Delaware | 25-1797617 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) | |
1201 South 2nd Street | ||
Milwaukee, Wisconsin | 53204 | |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Name of each exchange on which registered | |
Common Stock, $1 Par Value | New York Stock Exchange |
Large Accelerated Filer ☑ | Accelerated Filer ☐ | Non-accelerated Filer ☐ | Smaller reporting company ☐ |
• | macroeconomic factors, including global and regional business conditions, the availability and cost of capital, commodity prices, the cyclical nature of our customers’ capital spending, sovereign debt concerns and currency exchange rates; |
• | laws, regulations and governmental policies affecting our activities in the countries where we do business; |
• | the successful development of advanced technologies and demand for and market acceptance of new and existing products; |
• | the availability, effectiveness and security of our information technology systems; |
• | competitive products, solutions and services and pricing pressures, and our ability to provide high quality products, solutions and services; |
• | a disruption of our business due to natural disasters, pandemics, acts of war, strikes, terrorism, social unrest or other causes; |
• | our ability to manage and mitigate the risk related to security vulnerabilities and breaches of our products, solutions and services; |
• | intellectual property infringement claims by others and the ability to protect our intellectual property; |
• | the uncertainty of claims by taxing authorities in the various jurisdictions where we do business; |
• | our ability to attract and retain qualified personnel; |
• | our ability to manage costs related to employee retirement and health care benefits; |
• | the uncertainties of litigation, including liabilities related to the safety and security of the products, solutions and services we sell; |
• | our ability to manage and mitigate the risks associated with our solutions and services businesses; |
• | a disruption to our distribution channels; |
• | the availability and price of components and materials; |
• | the successful integration and management of acquired businesses; |
• | the successful execution of our cost productivity initiatives; and |
• | other risks and uncertainties, including but not limited to those detailed from time to time in our Securities and Exchange Commission (SEC) filings. |
September 30, | ||||||||
2016 | 2015 | |||||||
Architecture & Software | $ | 185.8 | $ | 165.1 | ||||
Control Products & Solutions | 1,024.6 | 999.5 | ||||||
$ | 1,210.4 | $ | 1,164.6 |
• | poor quality or an insecure supply chain, which could adversely affect the reliability and reputation of our products; |
• | changes in the cost of these purchases due to inflation, exchange rates, commodity market volatility or other factors; |
• | intellectual property risks such as ownership of rights or alleged infringement by suppliers; |
• | information security risks associated with providing confidential information to suppliers; and |
• | shortages of components, commodities or other materials, which could adversely affect our manufacturing efficiencies and ability to make timely delivery. |
• | difficulties in integrating the acquired business, retaining the acquired business’ customers and achieving the expected benefits of the acquisition, such as sales increases, access to technologies, cost savings and increases in geographic or product presence, in the desired time frames; |
• | loss of key employees of the acquired business; |
• | legal and compliance issues; |
• | difficulties implementing and maintaining consistent standards, controls, procedures, policies and information systems; and |
• | diversion of management’s attention from other business concerns. |
Location | Segment/Region | ||
Milwaukee, Wisconsin, United States | Global Headquarters and Control Products & Solutions | ||
Mayfield Heights, Ohio, United States | Architecture & Software | ||
Cambridge, Canada | Canada | ||
Capelle, Netherlands / Diegem, Belgium | Europe, Middle East and Africa | ||
Hong Kong | Asia Pacific | ||
Weston, Florida, United States | Latin America | ||
The following table sets forth information regarding our principal manufacturing locations as of September 30, 2016. | |||
Location | Manufacturing Square Footage | ||
Monterrey, Mexico | 637,000 | ||
Aarau, Switzerland | 284,000 | ||
Twinsburg, Ohio, United States | 257,000 | ||
Mequon, Wisconsin, United States | 240,000 | ||
Cambridge, Canada | 216,000 | ||
Shanghai, China | 196,000 | ||
Harbin, China | 162,000 | ||
Singapore | 139,000 | ||
Katowice, Poland | 138,000 | ||
Tecate, Mexico | 135,000 | ||
Ladysmith, Wisconsin, United States | 124,000 | ||
Richland Center, Wisconsin, United States | 124,000 | ||
Jundiai, Brazil | 115,000 |
Name, Office and Position, and Principal Occupations and Employment | Age | |
Blake D. Moret — President and Chief Executive Officer since July 1, 2016; Senior Vice President previously | 53 | |
Kenneth M. Champa — Senior Vice President since July 1, 2016; previously Vice President, Finance, Control Products and Solutions and (from March 2015) Operations and Engineering Services | 62 | |
Sujeet Chand — Senior Vice President and Chief Technology Officer | 58 | |
Theodore D. Crandall — Senior Vice President and Chief Financial Officer | 61 | |
David M. Dorgan — Vice President and Controller | 52 | |
Steven W. Etzel — Vice President and Treasurer | 56 | |
Douglas M. Hagerman — Senior Vice President, General Counsel and Secretary | 55 | |
Frank C. Kulaszewicz — Senior Vice President | 52 | |
John P. McDermott — Senior Vice President | 58 | |
John M. Miller — Vice President and Chief Intellectual Property Counsel | 49 | |
Robert B. Murphy — Senior Vice President, Operations and Engineering Services since May 2, 2016; Vice President, Manufacturing Operations previously | 57 | |
Susan J. Schmitt — Senior Vice President, Human Resources | 53 |
2016 | 2015 | |||||||||||||||
Fiscal Quarters | High | Low | High | Low | ||||||||||||
First | $ | 111.03 | $ | 98.47 | $ | 118.32 | $ | 98.55 | ||||||||
Second | 115.62 | 87.53 | 118.96 | 102.31 | ||||||||||||
Third | 120.60 | 107.17 | 127.05 | 110.00 | ||||||||||||
Fourth | 123.11 | 110.89 | 126.77 | 99.00 |
Period | Total Number of Shares Purchased(1) | Average Price Paid Per Share(2) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Approx. Dollar Value of Shares that may yet be Purchased Under the Plans or Programs(3) | ||||||||||
July 1 – 31, 2016 | 323,275 | $ | 116.81 | 323,275 | $ | 1,037,423,371 | ||||||||
August 1 – 31, 2016 | 462,436 | 117.55 | 460,000 | 983,352,795 | ||||||||||
September 1 – 30, 2016 | 330,000 | 116.09 | 330,000 | 945,043,797 | ||||||||||
Total | 1,115,711 | 116.91 | 1,113,275 |
(1) | All of the shares purchased during the quarter ended September 30, 2016 were acquired pursuant to the repurchase programs described in (3) below, except for 2,436 shares that were acquired in August in connection with stock swap exercises of employee stock options. |
(2) | Average price paid per share includes brokerage commissions. |
(3) | On June 4, 2014, the Board of Directors authorized us to expend $1.0 billion to repurchase shares of our common stock. On April 6, 2016, the Board of Directors authorized us to expend an additional $1.0 billion to repurchase shares of our common stock. Our repurchase programs allow us to repurchase shares at management's discretion or at our broker’s discretion pursuant to a share repurchase plan subject to price and volume parameters. |
Year Ended September 30, | ||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||
(in millions, except per share data) | ||||||||||||||||||||
Consolidated Statement of Operations Data: | ||||||||||||||||||||
Sales | $ | 5,879.5 | $ | 6,307.9 | $ | 6,623.5 | $ | 6,351.9 | $ | 6,259.4 | ||||||||||
Interest expense | 71.3 | 63.7 | 59.3 | 60.9 | 60.1 | |||||||||||||||
Net income | 729.7 | 827.6 | 826.8 | 756.3 | 737.0 | |||||||||||||||
Earnings per share: | ||||||||||||||||||||
Basic | 5.60 | 6.15 | 5.98 | 5.43 | 5.20 | |||||||||||||||
Diluted | 5.56 | 6.09 | 5.91 | 5.36 | 5.13 | |||||||||||||||
Cash dividends per share | 2.90 | 2.60 | 2.32 | 1.98 | 1.745 | |||||||||||||||
Consolidated Balance Sheet Data: (at end of period) | ||||||||||||||||||||
Total assets | $ | 7,101.2 | $ | 6,404.7 | $ | 6,224.3 | $ | 5,844.6 | $ | 5,636.5 | ||||||||||
Short-term debt | 448.6 | — | 325.0 | 179.0 | 157.0 | |||||||||||||||
Long-term debt | 1,516.3 | 1,500.9 | 900.4 | 905.1 | 905.0 | |||||||||||||||
Shareowners’ equity | 1,990.1 | 2,256.8 | 2,658.1 | 2,585.5 | 1,851.7 | |||||||||||||||
Other Data: | ||||||||||||||||||||
Capital expenditures | $ | 116.9 | $ | 122.9 | $ | 141.0 | $ | 146.2 | $ | 139.6 | ||||||||||
Depreciation | 143.3 | 133.1 | 122.5 | 113.8 | 103.9 | |||||||||||||||
Intangible asset amortization | 28.9 | 29.4 | 30.0 | 31.4 | 34.7 |
• | investments in manufacturing, including upgrades, modifications and expansions of existing facilities or production lines and new facilities or production lines; |
• | investments in basic materials production capacity, which may be related to commodity pricing levels; |
• | our customers’ needs for faster time to market, lower total cost of ownership, improved asset utilization and optimization, and enterprise risk management; |
• | our customers’ needs to continuously improve quality, safety and sustainability; |
• | industry factors that include our customers’ new product introductions, demand for our customers’ products or services and the regulatory and competitive environments in which our customers operate; |
• | levels of global industrial production and capacity utilization; |
• | regional factors that include local political, social, regulatory and economic circumstances; and |
• | the spending patterns of our customers due to their annual budgeting processes and their working schedules. |
• | achieve organic sales growth in excess of the automation market by expanding our served market and strengthening our competitive differentiation; |
• | diversify our sales streams by broadening our portfolio of products, solutions and services, expanding our global presence and serving a wider range of industries and applications; |
• | grow market share by gaining new customers and by capturing a larger share of existing customers’ spending; |
• | enhance our market access by building our channel capability and partner network; |
• | acquire companies that serve as catalysts to organic growth by adding complementary technology, expanding our served market, or enhancing our domain expertise or market access; |
• | deploy human and financial resources to strengthen our technology leadership and our intellectual capital business model; |
• | continuously improve quality and customer experience; and |
• | drive annual cost productivity. |
• | The Industrial Production (IP) Index, published by the Federal Reserve, which measures the real output of manufacturing, mining, and electric and gas utilities. The IP Index is expressed as a percentage of real output in a base year, currently 2012. Historically there has been a meaningful correlation between the changes in the IP Index and the level of automation investment made by our U.S. customers in their manufacturing base. |
• | The Manufacturing Purchasing Managers’ Index (PMI), published by the Institute for Supply Management (ISM), which indicates the current and near-term state of manufacturing activity in the U.S. According to the ISM, a PMI measure above 50 indicates that the U.S. manufacturing economy is generally expanding while a measure below 50 indicates that it is generally contracting. |
• | Industrial Equipment Spending, compiled by the Bureau of Economic Analysis, which provides insight into spending trends in the broad U.S. industrial economy. This measure over the longer term has proven to demonstrate a reasonable correlation with our domestic growth. |
• | Capacity Utilization (Total Industry), published by the Federal Reserve, which measures plant operating activity. Historically there has been a meaningful correlation between Capacity Utilization and levels of U.S. IP. |
IP Index | PMI | Industrial Equipment Spending (in billions) | Capacity Utilization (percent) | |||||||||
Fiscal 2016 quarter ended: | ||||||||||||
September 2016 | 104.4 | 51.5 | 228.2 | 75.5 | ||||||||
June 2016 | 103.9 | 53.2 | 227.3 | 75.2 | ||||||||
March 2016 | 104.1 | 51.8 | 222.2 | 75.4 | ||||||||
December 2015 | 104.6 | 48.0 | 224.7 | 75.8 | ||||||||
Fiscal 2015 quarter ended: | ||||||||||||
September 2015 | 105.5 | 50.0 | 219.8 | 76.6 | ||||||||
June 2015 | 105.1 | 53.1 | 222.7 | 76.6 | ||||||||
March 2015 | 105.8 | 52.3 | 216.4 | 77.7 | ||||||||
December 2014 | 106.3 | 55.1 | 216.5 | 78.6 | ||||||||
Fiscal 2014 quarter ended: | ||||||||||||
September 2014 | 105.3 | 56.1 | 222.9 | 78.4 | ||||||||
June 2014 | 104.7 | 55.7 | 218.5 | 78.4 | ||||||||
March 2014 | 103.3 | 54.4 | 212.4 | 77.6 | ||||||||
December 2013 | 102.3 | 56.5 | 204.0 | 77.3 |
• | Sales related to our process initiative decreased 19 percent in 2016 compared to 2015. Excluding the impact of currency translation, process initiative sales decreased 16 percent year over year. |
• | Logix sales decreased 7 percent year over year compared to 2015. Logix organic sales decreased 4 percent. |
• | Sales in emerging markets decreased 8.4 percent in 2016 compared to 2015. Organic sales in emerging countries increased 1.2 percent year over year, and currency translation reduced sales in emerging countries by 9.7 percentage points. |
Year Ended September 30, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Sales | ||||||||||||
Architecture & Software | $ | 2,635.2 | $ | 2,749.5 | $ | 2,845.3 | ||||||
Control Products & Solutions | 3,244.3 | 3,558.4 | 3,778.2 | |||||||||
Total sales (a) | $ | 5,879.5 | $ | 6,307.9 | $ | 6,623.5 | ||||||
Segment operating earnings(1) | ||||||||||||
Architecture & Software | $ | 695.0 | $ | 808.6 | $ | 839.6 | ||||||
Control Products & Solutions | 493.7 | 551.9 | 512.4 | |||||||||
Total segment operating earnings(2) (b) | 1,188.7 | 1,360.5 | 1,352.0 | |||||||||
Purchase accounting depreciation and amortization | (18.4 | ) | (21.0 | ) | (21.6 | ) | ||||||
General corporate — net | (79.7 | ) | (85.6 | ) | (81.0 | ) | ||||||
Non-operating pension costs | (76.2 | ) | (62.7 | ) | (55.9 | ) | ||||||
Interest expense | (71.3 | ) | (63.7 | ) | (59.3 | ) | ||||||
Income before income taxes (c) | 943.1 | 1,127.5 | 1,134.2 | |||||||||
Income tax provision | (213.4 | ) | (299.9 | ) | (307.4 | ) | ||||||
Net income | $ | 729.7 | $ | 827.6 | $ | 826.8 | ||||||
Diluted EPS | $ | 5.56 | $ | 6.09 | $ | 5.91 | ||||||
Adjusted EPS(3) | $ | 5.93 | $ | 6.40 | $ | 6.17 | ||||||
Diluted weighted average outstanding shares | 131.1 | 135.7 | 139.7 | |||||||||
Total segment operating margin(2) (b/a) | 20.2 | % | 21.6 | % | 20.4 | % | ||||||
Pre-tax margin (c/a) | 16.0 | % | 17.9 | % | 17.1 | % |
(1) | See Note 15 in the Financial Statements for the definition of segment operating earnings. |
(2) | Total segment operating earnings and total segment operating margin are non-GAAP financial measures. We exclude purchase accounting depreciation and amortization, general corporate – net, non-operating pension costs, interest expense and income tax provision because we do not consider these costs to be directly related to the operating performance of our segments. We believe that these measures are useful to investors as measures of operating performance. We use these measures to monitor and evaluate the profitability of our operating segments. Our measures of total segment operating earnings and total segment operating margin may be different from measures used by other companies. |
(3) | Adjusted EPS is a non-GAAP earnings measure that excludes the non-operating pension costs and their related income tax effects. See Adjusted Income, Adjusted EPS and Adjusted Effective Tax Rate Reconciliation for more information on this non-GAAP measure. |
Year Ended September 30, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Purchase accounting depreciation and amortization | ||||||||||||
Architecture & Software | $ | 3.9 | $ | 4.3 | $ | 4.1 | ||||||
Control Products & Solutions | 13.5 | 15.7 | 16.5 | |||||||||
Non-operating pension costs | ||||||||||||
Architecture & Software | 26.9 | 22.6 | 20.6 | |||||||||
Control Products & Solutions | 42.0 | 35.3 | 32.2 |
Year Ended September 30, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Service cost | $ | 88.0 | $ | 85.7 | $ | 78.5 | ||||||
Amortization of prior service credit | (2.9 | ) | (2.7 | ) | (2.7 | ) | ||||||
Operating pension costs | 85.1 | 83.0 | 75.8 | |||||||||
Interest cost | 169.5 | 167.2 | 174.2 | |||||||||
Expected return on plan assets | (218.3 | ) | (223.2 | ) | (217.9 | ) | ||||||
Amortization of net actuarial loss | 124.5 | 118.7 | 99.7 | |||||||||
Special termination benefit | 0.5 | — | — | |||||||||
Settlements | — | — | (0.1 | ) | ||||||||
Non-operating pension costs | 76.2 | 62.7 | 55.9 | |||||||||
Net periodic pension cost | $ | 161.3 | $ | 145.7 | $ | 131.7 |
Year Ended September 30, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Income from continuing operations | $ | 729.7 | $ | 827.6 | $ | 826.8 | ||||||
Non-operating pension costs | 76.2 | 62.7 | 55.9 | |||||||||
Tax effect of non-operating pension costs | (27.5 | ) | (21.9 | ) | (20.0 | ) | ||||||
Adjusted Income | $ | 778.4 | $ | 868.4 | $ | 862.7 | ||||||
Diluted EPS from continuing operations | $ | 5.56 | $ | 6.09 | $ | 5.91 | ||||||
Non-operating pension costs per diluted share | 0.58 | 0.46 | 0.40 | |||||||||
Tax effect of non-operating pension costs per diluted share | (0.21 | ) | (0.15 | ) | (0.14 | ) | ||||||
Adjusted EPS | $ | 5.93 | $ | 6.40 | $ | 6.17 | ||||||
Effective tax rate | 22.6 | % | 26.6 | % | 27.1 | % | ||||||
Tax effect of non-operating pension costs | 1.0 | % | 0.4 | % | 0.4 | % | ||||||
Adjusted Effective Tax Rate | 23.6 | % | 27.0 | % | 27.5 | % |
(in millions, except per share amounts) | 2016 | 2015 | Change | |||||||||
Sales | $ | 5,879.5 | $ | 6,307.9 | $ | (428.4 | ) | |||||
Income before income taxes | 943.1 | 1,127.5 | (184.4 | ) | ||||||||
Diluted EPS | 5.56 | 6.09 | (0.53 | ) | ||||||||
Adjusted EPS | 5.93 | 6.40 | (0.47 | ) |
Change vs. | Change in Organic Sales(1) vs. | |||||||||
Year Ended September 30, 2016 | Year Ended September 30, 2015 | Year Ended September 30, 2015 | ||||||||
United States | $ | 3,213.4 | (6.8 | )% | (6.9 | )% | ||||
Canada | 316.4 | (13.7 | )% | (6.8 | )% | |||||
Europe, Middle East and Africa | 1,147.2 | (2.3 | )% | 1.8 | % | |||||
Asia Pacific | 764.4 | (8.4 | )% | (4.8 | )% | |||||
Latin America | 438.1 | (9.9 | )% | 7.2 | % | |||||
Total sales | $ | 5,879.5 | (6.8 | )% | (3.9 | )% |
(1) | Organic sales are sales excluding the effect of changes in currency exchange rates and acquisitions. See Supplemental Sales Information for information on this non-GAAP measure. |
• | Sales in the United States declined year over year, mainly due to weakness in heavy industries, particularly oil and gas. |
• | Sales in Canada decreased due to the unfavorable impact of currency translation as well as declines in heavy industries, particularly oil and gas. |
• | EMEA sales decreased due to the unfavorable impact of currency translation. Organic sales increased in both mature Europe and emerging countries. |
• | Asia Pacific sales declined due to the unfavorable impact of currency translation as well as a decrease in organic sales in China. |
• | Latin America sales decreased due to the unfavorable impact of currency translation. Organic sales growth in the region was led by Mexico. |
(in millions, except percentages) | 2016 | 2015 | Change | |||||||||||
Sales | $ | 2,635.2 | $ | 2,749.5 | $ | (114.3 | ) | |||||||
Segment operating earnings | 695.0 | 808.6 | (113.6 | ) | ||||||||||
Segment operating margin | 26.4 | % | 29.4 | % | (3.0 | ) | pts |
(in millions, except percentages) | 2016 | 2015 | Change | |||||||||||
Sales | $ | 3,244.3 | $ | 3,558.4 | $ | (314.1 | ) | |||||||
Segment operating earnings | 493.7 | 551.9 | (58.2 | ) | ||||||||||
Segment operating margin | 15.2 | % | 15.5 | % | (0.3 | ) | pts |
(in millions, except per share amounts) | 2015 | 2014 | Change | |||||||||
Sales | $ | 6,307.9 | $ | 6,623.5 | $ | (315.6 | ) | |||||
Income before income taxes | 1,127.5 | 1,134.2 | (6.7 | ) | ||||||||
Diluted EPS | 6.09 | 5.91 | 0.18 | |||||||||
Adjusted EPS | 6.40 | 6.17 | 0.23 |
Change vs. | Change in Organic Sales(1) vs. | |||||||||
Year Ended September 30, 2015 | Year Ended September 30, 2014 | Year Ended September 30, 2014 | ||||||||
United States | $ | 3,446.8 | 0.9 | % | 0.9 | % | ||||
Canada | 366.6 | (16.1 | )% | (5.3 | )% | |||||
Europe, Middle East and Africa | 1,174.0 | (13.2 | )% | 2.1 | % | |||||
Asia Pacific | 834.5 | (5.6 | )% | (1.1 | )% | |||||
Latin America | 486.0 | (9.3 | )% | 8.9 | % | |||||
Total sales | $ | 6,307.9 | (4.8 | )% | 1.1 | % |
(1) | Organic sales are sales excluding the effect of changes in currency exchange rates and acquisitions. See Supplemental Sales Information for information on this non-GAAP measure. |
• | Sales in the United States increased modestly, with strength in the consumer and automotive industries offset by weakness in heavy industries, especially the oil and gas industry. |
• | Sales in Canada declined due to the unfavorable impact of currency translation as well as declines in resource-based industries, particularly the oil and gas industry. |
• | EMEA sales decreased due to the unfavorable impact of currency translation. Organic sales growth was led by emerging countries with modest growth in mature Europe. |
• | Asia Pacific sales declined due to the unfavorable impact of currency translation as well as a decrease in organic sales in China, partially offset by growth in India. |
• | Latin America sales decreased due to the unfavorable impact of currency translation. Organic sales growth in the region was primarily driven by strong sales growth in Mexico. |
(in millions, except percentages) | 2015 | 2014 | Change | |||||||||||
Sales | $ | 2,749.5 | $ | 2,845.3 | $ | (95.8 | ) | |||||||
Segment operating earnings | 808.6 | 839.6 | (31.0 | ) | ||||||||||
Segment operating margin | 29.4 | % | 29.5 | % | (0.1 | ) | pts |
(in millions, except percentages) | 2015 | 2014 | Change | |||||||||||
Sales | $ | 3,558.4 | $ | 3,778.2 | $ | (219.8 | ) | |||||||
Segment operating earnings | 551.9 | 512.4 | 39.5 | |||||||||||
Segment operating margin | 15.5 | % | 13.6 | % | 1.9 | pts |
Year Ended September 30, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Cash provided by (used for): | ||||||||||||
Operating activities | $ | 947.3 | $ | 1,187.7 | $ | 1,033.3 | ||||||
Investing activities | (440.0 | ) | (246.9 | ) | (483.4 | ) | ||||||
Financing activities | (397.7 | ) | (608.1 | ) | (521.8 | ) | ||||||
Effect of exchange rate changes on cash | (10.5 | ) | (96.7 | ) | (37.7 | ) | ||||||
Cash provided by (used for) continuing operations | $ | 99.1 | $ | 236.0 | $ | (9.6 | ) |
Year Ended September 30, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Cash provided by continuing operating activities | $ | 947.3 | $ | 1,187.7 | $ | 1,033.3 | ||||||
Capital expenditures | (116.9 | ) | (122.9 | ) | (141.0 | ) | ||||||
Excess income tax benefit from share-based compensation | 3.3 | 12.4 | 29.9 | |||||||||
Free cash flow | $ | 833.7 | $ | 1,077.2 | $ | 922.2 |
Credit Rating Agency | Short Term Rating | Long Term Rating | Outlook | |||
Standard & Poor’s | A-1 | A | Stable | |||
Moody’s | P-2 | A3 | Stable | |||
Fitch Ratings | F1 | A | Stable |
Payments by Period | ||||||||||||||||||||||||||||
Total | 2017 | 2018 | 2019 | 2020 | 2021 | Thereafter | ||||||||||||||||||||||
Long-term debt and interest (a) | $ | 3,041.0 | $ | 71.7 | $ | 314.6 | $ | 57.6 | $ | 354.0 | $ | 51.4 | $ | 2,191.7 | ||||||||||||||
Minimum operating lease payments | 335.9 | 76.2 | 65.2 | 52.8 | 45.5 | 33.7 | 62.5 | |||||||||||||||||||||
Postretirement benefits (b) | 86.9 | 10.6 | 11.2 | 10.9 | 7.0 | 5.7 | 41.5 | |||||||||||||||||||||
Pension funding contribution (c) | 49.2 | 49.2 | — | — | — | — | — | |||||||||||||||||||||
Purchase obligations (d) | 104.1 | 65.0 | 17.1 | 9.6 | 9.8 | 2.6 | — | |||||||||||||||||||||
Other long-term liabilities (e) | 89.0 | 14.8 | — | — | — | — | — | |||||||||||||||||||||
Unrecognized tax benefits (f) | 37.6 | — | — | — | — | — | — | |||||||||||||||||||||
Rocky Flats settlement (g) | 242.5 | 242.5 | — | — | — | — | — | |||||||||||||||||||||
Total | $ | 3,986.2 | $ | 530.0 | $ | 408.1 | $ | 130.9 | $ | 416.3 | $ | 93.4 | $ | 2,295.7 |
(a) | The amounts for long-term debt assume that the respective debt instruments will be outstanding until their scheduled maturity dates. The amounts include interest but exclude the amounts to be paid or received under interest rate swap contracts, including the $19.5 million fair value adjustment recorded for the interest rate swap contracts at September 30, 2016 and the unamortized discount of $45.1 million at September 30, 2016. See Note 5 in the Financial Statements for more information regarding our long-term debt. |
(b) | Our postretirement benefit plans are unfunded and are subject to change. Amounts reported are estimates of future benefit payments, to the extent estimable. |
(c) | Amounts reported for pension funding contributions reflect current estimates of known commitments. Contributions to our pension plans beyond 2017 will depend on future investment performance of our pension plan assets, changes in discount rate assumptions and governmental regulations in effect at the time. Amounts subsequent to 2017 are excluded from the summary above, as these amounts cannot be estimated with certainty. The minimum contribution for our U.S. pension plan as required by the Employee Retirement Income Security Act (ERISA) is currently zero. We may make additional contributions to this plan at the discretion of management. |
(d) | This item includes contractual commitments for capital expenditures, certain materials purchases and long-term obligations under agreements with various service providers. |
(e) | Other long-term liabilities include environmental remediation costs, conditional asset retirement obligations and indemnification liabilities, net of related receivables. Amounts subsequent to 2017 are excluded from the summary above, as we are unable to make a reasonably reliable estimate of when the liabilities will be paid. |
(f) | Amount for unrecognized tax benefits includes accrued interest and penalties. We are unable to make a reasonably reliable estimate of when the liabilities for unrecognized tax benefits will be settled or paid. |
(g) | Refer to Note 17 in the Financial Statements for discussion of the Rocky Flats settlement. |
Year Ended September 30, 2015 | |||||||||||||||||||||||
Year Ended September 30, 2016 | |||||||||||||||||||||||
Sales | Effect of Changes in Currency | Sales Excluding Changes in Currency | Effect of Acquisitions | Organic Sales | Sales | ||||||||||||||||||
United States | $ | 3,213.4 | $ | 2.1 | $ | 3,215.5 | $ | (6.9 | ) | $ | 3,208.6 | $ | 3,446.8 | ||||||||||
Canada | 316.4 | 25.1 | 341.5 | — | 341.5 | 366.6 | |||||||||||||||||
Europe, Middle East and Africa | 1,147.2 | 49.1 | 1,196.3 | (1.1 | ) | 1,195.2 | 1,174.0 | ||||||||||||||||
Asia Pacific | 764.4 | 31.7 | 796.1 | (1.6 | ) | 794.5 | 834.5 | ||||||||||||||||
Latin America | 438.1 | 83.0 | 521.1 | — | 521.1 | 486.0 | |||||||||||||||||
Total Company Sales | $ | 5,879.5 | $ | 191.0 | $ | 6,070.5 | $ | (9.6 | ) | $ | 6,060.9 | $ | 6,307.9 |
Year Ended September 30, 2014 | |||||||||||||||||||||||
Year Ended September 30, 2015 | |||||||||||||||||||||||
Sales | Effect of Changes in Currency | Sales Excluding Changes in Currency | Effect of Acquisitions | Organic Sales | Sales | ||||||||||||||||||
United States | $ | 3,446.8 | $ | 4.2 | $ | 3,451.0 | $ | (6.1 | ) | $ | 3,444.9 | $ | 3,414.6 | ||||||||||
Canada | 366.6 | 47.3 | 413.9 | — | 413.9 | 437.0 | |||||||||||||||||
Europe, Middle East and Africa | 1,174.0 | 208.6 | 1,382.6 | (2.7 | ) | 1,379.9 | 1,351.8 | ||||||||||||||||
Asia Pacific | 834.5 | 39.5 | 874.0 | — | 874.0 | 884.0 | |||||||||||||||||
Latin America | 486.0 | 97.6 | 583.6 | — | 583.6 | 536.1 | |||||||||||||||||
Total Company Sales | $ | 6,307.9 | $ | 397.2 | $ | 6,705.1 | $ | (8.8 | ) | $ | 6,696.3 | $ | 6,623.5 |
Year Ended September 30, 2015 | |||||||||||||||||||||||
Year Ended September 30, 2016 | |||||||||||||||||||||||
Sales | Effect of Changes in Currency | Sales Excluding Changes in Currency | Effect of Acquisitions | Organic Sales | Sales | ||||||||||||||||||
Architecture & Software | $ | 2,635.2 | $ | 83.7 | $ | 2,718.9 | $ | (9.3 | ) | $ | 2,709.6 | $ | 2,749.5 | ||||||||||
Control Products & Solutions | 3,244.3 | 107.3 | 3,351.6 | (0.3 | ) | 3,351.3 | 3,558.4 | ||||||||||||||||
Total Company Sales | $ | 5,879.5 | $ | 191.0 | $ | 6,070.5 | $ | (9.6 | ) | $ | 6,060.9 | $ | 6,307.9 |
Year Ended September 30, 2014 | |||||||||||||||||||||||
Year Ended September 30, 2015 | |||||||||||||||||||||||
Sales | Effect of Changes in Currency | Sales Excluding Changes in Currency | Effect of Acquisitions | Organic Sales | Sales | ||||||||||||||||||
