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| 8-K - ROCKWELL COLLINS INC | v172434_8k.htm |
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EXHIBIT
99.1
News
Release
|
Rockwell
Collins reports first quarter fiscal year 2010 earnings per share of
$0.76
|
|
o
|
First
quarter 2010 sales of $1.027 billion decreased 3% and earnings per share
of $0.76 decreased 20% from the same period in
2009
|
|
|
o
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First
quarter 2010 operating cash flow of $84 million increased $63 million
compared to the same period in 2009
|
CEDAR RAPIDS, Iowa (January 28, 2010)
– Rockwell Collins, Inc. (NYSE: COL) today reported net income of $121
million for its fiscal year 2010 first quarter ended December 31, 2009, a
decrease of $30 million, or 20%, from fiscal year 2009 first quarter net income
of $151 million. Earnings per share was $0.76, a decrease of $0.19, or 20%, from
earnings per share of $0.95 for the same period in 2009.
First
quarter 2010 sales decreased $31 million, or 3%, to $1.027 billion compared to
sales of $1.058 billion for the same period a year ago. Incremental sales from
the acquisitions of DataPath, Inc. and SEOS Group Ltd. contributed $69 million
of revenue growth. The organic revenue decline of $100 million resulted
primarily from continued weakness in business jet OEM revenues, lower commercial
aerospace aftermarket revenues and a decline in sales of Defense Advance GPS
Receivers within Government Systems. Total segment operating margins were 19.7%
for the first quarter of 2010 compared to 22.4% for the first quarter of
2009.
Cash
provided by operating activities for the first three months of 2010 totaled $84
million compared to the $21 million reported for the same period last year. The
increase resulted from working capital improvements as well as lower employee
incentive compensation payments, partially offset by higher pension plan
contributions and lower net income.
“After
effects of the global recession and delays in passing the fiscal year 2010
Defense Appropriations bill impacted our first quarter revenues largely as we
expected,” said Rockwell Collins Chairman, President and Chief Executive Officer
Clay Jones. “Although revenues declined on a year-over-year basis we realized an
increase in operating cash flow through working capital performance and
minimized the impact to operating margins through effective cost
containment.”
Mr. Jones
went on to state, “Improvements in commercial aerospace conditions and general
developments in the formulation of defense budgets world-wide reinforce my
confidence that we should see sequential growth in sales and profitability
throughout the year which will allow us to achieve our full year
forecast.”
Following
is a discussion of fiscal year 2010 first quarter sales and earnings for each
business segment.
Government
Systems
Government
Systems, which provides communication and electronic systems, products and
services for airborne and surface applications to the U.S. Department of
Defense, other government agencies, civil agencies, defense contractors and
foreign ministries of defense, achieved first quarter sales of $616 million, an
increase of $42 million, or 7%, compared to the $574 million reported for the
same period last year. Incremental sales from the acquisitions of DataPath Inc.
and SEOS Group Ltd. contributed a total of $65 million, or 11 percentage points
of revenue growth.
Airborne
solutions sales increased $7 million, or 2%, to $410 million. Incremental sales
from the acquisition of SEOS Group Ltd. contributed $5 million to Airborne
solutions revenue growth. Organic sales were relatively flat as lower revenues
related to the F-22 program were offset by higher tanker and transport program
revenues. Surface solutions sales increased $35 million, or 20%, to $206
million. Incremental sales from the acquisition of DataPath, Inc. contributed
$60 million to Surface solutions revenue growth. Organic sales declined $25
million primarily due to lower sales for the Defense Advanced GPS Receiver
(DAGR) program.
Government
Systems first quarter operating earnings decreased 4% to $134 million, resulting
in an operating margin of 21.8%, compared to operating earnings of $140 million,
or an operating margin of 24.4%, for the same period last year. The decrease in
operating earnings was primarily due to increased pension expense and higher
company funded research and development costs, which were partially offset by
the increased sales volume. Operating
margins were also impacted by lower margin revenues from the DataPath and SEOS
acquisitions.
Commercial
Systems
Commercial
Systems, which provides aviation electronics systems, products and services to
air transport, business and regional aircraft manufacturers and airlines
worldwide, achieved first quarter sales of $411 million, a decrease of $73
million, or 15%, compared to sales of $484 million reported for the same period
last year.
