Document_and_Entity_Informatio
Document and Entity Information Document | 3 Months Ended | |
Dec. 31, 2014 | Jan. 19, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ROCKWELL COLLINS INC | |
Entity Central Index Key | 1137411 | |
Document and Entity Information | -21 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Registrant Name | 10-Q | |
Document Period End Date | 31-Dec-14 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | FALSE | |
Entity Common Stock, Shares Outstanding | 132,287,306 |
Consolidated_Statement_of_Fina
Consolidated Statement of Financial Position (USD $) | Dec. 31, 2014 | Sep. 30, 2014 |
In Millions, unless otherwise specified | ||
Current Assets: | ||
Cash and cash equivalents | $315 | $323 |
Receivables, net | 1,044 | 1,033 |
Inventories, net | 1,779 | 1,709 |
Current deferred income taxes | 9 | 9 |
Business held for sale | 17 | 15 |
Other current assets | 124 | 115 |
Total current assets | 3,288 | 3,204 |
Property | 919 | 919 |
Goodwill | 1,856 | 1,863 |
Intangible Assets | 685 | 688 |
Long-term Deferred Income Taxes | 92 | 101 |
Other Assets | 300 | 288 |
TOTAL ASSETS | 7,140 | 7,063 |
Current Liabilities: | ||
Short-term debt | 831 | 504 |
Accounts payable | 461 | 535 |
Compensation and benefits | 195 | 256 |
Advance payments from customers | 368 | 359 |
Accrued customer incentives | 201 | 202 |
Product warranty costs | 103 | 104 |
Liabilities associated with business held for sale | 12 | 16 |
Other current liabilities | 192 | 222 |
Total current liabilities | 2,363 | 2,198 |
Long-term Debt, Net | 1,670 | 1,663 |
Retirement Benefits | 1,012 | 1,096 |
Other Liabilities | 225 | 217 |
Equity: | ||
Common stock ($0.01 par value; shares authorized: 1,000; shares issued: 183.8) | 2 | 2 |
Additional paid-in capital | 1,486 | 1,489 |
Retained earnings | 4,732 | 4,605 |
Accumulated other comprehensive loss | -1,373 | -1,366 |
Common stock in treasury, at cost (shares held: December 31, 2014, 51.3; September 30, 2014, 49.8) | -2,983 | -2,846 |
Total shareowners’ equity | 1,864 | 1,884 |
Noncontrolling interest | 6 | 5 |
Total equity | 1,870 | 1,889 |
TOTAL LIABILITIES AND EQUITY | $7,140 | $7,063 |
Consolidated_Statement_of_Fina1
Consolidated Statement of Financial Position (Parenthetical) (USD $) | Dec. 31, 2014 | Sep. 30, 2014 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $0.01 | $0.01 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 183,800,000 | 183,800,000 |
Common stock, shares held in treasury | 51,300,000 | 48,700,000 |
Consolidated_Statement_of_Oper
Consolidated Statement of Operations (USD $) | 3 Months Ended | |||
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | ||
Sales: | ||||
Product sales | $1,035 | $990 | ||
Service sales | 191 | 64 | ||
Total sales | 1,226 | 1,054 | ||
Costs, expenses and other: | ||||
Product cost of sales | 718 | 693 | ||
Service cost of sales | 139 | 44 | ||
Selling, general and administrative expenses | 137 | 134 | ||
Interest expense | 15 | [1] | 12 | [1] |
Other income, net | -1 | -13 | ||
Total costs, expenses and other | 1,008 | 870 | ||
Income from continuing operations before income taxes | 218 | 184 | ||
Income tax expense | 49 | 50 | ||
Income from continuing operations | 169 | 134 | ||
(Loss) from discontinued operations, net of taxes | -2 | -3 | ||
Net income | $167 | $131 | ||
Basic | ||||
Continuing operations | $1.28 | $0.99 | ||
Discontinued operations | ($0.02) | ($0.02) | ||
Basic earnings per share | $1.26 | $0.97 | ||
Diluted | ||||
Continuing operations | $1.26 | $0.98 | ||
Discontinued operations | ($0.02) | ($0.02) | ||
Diluted earnings per share | $1.24 | $0.96 | ||
Weighted average common shares: | ||||
Basic | 133 | 135.2 | ||
Diluted | 134.5 | 136.7 | ||
Cash dividends per share | $0.30 | $0.30 | ||
[1] | During the three months ended December 31, 2014, and December 31, 2013, the Company incurred $0 million and $3 million, respectively, of bridge credit facility fees related to the acquisition of ARINC. These costs are included in interest expense; therefore total transaction costs related to the acquisition of ARINC during these periods were $0 million and $15 million, respectively. |
Consolidated_Statement_of_Comp
Consolidated Statement of Comprehensive Income Statement (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Statement of Comprehensive Income [Abstract] | ||
Net income | $167 | $131 |
Unrealized foreign currency translation adjustments | -14 | 1 |
Pension and other retirement benefits adjustments (net of taxes for the three months ended December 31, 2014 and 2013 of $7 and $5, respectively) | 11 | 9 |
Foreign currency cash flow hedge adjustment (net of taxes for the three months ended December 31, 2014 and 2013 of $2 and $(1), respectively) | -4 | 2 |
Comprehensive income | $160 | $143 |
Consolidated_Statement_of_Comp1
Consolidated Statement of Comprehensive Income (Parenthetical) (Parentheticals) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Statement of Comprehensive Income [Abstract] | ||
Pension and other retirement benefits adjustments tax amount | $0 | ($191) |
Foreign currency cash flow hedge adjustment tax amount | $0 | ($2) |
Consolidated_Statement_of_Cash
Consolidated Statement of Cash Flows (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Operating Activities: | ||
Net income | $167 | $131 |
(Loss) from discontinued operations, net of taxes | -2 | -3 |
Income from continuing operations | 169 | 134 |
Adjustments to arrive at cash provided by operating activities: | ||
Gain on sale of business | 0 | -10 |
Depreciation | 38 | 32 |
Amortization of intangible assets and pre-production engineering costs | 24 | 12 |
Stock-based compensation expense | 5 | 5 |
Compensation and benefits paid in common stock | 11 | 12 |
Excess tax benefit from stock-based compensation | -7 | -2 |
Deferred income taxes | 13 | 8 |
Pension plan contributions | -58 | -57 |
Changes in assets and liabilities, excluding effects of acquisitions and foreign currency adjustments | ||
Receivables | -15 | 86 |
Production inventory | -52 | -48 |
Pre-production engineering costs | -43 | -49 |
Accounts payable | -51 | -42 |
Compensation and benefits | -59 | -108 |
Advance payments from customers | 13 | 5 |
Accrued customer incentives | -1 | 1 |
Product warranty costs | 0 | -5 |
Income taxes | 8 | -6 |
Other assets and liabilities | -55 | 8 |
Cash (Used for) Operating Activities from Continuing Operations | -60 | -24 |
Investing Activities: | ||
Property additions | -62 | -38 |
Acquisition of businesses, net of cash acquired | 0 | -1,420 |
Proceeds from business divestitures | 0 | 24 |
Other investing activities | -14 | 0 |
Cash (Used for) Investing Activities from Continuing Operations | -76 | -1,434 |
Financing Activities: | ||
Purchases of treasury stock | -173 | -22 |
Cash dividends | -40 | -41 |
Repayment of short-term borrowings | 0 | -200 |
Increase in short-term commercial paper borrowings, net | 327 | 682 |
Increase in long-term borrowings | 0 | 1,089 |
Proceeds from the exercise of stock options | 17 | 7 |
Excess tax benefit from stock-based compensation | 7 | 2 |
Other financing activities | 0 | 0 |
Cash Provided by Financing Activities from Continuing Operations | 138 | 1,517 |
Effect of exchange rate changes on cash and cash equivalents | -9 | 3 |
Cash (Used for) Discontinued Operations: | ||
Operating activities | -1 | -14 |
Cash (used for) discontinued operations | -1 | -14 |
Net Change in Cash and Cash Equivalents | -8 | 48 |
Cash and Cash Equivalents at Beginning of Period | 323 | 391 |
Cash and Cash Equivalents at End of Period | $315 | $439 |
Business_Description_and_Basis
Business Description and Basis of Presentation | 3 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Description and Basis of Presentation | Business Description and Basis of Presentation |
Rockwell Collins, Inc. (the Company or Rockwell Collins) designs, produces and supports communications and aviation systems for commercial and military customers and provides information management services through voice and data communication networks and solutions worldwide. | |
The Company operates on a 52/53 week fiscal year with quarters ending on the Friday closest to the last day of the calendar quarter. For ease of presentation, December 31 and September 30 are utilized consistently throughout these financial statements and notes to represent the period end dates. | |
The Company has one consolidated subsidiary with income attributable to noncontrolling interest. The net income and comprehensive income attributable to the noncontrolling interest is insignificant. | |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and with the instructions to Form 10-Q of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted. These financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended September 30, 2014. | |
In the opinion of management, the unaudited financial statements contain all adjustments, consisting of adjustments of a normal recurring nature, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The results of operations for the three months ended December 31, 2014 are not necessarily indicative of the results that may be expected for the full year. | |
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates and assumptions. | |
During the first quarter of 2014, the Company acquired ARINC Incorporated (ARINC). As a result of the acquisition, the Company’s service sales are greater than ten percent of total sales. Accordingly, service and product sales and service and product cost of sales are presented separately and prior period results were reclassified to conform to the current year presentation. This change did not impact previously reported total revenues, total cost of sales, or net income, nor did it have any effect on the Company’s financial position or cash flows for any prior periods. | |
As discussed in Note 4, Discontinued Operations and Divestitures, on July 25, 2014 the Company divested its satellite communication systems business, formerly known as Datapath, Inc. (Datapath), with operations in Duluth, Georgia and Stockholm, Sweden. As a result, this business has been accounted for as discontinued operations for all periods presented. The Company also intends to divest ARINC's Aerospace Systems Engineering and Support (ASES) business, which provides military aircraft integration and modifications, maintenance, and logistics and support, in order to align with the Company's long-term primary business strategies. During the fourth quarter of 2014, the Company entered into an agreement to divest this business. Subsequently, during the quarter ended December 31, 2014, the parties mutually agreed to terminate the agreement and ASES remains classified as held-for-sale. The operating results of ASES are included in discontinued operations in the Company's Condensed Consolidated Statement of Operations for all periods presented. |
Acquisitions
Acquisitions | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Business Combinations [Abstract] | |||||||||
Acquisitions | Acquisitions | ||||||||
On December 23, 2013, the Company acquired 100 percent of the outstanding common stock and voting interests of Radio Holdings, Inc. (Radio Holdings), the holding company of ARINC, a leading global provider of air-to-ground data and voice communication services. ARINC develops and operates communications and information processing systems and provides systems engineering and integration solutions to five key industries: commercial aviation, business aviation, airports, rail and nuclear security. Combining ARINC's communication networks and services with the Company's onboard aircraft information systems strengthens the Company's ability to deliver enhanced connectivity to aircraft operators worldwide. | |||||||||
The ARINC purchase price was $1,405 million, net of cash acquired and net of $10 million in cash received by the Company in June 2014 from the settlement of various post-closing matters, including adjustments for changes in working capital. As discussed in Note 10, the Company used proceeds from the issuance of long-term debt and commercial paper to finance the cash purchase price. The following table summarizes the fair value of assets acquired and liabilities assumed at the acquisition date. | |||||||||
(in millions) | 23-Dec-13 | ||||||||
Restricted Cash(1) | $ | 61 | |||||||
Receivables and Other current assets | 216 | ||||||||
Building held for sale(2) | 81 | ||||||||
Business held for sale(3) | 15 | ||||||||
Property | 49 | ||||||||
Intangible Assets | 431 | ||||||||
Other Assets | 11 | ||||||||
Total Identifiable Assets Acquired | 864 | ||||||||
Payable to ARINC option holders(1) | (61 | ) | |||||||
Current Liabilities | (171 | ) | |||||||
Liability related to building held for sale(2) | (81 | ) | |||||||
Liabilities associated with business held for sale(3) | (12 | ) | |||||||
Long-term deferred income taxes | (182 | ) | |||||||
Retirement Benefits and Other Long-term Liabilities | (39 | ) | |||||||
Total Liabilities Assumed | (546 | ) | |||||||
Net Identifiable Assets Acquired, excluding Goodwill | 318 | ||||||||
Goodwill | 1,087 | ||||||||
Net Assets Acquired | $ | 1,405 | |||||||
(1) Option-holders of ARINC were due approximately $61 million at the transaction closing date. This payment did not clear until December 24, 2013. Therefore the opening balance sheet, which was prepared as of December 23, 2013, includes restricted cash of $61 million and a current liability payable to the ARINC option holders for an equal amount. | |||||||||
(2) On March 28, 2014, the Company sold the building which was classified as held for sale at the acquisition date. For more information related to the Building held for sale, see discussion below. | |||||||||
(3) Assets and liabilities associated with the Business held for sale relate to ASES, which the Company intends to divest, as detailed in Note 4. | |||||||||
The final determination of the fair value of certain assets and liabilities was completed during the first quarter of 2015, within the one year measurement period as allowed by FASB Accounting Standards Codification Topic 805, Business Combinations (ASC 805). As of December 31, 2014, the valuation studies necessary to determine the fair market value of the assets acquired and liabilities assumed were complete. | |||||||||
The purchase price allocation resulted in the recognition of $1,087 million of goodwill, none of which is expected to be deductible for tax purposes. All of the goodwill is included in the Company’s Information Management Services segment. The goodwill is primarily a result of revenue synergy opportunities generated by the combination of the Company’s aviation electronics and flight services business with ARINC’s network communication solutions and cost synergies resulting from the consolidation of certain corporate and administrative functions. Goodwill also results from the workforce acquired with the business. See Note 22 for additional information relating to the Information Management Services segment. | |||||||||
ARINC’s results of operations have been included in the Company's operating results for the period subsequent to the completion of the acquisition on December 23, 2013. For the three months ending December 31, 2014 and 2013, ARINC contributed sales of $137 million and $6 million, respectively and net income of $12 million and $1 million, respectively. | |||||||||
Building Held For Sale and Liability Related to Building Held for Sale | |||||||||
In connection with the acquisition of ARINC, the Company classified $81 million of acquired real estate assets as Building held for sale at the acquisition date, as well as an $81 million liability related to the Building held for sale at the acquisition date. The assets and related liability were recorded at their estimated fair value. | |||||||||
In November 2004, ARINC obtained approval from the Department of Labor to contribute these real estate assets to its defined benefit pension plan. In connection with this transaction, ARINC entered into a simultaneous agreement to leaseback the contributed facilities for a period of twenty years, through November 1, 2024. As a result of the related party elements of the transaction, no sale or gain was recognized when ARINC contributed the real estate to its pension plan. Instead, ARINC recognized a deferred gain liability equal to the fair value of the contributed real estate. The increase in deferred gain liability was offset by an equal reduction to pension plan liabilities to recognize the fair value of the contributed real estate in the funded status of the pension plan. | |||||||||
The Building held for sale was comprised of the land and buildings of the ARINC corporate headquarters located in Annapolis, Maryland. The related liability represented future rental payment obligations under the leaseback agreement. As of the acquisition date, the real estate assets were being marketed for sale. In March 2014, the assets were sold to an unrelated third party. The net proceeds from the sale of $81 million were remitted directly to the ARINC pension plan, and have been included as a benefit to the funded status of that plan. The sale had no impact on the Company's Condensed Consolidated Statement of Operations or Condensed Consolidated Statement of Cash Flows. | |||||||||
Concurrent with the sale of the real estate assets, the Company entered into revised lease agreements with the new owner of the Annapolis, Maryland facilities, extending the lease term for a portion of the facility through March 31, 2029. A portion of the leased assets have been classified as a capital lease resulting in the establishment of capital lease assets and offsetting capital lease obligation on the Company's Condensed Consolidated Statement of Financial Position. | |||||||||
Supplemental Pro-Forma Data | |||||||||
The following unaudited supplemental pro-forma data presents consolidated pro-forma information as if the acquisition and related financing had been completed as of the beginning of the prior year, or on October 1, 2013. | |||||||||
The unaudited supplemental pro-forma financial information does not reflect the potential realization of revenue synergies or cost savings, nor does it reflect other costs relating to the integration of the two companies. This pro-forma data should not be considered indicative of the results that would have actually occurred if the acquisition and related financing been consummated on October 1, 2013, nor are they indicative of future results. | |||||||||
The unaudited supplemental pro-forma financial information was calculated by combining the Company's results with the stand-alone results of ARINC for the pre-acquisition period, which were adjusted to account for certain transactions and other costs that would have been incurred during this pre-acquisition period. | |||||||||
Three Months Ended December 31 | |||||||||
(in millions, except per share amounts) | 2014 | 2013 | |||||||
Pro-forma sales | $ | 1,226 | $ | 1,160 | |||||
Pro-forma net income attributable to common shareowners from continuing operations | $ | 169 | $ | 139 | |||||
