Rockwell Collins, Inc. (NYSE: COL) today reported first quarter fiscal
year 2014 earnings per share of $0.96, an increase of 2% from earnings
per share of $0.94 in the first quarter of fiscal year 2013. Total sales
for the first quarter of 2014 were $1.07 billion, an increase of 1% from
$1.06 billion for the same period in 2013. As previously announced, the
company completed the acquisition of ARINC on December 23, 2013. ARINC
contributed $6 million of inorganic sales to the first quarter of 2014.
The company increased full year fiscal 2014 financial guidance to
include the acquisition of ARINC as well as an improved outlook for
Government Systems as follows:
-
Sales are now expected to be in the range of $4.95 billion to $5.05
billion (from $4.5 billion to $4.6 billion). ARINC sales are estimated
to be in the range of $400 million to $430 million. In addition,
expectations for Government Systems sales have improved due to the
passage of the Murray-Ryan Bipartisan Budget Act. We now expect
Government Systems sales to be down mid-single digits compared to the
prior guidance of being down mid-to-high single digits.
-
Earnings per share outlook increased 5 cents and is now expected to be
in the range of $4.35 to $4.55 (from $4.30 to $4.50), primarily due to
the improved Government Systems outlook. The company also expects the
combined impact of transaction related items (including acquisition
and integration costs and the gain on the sale of a business) and the
operations of ARINC for the remaining three quarters of the fiscal
year to be slightly accretive. During fiscal 2014, the company
estimates ARINC will have adjusted EBITDA margins of about 20% (9% to
10% segment operating margins).
-
Operating cash flow outlook increased $50 million and is now expected
to be in the range of $600 million to $700 million (from $550 million
to $650 million), primarily due to the incremental operating cash
flows from ARINC.
“First quarter Commercial Systems and Government Systems financial
results were in line with our expectations as we generated top-line
sales growth and maintained 20% total segment operating margins," said
Rockwell Collins Chief Executive Officer, Kelly Ortberg. "2014 begins a
new chapter for our company as we accelerate our return to growth. The
acquisition of ARINC, along with strong positions in our core markets
and expanding international business, will continue to fuel improved
performance reinforcing my confidence in our guidance for the year as
well as our outlook for the future."
Regarding the acquisition of ARINC, Ortberg commented, "Integration
activities are underway and progressing as planned. Our management team
is fully in place and focused on expanding our position as a leading
provider of information management services."
Following is a discussion of fiscal year 2014 first quarter sales and
earnings for each business segment. Certain amounts previously included
in the Commercial Systems segment have been reclassified to the newly
created Information Management Services segment. See the supplemental
schedule included in this press release for a reconciliation of amounts
reclassified.
Commercial Systems
Commercial Systems, which provides aviation electronics systems,
products and services to air transport, business and regional aircraft
manufacturers and airlines worldwide, achieved 2014 first quarter
results as summarized below.
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|
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
|
Q1 FY14
|
|
|
Q1 FY13
|
|
|
Inc/(Dec)
|
|
Commercial Systems sales
|
|
|
|
|
|
|
|
|
|
|
Original equipment
|
|
|
$
|
286
|
|
|
|
$
|
282
|
|
|
|
1
|
%
|
|
Aftermarket
|
|
|
216
|
|
|
|
197
|
|
|
|
10
|
%
|
|
Wide-body in-flight entertainment
|
|
|
19
|
|
|
|
27
|
|
|
|
(30
|
)%
|
|
Total Commercial Systems sales
|
|
|
$
|
521
|
|
|
|
$
|
506
|
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
|
|
|
$
|
111
|
|
|
|
$
|
105
|
|
|
|
6
|
%
|
|
Operating margin rate
|
|
|
21.3
|
%
|
|
|
20.8
|
%
|
|
|
50 bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Sales to aircraft original equipment manufacturers increased due to
higher hardware delivery rates for the Boeing 787 aircraft mostly
offset by lower deliveries to light business jet manufacturers.
-
Aftermarket sales increased primarily due to higher air transport
retrofits, a large delivery of spare parts for 787 aircraft, and
increased revenue from regulatory airspace mandates.
-
Wide-body in-flight entertainment sales decreased primarily due to the
absence of a $7 million last-time buy order for spare parts that
occurred in the prior year.
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. Results from the first
quarter of 2014 are summarized below.