Sales
related to aircraft OEMs decreased $43 million, or 18%, to $201 million, as
a result of reduced production rates at business jet OEMs, partially offset by
an increase in air transport OEM sales related to the adverse impact of the
Boeing strike in the prior year. Aftermarket sales decreased $27 million,
or 12%, to $192 million due primarily to lower aftermarket hardware sales and
lower service and support revenue. Wide-body in-flight entertainment
products and systems sales decreased $3 million, or 14%, to $18
million.
Commercial
Systems first quarter operating earnings decreased 30% to $68 million, resulting
in an operating margin of 16.5%, compared to operating earnings of $97 million,
or an operating margin of 20.0%, for the same period a year ago. The decrease in
operating earnings and margin was due primarily to lower sales volume and higher
pension expense, partially offset by lower research and development costs, a
reduction in selling, general and administrative expenses and a favorable
contract settlement.
Corporate
and Financial Highlights
General
corporate expenses that are not allocated to the company’s business segments
increased $5 million to $11 million during the first quarter of 2010 due to
higher pension expense. The company’s effective income tax rate of 33.1% for the
first quarter of 2010 was higher than the rate of 32.0% for the prior year
period primarily due to the unfavorable impact of the expiration of the Federal
Research and Development Tax Credit (Federal R&D Tax Credit) on December 31,
2009.
During
the first quarter of 2010 the company repurchased 0.5 million shares of its
common stock at a total cost of $28 million, leaving $181 million available for
authorized share repurchases. The company also paid dividends totaling $38
million, or 24 cents per share, on its common stock.
- 2
-
Fiscal
Year 2010 Outlook
The
following table is a complete summary of the company’s fiscal year 2010
financial guidance, which is unchanged from the financial guidance initially
provided on September 17, 2009:
|
•
|
Total
sales
|
$4.6
Bil. to $4.8 Bil.
|
|
•
|
Total
segment operating margins
|
18.5%
to 19.5%
|
|
•
|
Earnings
per share(1)
|
$3.35
to $3.55
|
|
•
|
Cash
flow from operations
|
$600
Mil. to $700 Mil.
|
|
•
|
Research
& development costs
|
$870
Mil. to $900 Mil.
|
|
•
|
Capital
expenditures
|
about
$135 Mil.
|
|
(1)
|
Based
on an estimated effective income tax rate in the range of 30% to
31%. The projected effective tax rate assumes the Federal
R&D Tax Credit is available for the entire fiscal year, although
legislation extending the Federal R&D Tax Credit beyond December 31,
2009 has yet to be enacted. If the Federal R&D Tax Credit
is not extended before the end of the September 30, 2010 fiscal year, the
impact to the effective tax rate guidance would be an increase of
approximately 2 percentage points.
|
Business
Highlights
Rockwell
Collins acquired Air Routing International
Rockwell
Collins acquired AR Group, Inc., and its affiliated companies including Air
Routing International, a premier provider of trip support services for business
aircraft flight operations. Air Routing has been providing flight departments
with trip planning services for more than 30 years. Recently, the company
extended its offering to give customers comprehensive online access to its
flight support tools. This offering provides customers with a single-source,
global solution for weather services, flight planning services, fuel
arrangements, international trip handling and concierge services.
Rockwell
Collins avionics and pilot controls selected for Russia's newest family of
aircraft
Rockwell
Collins was selected to provide avionics and pilot controls for the new MC-21
family of single-aisle aircraft being developed by Russian-based Irkut
Corporation, part of United Aircraft Corporation. The first of three aircraft
variants is due to enter service in 2016.
Rockwell
Collins avionics and pilot control systems made first flight on Boeing
787
Rockwell
Collins next generation avionics and pilot control systems contributed to the
successful first flight of Boeing's 787 Dreamliner airplane on December 15,
2009. Rockwell Collins serves as the systems supplier for the Boeing 787 flight
deck display system, crew alerting system, pilot controls, communication and
surveillance systems, and core network cabinet. Rockwell Collins also provides
the common data network for the airplane's Common Core System.