Pro-forma basic earnings per share from continuing operations | $ | 1.28 | $ | 1.03 | |||||
Pro-forma diluted earnings per share from continuing operations | $ | 1.26 | $ | 1.02 | |||||
The unaudited supplemental pro-forma data above exclude the results of ASES, which the Company intends to divest, as detailed in Note 4. The following significant adjustments were made to account for certain transactions and costs that would have occurred if the acquisition had been completed on October 1, 2013. These adjustments are net of any applicable tax impact and were included to arrive at the pro-forma results above. As the acquisition of ARINC was completed on December 23, 2013, the pro forma adjustments for the three months ended December 31, 2013 in the table below include only the required adjustments through December 23, 2013. | |||||||||
Three Months Ended December 31 | |||||||||
(in millions) | 2014 | 2013 | |||||||
Increases / (decreases) to pro-forma net income: | |||||||||
Net reduction to depreciation resulting from fixed asset purchase accounting adjustments(1) | $ | — | $ | 2 | |||||
Advisory, legal and accounting service fees(2) | — | 20 | |||||||
Amortization of acquired ARINC intangible assets, net(3) | — | (4 | ) | ||||||
(1) This adjustment captures the net impact to depreciation expense resulting from various purchase accounting adjustments to fixed assets | |||||||||
(2) This adjustment reflects the elimination of transaction-related fees incurred by ARINC and Rockwell Collins in connection with the acquisition and assumes all of the fees were incurred during the first quarter of 2013 | |||||||||
(3) This adjustment eliminates amortization of the historical ARINC intangible assets and replaces it with the new amortization for the acquired intangible assets |
Discontinued_Operations_and_Di
Discontinued Operations and Divestitures | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||
Discontinued Operations and Divestitures | Discontinued Operations and Divestitures | ||||||||
On July 25, 2014, the Company sold its satellite communication systems business formerly known as Datapath, Inc. (Datapath). The sales price, which is subject to post-closing adjustments for changes in working capital and other items, was $10 million. The Company recognized a pre-tax loss of $12 million ($2 million after-tax) related to the divestiture of the Datapath business. The high effective tax rate is primarily attributable to differences in the treatment of goodwill for income tax and financial reporting purposes. The operating results of Datapath, including the loss realized on the disposition, have been included in discontinued operations in the Company's Condensed Consolidated Statement of Operations for all periods presented. The Datapath business was formerly included in the Government Systems segment. The divestiture of this business is part of our strategy to reshape the Government Systems segment to align with the changing dynamics of the defense environment and focus on opportunities in addressed markets for the Company's core products and solutions. | |||||||||
The Company also intends to divest ARINC's ASES business, which provides military aircraft integration and modifications, maintenance, and logistics and support, in order to align with the Company's long-term primary business strategies. During the fourth quarter of 2014, the Company entered into an agreement to divest this business. Subsequently, during the quarter ended December 31, 2014, the parties mutually agreed to terminate the agreement and ASES remains classified as held-for-sale. The operating results of ASES are included in discontinued operations in the Company's Condensed Consolidated Statement of Operations for all periods presented. | |||||||||
As of December 31, 2014, the Company has classified $17 million of assets related to ASES as a business held-for-sale within current assets and $12 million of liabilities related to ASES as a business held-for-sale within current liabilities on the Condensed Consolidated Statement of Financial Position. The held-for-sale assets are primarily comprised of Receivables, and the held-for-sale liabilities are primarily comprised of Accounts payable and Other current liabilities. | |||||||||
Results of discontinued operations are as follows: | |||||||||
Three Months Ended December 31 | |||||||||
(in millions) | 2014 | 2013 | |||||||
Sales | $ | 8 | $ | 17 | |||||
(Loss) from discontinued operations before income taxes | (3 | ) | (4 | ) | |||||
Income tax benefit from discontinued operations | 1 | 1 | |||||||
On November 22, 2013, the Company sold its subsidiary, Kaiser Optical Systems, Inc. (KOSI), a supplier of spectrographic instrumentation and applied holographic technology, to Endress+Hauser. The sale price, after post-closing adjustments for changes in working capital, was $23 million. This resulted in a pretax gain of $10 million, which was included in Other income, net during the three months ended December 31, 2013. The divestiture of this business is part of our strategy to reshape the Government Systems segment to align with the changing dynamics of the defense environment and focus on opportunities in addressed markets for the Company's core products and solutions. As part of the divestiture agreement, the Company entered into a long-term supply agreement with the buyer that allows the Company to continue purchasing certain products from KOSI after completion of the sale. As a result of this continuing involvement, the KOSI divestiture did not qualify for classification as a discontinued operation. |
Receivables_Net
Receivables, Net | 3 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Receivables [Abstract] | ||||||||
Receivables, Net | Receivables, Net | |||||||
Receivables, net are summarized as follows: | ||||||||
(in millions) | December 31, | September 30, | ||||||
2014 | 2014 | |||||||
Billed | $ | 764 | $ | 758 | ||||
Unbilled | 456 | 485 | ||||||
Less progress payments | (164 | ) | (198 | ) | ||||
Total | 1,056 | 1,045 | ||||||
Less allowance for doubtful accounts | (12 | ) | (12 | ) | ||||
Receivables, net | $ | 1,044 | $ | 1,033 | ||||
Receivables expected to be collected beyond the next twelve months are classified as long-term and are included within Other Assets. Receivables, net due from equity affiliates were $68 million and $76 million at December 31, 2014 and September 30, 2014, respectively. | ||||||||
Unbilled receivables principally represent sales recorded under the percentage-of-completion method of accounting that have not been billed to customers in accordance with applicable contract terms. |
Inventories_Net
Inventories, Net | 3 Months Ended | |||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||
Inventories, Net | Inventories, Net | |||||||||||||||||||||||
Inventories, net are summarized as follows: | ||||||||||||||||||||||||
(in millions) | December 31, | September 30, | ||||||||||||||||||||||
2014 | 2014 | |||||||||||||||||||||||
Finished goods | $ | 232 | $ | 218 | ||||||||||||||||||||
Work in process | 273 | 262 | ||||||||||||||||||||||
Raw materials, parts and supplies | 375 | 361 | ||||||||||||||||||||||
Less progress payments | (8 | ) | (8 | ) | ||||||||||||||||||||
Total | 872 | 833 | ||||||||||||||||||||||
Pre-production engineering costs | 907 | 876 | ||||||||||||||||||||||
Inventories, net | $ | 1,779 | $ | 1,709 | ||||||||||||||||||||
The Company defers certain pre-production engineering costs during the development phase of a program in connection with long-term supply arrangements that contain contractual guarantees for reimbursement from customers. Such customer guarantees generally take the form of a minimum order quantity with quantified reimbursement amounts if the minimum order quantity is not taken by the customer. These costs are deferred to the extent of the contractual guarantees and are amortized over their estimated useful lives using a units-of-delivery method, up to 15 years. This amortization expense is included as a component of cost of sales. Amortization is based on the Company's expectation of delivery rates on a program-by-program basis and begins when the Company starts recognizing revenue as the Company delivers equipment for the program. The estimated useful life is limited to the amount of time the Company is virtually assured to earn revenues under long-term supply arrangements with the Company's customers. Pre-production engineering costs incurred pursuant to supply arrangements that do not contain contractual guarantees for reimbursement are expensed as incurred. | ||||||||||||||||||||||||
Anticipated annual amortization expense for pre-production engineering costs is as follows: | ||||||||||||||||||||||||
(in millions) | 2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | ||||||||||||||||||
Anticipated amortization expense for pre-production engineering costs | $ | 48 | $ | 77 | $ | 93 | $ | 104 | $ | 104 | $ | 493 | ||||||||||||
Amortization expense for pre-production engineering costs for the three months ended December 31, 2014 and 2013 was $12 million and $6 million, respectively. As of December 31, 2014, the weighted average amortization period remaining for pre-production engineering costs included in Inventories, net was approximately 11 years. |
Property
Property | 3 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Property, Plant and Equipment, Net [Abstract] | ||||||||
Property | Property | |||||||
Property is summarized as follows: | ||||||||
(in millions) | December 31, | September 30, | ||||||
2014 | 2014 | |||||||
Land | $ | 15 | $ | 15 | ||||
Buildings and improvements | 409 | 406 | ||||||
Machinery and equipment | 1,150 | 1,135 | ||||||
Information systems software and hardware | 369 | 369 | ||||||
Furniture and fixtures | 65 | 65 | ||||||
Capital leases | 60 | 60 | ||||||
Construction in progress | 145 | 142 | ||||||
Total | 2,213 | 2,192 | ||||||
Less accumulated depreciation | (1,294 | ) | (1,273 | ) | ||||
Property | $ | 919 | $ | 919 | ||||
A portion of the Company's operations are conducted in leased real estate facilities, including both operating and, to a lesser extent, capital leases. Accumulated depreciation relating to assets under capital lease totaled $3 million and $2 million as of December 31, 2014 and September 30, 2014, respectively. Amortization of assets under capital lease is recorded as depreciation expense. As of December 31, 2014, remaining minimum lease payments for property under capital leases total $86 million, including $28 million of interest. |
Goodwill_and_Intangible_Assets
Goodwill and Intangible Assets | 3 Months Ended | |||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets | |||||||||||||||||||||||
Changes in the carrying amount of goodwill are summarized as follows: | ||||||||||||||||||||||||
(in millions) | Government | Commercial | Information Management Services | Total | ||||||||||||||||||||
Systems | Systems | |||||||||||||||||||||||
Balance at September 30, 2014 | 508 | 262 | 1,093 | 1,863 | ||||||||||||||||||||
ARINC acquisition adjustment | — | — | (3 | ) | (3 | ) | ||||||||||||||||||
Foreign currency translation adjustments and other | (4 | ) | — | — | (4 | ) | ||||||||||||||||||
Balance at December 31, 2014 | $ | 504 | $ | 262 | $ | 1,090 | $ | 1,856 | ||||||||||||||||
The Company performs an annual impairment test of goodwill and indefinite-lived intangible assets during the second quarter of each fiscal year, or at any time there is an indication goodwill or indefinite-lived intangibles are more-likely-than-not impaired, commonly referred to as triggering events. There have been no such triggering events during any of the periods presented. | ||||||||||||||||||||||||
Intangible assets are summarized as follows: | ||||||||||||||||||||||||
December 31, 2014 | September 30, 2014 | |||||||||||||||||||||||
(in millions) | Gross | Accum | Net | Gross | Accum | Net | ||||||||||||||||||
Amort | Amort | |||||||||||||||||||||||
Intangible assets with finite lives: | ||||||||||||||||||||||||
Developed technology and patents | $ | 322 | $ | (183 | ) | $ | 139 | $ | 322 | $ | (178 | ) | $ | 144 | ||||||||||
Backlog | 5 | (1 | ) | 4 | 5 | (1 | ) | 4 | ||||||||||||||||
Customer relationships: | ||||||||||||||||||||||||
Acquired | 336 | (71 | ) | 265 | 336 | (67 | ) | 269 | ||||||||||||||||
Up-front sales incentives | 275 | (50 | ) | 225 | 266 | (47 | ) | 219 | ||||||||||||||||
License agreements | 13 | (9 | ) | 4 | 13 | (9 | ) | 4 | ||||||||||||||||
Trademarks and tradenames | 15 | (14 | ) | 1 | 15 | (14 | ) | 1 | ||||||||||||||||
Intangible assets with indefinite lives: | ||||||||||||||||||||||||
Trademarks and tradenames | 47 | — | 47 | 47 | — | 47 | ||||||||||||||||||
Intangible assets | $ | 1,013 | $ | (328 | ) | $ | 685 | $ | 1,004 | $ | (316 | ) | $ | 688 | ||||||||||
As a result of the ARINC acquisition, the Company has allocated $384 million to finite-lived intangible assets with a weighted average life of approximately 15 years and $47 million to indefinite-lived intangible assets. | ||||||||||||||||||||||||
Rockwell Collins provides up-front sales incentives prior to delivering products or performing services to certain commercial customers in connection with sales contracts. Up-front sales incentives are recorded as a Customer relationship intangible asset and are amortized using a units-of-delivery method over the period the Company has received a contractually enforceable right related to the incentives, up to 15 years. Amortization is based on the Company's expectation of delivery rates on a program-by-program basis. Amortization begins when the Company starts recognizing revenue as the Company delivers equipment for the program. | ||||||||||||||||||||||||
Up-front sales incentives consisting of cash payments or customer account credits are amortized as a reduction of sales, whereas incentives consisting of free products are amortized as cost of sales. As of December 31, 2014, the weighted average amortization period remaining for up-front sales incentives was approximately 11 years. | ||||||||||||||||||||||||
Anticipated annual amortization expense for intangible assets is as follows: | ||||||||||||||||||||||||
(in millions) | 2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | ||||||||||||||||||
Anticipated amortization expense for up-front sales incentives | $ | 12 | $ | 18 | $ | 18 | $ | 20 | $ | 22 | $ | 138 | ||||||||||||
Anticipated amortization expense for intangibles acquired in ARINC acquisition | 26 | 26 | 26 | 26 | 25 | 234 | ||||||||||||||||||
Anticipated amortization expense for all other intangible assets | 13 | 12 | 11 | 6 | 4 | 13 | ||||||||||||||||||
Total | $ | 51 | $ | 56 | $ | 55 | $ | 52 | $ | 51 | $ | 385 | ||||||||||||
Amortization expense for intangible assets for the three months ended December 31, 2014 and 2013 was $12 million and $6 million respectively. | ||||||||||||||||||||||||
The Company reviews Intangible assets for impairment at least annually, or whenever potential indicators of impairment exist. |
Other_Assets
Other Assets | 3 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Other Assets [Abstract] | ||||||||
Other Assets | Other Assets | |||||||
Other assets are summarized as follows: | ||||||||
(in millions) | December 31, | September 30, | ||||||
2014 | 2014 | |||||||
Long-term receivables | $ | 84 | $ | 84 | ||||
Investments in equity affiliates | 8 | 8 | ||||||
Exchange and rental assets (net of accumulated depreciation of $95 at December 31, 2014 and $94 at September 30, 2014) | 62 | 61 | ||||||
Other | 146 | 135 | ||||||
Other assets | $ | 300 | $ | 288 | ||||
Investments in Equity Affiliates | ||||||||
Investments in equity affiliates primarily consist of seven joint ventures, which are accounted for under the equity method. Under the equity method of accounting for investments, the Company's proportionate share of earnings or losses of its equity affiliates are included in Net income and classified as Other income, net in the Condensed Consolidated Statement of Operations. | ||||||||
All of the Company's joint ventures are 50 percent owned. For segment performance reporting purposes, Rockwell Collins’ share of earnings or losses of Rockwell Collins Elbit Systems of America (ESA), Data Link Solutions (DLS), Integrated Guidance Systems (IGS) and Quest Flight Training Limited are included in the operating results of the Government Systems segment. The results of Rockwell Collins CETC Avionics Co., Ltd (RCCAC) and AVIC Leihua Rockwell Collins Avionics Company (ALRAC) are included in the operating results of the Commercial Systems segment, and ADARI Aviation Technology Limited (ADARI) is included in the operating results of the Information Management Services segment. | ||||||||
In the normal course of business or pursuant to the underlying joint venture agreements, the Company may sell products or services to equity affiliates. The Company defers a portion of the profit generated from these sales equal to its ownership interest in the equity affiliates until the underlying product is ultimately sold to an unrelated third party. Sales to equity affiliates were $39 million and $38 million for the three months ended December 31, 2014 and 2013, respectively. The deferred portion of profit generated from sales to equity affiliates was $1 million at December 31, 2014 and $1 million at September 30, 2014. | ||||||||
Exchange and Rental Assets | ||||||||
Exchange and rental assets consist primarily of Company products that are either exchanged or rented to customers on a short-term basis in connection with warranty and other service related activities. These assets are recorded at acquisition or production cost and depreciated using the straight-line method over their estimated lives, up to 15 years. Depreciation methods and lives are reviewed periodically with any changes recorded on a prospective basis. Depreciation expense for exchange and rental assets was $2 million and $2 million for the three months ended December 31, 2014 and 2013, respectively. |
Debt
Debt | 3 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Debt Disclosure [Abstract] | ||||||||
Debt | Debt | |||||||
Commercial Paper Program | ||||||||
Under the Company’s commercial paper program, the Company may sell up to $1 billion face amount of unsecured short-term promissory notes in the commercial paper market. The commercial paper notes may bear interest or may be sold at a discount, and have a maturity of not more than 364 days from the time of issuance. The commercial paper program is supported by the Company's $1 billion five-year revolving credit facility. At December 31, 2014, short-term commercial paper borrowings outstanding were $831 million with a weighted-average interest rate and maturity period of 0.42 percent and 22 days, respectively. At September 30, 2014, short term commercial paper borrowings outstanding were $504 million with a weighted-average interest rate and maturity period of 0.32 percent and 29 days, respectively. | ||||||||
Revolving Credit Facilities | ||||||||
