Delaware | 25-1797617 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
1201 South Second Street, Milwaukee, Wisconsin | 53204 | |
(Address of principal executive offices) | (Zip Code) |
Large Accelerated Filer | ☑ | Accelerated Filer | ☐ | |||
Non-accelerated Filer | ☐ (Do not check if smaller reporting company) | Smaller Reporting Company | ☐ | |||
Emerging Growth Company | ☐ |
Page No. | |
March 31, 2017 | September 30, 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 1,440.8 | $ | 1,526.4 | |||
Short-term investments | 1,092.7 | 902.8 | |||||
Receivables | 1,082.6 | 1,079.0 | |||||
Inventories | 543.2 | 526.6 | |||||
Other current assets | 158.1 | 150.2 | |||||
Total current assets | 4,317.4 | 4,185.0 | |||||
Property, net of accumulated depreciation of $1,443.2 and $1,404.5, respectively | 567.2 | 578.3 | |||||
Goodwill | 1,063.3 | 1,073.9 | |||||
Other intangible assets, net | 239.2 | 255.3 | |||||
Deferred income taxes | 634.0 | 633.9 | |||||
Other assets | 243.9 | 374.8 | |||||
Total | $ | 7,065.0 | $ | 7,101.2 | |||
LIABILITIES AND SHAREOWNERS’ EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt | $ | 373.4 | $ | 448.6 | |||
Current portion of long-term debt | 250.0 | — | |||||
Accounts payable | 564.6 | 543.1 | |||||
Compensation and benefits | 196.0 | 145.6 | |||||
Advance payments from customers and deferred revenue | 247.1 | 214.5 | |||||
Customer returns, rebates and incentives | 179.4 | 176.5 | |||||
Other current liabilities | 214.9 | 447.6 | |||||
Total current liabilities | 2,025.4 | 1,975.9 | |||||
Long-term debt | 1,240.0 | 1,516.3 | |||||
Retirement benefits | 1,402.6 | 1,430.2 | |||||
Other liabilities | 199.2 | 188.7 | |||||
Commitments and contingent liabilities (Note 11) | |||||||
Shareowners’ equity: | |||||||
Common stock ($1.00 par value, shares issued: 181.4) | 181.4 | 181.4 | |||||
Additional paid-in capital | 1,615.4 | 1,588.2 | |||||
Retained earnings | 5,877.1 | 5,668.4 | |||||
Accumulated other comprehensive loss | (1,508.0 | ) | (1,538.8 | ) | |||
Common stock in treasury, at cost (shares held: March 31, 2017, 52.6; September 30, 2016, 52.9) | (3,968.1 | ) | (3,909.1 | ) | |||
Total shareowners’ equity | 2,197.8 | 1,990.1 | |||||
Total | $ | 7,065.0 | $ | 7,101.2 |
Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Sales | |||||||||||||||
Products and solutions | $ | 1,384.4 | $ | 1,283.0 | $ | 2,714.6 | $ | 2,554.3 | |||||||
Services | 169.9 | 157.3 | 330.0 | 312.6 | |||||||||||
1,554.3 | 1,440.3 | 3,044.6 | 2,866.9 | ||||||||||||
Cost of sales | |||||||||||||||
Products and solutions | (787.2 | ) | (738.3 | ) | (1,534.3 | ) | (1,446.9 | ) | |||||||
Services | (110.6 | ) | (107.9 | ) | (211.5 | ) | (213.2 | ) | |||||||
(897.8 | ) | (846.2 | ) | (1,745.8 | ) | (1,660.1 | ) | ||||||||
Gross profit | 656.5 | 594.1 | 1,298.8 | 1,206.8 | |||||||||||
Selling, general and administrative expenses | (409.2 | ) | (358.7 | ) | (779.2 | ) | (718.6 | ) | |||||||
Other income (expense) | 1.9 | (0.8 | ) | 5.9 | 0.7 | ||||||||||
Interest expense | (18.9 | ) | (17.6 | ) | (37.6 | ) | (35.0 | ) | |||||||
Income before income taxes | 230.3 | 217.0 | 487.9 | 453.9 | |||||||||||
Income tax provision | (40.8 | ) | (49.0 | ) | (83.7 | ) | (100.4 | ) | |||||||
Net income | $ | 189.5 | $ | 168.0 | $ | 404.2 | $ | 353.5 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 1.47 | $ | 1.29 | $ | 3.14 | $ | 2.69 | |||||||
Diluted | $ | 1.45 | $ | 1.28 | $ | 3.11 | $ | 2.68 | |||||||
Cash dividends per share | $ | 0.76 | $ | 0.725 | $ | 1.52 | $ | 1.45 | |||||||
Weighted average outstanding shares: | |||||||||||||||
Basic | 128.7 | 130.5 | 128.5 | 131.2 | |||||||||||
Diluted | 130.3 | 131.3 | 130.0 | 132.0 |
Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income | $ | 189.5 | $ | 168.0 | $ | 404.2 | $ | 353.5 | |||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Pension and other postretirement benefit plan adjustments (net of tax expense of $12.4, $9.8, $25.0, $19.6) | 23.8 | 18.4 | 48.3 | 36.8 | |||||||||||
Currency translation adjustments | 60.8 | 7.4 | (25.4 | ) | (17.0 | ) | |||||||||
Net change in unrealized gains and losses on cash flow hedges (net of tax (benefit) expense of ($0.7), ($4.3), $3.3, and ($4.1)) | (3.6 | ) | (12.5 | ) | 8.0 | (10.9 | ) | ||||||||
Net change in unrealized gains and losses on available-for-sale investments | (0.1 | ) | — | (0.1 | ) | — | |||||||||
Other comprehensive income | 80.9 | 13.3 | 30.8 | 8.9 | |||||||||||
Comprehensive income | $ | 270.4 | $ | 181.3 | $ | 435.0 | $ | 362.4 |
Six Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Operating activities: | |||||||
Net income | $ | 404.2 | $ | 353.5 | |||
Adjustments to arrive at cash provided by operating activities: | |||||||
Depreciation | 65.4 | 71.7 | |||||
Amortization of intangible assets | 15.6 | 14.7 | |||||
Share-based compensation expense | 20.2 | 20.6 | |||||
Retirement benefit expense | 86.1 | 78.2 | |||||
Pension contributions | (28.5 | ) | (21.2 | ) | |||
Net loss on disposition of property | 0.1 | 0.5 | |||||
Excess income tax benefit from share-based compensation | — | (1.2 | ) | ||||
Changes in assets and liabilities, excluding effects of acquisitions and foreign currency adjustments: | |||||||
Receivables | (16.4 | ) | 13.5 | ||||
Inventories | (16.6 | ) | (33.8 | ) | |||
Accounts payable | 20.0 | 3.3 | |||||
Advance payments from customers and deferred revenue | 33.2 | 26.5 | |||||
Compensation and benefits | 51.2 | (73.7 | ) | ||||
Income taxes | (7.7 | ) | (58.0 | ) | |||
Other assets and liabilities | (15.0 | ) | 4.7 | ||||
Cash provided by operating activities | 611.8 | 399.3 | |||||
Investing activities: | |||||||
Capital expenditures | (67.4 | ) | (52.6 | ) | |||
Acquisition of businesses, net of cash acquired | (1.1 | ) | (21.1 | ) | |||
Purchases of investments | (721.6 | ) | (590.6 | ) | |||
Proceeds from maturities of investments | 422.1 | 397.6 | |||||
Proceeds from sale of investments | 6.1 | — | |||||
Proceeds from sale of property | 0.4 | 0.2 | |||||
Cash used for investing activities | (361.5 | ) | (266.5 | ) | |||
Financing activities: | |||||||
Net (repayment) issuance of short-term debt | (75.1 | ) | 277.6 | ||||
Cash dividends | (195.5 | ) | (190.4 | ) | |||
Purchases of treasury stock | (185.0 | ) | (257.4 | ) | |||
Proceeds from the exercise of stock options | 136.9 | 12.8 | |||||
Excess income tax benefit from share-based compensation | — | 1.2 | |||||
Cash used for financing activities | (318.7 | ) | (156.2 | ) | |||
Effect of exchange rate changes on cash | (17.2 | ) | (7.6 | ) | |||
Decrease in cash and cash equivalents | (85.6 | ) | (31.0 | ) | |||
Cash and cash equivalents at beginning of period | 1,526.4 | 1,427.3 | |||||
Cash and cash equivalents at end of period | $ | 1,440.8 | $ | 1,396.3 |
Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income | $ | 189.5 | $ | 168.0 | $ | 404.2 | $ | 353.5 | |||||||
Less: Allocation to participating securities | (0.2 | ) | (0.2 | ) | (0.4 | ) | (0.4 | ) | |||||||
Net income available to common shareowners | $ | 189.3 | $ | 167.8 | $ | 403.8 | $ | 353.1 | |||||||
Basic weighted average outstanding shares | 128.7 | 130.5 | 128.5 | 131.2 | |||||||||||
Effect of dilutive securities | |||||||||||||||
Stock options | 1.3 | 0.8 | 1.3 | 0.8 | |||||||||||
Performance shares | 0.3 | — | 0.2 | — | |||||||||||
Diluted weighted average outstanding shares | 130.3 | 131.3 | 130.0 | 132.0 | |||||||||||
Earnings per share: | |||||||||||||||
Basic | $ | 1.47 | $ | 1.29 | $ | 3.14 | $ | 2.69 | |||||||
Diluted | $ | 1.45 | $ | 1.28 | $ | 3.11 | $ | 2.68 |
Six Months Ended March 31, | |||||||||||||
2017 | 2016 | ||||||||||||
Grants | Wtd. Avg. Share Fair Value | Grants | Wtd. Avg. Share Fair Value | ||||||||||
Stock options | 983 | $ | 25.39 | 1,134 | $ | 21.19 | |||||||
Performance shares | 42 | 174.37 | 96 | 87.64 | |||||||||
Restricted stock and restricted stock units | 46 | 135.84 | 57 | 103.67 | |||||||||
Unrestricted stock | 8 | 128.35 | 9 | 97.73 |
March 31, 2017 | September 30, 2016 | ||||||
Finished goods | $ | 215.1 | $ | 215.8 | |||
Work in process | 172.6 | 158.0 | |||||
Raw materials | 155.5 | 152.8 | |||||
Inventories | $ | 543.2 | $ | 526.6 |
Architecture & Software | Control Products & Solutions | Total | |||||||||
Balance as of September 30, 2016 | $ | 414.5 | $ | 659.4 | $ | 1,073.9 | |||||
Acquisition of business | — | 0.5 | 0.5 | ||||||||
Translation | (2.4 | ) | (8.7 | ) | (11.1 | ) | |||||
Balance as of March 31, 2017 | $ | 412.1 | $ | 651.2 | $ | 1,063.3 |
March 31, 2017 | |||||||||||
Carrying Amount | Accumulated Amortization | Net | |||||||||
Amortized intangible assets: | |||||||||||
Computer software products | $ | 182.4 | $ | 108.2 | $ | 74.2 | |||||
Customer relationships | 111.3 | 55.0 | 56.3 | ||||||||
