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 April 21, 2016 regarding Rockwell Collins quarterly 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 April 21, 2016. |
ROCKWELL COLLINS, INC. | |||
(Registrant) | |||
Dated: | April 21, 2016 | By | /s/ Patrick E. Allen |
Patrick E. Allen | |||
Senior Vice President and | |||
Chief Financial Officer |
99.1 | Press release of registrant dated April 21, 2016. |
(dollars in millions) | Q2 FY16 | Q2 FY15 | Inc/(Dec) | |||||||
Commercial Systems sales | ||||||||||
Original equipment | $ | 353 | $ | 370 | (5 | )% | ||||
Aftermarket | 248 | 234 | 6 | % | ||||||
Wide-body in-flight entertainment | 10 | 15 | (33 | )% | ||||||
Total Commercial Systems sales | $ | 611 | $ | 619 | (1 | )% | ||||
Operating earnings | $ | 135 | $ | 142 | (5 | )% | ||||
Operating margin rate | 22.1 | % | 22.9 | % | (80) bps |
• | Original equipment sales decreased as expected due to lower business aircraft OEM production rates, unfavorable airline selectable equipment mix, and lower Airbus A330 production rates. These decreases were partially offset by higher customer-funded development program revenues, higher product deliveries in support of the Airbus A350 and Boeing 787 production ramps, and higher product deliveries for the Bombardier CSeries program in support of entry into service. |
• | Aftermarket sales increased due to higher business jet avionics retrofit and mandate revenues as well as inorganic sales primarily from the acquisition of International Communications Group (ICG). |
• | Operating earnings and operating margin decreased from the prior year primarily due to sales mix as lower margin customer-funded development sales increased and higher margin business jet OEM sales decreased. In addition, SG&A costs increased from higher inorganic costs from the acquisitions of ICG and Pacific Avionics. These items were partially offset by lower company-funded research and development expense and cost savings initiatives from previously announced restructuring plans. |
(dollars in millions) | Q2 FY16 | Q2 FY15 | Inc/(Dec) | |||||||
Government Systems sales | ||||||||||
Avionics | $ | 357 | $ | 371 | (4 | )% | ||||
Communication and Navigation | 181 | 196 | (8 | )% | ||||||
Total Government Systems sales | $ | 538 | $ | 567 | (5 | )% | ||||
Operating earnings | $ | 108 | $ | 114 | (5 | )% | ||||
Operating margin rate | 20.1 | % | 20.1 | % | — |
• | Avionics sales decreased due to lower deliveries on various rotary wing platforms, lower simulation and training sales, partially offset by higher fixed-wing platform revenues. |
• | Communication and Navigation sales decreased due to the wind-down of an international electronic warfare program and lower international deliveries of targeting systems. |
• | Operating earnings and operating margin declined primarily due to lower sales volume and higher SG&A costs from further expansion in international emerging markets, partially offset by lower company-funded research and development expense and cost savings initiatives from previously announced restructuring plans. |
(dollars in millions) | Q2 FY16 | Q2 FY15 | Inc/(Dec) | |||||||
Information Management Services sales | $ | 162 | $ | 155 | 5 | % | ||||
Operating earnings | $ | 29 | $ | 22 | 32 | % | ||||
Operating margin rate | 17.9 | % | 14.2 | % | 370 bps |
• | IMS sales increased primarily due to 8 percent growth in aviation-related sales, including GLOBALinkSM and ARINCDirectSM. |
• | IMS operating earnings and operating margin increased due to incremental earnings on higher sales volume as well as the favorable resolution of certain prior year claims associated with international business jet support services. |
| Total sales | $5.3 billion to $5.4 billion |
| Total segment operating margins | About 21.0% |
| Earnings per share | $5.45 to $5.65 |
| Cash flow from operations | $750 million to $850 million |