Architecture & Software | $ | 2,749.5 | $ | 185.6 | $ | 2,935.1 | $ | (2.2 | ) | $ | 2,932.9 | $ | 2,845.3 | ||||||||||
Control Products & Solutions | 3,558.4 | 211.6 | 3,770.0 | (6.6 | ) | 3,763.4 | 3,778.2 | ||||||||||||||||
Total Company Sales | $ | 6,307.9 | $ | 397.2 | $ | 6,705.1 | $ | (8.8 | ) | $ | 6,696.3 | $ | 6,623.5 |
2017 | 2016 | Change | ||||||||||
Service cost | $ | 98.4 | $ | 88.0 | $ | 10.4 | ||||||
Prior service credit amortization | (3.8 | ) | (2.9 | ) | (0.9 | ) | ||||||
Operating pension cost | 94.6 | 85.1 | 9.5 | |||||||||
Interest cost | 151.7 | 169.5 | (17.8 | ) | ||||||||
Expected return on plan assets | (225.7 | ) | (218.3 | ) | (7.4 | ) | ||||||
Amortization of net actuarial loss | 153.4 | 124.5 | 28.9 | |||||||||
Special termination benefit | — | 0.5 | (0.5 | ) | ||||||||
Non-operating pension cost | 79.4 | 76.2 | 3.2 | |||||||||
Net periodic benefit cost | $ | 174.0 | $ | 161.3 | $ | 12.7 |
Asset Category | Target Allocations | Expected Return | ||||
Equity securities | 55% | 9% | – | 10% | ||
Debt securities | 40% | 4% | – | 6% | ||
Other | 5% | 6% | – | 11% |
Pension Benefits | ||||||||
Change in Projected Benefit Obligation | Change in Net Periodic Benefit Cost(1) | |||||||
Discount rate | $ | 140.3 | $ | 13.5 | ||||
Return on plan assets | — | 6.1 | ||||||
Compensation increase rate | (27.3 | ) | (5.3 | ) |
September 30, | |||||||
2016 | 2015 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 1,526.4 | $ | 1,427.3 | |||
Short-term investments | 902.8 | 721.9 | |||||
Receivables | 1,079.0 | 1,041.0 | |||||
Inventories | 526.6 | 535.6 | |||||
Other current assets | 150.2 | 171.0 | |||||
Total current assets | 4,185.0 | 3,896.8 | |||||
Property, net | 578.3 | 605.6 | |||||
Goodwill | 1,073.9 | 1,028.8 | |||||
Other intangible assets, net | 255.3 | 229.5 | |||||
Deferred income taxes | 633.9 | 494.8 | |||||
Other assets | 374.8 | 149.2 | |||||
Total | $ | 7,101.2 | $ | 6,404.7 | |||
LIABILITIES AND SHAREOWNERS’ EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt | $ | 448.6 | $ | — | |||
Accounts payable | 543.1 | 521.7 | |||||
Compensation and benefits | 145.6 | 225.0 | |||||
Advance payments from customers and deferred revenue | 214.5 | 200.8 | |||||
Customer returns, rebates and incentives | 176.5 | 172.2 | |||||
Other current liabilities | 447.6 | 208.0 | |||||
Total current liabilities | 1,975.9 | 1,327.7 | |||||
Long-term debt | 1,516.3 | 1,500.9 | |||||
Retirement benefits | 1,430.2 | 1,116.6 | |||||
Other liabilities | 188.7 | 202.7 | |||||
Commitments and contingent liabilities (Note 14) | |||||||
Shareowners’ equity: | |||||||
Common stock ($1.00 par value, shares issued: 181.4) | 181.4 | 181.4 | |||||
Additional paid-in capital | 1,588.2 | 1,552.1 | |||||
Retained earnings | 5,668.4 | 5,316.9 | |||||
Accumulated other comprehensive loss | (1,538.8 | ) | (1,334.6 | ) | |||
Common stock in treasury, at cost (shares held: 2016, 52.9; 2015, 49.0) | (3,909.1 | ) | (3,459.0 | ) | |||
Total shareowners’ equity | 1,990.1 | 2,256.8 | |||||
Total | $ | 7,101.2 | $ | 6,404.7 |
Year Ended September 30, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Sales | |||||||||||
Products and solutions | $ | 5,239.3 | $ | 5,652.2 | $ | 5,933.1 | |||||
Services | 640.2 | 655.7 | 690.4 | ||||||||
5,879.5 | 6,307.9 | 6,623.5 | |||||||||
Cost of sales | |||||||||||
Products and solutions | (2,982.1 | ) | (3,157.2 | ) | (3,391.3 | ) | |||||
Services | (421.9 | ) | (447.6 | ) | (478.3 | ) | |||||
(3,404.0 | ) | (3,604.8 | ) | (3,869.6 | ) | ||||||
Gross profit | 2,475.5 | 2,703.1 | 2,753.9 | ||||||||
Selling, general and administrative expenses | (1,467.4 | ) | (1,506.4 | ) | (1,570.1 | ) | |||||
Other income (expense) (Note 12) | 6.3 | (5.5 | ) | 9.7 | |||||||
Interest expense | (71.3 | ) | (63.7 | ) | (59.3 | ) | |||||
Income before income taxes | 943.1 | 1,127.5 | 1,134.2 | ||||||||
Income tax provision (Note 13) | (213.4 | ) | (299.9 | ) | (307.4 | ) | |||||
Net income | $ | 729.7 | $ | 827.6 | $ | 826.8 | |||||
Earnings per share: | |||||||||||
Basic | $ | 5.60 | $ | 6.15 | $ | 5.98 | |||||
Diluted | $ | 5.56 | $ | 6.09 | $ | 5.91 | |||||
Weighted average outstanding shares: | |||||||||||
Basic | 130.2 | 134.5 | 138.0 | ||||||||
Diluted | 131.1 | 135.7 | 139.7 |
Year Ended September 30, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Net income | $ | 729.7 | $ | 827.6 | $ | 826.8 | |||||
Other comprehensive loss: | |||||||||||
Pension and other postretirement benefit plan adjustments (net of tax benefit of $73.7, $106.6 and $27.6) | (142.7 | ) | (187.7 | ) | (85.6 | ) | |||||
Currency translation adjustments | (42.5 | ) | (199.9 | ) | (61.3 | ) | |||||
Net change in unrealized gains and losses on cash flow hedges (net of tax (benefit) expense of ($6.7), $4.5 and $1.9) | (19.0 | ) | 1.0 | 16.6 | |||||||
Other comprehensive loss | (204.2 | ) | (386.6 | ) | (130.3 | ) | |||||
Comprehensive income | $ | 525.5 | $ | 441.0 | $ | 696.5 |
Year Ended September 30, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Operating activities: | |||||||||||
Net income | $ | 729.7 | $ | 827.6 | $ | 826.8 | |||||
Adjustments to arrive at cash provided by operating activities: | |||||||||||
Depreciation | 143.3 | 133.1 | 122.5 | ||||||||
Amortization of intangible assets | 28.9 | 29.4 | 30.0 | ||||||||
Share-based compensation expense | 40.5 | 41.5 | 42.5 | ||||||||
Retirement benefit expense | 157.1 | 141.3 | 132.9 | ||||||||
Pension contributions | (44.3 | ) | (41.0 | ) | (42.1 | ) | |||||
Deferred income taxes | (70.5 | ) | (29.3 | ) | (7.2 | ) | |||||
Net loss (gain) on disposition of property | 1.7 | (0.1 | ) | 0.6 | |||||||
Income tax benefit from the exercise of stock options | — | — | 0.1 | ||||||||
Excess income tax benefit from share-based compensation | (3.3 | ) | (12.4 | ) | (29.9 | ) | |||||
Changes in assets and liabilities, excluding effects of acquisitions and foreign currency adjustments: | |||||||||||
Receivables | (18.9 | ) | 73.4 | (53.7 | ) | ||||||
Inventories | 4.6 | (2.5 | ) | 12.9 | |||||||
Accounts payable | 32.3 | 17.3 | (20.7 | ) | |||||||
Advance payments from customers and deferred revenue | 11.7 | 20.7 | (8.4 | ) | |||||||
Compensation and benefits | (81.1 | ) | (33.9 | ) | 43.3 | ||||||
Income taxes | (8.9 | ) | 27.3 | 1.8 | |||||||
Other assets and liabilities | 24.5 | (4.7 | ) | (18.1 | ) | ||||||
Cash provided by operating activities | 947.3 | 1,187.7 | 1,033.3 | ||||||||
Investing activities: | |||||||||||
Capital expenditures | (116.9 | ) | (122.9 | ) | (141.0 | ) | |||||
Acquisition of businesses, net of cash acquired | (139.1 | ) | (21.2 | ) | (81.5 | ) | |||||
Purchases of short-term investments | (1,070.7 | ) | (867.6 | ) | (705.7 | ) | |||||
Proceeds from maturities of short-term investments | 886.3 | 762.7 | 447.8 | ||||||||
Proceeds from sale of property | 0.4 | 2.1 | 0.4 | ||||||||
Other investing activities | — | — | (3.4 | ) | |||||||
Cash used for investing activities | (440.0 | ) | (246.9 | ) | (483.4 | ) | |||||
Financing activities: | |||||||||||
Net issuance (repayment) of short-term debt | 448.6 | (325.0 | ) | 146.0 | |||||||
Issuance of long-term debt, net of discount and issuance costs | — | 594.3 | — | ||||||||
Cash dividends | (378.2 | ) | (350.1 | ) | (320.5 | ) | |||||
Purchases of treasury stock | (507.6 | ) | (598.4 | ) | (485.7 | ) | |||||
Proceeds from the exercise of stock options | 36.2 | 60.3 | 108.5 | ||||||||
Excess income tax benefit from share-based compensation | 3.3 | 12.4 | 29.9 | ||||||||
Other financing activities | — | (1.6 | ) | — | |||||||
Cash used for financing activities | (397.7 | ) | (608.1 | ) | (521.8 | ) | |||||
Effect of exchange rate changes on cash | (10.5 | ) | (96.7 | ) | (37.7 | ) | |||||
Increase (decrease) in cash and cash equivalents | 99.1 | 236.0 | (9.6 | ) | |||||||
Cash and cash equivalents at beginning of year | 1,427.3 | 1,191.3 | 1,200.9 | ||||||||
Cash and cash equivalents at end of year | $ | 1,526.4 | $ | 1,427.3 | $ | 1,191.3 |
Year Ended September 30, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Common stock (no shares issued during years) | $ | 181.4 | $ | 181.4 | $ | 181.4 | |||||
Additional paid-in capital | |||||||||||
Beginning balance | 1,552.1 | 1,512.3 | 1,456.0 | ||||||||
Income tax benefit from share-based compensation | 3.3 | 12.4 | 29.8 | ||||||||
Share-based compensation expense | 39.5 | 40.7 | 41.6 | ||||||||
Shares delivered under incentive plans | (6.7 | ) | (13.3 | ) | (15.1 | ) | |||||
Ending balance | 1,588.2 | 1,552.1 | 1,512.3 | ||||||||
Retained earnings | |||||||||||
Beginning balance | 5,316.9 | 4,839.6 | 4,333.4 | ||||||||
Net income | 729.7 | 827.6 | 826.8 | ||||||||
Cash dividends (2016, $2.90 per share; 2015, $2.60 per share; 2014, $2.32 per share) | (378.2 | ) | (350.1 | ) | (320.5 | ) | |||||
Shares delivered under incentive plans | — | (0.2 | ) | (0.1 | ) | ||||||
Ending balance | 5,668.4 | 5,316.9 | 4,839.6 | ||||||||
Accumulated other comprehensive loss | |||||||||||
Beginning balance | (1,334.6 | ) | (948.0 | ) | (817.7 | ) | |||||
Other comprehensive loss | (204.2 | ) | (386.6 | ) | (130.3 | ) | |||||
Ending balance | (1,538.8 | ) | (1,334.6 | ) | (948.0 | ) | |||||
Treasury stock | |||||||||||
Beginning balance | (3,459.0 | ) | (2,927.2 | ) | (2,567.6 | ) | |||||
Purchases | (500.4 | ) | (606.4 | ) | (483.8 | ) | |||||
Shares delivered under incentive plans | 50.3 | 74.6 | 124.2 | ||||||||
Ending balance | (3,909.1 | ) | (3,459.0 | ) | (2,927.2 | ) | |||||
Total shareowners’ equity | $ | 1,990.1 | $ | 2,256.8 | $ | 2,658.1 |
2016 | 2015 | 2014 | ||||||||||
Net income | $ | 729.7 | $ | 827.6 | $ | 826.8 | ||||||
Less: Allocation to participating securities | (0.7 | ) | (0.7 | ) | (1.1 | ) | ||||||
Net income available to common shareowners | $ | 729.0 | $ | 826.9 | $ | 825.7 | ||||||
Basic weighted average outstanding shares | 130.2 | 134.5 | 138.0 | |||||||||
Effect of dilutive securities | ||||||||||||
Stock options | 0.9 | 1.1 | 1.5 | |||||||||
Performance shares | — | 0.1 | 0.2 | |||||||||
Diluted weighted average outstanding shares | 131.1 | 135.7 | 139.7 | |||||||||
Earnings per share: | ||||||||||||
Basic | $ | 5.60 | $ | 6.15 | $ | 5.98 | ||||||
Diluted | $ | 5.56 | $ | 6.09 | $ | 5.91 |
Architecture & Software | Control Products & Solutions | Total | ||||||||||
Balance as of September 30, 2014 | $ | 395.6 | $ | 655.0 | $ | 1,050.6 | ||||||
Acquisition of business | — | 14.9 | 14.9 | |||||||||
Translation | (7.6 | ) | (29.1 | ) | (36.7 | ) | ||||||
Balance as of September 30, 2015 | 388.0 | 640.8 | 1,028.8 | |||||||||
Acquisition of businesses | 35.0 | 37.7 | 72.7 | |||||||||
Translation | (8.5 | ) | (19.1 | ) | (27.6 | ) | ||||||
Balance as of September 30, 2016 | $ | 414.5 | $ | 659.4 | $ | 1,073.9 |
September 30, 2016 | ||||||||||||
Carrying Amount | Accumulated Amortization | Net | ||||||||||
Amortized intangible assets: | ||||||||||||
Computer software products | $ | 182.4 | $ | 103.4 | $ | 79.0 | ||||||
Customer relationships | 112.6 | 51.9 | 60.7 | |||||||||
Technology | 103.9 | 48.5 | 55.4 | |||||||||
Trademarks | 31.4 | 17.0 | 14.4 | |||||||||
Other | 11.0 | 8.9 | 2.1 | |||||||||
Total amortized intangible assets | 441.3 | 229.7 | 211.6 | |||||||||
Allen-Bradley® trademark not subject to amortization | 43.7 | — | 43.7 | |||||||||
Total | $ | 485.0 | $ | 229.7 | $ | 255.3 |
September 30, 2015 | ||||||||||||
Carrying Amount | Accumulated Amortization | Net | ||||||||||
Amortized intangible assets: | ||||||||||||
Computer software products | $ | 182.4 | $ | 91.9 | $ | 90.5 | ||||||
Customer relationships | 87.2 | 50.1 | 37.1 | |||||||||
Technology | 83.4 | 44.1 | 39.3 | |||||||||
Trademarks | 32.3 | 16.3 | 16.0 | |||||||||
Other | 11.5 | 8.6 | 2.9 | |||||||||
Total amortized intangible assets | 396.8 | 211.0 | 185.8 | |||||||||
Allen-Bradley® trademark not subject to amortization | 43.7 | — | 43.7 | |||||||||
Total | $ | 440.5 | $ | 211.0 | $ | 229.5 |
September 30, | ||||||||
2016 | 2015 | |||||||
Finished goods | $ | 215.8 | $ | 225.7 | ||||
Work in process | 158.0 | 157.5 | ||||||
Raw materials | 152.8 | 152.4 | ||||||
Inventories | $ | 526.6 | $ | 535.6 |
September 30, | ||||||||
2016 | 2015 | |||||||
Land | $ | 4.5 | $ | 4.5 | ||||
Buildings and improvements | 333.7 | 319.0 | ||||||
Machinery and equipment | 1,085.1 | 1,042.3 | ||||||
Internal-use software | 451.1 | 441.3 | ||||||
Construction in progress | 108.4 | 97.6 | ||||||
Total | 1,982.8 | 1,904.7 | ||||||
Less accumulated depreciation | (1,404.5 | ) | (1,299.1 | ) | ||||
Property, net | $ | 578.3 | $ | 605.6 |
September 30, | ||||||||
2016 | 2015 | |||||||
5.65% notes, payable in December 2017 | $ | 250.0 | $ | 250.0 | ||||
2.050% notes, payable in March 2020 | 305.1 | 304.2 | ||||||
2.875% notes, payable in March 2025 | 314.4 | 301.2 | ||||||
6.70% debentures, payable in January 2028 | 250.0 | 250.0 | ||||||
6.25% debentures, payable in December 2037 | 250.0 | 250.0 | ||||||
5.20% debentures, payable in January 2098 | 200.0 | 200.0 | ||||||
Unamortized discount and other | (53.2 | ) | (54.5 | ) | ||||
Long-term debt | $ | 1,516.3 | $ | 1,500.9 |
September 30, | ||||||||
2016 | 2015 | |||||||
Unrealized losses on foreign exchange contracts (Note 8) | $ | 15.6 | $ | 16.4 | ||||
Product warranty obligations (Note 7) | 28.0 | 27.9 | ||||||
Taxes other than income taxes | 43.1 | 34.9 | ||||||
Accrued interest | 16.9 | 16.9 | ||||||
Income taxes payable | 28.6 | 50.9 | ||||||
Rocky Flats settlement (Note 17) | 242.5 | — | ||||||
Other | 72.9 | 61.0 | ||||||
Other current liabilities | $ | 447.6 | $ | 208.0 |
September 30, | ||||||||
2016 | 2015 | |||||||
Beginning balance | $ | 27.9 | $ | 34.1 | ||||
Warranties recorded at time of sale | 25.0 | 26.7 | ||||||
Adjustments to pre-existing warranties | 1.2 | (4.5 | ) | |||||
Settlements of warranty claims | (26.1 | ) | (28.4 | ) | ||||
Ending balance | $ | 28.0 | $ | 27.9 |
2016 | 2015 | 2014 | ||||||||||
Forward exchange contracts | $ | (6.6 | ) | $ | 41.7 | $ | 16.9 |
2016 | 2015 | 2014 | ||||||||||
Sales | $ | (5.5 | ) | $ | (8.4 | ) | $ | (2.3 | ) | |||
Cost of sales | 25.5 | 44.6 | 0.7 | |||||||||
Selling, general and administrative expenses | (0.9 | ) | — | — | ||||||||
Total | $ | 19.1 | $ | 36.2 | $ | (1.6 | ) |
2016 | 2015 | 2014 | ||||||||||
Forward exchange contracts | $ | 2.3 | $ | (4.4 | ) | $ | — | |||||
Foreign currency denominated debt | 0.8 | 1.0 | (0.3 | ) | ||||||||
Total | $ | 3.1 | $ | (3.4 | ) | $ | (0.3 | ) |
2016 | 2015 | 2014 | ||||||||||
Interest expense | $ | 14.1 | $ | 5.4 | $ | — |
2016 | 2015 | 2014 | ||||||||||
Cost of sales | $ | 0.9 | $ | — | $ | — | ||||||
Other income (expense) | (11.1 | ) | 20.8 | 1.4 | ||||||||
Total | $ | (10.2 | ) | $ | 20.8 | $ | 1.4 |
Level 1: | Quoted prices in active markets for identical assets or liabilities. |
Level 2: | Quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability. |
Level 3: | Unobservable inputs for the asset or liability. |
Fair Value (Level 2) | ||||||||||
Derivatives Designated as Hedging Instruments | Balance Sheet Location | September 30, 2016 | September 30, 2015 | |||||||
Forward exchange contracts | Other current assets | $ | 5.2 | $ | 32.6 | |||||
Forward exchange contracts | Other assets | 0.6 | 1.7 | |||||||
Forward exchange contracts | Other current liabilities | (11.7 | ) | (13.3 | ) | |||||
Forward exchange contracts | Other liabilities | (1.8 | ) | (2.1 | ) | |||||
Interest rate swap contracts | Other assets | 19.5 | 5.4 | |||||||
Total | $ | 11.8 | $ | 24.3 |
Fair Value (Level 2) | ||||||||||
Derivatives Not Designated as Hedging Instruments | Balance Sheet Location | September 30, 2016 | September 30, 2015 | |||||||
Forward exchange contracts | Other current assets | $ | 4.4 | $ | 20.3 | |||||
Forward exchange contracts | Other current liabilities | (3.9 | ) | (3.1 | ) | |||||
Total | $ | 0.5 | $ | 17.2 |
September 30, 2016 | |||||||||||||||||||
Fair Value | |||||||||||||||||||
Carrying Amount | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||
Cash and cash equivalents | $ | 1,526.4 | $ | 1,526.4 | $ | 1,480.6 | $ | 45.8 | $ | — | |||||||||
Short-term investments | 902.8 | 902.8 | — | 902.8 | — | ||||||||||||||
Short-term debt | 448.6 | 448.6 | — | 448.6 | — | ||||||||||||||
Long-term debt | 1,516.3 | 1,780.5 | — | 1,780.5 | — |
September 30, 2015 | |||||||||||||||||||
Fair Value | |||||||||||||||||||
Carrying Amount | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||
Cash and cash equivalents | $ | 1,427.3 | $ | 1,427.3 | $ | 1,412.1 | $ | 15.2 | $ | — | |||||||||
Short-term investments | 721.9 | 721.9 | — | 721.9 | — | ||||||||||||||
Short-term debt | — | — | — | — | — | ||||||||||||||
Long-term debt | 1,500.9 | 1,682.6 | — | 1,682.6 | — |
2016 | 2015 | 2014 | |||||||
Beginning balance | 132.4 | 136.7 | 138.8 | ||||||
Treasury stock purchases | (4.6 | ) | (5.4 | ) | (4.1 | ) | |||
Shares delivered under incentive plans | 0.7 | 1.1 | 2.0 | ||||||
Ending balance | 128.5 | 132.4 | 136.7 |
Pension and other postretirement benefit plan adjustments, net of tax (Note 11) | Accumulated currency translation adjustments, net of tax | Net unrealized gains (losses) on cash flow hedges, net of tax | Total accumulated other comprehensive loss, net of tax | |||||||||||||
Balance as of September 30, 2013 | $ | (823.8 | ) | $ | 8.8 | $ | (2.7 | ) | $ | (817.7 | ) | |||||
Other comprehensive (loss) income before reclassifications | (143.9 | ) | (61.3 | ) | 14.2 | (191.0 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss | 58.3 | — | 2.4 | 60.7 | ||||||||||||
Other comprehensive (loss) income | (85.6 | ) | (61.3 | ) | 16.6 | (130.3 | ) | |||||||||
Balance as of September 30, 2014 | $ | (909.4 | ) | $ | (52.5 | ) | $ | 13.9 | $ | (948.0 | ) | |||||
Other comprehensive (loss) income before reclassifications | (257.3 | ) | (199.9 | ) | 36.7 | (420.5 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss | 69.6 | — | (35.7 | ) | 33.9 | |||||||||||
Other comprehensive (loss) income | (187.7 | ) | (199.9 | ) | 1.0 | (386.6 | ) | |||||||||
Balance as of September 30, 2015 | $ | (1,097.1 | ) | $ | (252.4 | ) | $ | 14.9 | $ | (1,334.6 | ) | |||||
Other comprehensive loss before reclassifications | (216.5 | ) | (42.5 | ) | (3.6 | ) | (262.6 | ) | ||||||||
Amounts reclassified from accumulated other comprehensive loss | 73.8 | — | (15.4 | ) | 58.4 | |||||||||||
Other comprehensive loss | $ | (142.7 | ) | $ | (42.5 | ) | $ | (19.0 | ) | $ | (204.2 | ) | ||||
Balance as of September 30, 2016 | $ | (1,239.8 | ) | $ | (294.9 | ) | $ | (4.1 | ) | $ | (1,538.8 | ) |
Year Ended September 30, | Affected Line in the Consolidated Statement of Operations | ||||||||||||
2016 | 2015 | 2014 | |||||||||||
Pension and other postretirement benefit plan adjustments: | |||||||||||||
Amortization of prior service credit | $ | (14.0 | ) | $ | (17.2 | ) | $ | (12.9 | ) | (a) | |||
Amortization of net actuarial loss | 126.8 | 123.2 | 102.6 | (a) | |||||||||
112.8 | 106.0 | 89.7 | Income before income taxes | ||||||||||
(39.0 | ) | (36.4 | ) | (31.4 | ) | Income tax provision | |||||||
$ | 73.8 | $ | 69.6 | $ | 58.3 | Net income | |||||||
Net unrealized losses (gains) on cash flow hedges: | |||||||||||||
Forward exchange contracts | $ | 5.5 | $ | 8.4 | $ | 2.3 | Sales | ||||||
Forward exchange contracts | (25.5 | ) | (44.6 | ) | (0.7 | ) | Cost of sales | ||||||
Forward exchange contracts | 0.9 | — | — | Selling, general and administrative expenses | |||||||||
(19.1 | ) | (36.2 | ) | 1.6 | Income before income taxes | ||||||||
3.7 | 0.5 | 0.8 | Income tax provision | ||||||||||
$ | (15.4 | ) | $ | (35.7 | ) | $ | 2.4 | Net income | |||||
Total reclassifications | $ | 58.4 | $ | 33.9 | $ | 60.7 | Net income |
2016 | 2015 | 2014 | |||||||
Average risk-free interest rate | 1.76 | % | 1.61 | % | 1.52 | % | |||
Expected dividend yield | 2.78 | % | 2.25 | % | 2.13 | % | |||
Expected volatility | 29 | % | 31 | % | 41 | % | |||
Expected term (years) | 5.1 | 5.1 | 5.2 |
Shares (in thousands) | Wtd. Avg. Exercise Price | Wtd. Avg. Remaining Contractual Term (years) | Aggregate Intrinsic Value of In-The-Money Options (in millions) | ||||||||||
Outstanding at October 1, 2015 | 4,574 | $ | 85.81 | ||||||||||
Granted | 1,167 | 104.36 | |||||||||||
Exercised | (556 | ) | 74.17 | ||||||||||
Forfeited | (75 | ) | 107.69 | ||||||||||
Cancelled | (12 | ) | 105.49 | ||||||||||
Outstanding at September 30, 2016 | 5,098 | 90.96 | 6.7 | $ | 160.0 | ||||||||
Vested or expected to vest at September 30, 2016 | 4,918 | 90.31 | 6.6 | 157.5 | |||||||||
Exercisable at September 30, 2016 | 3,049 | 79.15 | 5.4 | 131.7 |
Performance Shares (in thousands) | Wtd. Avg. Grant Date Share Fair Value | ||||||
Outstanding at October 1, 2015 | 226 | $ | 103.33 | ||||
Granted(1) | 96 | 87.64 | |||||
Adjustment for performance results achieved(2) | (5 | ) | 98.15 | ||||
Vested and issued | (67 | ) | 98.15 | ||||
Forfeited | (10 | ) | 100.01 | ||||
Outstanding at September 30, 2016 | 240 | 98.73 |
(1) | Performance shares granted assuming achievement of performance goals at target. |
(2) | Adjustments were due to the number of shares vested under the fiscal 2016 awards at the end of the three-year performance period ended September 30, 2015 being lower than the target number of shares. |
2016 | 2015 | 2014 | ||||||||||
Percent payout | 93 | % | 187 | % | 180 | % | ||||||
Shares vested (in thousands) | 67 | 154 | 127 | |||||||||
Total fair value of shares vested (in millions) | $ | 7.1 | $ | 17.2 | $ | 14.2 |
2016 | 2015 | 2014 | |||||||
Average risk-free interest rate | 1.21 | % | 0.96 | % | 0.60 | % | |||
Expected dividend yield | 2.75 | % | 2.22 | % | 2.11 | % | |||
Expected volatility | 22 | % | 24 | % | 33 | % |
Restricted Stock and Restricted Stock Units (in thousands) | Wtd. Avg. Grant Date Share Fair Value | ||||||
Outstanding at October 1, 2015 | 163 | $ | 98.22 | ||||
Granted | 65 | 105.38 | |||||
Vested | (67 | ) | 80.17 | ||||
Forfeited | (5 | ) | 107.86 | ||||
Outstanding at September 30, 2016 | 156 | 108.63 |
Other Postretirement | ||||||||||||||||||||||||
Pension Benefits | Benefits | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2016 | 2015 | 2014 | |||||||||||||||||||
Service cost | $ | 88.0 | $ | 85.7 | $ | 78.5 | $ | 1.3 | $ | 1.5 | $ | 2.0 | ||||||||||||
Interest cost | 169.5 | 167.2 | 174.2 | 3.3 | 4.1 | 6.5 | ||||||||||||||||||
Expected return on plan assets | (218.3 | ) | (223.2 | ) | (217.9 | ) | — | — | — | |||||||||||||||
Amortization: | ||||||||||||||||||||||||
Prior service credit | (2.9 | ) | (2.7 | ) | (2.7 | ) | (11.1 | ) | (14.5 | ) | (10.2 | ) | ||||||||||||
Net actuarial loss | 124.5 | 118.7 | 99.7 | 2.3 | 4.5 | 2.9 | ||||||||||||||||||
Special termination benefit | 0.5 | — | — | — | — | — | ||||||||||||||||||
Settlements | — | — | (0.1 | ) | — | — | — | |||||||||||||||||
Net periodic benefit cost (income) | $ | 161.3 | $ | 145.7 | $ | 131.7 | $ | (4.2 | ) | $ | (4.4 | ) | $ | 1.2 |
Pension Benefits | Other Postretirement Benefits | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Benefit obligation at beginning of year | $ | 4,282.2 | $ | 4,236.6 | $ | 93.3 | $ | 122.2 | ||||||||
Service cost | 88.0 | 85.7 | 1.3 | 1.5 | ||||||||||||
Interest cost | 169.5 | 167.2 | 3.3 | 4.1 | ||||||||||||
Actuarial losses (gains) | 515.4 | 230.2 | (0.2 | ) | (20.1 | ) | ||||||||||
Plan amendments | (10.0 | ) | (3.5 | ) | — | — | ||||||||||
Plan participant contributions | 4.3 | 4.9 | 4.0 | 5.4 | ||||||||||||
Benefits paid | (232.0 | ) | (329.1 | ) | (14.9 | ) | (17.7 | ) | ||||||||
Special termination benefit | 0.5 | — | — | — | ||||||||||||
Currency translation and other | (32.0 | ) | (109.8 | ) | 0.1 | (2.1 | ) | |||||||||
Benefit obligation at end of year | 4,785.9 | 4,282.2 | 86.9 | 93.3 | ||||||||||||
Plan assets at beginning of year | 3,262.5 | 3,591.0 | — | — | ||||||||||||
Actual return on plan assets | 394.3 | 29.5 | — | — | ||||||||||||
Company contributions | 44.3 | 41.0 | 10.9 | 12.3 | ||||||||||||
Plan participant contributions | 4.3 | 4.9 | 4.0 | 5.4 | ||||||||||||
Benefits paid | (232.0 | ) | (329.1 | ) | (14.9 | ) | (17.7 | ) | ||||||||
Currency translation and other | (25.5 | ) | (74.8 | ) | — | — | ||||||||||
Plan assets at end of year | 3,447.9 | 3,262.5 | — | — | ||||||||||||
Funded status of plans | $ | (1,338.0 | ) | $ | (1,019.7 | ) | $ | (86.9 | ) | $ | (93.3 | ) |
Net amount on balance sheet consists of: | ||||||||||||||||
Other assets | $ | 0.1 | $ | 0.1 | $ | — | $ | — | ||||||||
Compensation and benefits | (11.6 | ) | (11.3 | ) | (10.5 | ) | (11.4 | ) | ||||||||
Retirement benefits | (1,326.5 | ) | (1,008.5 | ) | (76.4 | ) | (81.9 | ) | ||||||||
Net amount on balance sheet | $ | (1,338.0 | ) | $ | (1,019.7 | ) | $ | (86.9 | ) | $ | (93.3 | ) |
Pension Benefits | Other Postretirement Benefits | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Prior service cost (credit) | $ | 4.9 | $ | 3.0 | $ | (15.9 | ) | $ | (22.9 | ) | ||||||
Net actuarial loss | 1,235.1 | 1,099.9 | 15.7 | 17.1 | ||||||||||||
Total | $ | 1,240.0 | $ | 1,102.9 | $ | (0.2 | ) | $ | (5.8 | ) |
Pension Benefits September 30, | Other Postretirement Benefits September 30, | |||||||||||||||||
2016 | 2015 | 2014 | 2016 | 2015 | 2014 | |||||||||||||
U.S. Plans | ||||||||||||||||||
Discount rate | 4.55 | % | 4.50 | % | 5.05 | % | 3.85 | % | 3.65 | % | 4.60 | % | ||||||
Expected return on plan assets | 7.50 | % | 7.50 | % | 7.50 | % | — | — | — | |||||||||
Compensation increase rate | 3.75 | % | 3.75 | % | 3.75 | % | — | — | — | |||||||||
Non-U.S. Plans | ||||||||||||||||||
Discount rate | 2.67 | % | 3.01 | % | 3.69 | % | 3.60 | % | 3.50 | % | 4.20 | % | ||||||
Expected return on plan assets | 5.21 | % | 5.31 | % | 5.33 | % | — | — | — | |||||||||
Compensation increase rate | 3.11 | % | 3.16 | % | 3.11 | % | — | — | — |
Pension Benefits September 30, | Other Postretirement Benefits September 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
U.S. Plans | ||||||||||||
Discount rate | 3.75 | % | 4.55 | % | 3.10 | % | 3.85 | % | ||||
Compensation increase rate | 3.50 | % | 3.75 | % | — | — | ||||||
Health care cost trend rate(1) | — | — | 6.50 | % | 7.00 | % | ||||||
Non-U.S. Plans | ||||||||||||
Discount rate | 1.77 | % | 2.67 | % | 2.80 | % | 3.60 | % | ||||
Compensation increase rate | 2.86 | % | 3.11 | % | — | — | ||||||
Health care cost trend rate(1) | — | — | 4.95 | % | 5.39 | % |
(1) | The health care cost trend rate reflects the estimated increase in gross medical claims costs. As a result of the plan amendment adopted effective October 1, 2002, our effective per person retiree medical cost increase is zero percent beginning in 2005 for the majority of our postretirement benefit plans. For our other plans, we assume the gross health care cost trend rate will decrease to 5.50% in 2018 for U.S. Plans and 4.50% in 2017 for Non-U.S. Plans. |
Allocation | Target | September 30, | ||||||||
Asset Category | Range | Allocations | 2016 | 2015 | ||||||
Equity securities | 40% | – | 65% | 52% | 50% | 48% | ||||
Debt securities | 30% | – | 50% | 39% | 41% | 43% | ||||
Other | 0% | – | 15% | 9% | 9% | 9% |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
U.S. Plans | ||||||||||||||||
Cash and cash equivalents | $ | 2.9 | $ | — | $ | — | $ | 2.9 | ||||||||
Equity securities: | ||||||||||||||||
Common stock | 705.9 | — | — | 705.9 | ||||||||||||
Mutual funds | 203.6 | — | — | 203.6 | ||||||||||||
Common collective trusts | — | 483.6 | — | 483.6 | ||||||||||||
Fixed income securities: | ||||||||||||||||
Corporate debt | — | 591.8 | — | 591.8 | ||||||||||||
Government securities | 252.6 | 99.5 | — | 352.1 | ||||||||||||
Common collective trusts | — | 161.4 | — | 161.4 | ||||||||||||
Other types of investments: | ||||||||||||||||
Private equity | — | — | 57.1 | 57.1 | ||||||||||||
Alternative equity | — | — | 56.9 | 56.9 | ||||||||||||
Insurance contracts | — | — | 0.9 | 0.9 | ||||||||||||
Non-U.S. Plans | ||||||||||||||||
Cash and cash equivalents | 1.9 | — | — | 1.9 | ||||||||||||
Equity securities: | ||||||||||||||||
Common stock | 48.6 | — | — | 48.6 | ||||||||||||
Common collective trusts | — | 279.3 | — | 279.3 | ||||||||||||
Fixed income securities: | ||||||||||||||||
Corporate debt | — | 34.1 | — | 34.1 | ||||||||||||
Government securities | 10.0 | 7.6 | — | 17.6 | ||||||||||||
Common collective trusts | — | 271.1 | — | 271.1 | ||||||||||||
Other types of investments: | ||||||||||||||||
Real estate funds | — | 85.4 | 9.2 | 94.6 | ||||||||||||
Insurance contracts | — | — | 79.7 | 79.7 | ||||||||||||
Other | — | 1.4 | 3.4 | 4.8 | ||||||||||||
Total plan investments | $ | 1,225.5 | $ | 2,015.2 | $ | 207.2 | $ | 3,447.9 |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
U.S. Plans | ||||||||||||||||
Cash and cash equivalents | $ | 5.1 | $ | — | $ | — | $ | 5.1 | ||||||||
Equity securities: | ||||||||||||||||
Common stock | 628.5 | — | — | 628.5 | ||||||||||||
Mutual funds | 174.6 | — | — | 174.6 | ||||||||||||
Common collective trusts | — | 467.5 | — | 467.5 | ||||||||||||
Fixed income securities: | ||||||||||||||||
Corporate debt | — | 643.8 | — | 643.8 | ||||||||||||
Government securities | 212.0 | 121.3 | — | 333.3 | ||||||||||||
Common collective trusts | — | 124.8 | — | 124.8 | ||||||||||||
Other types of investments: | ||||||||||||||||
