Delaware | 001-16445 | 52-2314475 |
(State or other jurisdiction | (Commission File Number) | (I.R.S. Employer |
of incorporation or organization) | Identification No.) | |
400 Collins Road NE | ||
Cedar Rapids, Iowa | 52498 | |
(Address of principal executive offices) | (Zip Code) |
£ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
£ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
£ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
£ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition. | |
Registrant’s press release dated October 30, 2015 regarding Rockwell Collins year-end results is furnished herewith as Exhibit 99.1. The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Exchange Act. |
Item 9.01. | Financial Statements and Exhibits. | |
(d) Exhibits. | ||
99.1 Press release of registrant dated October 30, 2015. |
ROCKWELL COLLINS, INC. | |||
(Registrant) | |||
Dated: | October 30, 2015 | By | /s/ Patrick E. Allen |
Patrick E. Allen | |||
Senior Vice President and | |||
Chief Financial Officer |
99.1 | Press release of registrant dated October 30, 2015. |
• | Full year sales increase 5% |
• | Cash provided by operating activities for the full year increase 13% |
• | Fiscal year 2016 guidance reiterated |
(dollars in millions) | Q4 FY15 | Q4 FY14 | Inc/(Dec) | |||||||
Commercial Systems sales | ||||||||||
Original equipment | $ | 372 | $ | 380 | (2 | )% | ||||
Aftermarket | 251 | 243 | 3 | % | ||||||
Wide-body in-flight entertainment | 13 | 16 | (19 | )% | ||||||
Total Commercial Systems sales | $ | 636 | $ | 639 | — | % | ||||
Operating earnings | $ | 146 | $ | 141 | 4 | % | ||||
Operating margin rate | 23.0 | % | 22.1 | % | 90 bps |
• | Original equipment sales decreased due to lower sales for Chinese regional aircraft OEM programs partially offset by higher deliveries in support of the A350 and Legacy 500 entries into service. |
• | Aftermarket sales increased due to higher regulatory mandate sales, partially offset by lower spares provisioning for the Boeing 787 program. |
• | Operating earnings and operating margin increased primarily due to lower company-funded research and development expense and cost savings initiatives, partially offset by higher employee incentive compensation expense. |
(dollars in millions) | Q4 FY15 | Q4 FY14 | Inc/(Dec) | |||||||
Government Systems sales | ||||||||||
Avionics | $ | 381 | $ | 375 | 2 | % | ||||
Communication products | 92 | 128 | (28 | )% | ||||||
Surface solutions | 53 | 52 | 2 | % | ||||||
Navigation products | 55 | 50 | 10 | % | ||||||
Total Government Systems sales | $ | 581 | $ | 605 | (4 | )% | ||||
Operating earnings | $ | 129 | $ | 137 | (6 | )% | ||||
Operating margin rate | 22.2 | % | 22.6 | % | (40) bps |
• | Avionics sales increased due to higher tanker/transport hardware deliveries partially offset by lower rotary wing hardware sales. |
• | Communication products sales decreased due to lower Joint Tactical Radio System Manpack sales. |
• | Navigation products sales increased primarily due to development effort on modernized GPS products. |
• | Changes in foreign currency rates, primarily the strengthening of the U.S. dollar, resulted in a $12 million reduction to Government Systems sales for the fourth quarter of fiscal year 2015 when compared to the same quarter in the prior year. The $12 million reduction is included within the Government Systems sales categories above. |
• | Operating earnings and operating margin decreased due to lower sales, higher investment in company-funded research and development expense, and higher employee incentive compensation expense, partially offset by favorable hardware product mix and cost savings initiatives. |
(dollars in millions) | Q4 FY15 | Q4 FY14 | Inc/(Dec) | |||||||
Information Management Services sales | $ | 167 | $ | 158 | 6 | % | ||||
