[October 23, 2016] |
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Rockwell Collins Reports Fourth Quarter Fiscal Year 2016 Results and Provides Fiscal Year 2017 Financial Guidance
Rockwell Collins, Inc. (NYSE:COL) today reported fourth quarter fiscal
year 2016 earnings per share from continuing operations increased 14% to
$1.58, compared to $1.38 in the prior year. Total sales for the fourth
quarter of fiscal year 2016 were $1.45 billion, a 4% increase from the
same period in fiscal year 2015. Total segment operating margin for the
fourth quarter increased 60 basis points to 22.6% and segment operating
earnings increased 7% to $326 million, compared to the same period in
fiscal year 2015.
Fiscal year 2016 sales were $5.26 billion, compared to $5.24 billion in
fiscal year 2015. Earnings per share from continuing operations
increased 6% to $5.50, compared to $5.19 in the prior year. Cash
provided by operating activities from continuing operations totaled $723
million in fiscal year 2016, compared to $749 million in fiscal year
2015. Free cash flow was $530 million in fiscal year 2016, compared to
$539 million in fiscal year 2015.
The Company announced financial guidance for its fiscal year 2017. This
financial guidance is based on stand-alone expectations for Rockwell
Collins and does not contemplate the acquisition of B/E Aerospace that
was separately announced today. The Company expects revenue between $5.3
billion and $5.4 billion and free cash flow in the range of $600 million
to $700 million. Total segment operating margins in 2017 are expected to
be about flat with 2016. Integral to this guidance are the following
assumptions for the Company's reporting segments in comparison to fiscal
year 2016:
-
Government Systems sales are expected to grow low-to-mid single-digits.
-
Commercial Systems sales are expected to be about flat.
-
Information Management Services sales are expected to be up
mid-to-high single-digits.
"I'm pleased to report a strong quarter of operational performance
highlighted by double-digit earnings per share growth and robust
quarterly free cash flow generation," said Rockwell Collins Chairman,
President, and Chief Executive Officer, Kelly Ortberg. "As we look to
fiscal year 2017, we expect continued recovery in Government Systems
driven by an improved budget environment. We also expect our Information
Management Services business will continue to grow as a result of the
ongoing demand for aircraft connectivity. Our Commercial Systems
business is expected to be flat as air transport OEM growth is being
offset by lower business jet sales and aftermarket parts recycling. We
look forward to completing the acquisition of B/E Aerospace which will
significantly enhance our long-term outlook."
Following is a discussion of fiscal year 2016 fourth quarter sales and
earnings for each business segment.
Commercial Systems
Commercial Systems, which provides aviation electronics systems,
products and services to air transport, business and regional aircraft
manufacturers and airlines worldwide, achieved 2016 fourth quarter
results as summarized below.
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(dollars in millions)
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Q4 FY16
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|
Q4 FY15
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Inc/(Dec)
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Commercial Systems sales
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Original equipment
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$
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351
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|
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$
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372
|
|
|
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(6
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)%
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Aftermarket
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|
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251
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|
|
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251
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|
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|
-
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%
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Wide-body in-flight entertainment
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8
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13
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(38
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)%
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Total Commercial Systems sales
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$
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610
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$
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636
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(4
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)%
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Operating earnings
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$
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130
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$
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146
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(11
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)%
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Operating margin rate
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21.3
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%
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23.0
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%
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-
Original equipment sales decreased due to lower business aircraft OEM
production rates, unfavorable customer timing for airline selectable
equipment, and lower Airbus A330 production rates. These decreases
were partially offset by higher product deliveries in support of the
Airbus A350, Boeing 787, and Bombardier CSeries production rate
increases, as well as higher customer-funded development program
revenues.
-
Aftermarket sales were flat as higher air transport entry-into-service
spares sales were offset by lower business jet cabin retrofit sales.
-
Operating earnings and operating margin decreased due to lower
business jet sales, a $4 million charge related to employee headcount
reductions, and higher research and development expense and
amortization of pre-production engineering costs. These unfavorable
items were partially offset by cost savings initiatives from
previously announced restructuring plans.
Government Systems
Government Systems provides a broad range of electronic products,
systems and services to customers including the U.S. Department of
Defense, other government agencies, civil agencies, defense contractors
and ministries of defense around the world.
Beginning with the first quarter of fiscal year 2016, Government Systems
sales categories have been consolidated as a result of an internal
reorganization and are delineated based on the underlying product
technologies. The previously reported sales categories of Communication
products, Surface solutions and Navigation products are now primarily
consolidated into Communication and navigation. Government Systems sales
for the fourth quarter of fiscal year 2015 have been reclassified to the
current year presentation.
Results from the fourth quarter of 2016 are summarized below.
