Document and Entity Information
Document and Entity Information Document - shares | 9 Months Ended | |
Jun. 30, 2015 | Jul. 20, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ROCKWELL COLLINS INC | |
Entity Central Index Key | 1,137,411 | |
Document and Entity Information | --09-30 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Registrant Name | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 131,770,187 | |
Well known seasoned issuer | Yes | |
Voluntary filer | No | |
Current reporting status | Yes |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Financial Position - USD ($) $ in Millions | Jun. 30, 2015 | Sep. 30, 2014 |
Current Assets: | ||
Cash and cash equivalents | $ 294 | $ 323 |
Receivables, net | 1,112 | 1,033 |
Inventories, net | 1,844 | 1,709 |
Current deferred income taxes | 8 | 9 |
Business held for sale | 0 | 15 |
Other current assets | 120 | 115 |
Total current assets | 3,378 | 3,204 |
Property | 933 | 919 |
Goodwill | 1,868 | 1,863 |
Intangible Assets | 672 | 688 |
Long-term Deferred Income Taxes | 56 | 101 |
Other Assets | 323 | 288 |
TOTAL ASSETS | 7,230 | 7,063 |
Current Liabilities: | ||
Short-term debt | 745 | 504 |
Accounts payable | 430 | 535 |
Compensation and benefits | 259 | 256 |
Advance payments from customers | 361 | 359 |
Accrued customer incentives | 234 | 202 |
Product warranty costs | 94 | 104 |
Liabilities associated with business held for sale | 0 | 16 |
Other current liabilities | 219 | 222 |
Total current liabilities | 2,342 | 2,198 |
Long-term Debt, Net | 1,667 | 1,663 |
Retirement Benefits | 956 | 1,096 |
Other Liabilities | 210 | 217 |
Equity: | ||
Common stock ($0.01 par value; shares authorized: 1,000; shares issued: 183.8) | 2 | 2 |
Additional paid-in capital | 1,508 | 1,489 |
Retained earnings | 4,983 | 4,605 |
Accumulated other comprehensive loss | (1,362) | (1,366) |
Common stock in treasury, at cost (shares held: June 30, 2015, 52.0; September 30, 2014, 49.8) | (3,082) | (2,846) |
Total shareowners’ equity | 2,049 | 1,884 |
Noncontrolling interest | 6 | 5 |
Total equity | 2,055 | 1,889 |
TOTAL LIABILITIES AND EQUITY | $ 7,230 | $ 7,063 |
Condensed Consolidated Stateme3
Condensed Consolidated Statement of Financial Position (Parenthetical) - $ / shares | Jun. 30, 2015 | 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 | 52,000,000 | 49,800,000 |
Condensed Consolidated Stateme4
Condensed Consolidated Statement of Operations - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | ||
Sales: | |||||
Product sales | $ 1,091 | $ 1,065 | $ 3,264 | $ 3,117 | |
Service sales | 202 | 199 | 596 | 460 | |
Total sales | 1,293 | 1,264 | 3,860 | 3,577 | |
Costs, expenses and other: | |||||
Product cost of sales | 754 | 743 | 2,266 | 2,176 | |
Service cost of sales | 134 | 134 | 416 | 319 | |
Selling, general and administrative expenses | 157 | 148 | 446 | 430 | |
Interest expense | [1] | 15 | 15 | 45 | 43 |
Other income, net | (4) | (5) | (9) | (20) | |
Total costs, expenses and other | 1,056 | 1,035 | 3,164 | 2,948 | |
Income from continuing operations before income taxes | 237 | 229 | 696 | 629 | |
Income tax expense | 59 | 66 | 186 | 184 | |
Income from continuing operations | 178 | 163 | 510 | 445 | |
(Loss) from discontinued operations, net of taxes | 0 | (5) | (8) | (8) | |
Net income | $ 178 | $ 158 | $ 502 | $ 437 | |
Basic | |||||
Continuing operations | $ 1.35 | $ 1.21 | $ 3.85 | $ 3.29 | |
Discontinued operations | 0 | (0.04) | (0.06) | (0.06) | |
Basic earnings per share | 1.35 | 1.17 | 3.79 | 3.23 | |
Diluted | |||||
Continuing operations | 1.33 | 1.19 | 3.81 | 3.25 | |
Discontinued operations | 0 | (0.04) | (0.06) | (0.06) | |
Diluted earnings per share | $ 1.33 | $ 1.15 | $ 3.75 | $ 3.19 | |
Weighted average common shares: | |||||
Basic | 132.1 | 135.2 | 132.4 | 135.3 | |
Diluted | 133.6 | 136.9 | 133.9 | 136.9 | |
Cash dividends per share | $ 0.33 | $ 0.30 | $ 0.93 | $ 0.90 | |
[1] | During the nine months ended June 30, 2014, the Company incurred $3 million of bridge credit facility fees related to the acquisition of ARINC. These costs are included in interest expense; total transaction costs related to the acquisition of ARINC during this period were $16 million. |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 178 | $ 158 | $ 502 | $ 437 |
Unrealized foreign currency translation adjustments | 9 | 3 | (27) | 2 |
Pension and other retirement benefits adjustments (net of taxes for the three and nine months ended June 30, 2015 of $7 and $20 respectively; net of taxes for the three and nine months ended June 30, 2014 of $5 and $15, respectively) | 10 | 9 | 33 | 26 |
Foreign currency cash flow hedge adjustments (net of taxes for the three and nine months ended June 30, 2015 of ($1) and $(2), respectively; net of taxes for the three and nine months ended June 30, 2014 of $0 and $0, respectively) | 1 | 2 | (2) | 4 |
Comprehensive income | $ 198 | $ 172 | $ 506 | $ 469 |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Comprehensive Income (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Pension and other retirement benefits adjustments tax amount | $ 7 | $ 5 | $ 20 | $ 15 |