On September 24, 2013, the Company entered into new credit agreements to ensure adequate commercial paper borrowing capacity in anticipation of the Company's then pending ARINC acquisition and to meet other short-term cash requirements. The Company closed on these new revolving credit facilities on December 23, 2013, concurrent with the ARINC acquisition closing date. These new credit facilities consist of a five-year $1 billion credit facility that expires in December 2018 and a 364-day $200 million credit facility that expired in December 2014 and was not renewed. These agreements replaced the prior $850 million revolving credit facility that was terminated concurrently upon the closing of the new agreements. | ||||||||
The credit facilities include one financial covenant requiring the Company to maintain a consolidated debt to total capitalization ratio of not greater than 60 percent. The ratio excludes the equity impact on accumulated other comprehensive loss related to defined benefit retirement plans. The ratio was 44 percent as of December 31, 2014. The credit facilities also contain covenants that require the Company to satisfy certain conditions in order to incur debt secured by liens, engage in sale/leaseback transactions or merge or consolidate with another entity. Borrowings under these credit facilities bear interest at the London Interbank Offered Rate (LIBOR) plus a variable margin based on the Company’s unsecured long-term debt rating or, at the Company’s option, rates determined by competitive bid. At December 31, 2014 and September 30, 2014 there were no outstanding borrowings under these revolving credit facilities. | ||||||||
In addition, short-term credit facilities available to non-U.S. subsidiaries amounted to $41 million as of December 31, 2014, of which $12 million was utilized to support commitments in the form of commercial letters of credit. At | ||||||||
December 31, 2014 and September 30, 2014, there were no short-term borrowings outstanding under the Company’s non-U.S. subsidiaries’ credit facilities. | ||||||||
At December 31, 2014 and September 30, 2014, there were no significant commitment fees or compensating balance requirements under any of the Company’s credit facilities. | ||||||||
December 2013 Long-term Debt Issuances | ||||||||
On December 16, 2013, the Company issued $300 million of floating rate unsecured debt due December 15, 2016 (the 2016 Notes). The 2016 Notes bear annual interest at a rate equal to three-month LIBOR plus 0.35 percent. As of December 31, 2014 the quarterly interest rate was 0.59 percent. The rate resets quarterly. The net proceeds to the Company from the 2016 Notes, after deducting $1 million of debt issuance costs, were $299 million. | ||||||||
On December 16, 2013, the Company issued $400 million of 3.7 percent fixed rate unsecured debt due December 15, 2023 (the 2023 Notes). The net proceeds to the Company from the 2023 Notes, after deducting a $1 million discount and $3 million of debt issuance costs, were $396 million. In March 2014, the Company entered into interest rate swap contracts which effectively converted $200 million of the 2023 Notes to floating rate debt based on one-month LIBOR plus 0.94 percent. See Notes 16 and 17 for additional information relating to the interest rate swap contracts. | ||||||||
On December 16, 2013, the Company issued $400 million of 4.8 percent fixed rate unsecured debt due December 15, 2043 (the 2043 Notes). The net proceeds to the Company from the 2043 Notes, after deducting a $2 million discount and $4 million of debt issuance costs, were $394 million. | ||||||||
The net proceeds after discounts and debt issuance costs from the December 16, 2013 debt issuances totaled $1,089 million. Approximately $900 million was used to finance the ARINC acquisition and approximately $200 million was used to refinance the 2013 Notes that matured on December 1, 2013. The remaining ARINC purchase price was funded using commercial paper proceeds. | ||||||||
Other Long-term Debt | ||||||||
On November 16, 2011, the Company issued $250 million of 3.10 percent fixed rate unsecured debt due November 15, 2021 (the 2021 Notes). | ||||||||
On May 6, 2009, the Company issued $300 million of 5.25 percent fixed rate unsecured debt due July 15, 2019 (the 2019 Notes). In January 2010, the Company entered into interest rate swap contracts which effectively converted $150 million of the 2019 Notes to floating rate debt based on six-month LIBOR plus 1.235 percent. See Notes 16 and 17 for additional information relating to the interest rate swap contracts. | ||||||||
The 2043, 2023, 2021, 2019 and 2016 Notes are included in the Condensed Consolidated Statement of Financial Position net of any unamortized discount within the caption Long-term Debt, Net. The debt issuance costs are capitalized within Other Assets on the Condensed Consolidated Statement of Financial Position. The debt issuance costs and any discounts are amortized over the life of the debt and are recorded in Interest expense. | ||||||||
The 2043, 2023, 2021, 2019 and 2016 Notes each contain covenants that require the Company to satisfy certain conditions in order to incur debt secured by liens, engage in sales/leaseback transactions, merge or consolidate with another entity or transfer substantially all of the Company’s assets. The Company was in compliance with all debt covenants at December 31, 2014 and September 30, 2014. | ||||||||
Long-term debt is summarized as follows: | ||||||||
(in millions) | December 31, | September 30, 2014 | ||||||
2014 | ||||||||
Principal amount of 2043 Notes, net of discount | $ | 398 | $ | 398 | ||||
Principal amount of 2023 Notes, net of discount | 399 | 399 | ||||||
Principal amount of 2021 Notes, net of discount | 250 | 249 | ||||||
Principal amount of 2019 Notes, net of discount | 299 | 299 | ||||||
Principal amount of 2016 Notes | 300 | 300 | ||||||
Fair value swap adjustment (Notes 16 and 17) | 24 | 18 | ||||||
Long-term debt, net | $ | 1,670 | $ | 1,663 | ||||
Interest paid on debt for the three months ended December 31, 2014 and 2013 was $20 million and $8 million, respectively. |
Retirement_Benefits
Retirement Benefits | 3 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Compensation and Retirement Disclosure [Abstract] | ||||||||
Pension and Other Postretirement Benefits Disclosure [Text Block] | The components of expense for Other Retirement Benefits for the three months ended December 31, 2014 and 2013 are as follows: | |||||||
Three Months Ended | ||||||||
31-Dec | ||||||||
(in millions) | 2014 | 2013 | ||||||
Interest cost | $ | 1 | $ | 2 | ||||
Amortization: | ||||||||
Prior service credit | (1 | ) | (2 | ) | ||||
Net actuarial loss | 2 | 2 | ||||||
Net benefit expense | $ | 2 | $ | 2 | ||||
Retirement Benefits | ||||||||
The Company sponsors defined benefit pension (Pension Benefits) and other postretirement (Other Retirement Benefits) plans which provide monthly pension and other benefits to eligible employees upon retirement. | ||||||||
Pension Benefits | ||||||||
The components of expense (income) for Pension Benefits for the three months ended December 31, 2014 and 2013 are as follows: | ||||||||
Three Months Ended | ||||||||
31-Dec | ||||||||
(in millions) | 2014 | 2013 | ||||||
Service cost | $ | 3 | $ | 2 | ||||
Interest cost | 39 | 40 | ||||||
Expected return on plan assets | (60 | ) | (53 | ) | ||||
Amortization: | ||||||||
Prior service credit | (1 | ) | (3 | ) | ||||
Net actuarial loss | 18 | 17 | ||||||
Net benefit expense (income) | $ | (1 | ) | $ | 3 | |||
Other Retirement Benefits | ||||||||
The components of expense for Other Retirement Benefits for the three months ended December 31, 2014 and 2013 are as follows: | ||||||||
Three Months Ended | ||||||||
31-Dec | ||||||||
(in millions) | 2014 | 2013 | ||||||
Interest cost | $ | 1 | $ | 2 | ||||
Amortization: | ||||||||
Prior service credit | (1 | ) | (2 | ) | ||||
Net actuarial loss | 2 | 2 | ||||||
Net benefit expense | $ | 2 | $ | 2 | ||||
Pension Plan Funding | ||||||||
The Company’s objective with respect to the funding of its pension plans is to provide adequate assets for the payment of future benefits. Pursuant to this objective, the Company will fund its pension plans as required by governmental regulations and may consider discretionary contributions as conditions warrant. In October 2014, the Company voluntarily contributed $55 million to its U.S. qualified pension plan. There was no minimum statutory funding requirement for 2015 and the Company does not currently expect to make any additional discretionary contributions during 2015 to this plan. Furthermore, the Company is not required to make, and does not intend to make, any contributions to the ARINC pension plans during 2015. Any additional future contributions necessary to satisfy minimum statutory funding requirements are dependent upon actual plan asset returns, interest rates, and actuarial assumptions. Contributions to the non-U.S. plans and the U.S. non-qualified plan are expected to total $14 million in 2015. | ||||||||
ARINC Pension Plan and Other Retirement Benefits | ||||||||
ARINC sponsors two primary pension sub-plans: one for union employees and one for non-union employees. ARINC also provides postretirement health coverage for many of its current and former employees and postretirement | ||||||||
life insurance benefits for certain retirees. The ARINC pension and postretirement benefit obligations are included within Retirement Benefits as liabilities on the Company's Condensed Consolidated Statement of Financial Position as of December 31, 2014. |
StockBased_Compensation_and_Ea
Stock-Based Compensation and Earnings Per Share | 3 Months Ended | |||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||
Stock Based Compensation and Earnings Per Share Abstract | ||||||||||||||||||
Stock-Based Compensation and Earnings Per Share | Stock-Based Compensation and Earnings Per Share | |||||||||||||||||
Stock-based compensation expense and related income tax benefit included within the Condensed Consolidated Statement of Operations is as follows: | ||||||||||||||||||
Three Months Ended December 31 | ||||||||||||||||||
(in millions) | 2014 | 2013 | ||||||||||||||||
Stock-based compensation expense included in: | ||||||||||||||||||
Product cost of sales | $ | 2 | $ | 2 | ||||||||||||||
Selling, general and administrative expenses | 3 | 3 | ||||||||||||||||
Total | $ | 5 | $ | 5 | ||||||||||||||
Income tax benefit | $ | 2 | $ | 2 | ||||||||||||||
The Company issued awards of equity instruments under the Company's various incentive plans for the three months ended December 31, 2014 and 2013 as follows: | ||||||||||||||||||
Options | Performance Shares | Restricted Stock Units | ||||||||||||||||
(shares in thousands) | Number Issued | Weighted Average Fair Value | Number Issued | Weighted Average Fair Value | Number Issued | Weighted Average Fair Value | ||||||||||||
Three months ended December 31, 2014 | 555.6 | $ | 19.6 | 129.7 | $ | 82.63 | 52.8 | $ | 83.6 | |||||||||
Three months ended December 31, 2013 | 530.5 | 18.42 | 137.3 | 70.97 | 58.4 | 70.9 | ||||||||||||
The maximum number of shares of common stock that can be issued in respect of performance shares granted in 2015 based on the achievement of performance targets for fiscal years 2015 through 2017 is approximately 311,000. | ||||||||||||||||||
The fair value of each option granted by the Company was estimated using a binomial lattice pricing model and the following weighted average assumptions: | ||||||||||||||||||
2015 Grants | 2014 Grants | |||||||||||||||||
Risk-free interest rate | 0.6% - 2.5% | 0.3% - 3.0% | ||||||||||||||||
Expected dividend yield | 1.6 | % | 1.9 | % | ||||||||||||||
Expected volatility | 24 | % | 28 | % | ||||||||||||||
Expected life | 7 years | 7 years | ||||||||||||||||
Employee Benefits Paid in Company Stock | ||||||||||||||||||
During the three months ended December 31, 2014 and 2013, 0.1 million and 0.2 million shares, respectively, of the Company's common stock were issued to employees under the Company's employee stock purchase and defined contribution savings plans at a value of $11 million and $12 million for the respective periods. | ||||||||||||||||||
Earnings Per Share and Diluted Share Equivalents | ||||||||||||||||||
The computation of basic and diluted earnings per share is as follows: | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||
31-Dec | ||||||||||||||||||
(in millions, except per share amounts) | 2014 | 2013 | ||||||||||||||||
Numerator for basic and diluted earnings per share: | ||||||||||||||||||
Income from continuing operations | $ | 169 | $ | 134 | ||||||||||||||
Income (loss) from discontinued operations, net of taxes | (2 | ) | (3 | ) | ||||||||||||||
Net income | $ | 167 | $ | 131 | ||||||||||||||
Denominator: | ||||||||||||||||||
Denominator for basic earnings per share – weighted average common shares | 133 | 135.2 | ||||||||||||||||
Effect of dilutive securities: | ||||||||||||||||||
Stock options | 1.1 | 1.1 | ||||||||||||||||
Performance shares, restricted stock and restricted stock units | 0.4 | 0.4 | ||||||||||||||||
Dilutive potential common shares | 1.5 | 1.5 | ||||||||||||||||
Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversion | 134.5 | 136.7 | ||||||||||||||||
Earnings (loss) per share: | ||||||||||||||||||
Basic | ||||||||||||||||||
Continuing operations | $ | 1.28 | $ | 0.99 | ||||||||||||||
Discontinued operations | (0.02 | ) | (0.02 | ) | ||||||||||||||
Basic earnings per share | $ | 1.26 | $ | 0.97 | ||||||||||||||
Diluted | ||||||||||||||||||
Continuing operations | $ | 1.26 | $ | 0.98 | ||||||||||||||
Discontinued operations | (0.02 | ) | (0.02 | ) | ||||||||||||||
Diluted earnings per share | $ | 1.24 | $ | 0.96 | ||||||||||||||
The average outstanding diluted shares calculation excludes options with an exercise price that exceeds the average market price of shares during the period. Stock options excluded from the average outstanding diluted shares calculation were 0.6 million, and 0.9 million for the three months ended December 31, 2014 and 2013, respectively. | ||||||||||||||||||
Earnings per share amounts are computed independently each quarter. As a result, the sum of each quarter's per share amount may not equal the total per share amount for the full year. |
Shareowners_Equity
Shareowners' Equity | 3 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||
Shareowners' Equity | Changes in accumulated other comprehensive loss (AOCL), net of tax, by component for the three months ended December 31, 2014 are as follows: | ||||||||||||||||
Foreign Exchange Translation Adjustment | Pension and Other Postretirement Adjustments (1) | Change in the Fair Value of Effective Cash Flow Hedges | Total | ||||||||||||||
Balance at September 30, 2014 | $ | (15 | ) | $ | (1,348 | ) | $ | (3 | ) | $ | (1,366 | ) | |||||
Other comprehensive loss before reclassifications | (14 | ) | — | (5 | ) | (19 | ) | ||||||||||
Amounts reclassified from accumulated other comprehensive loss | — | 11 | 1 | 12 | |||||||||||||
Net current period other comprehensive income/(loss) | (14 | ) | 11 | (4 | ) | (7 | ) | ||||||||||
Balance at December 31, 2014 | $ | (29 | ) | $ | (1,337 | ) | $ | (7 | ) | $ | (1,373 | ) | |||||
(1) Reclassifications from AOCL to net income, related to the amortization of net actuarial losses and prior service credits for the Company's retirement benefit plans, were $18 million ($11 million net of tax), for the quarter ended December 31, 2014. The reclassifications are included in the computation of net benefit expense. See Note 11, Retirement Benefits for additional details. |
Other_Income_Net
Other Income, Net | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Nonoperating Income (Expense) [Abstract] | |||||||||
Other Income, Net | Other Income, Net | ||||||||
Other income, net consists of the following for the three months ended December 31, 2014 and 2013: | |||||||||
Three Months Ended December 31 | |||||||||
(in millions) | 2014 | 2013 | |||||||
Earnings from equity affiliates | $ | — | $ | 3 | |||||
Gain from business divestiture | — | 10 | |||||||
Other | 1 | — | |||||||
Other income, net | $ | 1 | $ | 13 | |||||
Income_Taxes
Income Taxes | 3 Months Ended |
Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes |
At the end of each interim reporting period, the Company makes an estimate of the annual effective income tax rate. Tax items included in the annual effective income tax rate are pro-rated for the full year and tax items discrete to a specific quarter are included in the effective income tax rate for that quarter. The estimate used in providing for income taxes on a year-to-date basis may change in subsequent interim periods. | |
During the three months ended December 31, 2014 and 2013, the effective income tax rate from continuing operations was 22.5 percent and 27.2 percent, respectively. The lower current year effective income tax rate from continuing operations was primarily due to the retroactive extension of the Federal R&D Tax Credit which had previously expired on December 31, 2013, partially offset by the absence of the recognition of a tax benefit related to prior years' Extraterritorial Income Exclusion deductions. On December 19, 2014, the Tax Increase Prevention Act of 2014 was enacted, which retroactively reinstated and extended the Federal R&D Tax Credit from January 1, 2014 through December 31, 2014. | |
The Company's U.S. Federal income tax returns for the tax year ended September 30, 2011 and prior years have been audited by the IRS and are closed to further adjustments by the IRS. The IRS is currently auditing the Company's tax returns for the years ended September 30, 2012 and 2013. ARINC's U.S. Federal income tax returns are currently under audit by the IRS for the tax years ended December 31, 2009 and December 31, 2012 and are closed to further adjustments by the IRS for all tax years ended December 31, 2008 and prior. The Company and ARINC are also currently under audit in various U.S. states and non-U.S. jurisdictions. The U.S. states and non-U.S. jurisdictions have statutes of limitations generally ranging from 3 to 5 years. The Company believes it has adequately provided for any tax adjustments that may result from the various audits. | |
The Company had net income tax payments of $23 million and $49 million during the three months ended December 31, 2014 and 2013, respectively. | |
The Company has gross unrecognized tax benefits recorded within Other Liabilities in the Condensed Consolidated Statement of Financial Position of $55 million and $48 million as of December 31, 2014 and September 30, 2014, respectively. The total amount of unrecognized tax benefits that, if recognized, would affect the effective income tax rate was $31 million and $25 million as of December 31, 2014 and September 30, 2014, respectively. Although the timing and outcome of tax settlements are uncertain, it is reasonably possible that during the next 12 months a reduction in unrecognized tax benefits may occur in the range of $0 to $1 million based on the outcome of tax examinations or as a result of the expiration of various statutes of limitations. | |