Technology | 103.2 | 52.4 | 50.8 | ||||||||
Trademarks | 30.8 | 18.3 | 12.5 | ||||||||
Other | 10.6 | 8.9 | 1.7 | ||||||||
Total amortized intangible assets | 438.3 | 242.8 | 195.5 | ||||||||
Allen-Bradley® trademark not subject to amortization | 43.7 | — | 43.7 | ||||||||
Total | $ | 482.0 | $ | 242.8 | $ | 239.2 |
September 30, 2016 | |||||||||||
Carrying Amount | Accumulated Amortization | Net | |||||||||
Amortized intangible assets: | |||||||||||
Computer software products | $ | 182.4 | $ | 103.4 | $ | 79.0 | |||||
Customer relationships | 112.6 | 51.9 | 60.7 | ||||||||
Technology | 103.9 | 48.5 | 55.4 | ||||||||
Trademarks | 31.4 | 17.0 | 14.4 | ||||||||
Other | 11.0 | 8.9 | 2.1 | ||||||||
Total amortized intangible assets | 441.3 | 229.7 | 211.6 | ||||||||
Allen-Bradley® trademark not subject to amortization | 43.7 | — | 43.7 | ||||||||
Total | $ | 485.0 | $ | 229.7 | $ | 255.3 |
March 31, 2017 | September 30, 2016 | ||||||
Unrealized losses on foreign exchange contracts | $ | 16.1 | $ | 15.6 | |||
Product warranty obligations | 26.6 | 28.0 | |||||
Taxes other than income taxes | 44.0 | 43.1 | |||||
Accrued interest | 16.9 | 16.9 | |||||
Income taxes payable | 49.6 | 28.6 | |||||
Rocky Flats settlement (Note 14) | — | 242.5 | |||||
Other | 61.7 | 72.9 | |||||
Other current liabilities | $ | 214.9 | $ | 447.6 |
Six Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Balance at beginning of period | $ | 28.0 | $ | 27.9 | |||
Accruals for warranties issued during the current period | 12.5 | 12.6 | |||||
Adjustments to pre-existing warranties | (1.7 | ) | 0.1 | ||||
Settlements of warranty claims | (12.2 | ) | (12.5 | ) | |||
Balance at end of period | $ | 26.6 | $ | 28.1 |
March 31, 2017 | September 30, 2016 | |||||||
Certificates of deposit and time deposits | $ | 999.4 | $ | 902.8 | ||||
Commercial paper | 14.2 | — | ||||||
Corporate debt securities | 76.3 | — | ||||||
Government securities | 114.2 | — | ||||||
Total | $ | 1,204.1 | $ | 902.8 |
Fair Value | ||||
Less than one year | $ | 1,092.7 | ||
Due in one to three years | 111.4 | |||
Total | $ | 1,204.1 |
March 31, 2017 | September 30, 2016 | |||||||
Short-term investments | $ | 1,092.7 | $ | 902.8 | ||||
Other assets | 111.4 | — | ||||||
Total | $ | 1,204.1 | $ | 902.8 |
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 liability. |
March 31, 2017 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Certificates of deposit and time deposits | $ | — | $ | 999.4 | $ | — | $ | 999.4 | ||||||||
Commercial paper | — | 14.2 | — | 14.2 | ||||||||||||
Corporate debt securities | — | 76.3 | — | 76.3 | ||||||||||||
Government securities | 96.8 | 17.4 | — | 114.2 | ||||||||||||
Total | $ | 96.8 | $ | 1,107.3 | $ | — | $ | 1,204.1 |
September 30, 2016 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Certificates of deposit and time deposits | $ | — | $ | 902.8 | $ | — | $ | 902.8 | ||||||||
Commercial paper | — | — | — | — | ||||||||||||
Corporate debt securities | — | — | — | — | ||||||||||||
Government securities | — | — | — | — | ||||||||||||
Total | $ | — | $ | 902.8 | $ | — | $ | 902.8 |
Pension Benefits | |||||||||||||||
Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost | $ | 24.2 | $ | 21.8 | $ | 48.3 | $ | 43.9 | |||||||
Interest cost | 37.8 | 42.2 | 75.6 | 84.7 | |||||||||||
Expected return on plan assets | (56.2 | ) | (54.4 | ) | (112.4 | ) | (109.1 | ) | |||||||
Amortization: | |||||||||||||||
Prior service credit | (1.1 | ) | (0.7 | ) | (1.9 | ) | (1.4 | ) | |||||||
Net actuarial loss | 38.2 | 31.1 | 76.2 | 62.2 | |||||||||||
Settlements | — | — | 0.2 | — | |||||||||||
Net periodic benefit cost | $ | 42.9 | $ | 40.0 | $ | 86.0 | $ | 80.3 |
Other Postretirement Benefits | |||||||||||||||
Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost | $ | 0.4 | $ | 0.3 | $ | 0.7 | $ | 0.6 | |||||||
Interest cost | 0.7 | 0.9 | 1.3 | 1.7 | |||||||||||
Amortization: | |||||||||||||||
Prior service credit | (1.5 | ) | (2.9 | ) | (3.0 | ) | (5.7 | ) | |||||||
Net actuarial loss | 0.6 | 0.7 | 1.1 | 1.3 | |||||||||||
Net periodic benefit cost (income) | $ | 0.2 | $ | (1.0 | ) | $ | 0.1 | $ | (2.1 | ) |
Three Months Ended March 31, 2017 | |||||||||||||||||||
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 | Net unrealized gains (losses) on available-for-sale investments, net of tax | Total accumulated other comprehensive loss, net of tax | |||||||||||||||
Balance as of December 31, 2016 | $ | (1,215.3 | ) | $ | (381.1 | ) | $ | 7.5 | $ | — | $ | (1,588.9 | ) | ||||||
Other comprehensive income (loss) before reclassifications | — | 60.8 | (2.3 | ) | (0.1 | ) | 58.4 | ||||||||||||
Amounts reclassified from accumulated other comprehensive loss | 23.8 | — | (1.3 | ) | — | 22.5 | |||||||||||||
Other comprehensive income (loss) | 23.8 | 60.8 | (3.6 | ) | (0.1 | ) | 80.9 | ||||||||||||
Balance as of March 31, 2017 | $ | (1,191.5 | ) | $ | (320.3 | ) | $ | 3.9 | $ | (0.1 | ) | $ | (1,508.0 | ) | |||||
Six Months Ended March 31, 2017 | |||||||||||||||||||
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 | Net unrealized gains (losses) on available-for-sale investments, net of tax | Total accumulated other comprehensive loss, net of tax | |||||||||||||||
Balance as of September 30, 2016 | $ | (1,239.8 | ) | $ | (294.9 | ) | $ | (4.1 | ) | $ | — | $ | (1,538.8 | ) | |||||
Other comprehensive income (loss) before reclassifications | 0.7 | (25.4 | ) | 9.5 | (0.1 | ) | (15.3 | ) | |||||||||||
Amounts reclassified from accumulated other comprehensive loss | 47.6 | — | (1.5 | ) | — | 46.1 | |||||||||||||
Other comprehensive income (loss) | 48.3 | (25.4 | ) | 8.0 | (0.1 | ) | 30.8 | ||||||||||||
Balance as of March 31, 2017 | $ | (1,191.5 | ) | $ | (320.3 | ) | $ | 3.9 | $ | (0.1 | ) | $ | (1,508.0 | ) |
Three Months Ended March 31, 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 | Net unrealized gains (losses) on available-for-sale investments, net of tax | Total accumulated other comprehensive loss, net of tax | |||||||||||||||
Balance as of December 31, 2015 | $ | (1,078.7 | ) | $ | (276.8 | ) | $ | 16.5 | $ | — | $ | (1,339.0 | ) | ||||||
Other comprehensive income (loss) before reclassifications | — | 7.4 | (5.8 | ) | — | 1.6 | |||||||||||||
Amounts reclassified from accumulated other comprehensive loss | 18.4 | — | (6.7 | ) | — | 11.7 | |||||||||||||
Other comprehensive income (loss) | 18.4 | 7.4 | (12.5 | ) | — | 13.3 | |||||||||||||
Balance as of March 31, 2016 | $ | (1,060.3 | ) | $ | (269.4 | ) | $ | 4.0 | $ | — | $ | (1,325.7 | ) | ||||||
Six Months Ended March 31, 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 | Net unrealized gains (losses) on available-for-sale investments, 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) income before reclassifications | — | (17.0 | ) | 0.7 | — | (16.3 | ) | ||||||||||||
Amounts reclassified from accumulated other comprehensive loss | 36.8 | — | (11.6 | ) | — | 25.2 | |||||||||||||
Other comprehensive income (loss) | 36.8 | (17.0 | ) | (10.9 | ) | — | 8.9 | ||||||||||||
Balance as of March 31, 2016 | $ | (1,060.3 | ) | $ | (269.4 | ) | $ | 4.0 | $ | — | $ | (1,325.7 | ) |
Three Months Ended March 31, | Six Months Ended March 31, | Affected Line in the Condensed Consolidated Statement of Operations | |||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Pension and other postretirement benefit plan adjustments: | |||||||||||||||||
Amortization of prior service credit | $ | (2.6 | ) | $ | (3.6 | ) | $ | (4.9 | ) | $ | (7.1 | ) | (a) | ||||
Amortization of net actuarial loss | 38.8 | 31.8 | 77.3 | 63.5 | (a) | ||||||||||||
Settlements | — | — | 0.2 | — | (a) | ||||||||||||
36.2 | 28.2 | 72.6 | 56.4 | Income before income taxes | |||||||||||||
(12.4 | ) | (9.8 | ) | (25.0 | ) | (19.6 | ) | Income tax provision | |||||||||
$ | 23.8 | $ | 18.4 | $ | 47.6 | $ | 36.8 | Net income | |||||||||
Net unrealized losses (gains) on cash flow hedges: | |||||||||||||||||
Forward exchange contracts | $ | 1.0 | $ | 1.6 | $ | 1.5 | $ | 4.1 | Sales | ||||||||
Forward exchange contracts | (2.6 | ) | (10.2 | ) | (3.6 | ) | (19.0 | ) | Cost of sales | ||||||||
Forward exchange contracts | 0.3 | — | 0.6 | — | Selling, general and administrative expenses | ||||||||||||
(1.3 | ) | (8.6 | ) | (1.5 | ) | (14.9 | ) | Income before income taxes | |||||||||
— | 1.9 | — | 3.3 | Income tax provision | |||||||||||||
$ | (1.3 | ) | $ | (6.7 | ) | $ | (1.5 | ) | $ | (11.6 | ) | Net income | |||||
Total reclassifications | $ | 22.5 | $ | 11.7 | $ | 46.1 | $ | 25.2 | Net income |
Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Sales | |||||||||||||||
Architecture & Software | $ | 719.0 | $ | 629.5 | $ | 1,415.4 | $ | 1,272.4 | |||||||
Control Products & Solutions | 835.3 | 810.8 | 1,629.2 | 1,594.5 | |||||||||||