Rockwell
Collins Head-Up Guidance System certified for Bombardier's Challenger
605
Rockwell
Collins received Federal Aviation Administration certification of its HGS-6605
Head-Up Guidance System (HGS) on the Bombardier Challenger 605. The Rockwell
Collins HGS-6605 features advanced active-matrix liquid crystal display
technology that presents critical flight information in the pilot's forward
field of view. Aircraft flight path and attitude symbols overlay the outside
scene and provide the benefits of enhanced situational awareness, improved
energy management and increased touchdown precision.
Rockwell
Collins Pro Line Fusion™ avionics system successfully completed first flight on
G250
Rockwell
Collins announced that its Pro Line Fusion™ avionics system successfully
completed its first test flight on the Gulfstream G250 super mid-size business
jet. As the company's next-generation avionics system for business aircraft, Pro
Line Fusion™ is a core
element of the Gulfstream PlaneView 250 cockpit.
Rockwell
Collins selected to provide avionics solutions for flydubai
Rockwell
Collins was selected by flydubai, Dubai's first low cost airline, to provide
avionics and a data link communication system for its fleet of 54
next-generation Boeing 737 aircraft. The solution includes Rockwell Collins
Head-Up Guidance System, MultiScan Hazard Detection System and sensors, as well
as the Rockwell Collins Hermes 2100 Ground Data Link system.
- 3
-
Dubai
Aerospace Enterprise selected Rockwell Collins avionics for installation on
A320s
Dubai
Aerospace Enterprise - an aerospace corporation with operations from aircraft
leasing, maintenance, repair and overhaul, and aviation IT solutions - selected
Rockwell Collins communication, navigation and surveillance systems. The systems
will be offered as "baseline" equipment for installation on 70 of the company's
new Airbus A320 aircraft.
Rockwell
Collins received $450 million contract for ARC-210 radios
The U.S.
Navy awarded a four-year production contract to Rockwell Collins for ARC-210
radios. The contract has a potential value of $450 million over the four-year
life of the program. Included in the contract is the next generation ARC-210
radio, which will enter production in 2010. This fifth generation of the ARC-210
is software reprogrammable and brings several new capabilities to the
warfighter, including extended frequency range for interoperability with civil
agencies.
Rockwell
Collins B737 full flight simulator achieved Level D certification
Rockwell
Collins achieved Level D, Zero Flight Time certification from the United Kingdom
Civil Aviation Authority for the company's new Boeing 737 NG full flight
simulator. The simulator is installed at CTC Aviation Group's Crew Training
Center near Southampton, U.K.
Rockwell
Collins named top supplier by Hawker Beechcraft Corporation
Hawker
Beechcraft Corporation (HBC) recently announced the recipients of its 2009
supplier awards. Rockwell Collins was selected from hundreds of HBC suppliers as
the HBC Supplier of the Year, HBC's top honor. This is the second time in three
years Rockwell Collins has won the award.
Rockwell
Collins awarded contract to provide satellite communications
terminals
Rockwell
Collins was selected to provide Extended Data Rate International Partners
Variant Single Channel Anti-jam Manportable (SCAMP) terminals to the Canadian
Department of National Defense. The Foreign Military Sale contract will be
executed through the U.S. Army's Communications-Electronics Command Group.
The SCAMP
terminals will be used with the U.S. Advanced Extremely High Frequency (AEHF)
satellites. The AEHF system is a joint service satellite communications system
that provides near-worldwide, secure, survivable and jam-resistant
communications for high-priority military ground, sea and air
assets.
Rockwell
Collins selected to provide Radar Electronic Support Measures for German
frigates
Rockwell
Collins was selected to provide a Radar Electronic Support Measures (CS-3600)
suite for Germany's F125 Special Forces and Stabilization frigates. The CS-3600
system automatically collects and analyzes radar signals, allowing the ship's
crew to know when an aircraft, missile or other ship could be
approaching.
Rockwell
Collins selected for KC-135 Block 45 upgrade program
The U.S.
Air Force selected Rockwell Collins for the Engineering, Manufacturing and
Development (EMD) phase of the KC-135 Block 45 cockpit upgrade program. During
the EMD phase, the company will modernize two prototype KC-135 refueling tanker
flight decks, establishing the production baseline for 415 additional KC-135
aircraft expected to receive the Block 45 upgrade. The modernization will
provide the aircraft flight decks with the latest generation autopilot, flight
director, radar altimeter and electronic engine instrument display. The contract
also calls for replacing the aging analog engine instruments with a large format
color instrument display.