The Company includes interest and penalties related to unrecognized tax benefits in income tax expense. The total amount of interest and penalties recognized within Other Liabilities in the Condensed Consolidated Statement of Financial Position was $2 million and $1 million as of December 31, 2014 and September 30, 2014, respectively. The total amount of interest and penalties recorded as an expense or (income) within Income tax expense in the Condensed Consolidated Statement of Operations was $0 million for each of the three months ended December 31, 2014 and 2013, respectively. |
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||
Fair Value Measurements | Fair Value Measurements | |||||||||||||||
The FASB defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The FASB’s guidance classifies the inputs used to measure fair value into the following hierarchy: | ||||||||||||||||
Level 1 - | quoted prices (unadjusted) in active markets for identical assets or liabilities | |||||||||||||||
Level 2 - | quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument | |||||||||||||||
Level 3 - | unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value | |||||||||||||||
A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. | ||||||||||||||||
The fair value of the Company's financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 and September 30, 2014 are as follows: | ||||||||||||||||
December 31, 2014 | September 30, 2014 | |||||||||||||||
(in millions) | Fair Value | Fair Value | Fair Value | |||||||||||||
Hierarchy | Asset (Liability) | Asset (Liability) | ||||||||||||||
Deferred compensation plan investments | Level 1 | $ | 53 | $ | 50 | |||||||||||
Interest rate swap assets | Level 2 | 24 | 18 | |||||||||||||
Foreign currency forward exchange contract assets | Level 2 | 6 | 6 | |||||||||||||
Foreign currency forward exchange contract liabilities | Level 2 | (13 | ) | (9 | ) | |||||||||||
There were no transfers between Levels of the fair value hierarchy during the three months ended December 31, 2014 or 2013. | ||||||||||||||||
The carrying amounts and fair values of the Company's financial instruments are as follows: | ||||||||||||||||
Asset (Liability) | ||||||||||||||||
December 31, 2014 | September 30, 2014 | |||||||||||||||
(in millions) | Carrying | Fair | Carrying | Fair | ||||||||||||
Amount | Value | Amount | Value | |||||||||||||
Cash and cash equivalents | $ | 315 | $ | 315 | $ | 323 | $ | 323 | ||||||||
Short-term debt | (831 | ) | (831 | ) | (504 | ) | (504 | ) | ||||||||
Long-term debt | (1,646 | ) | (1,788 | ) | (1,645 | ) | (1,747 | ) | ||||||||
The fair value of cash and cash equivalents and short-term debt approximates their carrying value due to the short-term nature of the instruments. These items are within Level 1 of the fair value hierarchy. Fair value information for all long-term debt is within Level 2 of the fair value hierarchy. The fair value of these financial instruments was based on current market interest rates and estimates of current market conditions for instruments with similar terms, maturities and degree of risk. The carrying amount and fair value of short-term and long-term debt excludes the interest rate swaps fair value adjustment. These fair value estimates do not necessarily reflect the amounts the Company would realize in a current market exchange. |
Derivative_Financial_Instrumen
Derivative Financial Instruments | 3 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||
Derivative Financial Instruments | Derivative Financial Instruments | |||||||||
Interest Rate Swaps | ||||||||||
The Company manages its exposure to interest rate risk by maintaining a mix of fixed and variable rate debt, which over time should moderate the costs of debt financing. When considered necessary, the Company may use financial instruments in the form of interest rate swaps to help meet this objective. In March, 2014 the Company entered into three interest rate swap contracts (the 2023 Swaps) which expire on December 15, 2023 and effectively converted $200 million of the 2023 Notes to floating rate debt based on one-month LIBOR plus 0.94 percent. | ||||||||||
In January 2010, the Company entered into two interest rate swap contracts (the 2019 Swaps) which expire on July 15, 2019 and effectively converted $150 million of the 2019 Notes to floating rate debt based on six-month LIBOR plus 1.235 percent. | ||||||||||
The Company designated the 2019 and 2023 Swaps (the Swaps) as fair value hedges. The 2019 and 2023 Swaps are recorded within Other Assets at a fair value of $24 million, offset by a fair value adjustment to Long-term Debt (Note 10) of $24 million at December 31, 2014. At September 30, 2014, the Swaps were recorded within Other Assets at a fair value of $18 million, offset by a fair value adjustment to Long-term Debt (Note 10) of $18 million. Cash payments or receipts between the Company and the counterparties to the Swaps are recorded as an adjustment to interest expense. | ||||||||||
Forward Starting Interest Rate Swaps | ||||||||||
In September 2013, the Company entered into forward starting interest rate swap agreements with combined notional values of $200 million to effectively lock in fixed interest rates on a portion of the long-term debt it incurred in December 2013 to refinance maturing debt and to fund the acquisition of ARINC. In October 2013, the Company entered into an additional $300 million notional value of forward starting interest rate swap agreements. These forward starting interest rate swaps were designated as cash flow hedges and were executed to hedge the risk of potentially higher benchmark U.S. Treasury bond yields on long-term debt with maturities ranging from 2023 to 2043 and fixed interest rates ranging between 2.8150 percent and 3.8775 percent. The forward starting interest rate swaps were terminated in December 2013 concurrent with the Company's debt issuance. Upon termination, the forward starting swaps were valued at a net loss of $2 million. This net loss has been deferred within Accumulated other comprehensive losses in the Condensed Consolidated Statement of Financial Position and will be amortized into interest expense over the life of the corresponding debt. | ||||||||||
Foreign Currency Forward Exchange Contracts | ||||||||||
The Company transacts business in various foreign currencies which subjects the Company’s cash flows and earnings to exposure related to changes in foreign currency exchange rates. These exposures arise primarily from purchases or sales of products and services from third parties and intercompany transactions. Foreign currency forward exchange contracts provide for the purchase or sale of foreign currencies at specified future dates at specified exchange rates and are used to offset changes in the fair value of certain assets or liabilities or forecasted cash flows resulting from transactions denominated in foreign currencies. As of December 31, 2014 and September 30, 2014, the Company had outstanding foreign currency forward exchange contracts with notional amounts of $329 million and $575 million, respectively. These notional values consist primarily of contracts for the European euro, British pound sterling and Japanese yen, and are stated in U.S. dollar equivalents at spot exchange rates at the respective dates. | ||||||||||
Fair Value of Derivative Instruments | ||||||||||
Fair values of derivative instruments in the Condensed Consolidated Statement of Financial Position as of December 31, 2014 and September 30, 2014 are as follows: | ||||||||||
Asset Derivatives | ||||||||||
(in millions) | Classification | December 31, | September 30, 2014 | |||||||
2014 | ||||||||||
Foreign currency forward exchange contracts | Other current assets | $ | 6 | $ | 6 | |||||
Interest rate swaps | Other assets | 24 | 18 | |||||||
Total | $ | 30 | $ | 24 | ||||||
Liability Derivatives | ||||||||||
(in millions) | Classification | December 31, | September 30, 2014 | |||||||
2014 | ||||||||||
Foreign currency forward exchange contracts | Other current liabilities | $ | 13 | $ | 9 | |||||
The fair values of derivative instruments are presented on a gross basis as the Company does not have any derivative contracts which are subject to master netting arrangements. As of December 31, 2014 there were undesignated foreign currency forward exchange contracts classified within other current assets of $0 million and other current liabilities of $1 million. | ||||||||||
The effect of derivative instruments on the Condensed Consolidated Statement of Operations for the three months ended December 31, 2014 and 2013 is as follows: | ||||||||||
Amount of Gain (Loss) | ||||||||||
Three Months Ended | ||||||||||
31-Dec | ||||||||||
(in millions) | Location of Gain (Loss) | 2014 | 2013 | |||||||
Derivatives Designated as Hedging Instruments: | ||||||||||
Fair Value Hedges | ||||||||||
Interest rate swaps | Interest expense | $ | 3 | $ | 2 | |||||
Cash Flow Hedges | ||||||||||
Foreign currency forward exchange contracts: | ||||||||||
Amount of (loss) recognized in AOCL (effective portion, before deferred tax impact) | AOCL | (7 | ) | (3 | ) | |||||
Amount of (loss) reclassified from AOCL into income | Cost of sales | (1 | ) | (1 | ) | |||||
Forward starting interest rate swaps: | ||||||||||
Amount of gain recognized in AOCL (effective portion, before deferred tax impact) | AOCL | — | 3 | |||||||
Derivatives Not Designated as Hedging Instruments: | ||||||||||
Foreign currency forward exchange contracts | Cost of sales | (2 | ) | — | ||||||
There was no significant impact to the Company’s earnings related to the ineffective portion of any hedging instruments during the three months ended December 31, 2014. In addition, there was no significant impact to the Company’s earnings when a hedged firm commitment no longer qualified as a fair value hedge or when a hedged forecasted transaction no longer qualified as a cash flow hedge during the three months ended December 31, 2014. | ||||||||||
The Company did not have any hedges with credit-risk-related contingent features or that required the posting of collateral as of December 31, 2014. The cash flows from derivative contracts are recorded in operating activities in the Condensed Consolidated Statement of Cash Flows. | ||||||||||
Cash flow hedges are de-designated once the underlying transaction is recorded on the balance sheet, or approximately 60 days from the maturity date of the hedge. The Company expects to reclassify approximately $6 million of net losses into earnings over the next 12 months. The maximum duration of a foreign currency cash flow hedge contract at December 31, 2014 was 67 months. |
Guarantees_and_Indemnification
Guarantees and Indemnifications | 3 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Guarantees and Indemnifications Abstract | ||||||||
Guarantees and Indemnifications | Guarantees and Indemnifications | |||||||
Product warranty costs | ||||||||
Accrued liabilities are recorded to reflect the Company’s contractual obligations relating to warranty commitments to customers. Warranty coverage of various lengths and terms is provided to customers depending on standard offerings and negotiated contractual agreements. An estimate for warranty expense is recorded at the time of sale based on the length of the warranty and historical warranty return rates and repair costs. | ||||||||
Changes in the carrying amount of accrued product warranty costs are summarized as follows: | ||||||||
Three Months Ended | ||||||||
December 31 | ||||||||
(in millions) | 2014 | 2013 | ||||||
Balance at beginning of year | $ | 104 | $ | 121 | ||||
Warranty costs incurred | (11 | ) | (11 | ) | ||||
Product warranty accrual | 11 | 12 | ||||||
Changes in estimates for prior years | — | (6 | ) | |||||
Foreign currency translation adjustments and other | (1 | ) | — | |||||
Balance at December 31 | $ | 103 | $ | 116 | ||||
Guarantees | ||||||||
The Company provides a parent company guarantee related to various obligations of its 50 percent owned joint venture, Quest Flight Training Limited (Quest). The Company has guaranteed, jointly and severally with Quadrant Group plc (Quadrant), the other joint venture partner, the performance of Quest in relation to its contract with the United Kingdom Ministry of Defence (which expires in 2030) and the performance of certain Quest subcontractors (up to $2 million). In addition, the Company has also pledged equity shares in Quest to guarantee payment by Quest of a loan agreement executed by Quest. In the event of default on this loan agreement, the lending institution can request that the trustee holding such equity shares surrender them to the lending institution in order to satisfy all amounts then outstanding under the loan agreement. As of December 31, 2014, the outstanding loan balance was approximately $3 million. Quadrant has made an identical pledge to guarantee this obligation of Quest. | ||||||||
Should Quest fail to meet its obligations under these agreements, these guarantees may become a liability of the Company. As of December 31, 2014, the Quest guarantees are not reflected on the Company’s Condensed Consolidated Statement of Financial Position because the Company believes that Quest will meet all of its performance and financial obligations in relation to its contract with the United Kingdom Ministry of Defence and the loan agreement. | ||||||||
Letters of credit | ||||||||
The Company has contingent commitments in the form of letters of credit. Outstanding letters of credit are issued by banks on the Company’s behalf to support certain contractual obligations to its customers. If the Company fails to meet these contractual obligations, these letters of credit may become liabilities of the Company. Total outstanding letters of credit at December 31, 2014 were $280 million. These commitments are not reflected as liabilities on the Company’s Condensed Consolidated Statement of Financial Position. | ||||||||
Indemnifications | ||||||||
The Company enters into indemnifications with lenders, counterparties in transactions such as administration of employee benefit plans and other customary indemnifications with third parties in the normal course of business. The following are other than customary indemnifications based on the judgment of management: | ||||||||
In connection with agreements for the sale of portions of its business, the Company at times retains various liabilities of a business that relate to events occurring prior to its sale, such as tax, environmental, litigation and employment matters. The Company at times indemnifies the purchaser of a Rockwell Collins business in the event that a third party asserts a claim that relates to a liability retained by the Company. | ||||||||
The Company also provides indemnifications of varying scope and amounts to certain customers against claims of product liability or intellectual property infringement made by third parties arising from the use of Company or customer products or intellectual property. These indemnifications generally require the Company to compensate the other party for certain damages and costs incurred as a result of third party product liability or intellectual property claims arising from these transactions. | ||||||||
The amount the Company could be required to pay under its indemnification agreements is generally limited based on amounts specified in the underlying agreements, or in the case of some agreements, the maximum potential amount of future payments that could be required is not limited. When a potential claim is asserted under these agreements, the Company considers such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. A liability is recorded when a potential claim is both probable and estimable. The nature of these agreements prevents the Company from making a reasonable estimate of the maximum potential amount it could be required to pay should counterparties to these agreements assert a claim; however, the Company currently has no material claims pending related to such agreements. |
Environmental_Matters
Environmental Matters | 3 Months Ended |
Dec. 31, 2014 | |
Environmental Remediation Obligations [Abstract] | |
Environmental Matters | Environmental Matters |
The Company is subject to federal, state and local regulations relating to the discharge of substances into the environment, the disposal of hazardous wastes and other activities affecting the environment that have had and will continue to have an impact on the Company’s manufacturing operations. These environmental protection regulations may require the investigation and remediation of environmental impairments at current and previously owned or leased properties. In addition, lawsuits, claims and proceedings have been asserted on occasion against the Company alleging violations of environmental protection regulations, or seeking remediation of alleged environmental impairments, principally at previously owned or leased properties. As of December 31, 2014, the Company is involved in the investigation or remediation of eight sites under these regulations or pursuant to lawsuits asserted by third parties. Management estimates that the total reasonably possible future costs the Company could incur for seven of these sites is not significant. Management estimates that the total reasonably possible future costs the Company could incur from one of these sites to be approximately $12 million. The Company has recorded environmental reserves for this site of $6 million as of December 31, 2014, which represents management’s best estimate of the probable future cost for this site. | |
To date, compliance with environmental regulations and resolution of environmental claims has been accomplished without material effect on the Company’s liquidity and capital resources, competitive position or financial condition. Management believes that expenditures for environmental capital investment and remediation necessary to comply with present regulations governing environmental protection and other expenditures for the resolution of environmental claims will not have a material effect on the Company’s business or financial position. |
Legal_Matters
Legal Matters | 3 Months Ended |
Dec. 31, 2014 | |
Legal Matters Abstract | |
Legal Matters | Legal Matters |
The Company is subject to various lawsuits, claims and proceedings that have been or may be instituted or asserted against the Company relating to the conduct of the Company's business, including those pertaining to product liability, antitrust, intellectual property, safety and health, exporting and importing, contract, employment and regulatory matters. Although the outcome of these matters cannot be predicted with certainty and some lawsuits, claims or proceedings may be disposed of unfavorably to the Company, management believes there are no material pending legal proceedings. |
Restructuring_Pension_Settleme
Restructuring, Pension Settlement and Asset Impairment Charges, Net | 3 Months Ended |
