.7       (9.6 )     246.1       —       246.1       239.0  
 
                                    
Total
   $ 3,500.1     $ (108.0 )   $ 3,392.1     $ (16.4 )   $ 3,375.7     $ 3,258.1  
 
                                    
The following is a reconciliation of reported sales to organic sales for our operating segments for the three and nine months ended June 30, 2010 compared to sales for the three and nine months ended June 30, 2009:
                                                 
    Three Months Ended June 30,  
    2010     2009  
                    Sales                    
                    Excluding                    
            Effect of     Effect of                    
            Changes in     Changes in     Effect of     Organic        
    Sales     Currency     Currency     Acquisitions     Sales     Sales  
 
                                                
Architecture & Software
   $ 553.9     $ (1.0 )   $ 552.9     $ —     $ 552.9     $ 399.5  
Control Products & Solutions
     714.2       (3.9 )     710.3       —       710.3       611.3  
 
                                    
Total
   $ 1,268.1     $ (4.9 )   $ 1,263.2     $ —     $ 1,263.2     $ 1,010.8  
 
                                    
                                                 
    Nine Months Ended June 30,  
    2010     2009  
                    Sales                    
                    Excluding                    
            Effect of     Effect of                    
            Changes in     Changes in     Effect of     Organic        
    Sales     Currency     Currency     Acquisitions     Sales     Sales  
 
                                                
Architecture & Software
   $ 1,539.1     $ (52.1 )   $ 1,487.0     $ —     $ 1,487.0     $ 1,299.4  
Control Products & Solutions
     1,961.0       (55.9 )     1,905.1       (16.4 )     1,888.7       1,958.7  
 
                                    
Total
   $ 3,500.1     $ (108.0 )   $ 3,392.1     $ (16.4 )   $ 3,375.7     $ 3,258.1  
 
                                    

 

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ROCKWELL AUTOMATION, INC.
OTHER SUPPLEMENTAL INFORMATION
(in millions)
Free Cash Flow
Our definition of free cash flow, which is a non-GAAP financial measure, takes into consideration capital investments required to maintain the operations of our businesses and execute our strategy. We account for share-based compensation under U.S. GAAP, which requires that we report the excess income tax benefit from share-based compensation as a financing cash flow rather than as an operating cash flow. We have added this benefit back to our calculation of free cash flow in order to generally classify cash flows arising from income taxes as operating cash flows.
In our opinion, free cash flow provides useful information to investors regarding our ability to generate cash from business operations that is available for acquisitions and other investments, service of debt principal, dividends and share repurchases. We use free cash flow, as defined, as one measure to monitor and evaluate performance. Our definition of free cash flow may be different from definitions used by other companies.
The following table summarizes free cash flow by quarter:
                                                         
    Quarter Ended  
    Dec. 31,     March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,     June 30,  
    2008     2009     2009     2009     2009     2010     2010  
 
                                                        
Cash provided by continuing operating activities
   $ 48.8     $ 169.9     $ 189.9     $ 117.8     $ 119.4     $ 178.5     $ 135.5  
Capital expenditures of continuing operations
     (27.4 )     (18.3 )     (21.8 )     (30.5 )     (13.5 )     (17.0 )     (23.7 )
Excess income tax benefit from share-based compensation
     0.4       0.5       0.4       1.1       2.1       5.3       4.9  
 
                                          
Free cash flow
   $ 21.8     $ 152.1     $ 168.5     $ 88.4     $ 108.0     $ 166.8     $ 116.7  
 
                                          
Return On Invested Capital
Our press release contains information regarding Return On Invested Capital (ROIC), which is a non-GAAP financial measure. We believe that ROIC is useful to investors as a measure of performance and of the effectiveness of the use of capital in our operations. We use ROIC as one measure to monitor and evaluate performance. Our measure of ROIC may be different from that used by other companies. We define ROIC as the percentage resulting from the following calculation:
(a) Income from continuing operations, before special items, interest expense, income tax provision, and purchase accounting depreciation and amortization, divided by;
(b) average invested capital for the year, calculated as a five quarter rolling average using the sum of short-term debt, long-term debt, shareowners’ equity, and accumulated amortization of goodwill and other intangible assets, minus cash and cash equivalents, multiplied by;
(c) one minus the effective tax rate for the period.
ROIC is calculated as follows:
                 
    Twelve Months Ended  
    June 30,  
    2010     2009  
 
                
(a) Return
                
 
                
Income from continuing operations
   $ 338.0     $ 314.6  
Interest expense
     60.5       61.8  
Income tax provision
     77.2       107.2  
Purchase accounting depreciation and amortization
     18.6       19.3  
Special items
     —       42.7  
 
            
Return
     494.3       545.6  
 
            
 
                
(b) Average invested capital
                
Short-term debt
     —       136.9  
Long-term debt
     904.8       904.5  
Shareowners’ equity
     1,417.3       1,679.6  
Accumulated amortization of goodwill and intangibles
     671.2       641.1  
Cash and cash equivalents
     (716.8 )     (608.4 )
 
            
Average invested capital
     2,276.5       2,753.7  
 
            
 
                
(c) Effective tax rate
                
Income tax provision
     77.2       107.2  
 
                
Income from continuing operations before income taxes
   $ 415.2     $ 421.8  
 
            
 
                
Effective tax rate
     18.6 %     25.4 %
 
            
 
                
(a) / (b) * (1-c) Return On Invested Capital
     17.7 %     14.8 %
 
            

 

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