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What changed in Rockwell Automation's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Rockwell Automation's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+195 added−254 removedSource: 10-K (2023-11-08) vs 10-K (2022-11-08)

Top changes in Rockwell Automation's 2023 10-K

195 paragraphs added · 254 removed · 159 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeSales to our largest distributor in 2022, 2021, and 2020, were approximately 10 percent of our total sales. Employees See Item 7. MD&A for information on our employees, including information related to attracting, developing, and retaining highly qualified talent. Raw Materials We purchase a wide range of equipment, components, finished products, and materials used in our business.
Biggest changeMD&A for information on our employees, including information related to attracting, developing, and retaining highly qualified employees. Raw Materials We purchase a wide range of equipment, components, finished products, and materials used in our business. The raw materials essential to the manufacture of our products generally are available at competitive prices. We have a broad base of suppliers and subcontractors.
See Note 19 in the Consolidated Financial Statements for additional information on our operating segments. Geographic Information We do business in more than 100 countries around the world. The largest sales outside the United States on a country of destination basis are in China, Canada, Italy, Mexico, Germany, and the United Kingdom. See Item 1A.
See Note 19 in the Consolidated Financial Statements for additional information on our operating segments. Geographic Information We do business in more than 100 countries around the world. The largest sales outside the United States on a country of destination basis are in China, Canada, Italy, Mexico, the United Kingdom, and Germany. See Item 1A.
MD&A , or in Item 8. Financial Statements and Supplementary Data (the Consolidated Financial Statements), the information is incorporated in that Item by reference. All date references to years and quarters refer to our fiscal year and quarters, unless otherwise stated. Operating Segments Starting in fiscal 2021, we have three operating segments: Intelligent Devices, Software & Control, and Lifecycle Services.
MD&A , or in Item 8. Financial Statements and Supplementary Data (the Consolidated Financial Statements), the information is incorporated in that Item by reference. All date references to years and quarters refer to our fiscal year and quarters, unless otherwise stated. Operating Segments We have three operating segments: Intelligent Devices, Software & Control, and Lifecycle Services.
Information included in this Annual Report on Form 10-K refers to our continuing businesses unless otherwise indicated. Whenever an Item of this Annual Report on Form 10-K refers to information in our Proxy Statement for our Annual Meeting of Shareowners to be held on February 7, 2023 (the Proxy Statement), or to information under specific captions in Item 7.
Information included in this Annual Report on Form 10-K refers to our continuing businesses unless otherwise indicated. Whenever an Item of this Annual Report on Form 10-K refers to information in our Proxy Statement for our Annual Meeting of Shareowners to be held on February 6, 2024 (the Proxy Statement), or to information under specific captions in Item 7.
The Company’s name and its registered trademark “Rockwell Automation ® ” and other trademarks such as “Allen-Bradley ® ”, “A-B ® ”, “PlantPAx ® Process Automation System™”, and “The Connected Enterprise ®” are important to all of our business segments.
The Company’s name and its registered trademark “Rockwell Automation ® ” and other trademarks such as “Allen-Bradley ® ”, “A-B ® ”, “PlantPAx ® Process Automation System™”, and “Connected Enterprise ® ” are important to all of our business segments.
The Company continues the business founded as the Allen-Bradley Company in 1903. The privately-owned Allen-Bradley Company was a leading North American manufacturer of industrial automation equipment when the former Rockwell International Corporation (RIC) purchased it in 1985.
The privately-owned Allen-Bradley Company was a leading North American manufacturer of industrial automation equipment when the former Rockwell International Corporation (RIC) purchased it in 1985.
We believe that none of these claims or requests will have a material adverse effect on our financial condition. See Item 1A. Risk Factors for a discussion of risks associated with our intellectual property.
We have received various claims of patent infringement and requests for patent indemnification. We believe that none of these claims or requests will have a material adverse effect on our financial condition. See Item 1A. Risk Factors for a discussion of risks associated with our intellectual property.
Risk Factors for a discussion of risks associated with our reliance on third-party suppliers. Backlog See Item 7. MD&A for information on our order backlog. Environmental Protection Requirements Information about the effect of compliance with environmental protection requirements and resolution of environmental claims is contained in Note 17 in the Consolidated Financial Statements. See Item 1A.
Environmental Protection Requirements Information about the effect of compliance with environmental protection requirements and resolution of environmental claims is contained in Note 17 in the Consolidated Financial Statements. See Item 1A. Risk Factors for a discussion of risks associated with liabilities and costs related to environmental remediation.
While in the aggregate our patents and licenses are important in the operation of our business, we do not believe that loss or termination of any one of them would materially affect our business or financial condition. We have received various claims of patent infringement and requests for patent indemnification.
Patents, Licenses, and Trademarks We own or license numerous patents and patent applications related to our hardware and software products, solutions, and services. While in the aggregate our patents and licenses are important in the operation of our business, we do not believe that loss or termination of any one of them would materially affect our business or financial condition.
Factors that influence our competitive position include the breadth of our product portfolio and scope of solutions, technology differentiation, domain expertise, installed base, distribution network, quality of hardware and software products, solutions, and services, global presence, and price.
Factors that influence our competitive position include the breadth and performance of our product, solution and services portfolio, technology differentiation, industry and application expertise, installed base, partner ecosystem, global presence and price.
The Intelligent Devices segment includes drives, motion, safety, sensing, industrial components, and configured-to-order products. The Software & Control segment includes control and visualization software and hardware, information software, and network and security infrastructure. The Lifecycle Services segment includes consulting, professional services and solutions, connected services, and maintenance services, as well as the Sensia joint venture.
The Intelligent Devices segment includes drives, motion, advanced material handling, safety, sensing, industrial components, and configured-to-order products. The Software & Control segment includes control and visualization software and hardware, digital twin, simulation and information software, and network and security infrastructure.
Our operating segments share common sales, supply chain, and functional support organizations and conduct business globally. Major markets served by all segments consist of discrete end markets (e.g., Automotive, Semiconductor, and Warehousing & Logistics), hybrid end markets (e.g., Food & Beverage and Life Sciences), and process end markets (e.g., Oil & Gas, Metals, and Chemicals).
Major markets served by all segments consist of discrete end markets (e.g., Automotive including Electric Vehicle and Battery, Semiconductor, and e-Commerce & Warehouse Automation), hybrid end markets (e.g., Food & Beverage, Life Sciences, and Tire), and process end markets (e.g., Oil & Gas, Mining, and Chemicals).
Major competitors include Siemens AG, ABB Ltd, Schneider Electric SA, Emerson Electric Co., Mitsubishi Electric Corp., Honeywell International Inc., AVEVA Group plc, Dassault Systemes, and Aspen Technology, Inc. 3 Table of Contents Distribution In most countries, we sell primarily through independent distributors in conjunction with our direct sales force. Approximately 75 percent of our global sales are through independent distributors.
Major competitors include Siemens AG, ABB Ltd, Schneider Electric SA, Emerson Electric Co., Mitsubishi Electric Corp., Honeywell International Inc., AVEVA Group plc, Dassault Systemes, and Aspen Technology, Inc. 3 Table of Contents Distribution See Item 7. MD&A for information on our market access strategy, including distributor concentrations. Employees See Item 7.
The raw materials essential to the manufacture of our products generally are available at competitive prices. We have a broad base of suppliers and subcontractors. We depend upon the ability of our suppliers and subcontractors to meet performance and quality specifications and delivery schedules. See Item 1A.
We depend upon the ability of our suppliers and subcontractors to meet performance and quality specifications and delivery schedules. See Item 1A. Risk Factors for a discussion of risks associated with our reliance on third-party suppliers. Backlog See Item 7. MD&A for information on our order backlog.
Our hardware and software products, solutions, and services are designed to meet our customers’ needs to reduce total cost of ownership, maximize asset utilization, improve time to market, and reduce enterprise business risk. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) for additional information on our business and long-term strategy.
As a result, we make our customers more resilient, agile, and sustainable, creating more ways to win. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) for additional information on our business and long-term strategy. The Company continues the business founded as the Allen-Bradley Company in 1903.
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Item 1. Business General Rockwell Automation, Inc. (“Rockwell Automation” or the “Company”) is a global leader in industrial automation and digital transformation. We connect the imaginations of people with the potential of technology to expand what is humanly possible, making the world more productive and more sustainable.
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Item 1. Business General Rockwell Automation, Inc. (Rockwell Automation or the Company) is the world’s largest company dedicated to industrial automation and digital transformation. We understand and simplify our customers’ complex production challenges and deliver the most valued solutions that combine technology and industry expertise.
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Risk Factors for a discussion of risks associated with liabilities and costs related to environmental remediation. Patents, Licenses, and Trademarks We own or license numerous patents and patent applications related to our hardware and software products, solutions, and services.
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The Lifecycle Services segment includes digital consulting, professional services including engineered-to-order solutions, recurring services including cybersecurity, safety, remote monitoring, and asset management, and the Sensia joint venture. Our operating segments share common sales, supply chain, and functional support organizations and conduct business globally.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changePersistent high energy prices and the potential for further supply disruptions, including rationing, may have an adverse impact on industrial output and could reduce demand for our hardware and software products, solutions, and services in Europe. 5 Table of Contents We face the potential harms of natural disasters, including those as a result of climate change, pandemics, including the COVID-19 pandemic, acts of war, including the Russia and Ukraine conflict, terrorism, international conflicts, or other disruptions to our operations, the duration and severity of which are highly uncertain and difficult to predict.
Biggest changeDemand for our hardware and software products, solutions, and services is sensitive to industry volatility and risks including those related to commodity prices, supply and demand dynamics, production costs, geological and political activities, and environmental regulations including those intended to reduce the impact of climate change. 5 Table of Contents We face the potential harms of natural disasters, including those as a result of climate change, pandemics, acts of war, terrorism, international conflicts, or other disruptions to our operations, the duration and severity of which are highly uncertain and difficult to predict.
An inability to respond to changes in customer preferences could result in decreased demand for our products. Our success depends in part on our ability to anticipate and offer hardware and software products that appeal to the changing needs and preferences of our customers in the various markets we serve.
An inability to respond to changes in customer preferences could result in decreased demand for our products. Our success depends in part on our ability to anticipate and offer hardware and software products and services that appeal to the changing needs and preferences of our customers in the various markets we serve.
Even if we successfully identify and complete such transactions, we may not achieve the expected benefits of such transactions and we may not be able to successfully address risks and uncertainties inherent in such transactions, including: • difficulties in integrating the purchased or new operations, technologies, products or services, retaining customers, and achieving the expected benefits of the transaction, 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 or difficulties integrating personnel; 9 Table of Contents • legal and compliance issues; • unknown or undisclosed and unmitigated cyber risks to purchased systems, products, and services; • difficulties implementing and maintaining consistent standards, financial systems, internal and other controls, procedures, policies, and information systems; • difficulties maintaining relationships with our joint venture and other strategic partners (including as a result of such joint venture and other strategic partners having differing business objectives) and managing disputes with such joint venture and other strategic partners that may arise in connection with our relationships with them; and • difficulties in yielding the desired strategic or financial benefit from venture capital investments, including as a result of being a minority investor or macroeconomic conditions.
Even if we successfully identify and complete such transactions, we may not achieve the expected benefits of such transactions and we may not be able to successfully address risks and uncertainties inherent in such transactions, including: • difficulties in integrating the purchased or new operations, technologies, products or services, retaining customers, and achieving the expected benefits of the transaction, 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 or difficulties integrating personnel; • legal and compliance issues; • unknown or undisclosed and unmitigated cyber risks to purchased systems, products, and services; • difficulties implementing and maintaining consistent standards, financial systems, internal and other controls, procedures, policies, and information systems; • difficulties maintaining relationships with our joint venture and other strategic partners (including as a result of such joint venture and other strategic partners having differing business objectives) and managing disputes with such joint venture and other strategic partners that may arise in connection with our relationships with them; and • difficulties in yielding the desired strategic or financial benefit from venture capital investments, including as a result of being a minority investor or macroeconomic conditions.
We do business in more than 100 countries around the world. In addition, our manufacturing operations, suppliers, and employees are located in many places around the world. Less than half of our total sales in 2022 were to customers outside the U.S. The future success of our business depends on growth in our sales in all global markets.
