CEDAR RAPIDS, Iowa--(BUSINESS WIRE)--Rockwell Collins, Inc. (NYSE: COL) today reported third quarter fiscal year 2016 earnings per share from continuing operations increased 23% to $1.63 compared to $1.33 in the prior year. Total sales in the third quarter of fiscal year 2016 were $1.33 billion, a 3% increase from the same period in fiscal year 2015. Total segment operating margins increased 10 basis points to 21.1%.
"All of our business segments posted solid operating performance during the quarter, highlighted by a return to growth in Government Systems and 10% revenue growth in Information Management Services,” said Rockwell Collins Chairman, President, and Chief Executive Officer, Kelly Ortberg. “Directionally, fiscal 2016 continues to progress as we expected, and our restructuring actions announced in the first quarter are delivering the savings we anticipated. As a result, we are narrowing our financial guidance for the year."
The Company narrowed the ranges for its financial outlook for fiscal year 2016 as follows:
- Total sales are now expected to be about $5.3 billion (from $5.3 billion to $5.4 billion).
- Earnings per share is now expected to be in the range of $5.50 to $5.55 (from $5.45 to $5.65).
- Cash flow from operations is now expected to be about $750 million (from $750 million to $850 million).
- The full year income tax rate is now expected to be about 22.5% (from 22% to 23%).
"Lower-than-anticipated business aircraft OEM production rates and air transport aftermarket service and support sales have impacted our Commercial Systems revenue outlook," added Ortberg. "We now expect Commercial Systems sales to be down about 1% for the year. In addition, we now forecast our cash flow from operations at the lower end of the previously guided range due to the timing of receivable collections and higher spending for pre-production engineering costs. In spite of these market challenges, our strong operational performance has allowed us to narrow our earnings per share estimate for fiscal year 2016 within the previously guided range."
Following is a discussion of fiscal year 2016 third 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 third quarter results as summarized below.
(dollars in millions) | Q3 FY16 | Q3 FY15 | Inc/(Dec) | |||||||||
Commercial Systems sales | ||||||||||||
Original equipment | $ | 367 | $ | 373 | (2 | )% | ||||||
Aftermarket | 236 | 225 | 5 | % | ||||||||
Wide-body in-flight entertainment | 9 | 13 | (31 | )% | ||||||||
Total Commercial Systems sales | $ | 612 | $ | 611 | — | % | ||||||
Operating earnings | $ | 141 | $ | 141 | — | % | ||||||
Operating margin rate | 23.0 | % | 23.1 | % | (10) bps | |||||||
- Original equipment sales decreased due to lower business aircraft OEM production rates, lower product deliveries to a Chinese regional aircraft manufacturer, and lower Airbus A330 production rates. These decreases were mostly offset by higher product deliveries in support of the Airbus A350 and Boeing 787 production ramps, favorable customer timing for airline selectable equipment, higher product deliveries for the Bombardier CSeries program, and higher customer-funded development program revenues.
- Aftermarket sales increased due to higher simulation hardware deliveries, higher inorganic sales from the acquisition of International Communications Group, and higher flight deck retrofits, partially offset by lower spares provisioning and lower cabin retrofits.
- Operating earnings and operating margin were about flat with the prior year as benefits from cost savings initiatives from previously announced restructuring plans were offset by unfavorable sales mix as lower margin customer-funded development sales increased and higher margin business jet OEM sales decreased.
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 third quarter of fiscal year 2015 has been reclassified to the current year presentation.
Results from the third quarter of 2016 are summarized below.
(dollars in millions) | Q3 FY16 | Q3 FY15 | Inc/(Dec) | |||||||||
Government Systems sales | ||||||||||||
Avionics | $ | 376 | $ | 338 | 11 | % | ||||||
Communication and Navigation | 179 | 192 | (7 | )% | ||||||||
Total Government Systems sales | $ | 555 | $ | 530 | 5 | % | ||||||
Operating earnings | $ | 115 | $ | 108 | 6 | % | ||||||
Operating margin rate | 20.7 | % | 20.4 | % | 30 bps | |||||||
- Avionics sales increased due to higher fixed-wing platform revenues and higher simulation and training sales, partially offset by lower deliveries on various rotary wing platforms.
- 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 increased due to higher sales volume and cost savings initiatives from previously announced restructuring plans, partially offset by unfavorable development program 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 third quarter of 2016 are summarized below.