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(dollars in millions)
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Q4 FY16
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Q4 FY15
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Inc/(Dec)
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Government Systems sales
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Avionics
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$
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457
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|
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$
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400
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14
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%
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Communication and navigation
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205
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181
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13
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%
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Total Government Systems sales
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$
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662
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$
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581
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14
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%
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Operating earnings
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$
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168
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|
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$
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129
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30
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%
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Operating margin rate
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25.4
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%
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22.2
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%
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-
Avionics sales increased due to higher fixed-wing platform revenues,
simulation and training program sales, and sales from a classified
program.
-
Communication and navigation sales increased due to higher ARC-210
product sales, data links sales, and GPS-based product revenues,
partially offset by the wind-down of an international electronic
warfare program and lower international deliveries of targeting
systems.
-
Operating earnings and operating margin increased primarily due to
higher sales volume, cost savings from previously announced
restructuring plans, and lower company-funded research and development
expense. In addition, favorable development program contract
adjustments were offset by unfavorable warranty adjustments.
Information Management Services
Information Management Services (IMS) provides communication services,
systems integration and security solutions across the aviation, airport,
rail and nuclear security markets. Results from the fourth quarter of
2016 are summarized below.
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(dollars in millions)
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Q4 FY16
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Q4 FY15
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Inc/(Dec)
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Information Management Services sales
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$
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173
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$
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167
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4
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%
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Operating earnings
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$
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28
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$
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29
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(3
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)%
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Operating margin rate
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16.2
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%
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17.4
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%
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-
IMS sales increased due to growth in aviation related businesses and
higher non-aviation related sales due to the timing of nuclear
security program revenues. These increases were partially offset by
certain favorable adjustments recorded in the aviation related
businesses in the prior year.
-
IMS operating earnings and operating margin decreased primarily due to
certain favorable adjustments recorded in the aviation related
businesses in the prior year, partially offset by higher earnings from
the higher sales volume.
Income Taxes
The Company's effective income tax rate from continuing operations was
29.7% for the fourth quarter of fiscal year 2016 compared to a rate of
30.8% for the same period last year. The lower current year effective
income tax rate from continuing operations was primarily due to
differences in the availability of the Federal R&D tax credit.
Cash Flow
Cash provided by operating activities from continuing operations was
$723 million in fiscal year 2016, compared to $749 million in fiscal
year 2015. The $26 million decrease was primarily due to unfavorable net
working capital changes, partially offset by lower income tax payments.
The company paid a dividend on its common stock of 33 cents per share,
or $43 million, in the fourth quarter of 2016.
Fiscal Year 2017 Outlook
This financial guidance is based on stand-alone expectations for
Rockwell Collins in fiscal year 2017 and does not contemplate the
acquisition of B/E Aerospace that was separately announced today:
--
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Total sales
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$5.3 billion to $5.4 billion
|
--
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Total segment operating margins
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About 21.0%
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--
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Free cash flow
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$600 million to $700 million (1)
|
--
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Total research & development investment
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$900 million to $950 million (2)
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--
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Full year income tax rate
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28% to 29%
|
(1) - The Company's free cash flow expectations assume the Company will
make a $55 million discretionary contribution to the company's qualified
defined benefit pension plan, capital expenditures will total about $200
million, and net pre-production engineering costs capitalized in
inventory is expected to increase about $50 million in fiscal year 2017.
(2) - Total research and development investment consists of company and
customer funded research & development expenditures as well as the net
increase in pre-production engineering costs capitalized within
inventory.
Non-GAAP Financial Information
Total segment operating margin is a non-GAAP measure and is reconciled
to the related GAAP measure, Income from continuing operations before
income taxes, in the Segment Sales and Earnings Information schedule in
this press release. Total segment operating margin is calculated as
total segment operating earnings divided by total sales. The non-GAAP
total segment operating margin information included in this disclosure
is believed to be useful to investors' understanding and assessment of
the Company's ongoing operations.
Free cash flow is a non-GAAP measure and is reconciled to the related
GAAP measure, Cash Provided by Operating Activities from Continuing
Operations below. Free cash flow is calculated as Cash Provided by
Operating Activities from Continuing Operations less Property Additions.
The non-GAAP free cash flow information included in this disclosure is
believed to be useful to investors' understanding and assessment of the
Company's ongoing operations.
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Year Ended September 30
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(dollars in millions)
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2016
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2015
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Cash Provided by Operating Activities from Continuing Operations
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$
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723
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$
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749
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Less: Property Additions
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(193
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)
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(210
|
)
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Free Cash Flow
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$
|
530
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$
|
539
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Conference Call and Webcast Details
Separately today, Rockwell Collins announced the acquisition of B/E
Aerospace. Due to this pending transaction, both Rockwell Collins and
B/E Aerospace have canceled their previously scheduled earnings
conference calls and webcasts. Rockwell Collins and B/E Aerospace
executives will discuss the transaction during Rockwell Collins'
earnings webcast now scheduled Monday, October 24th at 8:30 a.m. Eastern
Time. 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.