We do business in more than 100 countries around the world. In addition, our manufacturing operations, suppliers, and employees are located in many places around the world. Less than half of our total sales in 2023 were to customers outside the U.S. The future success of our business depends on growth in our sales in all global markets.
The skills, experience, and industry knowledge of our employees significantly benefit our operations and performance. The market for employees and leaders with certain skills and experiences is very competitive, and difficulty attracting, developing, and retaining members of our management team and key employees could have a negative effect on our business, operating results, and financial condition.
The skills, experience, and industry knowledge of our employees significantly benefit our operations and performance. The market for employees and leaders with certain skills and experiences is very competitive, and difficulty attracting, developing, and retaining members of our leadership team and key employees could have a negative effect on our business, operating results, and financial condition.
In some instances, the divested business has assumed the liabilities; however, it is possible that we might be responsible for satisfying those liabilities if the divested business is unable to do so. 11 Table of Contents Item 1B. Unresolved Staff Comments None.
In some instances, the divested business has assumed the liabilities; however, it is possible that we might be responsible for satisfying those liabilities if the divested business is unable to do so. 10 Table of Contents Item 1B. Unresolved Staff Comments None.
Risks inherent in the sale of solutions and services include assuming greater responsibility for successfully delivering projects that meet a particular customer specification, including defining and controlling contract scope, efficiently executing projects, and managing the performance and quality of our subcontractors and suppliers.
There are inherent risks in our solutions and services businesses. Risks inherent in the sale of solutions and services include assuming greater responsibility for successfully delivering projects that meet a particular customer specification, including defining and controlling contract scope, efficiently executing projects, and managing the performance and quality of our subcontractors and suppliers.
Although it is not possible to predict such events or their consequences, these events could decrease demand for our hardware and software products, solutions, or services, increase our costs, or make it difficult or impossible for us to deliver products, solutions, or services.
Although it is not possible to predict such events or their consequences, these events could decrease demand for our hardware and software products, solutions, or services, increase our costs, or make it difficult or impossible for us to deliver products, solutions, or services. Our industry is highly competitive.
Natural disasters (including but not limited to those as a result of climate change), pandemics (including the COVID-19 pandemic), acts or threats of war (including the Russia and Ukraine conflict) or terrorism, international conflicts, power outages, fires, explosions, equipment failures, sabotage, political instability, and the actions taken by governments could cause damage to or disrupt our business operations, our suppliers or our customers, and could create economic instability.
Natural disasters (including but not limited to those as a result of climate change), pandemics, acts or threats of war or terrorism, international conflicts, power outages, fires, explosions, equipment failures, sabotage, political instability, and the actions taken by governments could cause damage to or disrupt our business operations, our suppliers or our customers, and could create economic instability.
Even where substitute sources of supply are available, qualifying alternative suppliers and establishing reliable supplies could cost more or result in delays and a loss of sales. Our business success depends on attracting, developing, and retaining highly qualified personnel. Our success depends on the efforts and abilities of our management team and employees.
Even where substitute sources of supply are available, qualifying alternative suppliers and establishing reliable supplies could cost more or result in delays and a loss of sales. 6 Table of Contents Our business success depends on attracting, developing, and retaining highly qualified employees. Our success depends on the efforts and abilities of our leadership team and employees across the Company.
In October 2021, the Organization for Economic Cooperation and Development (OECD) and G20 Finance Ministers reached an agreement that, among other things, ensures that income earned in each jurisdiction that a multinational enterprise operates in is subject to a minimum corporate income tax rate of at least 15%.
In October 2021, the Organization for Economic Cooperation and Development (OECD) and G20 Finance Ministers reached an agreement, known as Base Erosion and Profit Shifting (BEPS) Pillar Two, that, among other things, ensures that income earned in each jurisdiction that a multinational enterprise operates in is subject to a minimum corporate income tax rate of at least 15%.
We rely heavily on technology in our hardware and software products, solutions, and services for our customers’ manufacturing environment, and in our enterprise infrastructure. Despite the implementation of security measures, our systems are vulnerable to unauthorized access by nation states, hackers, cyber-criminals, malicious insiders, and other actors who may engage in fraud, theft of confidential or proprietary information, or sabotage.
Despite the implementation of security measures, our systems are vulnerable to unauthorized access by nation states, hackers, cyber-criminals, malicious insiders, and other actors who may engage in fraud, theft of confidential or proprietary information, or sabotage.
Claims from taxing authorities could have an adverse effect on our income tax expense and financial condition. We conduct business in many countries, which requires us to interpret and comply with the income tax laws and rulings in each of those taxing jurisdictions.
We conduct business in many countries, which requires us to interpret and comply with the income tax laws and rulings in each of those taxing jurisdictions.
The current cyber threat environment indicates increased risk for all companies, including those in industrial automation and information. Like other global companies, we have experienced cyber threats and incidents, although none have been material or had a material adverse effect on our business or financial condition.
Like other global companies, we have experienced cyber threats and incidents, although none have been material or had a material adverse effect on our business or financial condition.
Expenses and funding requirements related to employer-funded healthcare benefits depend on laws and regulations, which could change, as well as healthcare cost inflation. An inability to control costs and funding requirements related to employee and retiree benefits could negatively impact our operating results and financial condition.
Expenses and funding requirements related to employer-funded healthcare benefits depend on laws and regulations, which could change, as well as healthcare cost inflation.
Dollar (USD) may adversely impact our sales and profitability related to business we do outside the U.S. Oil & Gas is a major industry that we serve, including through our Sensia joint venture.
Dollar (USD) may adversely impact our sales and profitability related to business we do outside the U.S. Economic, political, regulatory, and compliance risks, particularly in emerging markets, can restrict our ability to exchange, transact, or pay dividends with foreign currencies we hold. Oil & Gas is a major industry that we serve, including through our Sensia joint venture.
If our access to credit, including the commercial paper market, is adversely affected by a change in market conditions or otherwise, our cost of borrowings may increase or our ability to fund operations may be reduced. Our industry is highly competitive. We face strong competition in all of our market segments in several significant respects.
If our access to credit, including the commercial paper market, is adversely affected by a change in market conditions or otherwise, our cost of borrowings may increase or our ability to fund operations may be reduced. Business and Operational Risks We rely on suppliers to provide equipment, components, and services.
Strategic Transactions and Investments Risks Failure to identify, manage, complete, and integrate strategic transactions may adversely affect our business or we may not achieve the expected benefits of these transactions. As part of our strategy, we pursue strategic transactions, including acquisitions, joint ventures, investments, and other business opportunities and purchases of technology from third parties.
As part of our strategy, we pursue strategic transactions, including acquisitions, joint ventures, investments, and other business opportunities and purchases of technology from third parties.
Demand for our hardware and software products, solutions, and services is sensitive to changes in levels of production and the financial performance of major industries that we serve.
As our product lead times are stabilizing, orders may decline as our distributor partners and customers work to lower their working capital by reducing inventory levels. Demand for our hardware and software products, solutions, and services is sensitive to changes in levels of production and the financial performance of major industries that we serve.
If we are not able to anticipate, identify, develop, and market products that respond to changes in customer preferences and emerging technological and broader industry trends, demand for our products could decline. 8 Table of Contents There are inherent risks in our solutions and services businesses.
Developing new hardware and software products and service offerings requires high levels of innovation, and the development process is often lengthy and costly. If we are not able to anticipate, identify, develop, and market products that respond to changes in customer preferences and emerging technological and broader industry trends, demand for our products could decline.
The occurrence or consequences of these risks may make it more difficult to operate our business and may increase our costs, which could decrease our profitability and have an adverse effect on our financial condition. 7 Table of Contents Failures or security breaches of our products, connected services, manufacturing environment, supply chain, or information technology systems could have an adverse effect on our business.
In addition, we are affected by changes in foreign currency exchange rates, inflation rates, and interest rates. The occurrence or consequences of these risks may make it more difficult to operate our business and may increase our costs, which could decrease our profitability and have an adverse effect on our financial condition.
We expect the level of competition to remain high in the future, which could limit our ability to maintain or increase our market share or profitability. 6 Table of Contents Business and Operational Risks We rely on suppliers to provide equipment, components, and services.
We expect the level of competition to remain high in the future, which could limit our ability to maintain or increase our market share or profitability. Volatility and disruption of the capital and credit markets may result in increased costs to maintain our capital structure.
Strategic transactions and technology investments could result in debt, dilution, liabilities, increased interest expense, restructuring charges, and impairment and amortization expenses related to goodwill and identifiable intangible assets. We own common stock in PTC Inc. and are exposed to the volatility, liquidity, and other risks inherent in holding that stock. We own common stock of PTC Inc.
Strategic transactions and technology investments could result in debt, dilution, liabilities, increased interest expense, restructuring charges, and impairment and amortization expenses related to goodwill and identifiable intangible assets. Legal, Tax, and Regulatory Risks New legislative and regulatory actions could adversely affect our business.
Changes in these requirements could impact demand for our hardware and software products, solutions, and services. 10 Table of Contents Compliance with privacy and cybersecurity regulations could increase our operating costs as part of our efforts to protect and safeguard our sensitive data, personal information, and IT infrastructure.
Compliance with privacy and cybersecurity regulations could increase our operating costs as part of our efforts to protect and safeguard our sensitive data, personal information, and IT infrastructure. Failure to maintain information privacy could result in legal liability or reputational harm. Claims from taxing authorities could have an adverse effect on our income tax expense and financial condition.
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Demand for our hardware and software products, solutions, and services is sensitive to industry volatility and risks including those related to commodity prices, supply and demand dynamics, production costs, geological and political activities, and environmental regulations including those intended to reduce the impact of climate change.
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We face strong competition in all of our market segments in several significant respects.
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Increases in energy demand and supply disruptions caused by the Russia and Ukraine conflict have resulted in significantly higher energy prices, particularly in Europe.
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Failures or security breaches of our products, connected services, manufacturing environment, supply chain, or information and operational technology systems could have an adverse effect on our business. We rely heavily on technology in our hardware and software products, solutions, and services for our customers’ manufacturing environment, and in our enterprise infrastructure.
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The COVID-19 pandemic continues to cause disruption to the global economy, including in all of the regions in which we, our suppliers, distributors, business partners, and customers do business and in which our workforce is located.
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In addition, cyber security threats may pose a significant risk to our third-party partners and could have a material adverse impact on their businesses, operations, products, and services that we use in our day-to-day operations. 7 Table of Contents The current cyber threat environment indicates increased risk for all companies, including those in industrial automation and information technology.
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We continue to monitor the pandemic, and while periodic local increases and decreases in COVID-19 cases are likely, generally the restrictions due to and in response to the pandemic continue to relax in most locations.
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An inability to control costs and funding requirements related to employee and retiree benefits could negatively impact our operating results and financial condition. 8 Table of Contents Strategic Transactions and Investments Risks Failure to identify, manage, complete, and integrate strategic transactions may adversely affect our business or we may not achieve the expected benefits of these transactions.
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However, the COVID-19 pandemic and efforts to manage it, including those by governmental authorities, have had, and could continue to have, an adverse effect on the economy and our business in many ways.
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Changes in these requirements could impact demand for our hardware and software products, solutions, and services. 9 Table of Contents The growing focus on environmental, social, and governance (ESG) factors by investors and other stakeholders and evolving compliance requirements by regulators may impact our business.
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This includes, but is not limited to, a continued limit on the movement of goods, services, and to some extent people, including our own workforce, resulting in worldwide disruptions in our supply chain and distribution.
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Failure to comply with ESG reporting requirements, including inaccurate or incomplete disclosures, may lead to regulatory penalties, litigation, and reputational damage.
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Adverse impacts to our customers’ business operations and financial condition could lead to a decrease in their liquidity and/or spending resulting in a decrease in demand for and our customers’ ability to pay for our hardware and software products, solutions, and services.
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The unprecedented and continuously evolving nature of the COVID-19 pandemic make the duration and severity of its impacts difficult to predict, which could limit our ability to respond to those impacts.
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Additionally, the impacts described above and other impacts of the COVID-19 pandemic and responses to it could substantially increase the risk to us from the other risks described in this Item 1A. Risk Factors . Volatility and disruption of the capital and credit markets may result in increased costs to maintain our capital structure.