Operating earnings | $ | 29 | $ | 21 | 38 | % | ||||
Operating margin rate | 17.4 | % | 13.3 | % | 410 bps |
• | IMS sales increased primarily due to low double-digit growth in aviation related businesses including GLOBALinkSM and ARINCDirectSM, partially offset by lower sales from the non-aviation related businesses due to the timing of certain airport programs and the exit of a government program. |
• | IMS operating earnings and operating margin increased primarily due to the higher sales volume, a more favorable mix of higher margin aviation related sales, and the absence of certain licensing costs incurred in the prior year. |
| Total sales | $5.3 billion to $5.4 billion |
| Total segment operating margins | About 21.0% |
| Earnings per share | $5.20 to $5.40 |
| Cash flow from operations | $700 million to $800 million |
| Total research & development investment | About $1 billion (1) |
| Capital expenditures | About $200 million |
| Full year income tax rate | About 28% |
• | Lufthansa Airlines’ passengers will be able to check-in faster at the airport due to the implementation of Rockwell Collins’ new ARINC vMUSE™ mobile passenger processing solution. Lufthansa is the first airline to implement this new technology, which gives it the ability to check-in travelers wherever and whenever needed. |
• | Airport Authority Hong Kong will deploy 120 common use self-service bag drop systems at Hong Kong International Airport, making it one of the largest self-service bag drop projects in the world. This new system will allow travelers at one of the world’s busiest airports to self-tag their bags, speeding up the departure process for passengers and reducing handling costs for the airport. |
• | Mactan Cebu International Airport selected Rockwell Collins' ARINC airport solutions to improve its passengers' travel experiences. |
Media Contact: | Investor Contact: |
Pam Tvrdy | Ryan Miller |
319.295.0591 | 319.295.7575 |
pam.tvrdy@rockwellcollins.com | investorrelations@rockwellcollins.com |
Three Months Ended | Year Ended | ||||||||||||||
September 30 | September 30 | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Sales | |||||||||||||||
Commercial Systems | $ | 636 | $ | 639 | $ | 2,434 | $ | 2,299 | |||||||
Government Systems | 581 | 605 | 2,187 | 2,209 | |||||||||||
Information Management Services | 167 | 158 | 623 | 471 | |||||||||||
Total sales | $ | 1,384 | $ | 1,402 | $ | 5,244 | $ | 4,979 | |||||||
Segment operating earnings | |||||||||||||||
Commercial Systems | $ | 146 | $ | 141 | $ | 554 | $ | 509 | |||||||
Government Systems | 129 | 137 | 457 | 465 | |||||||||||
Information Management Services | 29 | 21 | 95 | 62 | |||||||||||
Total segment operating earnings | 304 | 299 | 1,106 | 1,036 | |||||||||||
Interest expense | (16 | ) | (16 | ) | (61 | ) | (59 | ) | |||||||
Stock-based compensation | (7 | ) | (7 | ) | (24 | ) | (24 | ) | |||||||
General corporate, net | (15 | ) | (14 | ) | (59 | ) | (59 | ) | |||||||
Gain on divestiture of business | — | — | — | 10 | |||||||||||
ARINC transaction costs | — | — | — | (13 | ) | ||||||||||
Restructuring, pension settlement and asset impairment charges, net | — | (9 | ) | — | (9 | ) | |||||||||
Income from continuing operations before income taxes | 266 | 253 | 962 | 882 | |||||||||||
Income tax expense | (82 | ) | (80 | ) | (268 | ) | (264 | ) | |||||||
Income from continuing operations | 184 | 173 | 694 | 618 | |||||||||||
(Loss) from discontinued operations, net of taxes (1) | — | (6 | ) | (8 | ) | (14 | ) | ||||||||
Net income | $ | 184 | $ | 167 | $ | 686 | $ | 604 | |||||||
Diluted earnings per share: | |||||||||||||||
Continuing operations | $ | 1.38 | $ | 1.27 | $ | 5.19 | $ | 4.52 | |||||||
Discontinued operations | — | (0.04 | ) | (0.06 | ) | (0.10 | ) | ||||||||