| Total research & development investment | About $1 billion (1) |
| Capital expenditures | About $200 million |
| Full year income tax rate | 22% to 23% |
• | Transportation Partners selected a comprehensive suite of Rockwell Collins avionics for 201 Boeing 737 MAX and options for 29 Next-Generation Boeing 737 aircraft. Highlighted Rockwell Collins systems include MultiScan™ ThreatTrack weather radar, GLU-925 Multi-Mode Receiver, and Traffic Alert and Collision Avoidance traffic computer TTR-2100. Deliveries will begin in early 2017. |
• | BOC Aviation will feature Rockwell Collins’ advanced avionics, including MultiScan™ ThreatTrack weather radar, GLU-925 Multi-Mode Receiver, and Traffic Alert and Collision Avoidance traffic computer TTR-2100 as baseline configurations on Next-Generation Boeing 737 aircraft that begin delivery later this year. |
• | India-based GoAir will feature Rockwell Collins’ advanced avionics, including MultiScan™ ThreatTrack weather radar and GLU-925 Multi-Mode Receiver, on 72 Airbus A320neo aircraft. Deliveries will begin later this year. |
• | Azul Brazilian Airlines selected a host of Rockwell Collins avionics, including its MultiScan ThreatTrack weather radar and GLU-925 Multi-Mode Receiver, for 58 Airbus A320neo aircraft. Deliveries will begin in September. |
• | Air France Industries will soon upgrade four Airbus A330 aircraft for one of its customers with Rockwell Collins’ PAVES™ Passenger Services System. The standalone, cost-effective reading light and cabin crew call system with USB charging port brings several benefits, including a significant reduction in aircraft weight. |
• | Singapore-based Tigerair will be upgrading 34 Airbus A320 aircraft (21 firm orders and 13 optional) with the latest version of Rockwell Collins' Iridium satellite communications system. Deliveries will begin later this year. |
• | Air Astana selected Rockwell Collins to provide in-flight connectivity. Internet access will be available using personal computers, tablets and smartphones. |
• | Cologne Bonn Airport (CGN) switched to Rockwell Collins’ ARINC vMUSE™ common use passenger processing solution (CUPPS). The new ARINC vMUSE system will enable the airport to continue its successful deployment of CUPPS, providing CGN’s passengers with an enhanced check-in experience. |
• | Passengers traveling through Berlin Schönefeld Airport will experience faster check-in times with the implementation of a new CUPPS solution - ARINC vMUSETM- from Rockwell Collins. |
• | Whether reducing costs through shared resources or improving the seamless flow of passengers through the check-in process, both Dublin and Cork airports and their passengers will benefit from the recent selection of Rockwell Collins’ ARINC vMUSE™ CUPPS platforms. |
• | Travelers using Narita International Airport, the primary airport servicing Greater Tokyo, will be able to check-in faster due to the expanded deployment of ARINC CUPPS and ARINC self-service kiosks throughout the airport. |
Media Contact: | Investor Contact: |
Pam Tvrdy | Ryan Miller |
319.295.0591 | 319.295.7575 |
pam.tvrdy@rockwellcollins.com | investorrelations@rockwellcollins.com |
Three Months Ended | Six Months Ended | ||||||||||||||
March 31 | March 31 | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Sales: | |||||||||||||||
Commercial Systems | $ | 611 | $ | 619 | $ | 1,173 | $ | 1,187 | |||||||
Government Systems | 538 | 567 | 989 | 1,076 | |||||||||||
Information Management Services | 162 | 155 | 318 | 304 | |||||||||||
Total sales | $ | 1,311 | $ | 1,341 | $ | 2,480 | $ | 2,567 | |||||||
Segment operating earnings: | |||||||||||||||
Commercial Systems | $ | 135 | $ | 142 | $ | 260 | $ | 267 | |||||||
Government Systems | 108 | 114 | 194 | 220 | |||||||||||
Information Management Services | 29 | 22 | 53 | 43 | |||||||||||
Total segment operating earnings | 272 | 278 | 507 | 530 | |||||||||||
