10-QPeriod: Q1 FY2003

ROCKWELL AUTOMATION, INC Quarterly Report for Q1 Ended Dec 31, 2002

Filed February 6, 2003For Securities:ROK

Summary

Rockwell Automation, Inc. (ROK) reported its third quarter fiscal year 2003 results, showing a net income of $42 million, or $0.22 per diluted share, a notable improvement from the net loss of $79 million (or $0.42 per diluted share) in the prior year's comparable quarter. This turnaround is largely attributed to an increase in sales and improved operational efficiency, despite the company operating in a challenging industrial environment characterized by low manufacturing utilization. The company's 'Control Systems' segment demonstrated strong growth, offsetting declines in 'Power Systems' and 'FirstPoint Contact'. Financially, the company maintained a stable balance sheet with total assets of $4,006 million and total shareowners' equity of $1,612 million as of December 31, 2002. Cash flow from operations was robust, reaching $104 million for the quarter, contributing to a positive free cash flow of $89 million. The company also has a strong liquidity position with $307 million in cash and cash equivalents and significant available credit facilities, though it faces a $150 million note maturity in April 2003.

Key Highlights

  • 1Reported a net income of $42 million ($0.22/share) for the quarter ended December 31, 2002, a significant improvement from a net loss of $79 million ($0.42/share) in the prior year quarter.
  • 2Total sales increased to $984 million from $939 million in the prior year's comparable quarter, indicating a recovery in demand.
  • 3The 'Control Systems' segment showed strong performance with sales up 6% and operating earnings increasing to $86 million, driven by demand in key industries and growth in Logix™ products.
  • 4Cash flow from operations was $104 million and free cash flow was $89 million for the quarter, demonstrating healthy cash generation.
  • 5The company maintained a solid liquidity position with $307 million in cash and cash equivalents and significant available credit facilities.
  • 6Despite some market improvements, the company anticipates continued reliance on cost reduction measures and cautious capital allocation.
  • 7A significant federal research and experimentation credit refund claim of $70-75 million is anticipated in the second quarter of fiscal 2003, though not yet recognized in financial statements.

Frequently Asked Questions

For the quarter ended December 31, 2002, Rockwell Automation reported a net income of $42 million, or $0.22 per diluted share, a significant improvement from a net loss of $79 million, or $0.42 per diluted share, for the same period in the prior year. Sales also increased to $984 million from $939 million.

The 'Control Systems' segment performed strongly, with sales increasing and operating earnings rising due to higher sales volume and growth in its Logix™ product line. The 'Power Systems' segment saw a decrease in sales and operating earnings, while the 'FirstPoint Contact' segment experienced a decline in sales primarily due to reduced customer capital spending in telecommunications.

The company generated $104 million in cash from operating activities and $89 million in free cash flow for the quarter. This healthy cash generation, along with $307 million in cash and cash equivalents and available credit facilities, supports the company's liquidity and its ability to fund future operations, capital expenditures, and dividends.

The company has a $150 million note maturity in April 2003, which is expected to be funded by existing cash or a combination of cash and commercial paper borrowings. Additionally, Rockwell Automation anticipates filing a significant federal research and experimentation credit refund claim of $70-75 million in the second quarter of fiscal 2003, though the ultimate amount is subject to IRS audit and has not yet been recognized.