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|
(dollars in millions)
|
|
|
Q1 FY14
|
|
|
Q1 FY13
|
|
|
Inc/(Dec)
|
|
Government Systems sales
|
|
|
|
|
|
|
|
|
|
|
Avionics
|
|
|
$
|
317
|
|
|
|
$
|
315
|
|
|
|
1
|
%
|
|
Communication products
|
|
|
118
|
|
|
|
133
|
|
|
|
(11
|
)%
|
|
Surface solutions
|
|
|
58
|
|
|
|
50
|
|
|
|
16
|
%
|
|
Navigation products
|
|
|
39
|
|
|
|
48
|
|
|
|
(19
|
)%
|
|
Total Government Systems sales
|
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|
$
|
532
|
|
|
|
$
|
546
|
|
|
|
(3
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
|
|
|
$
|
101
|
|
|
|
$
|
107
|
|
|
|
(6
|
)%
|
|
Operating margin rate
|
|
|
19.0
|
%
|
|
|
19.6
|
%
|
|
|
(60) bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Avionics sales increased primarily due to higher hardware deliveries
for the E-6B aircraft upgrade program as well as hardware deliveries
for international programs, partially offset by lower KC-46 and KC-10
development program sales.
-
Communication product sales declined due to lower satellite and secure
communication product and service sales as troop deployments wound
down in the Middle East, partially offset by increased deliveries of
JTRS Manpack radios.
-
Surface solutions sales increased from higher international Firestorm
targeting systems sales partially offset by the reduction of effort on
the Common Range Integrated Instrumentation Systems (CRIIS)
development program.
-
Navigation product sales declined due primarily to lower Defense
Advanced GPS Receiver (DAGR) product deliveries.
Information Management Services
Information Management Services combines the network and connectivity
services provided by ARINC with Rockwell Collins’ flight services
business. Information Management Services include air-to-ground data and
voice communication services, business aviation flight support services,
airport information technology systems, and infrastructure security
capabilities.
The company has announced its intent to divest ARINC’s Aerospace Systems
Engineering and Support business (ASES), which provides military
aircraft integration and modification services. As such, the results of
ASES have been classified in discontinued operations and are excluded
from the results below.
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|
(dollars in millions)
|
|
|
Q1 FY14
|
|
|
Q1 FY13
|
|
|
Inc/(Dec)
|
|
Information Management Services sales
|
|
|
$
|
18
|
|
|
|
$
|
10
|
|
|
|
80
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
|
|
|
$
|
2
|
|
|
|
$
|
1
|
|
|
|
100
|
%
|
|
Operating margin rate
|
|
|
11.1
|
%
|
|
|
10.0
|
%
|
|
|
110 bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales for ARINC were $6 million in the first quarter of fiscal 2014,
which includes a partial week of revenue since the date of acquisition.
All remaining sales are related to the Rockwell Collins’ flight services
business.
The operating earnings of Information Management Services include
amortization expense from intangible assets related to the flight
services business of $1 million in the first quarter of 2014 and 2013.
Corporate and Financial Highlights
Acquisitions and Divestitures
During the first quarter of
fiscal 2014, the company completed the acquisition of ARINC for $1.42
billion. The acquisition of ARINC was funded through a combination of
new long-term debt issuances and commercial paper borrowings. The
company issued $1.1 billion of long-term debt in the first quarter of
fiscal 2014. Approximately $900 million of the long-term debt was used
for the ARINC acquisition and the remainder was used to refinance $200
million of our debt that matured in December 2013. The balance of the
ARINC purchase price was funded with commercial paper issuances which
the company intends to pay down over the next few years using operating
cash flow.
The company incurred a total of $15 million of transaction costs related
to the acquisition of ARINC during the first quarter of fiscal year
2014. $12 million of these costs are included in selling, general and
administrative expense and $3 million are included in interest expense.
In addition, the company completed the sale of Kaiser Optical Systems,
Inc., resulting in a pre-tax gain of $10 million in the first quarter of
fiscal year 2014.
Income Taxes
The company's effective income tax rate was
27.2% for the first quarter of 2014 compared to a rate of 29.8% for the
same period last year. The lower tax rate was due primarily to the
recognition of a tax benefit relating to prior years' Extraterritorial
Income Exclusion deductions.
Cash Flow
Cash used for operating activities was $38 million
for the first quarter of fiscal year 2014, compared to cash provided by
operating activities of $63 million in the same period last year. The
$101 million reduction in cash flow from operations was primarily due to
$60 million of higher employee incentive pay and $37 million of higher
income tax payments.