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In addition, we are affected by changes in foreign currency exchange rates, inflation rates, and interest rates.
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Developing new hardware and software products requires high levels of innovation, and the development process is often lengthy and costly.
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(PTC), a Nasdaq-listed company. We present this investment on our Consolidated Balance Sheet at its fair value at the end of each reporting period.
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The fair value of our shares of PTC common stock (PTC Shares) is subject to fluctuation in the future due to the volatility of the stock market, changes in general economic conditions, and the performance of PTC.
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We recognize all changes in the fair value of the PTC Shares (whether realized or unrealized) as gains or losses in our Consolidated Statement of Operations. Accordingly, changes in the fair value of the PTC Shares can materially impact the earnings we report, which introduces volatility in our earnings that is not associated with the results of our business operations.
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In particular, significant declines in the fair value of the PTC Shares would produce significant declines in our reported earnings. While there is an established trading market for shares of PTC common stock, there are limitations on our ability to dispose of some or all of the PTC Shares should we wish to reduce our investment.
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Until September 2023, we are subject to contractual restrictions on our ability to transfer the PTC Shares, subject to certain exceptions. In addition, we are subject to certain restrictions on our ability to transfer the PTC Shares under the securities laws.
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If we were forced to sell some or all of the PTC Shares in the market, there can be no assurance that we would be able to sell them at prices equivalent to the value of the PTC Shares that we have reported on our Consolidated Balance Sheet, and we may be forced to sell them at significantly lower prices.
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Finally, our equity position in PTC is a minority position, which exposes us to further risk as we are not able to exert control over PTC. Legal, Tax, and Regulatory Risks New legislative and regulatory actions could adversely affect our business.
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Failure to maintain information privacy could result in legal liability or reputational harm. In addition, increased public awareness and concern regarding climate change may result in more requirements or expectations that could mandate more restrictive or expansive standards, such as more prescriptive reporting of environmental, social, and governance metrics.
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There continues to be a lack of consistent climate change legislation and standards, which creates uncertainty.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAt September 30, 2022, the Company had approximately 50 manufacturing and distribution locations worldwide, disbursed evenly across our regions. There are no major encumbrances (other than financing arrangements, which in the aggregate are not significant) on any of our properties or equipment. Our properties and equipment are in good operating condition and are adequate for our present needs.
Biggest changeAt September 30, 2023, the Company had approximately 50 manufacturing and distribution locations worldwide, disbursed evenly across our regions. There are no major encumbrances (other than financing arrangements, which in the aggregate are not significant) on any of our properties or equipment. Our properties and equipment are in good operating condition and are adequate for our present needs.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe have included the S&P Electrical Components & Equipment Index for this fiscal year only for comparative purposes to prior fiscal year graphs. 14 Table of Contents The cumulative total returns on Rockwell Automation common stock and each index as of September 30, 2017 through 2022 plotted in the above graph are as follows: 2017 2018 2019 2020 2021 2022 Rockwell Automation (1) $ 100.00 $ 107.27 $ 96.48 $ 131.85 $ 178.54 $ 132.89 S&P 500 Index 100.00 117.90 122.90 141.50 183.93 155.43 S&P Selected GICS groups 100.00 126.80 136.68 195.25 248.49 210.34 S&P Electrical Components & Equipment 100.00 115.84 111.96 130.07 188.42 149.34 Cash dividends per common share 3.04 3.51 3.88 4.08 4.28 4.48 (1) Includes the reinvestment of all dividends in our common stock. 15 Table of Contents Item 6.
Biggest changeThe cumulative total returns on Rockwell Automation common stock and each index as of September 30, 2018 through 2023 plotted in the above graph are as follows: 2018 2019 2020 2021 2022 2023 Rockwell Automation (1) $ 100.00 $ 89.94 $ 122.91 $ 166.43 $ 123.89 $ 167.41 S&P 500 Index 100.00 104.25 120.02 156.01 131.85 160.31 S&P Selected GICS groups 100.00 107.60 148.77 189.73 159.25 207.01 Cash dividends per common share 3.51 3.88 4.08 4.28 4.48 4.72 (1) Includes the reinvestment of all dividends in our common stock. 14 Table of Contents Item 6.
Company Purchases The table below sets forth information with respect to purchases made by or on behalf of us of shares of our common stock during the three months ended September 30, 2022: 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.
Company Purchases The table below sets forth information with respect to purchases made by or on behalf of us of shares of our common stock during the three months ended September 30, 2023: 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.
The following line graph compares the cumulative total shareowner return on our common stock against the cumulative total return of the S&P Composite-500 Stock Index (S&P 500 Index), the S&P 500 Selected GICS groups (Capital Goods, Software & Services, and Technology Hardware & Equipment), and the S&P Electrical Components & Equipment Index for the period of five fiscal years from October 1, 2017, to September 30, 2022, assuming in each case a fixed investment of $100 at the respective closing prices on September 30, 2017, and reinvestment of all dividends.
The following line graph compares the cumulative total shareowner return on our common stock against the cumulative total return of the S&P Composite-500 Stock Index (S&P 500 Index) and the S&P 500 Selected GICS groups (Capital Goods, Software & Services, and Technology Hardware & Equipment) for the period of five fiscal years from October 1, 2018, to September 30, 2023, assuming in each case a fixed investment of $100 at the respective closing prices on September 30, 2018, and reinvestment of all dividends.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our common stock, $1 par value, is listed on the New York Stock Exchange and trades under the symbol “ROK”. On October 31, 2022, there were 12,652 shareowners of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our common stock, $1 par value, is listed on the New York Stock Exchange and trades under the symbol “ROK”. On October 31, 2023, there were 11,960 shareowners of record of our common stock.
(2) Average price paid per share includes brokerage commissions. (3) On both July 24, 2019, and May 2, 2022, the Board of Directors authorized us to expend an additional $1.0 billion to repurchase shares of our common stock.
(2) Average price paid per share includes brokerage commissions. (3) On May 2, 2022, the Board of Directors authorized us to expend an additional $1.0 billion to repurchase shares of our common stock.
Performance Graph The following information is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under the Exchange Act or to the liabilities of Section 18 of the Exchange Act, and will not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent the Company specifically incorporates it by reference into such a filing.
Our repurchase program allows 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. 13 Table of Contents Performance Graph The following information is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under the Exchange Act or to the liabilities of Section 18 of the Exchange Act, and will not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent the Company specifically incorporates it by reference into such a filing.
Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (3) July 1 – 31, 2022 193,368 $ 208.92 193,368 $ 1,286,459,441 August 1 – 31, 2022 73,880 249.01 73,880 1,268,062,555 September 1 – 30, 2022 71,780 234.01 71,780 1,251,265,224 Total 339,028 $ 222.97 339,028 (1) All of the shares purchased during the quarter ended September 30, 2022, were acquired pursuant to the repurchase program described in (3) below.
Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (3) July 1 – 31, 2023 56,822 $ 336.07 56,822 $ 975,955,429 August 1 – 31, 2023 82,698 298.05 82,698 951,307,019 September 1 – 30, 2023 37,732 291.47 37,732 940,309,320 Total 177,252 $ 308.84 177,252 (1) All of the shares purchased during the quarter ended September 30, 2023, were acquired pursuant to the repurchase program described in (3) below.
Removed
Our repurchase program allows 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.
Removed
For performance shares awarded in fiscal 2021, we changed our relative performance benchmark group from the S&P 500 Index to the S&P 500 Selected GICS groups noted above in order to include companies that are more aligned with the Company's strategic direction.
Removed
Accordingly, we will begin comparing our cumulative total shareowner return to the cumulative total return of both the S&P 500 Index and the S&P 500 Selected GICS groups (weighted based on respective GICS market capitalization) in the following graph.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeFinancial Statements and Supplementary Data 42 CONSOLIDATED BALANCE SHEET 42 CONSOLIDATED STATEMENT OF OPERATIONS 43 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 44 CONSOLIDATED STATEMENT OF CASH FLOWS 45 CONSOLIDATED STATEMENT OF SHAREOWNERS’ EQUITY 46 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 47
Biggest changeFinancial Statements and Supplementary Data 37 CONSOLIDATED BALANCE SHEET 37 CONSOLIDATED STATEMENT OF OPERATIONS 38 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 39 CONSOLIDATED STATEMENT OF CASH FLOWS 40 CONSOLIDATED STATEMENT OF SHAREOWNERS’ EQUITY 41 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 42
Item 6. Reserved 16 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 16 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 41 Item 8.
Item 6. Reserved 15 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 15 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 36 Item 8.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following are reconciliations of Net income attributable to Rockwell Automation, diluted EPS, and effective tax rate to Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate, respectively (in millions, except per share amounts and percentages): Year Ended September 30, 2022 2021 2020 Net income attributable to Rockwell Automation $ 932.2 $ 1,358.1 $ 1,023.4 Non-operating pension and postretirement benefit cost 4.7 63.8 37.4 Tax effect of non-operating pension and postretirement benefit cost (1.9) (16.0) (10.1) Purchase accounting depreciation and amortization attributable to Rockwell Automation 91.9 43.2 29.4 Tax effect of purchase accounting depreciation and amortization attributable to Rockwell Automation (22.3) (10.5) (7.0) Change in fair value of investments (1) 136.9 (397.4) (153.9) Tax effect of change in fair value of investments (1) (30.8) 64.7 — Adjusted Income $ 1,110.7 $ 1,105.9 $ 919.2 Diluted EPS $ 7.97 $ 11.58 $ 8.77 Non-operating pension and postretirement benefit cost 0.04 0.55 0.32 Tax effect of non-operating pension and postretirement benefit cost (0.02) (0.14) (0.09) Purchase accounting depreciation and amortization attributable to Rockwell Automation 0.78 0.37 0.25 Tax effect of purchase accounting depreciation and amortization attributable to Rockwell Automation (0.19) (0.09) (0.06) Change in fair value of investments (1) 1.17 (3.39) (1.32) Tax effect of change in fair value of investments (1) (0.26) 0.55 — Adjusted EPS $ 9.49 $ 9.43 $ 7.87 Effective tax rate 14.4 % 11.9 % 9.9 % Tax effect of non-operating pension and postretirement benefit cost 0.1 % 0.5 % 0.6 % Tax effect of purchase accounting depreciation and amortization attributable to Rockwell Automation 0.6 % 0.4 % 0.4 % Tax effect of change in fair value of investments (1) 0.9 % (1.2) % 1.5 % Adjusted Effective Tax Rate 16.0 % 11.6 % 12.4 % (1) Primarily relates to the change in fair value of investment in PTC. 31 Table of Contents Fiscal 2023 Guidance Diluted EPS $9.54 - $10.34 Non-operating pension and postretirement benefit cost 0.05 Tax effect of non-operating pension and postretirement benefit cost (0.01) Purchase accounting depreciation and amortization attributable to Rockwell Automation 0.81 Tax effect of purchase accounting depreciation and amortization attributable to Rockwell Automation (0.19) Change in fair value of investments (1) — Tax effect of change in fair value of investments (1) — Adjusted EPS (2) $10.20 - $11.00 Effective tax rate ~ 17.7% Tax effect of non-operating pension and postretirement benefit cost ~ —% Tax effect of purchase accounting depreciation and amortization attributable to Rockwell Automation ~ 0.3% Tax effect of change in fair value of investments (1) ~ —% Adjusted Effective Tax Rate ~ 18.0% (1) The year ended September 30, 2022, included a loss on investment of $136.9 million primarily due to the change in fair value of investment in PTC.
