10-KPeriod: FY2006

ROCKWELL AUTOMATION, INC Annual Report, Year Ended Sep 30, 2006

Filed November 9, 2006For Securities:ROK

Summary

Rockwell Automation, Inc. (ROK) reported strong growth in fiscal year 2006, with total sales reaching $5.6 billion, an 11% increase year-over-year. The company's Control Systems segment, its largest, saw a 10% sales increase, driven by strong performance in the Americas and Asia-Pacific, despite a slowdown in the North American automotive market. The Power Systems segment also performed well, with a 15% sales increase, benefiting from higher energy and commodity prices fueling customer investments in capacity expansion. Financially, the company demonstrated robust earnings from continuing operations, and successfully managed its debt, maintaining a healthy debt-to-total-capital ratio. Rockwell Automation also actively engaged in share repurchases, signaling confidence in its financial health and commitment to returning value to shareholders. A significant event noted is the announced divestiture of the Power Systems segment (Dodge mechanical and Reliance Electric motors and motor repair services businesses) for $1.8 billion, which is expected to close in the second quarter of fiscal 2007. This strategic move indicates a focus on optimizing the company's portfolio and reinvesting proceeds for future growth.

Key Highlights

  • 1Total sales grew by 11% to $5.6 billion in fiscal year 2006.
  • 2Control Systems segment sales increased by 10%, with strong performance in emerging economies.
  • 3Power Systems segment sales grew by 15%, driven by demand in heavy industries.
  • 4Diluted earnings per share from continuing operations increased to $3.49 from $2.77 in the prior year.
  • 5The company announced the divestiture of its Power Systems segment for $1.8 billion, expected to close in Q2 FY2007.
  • 6Share repurchases were significant, with 12.2 million shares bought back for $743.1 million.
  • 7The company's effective tax rate was 29.5%, down slightly from 29.7% in the previous year.

Frequently Asked Questions

Rockwell Automation is a global provider of industrial automation power, control, and information products and services, serving various industries.

Revenue growth was driven by strong demand in most industries served, particularly in emerging economies and sectors benefiting from higher commodity and energy prices, such as oil and gas, mining, and basic materials. The Control Systems segment benefited from broad industrial demand, while the Power Systems segment saw increased investment from customers in capacity expansion.

The announced divestiture of the Power Systems segment for $1.8 billion is a major strategic move. It signifies a focus on optimizing the company's business portfolio, likely allowing Rockwell Automation to concentrate on its core Control Systems business and redeploy the capital generated from the sale towards growth initiatives, share repurchases, or debt reduction.

The company generated strong operating cash flow, maintained a manageable debt-to-total-capital ratio of 33.5%, and actively repurchased its own shares. It also proactively contributed to its pension plans and had access to significant unsecured credit facilities, indicating a sound financial position.