Total | $ | 1,554.3 | $ | 1,440.3 | $ | 3,044.6 | $ | 2,866.9 | |||||||
Segment operating earnings | |||||||||||||||
Architecture & Software | $ | 190.6 | $ | 154.6 | $ | 399.2 | $ | 330.8 | |||||||
Control Products & Solutions | 105.4 | 122.9 | 213.4 | 242.6 | |||||||||||
Total | 296.0 | 277.5 | 612.6 | 573.4 | |||||||||||
Purchase accounting depreciation and amortization | (5.6 | ) | (4.5 | ) | (11.2 | ) | (9.2 | ) | |||||||
General corporate – net | (21.4 | ) | (19.5 | ) | (36.3 | ) | (37.5 | ) | |||||||
Non-operating pension costs | (19.8 | ) | (18.9 | ) | (39.6 | ) | (37.8 | ) | |||||||
Interest expense | (18.9 | ) | (17.6 | ) | (37.6 | ) | (35.0 | ) | |||||||
Income before income taxes | $ | 230.3 | $ | 217.0 | $ | 487.9 | $ | 453.9 |
• | macroeconomic factors, including global and regional business conditions, the availability and cost of capital, commodity prices, the cyclical nature of our customers’ capital spending, sovereign debt concerns and currency exchange rates; |
• | laws, regulations and governmental policies affecting our activities in the countries where we do business; |
• | the successful development of advanced technologies and demand for and market acceptance of new and existing products; |
• | the availability, effectiveness and security of our information technology systems; |
• | competitive products, solutions and services and pricing pressures, and our ability to provide high quality products, solutions and services; |
• | a disruption of our business due to natural disasters, pandemics, acts of war, strikes, terrorism, social unrest or other causes; |
• | our ability to manage and mitigate the risk related to security vulnerabilities and breaches of our products, solutions and services; |
• | intellectual property infringement claims by others and the ability to protect our intellectual property; |
• | the uncertainty of claims by taxing authorities in the various jurisdictions where we do business; |
• | our ability to attract and retain qualified personnel; |
• | our ability to manage costs related to employee retirement and health care benefits; |
• | the uncertainties of litigation, including liabilities related to the safety and security of the products, solutions and services we sell; |
• | our ability to manage and mitigate the risks associated with our solutions and services businesses; |
• | a disruption to our distribution channels; |
• | the availability and price of components and materials; |
• | the successful integration and management of acquired businesses; |
• | the successful execution of our cost productivity initiatives; and |
• | other risks and uncertainties, including but not limited to those detailed from time to time in our Securities and Exchange Commission (SEC) filings. |
• | investments in manufacturing, including upgrades, modifications and expansions of existing facilities or production lines and new facilities or production lines; |
• | investments in basic materials production capacity, which may be related to commodity pricing levels; |
• | our customers’ needs for faster time to market, lower total cost of ownership, improved asset utilization and optimization, and enterprise risk management; |
• | our customers’ needs to continuously improve quality, safety and sustainability; |
• | industry factors that include our customers’ new product introductions, demand for our customers’ products or services, and the regulatory and competitive environments in which our customers operate; |
• | levels of global industrial production and capacity utilization; |
• | regional factors that include local political, social, regulatory and economic circumstances; and |
• | the spending patterns of our customers due to their annual budgeting processes and their working schedules. |
• | achieve organic sales growth in excess of the automation market by expanding our served market and strengthening our competitive differentiation; |
• | diversify our sales streams by broadening our portfolio of products, solutions and services, expanding our global presence and serving a wider range of industries and applications; |
• | grow market share by gaining new customers and by capturing a larger share of existing customers’ spending; |
• | enhance our market access by building our channel capability and partner network; |
• | acquire companies that serve as catalysts to organic growth by adding complementary technology, expanding our served market, or enhancing our domain expertise or market access; |
• | deploy human and financial resources to strengthen our technology leadership and our intellectual capital business model; |
• | continuously improve quality and customer experience; and |
• | drive annual cost productivity. |
• | The Industrial Production (IP) Index, published by the Federal Reserve, which measures the real output of manufacturing, mining and electric and gas utilities. The IP Index is expressed as a percentage of real output in a base year, currently 2012. Historically, there has been a meaningful correlation between the changes in the IP Index and the level of automation investment made by our U.S. customers in their manufacturing base. |
• | The Manufacturing Purchasing Managers’ Index (PMI), published by the Institute for Supply Management (ISM), which indicates the current and near-term state of manufacturing activity in the U.S. According to the ISM, a PMI measure above 50 indicates that the U.S. manufacturing economy is generally expanding while a measure below 50 indicates that it is generally contracting. |
• | Industrial Equipment Spending, compiled by the Bureau of Economic Analysis, which provides insight into spending trends in the broad U.S. industrial economy. This measure over the longer term has proven to demonstrate a reasonable correlation with our domestic growth. |
• | Capacity Utilization (Total Industry), published by the Federal Reserve, which measures plant operating activity. Historically, there has been a meaningful correlation between Capacity Utilization and levels of U.S. IP. |
IP Index | PMI | Industrial Equipment Spending (in billions) | Capacity Utilization (percent) | ||||||||
Fiscal 2017 quarter ended: | |||||||||||
March 2017 | 103.7 | 57.2 | 236.5 | 75.8 | |||||||
December 2016 | 103.3 | 54.5 | 228.7 | 75.8 | |||||||
Fiscal 2016 quarter ended: | |||||||||||
September 2016 | 103.1 | 51.7 | 226.1 | 75.8 | |||||||
June 2016 | 102.9 | 52.8 | 227.3 | 75.7 | |||||||
March 2016 | 103.1 | 51.7 | 222.2 | 75.8 | |||||||
December 2015 | 103.4 | 47.9 | 224.7 | 76.0 | |||||||
Fiscal 2015 quarter ended: | |||||||||||
September 2015 | 104.4 | 50.1 | 219.8 | 76.7 |
• | Logix sales increased 12 percent year over year in the second quarter of 2017. Logix organic sales increased 13 percent year over year. |
• | Process initiative sales increased 11 percent year over year in the second quarter of 2017. Process initiative organic sales increased 3 percent year over year. Currency translation reduced process sales by 2 percentage points, and acquisitions contributed 10 percentage points to growth. |
• | Sales in emerging countries increased 7.2 percent year over year in the second quarter of 2017. Organic sales in emerging countries increased 8.8 percent year over year. Currency translation reduced sales in emerging countries by 1.6 percentage points. |
Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Sales | |||||||||||||||
Architecture & Software | $ | 719.0 | $ | 629.5 | $ | 1,415.4 | $ | 1,272.4 | |||||||
Control Products & Solutions | 835.3 | 810.8 | 1,629.2 | 1,594.5 | |||||||||||
Total sales (a) | $ | 1,554.3 | $ | 1,440.3 | $ | 3,044.6 | $ | 2,866.9 | |||||||
Segment operating earnings(1) | |||||||||||||||
Architecture & Software | $ | 190.6 | $ | 154.6 | $ | 399.2 | $ | 330.8 | |||||||
Control Products & Solutions | 105.4 | 122.9 | 213.4 | 242.6 | |||||||||||
Total segment operating earnings(2) (b) | 296.0 | 277.5 | 612.6 | 573.4 | |||||||||||
Purchase accounting depreciation and amortization | (5.6 | ) | (4.5 | ) | (11.2 | ) | (9.2 | ) | |||||||
General corporate — net | (21.4 | ) | (19.5 | ) | (36.3 | ) | (37.5 | ) | |||||||
Non-operating pension costs | (19.8 | ) | (18.9 | ) | (39.6 | ) | (37.8 | ) | |||||||
Interest expense | (18.9 | ) | (17.6 | ) | (37.6 | ) | (35.0 | ) | |||||||
Income before income taxes (c) | 230.3 | 217.0 | 487.9 | 453.9 | |||||||||||
Income tax provision | (40.8 | ) | (49.0 | ) | (83.7 | ) | (100.4 | ) | |||||||
Net income | $ | 189.5 | $ | 168.0 | $ | 404.2 | $ | 353.5 | |||||||
Diluted EPS | $ | 1.45 | $ | 1.28 | $ | 3.11 | $ | 2.68 | |||||||
Adjusted EPS(3) | $ | 1.55 | $ | 1.37 | $ | 3.30 | $ | 2.86 | |||||||
Diluted weighted average outstanding shares | 130.3 | 131.3 | 130.0 | 132.0 | |||||||||||
