Business Segment Information

Rockwell Automation, a leader in industrial automation and information, makes its customers more productive and the world more sustainable. We determine our operating segments based on the information used by our chief operating decision maker, our Chief Executive Officer, to allocate resources and assess performance. Based upon this information, we organize our hardware and software products, solutions and services into two operating segments: Architecture & Software and Control Products & Solutions.

Architecture & Software

The Architecture & Software segment contains all of the hardware, software and communication components of our integrated control and information architecture which are capable of controlling the customer’s industrial processes and connecting with their business enterprise. Architecture & Software has a broad portfolio of hardware and software products including:

•

Control platforms that perform multiple control disciplines and monitoring of applications, including discrete, batch and continuous process, drives control, motion control and machine safety control. Our platform products include controllers, electronic operator interface devices, electronic input/output devices, communication and networking products and industrial computers. The information-enabled Logix controllers provide integrated multi-discipline control that is modular and scalable.


•	Software products that include configuration and visualization software used to operate and supervise control platforms, advanced process control software, manufacturing execution systems (MES) and information solutions software that enables customers to improve operational productivity and meet regulatory requirements.


•	Other products, including sensors, machine safety components and linear motion control products.

Control Products & Solutions

The Control Products & Solutions segment combines a comprehensive portfolio of intelligent motor control and industrial control products, application expertise and project management capabilities. This comprehensive portfolio includes:


•	Low and medium voltage electro-mechanical and electronic motor starters, motor and circuit protection devices, AC/DC variable frequency drives, push buttons, signaling devices, termination and protection devices, relays and timers.


•	Value-added solutions ranging from packaged solutions such as configured drives and motor control centers to automation and information solutions where we provide design, integration and start-up services for custom-engineered hardware and software.


•	Services designed to help maximize a customer’s automation investment and provide total life-cycle support, including technical support and repair, asset management, training, predictive and preventative maintenance, and safety and network consulting.

The following tables reflect the sales and operating results of our reportable segments (in millions):



	2018			2017			2016
Sales:
Architecture & Software	$	3,098.2		$	2,899.3		$	2,635.2
Control Products & Solutions	3,567.8			3,412.0			3,244.3
Total	$	6,666.0		$	6,311.3		$	5,879.5
Segment operating earnings:
Architecture & Software	$	901.3		$	781.5		$	695.0
Control Products & Solutions	541.3			451.6			493.7
Total	1,442.6			1,233.1			1,188.7
Purchase accounting depreciation and amortization	(17.4		)	(21.4		)	(18.4		)
General corporate-net	(75.6		)	(76.3		)	(79.7		)
Non-operating pension costs	(24.6		)	(82.6		)	(76.2		)
Gain on sale of business	—			60.8			—
Costs related to unsolicited Emerson proposals	(11.2		)	—			—
Gain on investments	123.7			—			—
Valuation adjustment pending registration of PTC Shares	(33.7		)	—			—
Interest expense	(73.0		)	(76.2		)	(71.3		)
Income before income taxes	$	1,330.8		$	1,037.4		$	943.1

Among other considerations, we evaluate performance and allocate resources based upon segment operating earnings before income taxes, costs related to the unsolicited Emerson proposals in the first quarter of fiscal 2018, interest expense, costs related to corporate offices, non-operating pension costs, certain corporate initiatives, gains and losses on investments, valuation adjustment pending registration of PTC Shares, 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.

The following tables summarize the identifiable assets at September 30, 2018, 2017 and 2016 and the provision for depreciation and amortization and the amount of capital expenditures for property for the years then ended for each of the reportable segments and Corporate (in millions):



	2018		2017		2016
Identifiable assets:
Architecture & Software	$	1,788.9	$	2,482.8	$	2,054.3
Control Products & Solutions	2,094.9		2,078.2		2,034.6
Corporate	2,378.2		2,600.7		3,012.3
Total	$	6,262.0	$	7,161.7	$	7,101.2
Depreciation and amortization:
Architecture & Software	$	72.5	$	69.3	$	75.0
Control Products & Solutions	72.4		75.0		77.3
Corporate	2.3		3.2		1.5
Total	147.2		147.5		153.8
Purchase accounting depreciation and amortization	17.4		21.4		18.4
Total	$	164.6	$	168.9	$	172.2
Capital expenditures for property:
Architecture & Software	$	29.4	$	30.0	$	24.7
Control Products & Solutions	38.5		42.1		41.5
Corporate	57.6		69.6		50.7
Total	$	125.5	$	141.7	$	116.9

Identifiable assets at Corporate consist principally of cash, net deferred income tax assets, prepaid pension and property. Property shared by the segments and used in operating activities is also reported in Corporate identifiable assets and Corporate capital expenditures. Corporate identifiable assets include shared net property balances of $234.4 million, $259.3 million and $264.8 million at September 30, 2018, 2017 and 2016, respectively, for which depreciation expense has been allocated to segment operating earnings based on the expected benefit to be realized by each segment. Corporate capital expenditures include $57.6 million, $69.6 million and $50.7 million in 2018, 2017 and 2016, respectively, that will be shared by our operating segments.

We conduct a significant portion of our business activities outside the United States. The following tables present sales and property by geographic region (in millions):



	Sales						Property
	2018		2017		2016		2018		2017		2016
United States	$	3,602.6	$	3,458.4	$	3,213.4	$	437.6	$	443.4	$	445.4
Canada	361.5		343.4		316.4		12.6		8.8		7.3
Europe, Middle East and Africa	1,286.8		1,193.7		1,147.2		53.3		52.5		49.9
Asia Pacific	933.3		866.4		764.4		42.9		40.0		37.4
Latin America	481.8		449.4		438.1		30.4		39.2		38.3
Total	$	6,666.0	$	6,311.3	$	5,879.5	$	576.8	$	583.9	$	578.3

We attribute sales to the geographic regions based on the country of destination.

In most countries, we sell primarily through independent distributors in conjunction with our direct sales force. In other countries, we sell through a combination of our direct sales force and to a lesser extent, through independent distributors. We sell large systems and service offerings principally through our direct sales force, though opportunities are sometimes identified through distributors. Sales to our largest distributor in 2018, 2017 and 2016, which are attributable to both segments, were approximately 10 percent of our total sales.