Dec. 31, 2014 | |
Restructuring Costs and Asset Impairment Charges [Abstract] | |
Restructuring, Pension Settlement, and Asset Impairment Charges, Net | Restructuring, Pension Settlement and Asset Impairment Charges, Net |
In September 2014, the Company recorded pension settlement and restructuring charges totaling $9 million. This amount was comprised of (i) $5 million for pension settlement charges (included within Selling, general, and administrative expense) and (ii) $4 million for employee severance costs related to the consolidation and closure of two service centers as part of a plan to optimize the efficiency of the Company's global service center footprint. These severance costs were included within cost of sales. Through December 31, 2014, the Company has made cash payments of $7 million associated with these actions. As of December 31, 2014, approximately $2 million of employee severance costs remain to be paid in future periods. | |
During the year ended September 30, 2012, the Company recorded restructuring and asset impairment charges, net totaling $58 million. Included in this charge was $35 million related to employee severance costs, primarily resulting from decisions to realign the Company's European organizational structure to better position the business for long-term growth and to adjust the size of the workforce in anticipation of the sequestration impacts on the U.S. defense budgets. Through December 31, 2014, the Company has made cash severance payments of approximately $31 million related to the 2012 restructuring action. As of December 31, 2014, $4 million of employee separation costs related to the 2012 action remains to be paid in future periods. |
Business_Segment_Information
Business Segment Information | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Segment Reporting [Abstract] | |||||||||
Business Segment Information | Business Segment Information | ||||||||
The sales and earnings of continuing operations of the Company's operating segments are summarized as follows: | |||||||||
Three Months Ended December 31 | |||||||||
(in millions) | 2014 | 2013 | |||||||
Sales: | |||||||||
Commercial Systems | $ | 568 | $ | 521 | |||||
Government Systems | 509 | 515 | |||||||
Information Management Services | 149 | 18 | |||||||
Total sales | $ | 1,226 | $ | 1,054 | |||||
Segment operating earnings: | |||||||||
Commercial Systems | 125 | 111 | |||||||
Government Systems | 106 | 105 | |||||||
Information Management Services | 21 | 2 | |||||||
Total segment operating earnings | 252 | 218 | |||||||
Interest expense(1) | (15 | ) | (12 | ) | |||||
Stock-based compensation | (5 | ) | (5 | ) | |||||
General corporate, net | (14 | ) | (15 | ) | |||||
Gain on divestiture of business | — | 10 | |||||||
ARINC transaction costs(1) | — | (12 | ) | ||||||
Income from continuing operations before income taxes | 218 | 184 | |||||||
Income tax expense | (49 | ) | (50 | ) | |||||
Income from continuing operations | $ | 169 | $ | 134 | |||||
(1) During the three months ended December 31, 2014, and December 31, 2013, the Company incurred $0 million and $3 million, respectively, of bridge credit facility fees related to the acquisition of ARINC. These costs are included in interest expense; therefore total transaction costs related to the acquisition of ARINC during these periods were $0 million and $15 million, respectively. | |||||||||
The Company evaluates performance and allocates resources based upon, among other considerations, segment operating earnings. The Company's definition of segment operating earnings excludes income taxes, stock-based compensation, unallocated general corporate expenses, interest expense, gains and losses from the disposition of businesses, restructuring and asset impairment charges, and other special items as identified by management from time to time. Intersegment sales are not material and have been eliminated. | |||||||||
The following table summarizes sales by category for the three months ended December 31, 2014 and 2013: | |||||||||
Three Months Ended December 31 | |||||||||
(in millions) | 2014 | 2013 | |||||||
Commercial Systems sales categories: | |||||||||
Air transport aviation electronics | $ | 338 | $ | 304 | |||||
Business and regional aviation electronics | 230 | 217 | |||||||
Commercial Systems sales | 568 | 521 | |||||||
Government Systems sales categories: | |||||||||
Avionics | 320 | 317 | |||||||
Communication products | 92 | 101 | |||||||
Surface solutions | 56 | 58 | |||||||
Navigation products | 41 | 39 | |||||||
Government Systems sales | 509 | 515 | |||||||
Information Management Services sales | 149 | 18 | |||||||
Total sales | $ | 1,226 | $ | 1,054 | |||||
The air transport and business and regional aviation electronics sales categories are delineated based on the difference in underlying customer base, size of aircraft and markets served. For the three months ended December 31, 2014 and 2013, sales for air transport aviation electronics include revenue from wide-body in-flight entertainment products and services of $16 million and $19 million, respectively. | |||||||||
Sales categories for Government Systems are delineated based upon differences in the underlying product and service technologies and markets served. Prior period results of the Communication products category in Government Systems have been revised to exclude the divested Datapath business, which is now reported as a discontinued operation, as discussed in Note 4, Discontinued Operations and Divestitures. |
Significant_Accounting_Policie
Significant Accounting Policies (Policies) | 3 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Recently Adopted and Issued Accounting Standards | In April 2014 the Financial Accounting Standards Board (FASB) issued guidance that modifies the criteria used to qualify divestitures for classification as discontinued operations and expands disclosures related to disposals of significant components. The amendment will become effective for the company in fiscal 2016 with early adoption permitted; the Company does not currently expect to early adopt the amended guidance. The amended guidance is expected to decrease the likelihood that future disposals will qualify for discontinued operations treatment, meaning that the results of operations of some future disposals may be reported in continuing operations. |
In May 2014 the FASB issued a comprehensive new revenue recognition standard that effectively replaces all current guidance on the topic and expands disclosures regarding revenue. The guidance permits the use of either a retrospective or cumulative effect transition method. The new standard is effective for the Company in fiscal 2018 and early adoption is not permitted. The Company is currently evaluating the transition methods allowed under the new standard and the effect the standard will have on our consolidated financial statements and related disclosures. Given the new standard's impact on business processes, systems and internal controls, analysis of the new guidance will likely extend over several future periods. |
Acquisitions_Tables
Acquisitions (Tables) | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Business Combinations [Abstract] | |||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the fair value of assets acquired and liabilities assumed at the acquisition date. | ||||||||
(in millions) | 23-Dec-13 | ||||||||
Restricted Cash(1) | $ | 61 | |||||||
Receivables and Other current assets | 216 | ||||||||
Building held for sale(2) | 81 | ||||||||
Business held for sale(3) | 15 | ||||||||
Property | 49 | ||||||||
Intangible Assets | 431 | ||||||||
Other Assets | 11 | ||||||||
Total Identifiable Assets Acquired | 864 | ||||||||
Payable to ARINC option holders(1) | (61 | ) | |||||||
Current Liabilities | (171 | ) | |||||||
Liability related to building held for sale(2) | (81 | ) | |||||||
Liabilities associated with business held for sale(3) | (12 | ) | |||||||
Long-term deferred income taxes | (182 | ) | |||||||
Retirement Benefits and Other Long-term Liabilities | (39 | ) | |||||||
Total Liabilities Assumed | (546 | ) | |||||||
Net Identifiable Assets Acquired, excluding Goodwill | 318 | ||||||||
Goodwill | 1,087 | ||||||||
Net Assets Acquired | $ | 1,405 | |||||||
(1) Option-holders of ARINC were due approximately $61 million at the transaction closing date. This payment did not clear until December 24, 2013. Therefore the opening balance sheet, which was prepared as of December 23, 2013, includes restricted cash of $61 million and a current liability payable to the ARINC option holders for an equal amount. | |||||||||
(2) On March 28, 2014, the Company sold the building which was classified as held for sale at the acquisition date. For more information related to the Building held for sale, see discussion below. | |||||||||
(3) Assets and liabilities associated with the Business held for sale relate to ASES, which the Company intends to divest, as detailed in Note 4. | |||||||||
Business Acquisition, Pro Forma Information | |||||||||
Three Months Ended December 31 | |||||||||
(in millions, except per share amounts) | 2014 | 2013 | |||||||
Pro-forma sales | $ | 1,226 | $ | 1,160 | |||||
Pro-forma net income attributable to common shareowners from continuing operations | $ | 169 | $ | 139 | |||||
Pro-forma basic earnings per share from continuing operations | $ | 1.28 | $ | 1.03 | |||||
Pro-forma diluted earnings per share from continuing operations | $ | 1.26 | $ | 1.02 | |||||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustments | |||||||||
Three Months Ended December 31 | |||||||||
(in millions) | 2014 | 2013 | |||||||
Increases / (decreases) to pro-forma net income: | |||||||||
Net reduction to depreciation resulting from fixed asset purchase accounting adjustments(1) | $ | — | $ | 2 | |||||
Advisory, legal and accounting service fees(2) | — | 20 | |||||||
Amortization of acquired ARINC intangible assets, net(3) | — | (4 | ) | ||||||
(1) This adjustment captures the net impact to depreciation expense resulting from various purchase accounting adjustments to fixed assets | |||||||||
(2) This adjustment reflects the elimination of transaction-related fees incurred by ARINC and Rockwell Collins in connection with the acquisition and assumes all of the fees were incurred during the first quarter of 2013 | |||||||||
(3) This adjustment eliminates amortization of the historical ARINC intangible assets and replaces it with the new amortization for the acquired intangible assets |
Discontinued_Operations_and_Di1
Discontinued Operations and Divestitures (Tables) | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||
Schedule of Discontinued Operations | Results of discontinued operations are as follows: | ||||||||
Three Months Ended December 31 | |||||||||
(in millions) | 2014 | 2013 | |||||||
Sales | $ | 8 | $ | 17 | |||||
(Loss) from discontinued operations before income taxes | (3 | ) | (4 | ) | |||||
Income tax benefit from discontinued operations | 1 | 1 | |||||||
Receivables_Net_Tables
Receivables, Net (Tables) | 3 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Receivables [Abstract] | ||||||||
Schedule of Accounts Receivable | Receivables, net are summarized as follows: | |||||||
(in millions) | December 31, | September 30, | ||||||
2014 | 2014 | |||||||
Billed | $ | 764 | $ | 758 | ||||
Unbilled | 456 | 485 | ||||||
Less progress payments | (164 | ) | (198 | ) | ||||
Total | 1,056 | 1,045 | ||||||
Less allowance for doubtful accounts | (12 | ) | (12 | ) | ||||
Receivables, net | $ | 1,044 | $ | 1,033 | ||||
Inventories_Net_Tables
Inventories, Net (Tables) | 3 Months Ended | |||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||
Schedule of Inventories | Inventories, net are summarized as follows: | |||||||||||||||||||||||
(in millions) | December 31, | September 30, | ||||||||||||||||||||||
2014 | 2014 | |||||||||||||||||||||||
Finished goods | $ | 232 | $ | 218 | ||||||||||||||||||||
Work in process | 273 | 262 | ||||||||||||||||||||||
Raw materials, parts and supplies | 375 | 361 | ||||||||||||||||||||||
Less progress payments | (8 | ) | (8 | ) | ||||||||||||||||||||
Total | 872 | 833 | ||||||||||||||||||||||
Pre-production engineering costs | 907 | 876 | ||||||||||||||||||||||
Inventories, net | $ | 1,779 | $ | 1,709 | ||||||||||||||||||||
Schedule of Pre-Production Engineering Expected Amortization | Anticipated annual amortization expense for pre-production engineering costs is as follows: | |||||||||||||||||||||||
(in millions) | 2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | ||||||||||||||||||
Anticipated amortization expense for pre-production engineering costs | $ | 48 | $ | 77 | $ | 93 | $ | 104 | $ | 104 | $ | 493 | ||||||||||||
Property_Tables
Property (Tables) | 3 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Property, Plant and Equipment, Net [Abstract] | ||||||||
Property | Property is summarized as follows: | |||||||
(in millions) | December 31, | September 30, | ||||||
2014 | 2014 | |||||||
Land | $ | 15 | $ | 15 | ||||
Buildings and improvements | 409 | 406 | ||||||
Machinery and equipment | 1,150 | 1,135 | ||||||
Information systems software and hardware | 369 | 369 | ||||||
Furniture and fixtures | 65 | 65 | ||||||
Capital leases | 60 | 60 | ||||||
Construction in progress | 145 | 142 | ||||||
Total | 2,213 | 2,192 | ||||||
Less accumulated depreciation | (1,294 | ) | (1,273 | ) | ||||
Property | $ | 919 | $ | 919 | ||||
Goodwill_and_Intangible_Assets1
Goodwill and Intangible Assets (Tables) | 3 Months Ended | |||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||
Schedule of Goodwill | Changes in the carrying amount of goodwill are summarized as follows: | |||||||||||||||||||||||
(in millions) | Government | Commercial | Information Management Services | Total | ||||||||||||||||||||
Systems | Systems | |||||||||||||||||||||||
Balance at September 30, 2014 | 508 | 262 | 1,093 | 1,863 | ||||||||||||||||||||
ARINC acquisition adjustment | — | — | (3 | ) | (3 | ) | ||||||||||||||||||
Foreign currency translation adjustments and other | (4 | ) | — | — | (4 | ) | ||||||||||||||||||
Balance at December 31, 2014 | $ | 504 | $ | 262 | $ | 1,090 | $ | 1,856 | ||||||||||||||||
Summary of Intangible Assets | Intangible assets are summarized as follows: | |||||||||||||||||||||||
December 31, 2014 | September 30, 2014 | |||||||||||||||||||||||
(in millions) | Gross | Accum | Net | Gross | Accum | Net | ||||||||||||||||||
Amort | Amort | |||||||||||||||||||||||
Intangible assets with finite lives: | ||||||||||||||||||||||||
Developed technology and patents | $ | 322 | $ | (183 | ) | $ | 139 | $ | 322 | $ | (178 | ) | $ | 144 | ||||||||||
Backlog | 5 | (1 | ) | 4 | 5 | (1 | ) | 4 | ||||||||||||||||
Customer relationships: | ||||||||||||||||||||||||
Acquired | 336 | (71 | ) | 265 | 336 | (67 | ) | 269 | ||||||||||||||||
Up-front sales incentives | 275 | (50 | ) | 225 | 266 | (47 | ) | 219 | ||||||||||||||||
License agreements | 13 | (9 | ) | 4 | 13 | (9 | ) | 4 | ||||||||||||||||
Trademarks and tradenames | 15 | (14 | ) | 1 | 15 | (14 | ) | 1 | ||||||||||||||||
Intangible assets with indefinite lives: | ||||||||||||||||||||||||
Trademarks and tradenames | 47 | — | 47 | 47 | — | 47 | ||||||||||||||||||
Intangible assets | $ | 1,013 | $ | (328 | ) | $ | 685 | $ | 1,004 | $ | (316 | ) | $ | 688 | ||||||||||
Schedule of Intangible Asset Expected Amortization Expense | ||||||||||||||||||||||||
(in millions) | 2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | ||||||||||||||||||
Anticipated amortization expense for up-front sales incentives | $ | 12 | $ | 18 | $ | 18 | $ | 20 | $ | 22 | $ | 138 | ||||||||||||
Anticipated amortization expense for intangibles acquired in ARINC acquisition | 26 | 26 | 26 | 26 | 25 | 234 | ||||||||||||||||||
Anticipated amortization expense for all other intangible assets | 13 | 12 | 11 | 6 | 4 | 13 | ||||||||||||||||||
Total | $ | 51 | $ | 56 | $ | 55 | $ | 52 | $ | 51 | $ | 385 | ||||||||||||
Other_Assets_Tables
Other Assets (Tables) | 3 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Other Assets [Abstract] | ||||||||
Other Assets | Other assets are summarized as follows: | |||||||
(in millions) | December 31, | September 30, | ||||||
2014 | 2014 | |||||||
Long-term receivables | $ | 84 | $ | 84 | ||||
Investments in equity affiliates | 8 | 8 | ||||||
Exchange and rental assets (net of accumulated depreciation of $95 at December 31, 2014 and $94 at September 30, 2014) | 62 | 61 | ||||||
Other | 146 | 135 | ||||||
Other assets | $ | 300 | $ | 288 | ||||
Debt_Tables
Debt (Tables) | 3 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Debt Disclosure [Abstract] | ||||||||
Schedule of Short-term Debt | ||||||||
Long-Term Debt Reconciliation to Carrying Amount | Long-term debt is summarized as follows: | |||||||
(in millions) | December 31, | September 30, 2014 | ||||||
2014 | ||||||||
Principal amount of 2043 Notes, net of discount | $ | 398 | $ | 398 | ||||
Principal amount of 2023 Notes, net of discount | 399 | 399 | ||||||
Principal amount of 2021 Notes, net of discount | 250 | 249 | ||||||
Principal amount of 2019 Notes, net of discount | 299 | 299 | ||||||
Principal amount of 2016 Notes | 300 | 300 | ||||||
Fair value swap adjustment (Notes 16 and 17) | 24 | 18 | ||||||
Long-term debt, net | $ | 1,670 | $ | 1,663 | ||||
Retirement_Benefits_Tables
Retirement Benefits (Tables) | 3 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Defined Benefit Plan Disclosure | ||||||||
Schedule of Defined Benefit Plans Components of Expense Income | The components of expense (income) for Pension Benefits for the three months ended December 31, 2014 and 2013 are as follows: | |||||||
Three Months Ended | ||||||||
31-Dec | ||||||||
(in millions) | 2014 | 2013 | ||||||
Service cost | $ | 3 | $ | 2 | ||||
Interest cost | 39 | 40 | ||||||
Expected return on plan assets | (60 | ) | (53 | ) | ||||
Amortization: | ||||||||
Prior service credit | (1 | ) | (3 | ) | ||||
Net actuarial loss | 18 | 17 | ||||||
Net benefit expense (income) | $ | (1 | ) | $ | 3 | |||
Pension and Other Postretirement Benefits Disclosure [Text Block] | The components of expense for Other Retirement Benefits for the three months ended December 31, 2014 and 2013 are as follows: | |||||||
Three Months Ended | ||||||||
31-Dec | ||||||||
(in millions) | 2014 | 2013 | ||||||
Interest cost | $ | 1 | $ | 2 | ||||
Amortization: | ||||||||
Prior service credit | (1 | ) | (2 | ) | ||||
Net actuarial loss | 2 | 2 | ||||||
Net benefit expense | $ | 2 | $ | 2 | ||||
Retirement Benefits | ||||||||
The Company sponsors defined benefit pension (Pension Benefits) and other postretirement (Other Retirement Benefits) plans which provide monthly pension and other benefits to eligible employees upon retirement. | ||||||||
Pension Benefits | ||||||||
The components of expense (income) for Pension Benefits for the three months ended December 31, 2014 and 2013 are as follows: | ||||||||
Three Months Ended | ||||||||
31-Dec | ||||||||
(in millions) | 2014 | 2013 | ||||||
Service cost | $ | 3 | $ | 2 | ||||
Interest cost | 39 | 40 | ||||||