Business Highlights
Airbus survey ranks Rockwell Collins No. 1 for avionics supplier
support Rockwell Collins was named by Airbus as its top
supplier in the Supplier-Furnished Equipment category and received an
Excellent In-Service Performance award.
Rockwell Collins and the Defense Contract Management Agency sign
agreement to streamline procurement of commercial items Rockwell
Collins and the Defense Contract Management Agency signed a Memorandum
of Agreement that establishes an improved process for procurement of
commercial items for military application.
Boeing 777X to feature touchscreen flight displays from Rockwell
Collins Boeing selected Rockwell Collins to provide its
industry-leading touchscreen flight displays for all five flight deck
displays on the new Boeing 777X. The advanced touchscreen capability
will make the flight deck more intuitive for pilots and more efficient
for flight operations.
Bombardier C Series first delivery marks airline debut of Rockwell
Collins' Pro Line Fusion® Rockwell Collins' Pro Line Fusion®
avionics made its airline debut following first delivery of Bombardier's
C Series to Swiss International Air Lines. The aircraft also features
Rockwell Collins' Primary Flight Control Computer, industry-leading
MultiScan™ weather radar with predictive windshear and dual Head-Up
Display.
Rockwell Collins named to the North American Dow Jones Sustainability
Index for 2016 For the eighth year in a row, Rockwell Collins
was named to the North American Dow Jones Sustainability Index. Rockwell
Collins is one of four North American Aerospace and Defense companies
recognized on this year's index in the Capital Goods category.
Rockwell Collins' advanced avionics and IFE selected for 44 Shenzhen
Airlines Boeing 737s Rockwell Collins was selected by
China-based Shenzhen Airlines to provide its full suite of advanced
avionics and PAVES™ Broadcast overhead In-Flight Entertainment (IFE) on
44 new airplanes, including 37 Boeing 737 MAX and seven Next-Generation
Boeing 737 aircraft.
Rockwell Collins HGS™ and EVS certified on Legacy 450/500 Rockwell
Collins' HGS™-3500, the industry's first Head-up Guidance System (HGS™)
developed for mid-size and light business aircraft and multi-spectral
EVS-3000 enhanced vision system have been certified for the Embraer
Legacy 450 and Legacy 500 executive jets-the first certification for
both technologies. The systems bring revolutionary flight deck
technology to the business aviation market segment that enhance pilot
situational awareness and increase safety.
Rockwell Collins' customer Zetta Jet accepts delivery of first Global
6000 aircraft enabled with global high speed cabin connectivity The
high speed cabin connectivity experience of the future is now one step
closer for Zetta Jet customers with the delivery of the company's first
Bombardier Global 6000 aircraft enabled with Inmarsat's Jet ConneX (JX).
Rockwell Collins is the service provider and a value added reseller of
JX connectivity as part of its ARINCDirect offering.
Rockwell Collins awarded production contract to modernize Air Force,
Navy and Army test ranges Rockwell Collins was awarded a $31
million contract from the U.S. Department of Defense to support
production of the Common Range Integrated Instrumentation System across
Air Force, Navy and Army test ranges. The award comes shortly after the
completion of a successful Production Readiness Review.
China Eastern to upgrade 737 fleet with Rockwell Collins Iridium®
SATCOM Rockwell Collins announced that China Eastern Airlines
selected its Iridium® SATCOM aftermarket solution for its fleet of more
than 100 Boeing 737 aircraft. Installations are currently in progress.
Rockwell Collins awarded Coptersafety contract for helicopter visual
training systems Rockwell Collins will supply visual systems,
including image generators, databases, and projectors, plus avionics and
aircraft data to Coptersafety OY, an independent helicopter training
establishment located in Helsinki, Finland. The systems will be used at
Coptersafety's new training facility at Vantaa Airport.
Indira Gandhi International Airport selected Rockwell Collins to
provide first mobile common use check-in platform in India Passengers
using Indira Gandhi International Airport (IGI) can now check in faster
due to the implementation of Rockwell Collins' new ARINC vMUSE™ mobile
passenger processing solution. IGI, India's busiest airport and the
largest in South Asia, is the first airport to implement ARINC vMUSE,
which gives airlines the ability to check in travelers wherever and
whenever needed.
Rockwell Collins' HGS™ to be offered on new Embraer E-Jet E2 aircraft Rockwell
Collins' dual Head-Up Guidance System (HGS™) was selected as an option
on the upcoming Embraer E-Jet E2 aircraft line, which includes the
E175-E2, E190-E2 and E195-E2.