Interest expense | (17 | ) | (15 | ) | (32 | ) | (30 | ) | |||||||
Stock-based compensation | (9 | ) | (7 | ) | (15 | ) | (12 | ) | |||||||
General corporate, net | (11 | ) | (15 | ) | (23 | ) | (29 | ) | |||||||
Restructuring and asset impairment charges | — | — | (45 | ) | — | ||||||||||
Income from continuing operations before income taxes | 235 | 241 | 392 | 459 | |||||||||||
Income tax expense | (63 | ) | (78 | ) | (87 | ) | (127 | ) | |||||||
Income from continuing operations | $ | 172 | $ | 163 | $ | 305 | $ | 332 | |||||||
Income (loss) from discontinued operations, net of taxes (1) | (1 | ) | (6 | ) | 1 | (8 | ) | ||||||||
Net income | $ | 171 | $ | 157 | $ | 306 | $ | 324 | |||||||
Diluted earnings per share: | |||||||||||||||
Continuing operations | $ | 1.30 | $ | 1.22 | $ | 2.30 | $ | 2.48 | |||||||
Discontinued operations | (0.01 | ) | (0.05 | ) | 0.01 | (0.06 | ) | ||||||||
Diluted earnings per share | $ | 1.29 | $ | 1.17 | $ | 2.31 | $ | 2.42 | |||||||
Weighted average diluted shares outstanding | 132.3 | 133.7 | 132.7 | 134.1 |
Three Months Ended | Six Months Ended | ||||||||||||||
March 31 | March 31 | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Commercial Systems sales: | |||||||||||||||
Air transport aviation electronics: | |||||||||||||||
Original equipment | $ | 214 | $ | 204 | $ | 397 | $ | 395 | |||||||
Aftermarket | 131 | 136 | 264 | 267 | |||||||||||
Wide-body in-flight entertainment | 10 | 15 | 21 | 31 | |||||||||||
Total air transport aviation electronics | 355 | 355 | 682 | 693 | |||||||||||
Business and regional aviation electronics: | |||||||||||||||
Original equipment | 139 | 166 | 269 | 306 | |||||||||||
Aftermarket | 117 | 98 | 222 | 188 | |||||||||||
Total business and regional aviation electronics | 256 | 264 | 491 | 494 | |||||||||||
Total Commercial Systems sales | $ | 611 | $ | 619 | $ | 1,173 | $ | 1,187 | |||||||
Commercial Systems sales: | |||||||||||||||
Total original equipment | $ | 353 | $ | 370 | $ | 666 | $ | 701 | |||||||
Total aftermarket | 248 | 234 | 486 | 455 | |||||||||||
Wide-body in-flight entertainment | 10 | 15 | 21 | 31 | |||||||||||
Total Commercial Systems sales | $ | 611 | $ | 619 | $ | 1,173 | $ | 1,187 | |||||||
Government Systems Sales: | |||||||||||||||
Avionics | $ | 357 | $ | 371 | $ | 650 | $ | 698 | |||||||
Communication and Navigation | 181 | 196 | 339 | 378 | |||||||||||
Total Government Systems Sales | $ | 538 | $ | 567 | $ | 989 | $ | 1,076 | |||||||
Information Management Services sales | $ | 162 | $ | 155 | $ | 318 | $ | 304 | |||||||
Total sales | $ | 1,311 | $ | 1,341 | $ | 2,480 | $ | 2,567 |
Three Months Ended | Six Months Ended | ||||||||||||||
March 31 | March 31 | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Research and Development Investment | |||||||||||||||
Customer-funded: | |||||||||||||||
Commercial Systems | $ | 61 | $ | 44 | $ | 108 | $ | 84 | |||||||
Government Systems | 99 | 106 | 186 | 195 | |||||||||||
Information Management Services | 2 | 2 | 4 | 4 | |||||||||||
Total Customer-funded | 162 | 152 | 298 | 283 | |||||||||||
Company-funded: | |||||||||||||||
Commercial Systems | 26 | 48 | 61 | 98 | |||||||||||
Government Systems | 19 | 24 | 36 | 42 | |||||||||||
Information Management Services (1) | 1 | — | 1 | 1 | |||||||||||
Total Company-funded | 46 | 72 | 98 | 141 | |||||||||||
Total Research and Development Expense | 208 | 224 | 396 | 424 | |||||||||||
Increase in Pre-production Engineering Costs, Net | 34 | 34 | 74 | 65 | |||||||||||
Total Research and Development Investment | $ | 242 | $ | 258 | $ | 470 | $ | 489 | |||||||
Percent of Total Sales | 18.5 | % | 19.2 | % | 19.0 | % | 19.0 | % |
March 31, 2016 | September 30, 2015 | ||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 300 | $ | 252 | |||
Receivables, net | 1,088 | 1,038 | |||||
Inventories, net (1) | 1,968 | 1,824 | |||||