(dollars in millions) | Q3 FY16 | Q3 FY15 | Inc/(Dec) | |||||||||
Information Management Services sales | $ | 167 | $ | 152 | 10 | % | ||||||
Operating earnings | $ | 26 | $ | 23 | 13 | % | ||||||
Operating margin rate | 15.6 | % | 15.1 | % | 50 bps | |||||||
- IMS sales increased due to 9% growth in aviation related sales, including GLOBALinkSM and ARINCDirectSM. In addition, non-aviation related sales increased 11% due primarily to higher airport and rail program sales.
- IMS operating earnings and operating margin increased due to incremental earnings on higher sales volume.
Corporate and Financial Highlights
Income Taxes
The company's effective income tax rate from
continuing operations was 13.4% for the third quarter of fiscal year
2016 compared to a rate of 24.9% for the same period last year. The
lower current year effective income tax rate from continuing operations
was primarily due to the release of a $41 million valuation allowance
related to a U.S. capital loss carryforward. This tax benefit was
partially offset by favorable adjustments recorded in the prior year
related to the remeasurement of certain tax positions.
Cash Flow
Cash provided by operating activities from
continuing operations was $223 million for the first nine months of
fiscal year 2016, compared to $341 million in the first nine months of
fiscal year 2015. The decrease in cash provided by operating activities
was due primarily to unfavorable net working capital changes, partially
offset by lower tax payments.
During the third quarter of 2016, the company repurchased 0.7 million shares of common stock at a total cost of $67 million. The company also paid a dividend on its common stock of 33 cents per share, or $43 million, in the third quarter of 2016.
Fiscal Year 2016 Outlook
The following table is a summary of the company's updated financial guidance for continuing operations for fiscal year 2016:
-- |
Total sales | About $5.3 billion (From $5.3 billion to $5.4 billion) | ||||
-- |
Total segment operating margins | About 21.0% | ||||
-- |
Earnings per share | $5.50 to $5.55 (From $5.45 to $5.65) | ||||
-- |
Cash flow from operations | About $750 million (From $750 million to $850 million) | ||||
-- |
Total research & development investment | About $1 billion (1) | ||||
-- |
Capital expenditures | About $200 million | ||||
-- |
Full year income tax rate | About 22.5% (From 22% to 23%) | ||||
(1) - 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.
Conference Call and Webcast Details
Rockwell Collins
Chairman, President and CEO, Kelly Ortberg, and Senior Vice President
and CFO, Patrick Allen, will conduct an earnings conference call at 9:00
a.m. Eastern Time on July 25, 2016. 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. The company was honored at a
special ceremony at the Farnborough Airshow.
Rockwell Collins completes critical CRIIS milestone for production
Rockwell
Collins completed the Production Readiness Review (PRR) for Common Range
Integrated Instrumentation System (CRIIS), paving the way for the U.S.
Department of Defense to award Production Lot 1. The PRR was done in
cooperation with the Test Resource Management Center and CRIIS System
Program Office at Eglin Air Force Base.
Mexican Navy selected Rockwell Collins to deliver Transportable
Blackhawk Operations Simulator (T-BOS)
Rockwell Collins will
deliver one Transportable Blackhawk Operations Simulator 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.
Bombardier CSeries 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
CSeries 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’ 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 on 44 new
airplanes, including 37 Boeing 737 MAX and seven Next-Generation Boeing
737 aircraft.
Rockwell Collins recognized by Bombardier as 2015 In-Service STAR
Award winner
Bombardier Commercial Aircraft recognized Rockwell
Collins’ exceptional achievements on the CRJ aircraft program throughout
the past year with its 2015 In-Service Supplier Top Achievement
Recognition (STAR) Award. The STAR Award recognizes suppliers with
performance scores of at least 90 percent in areas such as product
performance, airline support, and customer focus.
Rockwell Collins provides Venue™-based cabin system on Bombardier
Global 5000 and Global 6000 aircraft
Rockwell Collins’ Venue™
high-definition cabin management and entertainment system will be
featured on new Bombardier Global 5000 and Global 6000 aircraft
beginning in Q3 of 2016. It will also be available as a retrofit
solution on in-service Global aircraft models through Bombardier Service
Centers.
Rockwell Collins flight controls to be featured on Cessna Citation
Longitude
Rockwell Collins' horizontal stabilizer trim and flap
actuation systems will be featured on the new Cessna Citation Longitude
super-midsize business jet. Rockwell Collins’ horizontal stabilizer trim
actuator controls the pitch of the horizontal stabilizer in order to
reduce drag and trim the aircraft for optimal efficient flight. The flap
actuator system from Rockwell Collins extends and retracts the
trailing-edge flap system, which is used to increase lift during slow
flight.