Foreign currency cash flow hedge adjustment tax amount | $ (1) | $ 0 | $ (2) | $ 0 |
Condensed Consolidated Stateme7
Condensed Consolidated Statement of Cash Flows - USD ($) $ in Millions | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | ||
Operating Activities: | |||
Net income | $ 502 | $ 437 | |
Loss from discontinued operations, net of taxes | (8) | (8) | |
Income from continuing operations | 510 | 445 | |
Adjustments to arrive at cash provided by operating activities: | |||
Gain on sale of business | 0 | (10) | |
Depreciation | 114 | 102 | |
Amortization of intangible assets and pre-production engineering costs | 75 | 58 | |
Stock-based compensation expense | 17 | 17 | |
Compensation and benefits paid in common stock | 37 | 37 | |
Excess tax benefit from stock-based compensation | (12) | (5) | |
Deferred income taxes | 44 | 81 | |
Pension plan contributions | (66) | (66) | |
Changes in assets and liabilities, excluding effects of acquisitions and foreign currency adjustments: | |||
Receivables | (108) | 38 | |
Production inventory | (72) | (95) | |
Pre-production engineering costs | (134) | (156) | |
Accounts payable | (73) | (18) | |
Compensation and benefits | 9 | (77) | |
Advance payments from customers | 12 | (23) | |
Accrued customer incentives | 32 | 0 | |
Product warranty costs | (8) | (10) | |
Income taxes | 28 | (55) | |
Other assets and liabilities | (64) | 2 | |
Cash Provided by Operating Activities from Continuing Operations | 341 | 265 | |
Investing Activities: | |||
Property additions | (155) | (115) | |
Acquisition of businesses, net of cash acquired | (24) | (1,405) | |
Acquisition of intangible assets | 0 | (1) | |
Proceeds from business divestitures | 0 | 24 | |
Other investing activities | (8) | 0 | |
Cash (Used for) Investing Activities from Continuing Operations | (187) | (1,497) | |
Financing Activities: | |||
Purchases of treasury stock | (330) | (111) | |
Cash dividends | (123) | (122) | |
Repayment of debt | 0 | (200) | |
Increase in short-term commercial paper borrowings, net (1) | [1] | 241 | 620 |
Increase in long-term borrowings | 0 | 1,089 | |
Proceeds from the exercise of stock options | 48 | 35 | |
Excess tax benefit from stock-based compensation | 12 | 5 | |
Other financing activities | (1) | 0 | |
Cash (Used for) Provided by Financing Activities from Continuing Operations | (153) | 1,316 | |
Effect of exchange rate changes on cash and cash equivalents | (19) | 3 | |
Discontinued Operations: | |||
Operating activities | (14) | (28) | |
Investing activities | 3 | 0 | |
Cash (used for) discontinued operations | (11) | (28) | |
Net Change in Cash and Cash Equivalents | (29) | 59 | |
Cash and Cash Equivalents at Beginning of Period | 323 | 391 | |
Cash and Cash Equivalents at End of Period | 294 | 450 | |
Statement of Cash Flows Footnote [Abstract] | |||
Gross borrowings of commercial paper with maturities greater than three months | 0 | 265 | |
Gross payments of commercial paper with maturities greater than three months | 0 | 90 | |
Net borrowings of commercial paper with maturities greater than three months | $ 0 | $ 175 | |
[1] | Includes gross borrowings and repayments of commercial paper with maturities greater than three months as follows: Nine Months Ended June 30 2015 2014Gross borrowings of commercial paper with maturities greater than three months$— $265Gross payments of commercial paper with maturities greater than three months— 90Net borrowings of commerical paper with maturities greater than three months$— $175 |
Business Description and Basis
Business Description and Basis of Presentation | 9 Months Ended |
Jun. 30, 2015 | |
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, June 30 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 and nine months ended June 30, 2015 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. As discussed in Note 4, Discontinued Operations and Divestitures, on March 10, 2015, the Company divested ARINC's Aerospace Systems Engineering and Support (ASES) business, which provides military aircraft integration and modifications, maintenance and logistics and support. On July 25, 2014, the Company divested its satellite communication systems business, formerly known as Datapath, Inc. (Datapath). As a result, the Datapath and ASES businesses have been accounted for as discontinued operations for all periods presented. |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 9 Months Ended |
Jun. 30, 2015 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In May 2014, the Financial Accounting Standards Board (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 use of either a retrospective or cumulative effect transition method. Based upon the FASB's recent decision to approve a one year delay in implementation, the new standard is now effective for the Company in fiscal 2019, with early adoption permitted, but not earlier than fiscal 2018. The Company is currently evaluating the transition methods allowed under the new standard and the effect the standard will have on the Company's 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. In April 2014, the 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. |