Biggest changeThe following are reconciliations of Net income attributable to Rockwell Automation, diluted EPS, and effective tax rate to Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate, respectively (in millions, except per share amounts and percentages): Year Ended September 30, 2023 2022 2021 Net income attributable to Rockwell Automation $ 1,387.4 $ 932.2 $ 1,358.1 Non-operating pension and postretirement benefit cost 82.7 4.7 63.8 Tax effect of non-operating pension and postretirement benefit cost (20.6) (1.9) (16.0) Purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation (1) 178.3 91.9 43.2 Tax effect of purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation (1) (9.4) (22.3) (10.5) Change in fair value of investments (2) (279.3) 136.9 (397.4) Tax effect of change in fair value of investments (2) 67.6 (30.8) 64.7 Adjusted Income $ 1,406.7 $ 1,110.7 $ 1,105.9 Diluted EPS $ 11.95 $ 7.97 $ 11.58 Non-operating pension and postretirement benefit cost 0.72 0.04 0.55 Tax effect of non-operating pension and postretirement benefit cost (0.18) (0.02) (0.14) Purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation 1.54 0.78 0.37 Tax effect of purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation (0.08) (0.19) (0.09) Change in fair value of investments (2) (2.42) 1.17 (3.39) Tax effect of change in fair value of investments (2) 0.59 (0.26) 0.55 Adjusted EPS $ 12.12 $ 9.49 $ 9.43 Effective tax rate 20.5 % 14.4 % 11.9 % Tax effect of non-operating pension and postretirement benefit cost 0.3 % 0.1 % 0.5 % Tax effect of purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation (3.7) % 0.6 % 0.4 % Tax effect of change in fair value of investments (2) (0.7) % 0.9 % (1.2) % Adjusted Effective Tax Rate 16.4 % 16.0 % 11.6 % (1) Includes $97.3 million net expense from $157.5 million goodwill impairment charge included in Income before income taxes, $33.1 tax effect from goodwill impairment and related valuation allowances recorded in Income tax provision, and ($93.3) million Net loss attributable to noncontrolling interests.
We exclude purchase accounting depreciation and amortization, corporate and other, non-operating pension and postretirement benefit cost, change in fair value of investments, the $70 million legal settlement in fiscal 2021, interest expense, net, and income tax provision because we do not consider these items to be directly related to the operating performance of our segments.
We exclude purchase accounting depreciation and amortization, impairment, corporate and other, non-operating pension and postretirement benefit cost, change in fair value of investments, the $70 million legal settlement in fiscal 2021, interest expense, net, and income tax provision because we do not consider these items to be directly related to the operating performance of our segments.
The following is a summary of our credit ratings as of September 30, 2022: Credit Rating Agency Short Term Rating Long Term Rating Outlook Standard & Poor’s A-1 A Negative Moody’s P-2 A3 Stable Fitch Ratings F1 A Stable Our ability to access the commercial paper market, and the related costs of these borrowings, is affected by the strength of our credit ratings and market conditions.
The following is a summary of our credit ratings as of September 30, 2023: Credit Rating Agency Short Term Rating Long Term Rating Outlook Standard & Poor’s A-1 A Negative Moody’s P-2 A3 Stable Fitch Ratings F1 A Stable Our ability to access the commercial paper market, and the related costs of these borrowings, is affected by the strength of our credit ratings and market conditions.
Contributions to our pension plans beyond 2023 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 2023 are excluded from the summary above, as we are unable to make a reasonably reliable estimate of these amounts.
Contributions to our pension plans beyond 2024 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 2024 are excluded from the summary above, as we are unable to make a reasonably reliable estimate of these amounts.
Attracting, Developing, and Retaining Highly Qualified Talent At Rockwell Automation, we promise to expand human possibility within our company and throughout the world of industrial production, and we work to attract and develop highly engaged people who can and want to do their best work. Our commitment to diversity, equity, and inclusion starts at the top.
Attracting, Developing, and Retaining Highly Qualified Employees At Rockwell Automation, we promise to expand human possibility within our company and throughout the world of industrial production, and we work to attract and develop highly engaged people who can and want to do their best work. Our commitment to diversity, equity, and inclusion starts at the top.
We did not borrow against this credit facility or the former credit facility during the periods ended September 30, 2022 and 2021. Borrowings under our new $1.5 billion credit facility bear interest based on short-term money market rates in effect during the period the borrowings are outstanding.
We did not borrow against this credit facility or the former credit facility during the periods ended September 30, 2023 and 2022. Borrowings under our new $1.5 billion credit facility bear interest based on short-term money market rates in effect during the period the borrowings are outstanding.
In such event, the cost of borrowings under our unsecured committed credit facility could be higher than the cost of commercial paper borrowings. 35 Table of Contents We regularly monitor the third-party depository institutions that hold our cash and cash equivalents and short-term investments.
In such event, the cost of borrowings under our unsecured committed credit facility could be higher than the cost of commercial paper borrowings. 30 Table of Contents We regularly monitor the third-party depository institutions that hold our cash and cash equivalents and short-term investments.
(4) Under the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), the Company may elect to pay the transition tax interest-free over eight years, with 8% due in each of the first five years, 15% in year six, 20% in year seven, and 25% in year eight.
(4) Under the Tax Cuts and Jobs Act of 2017 (the Tax Act), the Company may elect to pay the transition tax interest-free over eight years, with 8% due in each of the first five years, 15% in year six, 20% in year seven, and 25% in year eight.
Our 11 board members include three female and two African American directors. In fiscal 2021, we hired our first chief diversity officer and made investments to accelerate our efforts to increase diversity, equity, and inclusion across the company.
Our 11 board members include four female and two African American directors. In fiscal 2021, we hired our first chief diversity officer and made investments to accelerate our efforts to increase diversity, equity, and inclusion across the company.
During fiscal 2022, we launched our Hybrid Workplace Program, which combines the values of both physical workspaces and virtual work options, both of which are important for attracting, retaining, and developing talent and facilitating innovation, engagement, and productivity.
During fiscal 2022, we launched our Hybrid Workplace Program, which combines the values of both physical workspaces and virtual work options, both of which are important for attracting, retaining, and developing employees and facilitating innovation, engagement, and productivity.
We use attrition rate information to identify and address unfavorable trends to mitigate risk to our business. See Item 1A. Risk Factors for a discussion of risks relating to our inability to attract, develop, and retain highly qualified talent.
We use attrition rate information to identify and address unfavorable trends to mitigate risk to our business. See Item 1A. Risk Factors for a discussion of risks relating to our inability to attract, develop, and retain highly qualified employees.
Employee training is used to reinforce our values companywide, with participation in trainings related to ethics, environment, health and safety, and emergency responses at or near 100%. 19 Table of Contents There are several ways in which we attract, develop, and retain highly qualified talent, including: • we make the safety and health of our employees a top priority.
Employee training is used to reinforce our values companywide, with participation in trainings related to ethics, environment, health and safety, and emergency responses at or near 100%. 17 Table of Contents There are several ways in which we attract, develop, and retain highly qualified employees, including: • We make the safety and health of our employees a top priority.
We used these net proceeds primarily to repay our outstanding commercial paper, with the remaining proceeds used for general corporate purposes. 34 Table of Contents We entered into treasury locks to manage the potential change in interest rates in anticipation of the issuance of the $1.5 billion aggregate notes in August 2021 and the $1.0 billion of fixed rate debt in March 2019.
We used these net proceeds primarily to repay our outstanding commercial paper, with the remaining proceeds used for general corporate purposes. We entered into treasury locks to manage the potential change in interest rates in anticipation of the issuance of the $1.5 billion aggregate notes in August 2021 and the $1.0 billion of fixed rate debt in March 2019.
Although we believe the assumptions and estimates made were reasonable and appropriate, these estimates require judgment and are based in part on historical experience and information obtained from Plex management. The key assumption requiring the use of judgement in the valuation of the customer relationship intangible asset was the customer attrition rate of 5 percent.
Although we believe the assumptions and estimates made were reasonable and appropriate, these estimates require judgment and are based in part on historical experience and information obtained from Plex management. 34 Table of Contents The key assumption requiring the use of judgement in the valuation of the customer relationship intangible asset was the customer attrition rate of 5 percent.
We used these net proceeds primarily to fund the acquisition of Plex. Refer to Note 4 in the Consolidated Financial Statements for additional information on this acquisition. In March 2019, we issued $1.0 billion aggregate principal amount of long-term notes in a registered public offering.
We used these net proceeds primarily to fund the acquisition of Plex. Refer to Note 4 in the Consolidated Financial Statements for additional information on this acquisition. 29 Table of Contents In March 2019, we issued $1.0 billion aggregate principal amount of long-term notes in a registered public offering.
We were in compliance with all covenants under our credit facilities at September 30, 2022 and 2021. There are no significant commitment fees or compensating balance requirements under our credit facilities.
We were in compliance with all covenants under our credit facilities at September 30, 2023 and 2022. There are no significant commitment fees or compensating balance requirements under our credit facilities.
Our estimate is based primarily on historical experience. If the time period were to change by 10 percent, the effect would be an adjustment to the accrual of approximately $25.7 million. More information regarding our revenue recognition and returns, rebates and incentives policies are contained in Note 1 and Note 2 in the Consolidated Financial Statements.
Our estimate is based primarily on historical experience. If the time period were to change by 10 percent, the effect would be an adjustment to the accrual of approximately $24.9 million. More information regarding our revenue recognition and returns, rebates, and incentives policies are contained in Note 1 and Note 2 in the Consolidated Financial Statements.
Overall demand for our hardware and software products, solutions, and services is driven by: • 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, operational productivity, asset management and reliability, 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.
Overall demand for our hardware and software products, solutions, and services is driven by: • investments in manufacturing, including new facilities or production lines, upgrades, modifications and expansions of existing 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, agility to address evolving consumer preferences, operational productivity, asset management and reliability, and business resilience, including security 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.
We strive for zero workplace injuries and illnesses and operate in a manner that recognizes safety as fundamental to Rockwell Automation being a great place to work. In fiscal 2022, we achieved 0.38 recordable cases per 100 employees. • we capture and act upon employee feedback through our annual employee engagement survey.
We strive for zero workplace injuries and illnesses and operate in a manner that recognizes safety as fundamental to Rockwell Automation being a great place to work. In fiscal 2023, we achieved 0.27 recordable cases per 100 employees. • We capture and act upon employee feedback through our annual employee engagement survey.
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. The table below depicts the trends in these indicators from fiscal 2020 to 2022. These figures are as of November 8, 2022, and are subject to revision by the issuing organizations.
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. The table below depicts the trends in these indicators from fiscal 2021 to 2023. These figures are as of November 8, 2023, and are subject to revision by the issuing organizations.
At September 30, 2021, there were $1.8 million of outstanding common stock share repurchases recorded in Accounts payable that did not settle until 2022. Our decision to repurchase shares in 2023 will depend on business conditions, free cash flow generation, other cash requirements, and stock price.
At September 30, 2022, there were $1.6 million of outstanding common stock share repurchases recorded in Accounts payable that did not settle until 2023. Our decision to repurchase shares in 2024 will depend on business conditions, free cash flow generation, other cash requirements, and stock price.
In fiscal 2022, the majority of our employees completed one or more of our training programs representing over 500,000 learning hours. • we offer employee assistance and work life benefits to all global employees. Our comprehensive benefits include healthcare benefits, disability and life insurance benefits, paid time off, and leave programs.
In fiscal 2023, the majority of our employees completed one or more of our training programs representing over 650,000 learning hours. • We offer employee assistance and work life benefits to all global employees. Our comprehensive benefits include healthcare benefits, disability and life insurance benefits, paid time off, and leave programs.
We use 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 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.
More information regarding goodwill impairment testing is contained in Note 1 and Note 3 in the Consolidated Financial Statements. Retirement Benefits - Pension Pension costs and obligations are actuarially determined and are influenced by assumptions used to estimate these amounts, including the discount rate.
More information regarding goodwill impairment testing is contained in Note 1 and Note 3 in the Consolidated Financial Statements. 33 Table of Contents Retirement Benefits - Pension Pension costs and obligations are actuarially determined and are influenced by assumptions used to estimate these amounts, including the discount rate.
If we were to allocate these costs, we would attribute them to each of our segments as follows (in millions): Year Ended September 30, 2022 2021 2020 Purchase accounting depreciation and amortization Intelligent Devices $ 2.5 $ 2.7 $ 2.9 Software & Control 69.0 19.2 6.7 Lifecycle Services 31.4 32.1 30.8 Non-operating pension and postretirement benefit (credit) cost Intelligent Devices $ (3.5) $ 14.1 $ 7.4 Software & Control (3.5) 14.1 7.4 Lifecycle Services (4.8) 18.8 9.9 30 Table of Contents Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate Reconciliation Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate are non-GAAP earnings measures that exclude non-operating pension and postretirement benefit cost, purchase accounting depreciation and amortization attributable to Rockwell Automation, change in fair value of investments, and Net loss attributable to noncontrolling interests, including their respective tax effects.