During the first quarter of fiscal year 2014, the company repurchased
0.2 million shares of common stock at a total cost of $17 million. The
company paid a dividend on its common stock of 30 cents per share, or
$41 million, in the first quarter of 2014.
Fiscal Year 2014 Outlook
The following table is a complete summary of the company's updated
fiscal year 2014 financial guidance:
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--
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|
Total sales
|
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|
$4.95 Bil. to $5.05 Bil. (From $4.5 Bil. to $4.6 Bil.)
|
|
--
|
|
Total segment operating margins (1)
|
|
|
20% to 21% (From 21% to 22%)
|
|
--
|
|
Earnings per share
|
|
|
$4.35 to $4.55 (From $4.30 to $4.50)
|
|
--
|
|
Cash flow from operations
|
|
|
$600 Mil. to $700 Mil. (From $550 Mil. to $650 Mil.)
|
|
--
|
|
Total research & development investment
|
|
|
About $950 Mil.
|
|
--
|
|
Capital expenditures
|
|
|
About $160 Mil. (From about $140 Mil.)
|
|
--
|
|
Full year income tax rate
|
|
|
About 30%
|
|
|
|
|
|
|
|
(1) The decrease in total segment operating margins is due to
the inclusion of estimated ARINC operating margins of 9% to 10%. The
company estimates that ARINC will have adjusted EBITDA margins of about
20% during fiscal year 2014. See the supplemental schedule included in
this press release for a reconciliation of the company's estimate of
ARINC's pre-tax income to its adjusted EBITDA in fiscal 2014.
Business Highlights
Rockwell Collins divested ARINC's Industry Standards Organization
To
serve the best interests of the industry and avoid any perceived
conflicts of interest, Rockwell Collins completed the sale of ARINC's
Industry Standards Organization to SAE International simultaneously with
the completion of the ARINC acquisition on December 23, 2013.
Rockwell Collins avionics selected by the following airlines:
-
Ethiopian Airlines selected Rockwell Collins to provide the full suite
of avionics equipment for its new and growing fleet of Boeing 777s,
which currently includes 10 aircraft.
-
Turkish Airlines selected the full suite of Rockwell Collins avionics
for 17 Airbus A330s, 25 Airbus A320s, 20 Boeing 777s and 20 Boeing
Next-Generation 737s.
-
Oman Air selected a full suite of Rockwell Collins avionics for 11 new
Boeing Next-Generation 737s.
Embraer bringing safety and operational benefits of Rockwell Collins
HGS™, EVS to Legacy 450/500
Rockwell Collins announced that
Embraer Executive Jets has selected Rockwell Collins’ HGS™-3500 and new
multi-spectral EVS-3000 enhanced vision system as options on its
mid-light Legacy 450 and mid-size Legacy 500 aircraft.
Rockwell Collins PAVES™ On-demand IFE system to debut on Sichuan
Airlines
Rockwell Collins announced that Sichuan Airlines will
be the launch airline customer for the company’s PAVES™ On-demand
in-flight entertainment (IFE) system for 20 new Airbus A319, A320 and
A321 aircraft.
Rockwell Collins high-fidelity image generation systems featured on
new Sukhoi Superjet 100 simulators
Three Sukhoi Superjet 100
full-flight simulators featuring Rockwell Collins image generation and
projection systems are successfully operating in SuperJet International
training centers in Moscow and Venice, as well as in Aeroflot Airlines
training facilities.
Air Canada selected Rockwell Collins DispatchSM
100 avionics support program for new Boeing 787 Dreamliner fleet
Air
Canada selected Rockwell Collins’ Dispatch 100 avionics service and
asset management program for its new fleet of 37 Boeing 787 Dreamliners,
which are scheduled to be delivered starting in 2014.
Boeing selected Rockwell Collins EP®-8000 image generators
Rockwell
Collins will supply EP-8000 image generators for Boeing Apache Longbow
Crew Trainers.
Rockwell Collins, CACI received WIN-T service contract
Rockwell
Collins and CACI have been awarded a contract by the U.S. Army to
provide satellite communications, radio frequency service and support
for the Warfighter Information Network-Tactical (WIN-T) program. The
$125 million contract includes options for two additional years.