Mexican Navy selects Rockwell Collins to deliver Transportable
Blackhawk Operations Simulator Rockwell Collins will deliver
one Transportable Blackhawk Operations Simulator (T-BOS) and associated
services to the Mexican Navy in Veracruz, Mexico, making this delivery
the seventeenth T-BOS delivered to domestic and international customers
for the UH-60M Blackhawk helicopter.
About Rockwell Collins
Rockwell Collins is a pioneer in the development and deployment of
innovative communication and aviation electronic solutions for both
commercial and government applications. Our expertise in flight deck
avionics, cabin electronics, mission communications, simulation and
training and information management services is delivered by a global
workforce, and a service and support network that crosses more than 150
countries. To find out more, please visit www.rockwellcollins.com.
Safe Harbor Statement
This press release contains statements, including statements regarding
certain projections, business trends, and the proposed acquisition of
B/E Aerospace 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 and suppliers, including bankruptcies; the health of the
global economy, including potential deterioration in economic and
financial market conditions; adjustments to the commercial OEM
production rates and the aftermarket; the impacts of natural disasters
and pandemics, including operational disruption, potential supply
shortages and other economic impacts; cybersecurity threats, including
the potential misappropriation of assets or sensitive information,
corruption of data or operational disruption; delays related to the
award of domestic and international contracts; delays in customer
programs, including new aircraft programs entering service later than
anticipated; the continued support for military transformation and
modernization programs; potential impact of volatility in oil prices,
currency exchange rates or interest rates on the commercial aerospace
industry or our business; the impact of terrorist events on the
commercial aerospace industry; changes in domestic and foreign
government spending, budgetary, procurement 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; potential unavailability of
our mission-critical data and voice communication networks; unfavorable
outcomes on or potential cancellation or restructuring of contracts,
orders or program priorities by our customers; recruitment and retention
of qualified personnel; regulatory restrictions on air travel due to
environmental concerns; effective negotiation of collective bargaining
agreements by us, our customers, and our suppliers; 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 internal performance plans such as
restructuring activities, productivity and quality improvements and cost
reduction initiatives; achievement of ARINC integration and synergy
plans as well as our other acquisition and related integration plans;
continuing to maintain our planned effective tax rates; 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 laws and regulations including compliance
requirements associated with U.S. Government work, export control and
environmental 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 lawsuits, claims and legal proceedings, risk that one or more
closing conditions to the acquisition of B/E Aerospace, including
certain regulatory approvals, may not be satisfied or waived, on a
timely basis or otherwise, including that a governmental entity may
prohibit, delay or refuse to grant approval for the consummation of the
proposed transaction, may require conditions, limitations or
restrictions in connection with such approvals or that the required
approval by the shareholders of each of B/E Aerospace and Rockwell
Collins may not be obtained; risk of unexpected costs, charges or
expenses resulting from the proposed acquisition of B/E Aerospace;
uncertainty of the expected financial performance of the combined
company following completion of the proposed acquisition of B/E
Aerospace; failure to realize the anticipated benefits of the proposed
acquisition of B/E Aerospace, including as a result of delay in
completing the proposed transaction or integrating the businesses of
Rockwell Collins and B/E Aerospace; risk to the ability of the combined
company to implement its business strategy; risk of an occurrence of any
event that could give rise to termination of the merger agreement; risk
that stockholder litigation in connection with the proposed transaction
may affect the timing or occurrence of the contemplated merger or result
in significant costs of defense, indemnification and liability 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.
No Offer or Solicitation
This communication is for informational purposes only and not intended
to and does not constitute an offer to subscribe for, buy or sell, the
solicitation of an offer to subscribe for, buy or sell or an invitation
to subscribe for, buy or sell any securities or the solicitation of any
vote or approval in any jurisdiction pursuant to or in connection with
the proposed transaction or otherwise, nor shall there be any sale,
issuance or transfer of securities in any jurisdiction in contravention
of applicable law. No offer of securities shall be made except by means
of a prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended, and otherwise in accordance with applicable law.