Total segment operating margin(2) (b/a) | 19.0 | % | 19.3 | % | 20.1 | % | 20.0 | % | |||||||
Pre-tax margin (c/a) | 14.8 | % | 15.1 | % | 16.0 | % | 15.8 | % |
(1) | See Note 13 in the Condensed Consolidated Financial Statements for the definition of segment operating earnings. |
(2) | Total segment operating earnings and total segment operating margin are non-GAAP financial measures. We exclude purchase accounting depreciation and amortization, general corporate – net, non-operating pension costs, interest expense and income tax provision because we do not consider these costs to be directly related to the operating performance of our segments. 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 measures of total segment operating earnings and total segment operating margin may be different from measures used by other companies. |
(3) | Adjusted EPS is a non-GAAP earnings measure that excludes the non-operating pension costs and their related income tax effects. See Adjusted Income, Adjusted EPS and Adjusted Effective Tax Rate Reconciliation for more information on this non-GAAP measure. |
Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Purchase accounting depreciation and amortization | |||||||||||||||
Architecture & Software | $ | 1.6 | $ | 0.9 | $ | 3.2 | $ | 1.8 | |||||||
Control Products & Solutions | 3.7 | 3.4 | 7.5 | 6.9 | |||||||||||
Non-operating pension costs | |||||||||||||||
Architecture & Software | 7.1 | 6.7 | 14.2 | 13.4 | |||||||||||
Control Products & Solutions | 11.1 | 10.5 | 22.2 | 21.0 |
Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost | $ | 24.2 | $ | 21.8 | $ | 48.3 | $ | 43.9 | |||||||
Amortization of prior service credit | (1.1 | ) | (0.7 | ) | (1.9 | ) | (1.4 | ) | |||||||
Operating pension costs | 23.1 | 21.1 | 46.4 | 42.5 | |||||||||||
Interest cost | 37.8 | 42.2 | 75.6 | 84.7 | |||||||||||
Expected return on plan assets | (56.2 | ) | (54.4 | ) | (112.4 | ) | (109.1 | ) | |||||||
Amortization of net actuarial loss | 38.2 | 31.1 | 76.2 | 62.2 | |||||||||||
Settlements | — | — | 0.2 | — | |||||||||||
Non-operating pension costs | 19.8 | 18.9 | 39.6 | 37.8 | |||||||||||
Net periodic pension cost | $ | 42.9 | $ | 40.0 | $ | 86.0 | $ | 80.3 |
Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Income from continuing operations | $ | 189.5 | $ | 168.0 | $ | 404.2 | $ | 353.5 | |||||||
Non-operating pension costs | 19.8 | 18.9 | 39.6 | 37.8 | |||||||||||
Tax effect of non-operating pension costs | (7.3 | ) | (6.9 | ) | (14.5 | ) | (13.7 | ) | |||||||
Adjusted Income | $ | 202.0 | $ | 180.0 | $ | 429.3 | $ | 377.6 | |||||||
Diluted EPS from continuing operations | $ | 1.45 | $ | 1.28 | $ | 3.11 | $ | 2.68 | |||||||
Non-operating pension costs per diluted share | 0.15 | 0.14 | 0.30 | 0.29 | |||||||||||
Tax effect of non-operating pension costs per diluted share | (0.05 | ) | (0.05 | ) | (0.11 | ) | (0.11 | ) | |||||||
Adjusted EPS | $ | 1.55 | $ | 1.37 | $ | 3.30 | $ | 2.86 | |||||||
Effective tax rate | 17.7 | % | 22.6 | % | 17.2 | % | 22.1 | % | |||||||
Tax effect of non-operating pension costs | 1.5 | % | 1.1 | % | 1.4 | % | 1.1 | % | |||||||
Adjusted Effective Tax Rate | 19.2 | % | 23.7 | % | 18.6 | % | 23.2 | % |
Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||||||||||
(in millions, except per share amounts) | 2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||||||
Sales | $ | 1,554.3 | $ | 1,440.3 | $ | 114.0 | $ | 3,044.6 | $ | 2,866.9 | $ | 177.7 | ||||||||||||
Income before income taxes | 230.3 | 217.0 | 13.3 | 487.9 | 453.9 | 34.0 | ||||||||||||||||||
Diluted EPS | 1.45 | 1.28 | 0.17 | 3.11 | 2.68 | 0.43 | ||||||||||||||||||
Adjusted EPS | 1.55 | 1.37 | 0.18 | 3.30 | 2.86 | 0.44 |
Change vs. | Change in Organic Sales(1) vs. | ||||||||
Three Months Ended March 31, 2017 | Three Months Ended March 31, 2016 | Three Months Ended March 31, 2016 | |||||||
United States | $ | 868.7 | 7.9 | % | 5.2 | % | |||
Canada | 85.0 | 11.5 | % | 7.9 | % | ||||
Europe, Middle East and Africa (EMEA) | 301.0 | 9.6 | % | 12.4 | % | ||||
Asia Pacific | 198.5 | 10.6 | % | 11.1 | % | ||||
Latin America | 101.1 | (4.0 | )% | (3.3 | )% | ||||
Total Sales | $ | 1,554.3 | 7.9 | % | 6.8 | % | |||
Change vs. | Change in Organic Sales(1) vs. | ||||||||
Six Months Ended March 31, 2017 | Six Months Ended March 31, 2016 | Six Months Ended March 31, 2016 | |||||||
United States | $ | 1,688.8 | 6.1 | % | 3.5 | % | |||
Canada | 167.7 | 8.3 | % | 6.6 | % | ||||
Europe, Middle East and Africa (EMEA) | 571.7 | 4.2 | % | 5.3 | % | ||||
Asia Pacific | 404.1 | 14.7 | % | 15.4 | % | ||||
Latin America | 212.3 | (2.9 | )% | 1.5 | % | ||||
Total sales | $ | 3,044.6 | 6.2 | % | 5.3 | % |
• | Sales in the United States increased in the three and six months ended March 31, 2017, mainly due to strength in the automotive industry. |
• | Canada sales increased in the three and six months ended March 31, 2017, with growth in most industries led by consumer, transportation, and pulp and paper. |
• | EMEA sales increased in the three and six months ended March 31, 2017, due to strong growth across both developed and emerging countries. |
• | Sales in Asia Pacific increased in the three and six months ended March 31, 2017, with broad-based growth across the region led by China. |
• | Latin America sales were down in the three months ended March 31, 2017, where growth in Mexico was more than offset by declines across the rest of the region. In the six months ended March 31, 2017, Latin America sales decreased due to the unfavorable impact of currency, partially offset by organic growth led by Mexico. |
Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||||||||||||
(in millions, except percentages) | 2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||||||||
Sales | $ | 719.0 | $ | 629.5 | $ | 89.5 | $ | 1,415.4 | $ | 1,272.4 | $ | 143.0 | ||||||||||||||
Segment operating earnings | 190.6 | 154.6 | 36.0 | 399.2 | 330.8 | 68.4 | ||||||||||||||||||||
Segment operating margin | 26.5 | % | 24.6 | % | 1.9 | pts | 28.2 | % | 26.0 | % | 2.2 | pts |
Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||||||||||||
(in millions, except percentages) | 2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||||||||
Sales | $ | 835.3 | $ | 810.8 | $ | 24.5 | $ | 1,629.2 | $ | 1,594.5 | $ | 34.7 | ||||||||||||||
Segment operating earnings | 105.4 | 122.9 | (17.5 | ) | 213.4 | 242.6 | (29.2 | ) | ||||||||||||||||||
Segment operating margin | 12.6 | % | 15.2 | % | (2.6 | ) | pts | 13.1 | % | 15.2 | % | (2.1 | ) | pts |
Six Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Cash provided by (used for): | |||||||
Operating activities | $ | 611.8 | $ | 399.3 | |||
Investing activities | (361.5 | ) | (266.5 | ) | |||
Financing activities | (318.7 | ) | (156.2 | ) | |||
Effect of exchange rate changes on cash | (17.2 | ) | (7.6 | ) | |||
Cash used for continuing operations | $ | (85.6 | ) | $ | (31.0 | ) |
Six Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Cash provided by continuing operating activities | $ | 611.8 | $ | 399.3 | |||
Capital expenditures | (67.4 | ) | (52.6 | ) | |||
Excess income tax benefit from share-based compensation | — | 1.2 | |||||
Free cash flow | $ | 544.4 | $ | 347.9 |
Credit Rating Agency | Short-Term Rating | Long-Term Rating | Outlook | |||
Standard & Poor’s | A-1 | A | Stable | |||
Moody’s | P-2 | A3 | Stable | |||
Fitch Ratings | F1 | A | Stable |
Three Months Ended March 31, 2017 | Three Months Ended March 31, 2016 | ||||||||||||||||||||||
Sales | Effect of Changes in Currency | Sales Excluding Effect of Changes in Currency | Effect of Acquisitions | Organic Sales | Sales | ||||||||||||||||||
United States | $ | 868.7 | $ | 0.2 | $ | 868.9 | $ | (22.4 | ) | $ | 846.5 | $ | 804.8 | ||||||||||
Canada | 85.0 | (2.8 | ) | 82.2 | — | 82.2 | 76.2 | ||||||||||||||||
Europe, Middle East and Africa | 301.0 | 8.2 | 309.2 | (0.6 | ) | 308.6 | 274.6 | ||||||||||||||||
Asia Pacific | 198.5 | 1.7 | 200.2 | (0.9 | ) | 199.3 | 179.4 | ||||||||||||||||
Latin America | 101.1 | 0.7 | 101.8 | — | 101.8 | 105.3 | |||||||||||||||||
Total Company Sales | $ | 1,554.3 | $ | 8.0 | $ | 1,562.3 | $ | (23.9 | ) | $ | 1,538.4 | $ | 1,440.3 | ||||||||||
Six Months Ended March 31, 2017 | Six Months Ended March 31, 2016 | ||||||||||||||||||||||
Sales | Effect of Changes in Currency | Sales Excluding Effect of Changes in Currency | Effect of Acquisitions | Organic Sales | Sales | ||||||||||||||||||
United States | $ | 1,688.8 | $ | 0.4 | $ | 1,689.2 | $ | (41.1 | ) | $ | 1,648.1 | $ | 1,592.1 | ||||||||||
Canada | 167.7 | (2.5 | ) | 165.2 | (0.1 | ) | 165.1 | 154.9 | |||||||||||||||
Europe, Middle East and Africa | 571.7 | 12.3 | 584.0 | (6.0 | ) | 578.0 | 548.8 | ||||||||||||||||