DARPA selected Rockwell Collins to develop prototype for next
generation of software defined radios
Rockwell Collins was
selected by the Defense Advanced Research Projects Agency (DARPA) to
develop a direct conversion digital receiver based on photonic
technology. The three-year contract for the DISARMER program is valued
at up to $8.5 million.
Rockwell Collins selected to provide close air support software for
U.S. Air Force
The U.S. Air Force awarded Rockwell Collins a
$15 million contract to develop, test, field and support the next
generation of software for the Tactical Air Control Party (TACP) close
air support system.
Korea Aerospace Industries selected Rockwell Collins HF-9000 radio
system for the South Korea Marine Helicopter
The Rockwell
Collins HF-9000 high-frequency radio system was selected by Korea
Aerospace Industries for the Republic of Korea Marine Helicopter
program. The system will be used for voice communication, primarily
during Navy amphibious missions.
Conference Call and Webcast Details
Rockwell Collins CEO and President, Kelly Ortberg, and Senior Vice
President and CFO, Patrick Allen, will conduct an earnings conference
call at 9:00 a.m. Eastern Time on January 21, 2014. 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 24, 2014.
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.
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 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, 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; unanticipated impacts of
sequestration and other provisions of the Budget Control Act of 2011 as
modified by the Bipartisan Budget Act of 2013; the continued support for
military transformation and modernization programs; potential adverse
impact of oil prices on the commercial aerospace industry; the impact of
terrorist events on the commercial aerospace industry; declining defense
budgets resulting from budget deficits in the U.S. and abroad; 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; favorable 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 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 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 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, 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.
|
|
|
ROCKWELL COLLINS, INC.
|
|
SEGMENT SALES AND EARNINGS INFORMATION
|
|
(Unaudited)
|
|
(in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
December 31
|
|
|
|
|
2013
|
|
|
2012
|
|
Sales
|
|
|
|
|
|
|
|
Government Systems
|
|
|
$
|
532
|
|
|
|
$
|
546
|
|
|
Commercial Systems
|
|
|
521
|
|
|
|
506
|
|
|
Information Management Services
|
|
|
18
|
|
|
|
10
|
|
|
Total sales
|
|
|
$
|
1,071
|
|
|
|
$
|
1,062
|
|
|
|
|
|
|
|
|
|
|
Segment operating earnings
|
|
|
|
|
|
|
|
Government Systems
|
|
|
$
|
101
|
|
|
|
$
|
107
|
|
|
Commercial Systems
|
|
|
111
|
|
|
|
105
|
|
|
Information Management Services
|
|
|
2
|
|
|
|
1
|
|
|
Total segment operating earnings
|
|
|
214
|
|
|
|
213
|
|
|
|
|
|
|
|
|
|
|
Interest expense(1)
|
|
|
(12
|
)
|
|
|
(6
|
)
|
|
Stock-based compensation
|
|
|
(5
|
)
|
|
|
(6
|
)
|
|
General corporate, net
|
|
|
(15
|
)
|
|
|
(13
|
)
|
|
Gain on divestiture of business
|
|
|
10
|
|
|
|
—
|
|
|
ARINC transaction costs(1)
|
|
|
(12
|
)
|
|
|
—
|
|
|
Income from continuing operations before income taxes
|
|
|
180
|
|
|
|
188
|
|
|
Income tax expense
|
|
|
(49
|
)
|
|
|
(56
|
)
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
131
|
|
|
|
132
|
|
|
Income from discontinued operations, net of taxes
|
|
|
—
|
|
|
|
—
|
|
|
Net income
|
|
|
$
|
131
|
|
|
|
$
|
132
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
$
|
0.96
|
|
|
|
$
|
0.94
|
|
|
Discontinued operations
|
|
|
—
|
|
|
|
—
|
|
|
Diluted earnings per share
|
|
|
0.96
|
|
|
|
0.94
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted shares outstanding
|
|
|
136.7
|
|
|
|
140.7
|
|
|
|
|
|
|
|
|
|
|
|
(1) During the three months ended December 31, 2013, the
company incurred bridge facility fees of $3 million. These costs were
included in Interest expense. Total ARINC transaction costs incurred
during the period were $15 million.
