TEXT-S&P: Rockwell Automation ratings unchanged by buyback plan

Fri Jun 8, 2012 12:06pm EDT

June 8 - Standard & Poor's Ratings Services said today that its ratings and
outlook on Rockwell Automation Inc. (A/Stable/A-1) are not affected by
the company's announcement that its board of directors has authorized a $1
billion share repurchase program. The authorization supplements the $1 billion
program from 2007, of which approximately $51 million remained outstanding as of
June 7, 2012. The company also increased its dividend by 11%. The buyback
authorization is open-ended; we expect that Rockwell will align spending with
cash flow generation and other uses such as acquisitions and pension
contributions. 	
	
Rockwell generated more than $500 million of free cash flow (FOCF) last year, 	
and we expect FOCF to exceed $450 million this year, even after a $300 million 	
pension contribution. The company also continues to hold significant excess 	
cash, with cash and short-term investments totaling about $1.1 billion as of 	
March 31, 2012, compared with funded debt of about $1.2 billion. We believe 	
that the company's exposure to cyclical end-markets and its still significant 	
pension obligations will cause credit measures to fluctuate over the business 	
cycle, but we'd expect these to remain generally consistent with our 	
expectations for the rating, including FFO to total debt of 45%-50%.
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