Additional Information and Where to Find It
In connection with the proposed transaction, Rockwell Collins will
prepare a registration statement on Form S-4 that will include a joint
proxy statement/prospectus (the "Joint Proxy Statement/Prospectus") for
the stockholders of B/E Aerospace and Rockwell Collins to be filed with
the SEC, and each will mail the Joint Proxy Statement/Prospectus to
their respective stockholders and file other documents regarding the
proposed transaction with the SEC. This communication is not a
substitute for any proxy statement, registration statement, proxy
statement/prospectus or other document Rockwell Collins and/or B/E
Aerospace may file with the SEC in connection with the proposed
transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ CAREFULLY
AND IN THEIR ENTIRETY THE JOINT PROXY STATEMENT/PROSPECTUS WHEN IT
BECOMES AVAILABLE, ANY AMENDMENTS OR SUPPLEMENTS TO THE JOINT PROXY
STATEMENT/PROSPECTUS, AND OTHER DOCUMENTS FILED BY ROCKWELL COLLINS OR
B/E AEROSPACE WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION,
BECAUSE THESE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION. The Joint
Proxy Statement/Prospectus (when available) will be mailed to
stockholders of Rockwell Collins and B/E Aerospace. Investors and
security holders will be able to obtain free copies of Joint Proxy
Statement/Prospectus and other documents filed with the SEC by Rockwell
Collins and/or B/E Aerospace through the website maintained by the SEC
at www.sec.gov.
Investors and security holders will also be able to obtain free copies
of the documents filed by Rockwell Collins with the SEC on Rockwell
Collins' internet website at http://www.rockwellcollins.com
or by contacting Rockwell Collins' Investor Relations at Rockwell
Collins, 400 Collins Rd. NE, Cedar Rapids, IA 52498 or by calling (319)
295-7575. Investors and security holders will also be able to obtain
free copies of the documents filed by B/E Aerospace with the SEC on B/E
Aerospace's internet website at http://www.beaerospace.com
or by contacting B/E Aerospace's Investor Relations at B/E Aerospace,
Inc., 1400 Corporate Center Way, Wellington, FL or by calling (561)
791-5000.
Participants in the Solicitation
Rockwell Collins, B/E Aerospace, their respective directors, executive
officers and other members of its management and employees may be deemed
to be participants in the solicitation of proxies in connection with the
proposed transaction. Information regarding the persons who may, under
the rules of the SEC, be deemed participants in the solicitation of
proxies in connection with the proposed transaction, including a
description of their direct or indirect interests, by security holdings
or otherwise, will be set forth in the Joint Proxy Statement/Prospectus
and other relevant materials when it is filed with the SEC. Information
regarding the directors and executive officers of Rockwell Collins is
contained in Rockwell Collins' proxy statement for its 2016 annual
meeting of stockholders, filed with the SEC on December 16, 2015, and
Rockwell Collins' Current Report on Form 8-K filed with the SEC on April
29, 2016. Information regarding the directors and executive officers of
B/E Aerospace is contained in B/E Aerospace's proxy statement for its
2016 annual meeting of stockholders, filed with the SEC on April 28,
2016. These documents can be obtained free of charge from the sources
indicated above.
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|
|
|
|
|
|
|
ROCKWELL COLLINS, INC.
SEGMENT SALES AND EARNINGS INFORMATION
(Unaudited)
(in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30
|
|
|
Year Ended September 30
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Systems
|
|
|
|
$
|
610
|
|
|
|
$
|
636
|
|
|
|
$
|
2,395
|
|
|
|
$
|
2,434
|
|
Government Systems
|
|
|
|
662
|
|
|
|
581
|
|
|
|
2,206
|
|
|
|
2,187
|
|
Information Management Services
|
|
|
|
173
|
|
|
|
167
|
|
|
|
658
|
|
|
|
623
|
|
Total sales
|
|
|
|
$
|
1,445
|
|
|
|
$
|
1,384
|
|
|
|
$
|
5,259
|
|
|
|
$
|
5,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Systems
|
|
|
|
$
|
130
|
|
|
|
$
|
146
|
|
|
|
$
|
531
|
|
|
|
$
|
554
|
|
Government Systems
|
|
|
|
168
|
|
|
|
129
|
|
|
|
477
|
|
|
|
457
|
|
Information Management Services
|
|
|
|
28
|
|
|
|
29
|
|
|
|
107
|
|
|
|
95
|
|
Total segment operating earnings
|
|
|
|
326
|
|
|
|
304
|
|
|
|
1,115
|
|
|
|
1,106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
(16
|
)
|
|
|
(16
|
)
|
|
|
(64
|
)
|
|
|
(61
|
)
|
Stock-based compensation
|
|
|
|
(6
|
)
|
|
|
(7
|
)
|
|
|
(27
|
)
|
|
|
(24
|
)
|
General corporate, net
|
|
|
|
(8
|
)
|
|
|
(15
|
)
|
|
|
(44
|
)
|
|
|
(59
|
)
|
Restructuring and asset impairment charges
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(45
|
)
|
|
|
-
|
|
Income from continuing operations before income taxes
|
|
|
|
296
|
|
|
|
266
|
|
|
|
935
|
|
|
|
962
|
|
Income tax expense
|
|
|
|
(88
|
)
|
|
|
(82
|
)
|
|
|
(208
|
)
|
|
|
(268
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
|
208
|
|
|
|
184
|
|
|
|
727
|
|
|
|
694
|
|
Income (loss) from discontinued operations, net of taxes (1)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
|
|
(8
|
)
|
Net income
|
|
|
|
$
|
208
|
|
|
|
$
|
184
|
|
|
|
$
|
728
|
|
|
|
$
|
686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
$
|
1.58
|
|
|
|
$
|
1.38
|
|
|
|
$
|
5.50
|
|
|
|
$
|
5.19
|
|
Discontinued operations
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.01
|
|
|
|
(0.06
|
)
|
Diluted earnings per share
|
|
|
|
$
|
1.58
|
|
|
|
$
|
1.38
|
|
|
|
$
|
5.51
|
|
|
|
$
|
5.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted shares outstanding
|
|
|
|
131.5
|
|
|
|
133.2
|
|
|
|
132.1
|
|
|
|
133.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) On March 10, 2015, the Company sold its Aerospace Systems
Engineering and Support business (ASES), which provides military
aircraft integration and modification services. The results of ASES have
been classified as discontinued operations. During the twelve months of
2016, the Company recorded $2 million of income from discontinued
operations ($1 million after-tax), primarily due to the favorable
settlement of a contractual matter with a customer of the ASES business.
