Summary
Rockwell Automation, Inc. (ROK) reported its financial results for the quarter and six months ended March 31, 2003. Total sales for the quarter increased to $1,029 million from $958 million in the prior year's comparable period, and for the six months, sales rose to $2,013 million from $1,897 million. While net income for the quarter decreased to $49 million ($0.26 per diluted share) from $61 million ($0.33 per diluted share), the six-month period saw a significant turnaround, with net income of $91 million ($0.48 per diluted share) compared to a net loss of $18 million ($0.10 per diluted share) in the prior year. This improvement is partly attributable to the absence of a substantial accounting charge recorded in the first half of fiscal year 2002 related to SFAS 142. The company's Control Systems segment showed robust growth in both sales and operating earnings, driven by strong international performance and gains in specific business units like Logix™ and Process Solutions. The Power Systems segment experienced stable earnings despite slightly lower sales, benefiting from cost reductions and a favorable product mix. The FirstPoint Contact segment continued to face challenges due to weak capital spending in the telecommunications sector, resulting in lower sales and break-even operating earnings. Management remains optimistic, forecasting full-year diluted earnings per share of approximately $1.10, supported by stable market indicators and the company's ongoing efforts in cost management and strategic acquisitions. A significant development for the company is the agreement with the IRS on a research and experimentation credit refund claim, expected to result in a substantial tax benefit in the third quarter of fiscal year 2003.
Key Highlights
- 1Sales for the quarter ended March 31, 2003, increased by 7.4% to $1,029 million, and six-month sales grew by 6.1% to $2,013 million.
- 2Net income for the six months improved significantly to $91 million ($0.48/share) from a net loss of $18 million ($0.10/share) in the prior year, largely due to the absence of a large prior-year accounting charge.
- 3The Control Systems segment demonstrated strong performance, with sales up 11% for the quarter and 10% for the six months, and segment operating earnings increasing by $12 million and $31 million, respectively.
- 4Free cash flow increased by $57 million to $159 million for the six months ended March 31, 2003, driven by higher earnings and working capital reductions.
- 5The company reached an agreement with the IRS for a $65 million research and experimentation credit refund, expected to be recognized as a tax benefit in Q3 2003.
- 6Rockwell Automation announced an expanded stock repurchase program, authorizing up to an additional $200 million in share repurchases.
- 7The company reported a $3 million after-tax charge related to the sale of its majority ownership interest in Reliance Electric Limited Japan (REJ) in the second quarter.