The following tables summarize sales by product category for the three
months ended December 31, 2013 and 2012 (unaudited, in millions):
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
December 31
|
|
|
|
|
2013
|
|
|
2012
|
|
Government Systems sales:
|
|
|
|
|
|
|
|
Avionics
|
|
|
$
|
317
|
|
|
|
$
|
315
|
|
Communication products
|
|
|
118
|
|
|
|
133
|
|
Surface solutions
|
|
|
58
|
|
|
|
50
|
|
Navigation products
|
|
|
39
|
|
|
|
48
|
|
Total Government Systems sales
|
|
|
$
|
532
|
|
|
|
$
|
546
|
|
|
|
|
|
|
|
|
|
Commercial Systems sales:
|
|
|
|
|
|
|
|
Air transport aviation electronics:
|
|
|
|
|
|
|
|
Original equipment
|
|
|
$
|
157
|
|
|
|
$
|
140
|
|
Aftermarket
|
|
|
128
|
|
|
|
112
|
|
Wide-body in-flight entertainment
|
|
|
19
|
|
|
|
27
|
|
Total air transport aviation electronics
|
|
|
304
|
|
|
|
279
|
|
|
|
|
|
|
|
|
|
Business and regional aviation electronics:
|
|
|
|
|
|
|
|
Original equipment
|
|
|
129
|
|
|
|
142
|
|
Aftermarket
|
|
|
88
|
|
|
|
85
|
|
Total business and regional aviation electronics
|
|
|
217
|
|
|
|
227
|
|
Total Commercial Systems sales
|
|
|
$
|
521
|
|
|
|
$
|
506
|
|
|
|
|
|
|
|
|
|
Commercial Systems sales:
|
|
|
|
|
|
|
|
Total original equipment
|
|
|
$
|
286
|
|
|
|
$
|
282
|
|
Total aftermarket
|
|
|
216
|
|
|
|
197
|
|
Wide-body in-flight entertainment
|
|
|
19
|
|
|
|
27
|
|
Total Commercial Systems sales
|
|
|
$
|
521
|
|
|
|
$
|
506
|
|
|
|
|
|
|
|
|
|
Information Management Services sales
|
|
|
$
|
18
|
|
|
|
$
|
10
|
|
|
|
|
|
|
|
|
|
Total sales
|
|
|
$
|
1,071
|
|
|
|
$
|
1,062
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes total Research & Development Investment
by segment and funding type for the three months ended December 31, 2013
and 2012 (unaudited, dollars in millions):
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
December 31
|
|
|
|
|
2013
|
|
|
2012
|
|
Research and Development Investment
|
|
|
|
|
|
|
|
Customer-funded:
|
|
|
|
|
|
|
|
Government Systems
|
|
|
$
|
89
|
|
|
|
$
|
98
|
|
|
Commercial Systems
|
|
|
22
|
|
|
|
22
|
|
|
Information Management Services
|
|
|
—
|
|
|
|
—
|
|
|
Total Customer-funded
|
|
|
111
|
|
|
|
120
|
|
|
|
|
|
|
|
|
|
|
Company-funded:
|
|
|
|
|
|
|
|
Government Systems
|
|
|
16
|
|
|
|
17
|
|
|
Commercial Systems
|
|
|
49
|
|
|
|
54
|
|
|
Information Management Services
|
|
|
—
|
|
|
|
—
|
|
|
Total Company-funded
|
|
|
65
|
|
|
|
71
|
|
|
Total Research and Development Expense
|
|
|
176
|
|
|
|
191
|
|
|
|
|
|
|
|
|
|
|
Increase in Pre-production Engineering Costs, Net
|
|
|
43
|
|
|
|
36
|
|
|
Total Research and Development Investment
|
|
|
$
|
219
|
|
|
|
$
|
227
|
|
|
|
|
|
|
|
|
|
|
Percent of Total Sales
|
|
|
20.4
|
%
|
|
|
21.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROCKWELL COLLINS, INC.