U.S. Secretary of Defense recognizes Rockwell Collins for excellence
in Performance Based Logistics
The AN/ARC-210 PBL team
implemented a 10-year PBL solution between Naval Supply Systems Command
(NAVSUP) and Rockwell Collins that improved battlefield interoperability
and mission availability. The award was presented to Rockwell Collins
and NAVSUP by the Deputy Assistant to the Secretary of Defense Terry
Emmert during a ceremony at the DoD Product Support Conference at Ft.
Belvoir, Virginia.
Rockwell Collins MicroGRAM selected for U.S. Navy’s bomb disposal
robots
Rockwell Collins will provide up to 2,000 of its
MicroGRAM GPS receivers to Neya Systems and Northrop Grumman for
integration in Neya’s Autonomous Behavior Capability Module, in support
of Increment 1 of the Naval Surface Warfare Center’s Advanced Explosive
Ordnance Disposal Robotic System.
New Zealand’s three largest airports select Rockwell Collins common
use passenger processing solution
Wellington Airport and the
Common Use Terminal Equipment clubs at both Auckland and Christchurch
International Airports selected Rockwell Collins common use passenger
processing solutions, enabling the airports to reduce costs and
passengers to experience faster check-in times.
Rockwell Collins to provide fleet-wide international trip support
services for Hong Kong based Metrojet
Metrojet, a Hong Kong
based six-star business aviation services company, engaged Rockwell
Collins’ ARINCDirectSM to provide international trip support
services for its fleet of business aircraft. The new contract expands
Metrojet’s relationship with Rockwell Collins, which is currently using
a number of ARINCDirect’s integrated services.
Zetta Jet signs fleet-wide cabin connectivity agreement with Rockwell
Collins
Zetta Jet selected Rockwell Collins’ ARINCDirect to
provide its customers with the fastest internet speeds available through
Viasat Yonder over KU band and Inmarsat Jet ConneX (JX) over KA band.
Zetta Jet is the first business jet provider in Asia to offer high-speed
connectivity across its fleet of aircraft.
Airbus selects Rockwell Collins as a lead supplier for high-bandwidth
connectivity
Airbus has selected Rockwell Collins as a lead
supplier of High-Bandwidth Connectivity for the Airbus A320 single-aisle
family of aircraft, and long-range A330 and A380 aircraft.
About Rockwell Collins
Rockwell Collins is a pioneer in the
development and deployment of innovative and high-integrity 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.
Forward-Looking Statement
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
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; 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; 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, 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 | Nine Months Ended | |||||||||||||||||||
June 30 | June 30 | |||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Sales: | ||||||||||||||||||||
Commercial Systems | $ | 612 | $ | 611 | $ | 1,785 | $ | 1,798 | ||||||||||||
Government Systems | 555 | 530 | 1,544 | 1,606 | ||||||||||||||||
Information Management Services | 167 | 152 | 485 | 456 | ||||||||||||||||
Total sales | $ | 1,334 | $ | 1,293 | $ | 3,814 | $ | 3,860 | ||||||||||||
Segment operating earnings: | ||||||||||||||||||||
Commercial Systems | $ | 141 | $ | 141 | $ | 401 | $ | 408 | ||||||||||||
Government Systems | 115 | 108 | 309 | 328 | ||||||||||||||||
Information Management Services | 26 | 23 | 79 | 66 | ||||||||||||||||
Total segment operating earnings | 282 | 272 | 789 | 802 | ||||||||||||||||
Interest expense | (16 | ) | (15 | ) | (48 | ) | (45 | ) | ||||||||||||
Stock-based compensation | (6 | ) | (5 | ) | (21 | ) | (17 | ) | ||||||||||||
General corporate, net | (13 | ) | (15 | ) | (36 | ) | (44 | ) | ||||||||||||
Restructuring and asset impairment charges | — | — | (45 | ) | — | |||||||||||||||
Income from continuing operations before income taxes | 247 | 237 | 639 | 696 | ||||||||||||||||
Income tax expense | (33 | ) | (59 | ) | (120 | ) | (186 | ) | ||||||||||||
Income from continuing operations | $ | 214 | $ | 178 | $ | 519 | $ | 510 | ||||||||||||