Expected return on plan assets | (60 | ) | (53 | ) | ||||
Amortization: | ||||||||
Prior service credit | (1 | ) | (3 | ) | ||||
Net actuarial loss | 18 | 17 | ||||||
Net benefit expense (income) | $ | (1 | ) | $ | 3 | |||
Other Retirement Benefits | ||||||||
The components of expense for Other Retirement Benefits for the three months ended December 31, 2014 and 2013 are as follows: | ||||||||
Three Months Ended | ||||||||
31-Dec | ||||||||
(in millions) | 2014 | 2013 | ||||||
Interest cost | $ | 1 | $ | 2 | ||||
Amortization: | ||||||||
Prior service credit | (1 | ) | (2 | ) | ||||
Net actuarial loss | 2 | 2 | ||||||
Net benefit expense | $ | 2 | $ | 2 | ||||
Pension Plan Funding | ||||||||
The Company’s objective with respect to the funding of its pension plans is to provide adequate assets for the payment of future benefits. Pursuant to this objective, the Company will fund its pension plans as required by governmental regulations and may consider discretionary contributions as conditions warrant. In October 2014, the Company voluntarily contributed $55 million to its U.S. qualified pension plan. There was no minimum statutory funding requirement for 2015 and the Company does not currently expect to make any additional discretionary contributions during 2015 to this plan. Furthermore, the Company is not required to make, and does not intend to make, any contributions to the ARINC pension plans during 2015. Any additional future contributions necessary to satisfy minimum statutory funding requirements are dependent upon actual plan asset returns, interest rates, and actuarial assumptions. Contributions to the non-U.S. plans and the U.S. non-qualified plan are expected to total $14 million in 2015. | ||||||||
ARINC Pension Plan and Other Retirement Benefits | ||||||||
ARINC sponsors two primary pension sub-plans: one for union employees and one for non-union employees. ARINC also provides postretirement health coverage for many of its current and former employees and postretirement | ||||||||
life insurance benefits for certain retirees. The ARINC pension and postretirement benefit obligations are included within Retirement Benefits as liabilities on the Company's Condensed Consolidated Statement of Financial Position as of December 31, 2014. |
StockBased_Compensation_and_Ea1
Stock-Based Compensation and Earnings Per Share (Tables) | 3 Months Ended | |||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||
Stock Based Compensation and Earnings Per Share Abstract | ||||||||||||||||||
Stock-Based Compensation Expense Categorization | Stock-based compensation expense and related income tax benefit included within the Condensed Consolidated Statement of Operations is as follows: | |||||||||||||||||
Three Months Ended December 31 | ||||||||||||||||||
(in millions) | 2014 | 2013 | ||||||||||||||||
Stock-based compensation expense included in: | ||||||||||||||||||
Product cost of sales | $ | 2 | $ | 2 | ||||||||||||||
Selling, general and administrative expenses | 3 | 3 | ||||||||||||||||
Total | $ | 5 | $ | 5 | ||||||||||||||
Income tax benefit | $ | 2 | $ | 2 | ||||||||||||||
Schedule of Stock Option Activity | The Company issued awards of equity instruments under the Company's various incentive plans for the three months ended December 31, 2014 and 2013 as follows: | |||||||||||||||||
Options | Performance Shares | Restricted Stock Units | ||||||||||||||||
(shares in thousands) | Number Issued | Weighted Average Fair Value | Number Issued | Weighted Average Fair Value | Number Issued | Weighted Average Fair Value | ||||||||||||
Three months ended December 31, 2014 | 555.6 | $ | 19.6 | 129.7 | $ | 82.63 | 52.8 | $ | 83.6 | |||||||||
Three months ended December 31, 2013 | 530.5 | 18.42 | 137.3 | 70.97 | 58.4 | 70.9 | ||||||||||||
Assumptions Used to Value Option Grants | The fair value of each option granted by the Company was estimated using a binomial lattice pricing model and the following weighted average assumptions: | |||||||||||||||||
2015 Grants | 2014 Grants | |||||||||||||||||
Risk-free interest rate | 0.6% - 2.5% | 0.3% - 3.0% | ||||||||||||||||
Expected dividend yield | 1.6 | % | 1.9 | % | ||||||||||||||
Expected volatility | 24 | % | 28 | % | ||||||||||||||
Expected life | 7 years | 7 years | ||||||||||||||||
Earnings Per Share and Diluted Share Equivalents | The computation of basic and diluted earnings per share is as follows: | |||||||||||||||||
Three Months Ended | ||||||||||||||||||
31-Dec | ||||||||||||||||||
(in millions, except per share amounts) | 2014 | 2013 | ||||||||||||||||
Numerator for basic and diluted earnings per share: | ||||||||||||||||||
Income from continuing operations | $ | 169 | $ | 134 | ||||||||||||||
Income (loss) from discontinued operations, net of taxes | (2 | ) | (3 | ) | ||||||||||||||
Net income | $ | 167 | $ | 131 | ||||||||||||||
Denominator: | ||||||||||||||||||
Denominator for basic earnings per share – weighted average common shares | 133 | 135.2 | ||||||||||||||||
Effect of dilutive securities: | ||||||||||||||||||
Stock options | 1.1 | 1.1 | ||||||||||||||||
Performance shares, restricted stock and restricted stock units | 0.4 | 0.4 | ||||||||||||||||
Dilutive potential common shares | 1.5 | 1.5 | ||||||||||||||||
Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversion | 134.5 | 136.7 | ||||||||||||||||
Earnings (loss) per share: | ||||||||||||||||||
Basic | ||||||||||||||||||
Continuing operations | $ | 1.28 | $ | 0.99 | ||||||||||||||
Discontinued operations | (0.02 | ) | (0.02 | ) | ||||||||||||||
Basic earnings per share | $ | 1.26 | $ | 0.97 | ||||||||||||||
Diluted | ||||||||||||||||||
Continuing operations | $ | 1.26 | $ | 0.98 | ||||||||||||||
Discontinued operations | (0.02 | ) | (0.02 | ) | ||||||||||||||
Diluted earnings per share | $ | 1.24 | $ | 0.96 | ||||||||||||||
Shareowners_Equity_Tables
Shareowners' Equity (Tables) | 3 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||
Reclassification out of Accumulated Other Comprehensive Income | Changes in accumulated other comprehensive loss (AOCL), net of tax, by component for the three months ended December 31, 2014 are as follows: | ||||||||||||||||
Foreign Exchange Translation Adjustment | Pension and Other Postretirement Adjustments (1) | Change in the Fair Value of Effective Cash Flow Hedges | Total | ||||||||||||||
Balance at September 30, 2014 | $ | (15 | ) | $ | (1,348 | ) | $ | (3 | ) | $ | (1,366 | ) | |||||
Other comprehensive loss before reclassifications | (14 | ) | — | (5 | ) | (19 | ) | ||||||||||
Amounts reclassified from accumulated other comprehensive loss | — | 11 | 1 | 12 | |||||||||||||
Net current period other comprehensive income/(loss) | (14 | ) | 11 | (4 | ) | (7 | ) | ||||||||||
Balance at December 31, 2014 | $ | (29 | ) | $ | (1,337 | ) | $ | (7 | ) | $ | (1,373 | ) | |||||
(1) Reclassifications from AOCL to net income, related to the amortization of net actuarial losses and prior service credits for the Company's retirement benefit plans, were $18 million ($11 million net of tax), for the quarter ended December 31, 2014. The reclassifications are included in the computation of net benefit expense. See Note 11, Retirement Benefits for additional details. |
Other_Income_Net_Tables
Other Income, Net (Tables) | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Nonoperating Income (Expense) [Abstract] | |||||||||
Summary of Other Income, Net | Other income, net consists of the following for the three months ended December 31, 2014 and 2013: | ||||||||
Three Months Ended December 31 | |||||||||
(in millions) | 2014 | 2013 | |||||||
Earnings from equity affiliates | $ | — | $ | 3 | |||||
Gain from business divestiture | — | 10 | |||||||
Other | 1 | — | |||||||
Other income, net | $ | 1 | $ | 13 | |||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 3 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||
Financial Assets and Liabilities at Fair Value on Recurring Basis | The fair value of the Company's financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 and September 30, 2014 are as follows: | |||||||||||||||
December 31, 2014 | September 30, 2014 | |||||||||||||||
(in millions) | Fair Value | Fair Value | Fair Value | |||||||||||||
Hierarchy | Asset (Liability) | Asset (Liability) | ||||||||||||||
Deferred compensation plan investments | Level 1 | $ | 53 | $ | 50 | |||||||||||
Interest rate swap assets | Level 2 | 24 | 18 | |||||||||||||
Foreign currency forward exchange contract assets | Level 2 | 6 | 6 | |||||||||||||
Foreign currency forward exchange contract liabilities | Level 2 | (13 | ) | (9 | ) | |||||||||||
Financial Instruments at Fair Value and Carrying Value | The carrying amounts and fair values of the Company's financial instruments are as follows: | |||||||||||||||
Asset (Liability) | ||||||||||||||||
December 31, 2014 | September 30, 2014 | |||||||||||||||
(in millions) | Carrying | Fair | Carrying | Fair | ||||||||||||
Amount | Value | Amount | Value | |||||||||||||
Cash and cash equivalents | $ | 315 | $ | 315 | $ | 323 | $ | 323 | ||||||||
Short-term debt | (831 | ) | (831 | ) | (504 | ) | (504 | ) | ||||||||
Long-term debt | (1,646 | ) | (1,788 | ) | (1,645 | ) | (1,747 | ) |
Derivative_Financial_Instrumen1
Derivative Financial Instruments (Tables) | 3 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||
Fair Value of Derivative Instruments in Condensed Consolidated Statement of Financial Position | Fair values of derivative instruments in the Condensed Consolidated Statement of Financial Position as of December 31, 2014 and September 30, 2014 are as follows: | |||||||||
Asset Derivatives | ||||||||||
(in millions) | Classification | December 31, | September 30, 2014 | |||||||
2014 | ||||||||||
Foreign currency forward exchange contracts | Other current assets | $ | 6 | $ | 6 | |||||
Interest rate swaps | Other assets | 24 | 18 | |||||||
Total | $ | 30 | $ | 24 | ||||||
Liability Derivatives | ||||||||||
(in millions) | Classification | December 31, | September 30, 2014 | |||||||
2014 | ||||||||||
Foreign currency forward exchange contracts | Other current liabilities | $ | 13 | $ | 9 | |||||
Effect of Derivative Instruments on the Condensed Consolidated Statement of Operations | The effect of derivative instruments on the Condensed Consolidated Statement of Operations for the three months ended December 31, 2014 and 2013 is as follows: | |||||||||
Amount of Gain (Loss) | ||||||||||
Three Months Ended | ||||||||||
31-Dec | ||||||||||
(in millions) | Location of Gain (Loss) | 2014 | 2013 | |||||||
Derivatives Designated as Hedging Instruments: | ||||||||||
Fair Value Hedges | ||||||||||
Interest rate swaps | Interest expense | $ | 3 | $ | 2 | |||||
Cash Flow Hedges | ||||||||||
Foreign currency forward exchange contracts: | ||||||||||
Amount of (loss) recognized in AOCL (effective portion, before deferred tax impact) | AOCL | (7 | ) | (3 | ) | |||||
Amount of (loss) reclassified from AOCL into income | Cost of sales | (1 | ) | (1 | ) | |||||
Forward starting interest rate swaps: | ||||||||||
Amount of gain recognized in AOCL (effective portion, before deferred tax impact) | AOCL | — | 3 | |||||||
Derivatives Not Designated as Hedging Instruments: | ||||||||||
Foreign currency forward exchange contracts | Cost of sales | (2 | ) | — | ||||||
Guarantees_and_Indemnification1
Guarantees and Indemnifications (Tables) | 3 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Guarantees and Indemnifications Abstract | ||||||||
Changes in Accrued Product Warranty Costs | Changes in the carrying amount of accrued product warranty costs are summarized as follows: | |||||||
Three Months Ended | ||||||||
December 31 | ||||||||
(in millions) | 2014 | 2013 | ||||||
Balance at beginning of year | $ | 104 | $ | 121 | ||||
Warranty costs incurred | (11 | ) | (11 | ) | ||||
Product warranty accrual | 11 | 12 | ||||||
Changes in estimates for prior years | — | (6 | ) | |||||
Foreign currency translation adjustments and other | (1 | ) | — | |||||
Balance at December 31 | $ | 103 | $ | 116 | ||||
Business_Segment_Information_T
Business Segment Information (Tables) | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Segment Reporting [Abstract] | |||||||||
Sales and Results of Continuing Operations of Operating Segments | The sales and earnings of continuing operations of the Company's operating segments are summarized as follows: | ||||||||
Three Months Ended December 31 | |||||||||
(in millions) | 2014 | 2013 | |||||||
Sales: | |||||||||
Commercial Systems | $ | 568 | $ | 521 | |||||
Government Systems | 509 | 515 | |||||||
Information Management Services | 149 | 18 | |||||||
Total sales | $ | 1,226 | $ | 1,054 | |||||
Segment operating earnings: | |||||||||
Commercial Systems | 125 | 111 | |||||||
Government Systems | 106 | 105 | |||||||
Information Management Services | 21 | 2 | |||||||
Total segment operating earnings | 252 | 218 | |||||||
Interest expense(1) | (15 | ) | (12 | ) | |||||
Stock-based compensation | (5 | ) | (5 | ) | |||||
General corporate, net | (14 | ) | (15 | ) | |||||
Gain on divestiture of business | — | 10 | |||||||
ARINC transaction costs(1) | — | (12 | ) | ||||||
Income from continuing operations before income taxes | 218 | 184 | |||||||
Income tax expense | (49 | ) | (50 | ) | |||||
Income from continuing operations | $ | 169 | $ | 134 | |||||
(1) During the three months ended December 31, 2014, and December 31, 2013, the Company incurred $0 million and $3 million, respectively, of bridge credit facility fees related to the acquisition of ARINC. These costs are included in interest expense; therefore total transaction costs related to the acquisition of ARINC during these periods were $0 million and $15 million, respectively. | |||||||||
Summary of Sales by Product Category | The following table summarizes sales by category for the three months ended December 31, 2014 and 2013: | ||||||||
Three Months Ended December 31 | |||||||||
(in millions) | 2014 | 2013 | |||||||
Commercial Systems sales categories: | |||||||||
Air transport aviation electronics | $ | 338 | $ | 304 | |||||
Business and regional aviation electronics | 230 | 217 | |||||||
Commercial Systems sales | 568 | 521 | |||||||
Government Systems sales categories: | |||||||||
Avionics | 320 | 317 | |||||||
Communication products | 92 | 101 | |||||||
Surface solutions | 56 | 58 | |||||||
Navigation products | 41 | 39 | |||||||
Government Systems sales | 509 | 515 | |||||||
Information Management Services sales | 149 | 18 | |||||||
Total sales | $ | 1,226 | $ | 1,054 | |||||
Acquisitions_Details
Acquisitions (Details) (USD $) | 3 Months Ended | 1 Months Ended | 9 Months Ended | ||||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2014 | Dec. 23, 2013 | |||
Acquisitions | |||||||||
Payments to acquire businesses, net of cash acquired | $0 | $1,420 | |||||||
Goodwill | 1,856 | 1,863 | |||||||
Total sales | 1,226 | 1,054 | |||||||
Net income | 167 | 131 | |||||||
ARINC transaction costs | 0 | [1] | 12 | [1] | |||||
Debt Instrument, Fee Amount | 0 | 0 | |||||||
ARINC [Member] | |||||||||
Acquisitions | |||||||||
Voting interests acquired (percent) | 100.00% | ||||||||
Payments to acquire businesses, net of cash acquired | 1,405 | ||||||||
Cash received for post-closing matters | 10 | ||||||||
Payable to ARINC option holders | 61 | [2] | |||||||
Restricted Cash | 61 | [2] | |||||||
Goodwill | 1,087 | ||||||||
Goodwill, expected tax deductible amount | 0 | ||||||||
Total sales | 6 | 137 | |||||||
Net income | 1 | 12 | |||||||
Building held for sale | 81 | [3] | |||||||
Liabilities for Real Estate Held-for-sale | 81 | [3] | |||||||
Proceeds from Sale of Property Held-for-sale | $81 | ||||||||
[1] | During the three months ended December 31, 2014, and December 31, 2013, the Company incurred $0 million and $3 million, respectively, of bridge credit facility fees related to the acquisition of ARINC. These costs are included in interest expense; therefore total transaction costs related to the acquisition of ARINC during these periods were $0 million and $15 million, respectively. | ||||||||
[2] | Option-holders of ARINC were due approximately $61 million at the transaction closing date. This payment did not clear until December 24, 2013. Therefore the opening balance sheet, which was prepared as of December 23, 2013, includes restricted cash of $61 million and a current liability payable to the ARINC option holders for an equal amount. | ||||||||
[3] | On March 28, 2014, the Company sold the building which was classified as held for sale at the acquisition date. For more information related to the Building held for sale, see discussion below. |
Acquisitions_Acquisition_Asset
Acquisitions Acquisition Assets Acquired and Liabilities Assumed (Details) (USD $) | Dec. 31, 2014 | Sep. 30, 2014 | Dec. 23, 2013 | |
In Millions, unless otherwise specified | ||||
Business Acquisition [Line Items] | ||||
Business held for sale | $17 | $15 | ||
Liabilities associated with business held for sale | -12 | -16 | ||
Goodwill | 1,856 | 1,863 | ||
ARINC [Member] | ||||
Business Acquisition [Line Items] | ||||
Restricted Cash | 61 | [1] | ||
Receivables and Other current assets | 216 | |||
Building held for sale | 81 | [2] | ||
Business held for sale | 15 | [3] | ||
Property | 49 | |||
Intangible Assets | 431 | |||
Other Assets | 11 | |||
Total Identifiable Assets Acquired | 864 | |||
Payable to ARINC option holders | -61 | [1] | ||
Current Liabilities | -171 | |||
Liability related to building held for sale | -81 | [2] | ||
Liabilities associated with business held for sale | -12 | [3] | ||
Long-term deferred income taxes | -182 | |||
Retirement Benefits and Other Long-term Liabilities | -39 | |||
Total Liabilities Assumed | -546 | |||
Net Identifiable Assets Acquired, excluding Goodwill | 318 | |||
Goodwill | 1,087 | |||
Net Assets Acquired | $1,405 | |||
[1] | Option-holders of ARINC were due approximately $61 million at the transaction closing date. This payment did not clear until December 24, 2013. Therefore the opening balance sheet, which was prepared as of December 23, 2013, includes restricted cash of $61 million and a current liability payable to the ARINC option holders for an equal amount. | |||
[2] | On March 28, 2014, the Company sold the building which was classified as held for sale at the acquisition date. For more information related to the Building held for sale, see discussion below. | |||
[3] | Assets and liabilities associated with the Business held for sale relate to ASES, which the Company intends to divest, as detailed in Note 4. |
Acquisitions_Proforma_Results_
Acquisitions Proforma Results (Details) (USD $) | 3 Months Ended | 9 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2014 |
Business Acquisition [Line Items] | |||
Total sales | $1,226 | $1,054 | |
Net income | 167 | 131 | |
ARINC [Member] | |||
Business Acquisition [Line Items] | |||
Total sales | 6 | 137 | |
Pro-forma sales | 1,226 | 1,160 | |
Pro-forma net income attributable to common shareowners from continuing operations | 169 | 139 | |
Pro-forma basic earnings per share from continuing operations | $1.28 | $1.03 | |