|
|
SUMMARY BALANCE SHEET
|
|
(Unaudited)
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
September 30,
|
|
|
|
|
2013
|
|
|
2013
|
|
Assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
439
|
|
|
|
$
|
391
|
|
Receivables, net
|
|
|
1,107
|
|
|
|
1,058
|
|
Inventories, net (1)
|
|
|
1,601
|
|
|
|
1,518
|
|
Current deferred income taxes
|
|
|
16
|
|
|
|
19
|
|
Building held for sale
|
|
|
78
|
|
|
|
—
|
|
Business held for sale
|
|
|
74
|
|
|
|
17
|
|
Other current assets
|
|
|
114
|
|
|
|
91
|
|
Total current assets
|
|
|
3,429
|
|
|
|
3,094
|
|
|
|
|
|
|
|
|
|
Property
|
|
|
842
|
|
|
|
773
|
|
Goodwill
|
|
|
1,828
|
|
|
|
779
|
|
Intangible assets
|
|
|
675
|
|
|
|
288
|
|
Long-term deferred income taxes
|
|
|
84
|
|
|
|
245
|
|
Other assets
|
|
|
235
|
|
|
|
221
|
|
Total assets
|
|
|
$
|
7,093
|
|
|
|
$
|
5,400
|
|
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
Short-term debt
|
|
|
$
|
917
|
|
|
|
$
|
436
|
|
Accounts payable
|
|
|
442
|
|
|
|
463
|
|
Compensation and benefits
|
|
|
207
|
|
|
|
293
|
|
Advance payments from customers
|
|
|
385
|
|
|
|
324
|
|
Accrued customer incentives
|
|
|
185
|
|
|
|
184
|
|
Product warranty costs
|
|
|
116
|
|
|
|
121
|
|
Liability related to building held for sale
|
|
|
78
|
|
|
|
—
|
|
Liabilities associated with business held for sale
|
|
|
9
|
|
|
|
4
|
|
Other current liabilities
|
|
|
147
|
|
|
|
156
|
|
Total current liabilities
|
|
|
2,486
|
|
|
|
1,981
|
|
|
|
|
|
|
|
|
|
Long-term debt, net
|
|
|
1,658
|
|
|
|
563
|
|
Retirement benefits
|
|
|
1,023
|
|
|
|
1,078
|
|
Other liabilities
|
|
|
196
|
|
|
|
155
|
|
Equity
|
|
|
1,730
|
|
|
|
1,623
|
|
Total liabilities and equity
|
|
|
$
|
7,093
|
|
|
|
$
|
5,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Inventories, net is comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
September 30,
|
|
|
|
|
2013
|
|
|
2013
|
|
Inventories, net:
|
|
|
|
|
|
|
|
Production inventory
|
|
|
$
|
844
|
|
|
|
$
|
804
|
|
Pre-production engineering costs
|
|
|
757
|
|
|
|
714
|
|
Total Inventories, net
|
|
|
$
|
1,601
|
|
|
|
$
|
1,518
|
|
|
|
|
|
|
|
|
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.
|
|
CONDENSED CASH FLOW INFORMATION
|
|
(Unaudited)
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
December 31
|
|
|
|
|
2013
|
|
|
2012
|
|
Operating Activities:
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
131
|
|
|
|
$
|
132
|
|
|
Adjustments to arrive at cash provided by operating activities:
|
|
|
|
|
|
|
|
Gain on sale of business
|
|
|
(10
|
)
|
|
|
—
|
|
|
Depreciation
|
|
|
32
|
|
|
|
30
|
|
|
Amortization of intangible assets and pre-production engineering
costs
|
|
|
13
|
|
|
|
13
|
|
|
Stock-based compensation expense
|
|
|
5
|
|
|
|
6
|
|
|
Compensation and benefits paid in common stock
|
|
|
12
|
|
|
|
18
|
|
|
Excess tax benefit from stock-based compensation
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
Deferred income taxes
|
|
|
7
|
|
|
|
7
|
|
|
Pension plan contributions
|
|
|
(57
|
)
|
|
|
(57
|
)
|
|
Changes in assets and liabilities, excluding effects of
acquisitions and foreign currency adjustments:
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
81
|
|
|
|
67
|
|
|
Production Inventory
|
|
|
(49
|
)
|
|
|
(45
|
)
|
|
Pre-production engineering costs
|
|
|
(49
|
)
|
|
|
(41
|
)
|
|
Accounts payable
|
|
|
(45
|
)
|
|
|
(64
|
)
|
|
Compensation and benefits
|
|
|
(112
|
)
|
|
|
(50
|
)
|
|
Advance payments from customers
|
|
|
5
|
|
|
|
34
|
|
|
Accrued customer incentives
|
|
|
1
|
|
|
|
(2
|
)
|
|
Product warranty costs
|
|
|
(5
|
)
|
|
|
(5
|
)
|
|
Income taxes
|
|
|
(6
|
)
|
|
|
36
|
|
|
Other assets and liabilities
|
|
|
10
|
|
|
|
(15
|
)
|
|
Cash (Used for) Provided by Operating Activities
|
|
|
(38
|
)
|
|
|
63
|
|
|
|
|
|
|
|
|
|
|
Investing Activities:
|
|
|
|
|
|
|
|
Acquisition of business, net of cash acquired
|
|
|
(1,420
|
)
|
|
|
—
|
|
|
Property additions
|
|
|