Diluted earnings per share | $ | 1.38 | $ | 1.23 | $ | 5.13 | $ | 4.42 | |||||||
Weighted average diluted shares outstanding | 133.2 | 136.2 | 133.7 | 136.7 |
Three Months Ended | Year Ended | ||||||||||||||
September 30 | September 30 | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Commercial Systems sales: | |||||||||||||||
Air transport aviation electronics: | |||||||||||||||
Original equipment | $ | 209 | $ | 194 | $ | 806 | $ | 703 | |||||||
Aftermarket | 133 | 133 | 522 | 512 | |||||||||||
Wide-body in-flight entertainment | 13 | 16 | 57 | 70 | |||||||||||
Total air transport aviation electronics | 355 | 343 | 1,385 | 1,285 | |||||||||||
Business and regional aviation electronics: | |||||||||||||||
Original equipment | 163 | 186 | 640 | 618 | |||||||||||
Aftermarket | 118 | 110 | 409 | 396 | |||||||||||
Total business and regional aviation electronics | 281 | 296 | 1,049 | 1,014 | |||||||||||
Total Commercial Systems sales | $ | 636 | $ | 639 | $ | 2,434 | $ | 2,299 | |||||||
Commercial Systems sales: | |||||||||||||||
Total original equipment | $ | 372 | $ | 380 | $ | 1,446 | $ | 1,321 | |||||||
Total aftermarket | 251 | 243 | 931 | 908 | |||||||||||
Wide-body in-flight entertainment | 13 | 16 | 57 | 70 | |||||||||||
Total Commercial Systems sales | $ | 636 | $ | 639 | $ | 2,434 | $ | 2,299 | |||||||
Government Systems Sales: | |||||||||||||||
Avionics | $ | 381 | $ | 375 | $ | 1,390 | $ | 1,342 | |||||||
Communication products | 92 | 128 | 401 | 455 | |||||||||||
Surface Solutions | 53 | 52 | 200 | 234 | |||||||||||
Navigation products | 55 | 50 | 196 | 178 | |||||||||||
Total Government Systems Sales | $ | 581 | $ | 605 | $ | 2,187 | $ | 2,209 | |||||||
Information Management Services sales | $ | 167 | $ | 158 | $ | 623 | $ | 471 | |||||||
Total sales | $ | 1,384 | $ | 1,402 | $ | 5,244 | $ | 4,979 |
Three Months Ended | Year Ended | ||||||||||||||
September 30 | September 30 | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Research and Development Investment | |||||||||||||||
Customer-funded: | |||||||||||||||
Commercial Systems | $ | 56 | $ | 57 | $ | 187 | $ | 143 | |||||||
Government Systems | 89 | 87 | 382 | 353 | |||||||||||
Information Management Services | 2 | 3 | 9 | 8 | |||||||||||
Total Customer-funded | 147 | 147 | 578 | 504 | |||||||||||
Company-funded: | |||||||||||||||
Commercial Systems | 44 | 53 | 182 | 193 | |||||||||||
Government Systems | 26 | 21 | 88 | 74 | |||||||||||
Information Management Services (1) | 1 | — | 2 | 1 | |||||||||||
Total Company-funded | 71 | 74 | 272 | 268 | |||||||||||
Total Research and Development Expense | 218 | 221 | 850 | 772 | |||||||||||
Increase in Pre-production Engineering Costs, Net | 37 | 30 | 136 | 162 | |||||||||||
Total Research and Development Investment | $ | 255 | $ | 251 | $ | 986 | $ | 934 | |||||||
Percent of Total Sales | 18.4 | % | 17.9 | % | 18.8 | % | 18.8 | % |
September 30 | |||||||
2015 | 2014 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 252 | $ | 323 | |||
Receivables, net | 1,038 | 1,033 | |||||
Inventories, net (1) | 1,824 | 1,709 | |||||
Current deferred income tax asset | 9 | 9 | |||||
Business held for sale | — | 15 | |||||
Other current assets | 110 | 115 | |||||
Total current assets | 3,233 | 3,204 | |||||
Property | 964 | 919 | |||||
Goodwill | 1,904 | 1,863 | |||||
Intangible assets | 703 | 688 | |||||
Long-term deferred income taxes | 241 | 101 | |||||
Other assets | 344 | 288 | |||||
Total assets | $ | 7,389 | $ | 7,063 | |||
Liabilities and equity | |||||||
Short-term debt | $ | 448 | $ | 504 | |||
Accounts payable | 487 | 535 | |||||
Compensation and benefits | 273 | 256 | |||||
Advance payments from customers | 365 | 359 | |||||
Accrued customer incentives | 232 | 202 | |||||
Product warranty costs | 89 | 104 | |||||