If we were to allocate these costs, we would attribute them to each of our segments as follows (in millions): Year Ended September 30, 2023 2022 2021 Purchase accounting depreciation and amortization, and impairment Intelligent Devices $ 4.7 $ 2.5 $ 2.7 Software & Control 68.5 69.0 19.2 Lifecycle Services 190.2 31.4 32.1 Non-operating pension and postretirement benefit cost (credit) Intelligent Devices $ 21.2 $ (3.5) $ 14.1 Software & Control 21.2 (3.5) 14.1 Lifecycle Services 28.3 (4.8) 18.8 25 Table of Contents Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate Reconciliation Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate are non-GAAP earnings measures that exclude non-operating pension and postretirement benefit cost, purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation, change in fair value of investments, and Net loss attributable to noncontrolling interests, including their respective tax effects.
Charges for workforce reductions and facility rationalization may be required in order to effectively execute our productivity programs. 21 Table of Contents U.S. Economic Trends In 2022, sales in the U.S. accounted for over half of our total sales.
Charges for workforce reductions and facility rationalization may be required in order to effectively execute our productivity programs. 19 Table of Contents U.S. Economic Trends In 2023, sales in the U.S. accounted for over half of our total sales.
At September 30, 2022, the majority of our Cash and cash equivalents were held by non-U.S. subsidiaries. As a result of the broad changes to the U.S. international tax system under the Tax Act, we account for taxes on earnings of substantially all of our non-U.S. subsidiaries including both non-U.S. and U.S. taxes.
At September 30, 2023, approximately half of our Cash and cash equivalents were held by non-U.S. subsidiaries. As a result of the broad changes to the U.S. international tax system under the Tax Act, we account for taxes on earnings of substantially all of our non-U.S. subsidiaries including both non-U.S. and U.S. taxes.
The discount rate was set as of our September 30 measurement date and was determined by modeling a portfolio of bonds that match the expected cash flow of our benefit plans. 38 Table of Contents The changes in our discount rate has an inverse relationship with our net periodic benefit cost and projected benefit obligation.
The discount rate was set as of our September 30 measurement date and was determined by modeling a portfolio of bonds that match the expected cash flow of our benefit plans. The changes in our discount rate have an inverse relationship with our net periodic benefit cost and projected benefit obligation.
Changes in any of the assumptions and the amortization of differences between the assumptions and actual experience will affect the amount of pension expense in future periods. Our global pension expense in 2022 was $74.4 million compared to $157.0 million in 2021.
Changes in any of the assumptions and the amortization of differences between the assumptions and actual experience will affect the amount of pension expense in future periods. Our global pension expense in 2023 was $122.0 million compared to $74.4 million in 2022.
If such factors impact our ability to achieve forecasted revenue growth rates and margins, the fair value of the reporting unit could decrease, which may result in an impairment.
If such factors impact our ability to achieve forecasted revenue growth rates and margins, the fair value of the reporting unit could decrease, which may result in an additional impairment of the remaining goodwill balance.
We monitor employee retention and attrition rates by demographic factors including by gender, ethnicity, generation, years of service, career role, region, business, and function. We generally experienced higher attrition rates in fiscal 2022 as compared to fiscal 2021. We believe the increase is consistent with market trends experienced broadly across labor markets in fiscal 2022.
We monitor employee retention and attrition rates by demographic factors including by gender, ethnicity, generation, years of service, career role, region, business, and function. We generally experienced lower attrition rates in fiscal 2023 as compared to fiscal 2022. We believe the decrease is consistent with market trends experienced broadly across labor markets in fiscal 2023.
Our quarterly dividend rate as of September 30, 2022, is $1.12 per common share ($4.48 per common share annually), which is determined at the sole discretion of our Board of Directors. Supplemental Sales Information We translate sales of subsidiaries operating outside of the United States using exchange rates effective during the respective period.
Our quarterly dividend rate as of September 30, 2023, is $1.18 per common share ($4.72 per common share annually), which is determined at the sole discretion of our Board of Directors. Supplemental Sales Information We translate sales of subsidiaries operating outside of the United States using exchange rates effective during the respective period.
The following chart illustrates the estimated change in projected benefit obligation and annual net periodic benefit cost assuming a change of 25 basis points in the discount rate for our U.S. pension plans (in millions): Pension Benefits Change in Projected Benefit Obligation Change in Net Periodic Benefit Cost (1) Discount rate $ 69.0 $ 5.3 (1) Change includes both operating and non-operating pension costs.
The following chart illustrates the estimated change in projected benefit obligation and annual net periodic benefit cost assuming a change of 25 basis points in the discount rate for our U.S. pension plans (in millions): Pension Benefits Change in Projected Benefit Obligation Change in Net Periodic Benefit Cost (1) Discount rate $ 52.4 $ 0.2 (1) Change includes both operating and non-operating pension costs.
Domain expertise refers to the industry and application knowledge required to deliver solutions and services that support customers through the entire life cycle of their automation investment. The combination of industry-specific domain expertise of our people with our innovative technologies enables us to help our customers solve their manufacturing and business challenges.
Domain expertise refers to the industry and application knowledge required to deliver solutions and services that support customers through the entire lifecycle of their automation investment. The combination of industry-specific domain expertise of our people with our innovative technologies enables us to help our customers automate and transform their manufacturing processes and solve their business challenges.
The effects of currency translation decreased sales by 2.5 percentage points and acquisitions increased sales by 0.6 percentage points. All regions experienced sales increases. Segment Operating Margin Lifecycle Services segment operating earnings increased 0.1 percent year over year.
The effects of currency translation decreased sales by 1.6 percentage points and acquisitions increased sales by 0.6 percentage points. All regions experienced reported and organic sales increases. Segment Operating Margin Lifecycle Services segment operating earnings decreased 6.3 percent year over year.
Our global inclusion index score was 77, two points higher than the global benchmark of 75. • we invest in growth and development of our employees. As the pace of change increases, it is important we provide re-skilling and upskilling opportunities for our technical talent, along with soft skills and leadership development for all.
Our global inclusion index score was 81, six points higher than the industry norm of 75. • We invest in growth and development of our employees. As the pace of change increases, it is important we provide re-skilling and upskilling opportunities for our technical talent, along with soft skills and leadership development for all.
As of September 30, 2022, the fiscal year-to-date sales of our PTC shares under our 10b5-1 plan and open market sales resulted in a gross inflow of $202.4 million. This excludes any tax liability related to the realized gain on investment. These proceeds, and any proceeds from future sales, will support our future uses of cash.
As of September 30, 2023 and 2022, the fiscal year sales of our PTC shares under our 10b5-1 plan and open market sales resulted in a gross inflow of $1,210.4 million and $210.2 million, respectively. This excludes any tax liability related to the realized gain on sale of the investment. These proceeds will support our future uses of cash.
In 2021, we repurchased approximately 1.1 million shares of our common stock under our share repurchase program at a total cost of $301.4 million and an average cost of $263.43 per share. At September 30, 2022, there were $1.6 million of outstanding common stock share repurchases recorded in Accounts payable that did not settle until 2023.
In 2022, we repurchased approximately 1.3 million shares of our common stock under our share repurchase program at a total cost of $301.1 million and an average cost of $223.05 per share. At September 30, 2023, there were $1.1 million of outstanding common stock share repurchases recorded in Accounts payable that did not settle until 2024.
Separate short-term unsecured credit facilities of approximately $214.1 million at September 30, 2022, were available to non-U.S. subsidiaries, of which approximately $30.0 million was committed under letters of credit. Borrowings under our non-U.S. credit facilities at September 30, 2022 and 2021, were not significant.
Separate short-term unsecured credit facilities of approximately $225.8 million at September 30, 2023, were available to non-U.S. subsidiaries, of which approximately $32.0 million was committed under letters of credit. Borrowings under our non-U.S. credit facilities at September 30, 2023 and 2022, were not significant.
Approximately all of our 2022 global pension expense and 76 percent of our global projected benefit obligation relate to our U.S. pension plan. The discount rate used to determine our 2022 U.S. pension expense was 3.86 percent, compared to 2.90 percent for 2021. For 2023, our U.S. discount rate will increase to 5.65 percent from 3.86 percent in 2022.
Approximately all of our 2023 global pension expense and 70 percent of our global projected benefit obligation relate to our U.S. pension plan. The discount rate used to determine our 2023 U.S. pension expense was 5.65 percent, compared to 3.86 percent for 2022. For 2024, our U.S. discount rate will increase to 6.10 percent from 5.65 percent in 2023.
(3) Adjusted EPS is a non-GAAP earnings measure. See Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate Reconciliation for more information on this non-GAAP measure. 25 Table of Contents 2022 Compared to 2021 Sales Sales in fiscal 2022 increased 10.9 percent compared to 2021. Organic sales increased 11.3 percent. Currency translation decreased sales by 2.7 percentage points.
(3) Adjusted EPS is a non-GAAP earnings measure. See Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate Reconciliation for more information on this non-GAAP measure. 22 Table of Contents 2023 Compared to 2022 Sales Sales in fiscal 2023 increased 16.7 percent compared to 2022. Organic sales increased 16.9 percent. Currency translation decreased sales by 1.4 percentage points.
IP Index PMI Fiscal 2022 quarter ended: September 2022 102.4 50.9 June 2022 101.9 53.0 March 2022 101.1 57.1 December 2021 100.1 58.8 Fiscal 2021 quarter ended: September 2021 98.8 60.5 June 2021 97.9 60.9 March 2021 96.7 63.7 December 2020 96.1 60.5 Fiscal 2020 quarter ended: September 2020 94.1 55.7 June 2020 84.6 52.2 March 2020 97.5 49.7 December 2019 101.7 47.8 During 2022, inflation in the U.S. has had an impact on our input costs and pricing.
IP Index PMI Fiscal 2023 quarter ended: September 2023 99.6 49.0 June 2023 99.6 46.0 March 2023 99.5 46.3 December 2022 99.6 48.4 Fiscal 2022 quarter ended: September 2022 102.4 50.9 June 2022 101.9 53.0 March 2022 101.1 57.1 December 2021 100.1 58.8 Fiscal 2021 quarter ended: September 2021 98.8 60.5 June 2021 97.9 60.9 March 2021 96.7 63.7 December 2020 96.1 60.5 Inflation in the U.S. has also had an impact on our input costs and pricing.
The various indicators we use to gauge the direction and momentum of our served U.S. markets include: • 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 2017.
The various indicators we use to gauge the direction and momentum of our served U.S. markets include: • The Industrial Production (IP) Index, published by the Federal Reserve, which measures the real output of manufacturing, mining, and electric and gas utilities.
The table below presents our sales for the year ended September 30, 2022, attributed to the geographic regions based upon country of destination, and the percentage change from the same period in 2021 (in millions, except percentages). The results by region, segment, and industry were primarily driven by component availability rather than the underlying demand. Change vs.
The table below presents our sales for the year ended September 30, 2023, attributed to the geographic regions based upon country of destination, and the percentage change from the same period in 2022 (in millions, except percentages). The results by region and segment were primarily impacted by the composition of backlog versus underlying demand. Change vs.
Our total order backlog consists of (in millions): September 30, 2022 2021 Intelligent Devices $ 2,086.1 $ 1,052.8 Software & Control 1,456.8 618.2 Lifecycle Services 1,654.1 1,239.5 Total Company $ 5,197.0 $ 2,910.5 See Note 2 in the Consolidated Financial Statements for additional information on the nature of our products and services and revenue recognition.
Our total order backlog consists of (in millions): September 30, 2023 2022 Intelligent Devices $ 1,464.1 $ 2,086.1 Software & Control 897.5 1,456.8 Lifecycle Services 1,747.3 1,654.1 Total Company $ 4,108.9 $ 5,197.0 See Note 2 in the Consolidated Financial Statements for additional information on the nature of our products and services and revenue recognition.
See Note 16 in the Consolidated Financial Statements for a complete reconciliation of the United States statutory tax rate to the effective tax rate and more information on tax events in 2022 and 2021 affecting each year’s respective tax rates.