Rockwell
Collins introduced new MicroDAGR GPS receiver for soldiers
Rockwell
Collins introduced its new MicroDAGR hand-held GPS receiver for soldiers. The
MicroDAGR provides dismounted soldiers with real-time position, navigation,
moving maps and timing information on a full-color touch screen display, and is
small enough to be worn on the wrist, attached to a lanyard, or placed in a
pocket. First deliveries will go to the U.S. Army Rapid Equipping
Force.
Rockwell
Collins delivered Ground Soldier System prototypes
Rockwell
Collins delivered 10 prototype systems for the U.S. Army Ground Soldier System
Increment 1 program. Rockwell Collins, together with its teammate Elbit Systems
of America, created a full soldier system prototype that improves upon
combat-proven displays and navigation systems originally developed for the Land
Warrior program, and incorporates video processing, mass storage, computing and
information assurance capabilities.
- 4
-
Rockwell
Collins recognized for environmental commitment
Rockwell
Collins placed in Newsweek's 2009 Green Rankings, an evaluation of the 500
largest U.S. companies based on environmental impact, green policies and
performance, and reputation among peers and environmental experts. The company
was ranked 105th overall and fourth in the transportation and aerospace
sector.
Conference
Call and Webcast Details
Rockwell
Collins Chairman, President and CEO Clay Jones and Senior Vice President and CFO
Patrick Allen will conduct an earnings conference call at 11:00 a.m. Eastern
Time on January 28, 2010. Individuals may listen to the call and view
management’s supporting slide presentation on the Internet at www.rockwellcollins.com.
Listeners are encouraged to go to the Investor Relations portion of the web site
at least 15 minutes prior to the call to download and install any necessary
software. The call will be available for replay on the Internet at www.rockwellcollins.com
through March 22, 2010.
Rockwell
Collins is a pioneer in the development and deployment of innovative
communication and aviation electronics solutions for both commercial and
government applications. Our expertise in flight deck avionics, cabin
electronics, mission communications, information management and simulation and
training is delivered by nearly 20,000 employees, and a global service and
support network that crosses 27 countries. To find out more, please visit
www.rockwellcollins.com.
This
press release contains statements, including certain projections and business
trends, that are forward-looking statements as defined in the Private Securities
Litigation Reform Act of 1995. Actual results may differ materially from
those projected as a result of certain risks and uncertainties, including but
not limited to the financial condition of our customers (including major U.S.
airlines); the health of the global economy, including potential deterioration
in the currently volatile economic and financial market conditions; the rate of
recovery of the commercial aftermarket; delays related to the award of domestic
and international contracts; the continued support for military transformation
and modernization programs; potential adverse impact of oil prices on the
commercial aerospace industry; the impact of the global war on terrorism and
declining defense budgets on government military procurement expenditures and
budgets; changes in domestic and foreign government spending, budgetary and
trade policies adverse to our businesses; market acceptance of our new and
existing technologies, products and services; reliability of and customer
satisfaction with our products and services; favorable outcomes on or potential
cancellation or restructuring of contracts, orders or program priorities by our
customers; customer bankruptcies and profitability; recruitment and retention of
qualified personnel; regulatory restrictions on air travel due to environmental
concerns; effective negotiation of collective bargaining agreements by us and
our customers; performance of our customers and subcontractors; risks inherent
in development and fixed-price contracts, particularly the risk of cost
overruns; risk of significant reduction to air travel or aircraft capacity
beyond our forecasts; our ability to execute to our internal performance plans
such as our productivity improvement and cost reduction initiatives; achievement
of our acquisition and related integration plans; continuing to maintain our
planned effective tax rates which is primarily dependent on legislation
extending the Federal Research and Development Tax Credit beyond December 31,
2009; our ability to develop contract compliant systems and products on schedule
and within anticipated cost estimates; risk of fines and penalties related to
noncompliance with export control regulations; risk of asset impairments; our
ability to win new business and convert those orders to sales within the fiscal
year in accordance with our annual operating plan; and the uncertainties of the
outcome of litigation, as well as other risks and uncertainties, including but
not limited to those detailed herein and from time to time in our Securities and
Exchange Commission filings. These forward-looking statements are
made only as of the date hereof and the company assumes no obligation to update
any forward-looking statement.
|
Media
Contact:
|
Investor
Contact:
|
|
Pam
Tvrdy
|
Dan
Swenson
|
|
319.295.0591
|
319.295.7575
|
|
pjtvrdy@rockwellcollins.com
|
investorrelations@rockwellcollins.com
|
- 5
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ROCKWELL
COLLINS, INC.