Private equity | — | — | 70.2 | 70.2 | ||||||||||||
Alternative equity | — | — | 50.7 | 50.7 | ||||||||||||
Insurance contracts | — | — | 0.9 | 0.9 | ||||||||||||
Non-U.S. Plans | ||||||||||||||||
Cash and cash equivalents | 2.3 | — | — | 2.3 | ||||||||||||
Equity securities: | ||||||||||||||||
Common stock | 37.0 | — | — | 37.0 | ||||||||||||
Common collective trusts | — | 259.5 | — | 259.5 | ||||||||||||
Fixed income securities: | ||||||||||||||||
Corporate debt | — | 40.0 | — | 40.0 | ||||||||||||
Government securities | 2.8 | 6.6 | — | 9.4 | ||||||||||||
Common collective trusts | — | 258.6 | — | 258.6 | ||||||||||||
Other types of investments: | ||||||||||||||||
Real estate funds | — | 79.4 | 8.7 | 88.1 | ||||||||||||
Insurance contracts | — | — | 63.8 | 63.8 | ||||||||||||
Other | — | 1.3 | 3.1 | 4.4 | ||||||||||||
Total plan investments | $ | 1,062.3 | $ | 2,002.8 | $ | 197.4 | $ | 3,262.5 |
Balance October 1, 2015 | Realized Gains (Losses) | Unrealized Gains (Losses) | Purchases, Sales, Issuances, and Settlements, Net | Balance September 30, 2016 | ||||||||||||||||
U.S. Plans | ||||||||||||||||||||
Private equity | $ | 70.2 | $ | 5.3 | $ | (13.3 | ) | $ | (5.1 | ) | $ | 57.1 | ||||||||
Alternative equity | 50.7 | 2.2 | (5.6 | ) | 9.6 | 56.9 | ||||||||||||||
Insurance contracts | 0.9 | — | — | — | 0.9 | |||||||||||||||
Non-U.S. Plans | ||||||||||||||||||||
Real estate | 8.7 | — | 0.5 | — | 9.2 | |||||||||||||||
Insurance contracts | 63.8 | — | 14.5 | 1.4 | 79.7 | |||||||||||||||
Other | 3.1 | — | — | 0.3 | 3.4 | |||||||||||||||
$ | 197.4 | $ | 7.5 | $ | (3.9 | ) | $ | 6.2 | $ | 207.2 |
Balance October 1, 2014 | Realized Gains (Losses) | Unrealized Gains (Losses) | Purchases, Sales, Issuances, and Settlements, Net | Balance September 30, 2015 | ||||||||||||||||
U.S. Plans | ||||||||||||||||||||
Private equity | $ | 78.8 | $ | 7.2 | $ | (11.0 | ) | $ | (4.8 | ) | $ | 70.2 | ||||||||
Alternative equity | 49.9 | 4.0 | 1.7 | (4.9 | ) | 50.7 | ||||||||||||||
Insurance contracts | 0.9 | — | — | — | 0.9 | |||||||||||||||
Non-U.S. Plans | ||||||||||||||||||||
Real estate | 8.6 | — | 0.1 | — | 8.7 | |||||||||||||||
Insurance contracts | 57.8 | — | 11.3 | (5.3 | ) | 63.8 | ||||||||||||||
Other | 3.3 | — | 0.1 | (0.3 | ) | 3.1 | ||||||||||||||
$ | 199.3 | $ | 11.2 | $ | 2.2 | $ | (15.3 | ) | $ | 197.4 |
Pension Benefits | Other Postretirement Benefits | |||||||
2017 | $ | 256.8 | $ | 10.6 | ||||
2018 | 246.2 | 11.2 | ||||||
2019 | 259.5 | 10.9 | ||||||
2020 | 268.5 | 7.0 | ||||||
2021 | 279.2 | 5.7 | ||||||
2022 – 2026 | 1,478.6 | 24.9 |
One Percentage Point Increase | One Percentage Point Decrease | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Increase (decrease) to total of service and interest cost components | $ | 0.2 | $ | 0.2 | $ | (0.2 | ) | $ | (0.2 | ) | ||||||
Increase (decrease) to postretirement benefit obligation | 2.9 | 3.0 | (2.5 | ) | (2.6 | ) |
2016 | 2015 | |||||||
Projected benefit obligation | $ | 4,784.5 | $ | 4,281.0 | ||||
Accumulated benefit obligation | 4,428.0 | 3,978.3 | ||||||
Fair value of plan assets | 3,446.5 | 3,261.2 |
2016 | 2015 | 2014 | ||||||||||
Interest income | $ | 12.7 | $ | 10.7 | $ | 9.5 | ||||||
Royalty income | 2.9 | 2.9 | 2.5 | |||||||||
Legacy product liability and environmental charges | (12.7 | ) | (19.8 | ) | (14.6 | ) | ||||||
Other | 3.4 | 0.7 | 12.3 | |||||||||
Other income (expense) | $ | 6.3 | $ | (5.5 | ) | $ | 9.7 |
2016 | 2015 | 2014 | ||||||||||
Components of income before income taxes: | ||||||||||||
United States | $ | 512.1 | $ | 660.5 | $ | 607.3 | ||||||
Non-United States | 431.0 | 467.0 | 526.9 | |||||||||
Total | $ | 943.1 | $ | 1,127.5 | $ | 1,134.2 |
Components of the income tax provision: | ||||||||||||
Current: | ||||||||||||
United States | $ | 175.9 | $ | 238.6 | $ | 219.4 | ||||||
Non-United States | 91.7 | 73.6 | 85.3 | |||||||||
State and local | 16.3 | 17.0 | 9.9 | |||||||||
Total current | 283.9 | 329.2 | 314.6 | |||||||||
Deferred: | ||||||||||||
United States | (53.7 | ) | (30.3 | ) | (3.8 | ) | ||||||
Non-United States | (8.8 | ) | 2.6 | (4.0 | ) | |||||||
State and local | (8.0 | ) | (1.6 | ) | 0.6 | |||||||
Total deferred | (70.5 | ) | (29.3 | ) | (7.2 | ) | ||||||
Income tax provision | $ | 213.4 | $ | 299.9 | $ | 307.4 | ||||||
Total income taxes paid | $ | 299.8 | $ | 313.1 | $ | 323.8 |
2016 | 2015 | 2014 | |||||||
Statutory tax rate | 35.0 | % | 35.0 | % | 35.0 | % | |||
State and local income taxes | 0.6 | 0.9 | 0.8 | ||||||
Non-United States taxes | (8.6 | ) | (7.9 | ) | (9.5 | ) | |||
Tax effect of foreign dividends | 0.1 | (0.2 | ) | 0.5 | |||||
Foreign currency transaction loss | (0.8 | ) | — | — | |||||
Research and development tax credit | (2.0 | ) | (0.6 | ) | (0.1 | ) | |||
Change in valuation allowances | (0.6 | ) | (0.5 | ) | (0.1 | ) | |||
Domestic manufacturing deduction | (1.2 | ) | (1.2 | ) | (1.1 | ) | |||
Adjustments for prior period tax matters | 0.4 | 0.5 | 1.0 | ||||||
Other | (0.3 | ) | 0.6 | 0.6 | |||||
Effective income tax rate | 22.6 | % | 26.6 | % | 27.1 | % |
2016 | 2015 | |||||||
Deferred income tax assets: | ||||||||
Compensation and benefits | $ | 16.2 | $ | 28.4 | ||||
Inventory | 18.0 | 15.3 | ||||||
Returns, rebates and incentives | 55.1 | 50.8 | ||||||
Retirement benefits | 493.6 | 371.2 | ||||||
Environmental remediation and other site-related costs | 34.8 | 31.1 | ||||||
Share-based compensation | 40.6 | 35.5 | ||||||
Other accruals and reserves | 60.5 | 48.9 | ||||||
Net operating loss carryforwards | 24.4 | 25.9 | ||||||
Tax credit carryforwards | 13.7 | 8.5 | ||||||
Capital loss carryforwards | 9.9 | 13.6 | ||||||
Other | 11.4 | 15.9 | ||||||
Subtotal | 778.2 | 645.1 | ||||||
Valuation allowance | (17.3 | ) | (22.2 | ) | ||||
Net deferred income tax assets | 760.9 | 622.9 | ||||||
Deferred income tax liabilities: | ||||||||
Property | (63.5 | ) | (74.9 | ) | ||||
Intangible assets | (54.9 | ) | (53.2 | ) | ||||
Other | (8.6 | ) | — | |||||
Deferred income tax liabilities | (127.0 | ) | (128.1 | ) | ||||
Total net deferred income tax assets | $ | 633.9 | $ | 494.8 |
Tax Attribute to be Carried Forward | Tax Benefit Amount | Valuation Allowance | Carryforward Period Ends | |||||||||
Non-United States net operating loss carryforward | $ | 7.7 | $ | 4.4 | 2017 | - | 2026 | |||||
Non-United States net operating loss carryforward | 6.1 | 1.6 | Indefinite | |||||||||
Non-United States capital loss carryforward | 9.9 | 9.9 | Indefinite | |||||||||
United States net operating loss carryforward | 2.8 | — | 2019 | - | 2033 | |||||||
United States tax credit carryforward | 2.5 | — | 2018 | - | 2037 | |||||||
State and local net operating loss carryforward | 7.8 | 0.2 | 2017 | - | 2033 | |||||||
State tax credit carryforward | 11.2 | 0.6 | 2019 | - | 2031 | |||||||
Subtotal — tax carryforwards | 48.0 | 16.7 | ||||||||||
Other deferred tax assets | 0.6 | 0.6 | Indefinite | |||||||||
Total | $ | 48.6 | $ | 17.3 |
2016 | 2015 | 2014 | ||||||||||
Gross unrecognized tax benefits balance at beginning of year | $ | 43.9 | $ | 38.9 | $ | 40.8 | ||||||
Additions based on tax positions related to the current year | 2.3 | 2.1 | 1.0 | |||||||||
Additions based on tax positions related to prior years | 14.9 | 11.6 | 2.2 | |||||||||
Reductions based on tax positions related to prior years | — | (1.0 | ) | — | ||||||||
Reductions related to settlements with taxing authorities | (27.1 | ) | (4.3 | ) | — | |||||||
Reductions related to lapses of statute of limitations | (1.6 | ) | (1.6 | ) | (4.2 | ) | ||||||
Effect of foreign currency translation | — | (1.8 | ) | (0.9 | ) | |||||||
Gross unrecognized tax benefits balance at end of year | $ | 32.4 | $ | 43.9 | $ | 38.9 |
2016 | 2015 | ||||||
Environmental remediation costs | $ | 73.9 | $ | 61.4 | |||
Conditional asset retirement obligations | 20.6 | 20.2 | |||||
Indemnification liabilities | 17.0 | 32.6 | |||||
Total recorded liabilities | 111.5 | 114.2 | |||||
Recorded probable expected recoveries | (22.5 | ) | (33.2 | ) | |||
Net recorded liabilities | $ | 89.0 | $ | 81.0 |
2016 | |||
Other current liabilities | $ | 14.6 | |
Other liabilities | 59.3 | ||
Total recorded environmental remediation costs(1) | 73.9 | ||
Receivables | (1.8 | ) | |
Other assets | (9.6 | ) | |
Total recorded probable expected recoveries | (11.4 | ) | |
Net environmental remediation costs | $ | 62.5 |
(1) | Includes $51.6 million related to discounted ongoing operating and maintenance expenditures. |
2016 | 2015 | ||||||
Other current liabilities | $ | 0.7 | $ | 0.4 | |||
Other liabilities | 19.9 | 19.8 | |||||
Total recorded conditional asset retirement obligations | 20.6 | 20.2 | |||||
Receivables | (0.1 | ) | — | ||||
Other assets | (0.2 | ) | (0.3 | ) | |||
Total recorded probable expected recoveries | (0.3 | ) | (0.3 | ) | |||
Net conditional asset retirement obligations | $ | 20.3 | $ | 19.9 |
2016 | 2015 | ||||||
Other current liabilities | $ | 4.9 | $ | 3.2 | |||
Other liabilities | 12.1 | 29.4 | |||||
Total recorded indemnification liabilities | 17.0 | 32.6 | |||||
Receivables | (3.5 | ) | (2.1 | ) | |||
Other assets | (7.3 | ) | (22.6 | ) | |||
Total recorded probable expected recoveries | (10.8 | ) | (24.7 | ) | |||
Net indemnification liabilities | $ | 6.2 | $ | 7.9 |
2017 | $ | 76.2 | |
2018 | 65.2 | ||
2019 | 52.8 | ||
2020 | 45.5 | ||
2021 | 33.7 | ||
Beyond 2021 | 62.5 | ||
Total | $ | 335.9 |
• | 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. |
• | 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 information 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. |
2016 | 2015 | 2014 | ||||||||||
Sales: | ||||||||||||
Architecture & Software | $ | 2,635.2 | $ | 2,749.5 | $ | 2,845.3 | ||||||
Control Products & Solutions | 3,244.3 | 3,558.4 | 3,778.2 | |||||||||
Total | $ | 5,879.5 | $ | 6,307.9 | $ | 6,623.5 | ||||||
Segment operating earnings: | ||||||||||||
Architecture & Software | $ | 695.0 | $ | 808.6 | $ | 839.6 | ||||||
Control Products & Solutions | 493.7 | 551.9 | 512.4 | |||||||||
Total | 1,188.7 | 1,360.5 | 1,352.0 | |||||||||
Purchase accounting depreciation and amortization | (18.4 | ) | (21.0 | ) | (21.6 | ) | ||||||
General corporate-net | (79.7 | ) | (85.6 | ) | (81.0 | ) | ||||||
Non-operating pension costs | (76.2 | ) | (62.7 | ) | (55.9 | ) | ||||||
Interest expense | (71.3 | ) | (63.7 | ) | (59.3 | ) | ||||||
Income before income taxes | $ | 943.1 | $ | 1,127.5 | $ | 1,134.2 |
2016 | 2015 | 2014 | ||||||||||
Identifiable assets: | ||||||||||||
Architecture & Software | $ | 2,054.3 | $ | 1,790.5 | $ | 1,874.5 | ||||||
Control Products & Solutions | 2,034.6 | 2,078.1 | 2,273.7 | |||||||||
Corporate | 3,012.3 | 2,536.1 | 2,076.1 | |||||||||
Total | $ | 7,101.2 | $ | 6,404.7 | $ | 6,224.3 | ||||||
Depreciation and amortization: | ||||||||||||
Architecture & Software | $ | 75.0 | $ | 69.7 | $ | 64.8 | ||||||
Control Products & Solutions | 77.3 | 70.3 | 65.9 | |||||||||
Corporate | 1.5 | 1.5 | 0.2 | |||||||||
Total | 153.8 | 141.5 | 130.9 | |||||||||
Purchase accounting depreciation and amortization | 18.4 | 21.0 | 21.6 | |||||||||
Total | $ | 172.2 | $ | 162.5 | $ | 152.5 | ||||||
Capital expenditures for property: | ||||||||||||
Architecture & Software | $ | 24.7 | $ | 29.4 | $ | 33.6 | ||||||
Control Products & Solutions | 41.5 | 56.8 | 51.2 | |||||||||
Corporate | 50.7 | 36.7 | 56.2 | |||||||||
Total | $ | 116.9 | $ | 122.9 | $ | 141.0 |
Sales | Property | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2016 | 2015 | 2014 | |||||||||||||||||||
United States | $ | 3,213.4 | $ | 3,446.8 | $ | 3,414.6 | $ | 445.4 | $ | 472.1 | $ | 497.5 | ||||||||||||
Canada | 316.4 | 366.6 | 437.0 | 7.3 | 7.3 | 7.6 | ||||||||||||||||||
Europe, Middle East and Africa | 1,147.2 | 1,174.0 | 1,351.8 | 49.9 | 50.4 | 48.8 | ||||||||||||||||||
Asia Pacific | 764.4 | 834.5 | 884.0 | 37.4 | 41.9 | 37.3 | ||||||||||||||||||
Latin America | 438.1 | 486.0 | 536.1 | 38.3 | 33.9 | 41.7 | ||||||||||||||||||
Total | $ | 5,879.5 | $ | 6,307.9 | $ | 6,623.5 | $ | 578.3 | $ | 605.6 | $ | 632.9 |
2016 Quarters | |||||||||||||||||||
(in millions, except per share amounts) | First | Second | Third | Fourth | 2016 | ||||||||||||||
Sales | $ | 1,426.6 | $ | 1,440.3 | $ | 1,474.0 | 1,538.6 | $ | 5,879.5 | ||||||||||
Gross profit | 612.7 | 594.1 | 616.8 | 651.9 | 2,475.5 | ||||||||||||||
Income before income taxes | 236.9 | 217.0 | 252.3 | 236.9 | 943.1 | ||||||||||||||
Net income | 185.5 | 168.0 | 191.0 | 185.2 | 729.7 | ||||||||||||||
Earnings per share: | |||||||||||||||||||
Basic | 1.41 | 1.29 | 1.47 | 1.44 | 5.60 | ||||||||||||||
Diluted | 1.40 | 1.28 | 1.46 | 1.43 | 5.56 |
2015 Quarters | ||||||||||||||||||||
(in millions, except per share amounts) | First | Second | Third | Fourth | 2015 | |||||||||||||||
Sales | $ | 1,574.4 | $ | 1,550.8 | $ | 1,575.2 | $ | 1,607.5 | $ | 6,307.9 | ||||||||||
Gross profit | 687.5 | 673.2 | 678.2 | 664.2 | 2,703.1 | |||||||||||||||
Income before income taxes | 287.5 | 276.5 | 284.6 | 278.9 | 1,127.5 | |||||||||||||||
Net income | 214.2 | 206.0 | 206.1 | 201.3 | 827.6 | |||||||||||||||
Earnings per share: | ||||||||||||||||||||
Basic | 1.58 | 1.53 | 1.53 | 1.51 | 6.15 | |||||||||||||||
Diluted | 1.56 | 1.51 | 1.52 | 1.50 | 6.09 |
Number of Securities to be issued upon Exercise of Outstanding Options, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding Securities reflected in Column (a)) | |||||||||
Plan Category | (a) | (b) | (c) | ||||||||
Equity compensation plans approved by shareowners | 5,603,965 | (1) | $ | 90.96 | (2) | 6,657,783 | (3) | ||||
Equity compensation plans not approved by shareowners | — | n/a | — | ||||||||
Total | 5,603,965 | $ | 90.96 | 6,657,783 |
(1) | Represents outstanding options and shares issuable in payment of outstanding performance shares (at maximum payout) and restricted stock units under our 2012 Long-Term Incentives Plan, 2008 Long-Term Incentives Plan, 2000 Long-Term Incentives Plan and 2003 Directors Stock Plan. |
(2) | Represents the weighted average exercise price of outstanding options and does not take into account the performance shares and restricted units. |
(3) | Represents 6,417,371 and 240,412 shares available for future issuance under our 2012 Long-Term Incentives Plan and our 2003 Directors Stock Plan, respectively. |
(1) | Financial Statements (all financial statements listed below are those of the Company and its consolidated subsidiaries) |
Consolidated Balance Sheet, September 30, 2016 and 2015 | |
Consolidated Statement of Operations, years ended September 30, 2016, 2015 and 2014 | |
Consolidated Statement of Comprehensive Income, years ended September 30, 2016, 2015 and 2014 | |
Consolidated Statement of Cash Flows, years ended September 30, 2016, 2015 and 2014 | |
Consolidated Statement of Shareowners’ Equity, years ended September 30, 2016, 2015 and 2014 | |
Notes to Consolidated Financial Statements | |
Report of Independent Registered Public Accounting Firm | |
(2) | Financial Statement Schedule for the years ended September 30, 2016, 2015 and 2014 |
Page | |||
Schedule II—Valuation and Qualifying Accounts | S-1 |
(3) | Exhibits |
3-a | Restated Certificate of Incorporation of the Company, filed as Exhibit 3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, is hereby incorporated by reference. | ||
3-b | By-Laws of the Company, as amended and restated effective June 8, 2016, filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K dated June 10, 2016, are hereby incorporated by reference. | ||
4-a-1 | Indenture dated as of December 1, 1996 between the Company and The Bank of New York Trust Company, N.A. (formerly JPMorgan Chase, successor to The Chase Manhattan Bank, successor to Mellon Bank, N.A.), as Trustee, filed as Exhibit 4-a to Registration Statement No. 333-43071, is hereby incorporated by reference. | ||
4-a-2 | Form of certificate for the Company’s 6.70% Debentures due January 15, 2028, filed as Exhibit 4-b to the Company’s Current Report on Form 8-K dated January 26, 1998, is hereby incorporated by reference. | ||
4-a-3 | Form of certificate for the Company’s 5.20% Debentures due January 15, 2098, filed as Exhibit 4-c to the Company’s Current Report on Form 8-K dated January 26, 1998, is hereby incorporated by reference. | ||
4-a-4 | Form of certificate for the Company’s 5.65% Notes due December 31, 2017, filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated December 3, 2007, is hereby incorporated by reference. | ||
4-a-5 | Form of certificate for the Company’s 6.25% Debentures due December 31, 2037, filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated December 3, 2007, is hereby incorporated by reference. | ||
4-a-6 | Form of certificate for the Company’s 2.050% Notes due March 1, 2020, filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated February 17, 2015, is hereby incorporated by reference. | ||
4-a-7 | Form of certificate for the Company’s 2.875% Notes due March 1, 2025, filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated February 17, 2015, is hereby incorporated by reference. | ||
*10-a-1 | Copy of the Company’s 2003 Directors Stock Plan, filed as Exhibit 4-d to the Company’s Registration Statement on Form S-8 (No. 333-101780), is hereby incorporated by reference. | ||
*10-a-2 | Memorandum of Amendments to the Company’s 2003 Directors Stock Plan approved and adopted by the Board of Directors of the Company on April 25, 2003, filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, is hereby incorporated by reference. |
*10-a-3 | Memorandum of Amendments to the Company’s 2003 Directors Stock Plan approved and adopted by the Board of Directors of the Company on November 7, 2007, filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2007, is hereby incorporated by reference. | ||
*10-a-4 | Memorandum of Amendments to the Company’s 2003 Directors Stock Plan approved and adopted by the Board of Directors of the Company on September 3, 2008, filed as Exhibit 10-b-16 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2008, is hereby incorporated by reference. | ||
*10-a-5 | Form of Restricted Stock Unit Agreement under Section 6 of the Company’s 2003 Director’s Stock Plan, as amended, filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, is hereby incorporated by reference. | ||
*10-a-6 | Copy of the Company’s Directors Deferred Compensation Plan approved and adopted by the Board of Directors of the Company on November 5, 2008, filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2008, is hereby incorporated by reference. | ||
*10-a-7 | Summary of Non-Employee Director Compensation and Benefits as of October 1, 2016, filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, is hereby incorporated by reference. | ||
*10-b-1 | Copy of the Company’s 2000 Long-Term Incentives Plan, as amended through February 4, 2004, filed as Exhibit 10-e-1 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2004, is hereby incorporated by reference. | ||
*10-b-2 | Memorandum of Proposed Amendments to the Rockwell International Corporation 2000 Long-Term Incentives Plan approved and adopted by the Board of Directors of the Company on June 6, 2001, in connection with the spinoff of Rockwell Collins, Inc., filed as Exhibit 10-e-4 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2001, is hereby incorporated by reference. | ||
*10-b-3 | Forms of Stock Option Agreements under the Company’s 2000 Long-Term Incentives Plan, filed as Exhibit 10-e-6 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2002, are hereby incorporated by reference. | ||
*10-b-4 | Memorandum of Amendments to the Company’s 2000 Long-Term Incentives Plan, as amended, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated April 7, 2005, is hereby incorporated by reference. | ||
*10-b-5 | Memorandum of Amendments to the Company’s 2000 Long-Term Incentives Plan, as amended, filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K dated November 4, 2005, is hereby incorporated by reference. | ||
*10-b-6 | Memorandum of Proposed Amendment and Restatement of the Company’s 2000 Long-Term Incentives Plan, as amended, approved and adopted by the Board of Directors of the Company on November 7, 2007, filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2007, is hereby incorporated by reference. | ||
*10-b-7 | Forms of Stock Option Agreement under the Company’s 2000 Long-Term Incentives Plan, as amended, for options granted to executive officers of the Company after December 1, 2007, filed as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2007, is hereby incorporated by reference. | ||
*10-b-8 | Copy of resolutions of the Board of Directors of the Company, adopted December 5, 2007 and effective February 6, 2008, amending the Company’s 2000 Long-Term Incentives Plan, as amended, filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, is hereby incorporated by reference. | ||
*10-c-1 | Copy of the Company’s 2008 Long-Term Incentives Plan, as amended and restated through June 4, 2010, filed as Exhibit 99 to the Company’s Current Report on Form 8-K dated June 10, 2010, is hereby incorporated by reference. | ||
*10-c-2 | Form of Stock Option Agreement under the Company’s 2008 Long-Term Incentives Plan, filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, is hereby incorporated by reference. | ||
*10-c-3 | Forms of Stock Option Agreement under the Company’s 2008 Long-Term Incentives Plan for options granted to executive officers of the Company after December 1, 2008, filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2008, is hereby incorporated by reference. | ||
*10-c-4 | Form of Stock Option Agreement under the Company’s 2008 Long-Term Incentives Plan, as amended, for options granted to executive officers of the Company after December 6, 2010, filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2010, is hereby incorporated by reference. |
*10-c-5 | Form of Stock Option Agreement under the Company’s 2008 Long-Term Incentives Plan, as amended, for options granted to executive officers of the Company after November 30, 2011, filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2011, is hereby incorporated by reference. | ||
*10-c-6 | Copy of the Company's 2012 Long-Term Incentives Plan, as amended and restated through February 2, 2016, filed as Exhibit 4-c to the Company's Registration Statement on Form S-8 (No. 333-209706), is hereby incorporated by reference. | ||
*10-c-7 | Form of Stock Option Agreement under the Company's 2012 Long-Term Incentives Plan for options granted to executive officers of the Company after December 5, 2012, filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2012, is hereby incorporated by reference. | ||
*10-c-8 | Form of Restricted Stock Agreement under the Company's 2012 Long-Term Incentives Plan for shares of restricted stock awarded to executive officers of the Company after December 5, 2012, filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2012 is hereby incorporated by reference. | ||
*10-c-9 | Form of Performance Share Agreement under the Company's 2012 Long-Term Incentives Plan for performance shares awarded to executive officers of the Company after December 5, 2012, filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2012 is hereby incorporated by reference. | ||
*10-d | Copy of resolutions of the Compensation and Management Development Committee of the Board of Directors of the Company, adopted February 5, 2003, regarding the Corporate Office vacation plan, filed as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003, is hereby incorporated by reference. | ||
*10-e-1 | Copy of the Company’s Deferred Compensation Plan, as amended and restated September 6, 2006, filed as Exhibit 10-f to the Company’s Annual Report on Form 10-K for the year ended September 30, 2006, is hereby incorporated by reference. | ||
*10-e-2 | Memorandum of Proposed Amendment and Restatement of the Company’s Deferred Compensation Plan approved and adopted by the Board of Directors of the Company on November 7, 2007, filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2007, is hereby incorporated by reference. | ||
*10-f-1 | Copy of the Company’s Annual Incentive Compensation Plan for Senior Executive Officers, as amended December 3, 2003, filed as Exhibit 10-h-1 to the Company’s Annual Report for the year ended September 30, 2004, is hereby incorporated by reference. | ||
*10-f-2 | Copy of the Company’s Incentive Compensation Plan, filed as Exhibit 10 to the Company’s Current Report on Form 8-K dated September 7, 2005, is hereby incorporated by reference. | ||
*10-g-1 | Change of Control Agreement dated as of September 30, 2016 between the Company and Blake D. Moret, filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K dated October 4, 2016, is hereby incorporated by reference. | ||
*10-g-2 | Form of Change of Control Agreement dated as of September 30, 2016 between the Company and each of Theodore D. Crandall, Douglas M. Hagerman, Frank C. Kulaszewicz and John P. McDermott and certain other corporate officers filed as Exhibit 99.2 to the Company’s Current Report on Form 8-K dated October 4, 2016, is hereby incorporated by reference. | ||
*10-g-3 | Letter Agreement dated September 3, 2009 between the Company and Keith D. Nosbusch, filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K dated September 8, 2009, is hereby incorporated by reference. | ||
*10-g-4 | Letter Agreement dated September 3, 2009 between Registrant and Theodore D. Crandall, filed as Exhibit 99.2 to the Company’s Current Report on Form 8-K dated September 8, 2009, is hereby incorporated by reference. | ||
*10-g-5 | Letter Agreement dated July 1, 2016 between Registrant and Blake D. Moret, filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, is hereby incorporated by reference. | ||
10-h-1 | Agreement and Plan of Distribution dated as of December 6, 1996, among Rockwell International Corporation (renamed Boeing North American, Inc.), the Company (formerly named New Rockwell International Corporation), Allen-Bradley Company, Inc., Rockwell Collins, Inc., Rockwell Semiconductor Systems, Inc., Rockwell Light Vehicle Systems, Inc. and Rockwell Heavy Vehicle Systems, Inc., filed as Exhibit l0-b to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 1996, is hereby incorporated by reference. |
10-h-2 | Post-Closing Covenants Agreement dated as of December 6, 1996, among Rockwell International Corporation (renamed Boeing North American, Inc.), The Boeing Company, Boeing NA, Inc. and the Company (formerly named New Rockwell International Corporation), filed as Exhibit 10-c to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 1996, is hereby incorporated by reference. | ||
10-h-3 | Tax Allocation Agreement dated as of December 6, 1996, among Rockwell International Corporation (renamed Boeing North American, Inc.), the Company (formerly named New Rockwell International Corporation) and The Boeing Company, filed as Exhibit 10-d to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 1996, is hereby incorporated by reference. | ||
10-i-l | Distribution Agreement dated as of September 30, 1997 by and between the Company and Meritor Automotive, Inc., filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated October 10, 1997, is hereby incorporated by reference. | ||
10-i-2 | Employee Matters Agreement dated as of September 30, 1997 by and between the Company and Meritor Automotive, Inc., filed as Exhibit 2.2 to the Company’s Current Report on Form 8-K dated October 10, 1997, is hereby incorporated by reference. | ||
10-i-3 | Tax Allocation Agreement dated as of September 30, 1997 by and between the Company and Meritor Automotive, Inc., filed as Exhibit 2.3 to the Company’s Current Report on Form 8-K dated October 10, 1997, is hereby incorporated by reference. | ||
10-j-1 | Distribution Agreement dated as of December 31, 1998 by and between the Company and Conexant Systems, Inc., filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated January 12, 1999, is hereby incorporated by reference. | ||
10-j-2 | Amended and Restated Employee Matters Agreement dated as of December 31, 1998 by and between the Company and Conexant Systems, Inc., filed as Exhibit 2.2 to the Company’s Current Report on Form 8-K dated January 12, 1999, is hereby incorporated by reference. | ||
10-j-3 | Tax Allocation Agreement dated as of December 31, 1998 by and between the Company and Conexant Systems, Inc., filed as Exhibit 2.3 to the Company’s Current Report on Form 8-K dated January 12, 1999, is hereby incorporated by reference. | ||
10-k-1 | Distribution Agreement dated as of June 29, 2001 by and among the Company, Rockwell Collins, Inc. and Rockwell Scientific Company LLC, filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated July 11, 2001, is hereby incorporated by reference. | ||
10-k-2 | Employee Matters Agreement dated as of June 29, 2001 by and among the Company, Rockwell Collins, Inc. and Rockwell Scientific Company LLC, filed as Exhibit 2.2 to the Company’s Current Report on Form 8-K dated July 11, 2001, is hereby incorporated by reference. | ||
10-k-3 | Tax Allocation Agreement dated as of June 29, 2001 by and between the Company and Rockwell Collins, Inc., filed as Exhibit 2.3 to the Company’s Current Report on Form 8-K dated July 11, 2001, is hereby incorporated by reference. | ||