The Adjusted Effective Tax Rate in 2023 was 16.4 percent compared to 16.0 percent in 2022. See Note 16 in the Consolidated Financial Statements for a complete reconciliation of the United States statutory tax rate to the effective tax rate and additional information on tax events in 2023 and 2022 affecting each year’s respective tax rates.
Cash dividends declared to shareowners were $520.8 million in 2022 ($4.48 per common share), $497.5 million in 2021 ($4.28 per common share), and $472.8 million in 2020 ($4.08 per common share).
Cash dividends declared to shareowners were $544.0 million in 2023 ($4.72 per common share), $520.8 million in 2022 ($4.48 per common share), and $497.5 million in 2021 ($4.28 per common share).
At September 30, 2022, our employees, including those employed by consolidated subsidiaries, by region were approximately: North America 10,000 Europe, Middle East and Africa 5,500 Asia Pacific 6,000 Latin America 4,500 Total employees 26,000 Our employees had the following global gender demographics based on voluntary disclosure: September 30, 2022 Women Men All employees 32% 68% Individual Contributors 33% 67% People Managers 26% 74% Technical Talent 17% 83% Manufacturing Associates 48% 52% 20 Table of Contents Our U.S. employees had the following race and ethnicity demographics based on voluntary disclosure: September 30, 2022 Black / African American Asian Hispanic / Latinx White Multiracial, Native American and Pacific Islander Undisclosed All U.S.
At September 30, 2023, our employees, including those employed by consolidated subsidiaries, by region were approximately: North America 10,000 Europe, Middle East and Africa 5,500 Asia Pacific 7,500 Latin America 6,000 Total employees 29,000 Our employees had the following global gender demographics based on voluntary disclosure: September 30, 2023 Women Men Undisclosed All employees 33% 67% —% Individual Contributors 34% 66% —% People Managers 27% 73% —% Technical Talent 19% 81% —% Manufacturing Associates 46% 53% 1% 18 Table of Contents Our U.S. employees had the following race and ethnicity demographics based on voluntary disclosure: September 30, 2023 Black / African American Asian Hispanic / Latinx White Multiracial, Native American and Pacific Islander Undisclosed All U.S.
This has resulted in and could continue to result in: • disruptions in our supply chain; • difficulty in procuring or inability to procure components and materials necessary for our hardware and software products, solutions, and services; • increased costs for commodities, components, and freight services; and • delays in delivering, or an inability to deliver, our hardware and software products, solutions, and services.
Although there has been a continued gradual improvement in the supply chain environment, this has resulted in and could continue to result in: • challenges in our supply chain; • difficulty in procuring or inability to procure components and materials necessary for our hardware and software products, solutions, and services; • increased costs for commodities and components; and • delays in delivering, or an inability to deliver, our hardware and software products, solutions, and services.
Cash provided by operating activities was $823.1 million for the year ended September 30, 2022, compared to $1,261.0 million for the year ended September 30, 2021. Free cash flow was $682.0 million for the year ended September 30, 2022, compared to $1,140.7 million for the year ended September 30, 2021.
Cash provided by operating activities was $1,374.6 million for the year ended September 30, 2023, compared to $823.1 million for the year ended September 30, 2022. Free cash flow was $1,214.1 million for the year ended September 30, 2023, compared to $682.0 million for the year ended September 30, 2022.
See Financial Condition for a reconciliation of cash flows from operating activities to free cash flow and a discussion of why we believe this non-GAAP measure is useful to investors. Overview Rockwell Automation, Inc. is a global leader in industrial automation and digital transformation.
See Financial Condition for a reconciliation of Cash provided by operating activities to free cash flow and a discussion of why we believe this non-GAAP measure is useful to investors. Overview Rockwell Automation, Inc. is the world’s largest company dedicated to industrial automation and digital transformation.
Organic Annual Recurring Revenue ARR is a key metric that enables measurement of progress in growing our recurring revenue business. It represents the annual contract value of all active recurring revenue contracts at any point in time.
(2) Primarily relates to the change in fair value of our previous investment in PTC. 26 Table of Contents Annual Recurring Revenue (ARR) Organic ARR is a key metric that enables measurement of progress in growing our recurring revenue business. It represents the annual contract value of all active recurring revenue contracts at any point in time.
Note: Guidance includes estimated impact of CUBIC acquisition in fiscal year 2023. 24 Table of Contents Summary of Results of Operations The following table reflects our sales and operating results (in millions, except per share amounts and percentages): Year Ended September 30, 2022 2021 2020 Sales Intelligent Devices (a) $ 3,544.6 $ 3,311.9 $ 2,956.0 Software & Control (b) 2,312.9 1,947.0 1,681.3 Lifecycle Services (c) 1,902.9 1,738.5 1,692.5 Total sales (d) $ 7,760.4 $ 6,997.4 $ 6,329.8 Segment operating earnings (1) Intelligent Devices (e) $ 717.6 $ 702.1 $ 587.8 Software & Control (f) 666.7 531.0 473.8 Lifecycle Services (g) 158.3 158.2 196.3 Total segment operating earnings (2) (h) 1,542.6 1,391.3 1,257.9 Purchase accounting depreciation and amortization (103.9) (55.1) (41.4) Corporate and other (104.7) (120.6) (98.9) Non-operating pension and postretirement benefit cost (4.7) (63.8) (37.4) Change in fair value of investments (136.9) 397.4 153.9 Legal settlement — 70.0 — Interest expense, net (118.8) (93.0) (98.0) Income before income taxes (i) 1,073.6 1,526.2 1,136.1 Income tax provision (154.5) (181.9) (112.9) Net income 919.1 1,344.3 1,023.2 Net loss attributable to noncontrolling interests (13.1) (13.8) (0.2) Net income attributable to Rockwell Automation $ 932.2 $ 1,358.1 $ 1,023.4 Diluted EPS $ 7.97 $ 11.58 $ 8.77 Adjusted EPS (3) $ 9.49 $ 9.43 $ 7.87 Diluted weighted average outstanding shares 116.7 117.1 116.6 Pre-tax margin (i/d) 13.8 % 21.8 % 17.9 % Intelligent Devices segment operating margin (e/a) 20.2 % 21.2 % 19.9 % Software & Control segment operating margin (f/b) 28.8 % 27.3 % 28.2 % Lifecycle Services segment operating margin (g/c) 8.3 % 9.1 % 11.6 % Total segment operating margin (2) (h/d) 19.9 % 19.9 % 19.9 % (1) See Note 19 in the Consolidated Financial Statements for the definition of segment operating earnings.
We believe these and other actions we are taking are enabling us to normalize our product lead times and reduce our backlog. 21 Table of Contents Summary of Results of Operations The following table reflects our sales and operating results (in millions, except per share amounts and percentages): Year Ended September 30, 2023 2022 2021 Sales Intelligent Devices (a) $ 4,098.2 $ 3,544.6 $ 3,311.9 Software & Control (b) 2,886.0 2,312.9 1,947.0 Lifecycle Services (c) 2,073.8 1,902.9 1,738.5 Total sales (d) $ 9,058.0 $ 7,760.4 $ 6,997.4 Segment operating earnings (1) Intelligent Devices (e) $ 828.2 $ 717.6 $ 702.1 Software & Control (f) 953.2 666.7 531.0 Lifecycle Services (g) 148.4 158.3 158.2 Total segment operating earnings (2) (h) 1,929.8 1,542.6 1,391.3 Purchase accounting depreciation and amortization, and impairment (264.4) (103.9) (55.1) Corporate and other (127.9) (104.7) (120.6) Non-operating pension and postretirement benefit cost (82.7) (4.7) (63.8) Change in fair value of investments 279.3 (136.9) 397.4 Legal settlement — — 70.0 Interest expense, net (125.6) (118.8) (93.0) Income before income taxes (i) 1,608.5 1,073.6 1,526.2 Income tax provision (330.5) (154.5) (181.9) Net income 1,278.0 919.1 1,344.3 Net loss attributable to noncontrolling interests (109.4) (13.1) (13.8) Net income attributable to Rockwell Automation $ 1,387.4 $ 932.2 $ 1,358.1 Diluted EPS $ 11.95 $ 7.97 $ 11.58 Adjusted EPS (3) $ 12.12 $ 9.49 $ 9.43 Diluted weighted average outstanding shares 115.6 116.7 117.1 Pre-tax margin (i/d) 17.8 % 13.8 % 21.8 % Intelligent Devices segment operating margin (e/a) 20.2 % 20.2 % 21.2 % Software & Control segment operating margin (f/b) 33.0 % 28.8 % 27.3 % Lifecycle Services segment operating margin (g/c) 7.2 % 8.3 % 9.1 % Total segment operating margin (2) (h/d) 21.3 % 19.9 % 19.9 % (1) See Note 19 in the Consolidated Financial Statements for the definition of segment operating earnings.
Acquisitions increased sales by 2.3 percentage points. Organic annual recurring revenue at September 30, 2022, grew approximately 14 percent compared to September 30, 2021. See Organic Annual Recurring Revenue for information on this measure. Pricing increased sales in our Intelligent Devices and Software & Control operating segments by approximately 3.3 percentage points.
Acquisitions increased sales by 1.2 percentage points. Total and organic annual recurring revenue at September 30, 2023, grew approximately 16 percent compared to September 30, 2022. See Annual Recurring Revenue (ARR) for information on this measure. Pricing increased total company sales by approximately 5.5 percentage points, realized in the Intelligent Devices and Software & Control segments.
We use changes in key countries' gross domestic product (GDP), IP, and PMI as indicators of the growth opportunities in each region where we do business. Industrial output outside the U.S. was mixed in the fourth quarter of fiscal 2022.
We use changes in key countries' gross domestic product (GDP), IP, and PMI as indicators of the growth opportunities in each region where we do business.
It measures several engagement indicators and drivers and provides an overall employee engagement index (EEI) with external benchmark comparison. The latest survey, conducted in March 2022, showed an EEI of 76, which was equal to a global norm for this index.
It measures several engagement indicators and drivers and provides an overall employee engagement index (EEI) with external benchmark comparison. The latest survey, conducted in February 2023, showed an EEI of 76, which was eight points higher than the industry norm of 68 for this index.
We attribute sales to the geographic regions based on the country of destination. 36 Table of Contents The following is a reconciliation of reported sales to organic sales by geographic region (in millions): Year Ended September 30, 2022 Year Ended September 30, 2021 Reported Sales Less: Effect of Acquisitions Effect of Changes in Currency Organic Sales Reported Sales North America $ 4,722.0 $ 152.0 $ (6.5) $ 4,576.5 $ 4,132.8 Europe, Middle East and Africa 1,437.6 6.8 (140.5) 1,571.3 1,405.7 Asia Pacific 1,088.0 0.4 (34.4) 1,122.0 1,012.2 Latin America 512.8 2.3 (6.6) 517.1 446.7 Total Company Sales $ 7,760.4 $ 161.5 $ (188.0) $ 7,786.9 $ 6,997.4 Year Ended September 30, 2021 Year Ended September 30, 2020 Reported Sales Less: Effect of Acquisitions Effect of Changes in Currency Organic Sales Reported Sales North America $ 4,132.8 $ 48.1 $ 24.6 $ 4,060.1 $ 3,760.2 Europe, Middle East and Africa 1,405.7 44.9 76.9 1,283.9 1,249.3 Asia Pacific 1,012.2 0.6 53.1 958.5 868.7 Latin America 446.7 0.3 (4.7) 451.1 451.6 Total Company Sales $ 6,997.4 $ 93.9 $ 149.9 $ 6,753.6 $ 6,329.8 The following is a reconciliation of reported sales to organic sales by operating segment (in millions): Year Ended September 30, 2022 Year Ended September 30, 2021 Reported Sales Less: Effect of Acquisitions Effect of Changes in Currency Organic Sales Reported Sales Intelligent Devices $ 3,544.6 $ — $ (89.8) $ 3,634.4 $ 3,311.9 Software & Control 2,312.9 150.6 (52.7) 2,215.0 1,947.0 Lifecycle Services 1,902.9 10.9 (45.5) 1,937.5 1,738.5 Total Company Sales $ 7,760.4 $ 161.5 $ (188.0) $ 7,786.9 $ 6,997.4 Year Ended September 30, 2021 Year Ended September 30, 2020 Reported Sales Less: Effect of Acquisitions Effect of Changes in Currency Organic Sales Reported Sales Intelligent Devices $ 3,311.9 $ — $ 70.5 $ 3,241.4 $ 2,956.0 Software & Control 1,947.0 54.8 42.1 1,850.1 1,681.3 Lifecycle Services 1,738.5 39.1 37.3 1,662.1 1,692.5 Total Company Sales $ 6,997.4 $ 93.9 $ 149.9 $ 6,753.6 $ 6,329.8 37 Table of Contents Critical Accounting Estimates We believe the following accounting estimates are the most critical to the understanding of our financial statements as they could have the most significant effect on our reported results and require subjective or complex judgments by management.