SEGMENT
SALES AND EARNINGS INFORMATION
(Unaudited)
(in
millions, except per share amounts)
|
Three
Months Ended
|
||||||||
|
Dec.
31
|
||||||||
|
2009
|
2008
|
|||||||
|
Sales
|
||||||||
|
Government
Systems
|
$ | 616 | $ | 574 | ||||
|
Commercial
Systems
|
411 | 484 | ||||||
|
Total
sales
|
$ | 1,027 | $ | 1,058 | ||||
|
Segment
operating earnings
|
||||||||
|
Government
Systems
|
$ | 134 | $ | 140 | ||||
|
Commercial
Systems
|
68 | 97 | ||||||
|
Total
segment operating earnings
|
202 | 237 | ||||||
|
Interest
expense
|
(6 | ) | (4 | ) | ||||
|
Stock-based
compensation
|
(5 | ) | (5 | ) | ||||
|
General
corporate, net
|
(11 | ) | (6 | ) | ||||
|
Restructuring
adjustment
|
1 | - | ||||||
|
Income
before income taxes
|
181 | 222 | ||||||
|
Income
tax provision
|
(60 | ) | (71 | ) | ||||
|
Net
income
|
$ | 121 | $ | 151 | ||||
|
Diluted
earnings per share
|
$ | 0.76 | $ | 0.95 | ||||
|
Weighted
average diluted shares outstanding
|
159.2 | 159.2 | ||||||
The
company’s effective income tax rate of 33.1% for the first quarter of fiscal
year 2010 was higher than the rate of 32.0% for the prior year period primarily
due to the unfavorable impact of the expiration of the Federal Research and
Development Tax Credit on December 31, 2009.
The
following tables summarize total sales by product category and Commercial
Systems’ sales by type of product or service for the three months ended December
31, 2009 and 2008 (unaudited, in millions):
|
Three
Months Ended
|
||||||||
|
Dec.
31
|
||||||||
|
2009
|
2008
|
|||||||
|
Government
Systems’ sales by product category:
|
||||||||
|
Airborne
solutions
|
$ | 410 | $ | 403 | ||||
|
Surface
solutions
|
206 | 171 | ||||||
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Total
|
$ | 616 | $ | 574 | ||||
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Commercial
Systems’ sales by product category:
|
||||||||
|
Wide-body
in-flight entertainment products
|
$ | 18 | $ | 21 | ||||
|
All
other air transport aviation electronics
|
223 | 199 | ||||||
|
Total
air transport aviation electronics
|
241 | 220 | ||||||
|
Business
and regional aviation electronics
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170 | 264 | ||||||
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Total
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$ | 411 | $ | 484 | ||||
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Commercial
Systems’ sales by type of product or service:
|
||||||||
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Original
equipment
|
$ | 201 | $ | 244 | ||||
|
Aftermarket
|
192 | 219 | ||||||
|
Wide-body
in-flight entertainment products
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18 | 21 | ||||||
|
Total
Commercial Systems sales
|
$ | 411 | $ | 484 | ||||
- 6
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ROCKWELL
COLLINS, INC.
SUMMARY
BALANCE SHEET
(Unaudited)
(in
millions)
|
Dec.
31,
|
Sept.