(38
|
)
|
|
|
(40
|
)
|
|
Proceeds from business divestitures
|
|
|
24
|
|
|
|
—
|
|
|
Cash (Used for) Investing Activities
|
|
|
(1,434
|
)
|
|
|
(40
|
)
|
|
|
|
|
|
|
|
|
|
Financing Activities:
|
|
|
|
|
|
|
|
Purchases of treasury stock
|
|
|
(22
|
)
|
|
|
(336
|
)
|
|
Cash dividends
|
|
|
(41
|
)
|
|
|
(42
|
)
|
|
Proceeds from short-term commercial paper borrowings, net
|
|
|
682
|
|
|
|
345
|
|
|
Repayment of debt
|
|
|
(200
|
)
|
|
|
—
|
|
|
Net proceeds from long-term debt issuance
|
|
|
1,089
|
|
|
|
—
|
|
|
Proceeds from the exercise of stock options
|
|
|
7
|
|
|
|
7
|
|
|
Excess tax benefit from stock-based compensation
|
|
|
2
|
|
|
|
1
|
|
|
Cash Provided by (Used for) Financing Activities
|
|
|
1,517
|
|
|
|
(25
|
)
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
3
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
Net Change in Cash and Cash Equivalents
|
|
|
48
|
|
|
|
2
|
|
|
Cash and Cash Equivalents at Beginning of Period
|
|
|
391
|
|
|
|
335
|
|
|
Cash and Cash Equivalents at End of Period
|
|
|
$
|
439
|
|
|
|
$
|
337
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROCKWELL COLLINS, INC.
|
|
SUPPLEMENTAL INFORMATION
|
|
(Unaudited)
|
|
(in millions)
|
|
|
|
With the acquisition of ARINC Incorporated (ARINC) in the first
quarter of fiscal year 2014, the Information Management Services
business segment was formed. This new segment combines ARINC with
the company's flight services business, which was previously
included in the Commercial Systems segment. To further enhance
comparability and analysis, the following table provides the
revised presentation of the Commercial Systems segment sales and
operating earnings to exclude the flight services business
results, by quarter, for the year ended September 30, 2013.
Commercial Systems sales and operating earnings have been revised
to conform to the current year presentation.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
Dec. 31,
|
|
|
Mar. 31,
|
|
|
Jun. 30,
|
|
|
Sept. 30,
|
|
|
Full Year
|
|
|
|
|
2012
|
|
|
2013
|
|
|
2013
|
|
|
2013
|
|
|
2013
|
|
Commercial Systems sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Air transport aviation electronics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Original equipment
|
|
|
$
|
140
|
|
|
|
$
|
154
|
|
|
|
$
|
151
|
|
|
|
$
|
156
|
|
|
|
$
|
601
|
|
Aftermarket
|
|
|
112
|
|
|
|
116
|
|
|
|
127
|
|
|
|
142
|
|
|
|
497
|
|
Wide-body in-flight entertainment
|
|
|
27
|
|
|
|
18
|
|
|
|
19
|
|
|
|
19
|
|
|
|
83
|
|
Total air transport aviation electronics
|
|
|
279
|
|
|
|
288
|
|
|
|
297
|
|
|
|
317
|
|
|
|
1,181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business and regional aviation electronics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Original equipment
|
|
|
$
|
142
|
|
|
|
$
|
158
|
|
|
|
$
|
158
|
|
|
|
$
|
154
|
|
|
|
$
|
612
|
|
Aftermarket
|
|
|
85
|
|
|
|
96
|
|
|
|
96
|
|
|
|
100
|
|
|
|
377
|
|
Total business and regional aviation electronics
|
|
|
227
|
|
|
|
254
|
|
|
|
254
|
|
|
|
254
|
|
|
|
989
|
|
Total Commercial Systems sales
|
|
|
$
|
506
|
|
|
|
$
|
542
|
|
|
|
$
|
551
|
|
|
|
$
|
571
|
|
|
|
$
|
2,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Systems operating earnings
|
|
|
$
|
105
|
|
|
|
$
|
116
|
|
|
|
$
|
131
|
|
|
|
$
|
120
|
|
|
|
$
|
472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Information Management Services sales
|
|
|
$
|
10
|
|
|
|
$
|
11
|
|
|
|
$
|
12
|
|
|
|
$
|
12
|
|
|
|
$
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Information Management Services operating earnings(1)
|
|
|
$
|
1
|
|
|
|
$
|
1
|
|
|
|
$
|
1
|
|
|
|
$
|
2
|
|
|
|
$
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The operating earnings of Information Management
Services include amortization expense from intangible assets related
to the existing flight services business of $4 million for the full
year 2013, or approximately $1 million per quarter.