The following table summarizes sales by category for the three and
twelve months ended September 30, 2016 and 2015 (unaudited, in millions):
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30
|
|
|
Year Ended September 30
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
Commercial Systems sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Air transport aviation electronics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Original equipment
|
|
|
|
$
|
219
|
|
|
|
$
|
209
|
|
|
|
$
|
850
|
|
|
|
$
|
806
|
Aftermarket
|
|
|
|
151
|
|
|
|
133
|
|
|
|
542
|
|
|
|
522
|
Wide-body in-flight entertainment
|
|
|
|
8
|
|
|
|
13
|
|
|
|
38
|
|
|
|
57
|
Total air transport aviation electronics
|
|
|
|
378
|
|
|
|
355
|
|
|
|
1,430
|
|
|
|
1,385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business and regional aviation electronics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Original equipment
|
|
|
|
132
|
|
|
|
163
|
|
|
|
534
|
|
|
|
640
|
Aftermarket
|
|
|
|
100
|
|
|
|
118
|
|
|
|
431
|
|
|
|
409
|
Total business and regional aviation electronics
|
|
|
|
232
|
|
|
|
281
|
|
|
|
965
|
|
|
|
1,049
|
Total Commercial Systems sales
|
|
|
|
$
|
610
|
|
|
|
$
|
636
|
|
|
|
$
|
2,395
|
|
|
|
$
|
2,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Systems sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total original equipment
|
|
|
|
$
|
351
|
|
|
|
$
|
372
|
|
|
|
$
|
1,384
|
|
|
|
$
|
1,446
|
Total aftermarket
|
|
|
|
251
|
|
|
|
251
|
|
|
|
973
|
|
|
|
931
|
Wide-body in-flight entertainment
|
|
|
|
8
|
|
|
|
13
|
|
|
|
38
|
|
|
|
57
|
Total Commercial Systems sales
|
|
|
|
$
|
610
|
|
|
|
$
|
636
|
|
|
|
$
|
2,395
|
|
|
|
$
|
2,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government Systems Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Avionics
|
|
|
|
$
|
457
|
|
|
|
$
|
400
|
|
|
|
$
|
1,483
|
|
|
|
$
|
1,436
|
Communication and navigation
|
|
|
|
205
|
|
|
|
181
|
|
|
|
723
|
|
|
|
751
|
Total Government Systems Sales
|
|
|
|
$
|
662
|
|
|
|
$
|
581
|
|
|
|
$
|
2,206
|
|
|
|
$
|
2,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Information Management Services sales
|
|
|
|
$
|
173
|
|
|
|
$
|
167
|
|
|
|
$
|
658
|
|
|
|
$
|
623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total sales
|
|
|
|
$
|
1,445
|
|
|
|
$
|
1,384
|
|
|
|
$
|
5,259
|
|
|
|
$
|
5,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes total Research and Development Investment
by segment and funding type for the three and twelve months ended
September 30, 2016 and 2015 (unaudited, dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30
|
|
|
Year Ended September 30
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
Research and Development Investment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer-funded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Systems
|
|
|
|
$
|
65
|
|
|
|
$
|
56
|
|
|
|
$
|
231
|
|
|
|
$
|
187
|
|
Government Systems
|
|
|
|
97
|
|
|
|
89
|
|
|
|
381
|
|
|
|
382
|
|
Information Management Services
|
|
|
|
3
|
|
|
|
2
|
|
|
|
9
|
|
|
|
9
|
|
Total Customer-funded
|
|
|
|
165
|
|
|
|
147
|
|
|
|
621
|
|
|
|
578
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-funded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Systems
|
|
|
|
46
|
|
|
|
44
|
|
|
|
143
|
|
|
|
182
|
|
Government Systems
|
|
|
|
23
|
|
|
|
26
|
|
|
|
79
|
|
|
|
88
|
|
Information Management Services (1)
|
|
|
|
1
|
|
|
|
1
|
|
|
|
2
|
|
|
|
2
|
|
Total Company-funded
|
|
|
|
70
|
|
|
|
71
|
|
|
|
224
|
|
|
|
272
|
|
Total Research and Development Expense
|
|
|
|
235
|
|
|
|
218
|
|
|
|
845
|
|
|
|
850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in Pre-production Engineering Costs, Net
|
|
|
|
24
|
|
|
|
37
|
|
|
|
128
|
|
|
|
136
|
|
Total Research and Development Investment
|
|
|
|
$
|
259
|
|
|
|
$
|
255
|
|
|
|
$
|
973
|
|
|
|
$
|
986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of Total Sales
|
|
|
|
17.9
|
%
|
|
|
18.4
|
%
|
|
|
18.5
|
%
|
|
|
18.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Research and development expenses for the Information
Management Services segment do not include costs of internally developed
software and other costs associated with the expansion and construction
of network-related assets. These costs are capitalized as Property on
the Summary Balance Sheet.