30,
|
|||||||
|
2009
|
2009
|
|||||||
|
Assets
|
||||||||
|
Cash
and cash equivalents
|
$ | 206 | $ | 235 | ||||
|
Receivables,
net
|
825 | 913 | ||||||
|
Inventories,
net
|
1,022 | 943 | ||||||
|
Current
deferred income taxes
|
155 | 154 | ||||||
|
Other
current assets
|
96 | 117 | ||||||
|
Total
current assets
|
2,304 | 2,362 | ||||||
|
Property
|
714 | 719 | ||||||
|
Goodwill
and intangible assets
|
1,068 | 964 | ||||||
|
Long-term
deferred income taxes
|
350 | 371 | ||||||
|
Other
assets
|
213 | 229 | ||||||
|
Total
assets
|
$ | 4,649 | $ | 4,645 | ||||
|
Liabilities
and equity
|
||||||||
|
Short-term
debt
|
$ | 62 | $ | - | ||||
|
Accounts
payable
|
339 | 366 | ||||||
|
Compensation
and benefits
|
185 | 199 | ||||||
|
Advance
payments from customers
|
342 | 349 | ||||||
|
Product
warranty costs
|
210 | 217 | ||||||
|
Other
current liabilities
|
241 | 228 | ||||||
|
Total
current liabilities
|
1,379 | 1,359 | ||||||
|
Long-term
debt, net
|
529 | 532 | ||||||
|
Retirement
benefits
|
1,141 | 1,254 | ||||||
|
Other
liabilities
|
216 | 205 | ||||||
|
Equity
|
1,384 | 1,295 | ||||||
|
Total
liabilities and equity
|
$ | 4,649 | $ | 4,645 | ||||
- 7
-
ROCKWELL
COLLINS, INC.
CONDENSED
CASH FLOW INFORMATION
(Unaudited)
(in
millions)
|
Three
Months Ended
|
||||||||
|
Dec.
31
|
||||||||
|
2009
|
2008
|
|||||||
|
Operating
Activities:
|
||||||||
|
Net
income
|
$ | 121 | $ | 151 | ||||
|
Adjustments
to arrive at cash provided by operating activities:
|
||||||||
|
Depreciation
|
27 | 26 | ||||||
|
Amortization
of intangible assets
|
9 | 6 | ||||||
|
Stock-based
compensation expense
|
5 | 5 | ||||||
|
Compensation
and benefits paid in common stock
|
17 | 17 | ||||||
|
Tax
benefit from stock-based compensation
|
2 | - | ||||||
|
Excess
tax benefit from stock-based compensation
|
(2 | ) | - | |||||
|
Deferred
income taxes
|
5 | - | ||||||
|
Pension
plan contributions
|
(101 | ) | (4 | ) | ||||
|
Changes
in assets and liabilities, excluding effects of
acquisitions
|
||||||||
|
and
foreign currency adjustments:
|
||||||||
|
Receivables
|
118 | 76 | ||||||
|
Inventories
|
(87 | ) | (63 | ) | ||||
|
Accounts
payable
|
(31 | ) | (92 | ) | ||||
|
Compensation
and benefits
|
(13 | ) | (121 | ) | ||||
|
Advanced
payments from customers
|
(7 | ) | (22 | ) | ||||
|
Income
taxes
|
48 | 86 | ||||||
|
Other
assets and liabilities
|
(27 | ) | (44 | ) | ||||
|
Cash
Provided by Operating Activities
|
84 | 21 | ||||||
|
Investing
Activities:
|
||||||||
|
Property
additions
|
(26 | ) | (45 | ) | ||||
|
Acquisition
of businesses, net of cash acquired
|
(92 | ) | (28 | ) | ||||
|
Other
investing activities
|
(1 | ) | - | |||||
|
Cash
Used for Investing Activities
|
(119 | ) | (73 | ) | ||||
|
Financing
Activities:
|
||||||||
|
Purchases
of treasury stock
|
(28 | ) | (41 | ) | ||||
|
Cash
dividends
|
(38 | ) | (38 | ) | ||||
|
Increase
in short-term borrowings
|
62 | 154 | ||||||
|
Proceeds
from the exercise of stock options
|
7 | 1 | ||||||
|
Excess
tax benefit from stock-based compensation
|
2 | - | ||||||
|
Cash
Provided by Financing Activities
|
5 | 76 | ||||||
|
Effect
of exchange rate changes on cash and cash equivalents
|
1 | 1 | ||||||
|
Net
Change in Cash and Cash Equivalents
|
(29 | ) | 25 | |||||
|
Cash
and Cash Equivalents at Beginning of Period
|
235 | 175 | ||||||
|
Cash
and Cash Equivalents at End of Period
|
$ | 206 | $ | 200 | ||||
# #
#
- 8
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