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Rockwell Automation Inc. Common Reports Operating Results (10-Q)

February 08, 2010 | About:
10qk

10qk

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Rockwell Automation Inc. Common (ROK) filed Quarterly Report for the period ended 2009-12-31.

Rockwell Automation Inc. Common has a market cap of $6.91 billion; its shares were traded at around $48.51 with a P/E ratio of 34.4 and P/S ratio of 1.59. The dividend yield of Rockwell Automation Inc. Common stocks is 2.39%. Rockwell Automation Inc. Common had an annual average earning growth of 5.3% over the past 10 years.ROK is in the portfolios of PRIMECAP Management, Paul Tudor Jones of The Tudor Group, Kenneth Fisher of Fisher Asset Management, LLC, Bruce Kovner of Caxton Associates, Murray Stahl of Horizon Asset Management, Jeremy Grantham of GMO LLC, Manning & Napier Advisors, Inc.

Highlight of Business Operations:

Income from continuing operations increased $48.9 million sequentially during the first quarter of 2010 as compared to the fourth quarter of 2009. In the fourth quarter of 2009, we recorded restructuring charges of $33.1 million.

Our sales declined $121.7 million, or 10.2 percent, from $1,189.2 million in the first quarter of 2009 to $1,067.5 million in the first quarter of 2010. An organic sales decline of 15.5 percent was partially offset by growth of 4.4 percentage points from currency translation and 0.9 percentage points from acquisitions. Substantially all of the organic sales decline was a result of a decrease in volume due to recent macroeconomic trends in most regions. There was no significant impact on revenue due to price.

Income from continuing operations before income taxes declined 30.3 percent, from $139.5 million in the first quarter of 2009 to $97.3 million in the first quarter of 2010. The decrease was primarily due to a decline in volume, higher incentive compensation and higher pension and postretirement expense, partially offset by benefits from cost reductions implemented during 2009 and favorable revenue mix.

As a consequence of the rapid and large declines in sales in fiscal 2009 due to the severe global recession, we took aggressive action to adjust our cost structure, including restructuring actions that were implemented throughout 2009, temporary employee pay and benefit reductions and general reductions in discretionary spending. In the first quarter of 2010, we saved approximately $40 million compared to the first quarter of 2009 related to benefits realized from restructuring actions taken in fiscal 2009, which was in line with our projections. We also realized a benefit of approximately $15 million in the quarter related to our temporary employee pay and benefit reductions implemented in the third quarter of 2009, partially offset by approximately $10 million of additional expense for incentive compensation. Our pension and postretirement expense in the first quarter of 2010 was also $10 million higher compared to the first quarter of 2009.

We expect to realize approximately $80 million of additional savings during the remainder of 2010 as a result of restructuring actions taken in fiscal 2009. Our favorable results in the first quarter of 2010 and an improved outlook for the full year caused us to reverse our temporary employee pay and benefit actions in January 2010, and as a result, we expect to have approximately $35 million of higher employee costs in the remainder of 2010 compared to the same period in 2009. We also expect approximately $70 million of higher incentive compensation expense and approximately $30 million of higher pension and postretirement expense in the remainder of 2010 as compared to the same period of 2009.

The effective tax rate for the first quarter of 2010 was 20.0 percent compared to 17.1 percent in the first quarter of 2009. The 2010 first quarter effective tax rate was higher than the 2009 first quarter rate primarily because we recognized discrete tax benefits of $11.1 million related to the resolution of a contractual tax obligation and the retroactive extension of the U.S. federal research tax credit in the first quarter of 2009, compared to a tax benefit of $4.7 million related to the favorable resolution of domestic and non-U.S. tax matters, partially offset by a discrete tax expense of $3.5 million related to the impact of a change in Mexican tax law in the first quarter of 2010.

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