Company: ROK
Filing Date: 2025-11-12
Form Type: 10-K
Source: 0001024478-25-000116
Chunk: 63

Company: ROCKWELL AUTOMATION, INC
Filing Date: 2025-11-12
Form: 10-K
Item: Item 4
Chunk 63
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 royalty rate of 2.05 percent. This rate was based on royalty market data. A 100 basis point change in the royalty rate would result in a change of $20 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.

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Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk during the normal course of business from changes in foreign currency exchange rates and interest rates. 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. These risks include transactions denominated in currencies other than a location’s functional currency, transaction gains and losses associated with intercompany loans with foreign subsidiaries, and translation of local currency balances of foreign subsidiaries. Our objective is to minimize our exposure to these risks through a combination of normal operating activities and the use of financial instruments including, but not limited to, foreign currency forward exchange contracts and cross-currency swaps. 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. We record all derivatives on the balance sheet at fair value regardless of the purpose for holding them. 

The use of foreign currency forward exchange contracts allows us to manage transactional exposure to exchange rate fluctuations as the gains or losses incurred on these contracts will offset, in whole or in part, losses or gains on the underlying foreign currency exposure. Foreign currency forward exchange contracts are denominated in currencies of major industrial countries in which we operate. The fair value of our foreign currency forward exchange contracts is an asset of $8 million and a liability of $23 million at September 30, 2025. For assets and liabilities denominated in currencies other than a location’s functional currency 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 million.

During 2025, we entered into cross-currency swaps in order to manage foreign currency translation risk of local currency balances of foreign subsidiaries. We designated the cross-currency swaps as a partial hedge of our net investment in certain subsidiaries that are not U.S. dollar functional. As a result,