Asia Pacific | 404.1 | 4.9 | 409.0 | (2.4 | ) | 406.6 | 352.4 | ||||||||||||||||
Latin America | 212.3 | 9.7 | 222.0 | (0.1 | ) | 221.9 | 218.7 | ||||||||||||||||
Total Company Sales | $ | 3,044.6 | $ | 24.8 | $ | 3,069.4 | $ | (49.7 | ) | $ | 3,019.7 | $ | 2,866.9 |
Three Months Ended March 31, 2017 | Three Months Ended March 31, 2016 | ||||||||||||||||||||||
Sales | Effect of Changes in Currency | Sales Excluding Effect of Changes in Currency | Effect of Acquisitions | Organic Sales | Sales | ||||||||||||||||||
Architecture & Software | $ | 719.0 | $ | 4.6 | $ | 723.6 | $ | (7.6 | ) | $ | 716.0 | $ | 629.5 | ||||||||||
Control Products & Solutions | 835.3 | 3.4 | 838.7 | (16.3 | ) | 822.4 | 810.8 | ||||||||||||||||
Total Company Sales | $ | 1,554.3 | $ | 8.0 | $ | 1,562.3 | $ | (23.9 | ) | $ | 1,538.4 | $ | 1,440.3 | ||||||||||
Six Months Ended March 31, 2017 | Six Months Ended March 31, 2016 | ||||||||||||||||||||||
Sales | Effect of Changes in Currency | Sales Excluding Effect of Changes in Currency | Effect of Acquisitions | Organic Sales | Sales | ||||||||||||||||||
Architecture & Software | $ | 1,415.4 | $ | 11.2 | $ | 1,426.6 | $ | (18.7 | ) | $ | 1,407.9 | $ | 1,272.4 | ||||||||||
Control Products & Solutions | 1,629.2 | 13.6 | 1,642.8 | (31.0 | ) | 1,611.8 | 1,594.5 | ||||||||||||||||
Total Company Sales | $ | 3,044.6 | $ | 24.8 | $ | 3,069.4 | $ | (49.7 | ) | $ | 3,019.7 | $ | 2,866.9 |
Period | Total Number of Shares Purchased(1) | Average Price Paid Per Share(2) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Approx. Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(3) | ||||||||||
January 1 - 31, 2017 | 60,676 | $ | 150.47 | 60,000 | $ | 855,175,094 | ||||||||
February 1 - 28, 2017 | 286,253 | 150.61 | 285,000 | 812,253,252 | ||||||||||
March 1 - 31, 2017 | 345,000 | 154.26 | 345,000 | 759,031,857 | ||||||||||
Total | 691,929 | 152.42 | 690,000 |
(1) | All of the shares purchased during the quarter ended March 31, 2017, were acquired pursuant to the repurchase program described in (3) below, except for 676 shares that were acquired in January and 1,253 shares that were acquired in February in connection with stock swap exercises of employee stock options. |
(2) | Average price paid per share includes brokerage commissions. |
(3) | On April 6, 2016, the Board of Directors authorized us to expend $1.0 billion to repurchase shares of our common stock. Our repurchase program allows us to repurchase shares at management's discretion or at our broker’s discretion pursuant to a share repurchase plan subject to price and volume parameters. |
Exhibit 10* | — | Letter agreement dated February 7, 2017 between the Company and Patrick P. Goris. | ||
Exhibit 15 | — | Letter of Deloitte & Touche LLP regarding Unaudited Financial Information. | ||
Exhibit 31.1 | — | Certification of Periodic Report by the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934. | ||
Exhibit 31.2 | — | Certification of Periodic Report by the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934. | ||
Exhibit 32.1 | — | Certification of Periodic Report by the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
Exhibit 32.2 | — | Certification of Periodic Report by the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
Exhibit 101 | — | Interactive Data Files. |
Exhibit No. | Exhibit | |
10 | Letter agreement dated February 7, 2017 between the Company and Patrick P. Goris. | |
15 | Letter of Deloitte & Touche LLP regarding Unaudited Financial Information. | |
31.1 | Certification of Periodic Report by the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934. | |
31.2 | Certification of Periodic Report by the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934. | |
32.1 | Certification of Periodic Report by the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 | Certification of Periodic Report by the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101 | Interactive Data Files. |
ROCKWELL AUTOMATION, INC. (Registrant) | |||||
Date: | May 5, 2017 | By | /s/ PATRICK P. GORIS | ||
Patrick P. Goris Senior Vice President and Chief Financial Officer (Principal Financial Officer) |
Date: | May 5, 2017 | By | /s/ DAVID M. DORGAN | ||
David M. Dorgan Vice President and Controller (Principal Accounting Officer) |
1. | any bonus or other incentive-based or equity-based compensation received by you from the Company during the 12-month period following the first public issuance or filing with the Securities and Exchange Commission of the financial document embodying such financial reporting requirement; and |
2. | any profits realized by you from the sale of securities of the Company during that 12-month period. |
Very truly yours, | |||
ROCKWELL AUTOMATION, INC. | |||
By | /s/ REBECCA W. HOUSE | ||
Rebecca W. House | |||
Senior Vice President, General Counsel and Secretary |
/s/ PATRICK P. GORIS |
Patrick P. Goris |
/s/ BLAKE D. MORET |
Blake D. Moret President and Chief Executive Officer |
/S/ PATRICK P. GORIS |
Patrick P. Goris Senior Vice President and Chief Financial Officer |
/s/ BLAKE D. MORET |
Blake D. Moret President and Chief Executive Officer |
/S/ PATRICK P. GORIS |
Patrick P. Goris Senior Vice President and Chief Financial Officer |
Document and Entity Information |
6 Months Ended |
---|---|
Mar. 31, 2017
shares
| |
Document and Entity Information [Abstract] | |
Entity Registrant Name | ROCKWELL AUTOMATION INC. |
Entity Central Index Key | 0001024478 |
Document Type | 10-Q |
Document Period End Date | Mar. 31, 2017 |
Amendment Flag | false |
Document Fiscal Year Focus | 2017 |
Document Fiscal Period Focus | Q2 |
Current Fiscal Year End Date | --09-30 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 128,835,404 |
Condensed Consolidated Balance Sheet (Unaudited) (Parenthetical) - USD ($) shares in Millions, $ in Millions |
Mar. 31, 2017 |
Sep. 30, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accumulated depreciation | $ 1,443.2 | $ 1,404.5 |
Common stock, par value per share | $ 1.00 | $ 1.00 |
Common stock, shares issued | 181.4 | 181.4 |
Treasury stock, shares | 52.6 | 52.9 |
Condensed Consolidated Statement of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Sales | ||||
Products and solutions | $ 1,384.4 | $ 1,283.0 | $ 2,714.6 | $ 2,554.3 |
Services | 169.9 | 157.3 | 330.0 | 312.6 |
Total sales | 1,554.3 | 1,440.3 | 3,044.6 | 2,866.9 |
Cost of sales | ||||
Products and solutions | (787.2) | (738.3) | (1,534.3) | (1,446.9) |
Services | (110.6) | (107.9) | (211.5) | (213.2) |
Total cost of sales | (897.8) | (846.2) | (1,745.8) | (1,660.1) |
Gross profit | 656.5 | 594.1 | 1,298.8 | 1,206.8 |
Selling, general and administrative expenses | (409.2) | (358.7) | (779.2) | (718.6) |
Other income (expense) | 1.9 | (0.8) | 5.9 | 0.7 |
Interest expense | (18.9) | (17.6) | (37.6) | (35.0) |
Income before income taxes | 230.3 | 217.0 | 487.9 | 453.9 |
Income tax provision | (40.8) | (49.0) | (83.7) | (100.4) |
Net income | $ 189.5 | $ 168.0 | $ 404.2 | $ 353.5 |
Basic earnings per share: | ||||
Basic | $ 1.47 | $ 1.29 | $ 3.14 | $ 2.69 |
Diluted earnings per share: | ||||
Diluted | 1.45 | 1.28 | 3.11 | 2.68 |
Cash dividends per share | $ 0.76 | $ 0.725 | $ 1.52 | $ 1.45 |
Weighted average outstanding shares: | ||||
Basic | 128.7 | 130.5 | 128.5 | 131.2 |
Diluted | 130.3 | 131.3 | 130.0 | 132.0 |
Condensed Consolidated Statement of Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Comprehensive income | ||||
Net income | $ 189.5 | $ 168.0 | $ 404.2 | $ 353.5 |
Other comprehensive income (loss), net of tax: | ||||
Pension and other postretirement benefit plan adjustments (net of tax expense of $12.4, $9.8, $25.0, $19.6) | 23.8 | 18.4 | 48.3 | 36.8 |
Currency translation adjustments | 60.8 | 7.4 | (25.4) | (17.0) |
Net change in unrealized gains and losses on cash flow hedges (net of tax (benefit) expense of ($0.7), ($4.3), $3.3, and ($4.1)) | (3.6) | (12.5) | 8.0 | (10.9) |
Net change in unrealized gains and losses on available-for-sale investments | (0.1) | 0.0 | (0.1) | 0.0 |
Other comprehensive income (loss) | 80.9 | 13.3 | 30.8 | 8.9 |
Comprehensive income | $ 270.4 | $ 181.3 | $ 435.0 | $ 362.4 |
Condensed Consolidated Statement of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Millions |
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Mar. 31, 2016 |
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Other Comprehensive Income (Loss), Tax, Parenthetical Disclosures [Abstract] | ||||
Tax expense from pension and other postretirement benefit plan adjustments | $ 12.4 | $ 9.8 | $ 25.0 | $ 19.6 |
Tax expense from net change in unrealized gains and losses on cash flow hedges | $ (0.7) | $ (4.3) | $ 3.3 | $ (4.1) |
Basis of Presentation and Accounting Policies |