Income (loss) from discontinued operations, net of taxes (1) | — | — | 1 | (8 | ) | |||||||||||||||
Net income | $ | 214 | $ | 178 | $ | 520 | $ | 502 | ||||||||||||
Diluted earnings per share: | ||||||||||||||||||||
Continuing operations | $ | 1.63 | $ | 1.33 | $ | 3.92 | $ | 3.81 | ||||||||||||
Discontinued operations | — | — | 0.01 | (0.06 | ) | |||||||||||||||
Diluted earnings per share | $ | 1.63 | $ | 1.33 | $ | 3.93 | $ | 3.75 | ||||||||||||
Weighted average diluted shares outstanding | 131.5 | 133.6 | 132.3 | 133.9 | ||||||||||||||||
(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 first nine 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 nine months ended June 30, 2016 and 2015 (unaudited, in millions):
Three Months Ended | Nine Months Ended | |||||||||||||||
June 30 | June 30 | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Commercial Systems sales: | ||||||||||||||||
Air transport aviation electronics: | ||||||||||||||||
Original equipment | $ | 234 | $ | 202 | $ | 631 | $ | 597 | ||||||||
Aftermarket | 127 | 122 | 391 | 389 | ||||||||||||
Wide-body in-flight entertainment | 9 | 13 | 30 | 44 | ||||||||||||
Total air transport aviation electronics | 370 | 337 | 1,052 | 1,030 | ||||||||||||
Business and regional aviation electronics: | ||||||||||||||||
Original equipment | 133 | 171 | 402 | 477 | ||||||||||||
Aftermarket | 109 | 103 | 331 | 291 | ||||||||||||
Total business and regional aviation electronics | 242 | 274 | 733 | 768 | ||||||||||||
Total Commercial Systems sales | $ | 612 | $ | 611 | $ | 1,785 | $ | 1,798 | ||||||||
Commercial Systems sales: | ||||||||||||||||
Total original equipment | $ | 367 | $ | 373 | $ | 1,033 | $ | 1,074 | ||||||||
Total aftermarket | 236 | 225 | 722 | 680 | ||||||||||||
Wide-body in-flight entertainment | 9 | 13 | 30 | 44 | ||||||||||||
Total Commercial Systems sales | $ | 612 | $ | 611 | $ | 1,785 | $ | 1,798 | ||||||||
Government Systems Sales: | ||||||||||||||||
Avionics | $ | 376 | $ | 338 | $ | 1,026 | $ | 1,036 | ||||||||
Communication and Navigation | 179 | 192 | 518 | 570 | ||||||||||||
Total Government Systems Sales | $ | 555 | $ | 530 | $ | 1,544 | $ | 1,606 | ||||||||
Information Management Services sales | $ | 167 | $ | 152 | $ | 485 | $ | 456 | ||||||||
Total sales | $ | 1,334 | $ | 1,293 | $ | 3,814 | $ | 3,860 | ||||||||
The following table summarizes total Research and Development Investment by segment and funding type for the three and nine months ended June 30, 2016 and 2015 (unaudited, dollars in millions):
Three Months Ended | Nine Months Ended | |||||||||||||||||||
June 30 | June 30 | |||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Research and Development Investment | ||||||||||||||||||||
Customer-funded: | ||||||||||||||||||||
Commercial Systems | $ | 58 | $ | 47 | $ | 166 | $ | 131 | ||||||||||||
Government Systems | 98 | 98 | 284 | 293 | ||||||||||||||||
Information Management Services | 2 | 3 | 6 | 7 | ||||||||||||||||
Total Customer-funded | 158 | 148 | 456 | 431 | ||||||||||||||||
Company-funded: | ||||||||||||||||||||
Commercial Systems | 36 | 40 | 97 | 138 | ||||||||||||||||
Government Systems | 20 | 20 | 56 | 62 | ||||||||||||||||
Information Management Services (1) | — | — | 1 | 1 | ||||||||||||||||
Total Company-funded | 56 | 60 | 154 | 201 | ||||||||||||||||
Total Research and Development Expense | 214 | 208 | 610 | 632 | ||||||||||||||||
Increase in Pre-production Engineering Costs, Net | 30 | 34 | 104 | 99 | ||||||||||||||||
Total Research and Development Investment | $ | 244 | $ | 242 | $ | 714 | $ | 731 | ||||||||||||
Percent of Total Sales | 18.3 | % | 18.7 | % | 18.7 | % | 18.9 | % | ||||||||||||
(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) | ||||||||
June 30, |
September |
|||||||
2016 |
30, 2015 |
|||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 307 | $ | 252 | ||||
Receivables, net | 1,184 | 1,038 | ||||||
Inventories, net (1) | 1,975 | 1,824 | ||||||
Other current assets | 148 | 110 | ||||||
Total current assets | 3,614 | 3,224 | ||||||
Property | 999 | 964 | ||||||
Goodwill | 1,918 | 1,904 | ||||||
Intangible Assets | 678 | 703 | ||||||
