Company: ROK
Filing Date: 2025-11-12
Form Type: 10-K
Source: 0001024478-25-000116
Chunk: 306

Company: ROCKWELL AUTOMATION, INC
Filing Date: 2025-11-12
Form: 10-K
Item: Item 8
Chunk 306
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 defense costs. Together, recognition of both claim indemnity and defense costs more accurately represent the estimated overall cost of resolving claims. We believe this broader accrual approach for net legacy asbestos-related defense costs is preferable and enhances the relevance and reliability of our financial reporting because it better reflects a more complete assessment of our obligations. As a result of this change, our accounting policy has been updated as follows: We accrue for legacy asbestos-related matters based on an estimate of the ultimate liability of claims incurred, whether filed or not, including an estimate of future indemnity and defense costs. Accruals for claims, including defense costs, are recorded based on an analysis of claim and resolution activity by type, defense spending, national litigation trends, and pending and future claims. We use known facts and historical claim trends and trends in defense costs, as well as an actuarial valuation in determining estimated required accruals, which we believe are probable and reasonably estimable. Our liabilities are undiscounted due to the subjectivity of the timing and/or amount of future cash payments.This accounting policy change in 2025 for defense costs has been reflected as a change in accounting estimate effected by a change in accounting principle and is accounted for on a prospective basis. We recorded pre-tax expense in Other (expense) income in the Consolidated Statement of Operations of $136 million for the year ended September 30, 2025 ($103 million after tax or $0.91 per share), which includes charges for a change in accounting method of $91 million and indemnity accrual increase of $45 million. The total gross liability, including defense costs, was $441 million at September 30, 2025, and is included in Other current liabilities and Other liabilities. This liability, net of insurance recoveries recorded in Receivables and Other assets, was $151 million at September 30, 2025. See Note 17 for additional information.Legal CostsWe expense legal costs as incurred, with the exception of legal costs associated with product liability matters including legacy asbestos claims.

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Table of ContentsNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Conditional Asset Retirement ObligationsWe record liabilities for costs related to legal obligations associated with the retirement of a tangible long-lived asset that results from the acquisition, construction, development, or the normal operation of the long-lived asset. The obligation to perform the asset retirement activity is not conditional even though the timing or method may be conditional.LeasesWe have operating