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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, 2016. The results of operations for the three and six-month periods ended March 31, 2017, 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. Cash and Cash Equivalents Cash and cash equivalents include time deposits, certificates of deposit, and other fixed income securities with original maturities of three months or less at the time of purchase. Short-term Investments Short-term investments include time deposits, certificates of deposit and other fixed income securities with original maturities longer than three months at the time of purchase and less than one year from period end. All investments meeting the definition of a security are accounted for as available-for-sale and stated at fair value. All other investments are stated at cost, which approximates fair value. Receivables Receivables are stated net of an allowance for doubtful accounts of $24.4 million at March 31, 2017, and $24.5 million at September 30, 2016. In addition, receivables are stated net of an allowance for certain customer returns, rebates and incentives of $10.8 million at March 31, 2017, and $7.9 million at September 30, 2016. Earnings Per Share The following table reconciles basic and diluted earnings per share (EPS) amounts (in millions, except per share amounts):
For each of the three and six months ended March 31, 2017, share-based compensation awards for 1.0 million shares were excluded from the diluted EPS calculation because they were antidilutive. For each of the three and six months ended March 31, 2016, share-based compensation awards for 2.9 million shares were excluded from the diluted EPS calculation because they were antidilutive. Non-Cash Investing and Financing Activities Capital expenditures of $17.6 million and $13.8 million were accrued within accounts payable and other current liabilities at March 31, 2017 and 2016, respectively. At March 31, 2017 and 2016, there were $7.0 million and $3.4 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. This requirement is effective for us no later than October 1, 2017; however, we elected to adopt earlier as of October 1, 2016. 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 change reduced our income tax provision by $16.8 million and $20.2 million in the three and six months ended March 31, 2017, respectively. The standard also requires this benefit or deficiency to be classified as an operating cash flow rather than as a financing cash flow. The requirement to record the benefit or deficiency within the income tax provision is effective on a prospective basis. We have elected to adopt the cash flow presentation requirement on a prospective basis. Our adoption of all other requirements under the new standard had no material impact on our financial statements. In February 2016, the FASB issued a new standard on accounting for leases that 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 standard is effective for us for reporting periods beginning October 1, 2019. We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements and related disclosures. 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 principles-based approach to recognizing revenue. The underlying principle is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. 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. We will adopt this new standard in the first quarter of fiscal 2019 and have established a project plan and a cross-functional implementation team to adopt the new standard. We are in the process of identifying necessary changes to accounting policies, processes, controls and systems to enable compliance with this new standard. We continue to evaluate the impact the adoption of this standard will have on our consolidated financial statements and related disclosures. |
Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-Based Compensation We recognized $9.5 million and $20.2 million of pre-tax share-based compensation expense during the three and six months ended March 31, 2017, respectively. We recognized $9.8 million and $20.6 million of pre-tax share-based compensation expense during the three and six months ended March 31, 2016, 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):
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Inventories |
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Inventories | Inventories Inventories consist of (in millions):
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Goodwill and Other Intangible Assets |
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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 six months ended March 31, 2017, are (in millions):
Other intangible assets consist of (in millions):
Estimated amortization expense is $29.8 million in 2017, $25.0 million in 2018, $21.8 million in 2019, $19.1 million in 2020 and $18.4 million in 2021. 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 2017 and concluded that these assets are not impaired. |
Short-term Debt |
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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 $373.0 million and $448.6 million at March 31, 2017, and September 30, 2016, respectively. The weighted average interest rate of the commercial paper outstanding was 1.04 percent and 0.57 percent at March 31, 2017, and September 30, 2016, respectively. The current portion of long-term debt consists of our $250.0 million 5.65% notes due in December 2017. These notes were included within long-term debt at September 30, 2016, but are included within current liabilities at March 31, 2017, as they are due within the next twelve months. At March 31, 2017, and September 30, 2016, our total borrowing capacity under our unsecured revolving credit facility expiring in March 2020 was $1.0 billion. We did not borrow against this credit facility during the three months ended March 31, 2017, or the twelve months ended September 30, 2016. In December 2016, we amended the financial covenant under this credit facility. The previous financial covenant, which limited our debt-to-total-capital ratio to 60 percent, was replaced with a minimum EBITDA-to-interest ratio of 3.0 to 1.0. The EBITDA-to-interest ratio is defined in the amendment as the ratio of consolidated EBITDA (as defined in the amendment) for the preceding four quarters to consolidated interest expense for the same period. |
Other Current Liabilities |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Liabilities | Other Current Liabilities Other current liabilities consist of (in millions):
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Product Warranty Obligations |
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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 six months ended March 31, 2017 and 2016 are (in millions):
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Investments |
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Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | 8. Investments We invest in certificates of deposit, time deposits, commercial paper and other fixed income securities. All investments meeting the U.S. GAAP definition of a security were classified as available-for-sale as of March 31, 2017, and September 30, 2016. Unrealized gains and losses on available-for-sale investments are included in our Condensed Consolidated Balance Sheet as a component of accumulated other comprehensive income, net of any deferred taxes. Realized gains and losses are included in net income. Our investments consist of (in millions):
Pre-tax gross unrealized gains and losses on available-for-sale investments were not material at March 31, 2017. Pre-tax gross realized gains and losses on available-for-sale investments were not material for the three and six months ended March 31, 2017 and 2016. At March 31, 2017, there were $12.4 million of outstanding purchases of investments recorded in accounts payable that did not settle until April 2017. We evaluated all investments for which the fair value was less than amortized cost for impairment on an individual security basis at March 31, 2017. This assessment included consideration of our intent and ability to hold the security and the credit risks specific to each security. We determined that the declines in fair value of these investments were not other than temporary as of March 31, 2017, and accordingly we did not recognize any impairment charges in net income. The table below summarizes the contractual maturities of our investments as of March 31, 2017 (in millions). Actual maturities may differ from the contractual maturities below as borrowers may have the right to prepay certain obligations.