Other current assets | 134 | 110 | |||||
Total current assets | 3,490 | 3,224 | |||||
Property | 991 | 964 | |||||
Goodwill | 1,920 | 1,904 | |||||
Intangible Assets | 693 | 703 | |||||
Deferred Income Taxes | 103 | 165 | |||||
Other Assets | 344 | 344 | |||||
TOTAL ASSETS | $ | 7,541 | $ | 7,304 | |||
Current Liabilities: | |||||||
Short-term debt | $ | 1,120 | $ | 448 | |||
Accounts payable | 460 | 487 | |||||
Compensation and benefits | 206 | 273 | |||||
Advance payments from customers | 303 | 365 | |||||
Accrued customer incentives | 240 | 232 | |||||
Product warranty costs | 84 | 89 | |||||
Other current liabilities | 160 | 166 | |||||
Total current liabilities | 2,573 | 2,060 | |||||
Long-term Debt, Net | 1,383 | 1,680 | |||||
Retirement Benefits | 1,356 | 1,466 | |||||
Other Liabilities | 240 | 218 | |||||
Equity | 1,989 | 1,880 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 7,541 | $ | 7,304 | |||
(1) Inventories, net is comprised of the following: | |||||||
March 31, 2016 | September 30, 2015 | ||||||
Inventories, net: | |||||||
Production inventory | $ | 882 | $ | 812 | |||
Pre-production engineering costs | 1,086 | 1,012 | |||||
Total Inventories, net | $ | 1,968 | $ | 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. |
Six Months Ended | |||||||
March 31 | |||||||
2016 | 2015(1) | ||||||
Operating Activities: | |||||||
Net income | $ | 306 | $ | 324 | |||
Income (loss) from discontinued operations, net of tax | 1 | (8 | ) | ||||
Income from continuing operations | 305 | 332 | |||||
Adjustments to arrive at cash used for operating activities: | |||||||
Non-cash restructuring charges | 6 | — | |||||
Depreciation | 71 | 76 | |||||
Amortization of intangible assets and pre-production engineering costs | 54 | 46 | |||||
Stock-based compensation expense | 15 | 12 | |||||
Compensation and benefits paid in common stock | 27 | 23 | |||||
Excess tax benefit from stock-based compensation(2) | — | (9 | ) | ||||
Deferred income taxes | 48 | 33 | |||||
Pension plan contributions | (63 | ) | (63 | ) | |||
Changes in assets and liabilities, excluding effects of acquisitions and foreign currency adjustments: | |||||||
Receivables | (50 | ) | (79 | ) | |||
Production inventory | (87 | ) | (56 | ) | |||
Pre-production engineering costs | (97 | ) | (86 | ) | |||
Accounts payable | (23 | ) | (40 | ) | |||
Compensation and benefits | (68 | ) | (36 | ) | |||
Advance payments from customers | (64 | ) | 16 | ||||
Accrued customer incentives | 8 | 2 | |||||
Product warranty costs | (5 | ) | (5 | ) | |||
Income taxes | 5 | 24 | |||||
Other assets and liabilities | (37 | ) | (58 | ) | |||
Cash Provided by Operating Activities from Continuing Operations | 45 | 132 | |||||
Investing Activities: | |||||||
Property additions | (93 | ) | (104 | ) | |||
Acquisition of businesses, net of cash acquired | (17 | ) | (22 | ) | |||
Other investing activities | — | (10 | ) | ||||
Cash (Used for) Investing Activities from Continuing Operations | (110 | ) | (136 | ) | |||
Financing Activities: | |||||||
Purchases of treasury stock | (188 | ) | (242 | ) | |||
Cash dividends | (86 | ) | (80 | ) | |||
Increase in short-term commercial paper borrowings, net | 372 | 281 | |||||
Proceeds from the exercise of stock options | 13 | 30 | |||||
Excess tax benefit from stock-based compensation(2) | — | 9 | |||||
Other financing activities | (1 | ) | — | ||||
Cash Provided by (Used for) Financing Activities from Continuing Operations | 110 | (2 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 3 | (22 | ) | ||||
Discontinued Operations: | |||||||
Operating activities | — | (14 | ) | ||||
Investing activities | — | 3 | |||||
Cash (Used for) Discontinued Operations | — | (11 | ) | ||||
Net Change in Cash and Cash Equivalents | 48 | (39 | ) | ||||
Cash and Cash Equivalents at Beginning of Period | 252 | 323 | |||||
Cash and Cash Equivalents at End of Period | $ | 300 | $ | 284 |