10-KPeriod: FY2005

ROCKWELL AUTOMATION, INC Annual Report, Year Ended Sep 30, 2005

Filed November 10, 2005For Securities:ROK

Summary

Rockwell Automation, Inc. (ROK) reported total sales of $5.0 billion for the fiscal year ended September 29, 2005, a 13% increase over the prior year, driven by strong performance in both its Control Systems and Power Systems segments. The company experienced robust growth across most industries served, particularly in emerging economies within the Asia-Pacific and Latin American regions. Control Systems, its largest segment, saw sales rise 13%, bolstered by its Logix platform and intelligent motor control products. Power Systems also grew significantly, up 17%, driven by demand in heavy industries like mining and oil & gas. Financially, Rockwell Automation demonstrated solid operational execution, with income from continuing operations increasing by 46% to $518.4 million, translating to diluted earnings per share of $2.77. The company's financial condition remained strong, with free cash flow generation of $514.8 million. Key initiatives for 2006 include continued focus on the Logix platform, geographic expansion, and cost productivity. The company projects 7-9% revenue growth and diluted EPS in the range of $3.00 to $3.10 for fiscal year 2006, assuming a favorable economic environment.

Key Highlights

  • 1Total sales reached $5.0 billion, a 13% increase year-over-year, driven by broad-based demand.
  • 2Control Systems segment sales grew 13% to $4.1 billion, with significant strength in the Logix platform.
  • 3Power Systems segment sales increased 17% to $0.9 billion, benefiting from demand in heavy industries.
  • 4Income from continuing operations grew 46% to $518.4 million.
  • 5Diluted earnings per share (EPS) from continuing operations were $2.77, up from $1.85 in the prior year.
  • 6Free cash flow generation was strong at $514.8 million.
  • 7The company provided a positive outlook for fiscal year 2006, expecting 7-9% revenue growth and EPS between $3.00 and $3.10.

Frequently Asked Questions

Rockwell Automation's revenue drivers in fiscal year 2005 were strong demand across its two main operating segments: Control Systems and Power Systems. Specific growth catalysts included the increasing adoption of its Logix platform and intelligent motor control products within the Control Systems segment, and robust demand from heavy industries like mining and oil & gas for the Power Systems segment. Geographic expansion, particularly in emerging economies, also contributed significantly.

The company demonstrated strong financial management. It generated $514.8 million in free cash flow, an increase from the prior year, which provided flexibility for investments and shareholder returns. The company maintained a solid balance sheet with a debt-to-total capital ratio of 31.2%. Significant cash uses included capital expenditures, dividends, and share repurchases.

Rockwell Automation's strategic priorities for fiscal year 2006 include accelerating the adoption and functionality of its Logix platform, expanding its geographic presence especially in emerging markets, leveraging its industry-specific expertise and solutions capabilities, and continuing to drive cost productivity initiatives. These efforts are expected to support their projected revenue growth of 7-9%.

The filing highlights several risks, including global economic and political uncertainties, currency exchange rate fluctuations, intense competition in the industrial automation market, reliance on third-party suppliers, potential disruptions to operations, and risks associated with information technology systems and the ongoing ERP implementation. The company also notes risks related to litigation and environmental matters.