Classification of our investments as current or noncurrent is based on the nature of the investment and when the investment is reasonably expected to be realized. These investments were included in the following line items within the Condensed Consolidated Balance Sheet (in millions):
8. Investments (continued) Fair Value of Investments U.S. GAAP defines fair value as the price that would be received for an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. U.S. GAAP also classifies the inputs used to measure fair value into the following hierarchy:
We recognize all available-for-sale investments at fair value in the Condensed Consolidated Balance Sheet. The valuation methodologies used for our investments measured at fair value are described as follows. Certificates of deposit and time deposits — These investments are stated at cost, which approximates fair value. Commercial paper — These investments are stated at amortized cost, which approximates fair value. Government securities — Valued at the most recent closing price on the active market on which the individual securities are traded or, absent an active market, utilizing observable inputs such as closing prices in less frequently traded markets. Corporate debt securities — Valued at either the yields currently available on comparable securities of issuers with similar credit ratings or valued under a discounted cash flow approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable such as credit and liquidity risks. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. We did not hold any Level 3 investments or have any transfers between levels of fair value measurements during the periods presented. Fair values of our investments were (in millions):
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits | Retirement Benefits The components of net periodic benefit cost (income) are (in millions):
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Accumulated Other Comprehensive Loss |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive loss by component for the three and six months ended March 31, 2017, were (in millions):
10. Accumulated Other Comprehensive Loss (continued) Changes in accumulated other comprehensive loss by component for the three and six months ended March 31, 2016, were (in millions):
10. Accumulated Other Comprehensive Loss (continued) The reclassifications out of accumulated other comprehensive loss to the Condensed Consolidated Statement of Operations were (in millions):
(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 9 for further information. |
Commitments and Contingent Liabilities |
6 Months Ended |
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Mar. 31, 2017 | |
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. We also have rights to historic insurance policies that provide indemnity and defense costs, over and above self-insured retentions, for claims arising out of certain asbestos liabilities relating to the divested measurement and flow control business. We initiated litigation against several insurers to pursue coverage for these claims, subject to each carrier's policy limits, and the case is now pending in Los Angeles County Superior Court. In September 2016, we entered into settlement agreements with certain insurance company defendants, and we continue to pursue our claims against the remaining defendants. We believe these settlement agreements will continue to provide partial coverage for these asbestos claims throughout the remaining life of 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 business, 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 for satisfying 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. 11. Commitments and Contingent Liabilities (continued) In many countries we provide a limited intellectual property indemnity as part of our terms and conditions of sale. We also at times provide limited intellectual property indemnities in other contracts with third parties, such as contracts concerning the development and manufacture of our products. As of March 31, 2017, 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 business, financial condition or results of operations; 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 business, financial condition or results of operations in a particular period. |
Income Taxes |
6 Months Ended |
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Mar. 31, 2017 | |
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 in the period in which they occur. The effective tax rate was 17.7 percent and 17.2 percent in the three and six months ended March 31, 2017, respectively, compared to 22.6 percent and 22.1 percent in the three and six months ended March 31, 2016. 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 and six months ended March 31, 2017, we also realized benefits from discrete tax items. In the three months ended March 31, 2016, we also realized a benefit from a discrete tax item. In the six months ended March 31, 2016, our effective tax rate was favorably impacted by this discrete tax item and the retroactive and permanent extension of the U.S. federal research and development tax credit during the first quarter of 2016. The amount of gross unrecognized tax benefits was $41.6 million and $32.4 million at March 31, 2017, and September 30, 2016, respectively, of which the entire amount would reduce our effective tax rate if recognized. Accrued interest and penalties related to unrecognized tax benefits were $5.7 million and $5.2 million at March 31, 2017, and September 30, 2016, 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 $20.1 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. If all of the unrecognized tax benefits were recognized, the net reduction to our income tax provision, including the recognition of interest and penalties and offsetting tax assets, could be up to $5.8 million. 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 |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segment Information | Business Segment Information The following tables reflect the sales and operating results of our reportable segments (in millions):
Among other considerations, we evaluate performance and allocate resources based upon segment operating earnings before income taxes, interest expense, costs related to corporate offices, 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 |
6 Months Ended |
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Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Matters and Contingencies | 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 court approved settlement agreement, we and Dow Chemical agreed to pay $375.0 million in the aggregate to resolve the claims. Under RIC’s contract with the DoE and federal law, RIC was entitled to indemnification by the DoE for its portion of the settlement amount, which was $243.75 million. 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. Pursuant to the settlement agreement, in fiscal 2016, RIC paid an initial amount of $1.25 million to the plaintiff class escrow fund. In January 2017, the DoE fulfilled its indemnification obligation by paying $243.75 million, and the full amount of RIC's obligation under the settlement agreement has now been transferred to the plaintiff class escrow account. As a result, we were not required to make any payment under the settlement agreement. |
Basis of Presentation and Accounting Policies (Policies) |
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Mar. 31, 2017 | ||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||
Receivables | Receivables Receivables are stated net of an allowance for doubtful accounts of $24.4 million at March 31, 2017, and $24.5 million at September 30, 2016. In addition, receivables are stated net of an allowance for certain customer returns, rebates and incentives of $10.8 million at March 31, 2017, and $7.9 million at September 30, 2016. |
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Recent accounting pronouncements | Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (FASB) issued a new standard on share-based compensation. This requirement is effective for us no later than October 1, 2017; however, we elected to adopt earlier as of October 1, 2016. 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 change reduced our income tax provision by $16.8 million and $20.2 million in the three and six months ended March 31, 2017, respectively. The standard also requires this benefit or deficiency to be classified as an operating cash flow rather than as a financing cash flow. The requirement to record the benefit or deficiency within the income tax provision is effective on a prospective basis. We have elected to adopt the cash flow presentation requirement on a prospective basis. Our adoption of all other requirements under the new standard had no material impact on our financial statements. In February 2016, the FASB issued a new standard on accounting for leases that 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 standard is effective for us for reporting periods beginning October 1, 2019. We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements and related disclosures. 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 principles-based approach to recognizing revenue. The underlying principle is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. 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. We will adopt this new standard in the first quarter of fiscal 2019 and have established a project plan and a cross-functional implementation team to adopt the new standard. We are in the process of identifying necessary changes to accounting policies, processes, controls and systems to enable compliance with this new standard. We continue to evaluate the impact the adoption of this standard will have on our consolidated financial statements and related disclosures. |
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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. |
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Investments | We invest in certificates of deposit, time deposits, commercial paper and other fixed income securities. All investments meeting the U.S. GAAP definition of a security were classified as available-for-sale as of March 31, 2017, and September 30, 2016. Unrealized gains and losses on available-for-sale investments are included in our Condensed Consolidated Balance Sheet as a component of accumulated other comprehensive income, net of any deferred taxes. Realized gains and losses are included in net income. |
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Fair Value of Financial Instruments | Fair Value of Investments U.S. GAAP defines fair value as the price that would be received for an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. U.S. GAAP also classifies the inputs used to measure fair value into the following hierarchy:
We recognize all available-for-sale investments at fair value in the Condensed Consolidated Balance Sheet. The valuation methodologies used for our investments measured at fair value are described as follows. Certificates of deposit and time deposits — These investments are stated at cost, which approximates fair value. Commercial paper — These investments are stated at amortized cost, which approximates fair value. Government securities — Valued at the most recent closing price on the active market on which the individual securities are traded or, absent an active market, utilizing observable inputs such as closing prices in less frequently traded markets. Corporate debt securities — Valued at either the yields currently available on comparable securities of issuers with similar credit ratings or valued under a discounted cash flow approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable such as credit and liquidity risks. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. We did not hold any Level 3 investments or have any transfers between levels of fair value measurements during the periods presented. |
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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 in the period in which they occur. |
Basis of Presentation and Accounting Policies (Tables) |
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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):
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Share-Based Compensation (Tables) |
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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):
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Inventories (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory, Current | Inventories consist of (in millions):
|
Goodwill and Other Intangible Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | Changes in the carrying amount of goodwill for the six months ended March 31, 2017, are (in millions):
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Schedule of Finite Lived and Indefinite Lived Intangible Assets by Major Class | Other intangible assets consist of (in millions):
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Other Current Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Liabilities | Other current liabilities consist of (in millions):
|
Product Warranty Obligations (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Product Warranty Liability | Changes in product warranty obligations for the six months ended March 31, 2017 and 2016 are (in millions):
|
Investments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment | Our investments consist of (in millions):
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Investments Classified by Contractual Maturity Date | The table below summarizes the contractual maturities of our investments as of March 31, 2017 (in millions). Actual maturities may differ from the contractual maturities below as borrowers may have the right to prepay certain obligations.