10-l | $1,000,000,000 Five-Year Credit Agreement dated as of March 24, 2015 among the Company, the Banks listed on the signature pages thereof, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A. and Goldman Sachs Bank USA, as Syndication Agents, and The Bank of New York Mellon, BMO Harris Bank N.A., Citibank, N.A., Deutsche Bank Securities Inc., The Northern Trust Company, PNC Bank National Association, U.S. Bank National Association, and Wells Fargo Bank, National Association, as Documentation Agents, filed as Exhibit 99 to the Company’s Current Report on Form 8-K dated March 27, 2015, is hereby incorporated by reference. | ||
10-m | Purchase and Sale Agreement dated as of August 24, 2005 by and between the Company and First Industrial Acquisitions, Inc., including the form of Lease Agreement attached as Exhibit I thereto, together with the First Amendment to Purchase and Sale Agreement dated as of September 30, 2005 and the Second Amendment to Purchase and Sale Agreement dated as of October 31, 2005, filed as Exhibit 10-p to the Company’s Annual Report on Form 10-K for the year ended September 30, 2005, is hereby incorporated by reference. | ||
10-n-1 | Purchase Agreement, dated as of November 6, 2006, by and among Rockwell Automation, Inc., Rockwell Automation of Ohio, Inc., Rockwell Automation Canada Control Systems, Grupo Industrias Reliance S.A. de C.V., Rockwell Automation GmbH (formerly known as Rockwell International GmbH) and Baldor Electric Company, contained in the Company’s Current Report on Form 8-K dated November 9, 2006, is hereby incorporated by reference. | ||
10-n-2 | First Amendment to Purchase Agreement dated as of January 24, 2007 by and among Rockwell Automation, Inc., Rockwell Automation of Ohio, Inc., Rockwell Automation Canada Control Systems, Grupo Industrias Reliance S.A. de C.V., Rockwell Automation GmbH and Baldor Electric Company, filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007, is hereby incorporated by reference. | ||
12 | Computation of Ratio of Earnings to Fixed Charges for the Five Years Ended September 30, 2016. |
21 | List of Subsidiaries of the Company. | ||
23 | Consent of Independent Registered Public Accounting Firm. | ||
24 | Powers of Attorney authorizing certain persons to sign this Annual Report on Form 10-K on behalf of certain directors and officers of the Company. | ||
31.1 | Certification of Periodic Report by the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934. | ||
31.2 | Certification of Periodic Report by the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934. | ||
32.1 | Certification of Periodic Report by the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
32.2 | Certification of Periodic Report by the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
101 | Interactive Data Files. |
* | Management contract or compensatory plan or arrangement. |
ROCKWELL AUTOMATION, INC. | ||
By | /s/ THEODORE D. CRANDALL | |
Theodore D. Crandall | ||
Senior Vice President and | ||
Chief Financial Officer |
By | /s/ THEODORE D. CRANDALL |
Theodore D. Crandall | |
Senior Vice President and | |
Chief Financial Officer | |
(Principal Financial Officer) | |
By | /s/ DAVID M. DORGAN |
David M. Dorgan | |
Vice President and Controller | |
(Principal Accounting Officer) | |
Blake D. Moret* | |
President and | |
Chief Executive Officer | |
(Principal Executive Officer) | |
and Director | |
Keith D. Nosbusch* | |
Chairman of the Board | |
Betty C. Alewine* | |
Director | |
J. Phillip Holloman* | |
Director | |
Steven R. Kalmanson* | |
Director | |
James P. Keane* | |
Director | |
Lawrence D. Kingsley* | |
Director | |
William T. McCormick, Jr.* | |
Director | |
Donald R. Parfet * | |
Director | |
Lisa A. Payne* | |
Director | |
Thomas W. Rosamilia* | |
Director | |
*By | /s/ DOUGLAS M. HAGERMAN |
Douglas M. Hagerman, Attorney-in-fact** | |
**By | authority of powers of attorney filed herewith |
Balance at | Additions | |||||||||||||||||||
(in millions) | Beginning of Year | Charged to Costs and Expenses | Charged to Other Accounts | Deductions(b) | Balance at End of Year | |||||||||||||||
Description | ||||||||||||||||||||
*Year ended September 30, 2016 | ||||||||||||||||||||
Allowance for doubtful accounts (a) | $ | 24.8 | $ | 10.9 | $ | — | $ | 11.2 | $ | 24.5 | ||||||||||
Valuation allowance for deferred tax assets | 22.2 | 1.0 | 0.6 | 6.5 | 17.3 | |||||||||||||||
*Year ended September 30, 2015 | ||||||||||||||||||||
Allowance for doubtful accounts (a) | $ | 22.2 | $ | 8.1 | $ | — | $ | 5.5 | $ | 24.8 | ||||||||||
Valuation allowance for deferred tax assets | 27.8 | 2.5 | — | 8.1 | 22.2 | |||||||||||||||
*Year ended September 30, 2014 | ||||||||||||||||||||
Allowance for doubtful accounts (a) | $ | 25.3 | $ | 6.5 | $ | — | $ | 9.6 | $ | 22.2 | ||||||||||
Valuation allowance for deferred tax assets | 28.3 | 4.0 | 0.5 | 5.0 | 27.8 |
(a) | Includes allowances for current and other long-term receivables. |
(b) | Consists of amounts written off for the allowance for doubtful accounts and adjustments resulting from our ability to utilize foreign tax credits, capital losses, or net operating loss carryforwards for which a valuation allowance had previously been recorded. |
* | Amounts reported relate to continuing operations in all periods presented. |
Exhibit No. | Exhibit | |
12 | Computation of Ratio of Earnings to Fixed Charges for the Five Years Ended September 30, 2016. | |
21 | List of Subsidiaries of the Company. | |
23 | Consent of Independent Registered Public Accounting Firm. | |
24 | Powers of Attorney authorizing certain persons to sign this Annual Report on Form 10-K on behalf of certain directors and officers of the Company. | |
31.1 | Certification of Periodic Report by the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934. | |
31.2 | Certification of Periodic Report by the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934. | |
32.1 | Certification of Periodic Report by the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 | Certification of Periodic Report by the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101 | Interactive Data Files. |
* | See Part IV, Item 15(a)(3) for exhibits incorporated by reference. |
Fiscal Year Ended September 30, | ||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||
Earnings available for fixed charges: | ||||||||||||||||||||
Income from continuing operations before income taxes | $ | 943.1 | $ | 1,127.5 | $ | 1,134.2 | $ | 980.9 | $ | 965.9 | ||||||||||
Add fixed charges included in earnings: | ||||||||||||||||||||
Interest expense | $ | 71.3 | $ | 63.7 | $ | 59.3 | $ | 60.9 | $ | 60.1 | ||||||||||
Interest element of rentals | 61.5 | 62.5 | 64.7 | 63.4 | 60.6 | |||||||||||||||
Total | 132.8 | 126.2 | 124.0 | 124.3 | 120.7 | |||||||||||||||
Total earnings available for fixed charges | $ | 1,075.9 | $ | 1,253.7 | $ | 1,258.2 | $ | 1,105.2 | $ | 1,086.6 | ||||||||||
Fixed charges: | ||||||||||||||||||||
Fixed charges included in earnings | $ | 132.8 | $ | 126.2 | $ | 124.0 | $ | 124.3 | $ | 120.7 | ||||||||||
Capitalized interest | 0.1 | 1.1 | 1.2 | 0.4 | 0.9 | |||||||||||||||
Total fixed charges | $ | 132.9 | $ | 127.3 | $ | 125.2 | $ | 124.7 | $ | 121.6 | ||||||||||
Ratio of earnings to fixed charges | 8.1 | 9.8 | 10.0 | 8.9 | 8.9 |
(1) | In computing the ratio of earnings to fixed charges, earnings are defined as income from continuing operations before income taxes and cumulative effect of accounting change, adjusted for minority interest in income or loss of subsidiaries, undistributed earnings of affiliates, and fixed charges exclusive of capitalized interest. Fixed charges consist of interest on borrowings and that portion of rentals deemed representative of the interest factor. |
Percentage of Voting Securities Owned By | ||||||||
Name | Jurisdiction | Registrant | Subsidiary | |||||
Anorad Corporation | New York | 100 | % | |||||
MagneMotion Inc. | Delaware | 100 | % | |||||
Maverick Technologies Holdings, LLC | Missouri | 100 | % | |||||
Maverick Technologies, LLC | Missouri | 100 | % | |||||
Rockwell Automation (China) Company Limited | China | 100 | % | |||||
Rockwell Automation Switzerland G.m.b.H | Switzerland | 100 | % | |||||
Rockwell Automation Asia Pacific Business Center PTE. Ltd. | Singapore | 100 | % | |||||
Rockwell Automation Australia Ltd. | Australia | 100 | % | |||||
Rockwell Automation B.V. | Netherlands | 100 | % | |||||
Rockwell Automation Canada Holdings Inc. | Canada | 100 | % | |||||
Rockwell Automation Canada Ltd. | Canada | 100 | % | |||||
Rockwell Automation Control Solutions (Harbin) Co., Ltd. | China | 100 | % | |||||
Rockwell Automation de Mexico S.A. de C.V. | Mexico | 100 | % | |||||
Rockwell Automation do Brasil Ltda. | Brazil | 100 | % | |||||
Rockwell Automation Europe B.V. | Netherlands | 100 | % | |||||
Rockwell Automation G.m.b.H. | Germany | 100 | % | |||||
Rockwell Automation Germany G.m.b.H. & Co. KG | Germany | 100 | % | |||||
Rockwell Automation India Private Limited | India | 100 | % | |||||
Rockwell Automation International Holdings LLC | Delaware | 100 | % | |||||
Rockwell Automation Korea Ltd. | Korea | 100 | % | |||||
Rockwell Automation Limited | United Kingdom | 100 | % | |||||
Rockwell Automation L.L.C. | United Arab Emirates | 49 | % | |||||
Rockwell Automation Manufacturing (Shanghai) Limited | China | 100 | % | |||||
Rockwell Automation Monterrey Manufacturing S de RL de CV | Mexico | 100 | % | |||||
Rockwell Automation of Ohio, Inc. | Ohio | 100 | % | |||||
Rockwell Automation Proprietary Limited | South Africa | 74.99999 | % | |||||
Rockwell Automation Solutions G.m.b.H. | Germany | 100 | % | |||||
Rockwell Automation Sp. z.o.o. | Poland | 100 | % | |||||
Rockwell Automation Technologies, Inc. | Ohio | 100 | % | |||||
Rockwell European Holdings Ltd. | England | 100 | % |
1. | the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016 and any amendments thereto; |
2. | any and all amendments (including supplements and post-effective amendments) to |
a) | the Registration Statements on Form S-8 registering securities to be sold under the Company’s 2012 Long-Term Incentives Plan (Registration Nos. 333-180557 and 333-209706); |
b) | the Registration Statements on Form S-8 registering securities to be sold under the Company’s 2008 Long-Term Incentives Plan (Registration Nos. 333-150019 and 333-165727); |
c) | the Registration Statements on Form S-8 registering securities to be sold under the Company’s 2000 Long-Term Incentives Plan (Registration Nos. 333-38444 and 333-113041); |
d) | the Registration Statements on Form S-8 registering securities to be sold under the Company’s 1165(e) Plan (Registration Nos. 333-157203 and 333-205022); |
e) | the Registration Statements on Form S-8 registering securities to be sold under the Company’s Retirement Savings Plan (Registration Nos. 333-184400 and 333-149581) |
f) | the Registration Statement on Form S-8 registering securities to be sold pursuant to the Company’s 2003 Directors Stock Plan (Registration No. 333-101780); and |
3. | any and all amendments (including supplements and post-effective amendments) to the Registration Statement on Form S-3 (Registration No. 333-24685) registering |
a) | certain shares of Common Stock acquired by permitted transferees upon the exercise of transferable options assigned to them by certain participants in the Company’s 1988 Long-Term Incentives Plan in accordance with that Plan; |
b) | the offer and resale by any such permitted transferee who may be deemed to be an “affiliate” of the Company within the meaning of Rule 405 under the Securities Act of 1933, as amended (an Affiliate Selling Shareowner), of Common Stock so acquired by such Affiliate Selling Shareowner upon exercise of any such transferable option; and |
4. | any and all amendments (including supplements and post-effective amendments) to the Registration Statement on Form S-3 (Registration No. 333-202013) registering an indeterminate amount of debt securities of the Company in one or more series. |
Signature | Title | Date | ||
/s/ Blake D. Moret | President and Chief Executive Officer (principal executive officer) and Director | November 2, 2016 | ||
Blake D. Moret | ||||
/s/ Keith D. Nosbusch | Chairman of the Board | November 2, 2016 | ||
Keith D. Nosbusch | ||||
/s/ Betty C. Alewine | Director | November 2, 2016 | ||
Betty C. Alewine | ||||
/s/ J. Phillip Holloman | Director | November 2, 2016 | ||
J. Phillip Holloman | ||||
/s/ Steven R. Kalmanson | Director | November 2, 2016 | ||
Steven R. Kalmanson | ||||
/s/ James P. Keane | Director | November 2, 2016 | ||
James P. Keane | ||||
/s/ Lawrence D. Kingsley | Director | November 2, 2016 | ||
Lawrence D. Kingsley | ||||
/s/ Willam T. McCormick, Jr. | Director | November 2, 2016 | ||
William T. McCormick, Jr. | ||||
/s/ Donald R. Parfet | Director | November 2, 2016 | ||
Donald R. Parfet | ||||
/s/ Lisa A. Payne | Director | November 2, 2016 | ||
Lisa A. Payne | ||||
/s/ Thomas W. Rosamilia | Director | November 2, 2016 | ||
Thomas W. Rosamilia | ||||
/s/ Theodore D. Crandall | Senior Vice President and Chief Financial Officer (principal financial officer) | November 2, 2016 | ||
Theodore D. Crandall | ||||
/s/ Douglas M. Hagerman | Senior Vice President, General Counsel and Secretary | November 2, 2016 | ||
Douglas M. Hagerman | ||||
/s/ David M. Dorgan | Vice President and Controller (principal accounting officer) | November 2, 2016 | ||
David M. Dorgan | ||||
1. | I have reviewed this annual report on Form 10-K of Rockwell Automation, Inc.; |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
/s/ BLAKE D. MORET |
Blake D. Moret President and Chief Executive Officer |
1. | I have reviewed this annual report on Form 10-K of Rockwell Automation, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
/S/ THEODORE D. CRANDALL |
Theodore D. Crandall |
Senior Vice President and |
Chief Financial Officer |
/s/ BLAKE D. MORET |
Blake D. Moret President and Chief Executive Officer |
/S/ THEODORE D. CRANDALL |
Theodore D. Crandall |
Senior Vice President and |
Chief Financial Officer |
Document and Entity Information - USD ($) $ in Billions |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Oct. 31, 2016 |
Mar. 31, 2016 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | ROCKWELL AUTOMATION INC. | ||
Entity Central Index Key | 0001024478 | ||
Document Type | 10-K | ||
Document Period End Date | Sep. 30, 2016 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2016 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 14.7 | ||
Entity Common Stock, Shares Outstanding | 128,229,158 |
Consolidated Balance Sheet (Parenthetical) - $ / shares shares in Millions |
Sep. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Shareowners' equity: | ||
Common stock, par value per share | $ 1.00 | $ 1.00 |
Common stock, shares issued | 181.4 | 181.4 |
Treasury stock, shares held | 52.9 | 49.0 |
Consolidated Statement of Operations - USD ($) shares in Millions, $ in Millions |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Sales | |||
Products and solutions | $ 5,239.3 | $ 5,652.2 | $ 5,933.1 |
Services | 640.2 | 655.7 | 690.4 |
Total sales | 5,879.5 | 6,307.9 | 6,623.5 |
Cost of sales | |||
Products and solutions | (2,982.1) | (3,157.2) | (3,391.3) |
Services | (421.9) | (447.6) | (478.3) |
Total cost of sales | (3,404.0) | (3,604.8) | (3,869.6) |
Gross profit | 2,475.5 | 2,703.1 | 2,753.9 |
Selling, general and administrative expenses | (1,467.4) | (1,506.4) | (1,570.1) |
Other income (expense) (Note 12) | 6.3 | (5.5) | 9.7 |
Interest expense | (71.3) | (63.7) | (59.3) |
Income before income taxes | 943.1 | 1,127.5 | 1,134.2 |
Income tax provision (Note 13) | (213.4) | (299.9) | (307.4) |
Net income | $ 729.7 | $ 827.6 | $ 826.8 |
Basic earnings per share: | |||
Basic | $ 5.60 | $ 6.15 | $ 5.98 |
Diluted earnings per share: | |||
Diluted | $ 5.56 | $ 6.09 | $ 5.91 |
Weighted average outstanding shares: | |||
Basic | 130.2 | 134.5 | 138.0 |
Diluted | 131.1 | 135.7 | 139.7 |
Consolidated Statement of Comprehensive Income - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Net income | $ 729.7 | $ 827.6 | $ 826.8 |
Other comprehensive loss: | |||
Pension and other postretirement benefit plan adjustments (net of tax benefit of $73.7, $106.6 and $27.6) | (142.7) | (187.7) | (85.6) |
Currency translation adjustments | (42.5) | (199.9) | (61.3) |
Net change in unrealized gains and losses on cash flow hedges (net of tax (benefit) expense of ($6.7), $4.5 and $1.9) | (19.0) | 1.0 | 16.6 |
Other comprehensive loss | (204.2) | (386.6) | (130.3) |
Comprehensive income | $ 525.5 | $ 441.0 | $ 696.5 |
Consolidated Statement of Comprehensive Income (Parenthetical) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Other comprehensive loss: | |||
Tax benefit from pension and other postretirement benefit plan adjustments | $ (73.7) | $ (106.6) | $ (27.6) |
Tax (benefit) expense from net change in unrealized gains and losses on cash flow hedges | $ (6.7) | $ 4.5 | $ 1.9 |
Consolidated Statement of Shareowners' Equity (Parenthetical) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Retained Earnings | |||
Cash dividends per share | $ 2.90 | $ 2.60 | $ 2.32 |
Basis of Presentation and Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Accounting Policies | Basis of Presentation and Accounting Policies Rockwell Automation, Inc. ("Rockwell Automation" or "the Company"), a leader in industrial automation and information, makes its customers more productive and the world more sustainable. Basis of Presentation Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned and controlled majority-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. Investments in affiliates over which we do not have control but exercise significant influence are accounted for using the equity method of accounting. These affiliated companies are not material individually or in the aggregate to our financial position, results of operations or cash flows. Use of Estimates The preparation of consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the periods reported. Actual results could differ from those estimates. We use estimates in accounting for, among other items, customer returns, rebates and incentives; allowance for doubtful accounts; excess and obsolete inventory; share-based compensation; acquisitions; product warranty obligations; retirement benefits; litigation, claims and contingencies, including environmental matters, conditional asset retirement obligations and contractual indemnifications; and income taxes. We account for changes to estimates and assumptions prospectively when warranted by factually-based experience. Revenue Recognition We recognize revenue when it is realized or realizable and earned. Product and solution sales consist of industrial automation and information solutions; hardware and software products; and custom-engineered systems. Service sales include multi-vendor customer technical support and repair, asset management and optimization consulting and training. All service sales recorded in the Consolidated Statement of Operations are associated with our Control Products & Solutions segment. For approximately 85 percent of our consolidated sales, we record sales when all of the following have occurred: persuasive evidence of a sales agreement exists; pricing is fixed or determinable; collection is reasonably assured; and products have been delivered and acceptance has occurred, as may be required according to contract terms, or services have been rendered. Within this category, we will at times enter into arrangements that involve the delivery of multiple products and/or the performance of services, such as installation and commissioning. The timing of delivery, though varied based upon the nature of the undelivered component, is generally short-term in nature. For these arrangements, revenue is allocated to each deliverable based on that element's relative selling price, provided the delivered element has value to customers on a standalone basis and, if the arrangement includes a general right of return, delivery or performance of the undelivered items is probable and substantially in our control. Relative selling price is obtained from sources such as vendor-specific objective evidence, which is based on our separate selling price for that or a similar item, or from third-party evidence such as how competitors have priced similar items. If such evidence is not available, we use our best estimate of the selling price, which includes various internal factors such as our pricing strategy and market factors. We recognize substantially all of the remainder of our sales as construction-type contracts using either the percentage-of-completion or completed contract methods of accounting. We record sales relating to these contracts using the percentage-of-completion method when we determine that progress toward completion is reasonably and reliably estimable; we use the completed contract method for all others. Under the percentage-of-completion method, we recognize sales and gross profit as work is performed using the relationship between actual costs incurred and total estimated costs at completion. Under the percentage-of-completion method, we adjust sales and gross profit for revisions of estimated total contract costs or revenue in the period the change is identified. We record estimated losses on contracts when they are identified. We use contracts and customer purchase orders to determine the existence of a sales agreement. We use shipping documents and customer acceptance, when applicable, to verify delivery. We assess whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. We assess collectibility based on the creditworthiness of the customer as determined by credit evaluations and analysis, as well as the customer’s payment history. Shipping and handling costs billed to customers are included in sales and the related costs are included in cost of sales in the Consolidated Statement of Operations. Returns, Rebates and Incentives Our primary incentive program provides distributors with cash rebates or account credits based on agreed amounts that vary depending on the customer to whom our distributor ultimately sells the product. We also offer various other incentive programs that provide distributors and direct sale customers with cash rebates, account credits or additional products, solutions and services based on meeting specified program criteria. Certain distributors are offered a right to return product, subject to contractual limitations. We record accruals for customer returns, rebates and incentives at the time of revenue recognition based primarily on historical experience. Returns, rebates and incentives are recognized as a reduction of sales if distributed in cash or customer account credits. Rebates and incentives are recognized in cost of sales for additional products, solutions and services to be provided. Accruals are reported as a current liability in our balance sheet or, where a right of setoff exists, as a reduction of accounts receivable. Taxes on Revenue Producing Transactions Taxes assessed by governmental authorities on revenue producing transactions, including sales, value added, excise and use taxes, are recorded on a net basis (excluded from revenue). Cash and Cash Equivalents Cash and cash equivalents include time deposits and certificates of deposit with original maturities of three months or less at the time of purchase. Short-term Investments Short-term investments include time deposits and certificates of deposit with original maturities longer than three months but shorter than one year at the time of purchase. These investments are stated at cost, which approximates fair value. Receivables We record an allowance for doubtful accounts based on customer-specific analysis and general matters such as current assessments of past due balances and economic conditions. Receivables are stated net of an allowance for doubtful accounts of $24.5 million at September 30, 2016 and $22.0 million at September 30, 2015. In addition, receivables are stated net of an allowance for certain customer returns, rebates and incentives of $7.9 million at September 30, 2016 and $9.2 million at September 30, 2015. Inventories Inventories are stated at the lower of cost or market using the first-in, first-out (FIFO) or average cost methods. Market is determined on the basis of estimated realizable values. Property Property, including internal-use software, is stated at cost. We calculate depreciation of property using the straight-line method over 5 to 40 years for buildings and improvements, 3 to 20 years for machinery and equipment and 3 to 8 years for computer hardware and internal-use software. We capitalize significant renewals and enhancements and write off replaced units. We expense maintenance and repairs, as well as renewals of minor amounts. Property acquired during the year that is accrued within accounts payable or other current liabilities at year end is considered to be a non-cash investing activity and is excluded from cash used for capital expenditures in the Consolidated Statement of Cash Flows. Capital expenditures of $29.9 million, $27.3 million and $24.6 million were accrued within accounts payable and other current liabilities at September 30, 2016, 2015 and 2014, respectively. Intangible Assets Goodwill and other intangible assets generally result from business acquisitions. We account for business acquisitions by allocating the purchase price to tangible and intangible assets acquired and liabilities assumed at their fair values; the excess of the purchase price over the allocated amount is recorded as goodwill. We review goodwill and other intangible assets with indefinite useful lives for impairment annually or more frequently if events or circumstances indicate impairment may be present. Any excess in carrying value over the estimated fair value is charged to results of operations. We perform our annual impairment test during the second quarter of our fiscal year. We amortize certain customer relationships on an accelerated basis over the period of which we expect the intangible asset to generate future cash flows. We amortize all other intangible assets with finite useful lives on a straight-line basis over their estimated useful lives. Useful lives assigned range from 3 to 15 years for trademarks, 8 to 20 years for customer relationships, 5 to 17 years for technology and 5 to 30 years for other intangible assets. Intangible assets also include costs of software developed or purchased by our software business to be sold, leased or otherwise marketed. Amortization of these computer software products is calculated on a product-by-product basis as the greater of (a) the unamortized cost at the beginning of the year times the ratio of the current year gross revenue for a product to the total of the current and anticipated future gross revenue for that product or (b) the straight-line amortization over the remaining estimated economic life of the product. Impairment of Long-Lived Assets We evaluate the recoverability of the recorded amount of long-lived assets whenever events or changes in circumstances indicate that the recorded amount of an asset may not be fully recoverable. Impairment is assessed when the undiscounted expected future cash flows derived from an asset are less than its carrying amount. If we determine that an asset is impaired, we measure the impairment to be recognized as the amount by which the recorded amount of the asset exceeds its fair value. We report assets to be disposed of at the lower of the recorded amount or fair value less cost to sell. We determine fair value using a discounted future cash flow analysis. Derivative Financial Instruments We use derivative financial instruments in the form of foreign currency forward exchange contracts to manage certain foreign currency risks. We enter into these contracts to hedge our exposure to foreign currency exchange rate variability in the expected future cash flows associated with certain third-party and intercompany transactions denominated in foreign currencies forecasted to occur within the next two years. We also use these contracts to hedge portions of our net investments in certain non-U.S. subsidiaries against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. Additionally, we use derivative financial instruments in the form of interest rate swap contracts to manage our borrowing costs of certain long-term debt. We designate and account for these derivative financial instruments as hedges under U.S. GAAP. Furthermore, we use foreign currency forward exchange contracts that are not designated as hedges to offset transaction gains or losses associated with some of our assets and liabilities resulting from intercompany loans or other transactions with third parties that are denominated in currencies other than our entities' functional currencies. It is our policy to execute such instruments with global financial institutions that we believe to be creditworthy and not to enter into derivative financial instruments for speculative purposes. Foreign currency forward exchange contracts are usually denominated in currencies of major industrial countries. Foreign Currency Translation We translate assets and liabilities of subsidiaries operating outside of the United States with a functional currency other than the U.S. dollar into U.S. dollars using exchange rates at the end of the respective period. We translate sales, costs and expenses at average exchange rates effective during the respective period. We report foreign currency translation adjustments as a component of other comprehensive (loss) income. Currency transaction gains and losses are included in results of operations in the period incurred. Research and Development Expenses We expense research and development (R&D) costs as incurred; these costs were $319.3 million in 2016, $307.3 million in 2015 and $290.1 million in 2014. We include R&D expenses in cost of sales in the Consolidated Statement of Operations. Income Taxes We account for uncertain tax positions by determining whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. For tax positions that meet the more-likely-than-not recognition threshold, we determine the amount of benefit to recognize in the consolidated financial statements based on our assertion of the most likely outcome resulting from an examination, including the resolution of any related appeals or litigation processes. Earnings Per Share We present basic and diluted earnings per share (EPS) amounts. Basic EPS is calculated by dividing earnings available to common shareowners, which is income excluding the allocation to participating securities, by the weighted average number of common shares outstanding during the year, excluding unvested restricted stock. Diluted EPS amounts are based upon the weighted average number of common and common-equivalent shares outstanding during the year. We use the treasury stock method to calculate the effect of outstanding share-based compensation awards, which requires us to compute total employee proceeds as the sum of (a) the amount the employee must pay upon exercise of the award, (b) the amount of unearned share-based compensation costs attributed to future services and (c) the amount of tax benefits, if any, that would be credited to additional paid-in capital assuming exercise of the award. Share-based compensation awards for which the total employee proceeds of the award exceed the average market price of the same award over the period have an antidilutive effect on EPS, and accordingly, we exclude them from the calculation. Antidilutive share-based compensation awards for the years ended September 30, 2016 (2.2 million shares), 2015 (1.4 million shares) and 2014 (0.8 million shares) were excluded from the diluted EPS calculation. U.S. GAAP requires unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, to be treated as participating securities and included in the computation of earnings per share pursuant to the two-class method. Our participating securities are composed of unvested restricted stock and non-employee director restricted stock units. The following table reconciles basic and diluted EPS amounts (in millions, except per share amounts):