Pro-forma diluted earnings per share from continuing operations | $1.26 | $1.02 | |
Net income | $1 | $12 |
Acquisitions_Proforma_Nonrecur
Acquisitions Proforma Nonrecurring Adjustments (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | ||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||||
Net reduction to depreciation resulting from fixed asset purchase accounting adjustments | ($38) | ($32) | ||
Amortization of acquired ARINC intangible assets, net | -12 | -6 | ||
ARINC [Member] | ||||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||||
Net reduction to depreciation resulting from fixed asset purchase accounting adjustments | 0 | [1] | 2 | [1] |
Advisory, legal and accounting service fees | 0 | [2] | 20 | [2] |
Amortization of acquired ARINC intangible assets, net | $0 | [3] | ($4) | [3] |
[1] | This adjustment captures the net impact to depreciation expense resulting from various purchase accounting adjustments to fixed assets | |||
[2] | This adjustment reflects the elimination of transaction-related fees incurred by ARINC and Rockwell Collins in connection with the acquisition and assumes all of the fees were incurred during the first quarter of 2013 | |||
[3] | This adjustment eliminates amortization of the historical ARINC intangible assets and replaces it with the new amortization for the acquired intangible assets |
Discontinued_Operations_and_Di2
Discontinued Operations and Divestitures (Details) (USD $) | 3 Months Ended | 0 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Jul. 25, 2014 | Nov. 22, 2013 | Sep. 30, 2014 |
Discontinued Operations | |||||
Proceeds from divestiture of businesses | $0 | $24 | |||
Gain from business divestiture | 0 | 10 | |||
Assets Held-for-sale | 17 | 15 | |||
Liabilities associated with business held for sale | 12 | 16 | |||
Sales | 8 | 17 | |||
(Loss) from discontinued operations before income taxes | -3 | -4 | |||
Income tax benefit from discontinued operations | 1 | 1 | |||
Datapath [Member] | |||||
Discontinued Operations | |||||
Proceeds from divestiture of businesses | 10 | ||||
Gain from business divestiture | -12 | ||||
Gain (loss) on sale of business, net of tax | -2 | ||||
ASES [Member] | |||||
Discontinued Operations | |||||
Assets Held-for-sale | 17 | ||||
Liabilities associated with business held for sale | 12 | ||||
KOSI [Member] | |||||
Discontinued Operations | |||||
Proceeds from divestiture of businesses | 23 | ||||
Gain from business divestiture | $10 |
Receivables_Net_Details
Receivables, Net (Details) (USD $) | Dec. 31, 2014 | Sep. 30, 2014 |
In Millions, unless otherwise specified | ||
Receivables, Net | ||
Receivables due from equity affiliate | $68 | $76 |
Billed | 764 | 758 |
Unbilled | 456 | 485 |
Less progress payments | -164 | -198 |
Total | 1,056 | 1,045 |
Less allowance for doubtful accounts | -12 | -12 |
Receivables, net | $1,044 | $1,033 |
Inventories_Net_Details
Inventories, Net (Details) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2014 |
Inventories, Net | |||
Finished goods | $232 | $218 | |
Work in process | 273 | 262 | |
Raw materials, parts and supplies | 375 | 361 | |
Less progress payments | -8 | -8 | |
Total | 872 | 833 | |
Pre-production engineering costs | 907 | 876 | |
Inventories, net | 1,779 | 1,709 | |
Pre-production engineering amortization expense | 12 | 6 | |
Capitalized pre-production engineering weighted average amortization period remaining | 11 years | ||
Anticipated Amortization Expense for Pre-production Engineering Costs [Abstract] | |||
2015 | 48 | ||
2016 | 77 | ||
2017 | 93 | ||
2018 | 104 | ||
2019 | 104 | ||
Thereafter | $493 |
Property_Details
Property (Details) (USD $) | Dec. 31, 2014 | Sep. 30, 2014 |
In Millions, unless otherwise specified | ||
Property | ||
Property, Total | $2,213 | $2,192 |
Less accumulated depreciation | -1,294 | -1,273 |
Property | 919 | 919 |
Remaining minimum lease payments under capital lease | 86 | |
Remaining minimum interest payments under capital lease | 28 | |
Land [Member] | ||
Property | ||
Property, Total | 15 | 15 |
Building and Building Improvements [Member] | ||
Property | ||
Property, Total | 409 | 406 |
Machinery and Equipment [Member] | ||
Property | ||
Property, Total | 1,150 | 1,135 |
Information Systems Software and Hardware [Member] | ||
Property | ||
Property, Total | 369 | 369 |
Furniture and Fixtures [Member] | ||
Property | ||
Property, Total | 65 | 65 |
Capital Lease Obligations [Member] | ||
Property | ||
Property, Total | 60 | 60 |
Less accumulated depreciation | -3 | -2 |
Construction in Progress [Member] | ||
Property | ||
Property, Total | $145 | $142 |
Goodwill_and_Intangible_Assets2
Goodwill and Intangible Assets (Narrative) (Details) (USD $) | 3 Months Ended | ||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 23, 2013 | ||
Goodwill and Intangible Assets | |||||
Goodwill impairment loss | $0 | $0 | |||
Amortization expense | 12 | 6 | |||
Up-front sales incentives weighted average amortization period remaining, in years | 11 years | ||||
ARINC [Member] | |||||
Goodwill and Intangible Assets | |||||
ARINC acquisition adjustment | 3 | ||||
Intangible Assets | 431 | ||||
Weighted average useful life | 15 years | ||||
Amortization expense | 0 | [1] | 4 | [1] | |
Finite-Lived Intangible Assets [Member] | ARINC [Member] | |||||
Goodwill and Intangible Assets | |||||
Intangible Assets | 384 | ||||
Indefinite-lived Intangible Assets [Member] | ARINC [Member] | |||||
Goodwill and Intangible Assets | |||||
Intangible Assets | $47 | ||||
[1] | This adjustment eliminates amortization of the historical ARINC intangible assets and replaces it with the new amortization for the acquired intangible assets |
Goodwill_and_Intangible_Assets3
Goodwill and Intangible Assets (Changes in the carrying amount of goodwill) (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 23, 2013 |
Goodwill | ||
Goodwill beginning balance | $1,863 | |
Foreign currency translation adjustments and other | -4 | |
Goodwill ending balance | 1,856 | |
Government Systems [Member] | ||
Goodwill | ||
Goodwill beginning balance | 508 | |
Foreign currency translation adjustments and other | -4 | |
Goodwill ending balance | 504 | |
Commercial Systems [Member] | ||
Goodwill | ||
Goodwill beginning balance | 262 | |
Foreign currency translation adjustments and other | 0 | |
Goodwill ending balance | 262 | |
Information Management Services [Member] | ||
Goodwill | ||
Goodwill beginning balance | 1,093 | |
Foreign currency translation adjustments and other | 0 | |
Goodwill ending balance | 1,090 | |
ARINC [Member] | ||
Goodwill | ||
Goodwill beginning balance | 1,087 | |
ARINC acquisition adjustment | -3 | |
Goodwill ending balance | 1,087 | |
ARINC [Member] | Government Systems [Member] | ||
Goodwill | ||
ARINC acquisition adjustment | 0 | |
ARINC [Member] | Commercial Systems [Member] | ||
Goodwill | ||
ARINC acquisition adjustment | 0 | |
ARINC [Member] | Information Management Services [Member] | ||
Goodwill | ||
ARINC acquisition adjustment | ($3) |
Goodwill_and_Intangible_Assets4
Goodwill and Intangible Assets (Summary of intangible assets) (Details) (USD $) | Dec. 31, 2014 | Sep. 30, 2014 |
In Millions, unless otherwise specified | ||
Intangible Assets | ||
Accumulated Amortization | ($328) | ($316) |
Finite-lived and Indefinite-lived Intangible Assets, Gross | 1,013 | 1,004 |
Net | 685 | 688 |
Developed technology and patents [Member] | ||
Intangible Assets | ||
Gross | 322 | 322 |
Accumulated Amortization | -183 | -178 |
Finite-Lived Intangible Assets, Net | 139 | 144 |
Order or Production Backlog [Member] | ||
Intangible Assets | ||
Gross | 5 | 5 |
Accumulated Amortization | -1 | -1 |
Finite-Lived Intangible Assets, Net | 4 | 4 |
Customer relationships: Acquired [Member] | ||
Intangible Assets | ||
Gross | 336 | 336 |
Accumulated Amortization | -71 | -67 |
Finite-Lived Intangible Assets, Net | 265 | 269 |
Customer relationships: Up-front sales incentives [Member] | ||
Intangible Assets | ||
Gross | 275 | 266 |
Accumulated Amortization | -50 | -47 |
Finite-Lived Intangible Assets, Net | 225 | 219 |
Licensing Agreements [Member] | ||
Intangible Assets | ||
Gross | 13 | 13 |
Accumulated Amortization | -9 | -9 |
Finite-Lived Intangible Assets, Net | 4 | 4 |
Trademarks and tradenames [Member] | ||
Intangible Assets | ||
Gross | 15 | 15 |
Accumulated Amortization | -14 | -14 |
Finite-Lived Intangible Assets, Net | 1 | 1 |
Trademarks and tradenames [Member] | ||
Intangible Assets | ||
Indefinite-Lived Intangible Assets (Excluding Goodwill) | $47 | $47 |
Goodwill_and_Intangible_Assets5
Goodwill and Intangible Assets (Expected annual amortization expense for intangible assets) (Details) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Anticipated Future Amortization Expense [Abstract] | |
2015 | $51 |
2016 | 56 |
2017 | 55 |
2018 | 52 |
2019 | 51 |
Thereafter | 385 |
Up-front sales incentives [Member] | |
Anticipated Future Amortization Expense [Abstract] | |
2015 | 12 |
2016 | 18 |
2017 | 18 |
2018 | 20 |
2019 | 22 |
Thereafter | 138 |
Intangible Assets Excluding Up Front Sales Incentives [Member] | |
Anticipated Future Amortization Expense [Abstract] | |
2015 | 13 |
2016 | 12 |
2017 | 11 |
2018 | 6 |
2019 | 4 |
Thereafter | 13 |
ARINC [Member] | Intangible Assets Excluding Up Front Sales Incentives [Member] | |
Anticipated Future Amortization Expense [Abstract] | |
2015 | 26 |
2016 | 26 |
2017 | 26 |
2018 | 26 |
2019 | 25 |
Thereafter | $234 |
Other_Assets_Narrative_Details
Other Assets (Narrative) (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Joint_Venture | ||
Other Assets [Abstract] | ||
Number of equity affiliates (joint ventures) | 7 | |
Ownership Percentage | 50.00% | |
Sales to equity affiliates | $39 | $38 |
Deferred profit generated from sales to equity affiliates | 1 | 1 |
Exchange and rental assets estimated useful life | 15 years | |
Depreciation expense, exchange and rental assets | $2 | $2 |
Other_Assets_Summary_of_other_
Other Assets (Summary of other assets) (Details) (USD $) | Dec. 31, 2014 | Sep. 30, 2014 |
In Millions, unless otherwise specified | ||
Other Assets [Abstract] | ||
Long-term receivables | $84 | $84 |
Investments in equity affiliates | 8 | 8 |
Exchange and rental assets (net of accumulated depreciation of $95 at December 31, 2014 and $94 at September 30, 2014) | 62 | 61 |
Other | 146 | 135 |
Other assets | $300 | $288 |
Debt_Commercial_Paper_Borrowin
Debt (Commercial Paper Borrowings) (Details) (USD $) | 3 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 23, 2013 | |
Revolving Credit Facility [Member] | |||
Short-term Debt [Line Items] | |||
Line of credit facility, maximum borrowing capacity | $1,000,000,000 | ||
Short-term commercial paper borrowings [Member] | |||
Short-term Debt [Line Items] | |||
Line of credit facility, maximum borrowing capacity | 1,000,000,000 | ||
Maximum Days of Commercial Paper Maturity | 364 days | ||
Commercial Paper | 831,000,000 | 504,000,000 | |
Weighted Average Interest Rate | 0.42% | 0.32% | |
Weighted average maturity period | 22 days | 29 days | |
Short term Credit Facility [Member] | |||
Short-term Debt [Line Items] | |||
Line of credit facility, maximum borrowing capacity | $200,000,000 |
Debt_Revolving_Credit_Faciliti
Debt (Revolving Credit Facilities) (Details) (USD $) | 3 Months Ended | |||||
Dec. 31, 2012 | Dec. 16, 2013 | Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 23, 2013 | |
Revolving Credit Facility [Line Items] | ||||||
Debt Instrument, Fee Amount | $0 | $0 | ||||
Revolving Credit Facility [Member] | ||||||
Revolving Credit Facility [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | 1,000,000,000 | |||||
Revolving credit facility terminated | 850,000,000 | |||||
Maximum debt to total capitalization ratio per the debt covenants | 60.00% | |||||
Debt to total capitalization ratio | 44.00% | |||||
Line of Credit Facility, Amount Outstanding | 0 | 0 | ||||
Debt Instrument, Issuance Date | 23-Dec-13 | |||||
Short term Credit Facility [Member] | ||||||
Revolving Credit Facility [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | 200,000,000 | |||||
Maximum debt to total capitalization ratio per the debt covenants | 0.00% | |||||
Debt to total capitalization ratio | 0.00% | |||||
Line of Credit Facility, Amount Outstanding | 0 | 0 | ||||
Debt Instrument, Issuance Date | 23-Dec-13 | |||||
Short term Credit Facility Non US Subs [Member] | ||||||
Revolving Credit Facility [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | 41,000,000 | |||||
Amount utilized to support commitments in the form of letters of credit | 12,000,000 | |||||
Line of Credit Facility, Amount Outstanding | $0 | $0 | ||||
2023 Notes [Member] | Unsecured Notes [Member] | ||||||
Revolving Credit Facility [Line Items] | ||||||
Debt Instrument, Issuance Date | 16-Dec-13 |
Debt_Current_Portion_of_Long_T
Debt (Current Portion of Long Term Debt) (Details) (Unsecured Notes [Member]) | 1 Months Ended | 2 Months Ended | |
Mar. 31, 2014 | Jan. 31, 2010 | Nov. 20, 2003 | |
Short-term Debt [Line Items] | |||
Description of variable rate basis | one-month LIBOR | six-month LIBOR | |
2013 Notes [Member] | |||
Short-term Debt [Line Items] | |||
Debt Instrument, Issuance Date | 20-Nov-03 | ||
Debt Instrument, Maturity Date, Description | 1-Dec-13 | ||
Derivative, Inception Date | 20-Nov-03 | ||
2013 Notes [Member] | Six month LIBOR [Member] | |||
Short-term Debt [Line Items] | |||
Description of variable rate basis | six-month LIBOR |
Debt_Debt_New_LongTerm_Debt_Is
Debt Debt (New Long-Term Debt Issuance) (Details) (USD $) | 0 Months Ended | 3 Months Ended | 1 Months Ended | 3 Months Ended | ||
Dec. 16, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Jan. 31, 2010 | Dec. 16, 2013 | |
Long-term Debt | ||||||
Proceeds from Issuance of Long-term Debt | $1,089,000,000 | $0 | $1,089,000,000 | |||
Proceeds From Debt Issuance Used to Refinance Debt | 200,000,000 | |||||
Unsecured Notes [Member] | ||||||
Long-term Debt | ||||||
Description of variable rate basis | one-month LIBOR | six-month LIBOR | ||||
Unsecured Notes [Member] | 2016 Notes [Member] | ||||||
Long-term Debt | ||||||
Debt Instrument, Issuance Date | 16-Dec-13 | |||||
Face amount | 300,000,000 | 300,000,000 | ||||
Long-term Debt, Percentage Bearing Variable Interest, Percentage Rate | 0.59% | |||||
Debt Issuance Cost | 1,000,000 | |||||
Proceeds from Issuance of Long-term Debt | 299,000,000 | |||||
Unsecured Notes [Member] | 2016 Notes [Member] | Three month LIBOR [Member] | ||||||
Long-term Debt | ||||||
Description of variable rate basis | three-month LIBOR | |||||
Basis spread on variable rate | 0.35% | 0.35% | ||||
Unsecured Notes [Member] | 2023 Notes [Member] | ||||||
Long-term Debt | ||||||
Debt Instrument, Issuance Date | 16-Dec-13 | |||||
Face amount | 400,000,000 | 400,000,000 | ||||
Basis spread on variable rate | 0.94% | |||||
Debt Issuance Cost | 3,000,000 | |||||
Proceeds from Issuance of Long-term Debt | 396,000,000 | |||||
Derivative amount of hedged item | 200,000,000 | |||||
Interest rate | 3.70% | 3.70% | ||||
Debt Instrument, Unamortized Discount | 1,000,000 | 1,000,000 | ||||
Unsecured Notes [Member] | 2023 Notes [Member] | One Month LIBOR [Member] | ||||||
Long-term Debt | ||||||
Description of variable rate basis | one-month LIBOR | |||||
Basis spread on variable rate | 0.94% | |||||
Unsecured Notes [Member] | 2043 Notes [Member] | ||||||
Long-term Debt | ||||||
Debt Instrument, Issuance Date | 16-Dec-13 | |||||
Face amount | 400,000,000 | 400,000,000 | ||||
Debt Issuance Cost | 4,000,000 | |||||
Proceeds from Issuance of Long-term Debt | 394,000,000 | |||||
Interest rate | 4.80% | 4.80% | ||||
Debt Instrument, Unamortized Discount | 2,000,000 | 2,000,000 | ||||
ARINC [Member] | ||||||
Long-term Debt | ||||||
Proceeds from Debt Issuance Used to Fund Acquisition | $900,000,000 |
Debt_Other_LongTerm_Debt_Detai
Debt (Other Long-Term Debt) (Details) (Unsecured Notes [Member], USD $) | 1 Months Ended | 3 Months Ended | 2 Months Ended | 7 Months Ended | |
Mar. 31, 2014 | Jan. 31, 2010 | Dec. 16, 2013 | Nov. 16, 2011 | 6-May-09 | |
Long-term Debt | |||||
Description of variable rate basis | one-month LIBOR | six-month LIBOR | |||
2023 Notes [Member] | |||||
Long-term Debt | |||||
Face amount | $400,000,000 | ||||
Interest rate | 3.70% | ||||
Derivative amount of hedged item | 200,000,000 | ||||
Derivative basis spread on variable rate | 0.94% | ||||
Debt Instrument, Issuance Date | 16-Dec-13 | ||||
2023 Notes [Member] | One Month LIBOR [Member] | |||||
Long-term Debt | |||||
Derivative basis spread on variable rate | 0.94% | ||||
Description of variable rate basis | one-month LIBOR | ||||
2021 Notes [Member] | |||||
Long-term Debt | |||||
Face amount | 250,000,000 | ||||
Interest rate | 3.10% | ||||
Debt Instrument, Issuance Date | 16-Nov-11 | ||||
Debt Instrument, Maturity Date, Description | 15-Nov-21 | ||||
2019 Notes [Member] | |||||
Long-term Debt | |||||
Face amount | 300,000,000 | ||||
Interest rate | 5.25% | ||||
Derivative amount of hedged item | 150,000,000 | ||||
Derivative basis spread on variable rate | 1.24% | ||||
Debt Instrument, Issuance Date | 6-May-09 | ||||
Debt Instrument, Maturity Date, Description | 7/15/19 | ||||
2019 Notes [Member] | Six month LIBOR [Member] | |||||
Long-term Debt | |||||
Description of variable rate basis | six-month LIBOR |
Debt_Summary_of_longterm_debt_
Debt (Summary of long-term debt and a reconciliation to the carrying amount) (Details) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2014 |
Long-term Debt | |||
Fair value, swap adjustment | $24 | $18 | |
Interest Paid | 20 | 8 | |
Long-term Debt, Excluding Current Maturities | 1,670 | 1,663 | |
2043 Notes [Member] | Unsecured Notes [Member] | |||
Long-term Debt | |||
Principal amount of notes | 398 | 398 | |
2023 Notes [Member] | Unsecured Notes [Member] | |||
Long-term Debt | |||
Principal amount of notes | 399 | 399 | |
2021 Notes [Member] | Unsecured Notes [Member] | |||
Long-term Debt | |||
Principal amount of notes | 250 | 249 | |
2019 Notes [Member] | Unsecured Notes [Member] | |||
Long-term Debt | |||
Principal amount of notes | 299 | 299 | |
2016 Notes [Member] | Unsecured Notes [Member] | |||
Long-term Debt | |||
Principal amount of notes | $300 | $300 |
Retirement_Benefits_Components
Retirement Benefits (Components of Expense (Income)) (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Components of Expense (Income) | ||
Net benefit expense (income) | $2 | $2 |
Pension Plans, Defined Benefit [Member] | ||
Components of Expense (Income) | ||
Service cost | 3 | 2 |
Interest cost | 39 | 40 |
Expected return on plan assets | -60 | -53 |
Prior service credit | -1 | -3 |
Net actuarial loss | 18 | 17 |
Net benefit expense (income) | -1 | 3 |
Other Postretirement Benefit Plans, Defined Benefit [Member] | ||
Components of Expense (Income) | ||
Interest cost | 1 | 2 |
Prior service credit | -1 | -2 |
Net actuarial loss | $2 | $2 |
Retirement_Benefits_Disclosure
Retirement Benefits Disclosures - Retirement Benefits (Narrative) (Details) (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Defined Benefit Plan Disclosure | ||