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Fair Value, by Balance Sheet Grouping | Classification of our investments as current or noncurrent is based on the nature of the investment and when the investment is reasonably expected to be realized. These investments were included in the following line items within the Condensed Consolidated Balance Sheet (in millions):
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Fair Value Measurements, Recurring and Nonrecurring | Fair values of our investments were (in millions):
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Retirement Benefits (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | The components of net periodic benefit cost (income) are (in millions):
|
Accumulated Other Comprehensive Loss (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | Changes in accumulated other comprehensive loss by component for the three and six months ended March 31, 2017, were (in millions):
10. Accumulated Other Comprehensive Loss (continued) Changes in accumulated other comprehensive loss by component for the three and six months ended March 31, 2016, were (in millions):
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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):
(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 9 for further information. |
Business Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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):
|
Basis of Presentation and Accounting Policies (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Reconciled Basic and Diluted EPS | ||||
Net income | $ 189.5 | $ 168.0 | $ 404.2 | $ 353.5 |
Less: Allocation to participating securities | (0.2) | (0.2) | (0.4) | (0.4) |
Net income available to common shareowners | $ 189.3 | $ 167.8 | $ 403.8 | $ 353.1 |
Basic weighted average outstanding shares | 128.7 | 130.5 | 128.5 | 131.2 |
Effect of dilutive securities | ||||
Stock options | 1.3 | 0.8 | 1.3 | 0.8 |
Performance shares | 0.3 | 0.0 | 0.2 | 0.0 |
Diluted weighted average outstanding shares | 130.3 | 131.3 | 130.0 | 132.0 |
Basic earnings per share: | ||||
Basic | $ 1.47 | $ 1.29 | $ 3.14 | $ 2.69 |
Diluted earnings per share: | ||||
Diluted | $ 1.45 | $ 1.28 | $ 3.11 | $ 2.68 |
Basis of Presentation and Accounting Policies (Details Textual) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
Sep. 30, 2016 |
|
Accounting Policies [Abstract] | |||||
Allowance for doubtful accounts | $ 24.4 | $ 24.4 | $ 24.5 | ||
Allowance for certain customer returns, rebates and incentives | $ 10.8 | $ 10.8 | $ 7.9 | ||
Antidilutive share-based compensation awards | 1.0 | 2.9 | 1.0 | 2.9 | |
Capital expenditures in accounts payable or other current liabilities at period end | $ 17.6 | $ 13.8 | |||
Outstanding purchase of common stock recorded in accounts payable | 7.0 | $ 3.4 | |||
Reduction in income tax provision from early adoption of new share-based compensation standard | $ 16.8 | $ 20.2 |
Share-Based Compensation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Share-Based Compensation (Textual) [Abstract] | ||||
Pre-tax share-based compensation expense | $ 9.5 | $ 9.8 | $ 20.2 | $ 20.6 |
Stock options [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Grants | 983 | 1,134 | ||
Wtd. Avg. Share Fair Value | $ 25.39 | $ 21.19 | ||
Performance shares [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Grants | 42 | 96 | ||
Wtd. Avg. Share Fair Value | $ 174.37 | $ 87.64 | ||
Restricted stock and restricted stock units [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Grants | 46 | 57 | ||
Wtd. Avg. Share Fair Value | $ 135.84 | $ 103.67 | ||
Unrestricted stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Grants | 8 | 9 | ||
Wtd. Avg. Share Fair Value | $ 128.35 | $ 97.73 |
Inventories (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Sep. 30, 2016 |
---|---|---|
Inventories | ||
Finished goods | $ 215.1 | $ 215.8 |
Work in process | 172.6 | 158.0 |
Raw materials | 155.5 | 152.8 |
Inventories | $ 543.2 | $ 526.6 |
Goodwill and Other Intangible Assets (Details) $ in Millions |
6 Months Ended |
---|---|
Mar. 31, 2017
USD ($)
| |
Goodwill | |
Balance as of September 30, 2016 | $ 1,073.9 |
Acquisition of business | 0.5 |
Translation | (11.1) |
Balance as of March 31, 2017 | 1,063.3 |
Architecture & Software [Member] | |
Goodwill | |
Balance as of September 30, 2016 | 414.5 |
Acquisition of business | 0.0 |
Translation | (2.4) |
Balance as of March 31, 2017 | 412.1 |
Control Products & Solutions [Member] | |
Goodwill | |
Balance as of September 30, 2016 | 659.4 |
Acquisition of business | 0.5 |
Translation | (8.7) |
Balance as of March 31, 2017 | $ 651.2 |
Short-term Debt (Details) $ in Millions |
6 Months Ended | |
---|---|---|
Mar. 31, 2017
USD ($)
|
Sep. 30, 2016
USD ($)
|
|
Short-term Debt [Abstract] | ||
Commercial paper borrowings outstanding | $ 373.0 | $ 448.6 |
Weighted average interest rate of commercial paper outstanding | 1.04% | 0.57% |
Current portion of long-term debt | $ 250.0 | $ 0.0 |
Line of Credit [Member] | ||
Line of Credit Facility [Line Items] | ||
Borrowing capacity | $ 1,000.0 | |
Maximum [Member] | Line of Credit [Member] | ||
Line of Credit Facility [Line Items] | ||
Maximum debt to total capital ratio required by debt covenants | 0.60 | |
Maximum ratio of EBITDA to interest expense under credit facility | 3.0 |
Other Current Liabilities (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Sep. 30, 2016 |
Mar. 31, 2016 |
Sep. 30, 2015 |
---|---|---|---|---|
Other current liabilities | ||||
Unrealized losses on foreign exchange contracts | $ 16.1 | $ 15.6 | ||
Product warranty obligations | 26.6 | 28.0 | $ 28.1 | $ 27.9 |
Taxes other than income taxes | 44.0 | 43.1 | ||
Accrued interest | 16.9 | 16.9 | ||
Income taxes payable | 49.6 | 28.6 | ||
Rocky Flats settlement (Note 14) | 0.0 | 242.5 | ||
Other | 61.7 | 72.9 | ||
Other current liabilities | $ 214.9 | $ 447.6 |
Product Warranty Obligations (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Changes in product warranty obligations | ||
Balance at beginning of period | $ 28.0 | $ 27.9 |
Accruals for warranties issued during the current period | 12.5 | 12.6 |
Adjustments to pre-existing warranties | (1.7) | 0.1 |
Settlements of warranty claims | (12.2) | (12.5) |
Balance at end of period | $ 26.6 | $ 28.1 |
Investments (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Sep. 30, 2016 |
---|---|---|
Investment [Line Items] | ||
Total | $ 1,204.1 | $ 902.8 |
Purchases of investments, amount outstanding | 12.4 | |
Certificates of deposit and time deposits [Member] | ||
Investment [Line Items] | ||
Total | 999.4 | 902.8 |
Commercial paper [Member] | ||
Investment [Line Items] | ||
Total | 14.2 | 0.0 |
Corporate debt securities [Member] | ||
Investment [Line Items] | ||
Total | 76.3 | 0.0 |
Government securities [Member] | ||
Investment [Line Items] | ||
Total | $ 114.2 | $ 0.0 |
Investments (Details 1) - USD ($) $ in Millions |
Mar. 31, 2017 |
Sep. 30, 2016 |
---|---|---|
Investments [Abstract] | ||
Less than one year | $ 1,092.7 | |
Due in one to three years | 111.4 | |
Total | $ 1,204.1 | $ 902.8 |
Investments (Details 2) - USD ($) $ in Millions |
Mar. 31, 2017 |
Sep. 30, 2016 |
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total | $ 1,204.1 | $ 902.8 |
Short-term Investments [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total | 1,092.7 | 902.8 |
Other Assets [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total | $ 111.4 | $ 0.0 |
Retirement Benefits (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Pension Benefits [Member] | ||||
Components of net periodic benefit cost (income) | ||||
Service cost | $ 24.2 | $ 21.8 | $ 48.3 | $ 43.9 |
Interest cost | 37.8 | 42.2 | 75.6 | 84.7 |
Expected return on plan assets | (56.2) | (54.4) | (112.4) | (109.1) |
Amortization: | ||||
Prior service credit | (1.1) | (0.7) | (1.9) | (1.4) |
Net actuarial loss | 38.2 | 31.1 | 76.2 | 62.2 |
Settlements | 0.0 | 0.0 | 0.2 | 0.0 |
Net periodic benefit cost (income) | 42.9 | 40.0 | 86.0 | 80.3 |
Other Postretirement Benefits [Member] | ||||
Components of net periodic benefit cost (income) | ||||
Service cost | 0.4 | 0.3 | 0.7 | 0.6 |
Interest cost | 0.7 | 0.9 | 1.3 | 1.7 |
Amortization: | ||||
Prior service credit | (1.5) | (2.9) | (3.0) | (5.7) |
Net actuarial loss | 0.6 | 0.7 | 1.1 | 1.3 |
Net periodic benefit cost (income) | $ 0.2 | $ (1.0) | $ 0.1 | $ (2.1) |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2017 |
Mar. 31, 2016 |
Sep. 30, 2016 |
|
Income Tax Disclosure [Abstract] | |||||
Effective income tax rate | 17.70% | 22.60% | 17.20% | 22.10% | |
U.S. statutory rate | 35.00% | 35.00% | 35.00% | 35.00% | |
Gross unrecognized tax benefits | $ 41.6 | $ 41.6 | $ 32.4 | ||
Accrued interest and penalties related to unrecognized tax benefits | 5.7 | 5.7 | $ 5.2 | ||
Reasonably possible amount of reduction in gross unrecognized tax benefits for the next twelve months | 20.1 | 20.1 | |||
Reasonably possible amount of net reduction to income tax provision if unrecognized tax benefits were recognized | $ 5.8 | $ 5.8 | |||
Earliest open year for income tax examinations, U.S. federal | 2014 | ||||
Earliest open tax year for income tax examinations, state, local and non-U.S. | 2003 |
Rocky Flats Settlement (Details) - Rocky Flats [Member] - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2017 |
Sep. 30, 2016 |
|
Loss Contingencies [Line Items] | ||
Settlement amount, in aggregate | $ 375,000 | |
Settlement amount, total Rockwell obligation | 243,750 | |
Settlement amount, payments made to plaintiff class escrow fund | $ 243,750 | $ 1,250 |
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