|
|
|
|
|
|
ARINC Projected Financial Information
|
|
(Unaudited)
|
|
(in millions)
|
|
|
|
On December 23, 2013, the Company completed its acquisition of
ARINC Incorporated (ARINC). The results of operations for ARINC
will be included in our new business segment, Information
Management Services, which also includes the company’s existing
flight services business. The forward looking information provided
in the table below presents an overview of the expected
incremental impacts from the ARINC acquisition on the company's
fiscal year 2014 financial guidance.
|
|
|
|
|
|
|
|
|
|
|
|
Projected ARINC results for fiscal year 2014
|
|
|
|
|
ARINC
|
|
|
|
Corporate
|
|
|
|
|
|
|
|
Business (a)
|
|
|
|
Costs (b)
|
|
|
Total
|
|
Sales (midpoint of range for ARINC FY 2014 projection)
|
|
|
$
|
415
|
|
|
|
|
$
|
—
|
|
|
|
$
|
415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
$
|
40
|
|
|
|
|
$
|
(45
|
)
|
|
|
$
|
(5
|
)
|
|
Depreciation and amortization expense
|
|
|
45
|
|
(c)
|
|
|
—
|
|
|
|
45
|
|
|
Interest expense
|
|
|
—
|
|
|
|
|
25
|
|
|
|
25
|
|
|
EBITDA
|
|
|
85
|
|
|
|
|
(20
|
)
|
|
|
65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction and integration costs
|
|
|
5
|
|
(d)
|
|
|
15
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA, adjusted
|
|
|
$
|
90
|
|
|
|
|
$
|
(5
|
)
|
|
|
$
|
85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total EBITDA, adjusted as a percentage of sales
|
|
|
|
|
|
|
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Represents projected ARINC results from the December 23, 2013
acquisition date through fiscal year end September 30, 2014. The
company's flight services business is not included in the above table.
In addition, the company has announced its intent to divest ARINC’s
Aerospace Systems Engineering and Support business (ASES), which
provides military aircraft integration and modification services. As
such, the results of ASES have been classified in discontinued
operations and are excluded from the projected information in the table.
(b) The Company's definition of segment operating earnings excludes
certain items, including interest and other general corporate expenses
not allocated to business segments. Included in corporate costs is about
$15 million of deal related transaction costs primarily consisting of
legal, accounting, and advisory fees incurred for the ARINC acquisition.
The majority of these costs were incurred during the Company's first
fiscal quarter of 2014. Projected corporate costs also include about $25
million of interest expense, comprised of the incremental interest on
debt we issued in December 2013 to finance the acquisition, as well as
$3 million incurred in the first fiscal quarter of 2014 on a bridge loan
credit agreement that has since been terminated. The interest and deal
related transaction costs were excluded from the operating earnings of
the Information Management Services segment. The remaining corporate
costs of $5 million represent estimated selling, general and
administrative expenses related to ARINC that will be incurred at the
corporate level.
(c) The Company is in the process of completing its purchase price
accounting for the ARINC transaction. The projected depreciation and
intangible asset amortization expenses included in the table above are
subject to change and are based upon preliminary valuation estimates of
the acquired assets.
(d) Transaction and integration costs include approximately $5 million
of expense to integrate ARINC into Rockwell Collins and to combine our
existing flight services business with ARINC.
The Non-GAAP financial projections included in the table above for
earnings before interest, taxes, depreciation, and amortization (EBITDA)
and adjusted EBITDA are believed to be useful to an investor's
understanding and assessment of the recently completed ARINC
acquisition. The Company does not intend for the Non-GAAP information to
be considered in isolation or as a substitute for the related GAAP
measures. The Non-GAAP financial projections are intended to clarify the
impact that certain non-cash depreciation and amortization charges, and
certain transaction and integration expenses, are expected to have on
the projected financial results for ARINC during the Company's fiscal
year 2014.
Copyright Business Wire 2014