We attribute sales to the geographic regions based on the country of destination. 31 Table of Contents The following is a reconciliation of reported sales to organic sales by geographic region (in millions): Year Ended September 30, 2023 Year Ended September 30, 2022 Reported Sales Less: Effect of Acquisitions Effect of Changes in Currency Organic Sales Reported Sales North America $ 5,224.0 $ 15.6 $ (23.9) $ 5,232.3 $ 4,722.0 Europe, Middle East and Africa 1,870.6 57.5 (26.3) 1,839.4 1,437.6 Asia Pacific 1,358.0 18.2 (80.5) 1,420.3 1,088.0 Latin America 605.4 0.1 22.8 582.5 512.8 Total Company Sales $ 9,058.0 $ 91.4 $ (107.9) $ 9,074.5 $ 7,760.4 Year Ended September 30, 2022 Year Ended September 30, 2021 Reported Sales Less: Effect of Acquisitions Effect of Changes in Currency Organic Sales Reported Sales North America $ 4,722.0 $ 152.0 $ (6.5) $ 4,576.5 $ 4,132.8 Europe, Middle East and Africa 1,437.6 6.8 (140.5) 1,571.3 1,405.7 Asia Pacific 1,088.0 0.4 (34.4) 1,122.0 1,012.2 Latin America 512.8 2.3 (6.6) 517.1 446.7 Total Company Sales $ 7,760.4 $ 161.5 $ (188.0) $ 7,786.9 $ 6,997.4 The following is a reconciliation of reported sales to organic sales by operating segment (in millions): Year Ended September 30, 2023 Year Ended September 30, 2022 Reported Sales Less: Effect of Acquisitions Effect of Changes in Currency Organic Sales Reported Sales Intelligent Devices $ 4,098.2 $ 80.6 $ (46.4) $ 4,064.0 $ 3,544.6 Software & Control 2,886.0 — (30.7) 2,916.7 2,312.9 Lifecycle Services 2,073.8 10.8 (30.8) 2,093.8 1,902.9 Total Company Sales $ 9,058.0 $ 91.4 $ (107.9) $ 9,074.5 $ 7,760.4 Year Ended September 30, 2022 Year Ended September 30, 2021 Reported Sales Less: Effect of Acquisitions Effect of Changes in Currency Organic Sales Reported Sales Intelligent Devices $ 3,544.6 $ — $ (89.8) $ 3,634.4 $ 3,311.9 Software & Control 2,312.9 150.6 (52.7) 2,215.0 1,947.0 Lifecycle Services 1,902.9 10.9 (45.5) 1,937.5 1,738.5 Total Company Sales $ 7,760.4 $ 161.5 $ (188.0) $ 7,786.9 $ 6,997.4 32 Table of Contents Critical Accounting Estimates We believe the following accounting estimates are the most critical to the understanding of our financial statements as they could have the most significant effect on our reported results and require subjective or complex judgments by management.
We diversify our cash and cash equivalents and short-term investments among counterparties to minimize exposure to any one of these entities.
We diversify our cash and cash equivalents and short-term investments among counterparties to minimize exposure to any one of these entities. We use foreign currency forward exchange contracts to manage certain foreign currency risks.
Employees 7% 9% 5% 73% 2% 4% Individual Contributors 7% 10% 5% 72% 2% 4% People Managers 6% 7% 5% 78% 1% 3% Technical Talent 6% 12% 6% 72% 2% 2% Manufacturing Associates 14% 13% 3% 54% 2% 14% Continuous Improvement Productivity and continuous improvement are important components of our culture.
Employees 8% 11% 5% 70% 2% 4% Individual Contributors 9% 11% 5% 69% 2% 4% People Managers 6% 8% 6% 76% 1% 3% Technical Talent 6% 13% 5% 72% 2% 2% Manufacturing Associates 19% 15% 4% 50% 2% 10% Continuous Improvement Productivity and continuous improvement are important components of our culture.
Year Ended September 30, 2021 Year Ended September 30, 2020 Year Ended September 30, 2020 North America $ 4,132.8 9.9 % 8.0 % Europe, Middle East and Africa 1,405.7 12.5 % 2.8 % Asia Pacific 1,012.2 16.5 % 10.3 % Latin America 446.7 (1.1) % (0.1) % Total Company Sales $ 6,997.4 10.5 % 6.7 % (1) Organic sales and organic sales growth exclude the effect of acquisitions, changes in currency exchange rates, and divestitures.
Year Ended September 30, 2023 Year Ended September 30, 2022 Year Ended September 30, 2022 North America $ 5,224.0 10.6 % 10.8 % Europe, Middle East and Africa 1,870.6 30.1 % 27.9 % Asia Pacific 1,358.0 24.8 % 30.5 % Latin America 605.4 18.1 % 13.6 % Total Company Sales $ 9,058.0 16.7 % 16.9 % (1) Organic sales and organic sales growth exclude the effect of acquisitions, changes in currency exchange rates, and divestitures.
We offer a portfolio of all employee, managerial, and leader training that spans on-demand, virtual, and live instructor-led formats. Our programs focus on basic as well as transformational skills. We take pride in our culture and in fiscal 2021 created an opportunity for our employees to participate in team-based culture workshops.
We offer a portfolio of all employee, managerial, and leader training that spans on-demand, virtual, and live instructor-led formats. Our programs focus on basic as well as transformational skills.
Because ARR is based on annual contract value, it does not represent revenue recognized during a particular reporting period or revenue to be recognized in future reporting periods and is not intended to be a substitute for revenue, contract liabilities, or backlog. 32 Table of Contents Financial Condition The following is a summary of our cash flows from operating, investing, and financing activities, as reflected in the Consolidated Statement of Cash Flows (in millions): Year Ended September 30, 2022 2021 2020 Cash provided by (used for) Operating activities $ 823.1 $ 1,261.0 $ 1,120.5 Investing activities (7.8) (2,626.6) (618.0) Financing activities (934.2) 1,297.8 (798.9) Effect of exchange rate changes on cash (52.6) 16.8 8.4 Decrease in cash, cash equivalents, and restricted cash $ (171.5) $ (51.0) $ (288.0) The following table summarizes free cash flow, which is a non-GAAP financial measure (in millions): Year Ended September 30, 2022 2021 2020 Cash provided by operating activities $ 823.1 $ 1,261.0 $ 1,120.5 Capital expenditures (141.1) (120.3) (113.9) Free cash flow $ 682.0 $ 1,140.7 $ 1,006.6 Our definition of free cash flow takes into consideration capital investments required to maintain the operations of our businesses and execute our strategy.
We believe that Total ARR provides useful information to investors because it reflects our recurring revenue performance period over period including the effect of acquisitions. 27 Table of Contents Financial Condition The following is a summary of our cash flows from operating, investing, and financing activities, as reflected in the Consolidated Statement of Cash Flows (in millions): Year Ended September 30, 2023 2022 2021 Cash provided by (used for) Operating activities $ 1,374.6 $ 823.1 $ 1,261.0 Investing activities 854.3 (7.8) (2,626.6) Financing activities (1,675.6) (934.2) 1,297.8 Effect of exchange rate changes on cash 19.2 (52.6) 16.8 Increase (decrease) in cash, cash equivalents, and restricted cash $ 572.5 $ (171.5) $ (51.0) The following table summarizes free cash flow, which is a non-GAAP financial measure (in millions): Year Ended September 30, 2023 2022 2021 Cash provided by operating activities $ 1,374.6 $ 823.1 $ 1,261.0 Capital expenditures (160.5) (141.1) (120.3) Free cash flow $ 1,214.1 $ 682.0 $ 1,140.7 Our definition of free cash flow takes into consideration capital investments required to maintain the operations of our businesses and execute our strategy.
Economic Trends In 2022, sales to customers outside the U.S. accounted for less than half of our total sales. These customers include both indigenous companies and multinational companies with a global presence.
Producer prices remain elevated, however, year over year increases continued to decelerate following last years' surge in prices. Non-U.S. Economic Trends In 2023, sales to customers outside the U.S. accounted for less than half of our total sales. These customers include both indigenous companies and multinational companies with a global presence.
Organic sales increased 9.7 percent. The effects of currency translation decreased sales by 2.7 percentage points. All regions experienced sales increases. Segment Operating Margin Intelligent Devices segment operating earnings increased 2.2 percent year over year.
The effects of currency translation decreased sales by 1.3 percentage points and acquisitions increased sales by 2.3 percentage points. All regions experienced reported and organic sales increases. Segment Operating Margin Intelligent Devices segment operating earnings increased 15.4 percent year over year. Segment operating margin was 20.2 percent in 2023, unchanged from a year ago.
Organic sales increased 10.0 percent, the effect of currency translation increased sales by 2.5 percentage points, and acquisitions increased sales by 3.3 percentage points. All regions experienced sales increases. Segment Operating Margin Software & Control segment operating earnings increased 12.1 percent year over year.
Software & Control Sales Software & Control sales increased 24.8 percent in 2023 compared to 2022. Organic sales increased 26.1 percent. The effects of currency translation decreased sales by 1.3 percentage points. All regions experienced reported and organic sales increases. Segment Operating Margin Software & Control segment operating earnings increased 43.0 percent year over year.
We believe the assumptions and estimates made were reasonable and appropriate, which are based on a number of factors, including historical experience, reference to external product available market and industry growth publications, analysis of peer group projections, and information obtained from reporting unit management, including backlog.
Margin assumptions reflect volume and mix, productivity to offset cost inflation, and price used to fund investments . The assumptions and estimates made are based on a number of factors, including historical experience, reference to external product available market and industry growth publications, analysis of peer group projections, and information obtained from the new management team, including backlog.
Segment operating margin was 9.1 percent in 2021 compared to 11.6 percent a year ago, primarily due to the reinstatement of incentive compensation. 29 Table of Contents Supplemental Segment Information Purchase accounting depreciation and amortization and non-operating pension and postretirement benefit (credit) cost are not allocated to our operating segments because these costs are excluded from our measurement of each segment’s operating performance for internal purposes.
Supplemental Segment Information Purchase accounting depreciation and amortization, and impairment and non-operating pension and postretirement benefit cost (credit) are not allocated to our operating segments because these costs are excluded from our measurement of each segment’s operating performance for internal purposes.
Segment operating margin increased to 28.8 percent in 2022 from 27.3 percent in 2021, primarily due to higher sales, including pricing increases, and lower incentive compensation, partially offset by higher input costs, higher investment spend, and the impact of acquisitions. Lifecycle Services Sales Lifecycle Services sales increased 9.5 percent in 2022 compared to 2021. Organic sales increased 11.4 percent.
Segment operating margin increased to 33.0 percent in 2023 from 28.8 percent in 2022, primarily due to higher sales, partially offset by higher investment spend and higher incentive compensation. Lifecycle Services Sales Lifecycle Services sales increased 9.0 percent in 2023 compared to 2022. Organic sales increased 10.0 percent.
Significant long-term uses of cash include the following (in millions): Payments by Period Total 2023 2024 2025 2026 2027 Thereafter Long-term debt and interest (1) $ 5,942.1 $ 713.0 $ 110.9 $ 406.6 $ 102.3 $ 102.3 $ 4,507.0 Minimum lease payments (Note 18) 395.8 98.8 82.8 59.6 40.7 29.8 84.1 Postretirement benefits (2) 44.2 6.6 6.1 5.5 5.0 4.5 16.5 Pension funding contribution (3) 26.1 26.1 — — — — — Transition tax (4) 264.8 31.1 58.4 77.9 97.4 — — Total $ 6,673.0 $ 875.6 $ 258.2 $ 549.6 $ 245.4 $ 136.6 $ 4,607.6 (1) The amounts for Long-term debt assume that the respective debt instruments will be outstanding until their scheduled maturity dates and include interest but exclude unamortized discount.