Share-Based Compensation We recognize share-based compensation expense for equity awards on a straight-line basis over the service period of the award based on the fair value of the award as of the grant date. Product and Workers’ Compensation Liabilities We record accruals for product and workers’ compensation claims in the period in which they are probable and reasonably estimable. Our principal self-insurance programs include product liability and workers’ compensation where we self-insure up to a specified dollar amount. Claims exceeding this amount up to specified limits are covered by insurance policies purchased from commercial insurers. We estimate the liability for the majority of the self-insured claims using our claims experience for the periods being valued. Environmental Matters We record liabilities for environmental matters in the period in which our responsibility is probable and the costs can be reasonably estimated. We make changes to the liabilities in the periods in which the estimated costs of remediation change. At third-party environmental sites where more than one potentially responsible party has been identified, we record a liability for our estimated allocable share of costs related to our involvement with the site, as well as an estimated allocable share of costs related to the involvement of insolvent or unidentified parties. If we determine that recovery from insurers or other third parties is probable and a right of setoff exists, we record the liability net of the estimated recovery. If we determine that recovery from insurers or other third parties is probable but a right of setoff does not exist, we record a liability for the total estimated costs of remediation and a receivable for the estimated recovery. At environmental sites where we are the sole responsible party, we record a liability for the total estimated costs of remediation. Ongoing operating and maintenance expenditures included in our environmental remediation obligations are discounted to present value over the probable future remediation period. Our remaining environmental remediation obligations are undiscounted due to subjectivity of timing and/or amount of future cash payments. Conditional Asset Retirement Obligations We record liabilities for costs related to legal obligations associated with the retirement of a tangible, long-lived asset that results from the acquisition, construction, development or the normal operation of the long-lived asset. The obligation to perform the asset retirement activity is not conditional even though the timing or method may be conditional. Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (FASB) issued a new standard on share-based compensation. Among other changes to the existing guidance, this standard requires entities to record the excess income tax benefit or deficiency from share-based compensation within the income tax provision rather than within additional paid-in capital. This guidance is effective for us for reporting periods beginning no later than October 1, 2017. We are currently evaluating the impact the adoption of this guidance will have on our consolidated financial statements and related disclosures. In February 2016, the FASB issued a new standard on accounting for leases which requires lessees to recognize right-of-use assets and lease liabilities for most leases, among other changes to existing lease accounting guidance. The new standard also requires additional qualitative and quantitative disclosures about leasing activities. This guidance is effective for us for reporting periods beginning October 1, 2019. We are currently evaluating the impact the adoption of this guidance will have on our consolidated financial statements and related disclosures. In November 2015, the FASB issued new guidance that requires all deferred income taxes to be classified on the balance sheet as noncurrent assets or liabilities rather than separating current and noncurrent deferred income taxes based on the classification of the related assets and liabilities. This requirement is effective for us no later than October 1, 2017; however, we elected to adopt earlier as of December 31, 2015. Upon adoption of this guidance we retrospectively reclassified $151.2 million of deferred income taxes from current assets to noncurrent assets at September 30, 2015. In May 2014, the FASB issued a new standard on revenue recognition related to contracts with customers. This standard supersedes nearly all existing revenue recognition guidance and involves a five-step approach to recognizing revenue based on individual performance obligations in a contract. The new standard will also require additional qualitative and quantitative disclosures about contracts with customers, significant judgments made in applying the revenue guidance, and assets recognized from the costs to obtain or fulfill a contract. This guidance is effective for us for reporting periods beginning October 1, 2018. We are currently evaluating the impact the adoption of this guidance will have on our consolidated financial statements and related disclosures. |
Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Changes in the carrying amount of goodwill for the years ended September 30, 2016 and 2015 were (in millions):
During the year ended September 30, 2016, we recognized goodwill of $72.7 million and other intangible assets of $57.5 million resulting from three acquisitions. In March 2016, we acquired MagneMotion Inc., a manufacturer of intelligent conveying systems. In September 2016, we acquired Automation Control Products (ACP), a provider of centralized thin client, remote desktop and server management software, and Maverick Technologies (Maverick), a systems integrator. We assigned the full amount of goodwill related to MagneMotion Inc. and ACP to our Architecture & Software segment and the full amount of goodwill related to Maverick to our Control Products & Solutions segment. As of September 30, 2016, the purchase accounting and figures associated with ACP and Maverick are preliminary and will be finalized within the permitted measurement period. During the year ended September 30, 2015, we recognized goodwill of $14.9 million and other intangible assets of $5.4 million resulting from the acquisition of the assets of ESC Services, Inc., a global provider of lockout-tagout services and solutions. We assigned the full amount of goodwill related to ESC Services, Inc. to our Control Products & Solutions segment. Other intangible assets consist of (in millions):
Computer software products represent costs of computer software to be sold, leased or otherwise marketed. Computer software products amortization expense was $11.5 million in 2016, $9.4 million in 2015 and $9.4 million in 2014. Estimated amortization expense is $30.1 million in 2017, $25.1 million in 2018, $22.0 million in 2019, $19.0 million in 2020 and $18.4 million in 2021. We performed our annual evaluation of goodwill and indefinite life intangible assets for impairment as required by U.S. GAAP during the second quarter of 2016 and concluded that these assets are not impaired. |
Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories consist of (in millions):
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Property, net |
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Property, net | Property, net Property consists of (in millions):
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Long-term and Short-term Debt |
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Long-term and Short-term Debt | Long-term and Short-term Debt Long-term debt consists of (in millions):
In February 2015, upon issuance of our notes payable in March 2020 (2020 Notes) and March 2025 (2025 Notes), we entered into fixed-to-floating interest rate swap contracts with multiple banks that effectively converted the $600.0 million aggregate principal amount to floating rate debt, each at a rate based on three-month LIBOR plus a fixed spread. The effective floating interest rates were 1.281 percent for the 2020 Notes and 1.691 percent for the 2025 Notes at September 30, 2016. The aggregate fair value of the interest rate swap contracts at September 30, 2016 was a net unrealized gain of $19.5 million. We have designated these swaps as fair value hedges. The individual contracts are recorded in other assets on the Consolidated Balance Sheet with corresponding adjustments to the carrying value of the underlying debt. Additional information related to our interest rate swap contracts is included in Note 8. At September 30, 2016 and 2015, our total borrowing capacity under our unsecured revolving credit facility expiring in March 2020 was $1.0 billion. We can increase the aggregate amount of this credit facility by up to $350.0 million, subject to the consent of the banks in the credit facility. We have not borrowed against either credit facility during the years ended September 30, 2016 or 2015. Borrowings under this credit facility bear interest based on short-term money market rates in effect during the period the borrowings are outstanding. The terms of this credit facility contain covenants under which we would be in default if our debt-to-total-capital ratio was to exceed 60 percent. Separate short-term unsecured credit facilities of approximately $121.2 million at September 30, 2016 were available to non-U.S. subsidiaries. Borrowings under our non-U.S. credit facilities at September 30, 2016 and 2015 were not significant. There are no significant commitment fees or compensating balance requirements under any of our credit facilities. Our short-term debt obligations are primarily comprised of commercial paper borrowings. Commercial paper borrowings outstanding were $448.6 million at September 30, 2016. The weighted average interest rate of the commercial paper outstanding was 0.57 percent at September 30, 2016. There were no commercial paper borrowings outstanding at September 30, 2015. Interest payments were $69.2 million during 2016, $60.8 million during 2015 and $58.1 million during 2014. |
Other Current Liabilities |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Liabilities | Other Current Liabilities Other current liabilities consist of (in millions):
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Product Warranty Obligations |
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Product Warranties Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product Warranty Obligations | Product Warranty Obligations We record a liability for product warranty obligations at the time of sale to a customer based upon historical warranty experience. Most of our products are covered under a warranty period that runs for twelve months from either the date of sale or installation. We also record a liability for specific warranty matters when they become known and reasonably estimable. Changes in product warranty obligations were (in millions):
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Derivative Instruments and Fair Value Measurement |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Fair Value Measurement | Derivative Instruments and Fair Value Measurement We use foreign currency forward exchange contracts and foreign currency denominated debt obligations to manage certain foreign currency risks. We also use interest rate swap contracts to manage risks associated with interest rate fluctuations. The following information explains how we use and value these types of derivative instruments and how they impact our consolidated financial statements. Additional information related to the impacts of cash flow hedges on other comprehensive (loss) income is included in Note 9. Types of Derivative Instruments and Hedging Activities Cash Flow Hedges We enter into foreign currency forward exchange contracts to hedge our exposure to foreign currency exchange rate variability in the expected future cash flows associated with certain third-party and intercompany transactions denominated in foreign currencies forecasted to occur within the next two years (cash flow hedges). We report in other comprehensive (loss) income the effective portion of the gain or loss on derivative financial instruments that we designate and that qualify as cash flow hedges. We reclassify these gains or losses into earnings in the same periods when the hedged transactions affect earnings. To the extent forward exchange contracts designated as cash flow hedges are ineffective, changes in value are recorded in earnings through the maturity date. There was no impact on earnings due to ineffective cash flow hedges. At September 30, 2016, we had a U.S. dollar-equivalent gross notional amount of $663.2 million of foreign currency forward exchange contracts designated as cash flow hedges. The pre-tax amount of (losses) gains recorded in other comprehensive (loss) income related to cash flow hedges that would have been recorded in the Consolidated Statement of Operations had they not been so designated was (in millions):
The pre-tax amount of (losses) gains reclassified from accumulated other comprehensive loss into the Consolidated Statement of Operations related to derivative forward exchange contracts designated as cash flow hedges, which offset the related gains and losses on the hedged items during the periods presented, was (in millions):
Approximately $5.4 million of pre-tax net unrealized losses on cash flow hedges as of September 30, 2016 will be reclassified into earnings during the next 12 months. We expect that these net unrealized losses will be offset when the hedged items are recognized in earnings. Net Investment Hedges We use foreign currency forward exchange contracts and foreign currency denominated debt obligations to hedge portions of our net investments in non-U.S. subsidiaries (net investment hedges) against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. For all instruments that are designated as net investment hedges and meet effectiveness requirements, the net changes in value of the designated hedging instruments are recorded in accumulated other comprehensive loss within shareowners’ equity where they offset gains and losses recorded on our net investments globally. To the extent forward exchange contracts or foreign currency denominated debt designated as net investment hedges are ineffective, changes in value are recorded in earnings through the maturity date. There was no impact on earnings due to ineffective net investment hedges. At September 30, 2016, we had a gross notional amount of $465.0 million of foreign currency forward exchange contracts designated as net investment hedges. The pre-tax amount of gains (losses) recorded in other comprehensive income (loss) related to net investment hedges that would have been recorded in the Consolidated Statement of Operations had they not been so designated was (in millions):
Fair Value Hedges We use interest rate swap contracts to manage the borrowing costs of certain long-term debt. In February 2015, we issued $600.0 million in aggregate principal amount of fixed rate notes. Upon issuance of these notes, we entered into fixed-to-floating interest rate swap contracts that effectively convert these notes from fixed rate debt to floating rate debt. We designate these contracts as fair value hedges because they hedge the changes in fair value of the fixed rate notes resulting from changes in interest rates. The changes in value of these fair value hedges are recorded as gains or losses in interest expense and are offset by the losses or gains on the underlying debt instruments, which are also recorded in interest expense. There was no impact on earnings due to ineffective fair value hedges. At September 30, 2016, the aggregate notional value of our interest rate swaps designated as fair value hedges was $600.0 million. The pre-tax amount of net gains recognized within the Consolidated Statement of Operations related to derivative instruments designated as fair value hedges, which fully offset the related net losses on the hedged debt instruments during the periods presented, was (in millions):
Derivatives Not Designated as Hedging Instruments Certain of our locations have assets and liabilities denominated in currencies other than their functional currencies resulting from intercompany loans and other transactions with third parties denominated in foreign currencies. We enter into foreign currency forward exchange contracts that we do not designate as hedging instruments to offset the transaction gains or losses associated with some of these assets and liabilities. Gains and losses on derivative financial instruments for which we do not elect hedge accounting are recognized in the Consolidated Statement of Operations in each period, based on the change in the fair value of the derivative financial instruments. At September 30, 2016, we had a U.S. dollar-equivalent gross notional amount of $255.7 million of foreign currency forward exchange contracts not designated as hedging instruments. The pre-tax amount of gains (losses) from forward exchange contracts not designated as hedging instruments recognized in the Consolidated Statement of Operations was (in millions):
Fair Value of Financial Instruments U.S. GAAP defines fair value as the price that would be received for an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. U.S. GAAP also classifies the inputs used to measure fair value into the following hierarchy:
We recognize all derivative financial instruments as either assets or liabilities at fair value in the Consolidated Balance Sheet. We value our forward exchange contracts using a market approach. We use a valuation model based on inputs including forward and spot prices for currency and interest rate curves. We did not change our valuation techniques during fiscal 2016, 2015 or 2014. It is our policy to execute such instruments with major financial institutions that we believe to be creditworthy and not to enter into derivative financial instruments for speculative purposes. We diversify our foreign currency forward exchange contracts among counterparties to minimize exposure to any one of these entities. Our foreign currency forward exchange contracts are usually denominated in currencies of major industrial countries. The U.S. dollar-equivalent gross notional amount of our forward exchange contracts totaled $1,383.9 million at September 30, 2016. Currency pairs (buy/sell) comprising the most significant contract notional values were United States dollar (USD)/euro, USD/Swiss franc, USD/Canadian dollar, Swiss franc/euro, Swiss franc/Canadian dollar, Singapore dollar/USD and Mexican peso/USD. We value interest rate swap contracts using a market approach based on observable market inputs including publicized swap curves. Assets (liabilities) measured at fair value on a recurring basis and their location in our Consolidated Balance Sheet were (in millions):
We also hold financial instruments consisting of cash, short-term investments, short-term debt and long-term debt. The fair values of our cash, short-term investments and short-term debt approximate their carrying amounts as reported in our Consolidated Balance Sheet due to the short-term nature of these instruments. We base the fair value of long-term debt upon quoted market prices for the same or similar issues. The fair value of long-term debt below considers the terms of the debt excluding the impact of derivative and hedging activity. The carrying amount of a portion of our long-term debt is impacted by fixed-to-floating interest rate swap contracts that are designated as fair value hedges. The following table presents the carrying amounts and estimated fair values of financial instruments not measured at fair value in the Consolidated Balance Sheet (in millions):
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Shareowners' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareowners' Equity | Shareowners’ Equity Common Stock At September 30, 2016, the authorized stock of the Company consisted of one billion shares of common stock, par value $1.00 per share, and 25 million shares of preferred stock, without par value. At September 30, 2016, 13.1 million shares of authorized common stock were reserved for various incentive plans. Changes in outstanding common shares are summarized as follows (in millions):
At September 30, 2016 and 2015 there were $5.3 million and $12.5 million, respectively, of outstanding common stock share repurchases recorded in accounts payable that did not settle until the next fiscal year. Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive loss by component for the years ended September 30, 2016, 2015 and 2014 were (in millions):
The reclassifications out of accumulated other comprehensive loss to the Consolidated Statement of Operations for the years ended September 30, 2016, 2015 and 2014 were (in millions):
(a) Reclassified from accumulated other comprehensive loss into cost of sales and selling, general and administrative expenses. These components are included in the computation of net periodic benefit costs. See Note 11 for further information. |
Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-Based Compensation During 2016, 2015 and 2014 we recognized $40.5 million, $41.5 million and $42.5 million of pre-tax share-based compensation expense, respectively. The total income tax benefit related to share-based compensation expense was $12.9 million, $13.2 million and $12.9 million during 2016, 2015 and 2014, respectively. We recognize compensation expense on grants of share-based compensation awards on a straight-line basis over the service period of each award recipient. As of September 30, 2016, total unrecognized compensation cost related to share-based compensation awards was $34.5 million, net of estimated forfeitures, which we expect to recognize over a weighted average period of approximately 1.6 years. Our 2012 Long-Term Incentives Plan, as amended (2012 Plan), authorizes us to deliver up to 11.8 million shares of our common stock upon exercise of stock options or upon grant or in payment of stock appreciation rights, performance shares, performance units, restricted stock units and restricted stock. Our 2003 Directors Stock Plan, as amended, authorizes us to deliver up to 0.5 million shares of our common stock upon exercise of stock options or upon grant of shares of our common stock and restricted stock units. Shares relating to awards under our 2012 Plan, 2008 Long-Term Incentives Plan, as amended, or our 2000 Long-Term Incentives Plan, as amended, that terminate by expiration, forfeiture, cancellation or otherwise without the issuance or delivery of shares will be available for further awards under the 2012 Plan. Approximately 6.4 million shares under our 2012 Plan and 0.3 million shares under our 2003 Directors Stock Plan remain available for future grant or payment at September 30, 2016. We use treasury stock to deliver shares of our common stock under these plans. Our 2012 Plan does not permit share-based compensation awards to be granted after February 7, 2022. Stock Options We have granted non-qualified and incentive stock options to purchase our common stock under various incentive plans at prices equal to the fair market value of the stock on the grant dates. The exercise price for stock options granted under the plans may be paid in cash, already-owned shares of common stock or a combination of cash and such shares. Stock options expire ten years after the grant date and vest ratably over three years. The per-share weighted average fair value of stock options granted during the years ended September 30, 2016, 2015 and 2014 was $21.28, $26.70 and $34.03, respectively. The total intrinsic value of stock options exercised was $21.9 million, $46.1 million and $108.1 million during 2016, 2015 and 2014, respectively. We estimated the fair value of each stock option on the date of grant using the Black-Scholes pricing model and the following assumptions:
The average risk-free interest rate is based on U.S. Treasury security rates corresponding to the expected term in effect as of the grant date. The expected dividend yield is based on the expected annual dividend as a percentage of the market value of our common stock as of the grant date. We determined expected volatility using daily historical volatility of our stock price over the most recent period corresponding to the expected term as of the grant date. We determined the expected term of the stock options using historical data adjusted for the estimated exercise dates of unexercised options. A summary of stock option activity for the year ended September 30, 2016 is:
Performance Share Awards Certain officers and key employees are also eligible to receive shares of our common stock in payment of performance share awards granted to them. Grantees of performance shares will be eligible to receive shares of our common stock depending upon our total shareowner return, assuming reinvestment of all dividends, relative to the performance of companies in the S&P 500 Index over a three-year period. The awards actually earned will range from zero percent to 200 percent of the targeted number of performance shares for the three-year performance periods and will be paid, to the extent earned, in the fiscal quarter following the end of the applicable three-year performance period. A summary of performance share activity for the year ended September 30, 2016 is as follows:
The following table summarizes information about performance shares vested during the years ended September 30, 2016, 2015 and 2014:
For the three-year performance period ending September 30, 2016, the payout will be 10 percent of the target number of shares, with a maximum of 7,000 shares to be delivered in payment under the awards in December 2016. The per-share fair value of performance share awards granted during the years ended September 30, 2016, 2015 and 2014 was $87.64, $103.70 and $108.48, respectively, which we determined using a Monte Carlo simulation and the following assumptions:
The average risk-free interest rate is based on the three-year U.S. Treasury security rate in effect as of the grant date. The expected dividend yield is based on the expected annual dividend as a percentage of the market value of our common stock as of the grant date. The expected volatilities were determined using daily historical volatility for the most recent three-year period as of the grant date. Restricted Stock and Restricted Stock Units We grant restricted stock and restricted stock units to certain employees, and non-employee directors may elect to receive a portion of their compensation in restricted stock units. Restrictions on employee restricted stock and employee restricted stock units generally lapse over periods ranging from one to five years. Director restricted stock units generally are payable upon retirement. We value restricted stock and restricted stock units at the closing market value of our common stock on the date of grant. The weighted average grant date fair value of restricted stock and restricted stock unit awards granted during the years ended September 30, 2016, 2015 and 2014 was $105.38, $115.02 and $109.69, respectively. The total fair value of shares vested during the years ended September 30, 2016, 2015, and 2014 was $7.0 million, $8.0 million, and $6.4 million, respectively. A summary of restricted stock and restricted stock unit activity for the year ended September 30, 2016 is as follows:
We also granted approximately 10,000 shares of unrestricted common stock to non-employee directors during the year ended September 30, 2016. The weighted average grant date fair value of the unrestricted stock awards granted during the years ended September 30, 2016, 2015, and 2014 was $98.79, $111.43 and $108.86, respectively. |
Retirement Benefits |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits | Retirement Benefits We sponsor funded and unfunded pension plans and other postretirement benefit plans for our employees. The pension plans cover most of our employees and provide for monthly pension payments to eligible employees after retirement. Pension benefits for salaried employees generally are based on years of credited service and average earnings. Pension benefits for hourly employees are primarily based on specified benefit amounts and years of service. Effective July 1, 2010 we closed participation in our U.S. and Canada pension plans to employees hired after June 30, 2010. Employees hired after June 30, 2010 are instead eligible to participate in employee savings plans. The Company contributions are based on age and years of service and range from 3% to 7% of eligible compensation. Effective October 1, 2010, we also closed participation in our U.K. pension plan to employees hired after September 30, 2010 and these employees are now eligible for a defined contribution plan. Benefits to be provided to plan participants hired before July 1, 2010 or October 1, 2010, respectively, are not affected by these changes. Our policy with respect to funding our pension obligations is to fund the minimum amount required by applicable laws and governmental regulations. We were not required to make contributions to satisfy minimum funding requirements in our U.S. pension plans. We did not make voluntary contributions to our U.S. qualified pension plan in 2016, 2015 or 2014. Other postretirement benefits are primarily in the form of retirement medical plans that cover most of our employees in the U.S. and Canada and provide for the payment of certain medical costs of eligible employees and dependents after retirement. The components of net periodic benefit cost (income) are (in millions):
Benefit obligation, plan assets, funded status and net liability information is summarized as follows (in millions):
Amounts included in accumulated other comprehensive loss, net of tax, at September 30, 2016 and 2015 which have not yet been recognized in net periodic benefit cost are as follows (in millions):
During 2016, we recognized prior service credits of $14.0 million ($8.9 million net of tax) and net actuarial losses of $126.8 million ($82.7 million net of tax) in pension and other postretirement net periodic benefit cost, which were included in accumulated other comprehensive loss at September 30, 2015. In 2017, we expect to recognize prior service credits of $9.8 million ($6.5 million net of tax), and net actuarial losses of $155.5 million ($102.1 million net of tax) in pension and other postretirement net periodic benefit cost, which are included in accumulated other comprehensive loss at September 30, 2016. During 2015, we offered lump-sum distributions to certain deferred vested participants in the U.S. defined benefit plans. Related payments totaled $108.8 million. No settlement charge was required to be recorded. The accumulated benefit obligation for our pension plans was $4,429.1 million and $3,979.3 million at September 30, 2016 and 2015, respectively. Net Periodic Benefit Cost Assumptions Significant assumptions used in determining net periodic benefit cost included in the Consolidated Statement of Operations for the period ended September 30 are (in weighted averages):
Net Benefit Obligation Assumptions Significant assumptions used in determining the benefit obligations included in the Consolidated Balance Sheet are (in weighted averages):
In October 2014, the U.S. Society of Actuaries released a new mortality table (RP-2014) and new mortality improvement scale (MP-2014). We used these mortality tables to measure our U.S. pension obligation as of September 30, 2015. This change in mortality assumptions resulted in a $222.1 million increase to our projected benefit obligation. In October 2015, the U.S. Society of Actuaries released a new mortality improvement scale (MP-2015), which was used to measure our U.S. pension obligation as of September 30, 2016. This change in mortality assumptions resulted in a $28.0 million decrease to our projected benefit obligation. In determining the expected long-term rate of return on assets assumption, we consider actual returns on plan assets over the long term, adjusted for forward-looking considerations, such as inflation, interest rates, equity performance and the active management of the plan’s invested assets. We also considered our current and expected mix of plan assets in setting this assumption. This resulted in the selection of the weighted average long-term rate of return on assets assumption. Our global weighted-average targeted and actual asset allocations at September 30, by asset category, are:
The investment objective for pension funds related to our defined benefit plans is to meet the plan’s benefit obligations, while maximizing the long-term growth of assets without undue risk. We strive to achieve this objective by investing plan assets within target allocation ranges and diversification within asset categories. Target allocation ranges are guidelines that are adjusted periodically based on ongoing monitoring by plan fiduciaries. Investment risk is controlled by rebalancing to target allocations on a periodic basis and ongoing monitoring of investment manager performance relative to the investment guidelines established for each manager. As of September 30, 2016 and 2015, our pension plans do not directly own our common stock. In certain countries where we operate, there are no legal requirements or financial incentives provided to companies to pre-fund pension obligations. In these instances, we typically make benefit payments directly from cash as they become due, rather than by creating a separate pension fund. The valuation methodologies used for our pension plans’ investments measured at fair value are described as follows. There have been no changes in the methodologies used at September 30, 2016 and 2015. Common stock — Valued at the closing price reported on the active market on which the individual securities are traded. Mutual funds — Valued at the net asset value (NAV) reported by the fund. Corporate debt — Valued at either the yields currently available on comparable securities of issuers with similar credit ratings or valued under a discounted cash flow approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable such as credit and liquidity risks. Government securities — Valued at the most recent closing price on the active market on which the individual securities are traded or, absent an active market, utilizing observable inputs such as closing prices in less frequently traded markets. Common collective trusts — Valued at the NAV as determined by the custodian of the fund. The NAV is based on the fair value of the underlying assets owned by the fund, minus its liabilities then divided by the number of units outstanding. Private equity and alternative equity — Valued at the estimated fair value, as determined by the respective fund manager, based on the NAV of the investment units held at year end, which is subject to judgment. Real estate funds — Consists of the real estate funds, which provide an indirect investment into a diversified and multi-sector portfolio of property assets. Publicly-traded real estate funds are valued at the most recent closing price reported on the SIX Swiss Exchange. The remainder is valued at the estimated fair value, as determined by the respective fund manager, based on the NAV of the investment units held at year end, which is subject to judgment. Insurance contracts — Valued at the aggregate amount of accumulated contribution and investment income less amounts used to make benefit payments and administrative expenses which approximates fair value. Other — Consists of other fixed income investments and common collective trusts with a mix of equity and fixed income underlying assets. Other fixed income investments are valued at the most recent closing price reported in the markets in which the individual securities are traded, which may be infrequently. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. Refer to Note 8 for further information regarding levels in the fair value hierarchy. The following table presents our pension plans’ investments measured at fair value as of September 30, 2016:
The following table presents our pension plans’ investments measured at fair value as of September 30, 2015:
The table below sets forth a summary of changes in fair market value of our pension plans’ Level 3 assets for the year ended September 30, 2016:
The table below sets forth a summary of changes in fair market value of our pension plans’ Level 3 assets for the year ended September 30, 2015:
Estimated Future Payments We expect to contribute $49.2 million related to our worldwide pension plans and $10.6 million to our postretirement benefit plans in 2017. The following benefit payments, which include employees’ expected future service, as applicable, are expected to be paid (in millions):
Other Postretirement Benefits A one percentage point change in assumed health care cost trend rates would have the following effect (in millions):
Pension Benefits Information regarding our pension plans with accumulated benefit obligations in excess of the fair value of plan assets (underfunded plans) at September 30, 2016 and 2015 are as follows (in millions):
Defined Contribution Savings Plans We also sponsor certain defined contribution savings plans for eligible employees. Expense related to these plans was $38.6 million in 2016, $46.3 million in 2015 and $43.8 million in 2014. |
Other Income (Expense) |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income (Expense) | Other Income (Expense) The components of other income (expense) are (in millions):
Other income (expense) included an $8.0 million gain in 2014 from favorable resolutions of certain intellectual property and commercial legal matters. |
Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Selected income tax data (in millions):
Effective Tax Rate Reconciliation The reconciliation between the U.S. federal statutory rate and our effective tax rate was:
We operate in certain non-U.S. tax jurisdictions under government-sponsored tax incentive programs, the primary benefit of which will expire in 2019. These programs may be extended with reduced incentives if certain additional requirements are met. The tax benefit attributable to these incentive programs was $33.9 million ($0.26 per diluted share) in 2016, $36.5 million ($0.27 per diluted share) in 2015 and $42.9 million ($0.31 per diluted share) in 2014. Deferred Taxes The tax effects of temporary differences that give rise to our net deferred income tax assets (liabilities) at September 30, 2016 and 2015 were (in millions):
We have not provided U.S. deferred taxes for $3,274.0 million of undistributed earnings of certain non-U.S. subsidiaries, since these earnings have been determined to be indefinitely reinvested outside the U.S. and thus are not subject to U.S. income taxes and foreign withholding taxes. It is not practicable to estimate the amount of additional taxes that may be payable upon distribution of these earnings. We believe it is more likely than not that we will realize our deferred tax assets through the reduction of future taxable income, other than for the deferred tax assets reflected below. Tax attributes and related valuation allowances at September 30, 2016 were (in millions):
Unrecognized Tax Benefits A reconciliation of our gross unrecognized tax benefits, excluding interest and penalties, is as follows (in millions):
The amount of gross unrecognized tax benefits that would reduce our effective tax rate if recognized was $32.4 million, $43.9 million and $38.9 million at September 30, 2016, 2015 and 2014, respectively. Accrued interest and penalties related to unrecognized tax benefits were $5.2 million and $5.1 million at September 30, 2016 and 2015, respectively. We recognize interest and penalties related to unrecognized tax benefits in the income tax provision. Benefits (expense) recognized were $(0.1) million, $2.4 million and $4.0 million in 2016, 2015 and 2014, respectively. We do not expect the amount of gross unrecognized tax benefits to change significantly in the next 12 months. We conduct business globally and are routinely audited by the various tax jurisdictions in which we operate. We are no longer subject to U.S. federal income tax examinations for years before 2014 and are no longer subject to state, local and non-U.S. income tax examinations for years before 2003. |
Commitments and Contingent Liabilities |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingent Liabilities | Commitments and Contingent Liabilities Obligations and expected recoveries related to environmental remediation costs, conditional asset retirement obligations and other recorded indemnification matters as of September 30, 2016 and 2015 are as follows:
As of September 30, 2016, we have estimated the total reasonably possible costs we could incur from these environmental remediation and indemnification liabilities to be $133.6 million ($105.2 million, net of related receivables). Environmental Matters Federal, state and local requirements relating to the discharge of substances into the environment, the disposal of hazardous wastes and other activities affecting the environment have and will continue to have an effect on our manufacturing operations. Thus far, compliance with environmental requirements and resolution of environmental claims have been accomplished without material effect on our business, financial condition or results of operations. We have been designated as a potentially responsible party at 13 Superfund sites, excluding sites as to which our records disclose no involvement or as to which our potential liability has been finally determined and assumed by third parties. In addition, various other lawsuits, claims and proceedings have been asserted against us seeking remediation of alleged environmental impairments, principally at previously owned properties. Environmental remediation cost liabilities and related expected recoveries at September 30, 2016 are as follows (in millions):
Based on our assessment, we believe that our expenditures for environmental capital investment and remediation necessary to comply with present regulations governing environmental protection and other expenditures for the resolution of environmental claims will not have a material effect on our business, financial condition or results of operations. We cannot assess the possible effect of compliance with future requirements. Conditional Asset Retirement Obligations We accrue for costs related to a legal obligation associated with the retirement of a tangible long-lived asset that results from the acquisition, construction, development or the normal operation of the long-lived asset. The obligation to perform the asset retirement activity is not conditional even though the timing or method may be conditional. Identified conditional asset retirement obligations include asbestos abatement and remediation of soil contamination beneath current and previously divested facilities. We estimate conditional asset retirement obligations using site-specific knowledge and historical industry expertise. Conditional asset retirement obligations and related expected recoveries at September 30, 2016 and 2015 are as follows (in millions):
There have been no significant changes in liabilities incurred, liabilities settled, accretion expense or revisions in estimated cash flows for the periods ended September 30, 2016 and 2015, respectively. Other Matters Various other lawsuits, claims and proceedings have been or may be instituted or asserted against us relating to the conduct of our business, including those pertaining to product liability, environmental, safety and health, intellectual property, employment and contract matters. Although the outcome of litigation cannot be predicted with certainty and some lawsuits, claims or proceedings may be disposed of unfavorably to us, we believe the disposition of matters that are pending or have been asserted will not have a material effect on our business, financial condition or results of operations. We (including our subsidiaries) have been named as a defendant in lawsuits alleging personal injury as a result of exposure to asbestos that was used in certain components of our products many years ago. Currently there are a few thousand claimants in lawsuits that name us as defendants, together with hundreds of other companies. In some cases, the claims involve products from divested businesses, and we are indemnified for most of the costs. However, we have agreed to defend and indemnify asbestos claims associated with products manufactured or sold by our former Dodge mechanical and Reliance Electric motors and motor repair services businesses prior to their divestiture by us, which occurred on January 31, 2007. We are also responsible for half of the costs and liabilities associated with asbestos cases against our former Rockwell International Corporation's divested measurement and flow control business. But in all cases, for those claimants who do show that they worked with our products or products of divested businesses for which we are responsible, we nevertheless believe we have meritorious defenses, in substantial part due to the integrity of the products, the encapsulated nature of any asbestos-containing components, and the lack of any impairing medical condition on the part of many claimants. We defend those cases vigorously. Historically, we have been dismissed from the vast majority of these claims with no payment to claimants. We have maintained insurance coverage that we believe covers indemnity and defense costs, over and above self-insured retentions, for claims arising from our former Allen-Bradley subsidiary. Following litigation against Nationwide Indemnity Company (Nationwide) and Kemper Insurance (Kemper), the insurance carriers that provided liability insurance coverage to Allen-Bradley, we entered into separate agreements on April 1, 2008 with both insurance carriers to further resolve responsibility for ongoing and future coverage of Allen-Bradley asbestos claims. In exchange for a lump sum payment, Kemper bought out its remaining liability and has been released from further insurance obligations to Allen-Bradley. Nationwide entered into a cost share agreement with us to pay the substantial majority of future defense and indemnity costs for Allen-Bradley asbestos claims. We believe that this arrangement with Nationwide will continue to provide coverage for Allen-Bradley asbestos claims throughout the remaining life of the asbestos liability. We also have rights to historic insurance policies that provide indemnity and defense costs, over and above self-insured retentions, for claims arising out of certain asbestos liabilities relating to the divested measurement and flow control business. We initiated litigation against several insurers to pursue coverage for these claims, subject to each carrier's policy limits, and the case is now pending in Los Angeles County Superior Court. In September 2016, we entered into settlement agreements with certain insurance company defendants. In exchange for a lump sum payment, Lamorak Insurance Company bought out its remaining liability and has been released from further insurance obligations relating to the measurement and flow control business. Certain Underwriters at Lloyd’s, London and certain London Market Insurance Companies entered into a cost share agreement to pay a portion of future defense and indemnity costs for measurement and flow control asbestos claims. We believe this arrangement will continue to provide partial coverage for these asbestos claims throughout the remaining life of asbestos liability. The uncertainties of asbestos claim litigation make it difficult to predict accurately the ultimate outcome of asbestos claims. That uncertainty is increased by the possibility of adverse rulings or new legislation affecting asbestos claim litigation or the settlement process. Subject to these uncertainties and based on our experience defending asbestos claims, we do not believe these lawsuits will have a material effect on our business, financial condition or results of operations. We have, from time to time, divested certain of our businesses. In connection with these divestitures, certain lawsuits, claims and proceedings may be instituted or asserted against us related to the period that we owned the businesses, either because we agreed to retain certain liabilities related to these periods or because such liabilities fall upon us by operation of law. In some instances the divested business has assumed the liabilities; however, it is possible that we might be responsible to satisfy those liabilities if the divested business is unable to do so. In connection with the spin-offs of our former automotive business, semiconductor systems business and Rockwell Collins avionics and communications business, the spun-off companies have agreed to indemnify us for substantially all contingent liabilities related to the respective businesses, including environmental and intellectual property matters. In conjunction with the sale of our Dodge mechanical and Reliance Electric motors and motor repair services businesses, we agreed to indemnify Baldor Electric Company for costs and damages related to certain legal, legacy environmental and asbestos matters of these businesses arising before January 31, 2007, for which the maximum exposure would be capped at the amount received for the sale. Indemnification liabilities and related expected recoveries at September 30, 2016 and 2015 are as follows (in millions):
Included in the above are certain environmental indemnification liabilities that are substantially indemnified by ExxonMobil Corporation for which we have recorded a liability of $11.0 million and $26.0 million, and a related receivable of $10.8 million and $24.7 million, as of September 30, 2016 and 2015, respectively. In many countries we provide a limited intellectual property indemnity as part of our terms and conditions of sale. We also at times provide limited intellectual property indemnities in other contracts with third parties, such as contracts concerning the development and manufacture of our products. As of September 30, 2016, we were not aware of any material indemnification claims that were probable or reasonably possible of an unfavorable outcome. Historically, claims that have been made under the indemnification agreements have not had a material impact on our business, financial condition or results of operations; however, to the extent that valid indemnification claims arise in the future, future payments by us could be significant and could have a material adverse effect on our business, financial condition or results of operations in a particular period. Lease Commitments Rental expense was $115.5 million in 2016, $117.0 million in 2015 and $121.6 million in 2014. As of September 30, 2016, minimum future rental commitments under operating leases having noncancelable lease terms in excess of one year are payable as follows (in millions):
Commitments from third parties under sublease agreements having noncancelable lease terms in excess of one year were not significant as of September 30, 2016. Most leases contain renewal options for varying periods, and certain leases include options to purchase the leased property. |
Business Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segment Information | 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 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 products including:
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:
15. Business Segment Information (Continued) The following tables reflect the sales and operating results of our reportable segments for the years ended September 30, 2016, 2015 and 2014 (in millions):
Among other considerations, we evaluate performance and allocate resources based upon segment operating earnings before income taxes, interest expense, costs related to corporate offices, non-operating pension costs, certain nonrecurring corporate initiatives, 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, 2016, 2015 and 2014 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):
15. Business Segment Information (Continued) 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 $264.8 million, $266.8 million and $294.1 million at September 30, 2016, 2015 and 2014, 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 $50.7 million, $36.7 million and $56.2 million in 2016, 2015 and 2014, 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):
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 2016, 2015 and 2014, which are attributable to both segments, were approximately 10 percent of our total sales. |
Quarterly Financial Information (Unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information (Unaudited) | Quarterly Financial Information (Unaudited)
Note: The sum of the quarterly per share amounts will not necessarily equal the annual per share amounts presented. |
Rocky Flats Settlement |
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Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Matters and Contingencies | Rocky Flats Settlement From 1975 to 1989, Rockwell International Corporation (RIC) operated the Rocky Flats facility in Colorado for the U.S. Department of Energy (DoE). In 1990, a class of landowners near Rocky Flats sued RIC and Dow Chemical, another former operator of the facility. In May 2016, the parties agreed to settle this case and the DoE authorized the settlement. Under the settlement agreement, which is subject to court approval, we and Dow Chemical will pay $375.0 million in the aggregate to resolve the claims. Under RIC’s contract with the DoE and federal law, RIC is entitled to indemnification by the DoE for the settlement amount. When RIC was acquired by Boeing in 1996, we agreed to indemnify Boeing for RIC’s liabilities related to Rocky Flats and received the benefits of RIC’s corresponding indemnity rights against the DoE. We expect to be fully reimbursed by the DoE for our obligation of $243.75 million under the settlement, either before or after we pay the amounts due. We expect to pay up to $242.5 million within the next 12 months. We will promptly pursue reimbursement from the DoE; however, it is uncertain whether the government indemnification and reimbursement process will be completed by the time payment is due. At September 30, 2016, the liability is included within other current liabilities in the Consolidated Balance Sheet. An indemnification receivable of $243.75 million at September 30, 2016 is also included within other assets in the Consolidated Balance Sheet. |
Valuation and Qualifying Accounts |
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Schedule of Valuation and Qualifying Accounts Disclosure | SCHEDULE II ROCKWELL AUTOMATION, INC. VALUATION AND QUALIFYING ACCOUNTS For the Years Ended September 30, 2016, 2015 and 2014
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Basis of Presentation and Accounting Policies (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned and controlled majority-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. Investments in affiliates over which we do not have control but exercise significant influence are accounted for using the equity method of accounting. These affiliated companies are not material individually or in the aggregate to our financial position, results of operations or cash flows. |