Current deferred income tax liability | 84 | 57 | |||||
Liabilities associated with business held for sale | — | 16 | |||||
Other current liabilities | 166 | 165 | |||||
Total current liabilities | 2,144 | 2,198 | |||||
Long-term debt, net | 1,680 | 1,663 | |||||
Retirement benefits | 1,466 | 1,096 | |||||
Other liabilities | 219 | 217 | |||||
Equity | 1,880 | 1,889 | |||||
Total liabilities and equity | $ | 7,389 | $ | 7,063 | |||
(1) Inventories, net is comprised of the following: | |||||||
September 30, 2015 | September 30, 2014 | ||||||
Inventories, net: | |||||||
Production inventory | $ | 812 | $ | 833 | |||
Pre-production engineering costs | 1,012 | 876 | |||||
Total Inventories, net | $ | 1,824 | $ | 1,709 | |||
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. |
Year Ended | |||||||
September 30 | |||||||
2015 | 2014 | ||||||
Operating Activities: | |||||||
Net income | $ | 686 | $ | 604 | |||
Loss from discontinued operations, net of tax | (8 | ) | (14 | ) | |||
Income from continuing operations | 694 | 618 | |||||
Adjustments to arrive at cash provided by operating activities: | |||||||
Restructuring, asset impairment and other charges | — | 9 | |||||
Gain on sale of business | — | (10 | ) | ||||
Depreciation | 152 | 141 | |||||
Amortization of intangible assets and pre-production engineering costs | 100 | 84 | |||||
Stock-based compensation expense | 24 | 24 | |||||
Compensation and benefits paid in common stock | 50 | 50 | |||||
Excess tax benefit from stock-based compensation | (13 | ) | (6 | ) | |||
Deferred income taxes | 50 | 113 | |||||
Pension plan contributions | (69 | ) | (75 | ) | |||
Changes in assets and liabilities, excluding effects of acquisitions and foreign currency adjustments: | |||||||
Receivables | (46 | ) | 67 | ||||
Production inventory | (23 | ) | (84 | ) | |||
Pre-production engineering costs | (183 | ) | (198 | ) | |||
Accounts payable | (29 | ) | 23 | ||||
Compensation and benefits | 24 | (60 | ) | ||||
Advance payments from customers | 16 | (11 | ) | ||||
Accrued customer incentives | 30 | 18 | |||||
Product warranty costs | (14 | ) | (14 | ) | |||
Income taxes | 50 | (21 | ) | ||||
Other assets and liabilities | (64 | ) | (8 | ) | |||
Cash Provided by Operating Activities from Continuing Operations | 749 | 660 | |||||
Investing Activities: | |||||||
Property additions | (210 | ) | (163 | ) | |||
Acquisition of businesses, net of cash acquired | (74 | ) | (1,405 | ) | |||
Acquisition of intangible assets | — | (1 | ) | ||||
Proceeds from business divestitures | — | 24 | |||||
Other investing activities | (10 | ) | 8 | ||||
Cash (Used for) Investing Activities from Continuing Operations | (294 | ) | (1,537 | ) | |||
Financing Activities: | |||||||
Purchases of treasury stock | (330 | ) | (211 | ) | |||
Cash dividends | (167 | ) | (162 | ) | |||
Repayment of debt | — | (200 | ) | ||||
Increase (decrease) in short-term commercial paper borrowings, net | (56 | ) | 269 | ||||
Increase in long-term borrowings | — | 1,089 | |||||
Proceeds from the exercise of stock options | 49 | 37 | |||||
Excess tax benefit from stock-based compensation | 13 | 6 | |||||
Other financing activities | (1 | ) | (1 | ) | |||
Cash (Used for) Provided by Financing Activities from Continuing Operations | (492 | ) | 827 |
Year Ended | |||||||
September 30 | |||||||
2015 | 2014 | ||||||
Effect of exchange rate changes on cash and cash equivalents | (23 | ) | (12 | ) | |||
Discontinued Operations: | |||||||
Operating activities | (14 | ) | (16 | ) | |||
Investing activities | 3 | 10 | |||||
Cash (used for) discontinued operations | (11 | ) | (6 | ) | |||
Net Change in Cash and Cash Equivalents | (71 | ) | (68 | ) | |||
Cash and Cash Equivalents at Beginning of Period | 323 | 391 | |||||
Cash and Cash Equivalents at End of Period | $ | 252 | $ | 323 |