Defined Benefit Plan, Contributions by Employer | $55 | |
Defined Benefit Plans, Estimated Future Employer Contributions in Next Fiscal Year | 14 | |
Defined Benefit Plan, Net Periodic Benefit Cost | 2 | 2 |
Other Postretirement Benefit Plans, Defined Benefit [Member] | ||
Defined Benefit Plan Disclosure | ||
Defined Benefit Plan, Interest Cost | 1 | 2 |
Defined Benefit Plan, Amortization of Prior Service Cost (Credit) | -1 | -2 |
Defined Benefit Plan, Amortization of Gains (Losses) | -2 | -2 |
Pension Plans, Defined Benefit [Member] | ||
Defined Benefit Plan Disclosure | ||
Defined Benefit Plan, Service Cost | 3 | 2 |
Defined Benefit Plan, Interest Cost | 39 | 40 |
Defined Benefit Plan, Expected Return on Plan Assets | 60 | 53 |
Defined Benefit Plan, Amortization of Prior Service Cost (Credit) | -1 | -3 |
Defined Benefit Plan, Amortization of Gains (Losses) | -18 | -17 |
Defined Benefit Plan, Net Periodic Benefit Cost | ($1) | $3 |
StockBased_Compensation_and_Ea2
Stock-Based Compensation and Earnings Per Share (Stock-Based Compensation Expense) (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Stock-Based Compensation | ||
Stock-based compensation expense | $5 | $5 |
Income tax benefit | 2 | 2 |
Employee Share Based Compensation Allocation Of Recognized Expense Cost Of Sales [Member] | ||
Stock-Based Compensation | ||
Stock-based compensation expense | 2 | 2 |
Employee Service Share Based Compensation Allocation Of Recognized Expense Selling General and Administrative [Member] | ||
Stock-Based Compensation | ||
Stock-based compensation expense | $3 | $3 |
StockBased_Compensation_and_Ea3
Stock-Based Compensation and Earnings Per Share (Stock Option Fair Value Information) (Details) | 3 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Stock Based Compensation and Earnings Per Share Abstract | ||
Risk Free Interest Rate, Minimum | 0.30% | 0.30% |
Risk Free Interest Rate, Maximum | 3.00% | 2.90% |
Expected dividend yield | 1.60% | 1.90% |
Expected volatility | 24.00% | 28.00% |
Expected life | 7 years | 7 years |
StockBased_Compensation_and_Ea4
Stock-Based Compensation and Earnings Per Share (Earnings Per Share and Diluted Share Equivalents) (Details) (USD $) | 3 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Computation of Basic and Diluted Earnings Per Share | ||
Income from continuing operations | $169 | $134 |
(Loss) from discontinued operations, net of taxes | -2 | -3 |
Net income | $167 | $131 |
Denominator: | ||
Denominator for basic earnings per share – weighted average common shares | 133 | 135.2 |
Stock options | 1.1 | 1.1 |
Performance shares, restricted stock and restricted stock units | 0.4 | 0.4 |
Dilutive potential common shares | 1.5 | 1.5 |
Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversion | 134.5 | 136.7 |
Basic | ||
Continuing operations | $1.28 | $0.99 |
Discontinued operations | ($0.02) | ($0.02) |
Basic earnings per share | $1.26 | $0.97 |
Diluted | ||
Continuing operations | $1.26 | $0.98 |
Discontinued operations | ($0.02) | ($0.02) |
Diluted earnings per share | $1.24 | $0.96 |
Employee Stock Option [Member] | ||
Diluted | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0.6 | 0.9 |
Shareowners_Equity_Details
Shareowners' Equity (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Accumulated other comprehensive loss | ($1,366) | |
Other comprehensive loss before reclassifications | -19 | |
Amounts reclassified from accumulated other comprehensive loss | 12 | |
Net current period other comprehensive income/(loss) | -7 | |
Accumulated other comprehensive loss | -1,373 | |
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | 12 | |
Foreign Exchange Translation Adjustment [Member] | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Accumulated other comprehensive loss | -15 | |
Other comprehensive loss before reclassifications | -14 | |
Amounts reclassified from accumulated other comprehensive loss | 0 | |
Net current period other comprehensive income/(loss) | -14 | |
Accumulated other comprehensive loss | -29 | |
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | 0 | |
Pension and Other Postretirement Adjustments [Member] | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Accumulated other comprehensive loss | -1,348 | [1] |
Other comprehensive loss before reclassifications | 0 | [1] |
Amounts reclassified from accumulated other comprehensive loss | 11 | [1] |
Net current period other comprehensive income/(loss) | 11 | [1] |
Accumulated other comprehensive loss | -1,337 | [1] |
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax | 18 | |
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | 11 | [1] |
Change in the Fair Value of Effective Cash Flow Hedges [Member] | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Accumulated other comprehensive loss | -3 | |
Other comprehensive loss before reclassifications | -5 | |
Amounts reclassified from accumulated other comprehensive loss | 1 | |
Net current period other comprehensive income/(loss) | -4 | |
Accumulated other comprehensive loss | -7 | |
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | $1 | |
[1] | Reclassifications from AOCL to net income, related to the amortization of net actuarial losses and prior service credits for the Company's retirement benefit plans, were $18 million ($11 million net of tax), for the quarter ended December 31, 2014. The reclassifications are included in the computation of net benefit expense. See Note 11, Retirement Benefits for additional details. |
Other_Income_Net_Details
Other Income, Net (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Nonoperating Income (Expense) [Abstract] | ||
Earnings from equity affiliates | $0 | $3 |
Gain from business divestiture | 0 | 10 |
Other | 1 | 0 |
Other income, net | $1 | $13 |
Income_Taxes_Narrative_Details
Income Taxes (Narrative) (Details) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2014 |
Income Taxes | |||
Income Taxes Paid | $23 | $49 | |
Unrecognized Tax Benefits | 55 | 48 | |
Statute of Limitations, Range, Minimum (in years) | 3 years | ||
Statute of Limitations, Range, Maximum (in years) | 5 years | ||
Unrecognized tax benefits that, if recognized, would impact the effective income tax rate | 31 | 25 | |
Accrued Income tax penalties and interest | 2 | 1 | |
Interest and penalties expense (income) | 0 | 0 | |
Minimum [Member] | |||
Income Taxes | |||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit | 0 | ||
Maximum [Member] | |||
Income Taxes | |||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit | $1 |
Fair_Value_Measurements_Fair_V
Fair Value Measurements (Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis) (Details) (USD $) | 3 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | |
Fair Value of Assets and Liabilities Measured on Recurring Basis | |||
Transfers Between Measurement Levels | $0 | $0 | |
Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Deferred Compensation Plan Investments [Member] | |||
Fair Value of Assets and Liabilities Measured on Recurring Basis | |||
Assets at fair value | 53,000,000 | 50,000,000 | |
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Foreign Exchange Forward [Member] | |||
Fair Value of Assets and Liabilities Measured on Recurring Basis | |||
Liabilities at fair value | -13,000,000 | -9,000,000 | |
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Interest Rate Swap Assets [Member] | |||
Fair Value of Assets and Liabilities Measured on Recurring Basis | |||
Assets at fair value | 24,000,000 | 18,000,000 | |
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Foreign Exchange Forward [Member] | |||
Fair Value of Assets and Liabilities Measured on Recurring Basis | |||
Assets at fair value | 6,000,000 | ||
Other Current Assets [Member] | |||
Fair Value of Assets and Liabilities Measured on Recurring Basis | |||
Foreign currency forward exchange contracts | $6,000,000 | $6,000,000 |
Fair_Value_Measurements_Carryi
Fair Value Measurements (Carrying Amounts and Fair Values of Financial Instruments) (Details) (USD $) | Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 |
In Millions, unless otherwise specified | ||||
Carrying Amounts and Fair Value of Financial Instruments | ||||
Cash and cash equivalents | $315 | $323 | $439 | $391 |
Long-term debt | -1,670 | -1,663 | ||
Carrying Amount [Member] | ||||
Carrying Amounts and Fair Value of Financial Instruments | ||||
Cash and cash equivalents | 315 | 323 | ||
Short-term Debt | -831 | -504 | ||
Long-term debt | -1,646 | -1,645 | ||
Fair Value [Member] | ||||
Carrying Amounts and Fair Value of Financial Instruments | ||||
Cash and cash equivalents | 315 | 323 | ||
Short-term Debt | -831 | -504 | ||
Long-term debt | ($1,788) | ($1,747) |
Derivative_Financial_Instrumen2
Derivative Financial Instruments (Narrative) (Details) (USD $) | 3 Months Ended | 1 Months Ended | 2 Months Ended | 3 Months Ended | |||||
Dec. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Jan. 31, 2010 | Nov. 20, 2003 | Dec. 16, 2013 | Sep. 30, 2014 | Oct. 31, 2013 | Sep. 30, 2013 | |
Derivative Financial Instruments | |||||||||
Derivative Credit Risk Valuation Adjustment, Derivative Liabilities | $24,000,000 | $18,000,000 | |||||||
Derivative, Lower Fixed Interest Rate Range | 2.82% | ||||||||
Derivative, Higher Fixed Interest Rate Range | 3.88% | ||||||||
Amount of cash flow hedge gain (loss) to be reclassified into earnings over next 12 months | 6,000,000 | ||||||||
Maximum duration of a foreign currency cash flow hedge contract in months | 67 months | ||||||||
Gain (Loss) on Cash Flow Hedge Ineffectiveness, Net | 0 | 0 | |||||||
Gain (Loss) recognized when a hedged firm commitment no longer qualified as a fair value hedge or when a hedged forecasted transaction no longer qualified as a cash flow hedge | 0 | 0 | |||||||
Other Assets [Member] | |||||||||
Derivative Financial Instruments | |||||||||
Interest rate swap assets | 24,000,000 | 18,000,000 | |||||||
Unsecured Notes [Member] | |||||||||
Derivative Financial Instruments | |||||||||
Interest rate swap assets | 18,000,000 | ||||||||
Description of variable rate basis | one-month LIBOR | six-month LIBOR | |||||||
Swap expiration date | 15-Dec-23 | 15-Jul-19 | |||||||
Unsecured Notes [Member] | Other Assets [Member] | |||||||||
Derivative Financial Instruments | |||||||||
Interest rate swap assets | 24,000,000 | 18,000,000 | |||||||
Derivative Credit Risk Valuation Adjustment, Derivative Liabilities | 24,000,000 | ||||||||
Unsecured Notes [Member] | 2023 Notes [Member] | |||||||||
Derivative Financial Instruments | |||||||||
Derivative amount of hedged item | 200,000,000 | ||||||||
Basis spread on variable rate | 0.94% | ||||||||
Unsecured Notes [Member] | 2019 Notes [Member] | |||||||||
Derivative Financial Instruments | |||||||||
Derivative amount of hedged item | 150,000,000 | ||||||||
Basis spread on variable rate | 1.24% | ||||||||
Unsecured Notes [Member] | |||||||||
Derivative Financial Instruments | |||||||||
Description of variable rate basis | six-month LIBOR | ||||||||
Swap expiration date | 1-Dec-13 | ||||||||
Derivative, Inception Date | 20-Nov-03 | ||||||||
Forward Starting Interest Rate Swap [Member] | |||||||||
Derivative Financial Instruments | |||||||||
Notional amount of foreign currency derivatives | 200,000,000 | 300,000,000 | |||||||
Foreign Exchange Contract [Member] | |||||||||
Derivative Financial Instruments | |||||||||
Notional amount of foreign currency derivatives | 329,000,000 | 575,000,000 | |||||||
Foreign Exchange Contract [Member] | Other Current Assets [Member] | |||||||||
Derivative Financial Instruments | |||||||||
Derivative Instruments Not Designated as Hedging Instruments, Asset, at Fair Value | 0 | ||||||||
Foreign Exchange Contract [Member] | Other Current Liabilities [Member] | |||||||||
Derivative Financial Instruments | |||||||||
Derivative Instruments Not Designated as Hedging Instruments, Liability, at Fair Value | 1,000,000 | ||||||||
Cash Flow Hedging [Member] | AOCL [Member] | |||||||||
Derivative Financial Instruments | |||||||||
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net | $0 | ($3,000,000) | $2,000,000 |
Derivative_Financial_Instrumen3
Derivative Financial Instruments (Fair Values of Derivative Instruments) (Details) (USD $) | Dec. 31, 2014 | Sep. 30, 2014 |
In Millions, unless otherwise specified | ||
Derivative Financial Instruments | ||
Total | $30 | $24 |
Other Current Assets [Member] | ||
Derivative Financial Instruments | ||
Foreign currency forward exchange contracts | 6 | 6 |
Other Assets [Member] | ||
Derivative Financial Instruments | ||
Interest rate swaps | 24 | 18 |
Other Current Liabilities [Member] | ||
Derivative Financial Instruments | ||
Foreign currency forward exchange contracts | $13 | $9 |
Derivative_Financial_Instrumen4
Derivative Financial Instruments (Effect of Derivative Instruments) (Details) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 16, 2013 | Dec. 31, 2013 |
Cost of Sales [Member] | |||
Derivative Financial Instruments | |||
Gain (Loss) on Foreign Currency Derivative Instruments Not Designated as Hedging Instruments | ($2) | $0 | |
Fair Value Hedging [Member] | Interest Expense [Member] | |||
Derivative Financial Instruments | |||
Gain (loss) recognized from interest rate swaps | 3 | 2 | |
Cash Flow Hedging [Member] | Cost of Sales [Member] | |||
Derivative Financial Instruments | |||
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net | -1 | -1 | |
Cash Flow Hedging [Member] | AOCL [Member] | |||
Derivative Financial Instruments | |||
Amount of gain (loss) recognized in AOCL (effective portion, before deferred tax impact) | -7 | -3 | |
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net | $0 | ($2) | $3 |
Guarantees_and_Indemnification2
Guarantees and Indemnifications (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Guarantees and Indemnifications | ||
Balance at beginning of year | $104 | $121 |
Warranty costs incurred | -11 | -11 |
Product warranty accrual | 11 | 12 |
Changes in estimates for prior years | 0 | -6 |
Foreign currency translation adjustments and other | -1 | 0 |
Balance at December 31 | 103 | 116 |
Ownership Percentage | 50.00% | |
Outstanding letters of credit | 280 | |
Quest Guarantee [Member] | ||
Guarantees and Indemnifications | ||
Ownership Percentage | 50.00% | |
Quest performance guarantee | 2 | |
Outstanding Quest loan balance | $3 |
Environmental_Matters_Details
Environmental Matters (Details) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | Site |
Environmental Remediation Obligations [Abstract] | |
Number of Sites Involved in Investigation | 8 |
Environmental Loss Contingency Number of Sites Where Reasonably Possible Future Costs is Insignificant | 7 |
Site contingency reasonably possible future costs | $12 |
Accrual for environmental loss contingencies | $6 |
Restructuring_Pension_Settleme1
Restructuring, Pension Settlement and Asset Impairment Charges, Net (Details) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2014 |
2014 Restructuring [Member] | |
Restructuring and Asset Impairment Charges [Line Items] | |
Pension Settlement and Restructuring Charges | $9 |
Pension Settlement | 5 |
Payments for Restructuring and Pension Settlement | 7 |
Employee separation costs | 4 |
Employee Severance [Member] | 2014 Restructuring [Member] | |
Restructuring and Asset Impairment Charges [Line Items] | |
Restructuring Reserve | 2 |
Employee Severance [Member] | 2012 Restructuring [Member] | |
Restructuring and Asset Impairment Charges [Line Items] | |
Restructuring Reserve | 4 |
Restructuring Reserve, Settled with Cash | $31 |
Business_Segment_Information_N
Business Segment Information (Narrative) (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Business Segment Information | ||
Revenue, Net | $1,226 | $1,054 |
Commercial Systems [Member] | ||
Business Segment Information | ||
Revenue, Net | 568 | 521 |
Wide Body In Flight Entertainment Products and Services [Member] | Commercial Systems [Member] | ||
Business Segment Information | ||
Revenue, Net | $16 | $19 |
Business_Segment_Information_S
Business Segment Information (Sales and Results of Operations of Operating Segments) (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | ||
Business Segment Information | ||||
Sales: | $1,226 | $1,054 | ||
Segment operating earnings: | 252 | 218 | ||
Interest expense | -15 | [1] | -12 | [1] |
Stock-based compensation | -5 | -5 | ||
General corporate, net | -14 | -15 | ||
Gain on divestiture of business | 0 | 10 | ||
ARINC transaction costs | 0 | [1] | -12 | [1] |
Income from continuing operations before income taxes | 218 | 184 | ||
Income tax expense | -49 | -50 | ||
Income from continuing operations | 169 | 134 | ||
Government Systems [Member] | ||||
Business Segment Information | ||||
Sales: | 509 | 515 | ||
Segment operating earnings: | 106 | 105 | ||
Commercial Systems [Member] | ||||
Business Segment Information | ||||
Sales: | 568 | 521 | ||
Segment operating earnings: | 125 | 111 | ||
Information Management Services [Member] | ||||
Business Segment Information | ||||
Sales: | 149 | 18 | ||
Segment operating earnings: | 21 | 2 | ||
Air Transport Aviation Electronics [Member] | Commercial Systems [Member] | ||||
Business Segment Information | ||||
Sales: | 338 | 304 | ||
Business And Regional Aviation Electronics [Member] | Commercial Systems [Member] | ||||
Business Segment Information | ||||
Sales: | 230 | 217 | ||
Avionics [Member] | Government Systems [Member] | ||||
Business Segment Information | ||||
Sales: | 320 | 317 | ||
Communication products [Member] | Government Systems [Member] | ||||
Business Segment Information | ||||
Sales: | 92 | 101 | ||
Surface Solutions [Member] | Government Systems [Member] | ||||
Business Segment Information | ||||
Sales: | 56 | 58 | ||
Navigation Products [Member] | Government Systems [Member] | ||||
Business Segment Information | ||||
Sales: | $41 | $39 | ||
[1] | During the three months ended December 31, 2014, and December 31, 2013, the Company incurred $0 million and $3 million, respectively, of bridge credit facility fees related to the acquisition of ARINC. These costs are included in interest expense; therefore total transaction costs related to the acquisition of ARINC during these periods were $0 million and $15 million, respectively. |
Business_Segment_Information_S1
Business Segment Information (Summary of Sales by Product Category) (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Business Segment Information | ||
Sales: | $1,226 | $1,054 |
Government Systems [Member] | ||
Business Segment Information | ||
Sales: | 509 | 515 |
Commercial Systems [Member] | ||
Business Segment Information | ||
Sales: | 568 | 521 |
Air Transport Aviation Electronics [Member] | Commercial Systems [Member] | ||
Business Segment Information | ||
Sales: | 338 | 304 |
Communication products [Member] | Government Systems [Member] | ||
Business Segment Information | ||
Sales: | 92 | 101 |
Surface Solutions [Member] | Government Systems [Member] | ||
Business Segment Information | ||
Sales: | 56 | 58 |
Navigation Products [Member] | Government Systems [Member] | ||
Business Segment Information | ||
Sales: | $41 | $39 |