|
|
|
|
|
ROCKWELL COLLINS, INC.
SUMMARY BALANCE SHEET
(Unaudited)
(in millions)
|
|
|
|
|
|
|
|
|
|
September 30
|
|
|
|
|
2016
|
|
|
2015
|
Assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
340
|
|
|
|
$
|
252
|
Receivables, net
|
|
|
|
1,094
|
|
|
|
1,038
|
Inventories, net (1)
|
|
|
|
1,939
|
|
|
|
1,824
|
Other current assets
|
|
|
|
117
|
|
|
|
110
|
Total current assets
|
|
|
|
3,490
|
|
|
|
3,224
|
|
|
|
|
|
|
|
|
Property
|
|
|
|
1,035
|
|
|
|
964
|
Goodwill
|
|
|
|
1,919
|
|
|
|
1,904
|
Intangible assets
|
|
|
|
667
|
|
|
|
703
|
Deferred income taxes
|
|
|
|
219
|
|
|
|
165
|
Other assets
|
|
|
|
377
|
|
|
|
344
|
Total assets
|
|
|
|
$
|
7,707
|
|
|
|
$
|
7,304
|
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
Short-term debt
|
|
|
|
$
|
740
|
|
|
|
$
|
448
|
Accounts payable
|
|
|
|
527
|
|
|
|
487
|
Compensation and benefits
|
|
|
|
269
|
|
|
|
273
|
Advance payments from customers
|
|
|
|
283
|
|
|
|
365
|
Accrued customer incentives
|
|
|
|
246
|
|
|
|
232
|
Product warranty costs
|
|
|
|
87
|
|
|
|
89
|
Other current liabilities
|
|
|
|
194
|
|
|
|
166
|
Total current liabilities
|
|
|
|
2,346
|
|
|
|
2,060
|
|
|
|
|
|
|
|
|
Long-term debt, net
|
|
|
|
1,382
|
|
|
|
1,680
|
Retirement benefits
|
|
|
|
1,660
|
|
|
|
1,466
|
Other liabilities
|
|
|
|
235
|
|
|
|
218
|
Equity
|
|
|
|
2,084
|
|
|
|
1,880
|
Total liabilities and equity
|
|
|
|
$
|
7,707
|
|
|
|
$
|
7,304
|
|
|
|
|
|
|
|
|
(1) Inventories, net is comprised of the following:
|
|
|
|
|
|
|
|
|
September 30, 2016
|
|
|
September 30, 2015
|
Inventories, net:
|
|
|
|
|
|
|
|
Production inventory
|
|
|
|
$
|
799
|
|
|
|
$
|
812
|
Pre-production engineering costs
|
|
|
|
1,140
|
|
|
|
1,012
|
Total Inventories, net
|
|
|
|
$
|
1,939
|
|
|
|
$
|
1,824
|
|
|
|
|
|
|
|
|
Pre-production engineering costs include costs incurred during the
development phase of a program in connection with long-term supply
arrangements that contain contractual guarantees for reimbursement from
customers. These costs are deferred in Inventories, net to the extent of
the contractual guarantees and are amortized to customer-funded research
and development expense within cost of sales over their estimated useful
lives using a units-of-delivery method, up to 15 years.
|
|
|
|
|
ROCKWELL COLLINS, INC.