Deferred Income Taxes | 104 | 165 | ||||||
Other Assets | 362 | 344 | ||||||
TOTAL ASSETS | $ | 7,675 | $ | 7,304 | ||||
Current Liabilities: | ||||||||
Short-term debt | $ | 1,112 | $ | 448 | ||||
Accounts payable | 483 | 487 | ||||||
Compensation and benefits | 258 | 273 | ||||||
Advance payments from customers | 263 | 365 | ||||||
Accrued customer incentives | 245 | 232 | ||||||
Product warranty costs | 83 | 89 | ||||||
Other current liabilities | 171 | 166 | ||||||
Total current liabilities | 2,615 | 2,060 | ||||||
Long-term Debt, Net | 1,387 | 1,680 | ||||||
Retirement Benefits | 1,324 | 1,466 | ||||||
Other Liabilities | 235 | 218 | ||||||
Equity | 2,114 | 1,880 | ||||||
TOTAL LIABILITIES AND EQUITY | $ | 7,675 | $ | 7,304 | ||||
(1) Inventories, net is comprised of the following: | ||||||||
June 30, |
September |
|||||||
2016 |
30, 2015 |
|||||||
Inventories, net: | ||||||||
Production inventory | $ | 859 | $ | 812 | ||||
Pre-production engineering costs | 1,116 | 1,012 | ||||||
Total Inventories, net | $ | 1,975 | $ | 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. | ||||||||||
CONDENSED CASH FLOW INFORMATION | ||||||||||
(Unaudited, in millions) | ||||||||||
Nine Months Ended | ||||||||||
June 30 | ||||||||||
2016 |
2015 (1) |
|||||||||
Operating Activities: | ||||||||||
Net income | $ | 520 | $ | 502 | ||||||
Income (loss) from discontinued operations, net of tax | 1 | (8 | ) | |||||||
Income from continuing operations | 519 | 510 | ||||||||
Adjustments to arrive at cash provided by operating activities: | ||||||||||
Non-cash restructuring charges | 6 | — | ||||||||
Depreciation | 107 | 114 | ||||||||
Amortization of intangible assets and pre-production engineering costs | 83 | 75 | ||||||||
Stock-based compensation expense | 21 | 17 | ||||||||
Compensation and benefits paid in common stock | 41 | 37 | ||||||||
Excess tax benefit from stock-based compensation (2) | — | (12 | ) | |||||||
Deferred income taxes | 39 | 44 | ||||||||
Pension plan contributions | (66 | ) | (66 | ) | ||||||
Fair value of acquisition-related contingent consideration | 1 | — | ||||||||
Changes in assets and liabilities, excluding effects of acquisitions and foreign currency adjustments: | ||||||||||
Receivables | (163 | ) | (108 | ) | ||||||
Production inventory | (73 | ) | (72 | ) | ||||||
Pre-production engineering costs | (141 | ) | (134 | ) | ||||||
Accounts payable | 3 | (73 | ) | |||||||
Compensation and benefits | (15 | ) | 9 | |||||||
Advance payments from customers | (102 | ) | 12 | |||||||
Accrued customer incentives | 13 | 32 | ||||||||
Product warranty costs | (6 | ) | (8 | ) | ||||||
Income taxes | 3 | 28 | ||||||||
Other assets and liabilities | (47 | ) | (64 | ) | ||||||
Cash Provided by Operating Activities from Continuing Operations | 223 | 341 | ||||||||
Investing Activities: | ||||||||||
Property additions | (133 | ) | (155 | ) | ||||||
Acquisition of businesses, net of cash acquired | (17 | ) | (24 | ) | ||||||
Other investing activities | (1 | ) | (8 | ) | ||||||
Cash (Used for) Investing Activities from Continuing Operations | (151 | ) | (187 | ) | ||||||
Financing Activities: | ||||||||||
Purchases of treasury stock | (261 | ) | (330 | ) | ||||||
Cash dividends | (129 | ) | (123 | ) | ||||||
Increase in short-term commercial paper borrowings, net | 364 | 241 | ||||||||
Proceeds from the exercise of stock options | 15 | 48 | ||||||||
Excess tax benefit from stock-based compensation(2) | — | 12 | ||||||||
Other financing activities | (2 | ) | (1 | ) | ||||||
Cash (Used for) Financing Activities from Continuing Operations | (13 | ) | (153 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | (4 | ) | (19 | ) | ||||||
Discontinued Operations: | ||||||||||
Operating activities | — | (14 | ) | |||||||
Investing activities | — | 3 | ||||||||
Cash (Used for) Discontinued Operations | — | (11 | ) | |||||||
Net Change in Cash and Cash Equivalents | 55 | (29 | ) | |||||||
Cash and Cash Equivalents at Beginning of Period | 252 | 323 | ||||||||
Cash and Cash Equivalents at End of Period | $ | 307 | $ | 294 | ||||||
(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.