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Use of Estimates | Use of Estimates The preparation of consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the periods reported. Actual results could differ from those estimates. We use estimates in accounting for, among other items, customer returns, rebates and incentives; allowance for doubtful accounts; excess and obsolete inventory; share-based compensation; acquisitions; product warranty obligations; retirement benefits; litigation, claims and contingencies, including environmental matters, conditional asset retirement obligations and contractual indemnifications; and income taxes. We account for changes to estimates and assumptions prospectively when warranted by factually-based experience. |
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Revenue Recognition | Revenue Recognition We recognize revenue when it is realized or realizable and earned. Product and solution sales consist of industrial automation and information solutions; hardware and software products; and custom-engineered systems. Service sales include multi-vendor customer technical support and repair, asset management and optimization consulting and training. All service sales recorded in the Consolidated Statement of Operations are associated with our Control Products & Solutions segment. For approximately 85 percent of our consolidated sales, we record sales when all of the following have occurred: persuasive evidence of a sales agreement exists; pricing is fixed or determinable; collection is reasonably assured; and products have been delivered and acceptance has occurred, as may be required according to contract terms, or services have been rendered. Within this category, we will at times enter into arrangements that involve the delivery of multiple products and/or the performance of services, such as installation and commissioning. The timing of delivery, though varied based upon the nature of the undelivered component, is generally short-term in nature. For these arrangements, revenue is allocated to each deliverable based on that element's relative selling price, provided the delivered element has value to customers on a standalone basis and, if the arrangement includes a general right of return, delivery or performance of the undelivered items is probable and substantially in our control. Relative selling price is obtained from sources such as vendor-specific objective evidence, which is based on our separate selling price for that or a similar item, or from third-party evidence such as how competitors have priced similar items. If such evidence is not available, we use our best estimate of the selling price, which includes various internal factors such as our pricing strategy and market factors. We recognize substantially all of the remainder of our sales as construction-type contracts using either the percentage-of-completion or completed contract methods of accounting. We record sales relating to these contracts using the percentage-of-completion method when we determine that progress toward completion is reasonably and reliably estimable; we use the completed contract method for all others. Under the percentage-of-completion method, we recognize sales and gross profit as work is performed using the relationship between actual costs incurred and total estimated costs at completion. Under the percentage-of-completion method, we adjust sales and gross profit for revisions of estimated total contract costs or revenue in the period the change is identified. We record estimated losses on contracts when they are identified. We use contracts and customer purchase orders to determine the existence of a sales agreement. We use shipping documents and customer acceptance, when applicable, to verify delivery. We assess whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. We assess collectibility based on the creditworthiness of the customer as determined by credit evaluations and analysis, as well as the customer’s payment history. Shipping and handling costs billed to customers are included in sales and the related costs are included in cost of sales in the Consolidated Statement of Operations. |
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Returns, Rebates and Incentives | Returns, Rebates and Incentives Our primary incentive program provides distributors with cash rebates or account credits based on agreed amounts that vary depending on the customer to whom our distributor ultimately sells the product. We also offer various other incentive programs that provide distributors and direct sale customers with cash rebates, account credits or additional products, solutions and services based on meeting specified program criteria. Certain distributors are offered a right to return product, subject to contractual limitations. We record accruals for customer returns, rebates and incentives at the time of revenue recognition based primarily on historical experience. Returns, rebates and incentives are recognized as a reduction of sales if distributed in cash or customer account credits. Rebates and incentives are recognized in cost of sales for additional products, solutions and services to be provided. Accruals are reported as a current liability in our balance sheet or, where a right of setoff exists, as a reduction of accounts receivable. |
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Taxes on Revenue Producing Transactions | Taxes on Revenue Producing Transactions Taxes assessed by governmental authorities on revenue producing transactions, including sales, value added, excise and use taxes, are recorded on a net basis (excluded from revenue). |
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Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include time deposits and certificates of deposit with original maturities of three months or less at the time of purchase. |
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Short-Term Investments | Short-term Investments Short-term investments include time deposits and certificates of deposit with original maturities longer than three months but shorter than one year at the time of purchase. These investments are stated at cost, which approximates fair value. |
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Receivables | Receivables We record an allowance for doubtful accounts based on customer-specific analysis and general matters such as current assessments of past due balances and economic conditions. Receivables are stated net of an allowance for doubtful accounts of $24.5 million at September 30, 2016 and $22.0 million at September 30, 2015. In addition, receivables are stated net of an allowance for certain customer returns, rebates and incentives of $7.9 million at September 30, 2016 and $9.2 million at September 30, 2015. |
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Inventories | Inventories Inventories are stated at the lower of cost or market using the first-in, first-out (FIFO) or average cost methods. Market is determined on the basis of estimated realizable values. |
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Property | Property Property, including internal-use software, is stated at cost. We calculate depreciation of property using the straight-line method over 5 to 40 years for buildings and improvements, 3 to 20 years for machinery and equipment and 3 to 8 years for computer hardware and internal-use software. We capitalize significant renewals and enhancements and write off replaced units. We expense maintenance and repairs, as well as renewals of minor amounts. Property acquired during the year that is accrued within accounts payable or other current liabilities at year end is considered to be a non-cash investing activity and is excluded from cash used for capital expenditures in the Consolidated Statement of Cash Flows. Capital expenditures of $29.9 million, $27.3 million and $24.6 million were accrued within accounts payable and other current liabilities at September 30, 2016, 2015 and 2014, respectively. |
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Intangible Assets | Intangible Assets Goodwill and other intangible assets generally result from business acquisitions. We account for business acquisitions by allocating the purchase price to tangible and intangible assets acquired and liabilities assumed at their fair values; the excess of the purchase price over the allocated amount is recorded as goodwill. We review goodwill and other intangible assets with indefinite useful lives for impairment annually or more frequently if events or circumstances indicate impairment may be present. Any excess in carrying value over the estimated fair value is charged to results of operations. We perform our annual impairment test during the second quarter of our fiscal year. We amortize certain customer relationships on an accelerated basis over the period of which we expect the intangible asset to generate future cash flows. We amortize all other intangible assets with finite useful lives on a straight-line basis over their estimated useful lives. Useful lives assigned range from 3 to 15 years for trademarks, 8 to 20 years for customer relationships, 5 to 17 years for technology and 5 to 30 years for other intangible assets. Intangible assets also include costs of software developed or purchased by our software business to be sold, leased or otherwise marketed. Amortization of these computer software products is calculated on a product-by-product basis as the greater of (a) the unamortized cost at the beginning of the year times the ratio of the current year gross revenue for a product to the total of the current and anticipated future gross revenue for that product or (b) the straight-line amortization over the remaining estimated economic life of the product. |
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Impairment of Long-Lived Assets | Impairment of Long-Lived Assets We evaluate the recoverability of the recorded amount of long-lived assets whenever events or changes in circumstances indicate that the recorded amount of an asset may not be fully recoverable. Impairment is assessed when the undiscounted expected future cash flows derived from an asset are less than its carrying amount. If we determine that an asset is impaired, we measure the impairment to be recognized as the amount by which the recorded amount of the asset exceeds its fair value. We report assets to be disposed of at the lower of the recorded amount or fair value less cost to sell. We determine fair value using a discounted future cash flow analysis. |
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Derivative Financial Instruments | Derivative Financial Instruments We use derivative financial instruments in the form of foreign currency forward exchange contracts to manage certain foreign currency risks. We enter into these contracts to hedge our exposure to foreign currency exchange rate variability in the expected future cash flows associated with certain third-party and intercompany transactions denominated in foreign currencies forecasted to occur within the next two years. We also use these contracts to hedge portions of our net investments in certain non-U.S. subsidiaries against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. Additionally, we use derivative financial instruments in the form of interest rate swap contracts to manage our borrowing costs of certain long-term debt. We designate and account for these derivative financial instruments as hedges under U.S. GAAP. Furthermore, we use foreign currency forward exchange contracts that are not designated as hedges to offset transaction gains or losses associated with some of our assets and liabilities resulting from intercompany loans or other transactions with third parties that are denominated in currencies other than our entities' functional currencies. It is our policy to execute such instruments with global financial institutions that we believe to be creditworthy and not to enter into derivative financial instruments for speculative purposes. Foreign currency forward exchange contracts are usually denominated in currencies of major industrial countries. |
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Foreign Currency Translation | Foreign Currency Translation We translate assets and liabilities of subsidiaries operating outside of the United States with a functional currency other than the U.S. dollar into U.S. dollars using exchange rates at the end of the respective period. We translate sales, costs and expenses at average exchange rates effective during the respective period. We report foreign currency translation adjustments as a component of other comprehensive (loss) income. Currency transaction gains and losses are included in results of operations in the period incurred. |
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Research and Development Expenses | Research and Development Expenses We expense research and development (R&D) costs as incurred; these costs were $319.3 million in 2016, $307.3 million in 2015 and $290.1 million in 2014. We include R&D expenses in cost of sales in the Consolidated Statement of Operations. |
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Income Taxes | Income Taxes We account for uncertain tax positions by determining whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. For tax positions that meet the more-likely-than-not recognition threshold, we determine the amount of benefit to recognize in the consolidated financial statements based on our assertion of the most likely outcome resulting from an examination, including the resolution of any related appeals or litigation processes. |
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Earnings Per Share | Earnings Per Share We present basic and diluted earnings per share (EPS) amounts. Basic EPS is calculated by dividing earnings available to common shareowners, which is income excluding the allocation to participating securities, by the weighted average number of common shares outstanding during the year, excluding unvested restricted stock. Diluted EPS amounts are based upon the weighted average number of common and common-equivalent shares outstanding during the year. We use the treasury stock method to calculate the effect of outstanding share-based compensation awards, which requires us to compute total employee proceeds as the sum of (a) the amount the employee must pay upon exercise of the award, (b) the amount of unearned share-based compensation costs attributed to future services and (c) the amount of tax benefits, if any, that would be credited to additional paid-in capital assuming exercise of the award. Share-based compensation awards for which the total employee proceeds of the award exceed the average market price of the same award over the period have an antidilutive effect on EPS, and accordingly, we exclude them from the calculation. Antidilutive share-based compensation awards for the years ended September 30, 2016 (2.2 million shares), 2015 (1.4 million shares) and 2014 (0.8 million shares) were excluded from the diluted EPS calculation. U.S. GAAP requires unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, to be treated as participating securities and included in the computation of earnings per share pursuant to the two-class method. Our participating securities are composed of unvested restricted stock and non-employee director restricted stock units. |
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Share-Based Compensation | Share-Based Compensation We recognize share-based compensation expense for equity awards on a straight-line basis over the service period of the award based on the fair value of the award as of the grant date. |
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Product and Workers' Compensation Liabilities | Product and Workers’ Compensation Liabilities We record accruals for product and workers’ compensation claims in the period in which they are probable and reasonably estimable. Our principal self-insurance programs include product liability and workers’ compensation where we self-insure up to a specified dollar amount. Claims exceeding this amount up to specified limits are covered by insurance policies purchased from commercial insurers. We estimate the liability for the majority of the self-insured claims using our claims experience for the periods being valued. |
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Environmental Matters and Conditional Asset Retirement Obligations | Environmental Matters We record liabilities for environmental matters in the period in which our responsibility is probable and the costs can be reasonably estimated. We make changes to the liabilities in the periods in which the estimated costs of remediation change. At third-party environmental sites where more than one potentially responsible party has been identified, we record a liability for our estimated allocable share of costs related to our involvement with the site, as well as an estimated allocable share of costs related to the involvement of insolvent or unidentified parties. If we determine that recovery from insurers or other third parties is probable and a right of setoff exists, we record the liability net of the estimated recovery. If we determine that recovery from insurers or other third parties is probable but a right of setoff does not exist, we record a liability for the total estimated costs of remediation and a receivable for the estimated recovery. At environmental sites where we are the sole responsible party, we record a liability for the total estimated costs of remediation. Ongoing operating and maintenance expenditures included in our environmental remediation obligations are discounted to present value over the probable future remediation period. Our remaining environmental remediation obligations are undiscounted due to subjectivity of timing and/or amount of future cash payments. Conditional Asset Retirement Obligations We record liabilities for costs related to legal obligations associated with the retirement of a tangible, long-lived asset that results from the acquisition, construction, development or the normal operation of the long-lived asset. The obligation to perform the asset retirement activity is not conditional even though the timing or method may be conditional. |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (FASB) issued a new standard on share-based compensation. Among other changes to the existing guidance, this standard requires entities to record the excess income tax benefit or deficiency from share-based compensation within the income tax provision rather than within additional paid-in capital. This guidance is effective for us for reporting periods beginning no later than October 1, 2017. We are currently evaluating the impact the adoption of this guidance will have on our consolidated financial statements and related disclosures. In February 2016, the FASB issued a new standard on accounting for leases which requires lessees to recognize right-of-use assets and lease liabilities for most leases, among other changes to existing lease accounting guidance. The new standard also requires additional qualitative and quantitative disclosures about leasing activities. This guidance is effective for us for reporting periods beginning October 1, 2019. We are currently evaluating the impact the adoption of this guidance will have on our consolidated financial statements and related disclosures. In November 2015, the FASB issued new guidance that requires all deferred income taxes to be classified on the balance sheet as noncurrent assets or liabilities rather than separating current and noncurrent deferred income taxes based on the classification of the related assets and liabilities. This requirement is effective for us no later than October 1, 2017; however, we elected to adopt earlier as of December 31, 2015. Upon adoption of this guidance we retrospectively reclassified $151.2 million of deferred income taxes from current assets to noncurrent assets at September 30, 2015. In May 2014, the FASB issued a new standard on revenue recognition related to contracts with customers. This standard supersedes nearly all existing revenue recognition guidance and involves a five-step approach to recognizing revenue based on individual performance obligations in a contract. The new standard will also require additional qualitative and quantitative disclosures about contracts with customers, significant judgments made in applying the revenue guidance, and assets recognized from the costs to obtain or fulfill a contract. This guidance is effective for us for reporting periods beginning October 1, 2018. We are currently evaluating the impact the adoption of this guidance will have on our consolidated financial statements and related disclosures. |
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Product Warranty Obligations | We record a liability for product warranty obligations at the time of sale to a customer based upon historical warranty experience. Most of our products are covered under a warranty period that runs for twelve months from either the date of sale or installation. We also record a liability for specific warranty matters when they become known and reasonably estimable. |
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Fair value measurement of non-derivative instruments | We also hold financial instruments consisting of cash, short-term investments, short-term debt and long-term debt. The fair values of our cash, short-term investments and short-term debt approximate their carrying amounts as reported in our Consolidated Balance Sheet due to the short-term nature of these instruments. |
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Fair value of financial instruments | Fair Value of Financial Instruments U.S. GAAP defines fair value as the price that would be received for an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. U.S. GAAP also classifies the inputs used to measure fair value into the following hierarchy:
We recognize all derivative financial instruments as either assets or liabilities at fair value in the Consolidated Balance Sheet. We value our forward exchange contracts using a market approach. We use a valuation model based on inputs including forward and spot prices for currency and interest rate curves. We did not change our valuation techniques during fiscal 2016, 2015 or 2014. It is our policy to execute such instruments with major financial institutions that we believe to be creditworthy and not to enter into derivative financial instruments for speculative purposes. We diversify our foreign currency forward exchange contracts among counterparties to minimize exposure to any one of these entities. Our foreign currency forward exchange contracts are usually denominated in currencies of major industrial countries. The U.S. dollar-equivalent gross notional amount of our forward exchange contracts totaled $1,383.9 million at September 30, 2016. Currency pairs (buy/sell) comprising the most significant contract notional values were United States dollar (USD)/euro, USD/Swiss franc, USD/Canadian dollar, Swiss franc/euro, Swiss franc/Canadian dollar, Singapore dollar/USD and Mexican peso/USD. We value interest rate swap contracts using a market approach based on observable market inputs including publicized swap curves. |
Basis of Presentation and Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table reconciles basic and diluted EPS amounts (in millions, except per share amounts):
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Goodwill and Other Intangible Assets (Tables) |
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Goodwill | Changes in the carrying amount of goodwill for the years ended September 30, 2016 and 2015 were (in millions):
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Other intangible assets | Other intangible assets consist of (in millions):
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Inventories (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories consist of (in millions):
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Property, net (Tables) |
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Property, net | Property consists of (in millions):
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Long-term and Short-term Debt (Tables) |
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Schedule of Debt | Long-term debt consists of (in millions):
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Other Current Liabilities (Tables) |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Liabilities | Other current liabilities consist of (in millions):
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Product Warranty Obligations (Tables) |
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Changes in product warranty obligations | Changes in product warranty obligations were (in millions):
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Derivative Instruments and Fair Value Measurement (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) | The pre-tax amount of (losses) gains recorded in other comprehensive (loss) income related to cash flow hedges that would have been recorded in the Consolidated Statement of Operations had they not been so designated was (in millions):
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Schedule of Cash Flow Hedging Instruments, Statements of Financial Performance and Financial Position, Location | The pre-tax amount of (losses) gains reclassified from accumulated other comprehensive loss into the Consolidated Statement of Operations related to derivative forward exchange contracts designated as cash flow hedges, which offset the related gains and losses on the hedged items during the periods presented, was (in millions):
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Schedule of Net Investment Hedges in Accumulated Other Comprehensive Income (Loss) | The pre-tax amount of gains (losses) recorded in other comprehensive income (loss) related to net investment hedges that would have been recorded in the Consolidated Statement of Operations had they not been so designated was (in millions):
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Schedule of Fair Value Hedging Instruments, Statements of Financial Performance and Financial Position, Location | The pre-tax amount of net gains recognized within the Consolidated Statement of Operations related to derivative instruments designated as fair value hedges, which fully offset the related net losses on the hedged debt instruments during the periods presented, was (in millions):
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Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location | The pre-tax amount of gains (losses) from forward exchange contracts not designated as hedging instruments recognized in the Consolidated Statement of Operations was (in millions):
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Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | Assets (liabilities) measured at fair value on a recurring basis and their location in our Consolidated Balance Sheet were (in millions):
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Fair Value, by Balance Sheet Grouping | The following table presents the carrying amounts and estimated fair values of financial instruments not measured at fair value in the Consolidated Balance Sheet (in millions):
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Shareowners' Equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stockholders Equity | Changes in outstanding common shares are summarized as follows (in millions):
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Schedule of Accumulated Other Comprehensive Income (Loss) | Changes in accumulated other comprehensive loss by component for the years ended September 30, 2016, 2015 and 2014 were (in millions):
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Reclassification out of Accumulated Other Comprehensive Income (Loss) | The reclassifications out of accumulated other comprehensive loss to the Consolidated Statement of Operations for the years ended September 30, 2016, 2015 and 2014 were (in millions):
(a) Reclassified from accumulated other comprehensive loss into cost of sales and selling, general and administrative expenses. These components are included in the computation of net periodic benefit costs. See Note 11 for further information. |
Share-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-Based Payment Award, Stock Options, Valuation Assumptions | We estimated the fair value of each stock option on the date of grant using the Black-Scholes pricing model and the following assumptions:
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Schedule of Share-Based Compensation, Stock Options, Activity | A summary of stock option activity for the year ended September 30, 2016 is:
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Schedule of Nonvested Performance Units Activity | A summary of performance share activity for the year ended September 30, 2016 is as follows:
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Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Performance-Based Units, Vested and Expected to Vest | The following table summarizes information about performance shares vested during the years ended September 30, 2016, 2015 and 2014:
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Schedule of Share-Based Payment Award, Performance-Based Units, Valuation Assumptions | The per-share fair value of performance share awards granted during the years ended September 30, 2016, 2015 and 2014 was $87.64, $103.70 and $108.48, respectively, which we determined using a Monte Carlo simulation and the following assumptions:
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Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | A summary of restricted stock and restricted stock unit activity for the year ended September 30, 2016 is as follows:
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Retirement Benefits (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | The components of net periodic benefit cost (income) are (in millions):
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Schedule of Net Funded Status | Benefit obligation, plan assets, funded status and net liability information is summarized as follows (in millions):
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Schedule of Amounts Recognized in Balance Sheet |
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Schedule of Defined Benefit Plan Amounts Recognized in Other Comprehensive Income (Loss) | Amounts included in accumulated other comprehensive loss, net of tax, at September 30, 2016 and 2015 which have not yet been recognized in net periodic benefit cost are as follows (in millions):
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Schedule of Assumptions Used | Net Periodic Benefit Cost Assumptions Significant assumptions used in determining net periodic benefit cost included in the Consolidated Statement of Operations for the period ended September 30 are (in weighted averages):
Net Benefit Obligation Assumptions Significant assumptions used in determining the benefit obligations included in the Consolidated Balance Sheet are (in weighted averages):
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Schedule Of Weighted Average Allocation Of Plan Assets | Our global weighted-average targeted and actual asset allocations at September 30, by asset category, are:
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Schedule of Allocation of Plan Assets | The following table presents our pension plans’ investments measured at fair value as of September 30, 2016:
The following table presents our pension plans’ investments measured at fair value as of September 30, 2015:
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Defined Benefit Plan Change in Fair Value of Plan Assets Level Three | The table below sets forth a summary of changes in fair market value of our pension plans’ Level 3 assets for the year ended September 30, 2016:
The table below sets forth a summary of changes in fair market value of our pension plans’ Level 3 assets for the year ended September 30, 2015:
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Schedule of Expected Benefit Payments | The following benefit payments, which include employees’ expected future service, as applicable, are expected to be paid (in millions):
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Schedule of One-Percentage-Point Change in Assumed Health Care Cost Trend Rates | A one percentage point change in assumed health care cost trend rates would have the following effect (in millions):
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Schedule of Accumulated Benefit Obligations in Excess of Fair Value of Plan Assets | Information regarding our pension plans with accumulated benefit obligations in excess of the fair value of plan assets (underfunded plans) at September 30, 2016 and 2015 are as follows (in millions):
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Other Income (Expense) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of other income (expense) | The components of other income (expense) are (in millions):
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income before Income Tax, Domestic and Foreign |
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Schedule of Components of Income Tax Expense (Benefit) |
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Schedule of Effective Income Tax Rate Reconciliation | The reconciliation between the U.S. federal statutory rate and our effective tax rate was:
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Schedule of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to our net deferred income tax assets (liabilities) at September 30, 2016 and 2015 were (in millions):
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Schedule of Tax Attributes and Valuation Allowances | Tax attributes and related valuation allowances at September 30, 2016 were (in millions):
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Summary of Income Tax Contingencies | A reconciliation of our gross unrecognized tax benefits, excluding interest and penalties, is as follows (in millions):
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Commitments and Contingent Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loss Contingencies by Contingency | Obligations and expected recoveries related to environmental remediation costs, conditional asset retirement obligations and other recorded indemnification matters as of September 30, 2016 and 2015 are as follows:
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Environmental Remediation Cost Liabilities and Related Expected Recoveries | Environmental remediation cost liabilities and related expected recoveries at September 30, 2016 are as follows (in millions):
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Schedule of Asset Retirement Obligations | Conditional asset retirement obligations and related expected recoveries at September 30, 2016 and 2015 are as follows (in millions):
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Indemnification Liabilities and Expected Recoveries | Indemnification liabilities and related expected recoveries at September 30, 2016 and 2015 are as follows (in millions):
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Leases of Lessee Disclosure | As of September 30, 2016, minimum future rental commitments under operating leases having noncancelable lease terms in excess of one year are payable as follows (in millions):
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Business Segment Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following tables reflect the sales and operating results of our reportable segments for the years ended September 30, 2016, 2015 and 2014 (in millions):
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Components of Identifiable Assets, Depreciation and Amortization, and Capital Expenditures for Property | The following tables summarize the identifiable assets at September 30, 2016, 2015 and 2014 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):
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Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas | 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):
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Quarterly Financial Information (Unaudited) (Tables) |
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Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Financial Information |
Note: The sum of the quarterly per share amounts will not necessarily equal the annual per share amounts presented. |
Basis of Presentation and Accounting Policies (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Reconciled Basic and Diluted EPS | |||||||||||
Net income | $ 185.2 | $ 191.0 | $ 168.0 | $ 185.5 | $ 201.3 | $ 206.1 | $ 206.0 | $ 214.2 | $ 729.7 | $ 827.6 | $ 826.8 |
Less: Allocation to participating securities | (0.7) | (0.7) | (1.1) | ||||||||
Net income available to common shareowners | $ 729.0 | $ 826.9 | $ 825.7 | ||||||||
Basic weighted average outstanding shares | 130.2 | 134.5 | 138.0 | ||||||||
Effect of dilutive securities | |||||||||||
Stock options | 0.9 | 1.1 | 1.5 | ||||||||
Performance shares | 0.0 | 0.1 | 0.2 | ||||||||
Diluted weighted average outstanding shares | 131.1 | 135.7 | 139.7 | ||||||||
Basic earnings per share: | |||||||||||
Basic | $ 1.44 | $ 1.47 | $ 1.29 | $ 1.41 | $ 1.51 | $ 1.53 | $ 1.53 | $ 1.58 | $ 5.60 | $ 6.15 | $ 5.98 |
Diluted earnings per share: | |||||||||||
Diluted | $ 1.43 | $ 1.46 | $ 1.28 | $ 1.40 | $ 1.50 | $ 1.52 | $ 1.51 | $ 1.56 | $ 5.56 | $ 6.09 | $ 5.91 |
Basis of Presentation and Accounting Policies (Details Textuals) - USD ($) shares in Millions, $ in Millions |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Accounting Policies [Abstract] | |||
Percentage of consolidated sales recorded when all of the following have occurred: persuasive evidence of a sales agreement exists; pricing is fixed or determinable; collection is reasonably assured; and product has been delivered and acceptance has occurred, as may be required according to contract terms, or services have been rendered | 85.00% | ||
Allowances for doubtful accounts | $ 24.5 | $ 22.0 | |
Allowance for certain customer returns, rebates and incentives | 7.9 | 9.2 | |
Research and development costs | $ 319.3 | $ 307.3 | $ 290.1 |
Antidilutive share-based compensation awards | 2.2 | 1.4 | 0.8 |
Scenario, Previously Reported [Member] | |||
New Accounting Pronouncement, Early Adoption [Line Items] | |||
Current deferred tax assets retrospectively reclassified to noncurrent | $ 151.2 |
Goodwill and Other Intangible Assets (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Goodwill | ||
Beginning balance | $ 1,028.8 | $ 1,050.6 |
Acquisition of businesses | 72.7 | 14.9 |
Translation | (27.6) | (36.7) |
Ending balance | 1,073.9 | 1,028.8 |
Architecture and Software [Member] | ||
Goodwill | ||
Beginning balance | 388.0 | 395.6 |
Acquisition of businesses | 35.0 | 0.0 |
Translation | (8.5) | (7.6) |
Ending balance | 414.5 | 388.0 |
Control Products and Solutions [Member] | ||
Goodwill | ||
Beginning balance | 640.8 | 655.0 |
Acquisition of businesses | 37.7 | 14.9 |
Translation | (19.1) | (29.1) |
Ending balance | $ 659.4 | $ 640.8 |
Inventories (Details) - USD ($) $ in Millions |
Sep. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Inventories | ||
Finished goods | $ 215.8 | $ 225.7 |
Work in process | 158.0 | 157.5 |
Raw materials | 152.8 | 152.4 |
Inventories | $ 526.6 | $ 535.6 |
Property, net (Details) - USD ($) $ in Millions |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
---|---|---|---|
Property, net | |||
Land | $ 4.5 | $ 4.5 | |
Buildings and improvements | 333.7 | 319.0 | |
Machinery and equipment | 1,085.1 | 1,042.3 | |
Internal-use software | 451.1 | 441.3 | |
Construction in progress | 108.4 | 97.6 | |
Total | 1,982.8 | 1,904.7 | |
Less accumulated depreciation | (1,404.5) | (1,299.1) | |
Property, net | $ 578.3 | $ 605.6 | $ 632.9 |
Long-term and Short-term Debt (Details Textuals 1) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Long-term debt | ||
Fair value of interest rate swap contracts | $ 19.5 | |
Short-term Debt | ||
Commercial paper borrowings outstanding | $ 448.6 | $ 0.0 |
Weighted average interest rate of commercial paper outstanding | 0.57% | |
2.050% notes, payable in March 2020 | ||
Long-term debt | ||
Stated interest rate | 2.05% | |
Maturity date | Mar. 01, 2020 | |
Effective floating interest rate | 1.281% | |
2.875% notes, payable in March 2025 | ||
Long-term debt | ||
Stated interest rate | 2.875% | |
Maturity date | Mar. 01, 2025 | |
Effective floating interest rate | 1.691% | |
Aggregate principal amount of notes issued | ||
Long-term debt | ||
Long-term debt issued | $ 600.0 |
Long-term and Short-term Debt (Details Textuals 2) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2015
USD ($)
|
Sep. 30, 2014
USD ($)
|
|
Debt Disclosure [Abstract] | |||
Interest payments | $ 69.2 | $ 60.8 | $ 58.1 |
Line of Credit [Member] | |||
Line of Credit Facility [Line Items] | |||
Borrowing capacity | $ 1,000.0 | ||
Expiration date | Mar. 24, 2020 | ||
Option to increase borrowing capacity of credit facility | $ 350.0 | ||
Non US Facilities [Member] | |||
Line of Credit Facility [Line Items] | |||
Borrowing capacity | $ 121.2 | ||
Maximum [Member] | Line of Credit [Member] | |||
Line of Credit Facility [Line Items] | |||
Maximum debt to total capital ratio required by debt covenants | 0.60 |
Other Current Liabilities (Details) - USD ($) $ in Millions |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
---|---|---|---|
Other current liabilities | |||
Unrealized losses on foreign exchange contracts (Note 8) | $ 15.6 | $ 16.4 | |
Product warranty obligations (Note 7) | 28.0 | 27.9 | $ 34.1 |
Taxes other than income taxes | 43.1 | 34.9 | |
Accrued interest | 16.9 | 16.9 | |
Income taxes payable | 28.6 | 50.9 | |
Rocky Flats settlement (Note 17) | 242.5 | 0.0 | |
Other | 72.9 | 61.0 | |
Other current liabilities | $ 447.6 | $ 208.0 |
Product Warranty Obligations (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Changes in product warranty obligations | ||
Beginning balance | $ 27.9 | $ 34.1 |
Warranties recorded at time of sale | 25.0 | 26.7 |
Adjustments to pre-existing warranties | 1.2 | (4.5) |
Settlements of warranty claims | (26.1) | (28.4) |
Ending balance | $ 28.0 | $ 27.9 |
Shareowners' Equity (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Shareowners' Equity (Textuals) [Abstract] | |||
Common stock, authorized | 1,000.0 | ||
Common stock, par value | $ 1.00 | $ 1.00 | |
Preferred stock, authorized | 25.0 | ||
Preferred stock, par value | $ 0 | ||
Common stock reserved for various incentive plans | 13.1 | ||
Outstanding purchase of common stock recorded in accounts payable | $ 5.3 | $ 12.5 | |
Changes in outstanding common shares | |||
Beginning balance | 132.4 | 136.7 | 138.8 |
Treasury stock purchases | (4.6) | (5.4) | (4.1) |
Shares delivered under incentive plans | 0.7 | 1.1 | 2.0 |
Ending balance | 128.5 | 132.4 | 136.7 |
Share-Based Compensation (Details) |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Stock options [Member] | |||
Fair value assumptions for share-based compensation awards | |||
Average risk-free interest rate | 1.76% | 1.61% | 1.52% |
Expected dividend yield | 2.78% | 2.25% | 2.13% |
Expected volatility | 29.00% | 31.00% | 41.00% |
Expected term (years) | 5 years 1 month | 5 years 1 month | 5 years 2 months |
Performance shares [Member] | |||
Fair value assumptions for share-based compensation awards | |||
Average risk-free interest rate | 1.21% | 0.96% | 0.60% |
Expected dividend yield | 2.75% | 2.22% | 2.11% |
Expected volatility | 22.00% | 24.00% | 33.00% |
Retirement Benefits (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Amortization: | |||
Prior service credit | $ (14.0) | ||
Net actuarial loss | 126.8 | ||
Pension Benefits [Member] | |||
Components of net periodic benefit cost | |||
Service cost | 88.0 | $ 85.7 | $ 78.5 |
Interest cost | 169.5 | 167.2 | 174.2 |
Expected return on plan assets | (218.3) | (223.2) | (217.9) |
Amortization: | |||
Prior service credit | (2.9) | (2.7) | (2.7) |
Net actuarial loss | 124.5 | 118.7 | 99.7 |
Special termination benefit | 0.5 | 0.0 | 0.0 |
Settlements | 0.0 | 0.0 | (0.1) |
Net periodic benefit cost (income) | 161.3 | 145.7 | 131.7 |
Other Postretirement Benefits [Member] | |||
Components of net periodic benefit cost | |||
Service cost | 1.3 | 1.5 | 2.0 |
Interest cost | 3.3 | 4.1 | 6.5 |
Amortization: | |||
Prior service credit | (11.1) | (14.5) | (10.2) |
Net actuarial loss | 2.3 | 4.5 | 2.9 |
Special termination benefit | 0.0 | 0.0 | 0.0 |
Net periodic benefit cost (income) | $ (4.2) | $ (4.4) | $ 1.2 |
Retirement Benefits (Details 2) - USD ($) $ in Millions |
Sep. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Pension Benefits [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Prior service cost (credit) | $ 4.9 | $ 3.0 |
Net actuarial loss | 1,235.1 | 1,099.9 |
Total | 1,240.0 | 1,102.9 |
Other Postretirement Benefits [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Prior service cost (credit) | (15.9) | (22.9) |
Net actuarial loss | 15.7 | 17.1 |
Total | $ (0.2) | $ (5.8) |
Retirement Benefits (Details 4) |
12 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Equity Securities [Member] | ||
Asset Allocation | ||
Minimum | 40.00% | |
Maximum | 65.00% | |
Target Allocation | 52.00% | |
As of the balance sheet date | 50.00% | 48.00% |
Debt Securities [Member] | ||
Asset Allocation | ||
Minimum | 30.00% | |
Maximum | 50.00% | |
Target Allocation | 39.00% | |
As of the balance sheet date | 41.00% | 43.00% |
Other Security [Member] | ||
Asset Allocation | ||
Minimum | 0.00% | |
Maximum | 15.00% | |
Target Allocation | 9.00% | |
As of the balance sheet date | 9.00% | 9.00% |
Retirement Benefits (Details 7) $ in Millions |
Sep. 30, 2016
USD ($)
|
---|---|
Pension Benefits [Member] | |
Estimated future benefit payments | |
2017 | $ 256.8 |
2018 | 246.2 |
2019 | 259.5 |
2020 | 268.5 |
2021 | 279.2 |
2022 – 2026 | 1,478.6 |
Other Postretirement Benefits [Member] | |
Estimated future benefit payments | |
2017 | 10.6 |
2018 | 11.2 |
2019 | 10.9 |
2020 | 7.0 |
2021 | 5.7 |
2022 – 2026 | $ 24.9 |
Retirement Benefits (Details 8) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
One percentage point change in assumed health care cost trend rates | ||
One Percentage Point Increase - Increase to total of service and interest cost components | $ 0.2 | $ 0.2 |
One Percentage Point Decrease - Decrease to total of service and interest cost components | (0.2) | (0.2) |
One Percentage Point Increase - Increase to postretirement benefit obligation | 2.9 | 3.0 |
One Percentage Point Decrease - Decrease to postretirement benefit obligation | (2.5) | (2.6) |
Pension plans with accumulated benefit obligations in excess of plan assets | ||
Projected benefit obligation | 4,784.5 | 4,281.0 |
Accumulated benefit obligation | 4,428.0 | 3,978.3 |
Fair value of plan assets | $ 3,446.5 | $ 3,261.2 |
Other Income (Expense) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Components of other income (expense) | |||
Interest income | $ 12.7 | $ 10.7 | $ 9.5 |
Royalty income | 2.9 | 2.9 | 2.5 |
Legacy product liability and environmental charges | (12.7) | (19.8) | (14.6) |
Other | 3.4 | 0.7 | 12.3 |
Other income (expense) | $ 6.3 | $ (5.5) | 9.7 |
Gain from favorable resolutions of certain intellectual property and commercial legal matters | $ 8.0 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Components of income before income taxes | |||||||||||
United States | $ 512.1 | $ 660.5 | $ 607.3 | ||||||||
Non-United States | 431.0 | 467.0 | 526.9 | ||||||||
Total | $ 236.9 | $ 252.3 | $ 217.0 | $ 236.9 | $ 278.9 | $ 284.6 | $ 276.5 | $ 287.5 | 943.1 | 1,127.5 | 1,134.2 |
Current income tax provision: | |||||||||||
United States | 175.9 | 238.6 | 219.4 | ||||||||
Non-United States | 91.7 | 73.6 | 85.3 | ||||||||
State and local | 16.3 | 17.0 | 9.9 | ||||||||
Total current | 283.9 | 329.2 | 314.6 | ||||||||
Deferred income tax provision: | |||||||||||
United States | (53.7) | (30.3) | (3.8) | ||||||||
Non-United States | (8.8) | 2.6 | (4.0) | ||||||||
State and local | (8.0) | (1.6) | 0.6 | ||||||||
Total deferred | (70.5) | (29.3) | (7.2) | ||||||||
Income tax provision | 213.4 | 299.9 | 307.4 | ||||||||
Total income taxes paid | $ 299.8 | $ 313.1 | $ 323.8 |
Income Taxes (Details 1) |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Effective Tax Rate Reconciliation | |||
Statutory tax rate | 35.00% | 35.00% | 35.00% |
State and local income taxes | 0.60% | 0.90% | 0.80% |
Non-United States taxes | (8.60%) | (7.90%) | (9.50%) |
Tax effect of foreign dividends | 0.10% | (0.20%) | 0.50% |
Foreign currency transaction loss | (0.80%) | 0.00% | 0.00% |
Research and development tax credit | (2.00%) | (0.60%) | (0.10%) |
Change in valuation allowances | (0.60%) | (0.50%) | (0.10%) |
Domestic manufacturing deduction | (1.20%) | (1.20%) | (1.10%) |
Adjustments for prior period tax matters | 0.40% | 0.50% | 1.00% |
Other | (0.30%) | 0.60% | 0.60% |
Effective income tax rate | 22.60% | 26.60% | 27.10% |
Income Taxes (Details 2) - USD ($) $ in Millions |
Sep. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Deferred income tax assets: | ||
Compensation and benefits | $ 16.2 | $ 28.4 |
Inventory | 18.0 | 15.3 |
Returns, rebates and incentives | 55.1 | 50.8 |
Retirement benefits | 493.6 | 371.2 |
Environmental remediation and other site-related costs | 34.8 | 31.1 |
Share-based compensation | 40.6 | 35.5 |
Other accruals and reserves | 60.5 | 48.9 |
Net operating loss carryforwards | 24.4 | 25.9 |
Tax credit carryforwards | 13.7 | 8.5 |
Capital loss carryforwards | 9.9 | 13.6 |
Other | 11.4 | 15.9 |
Subtotal | 778.2 | 645.1 |
Valuation allowance | (17.3) | (22.2) |
Net deferred income tax assets | 760.9 | 622.9 |
Deferred income tax liabilities: | ||
Property | (63.5) | (74.9) |
Intangible assets | (54.9) | (53.2) |
Other | (8.6) | 0.0 |
Deferred income tax liabilities | (127.0) | (128.1) |
Total net deferred income tax assets | $ 633.9 | $ 494.8 |
Income Taxes (Details 4) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Unrecognized tax benefits, excluding interest and penalties | |||
Gross unrecognized tax benefits balance at beginning of year | $ 43.9 | $ 38.9 | $ 40.8 |
Additions based on tax positions related to the current year | 2.3 | 2.1 | 1.0 |
Additions based on tax positions related to prior years | 14.9 | 11.6 | 2.2 |
Reductions based on tax positions related to prior years | 0.0 | (1.0) | 0.0 |
Reductions related to settlements with taxing authorities | (27.1) | (4.3) | 0.0 |
Reductions related to lapses of statute of limitations | (1.6) | (1.6) | (4.2) |
Effect of foreign currency translation | 0.0 | (1.8) | (0.9) |
Gross unrecognized tax benefits balance at end of year | $ 32.4 | $ 43.9 | $ 38.9 |
Commitments and Contingent Liabilities (Details) - USD ($) $ in Millions |
Sep. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Loss Contingencies [Line Items] | ||
Environmental remediation costs | $ 73.9 | $ 61.4 |
Conditional asset retirement obligations | 20.6 | 20.2 |
Indemnification liabilities | 111.5 | 114.2 |
Recorded probable expected recoveries | (22.5) | (33.2) |
Net recorded liabilities | 89.0 | 81.0 |
Indemnification Agreement [Member] | ||
Loss Contingencies [Line Items] | ||
Other current liabilities | 4.9 | 3.2 |
Other liabilities | 12.1 | 29.4 |
Indemnification liabilities | 17.0 | 32.6 |
Receivables | (3.5) | (2.1) |
Other assets | (7.3) | (22.6) |
Recorded probable expected recoveries | (10.8) | (24.7) |
Net recorded liabilities | 6.2 | 7.9 |
Substantially Indemnified by ExxonMobil Corporation [Member] | Indemnification Agreement [Member] | ||
Loss Contingencies [Line Items] | ||
Indemnification liabilities | 11.0 | 26.0 |
Recorded probable expected recoveries | $ (10.8) | $ (24.7) |
Commitments and Contingent Liabilities (Details 1) - USD ($) $ in Millions |
Sep. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Accrual for Environmental Loss Contingencies [Abstract] | ||
Other current liabilities | $ 14.6 | |
Other liabilities | 59.3 | |
Total recorded environmental remediation costs | 73.9 | $ 61.4 |
Receivables | (1.8) | |
Other assets | (9.6) | |
Total recorded probable expected recoveries | (11.4) | |
Net environmental remediation costs | 62.5 | |
Discounted ongoing operating maintenance expenditures | 51.6 | |
Asset Retirement Obligation [Abstract] | ||
Other current liabilities | 0.7 | 0.4 |
Other liabilities | 19.9 | 19.8 |
Total recorded conditional asset retirement obligations | 20.6 | 20.2 |
Receivables | (0.1) | 0.0 |
Other assets | (0.2) | (0.3) |
Total recorded probable expected recoveries | (0.3) | (0.3) |
Net conditional asset retirement obligations | $ 20.3 | $ 19.9 |
Commitments and Contingent Liabilities (Details 2) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |||
2017 | $ 76.2 | ||
2018 | 65.2 | ||
2019 | 52.8 | ||
2020 | 45.5 | ||
2021 | 33.7 | ||
Beyond 2021 | 62.5 | ||
Total | 335.9 | ||
Leases, Operating [Abstract] | |||
Rental expense | $ 115.5 | $ 117.0 | $ 121.6 |
Commitments and Contingent Liabilities (Details Textuals) $ in Millions |
12 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
| |
Loss Contingency [Abstract] | |
Reasonably possible costs from environmental remediation costs and indemnification liabilities | $ 133.6 |
Reasonably possible costs from environmental remediation costs and indemnification liabilities, net of related receivables | $ 105.2 |
Number of Superfund sites designated potentially responsible party at | 13 |
Business Segment Information (Details 2) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Sales and property by geographic region | |||||||||||
Sales | $ 1,538.6 | $ 1,474.0 | $ 1,440.3 | $ 1,426.6 | $ 1,607.5 | $ 1,575.2 | $ 1,550.8 | $ 1,574.4 | $ 5,879.5 | $ 6,307.9 | $ 6,623.5 |
Property | 578.3 | 605.6 | 578.3 | 605.6 | 632.9 | ||||||
United States [Member] | |||||||||||
Sales and property by geographic region | |||||||||||
Sales | 3,213.4 | 3,446.8 | 3,414.6 | ||||||||
Property | 445.4 | 472.1 | 445.4 | 472.1 | 497.5 | ||||||
Canada [Member] | |||||||||||
Sales and property by geographic region | |||||||||||
Sales | 316.4 | 366.6 | 437.0 | ||||||||
Property | 7.3 | 7.3 | 7.3 | 7.3 | 7.6 | ||||||
Europe, Middle East and Africa [Member] | |||||||||||
Sales and property by geographic region | |||||||||||
Sales | 1,147.2 | 1,174.0 | 1,351.8 | ||||||||
Property | 49.9 | 50.4 | 49.9 | 50.4 | 48.8 | ||||||
Asia Pacific [Member] | |||||||||||
Sales and property by geographic region | |||||||||||
Sales | 764.4 | 834.5 | 884.0 | ||||||||
Property | 37.4 | 41.9 | 37.4 | 41.9 | 37.3 | ||||||
Latin America [Member] | |||||||||||
Sales and property by geographic region | |||||||||||
Sales | 438.1 | 486.0 | 536.1 | ||||||||
Property | $ 38.3 | $ 33.9 | $ 38.3 | $ 33.9 | $ 41.7 |
Business Segment Information (Details Textuals) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Segment Reporting Information [Line Items] | |||
Identifiable assets | $ 7,101.2 | $ 6,404.7 | $ 6,224.3 |
Capital expenditures | 116.9 | 122.9 | 141.0 |
Corporate, Non-Segment [Member] | |||
Segment Reporting Information [Line Items] | |||
Identifiable assets | 3,012.3 | 2,536.1 | 2,076.1 |
Capital expenditures | 50.7 | 36.7 | 56.2 |
Corporate, Non-Segment [Member] | Shared by segments and used in operating activities [Member] | |||
Segment Reporting Information [Line Items] | |||
Identifiable assets | 264.8 | 266.8 | 294.1 |
Capital expenditures | $ 50.7 | $ 36.7 | $ 56.2 |
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | |||
Segment Reporting Information [Line Items] | |||
Portion of total sales to largest distributor | 10.00% | 10.00% | 10.00% |
Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Quarterly Financial Information (Unaudited) | |||||||||||
Sales | $ 1,538.6 | $ 1,474.0 | $ 1,440.3 | $ 1,426.6 | $ 1,607.5 | $ 1,575.2 | $ 1,550.8 | $ 1,574.4 | $ 5,879.5 | $ 6,307.9 | $ 6,623.5 |
Gross profit | 651.9 | 616.8 | 594.1 | 612.7 | 664.2 | 678.2 | 673.2 | 687.5 | 2,475.5 | 2,703.1 | 2,753.9 |
Income before income taxes | 236.9 | 252.3 | 217.0 | 236.9 | 278.9 | 284.6 | 276.5 | 287.5 | 943.1 | 1,127.5 | 1,134.2 |
Net income | $ 185.2 | $ 191.0 | $ 168.0 | $ 185.5 | $ 201.3 | $ 206.1 | $ 206.0 | $ 214.2 | $ 729.7 | $ 827.6 | $ 826.8 |
Basic earnings per share: | |||||||||||
Basic | $ 1.44 | $ 1.47 | $ 1.29 | $ 1.41 | $ 1.51 | $ 1.53 | $ 1.53 | $ 1.58 | $ 5.60 | $ 6.15 | $ 5.98 |
Diluted earnings per share: | |||||||||||
Diluted | $ 1.43 | $ 1.46 | $ 1.28 | $ 1.40 | $ 1.50 | $ 1.52 | $ 1.51 | $ 1.56 | $ 5.56 | $ 6.09 | $ 5.91 |
Rocky Flats Settlement (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Loss Contingencies [Line Items] | ||
Settlement liability, Current | $ 242,500 | $ 0 |
Rocky Flats [Member] | ||
Loss Contingencies [Line Items] | ||
Settlement amount, in aggregate | 375,000 | |
Settlement amount, total Rockwell obligation | 243,750 | |
Settlement amount receivable from U.S. Department of Energy | $ 243,750 |
Valuation and Qualifying Accounts (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Allowance for Doubtful Accounts [Member] | |||
Valuation and Qualifying Accounts | |||
Balance at Beginning of Year | $ 24.8 | $ 22.2 | $ 25.3 |
Additions Charged to Costs and Expenses | 10.9 | 8.1 | 6.5 |
Additions Charged to Other Accounts | 0.0 | 0.0 | 0.0 |
Deductions | 11.2 | 5.5 | 9.6 |
Balance at End of Year | 24.5 | 24.8 | 22.2 |
Valuation Allowance of Deferred Tax Assets [Member] | |||
Valuation and Qualifying Accounts | |||
Balance at Beginning of Year | 22.2 | 27.8 | 28.3 |
Additions Charged to Costs and Expenses | 1.0 | 2.5 | 4.0 |
Additions Charged to Other Accounts | 0.6 | 0.0 | 0.5 |
Deductions | 6.5 | 8.1 | 5.0 |
Balance at End of Year | $ 17.3 | $ 22.2 | $ 27.8 |
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