CASH FLOW INFORMATION
(Unaudited, in millions)
|
|
|
|
|
|
|
|
|
|
Year Ended September 30
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015 (1)
|
Operating Activities:
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
728
|
|
|
|
$
|
686
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
|
1
|
|
|
|
(8
|
)
|
Income from continuing operations
|
|
|
|
727
|
|
|
|
694
|
|
Adjustments to arrive at cash provided by operating activities:
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
144
|
|
|
|
152
|
|
Amortization of intangible assets and pre-production engineering
costs
|
|
|
|
109
|
|
|
|
100
|
|
Stock-based compensation expense
|
|
|
|
27
|
|
|
|
24
|
|
Compensation and benefits paid in common stock
|
|
|
|
59
|
|
|
|
50
|
|
Excess tax benefit from stock-based compensation (2)
|
|
|
|
-
|
|
|
|
(13
|
)
|
Deferred income taxes
|
|
|
|
48
|
|
|
|
50
|
|
Pension plan contributions
|
|
|
|
(69
|
)
|
|
|
(69
|
)
|
Fair value of acquisition-related contingent consideration
|
|
|
|
1
|
|
|
|
-
|
|
Changes in assets and liabilities, excluding effects of acquisitions
and foreign currency adjustments:
|
|
|
|
|
|
|
|
Receivables
|
|
|
|
(91
|
)
|
|
|
(46
|
)
|
Production inventory
|
|
|
|
(18
|
)
|
|
|
(23
|
)
|
Pre-production engineering costs
|
|
|
|
(177
|
)
|
|
|
(183
|
)
|
Accounts payable
|
|
|
|
38
|
|
|
|
(29
|
)
|
Compensation and benefits
|
|
|
|
(4
|
)
|
|
|
24
|
|
Advance payments from customers
|
|
|
|
(82
|
)
|
|
|
16
|
|
Accrued customer incentives
|
|
|
|
14
|
|
|
|
30
|
|
Product warranty costs
|
|
|
|
(2
|
)
|
|
|
(14
|
)
|
Income taxes
|
|
|
|
25
|
|
|
|
50
|
|
Other assets and liabilities
|
|
|
|
(26
|
)
|
|
|
(64
|
)
|
Cash Provided by Operating Activities from Continuing Operations
|
|
|
|
723
|
|
|
|
749
|
|
Investing Activities:
|
|
|
|
|
|
|
|
Property additions
|
|
|
|
(193
|
)
|
|
|
(210
|
)
|
Acquisition of businesses, net of cash acquired
|
|
|
|
(17
|
)
|
|
|
(74
|
)
|
Other investing activities
|
|
|
|
1
|
|
|
|
(10
|
)
|
Cash (Used for) Investing Activities from Continuing Operations
|
|
|
|
(209
|
)
|
|
|
(294
|
)
|
Financing Activities:
|
|
|
|
|
|
|
|
Purchases of treasury stock
|
|
|
|
(261
|
)
|
|
|
(330
|
)
|
Cash dividends
|
|
|
|
(172
|
)
|
|
|
(167
|
)
|
Increase (decrease) in short-term commercial paper borrowings, net
|
|
|
|
(8
|
)
|
|
|
(56
|
)
|
Proceeds from the exercise of stock options
|
|
|
|
21
|
|
|
|
49
|
|
Excess tax benefit from stock-based compensation (2)
|
|
|
|
-
|
|
|
|
13
|
|
Other financing activities
|
|
|
|
(2
|
)
|
|
|
(1
|
)
|
Cash (Used for) Financing Activities from Continuing Operations
|
|
|
|
(422
|
)
|
|
|
(492
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
(4
|
)
|
|
|
(23
|
)
|
Discontinued Operations:
|
|
|
|
|
|
|
|
Operating activities
|
|
|
|
-
|
|
|
|
(14
|
)
|
Investing activities
|
|
|
|
-
|
|
|
|
3
|
|
Cash (Used for) Discontinued Operations
|
|
|
|
-
|
|
|
|
(11
|
)
|
Net Change in Cash and Cash Equivalents
|
|
|
|
88
|
|
|
|
(71
|
)
|
Cash and Cash Equivalents at Beginning of Period
|
|
|
|
252
|
|
|
|
323
|
|
Cash and Cash Equivalents at End of Period
|
|
|
|
$
|
340
|
|
|
|
$
|
252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) On March 10, 2015, the Company sold its Aerospace Systems
Engineering and Support (ASES) business, which provides military
aircraft integration and modification services. The results of ASES have
been classified as discontinued operations.
(2) The Company adopted the new standard on accounting for
share-based payments during the three months ended March 31, 2016, which
requires excess tax benefits from stock-based compensation to be
classified within operating cash flow. The Company elected to adopt the
new standard prospectively as of the beginning of 2016, therefore prior
periods have not been adjusted.
View source version on businesswire.com: http://www.businesswire.com/news/home/20161023005023/en/
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