Significant long-term uses of cash include the following (in millions): Payments by Period Total 2024 2025 2026 2027 2028 Thereafter Long-term debt and interest (1) $ 5,229.1 $ 110.9 $ 406.6 $ 102.3 $ 102.3 $ 343.9 $ 4,163.1 Minimum lease payments (Note 18) 409.6 100.5 86.3 64.4 49.1 35.4 73.9 Postretirement benefits (2) 46.4 7.3 6.8 6.2 5.6 5.0 15.5 Pension funding contribution (3) 26.6 26.6 — — — — — Transition tax (4) 233.7 58.4 77.9 97.4 — — — Capital gains tax on sale of PTC Shares 67.4 67.4 — — — — — Total $ 5,945.4 $ 303.7 $ 577.6 $ 270.3 $ 157.0 $ 384.3 $ 4,252.5 (1) The amounts for Long-term debt assume that the respective debt instruments will be outstanding until their scheduled maturity dates and include interest but exclude unamortized discount.
Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities , for additional information regarding share repurchases. 33 Table of Contents We expect future uses of cash to include working capital requirements, capital expenditures, additional contributions to our retirement plans, acquisitions of businesses and other inorganic investments, dividends to shareowners, repurchases of common stock, and repayments of debt.
We expect future uses of cash to include working capital requirements, capital expenditures, acquisitions of businesses and other inorganic investments, dividends to shareowners, repurchases of common stock, additional contributions to our retirement plans and repayments of debt. We expect capital expenditures in 2024 to be approximately $220 million.
The Producer Price Index (PPI), published by the Bureau of Labor Statistics, measures the average change over time in the selling prices received by domestic producers for their output.
We used the Producer Price Index (PPI), published by the Bureau of Labor Statistics, which measures the average change over time in the selling prices received by domestic producers for their output. After observing double-digit PPI growth through most of 2022, we have now observed PPI growth in the low single digits for the last three quarters.
A change in the customer attrition rate of 250 basis points would result in a change of $40.4 million in intangible assets. Recent Accounting Pronouncements See Note 1 in the Consolidated Financial Statements regarding recent accounting pronouncements. 40 Table of Contents
A two-year change in this assumption would result in a change of $52 million in intangible assets. More information regarding this business combination is contained in Note 4 in the Consolidated Financial Statements. Recent Accounting Pronouncements See Note 1 in the Consolidated Financial Statements regarding recent accounting pronouncements. 35 Table of Contents
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.
The IP Index is expressed as a percentage of real output in a base year, currently 2017. • 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.
Adjusted EPS was $9.49 in fiscal 2022, up 0.6 percent compared to $9.43 in fiscal 2021, primarily due to higher sales, including price increases, and lower incentive compensation, partially offset by higher input costs, higher investment spend, higher tax rate, and the prior year favorable legal settlement. 26 Table of Contents Intelligent Devices Sales Intelligent Devices sales increased 7.0 percent in 2022 compared to 2021.
Adjusted EPS was $12.12 in fiscal 2023, up 27.7 percent compared to $9.49 in fiscal 2022, primarily due to higher sales, partially offset by higher investment spend and higher incentive compensation. Intelligent Devices Sales Intelligent Devices sales increased 15.6 percent in 2023 compared to 2022. Organic sales increased 14.6 percent.
We have concluded that earnings of a limited number of our non-U.S. subsidiaries are indefinitely reinvested.
We have concluded that earnings of a limited number of our non-U.S. subsidiaries are indefinitely reinvested. In August 2021, we issued $1.5 billion aggregate principal amount of long-term notes in a registered public offering.
The decreases in Net income attributable to Rockwell Automation and diluted EPS were primarily due to the PTC adjustments and a $70 million pre-tax favorable legal settlement in the first quarter of fiscal 2021, partially offset by higher operating earnings.
The increases in Net income attributable to Rockwell Automation and diluted EPS were primarily due to higher total segment operating earnings and the PTC adjustments, partially offset by $97.3 million of expense for the goodwill impairment net of its related tax and noncontrolling interest effects.
We believe these acquisitions and investments will help us expand our served market and deliver value to our customers.
We believe these acquisitions and venture investments will help our served market and deliver value to our customers. See Note 4 in the Consolidated Financial Statements for additional information on our recent acquisitions.
Estimated future revenue growth and margins are based on management’s best estimate about current and future conditions. The revenue growth rate assumption reflects significant growth over the next five years before moderating back to a growth rate approximating longer term average inflationary rates.
The revenue growth rate assumption reflects above market growth over the next five years before moderating back to a growth rate approximating longer term average inflationary rates. The forecasted near-term growth rate projections take into account recent revenue performance and the orders backlog.
As customers seek to be more sustainable, our offering of hardware and software products provide strategic opportunities to appeal to their changing needs and preferences. Acquisitions and Investments Our acquisition and investment strategy focuses on hardware and software products, solutions, and services that will be catalytic to the organic growth of our core offerings.
We have developed a powerful partner ecosystem that acts as an amplifier to our internal capabilities and enables us to serve our customers’ evolving needs around the world. Acquisitions and Investments Our acquisition and investment strategy focuses on hardware and software products, solutions, and services that will be catalytic to the organic growth of our core offerings.
See Supplemental Sales Information for information on these non-GAAP measures. Corporate and Other Corporate and other expenses were $104.7 million in fiscal 2022 compared to $120.6 million in fiscal 2021. The prior year includes deal costs associated with the acquisition of Plex Systems.
See Supplemental Sales Information for information on these non-GAAP measures. Corporate and Other Corporate and other expenses were $127.9 million in fiscal 2023 compared to $104.7 million in fiscal 2022. The increase was primarily due to the year over year impact of mark-to-market adjustments related to our deferred and non-qualified compensation plans.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

12 edited+1 added−1 removed4 unchanged
Biggest changeA hypothetical 50 basis point increase in average market interest rates related to our short-term debt would not be significant to our results of operations or financial condition. We had outstanding fixed rate long-term and current portion of long-term debt obligations with a carrying value of $3,476.9 million at September 30, 2022, and $3,471.4 million at September 30, 2021.
Biggest changeWe have issued, and anticipate continuing to issue, short-term commercial paper obligations as needed. Changes in market interest rates on commercial paper borrowings affect our results of operations. A hypothetical 50 basis point increase in average market interest rates related to our short-term debt would not be significant to our results of operations or financial condition.
For derivatives that are hedges, depending on the nature of the hedge, changes in fair value are either offset by changes in the fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive loss until the hedged item is recognized in earnings.
For derivatives that are hedges, depending on the nature of the hedge, changes in fair value are either offset by changes in the fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in Other comprehensive income (loss) until the hedged item is recognized in earnings.
We currently have no plans to repurchase our outstanding fixed-rate instruments before their maturity and, therefore, fluctuations in market interest rates would not have an effect on our results of operations or shareowners’ equity. 41 Table of Contents
We currently have no plans to repurchase our outstanding fixed-rate instruments before their maturity and, therefore, fluctuations in market interest rates would not have an effect on our results of operations or shareowners’ equity. 36 Table of Contents
We recognize the ineffective portion of a derivative’s change in fair value in earnings immediately. There was no impact on earnings due to ineffective hedges in 2022, 2021, or 2020.
We recognize the ineffective portion of a derivative’s change in fair value in earnings immediately. There was no impact on earnings due to ineffective hedges in 2023, 2022, or 2021.
For such assets and liabilities without offsetting foreign currency forward exchange contracts, a 10 percent adverse change in the underlying foreign currency exchange rates would reduce our pre-tax income by approximately $35.1 million. We record all derivatives on the balance sheet at fair value regardless of the purpose for holding them.
For such assets and liabilities without offsetting foreign currency forward exchange contracts, a 10 percent adverse change in the underlying foreign currency exchange rates would reduce our pre-tax income by approximately $73.9 million. We record all derivatives on the balance sheet at fair value regardless of the purpose for holding them.
The strengthening of the U.S. dollar against foreign currencies has an unfavorable impact on our sales and results of operations. While future changes in foreign currency exchange rates are difficult to predict, our sales and profitability may be adversely affected if the U.S. dollar strengthens relative to current levels.
We do not enter into derivative financial instruments for speculative purposes. The strengthening of the U.S. dollar against foreign currencies has an unfavorable impact on our sales and results of operations. While future changes in foreign currency exchange rates are difficult to predict, our sales and profitability may be adversely affected if the U.S. dollar strengthens relative to current levels.
The fair value of this debt was approximately $3,074.5 million at September 30, 2022, and $3,881.6 million at September 30, 2021. The potential increase in fair value on such fixed-rate debt obligations from a hypothetical 50 basis point decrease in market interest rates would not be significant to our results of operations or financial condition.
The potential increase in fair value on such fixed-rate debt obligations from a hypothetical 50 basis point decrease in market interest rates would not be significant to our results of operations or financial condition.
We manage exposure to these risks through a combination of normal operating and financing activities as well as derivative financial instruments in the form of foreign currency forward exchange contracts. We sometimes use interest rate swap contracts to manage the balance of fixed and floating rate debt.
We manage exposure to these risks through a combination of normal operating and financing activities as well as derivative financial instruments in the form of foreign currency forward exchange contracts. Foreign Currency Risk We are exposed to foreign currency risks that arise from normal business operations.
The fair value of our foreign currency forward exchange contracts is an asset of $120.1 million and a liability of $32.2 million at September 30, 2022. We enter into these contracts with major financial institutions that we believe to be creditworthy. We do not enter into derivative financial instruments for speculative purposes.
Contracts are usually denominated in currencies of major industrial countries. The fair value of our foreign currency forward exchange contracts is an asset of $49.2 million and a liability of $11.5 million at September 30, 2023. We enter into these contracts with major financial institutions that we believe to be creditworthy.
Foreign Currency Risk We are exposed to foreign currency risks that arise from normal business operations. These risks include the translation of local currency balances of foreign subsidiaries, transaction gains and losses associated with intercompany loans with foreign subsidiaries, and transactions denominated in currencies other than a location’s functional currency.
These risks include the translation of local currency balances of foreign subsidiaries, transaction gains and losses associated with intercompany loans with foreign subsidiaries, and transactions denominated in currencies other than a location’s functional currency. Our objective is to minimize our exposure to these risks through a combination of normal operating activities and the use of foreign currency forward exchange contracts.
Also included in Short-term debt as of September 30, 2022 and 2021, is $42.3 million and $23.5 million, respectively, of interest-bearing loans from SLB to Sensia, due in December 2022. We have issued, and anticipate continuing to issue, short-term commercial paper obligations as needed. Changes in market interest rates on commercial paper borrowings affect our results of operations.
We are exposed to interest rate risk on certain of these debt obligations. Our Short-term debt as of September 30, 2023 and 2022, includes $23.5 million and $42.3 million, respectively, of interest-bearing loans from SLB to Sensia, due December 29, 2023. In December 2022, Sensia entered into an unsecured $75.0 million line of credit.
We are exposed to interest rate risk on certain of these debt obligations. Our Short-term debt as of September 30, 2022 and 2021, includes commercial paper borrowings of $317.0 million and $484.0 million, respectively, with weighted average interest rates of 3.03 percent and 0.18 percent, respectively, and weighted average maturity periods of 22 days and 90 days, respectively.
As of September 30, 2023, included in Short-term debt was $70.0 million borrowed against the line of credit with an interest rate of 6.29 percent. Also included in Short-term debt as of September 30, 2022 was commercial paper borrowings of $317.0 million with a weighted average interest rate of 3.03 percent and a weighted average maturity period of 22 days.
Removed
Our objective is to minimize our exposure to these risks through a combination of normal operating activities and the use of foreign currency forward exchange contracts. Contracts are usually denominated in currencies of major industrial countries.
Added
We had outstanding fixed rate long-term and current portion of long-term debt obligations with a carrying value of $2,871.5 million at September 30, 2023, and $3,476.9 million at September 30, 2022. The fair value of this debt was approximately $2,456.0 million at September 30, 2023, and $3,074.5 million at September 30, 2022.

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