Acquisitions
Acquisitions | 9 Months Ended |
Jun. 30, 2015 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions On March 20, 2015, the Company acquired 100 percent of the outstanding shares of Pacific Avionics Pty. Limited (Pacific Avionics), a Singapore-based company specializing in technologies used for wireless information distribution, including in-flight entertainment and connectivity. The purchase price, net of cash acquired, was $24 million . The Company is in the process of allocating the purchase price and obtaining a valuation for acquired intangible assets and their useful lives. Based on the Company's preliminary allocation of the purchase price, $9 million has been allocated to in process research and development (IPR&D) and $15 million to goodwill, none of which is deductible for tax purposes. The acquired IPR&D is recorded at fair value as an indefinite-lived intangible asset until the development is complete, at which time the asset will be considered a finite-lived intangible asset and amortized over its estimated useful life. The excess purchase price over net assets acquired, including intangible assets, reflects the Company's view that this acquisition will further enhance the Company's cabin products and information management services portfolios. Pacific Avionics is included within the Commercial Systems segment, and its results of operations have been included in the Company's operating results for the period subsequent to the completion of the acquisition on March 20, 2015. Pro-forma results of operations have not been presented because the effect of the acquisition is not material to the Company's consolidated results of operations. On December 23, 2013, the Company acquired 100 percent of the outstanding common stock and voting interests of Radio Holdings, Inc., 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 billion , 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) December 23, 2013 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 divested, as detailed in Note 4. The purchase price allocation resulted in the recognition of $1.087 billion of goodwill and $431 million of intangible assets with a weighted average useful life of approximately 15 years. None of the goodwill 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 ended June 30, 2015 and 2014 , ARINC contributed sales of $140 million and $134 million , respectively, and net income of $21 million and $12 million , respectively. For the nine months ended June 30, 2015 and 2014 , ARINC contributed sales of $421 million and $277 million , respectively, and net income of $47 million and $22 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 of $81 million from the sale 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 prior to 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 had been consummated prior to 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 Nine Months Ended June 30 June 30 (in millions, except per share amounts) 2015 (as Reported) 2014 (Pro-forma) 2015 (as Reported) 2014 (Pro-forma) Sales $ 1,293 $ 1,264 $ 3,860 $ 3,683 Net income attributable to common shareowners from continuing operations $ 178 $ 163 $ 510 $ 451 Basic earnings per share from continuing operations $ 1.35 $ 1.21 $ 3.85 $ 3.33 Diluted earnings per share from continuing operations $ 1.33 $ 1.19 $ 3.81 $ 3.29 The unaudited supplemental pro-forma data above excludes the results of ASES, which the Company divested, 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 prior to October 1, 2013. These adjustments are net of any applicable tax impact and were included to arrive at the pro-forma results above. Three Months Ended Nine Months Ended June 30 June 30 (in millions) 2015 2014 2015 2014 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) — — — 21 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 Div
Discontinued Operations and Divestitures | 9 Months Ended |
Jun. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations and Divestitures | Discontinued Operations and Divestitures On March 10, 2015, the Company sold 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. The sale price was $3 million , and additional post-closing consideration of up to $4 million may be received. The Company recognized a pre-tax loss of $5 million ( $3 million after-tax) related to the ASES divestiture. The operating results of ASES, including the loss realized on the disposition, have been included within discontinued operations in the Company's Condensed Consolidated Statement of Operations for all periods presented. On July 25, 2014, the Company sold its satellite communication systems business formerly known as Datapath. The sale 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 the Company's 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. Results of discontinued operations are as follows: Three Months Ended Nine Months Ended June 30 June 30 (in millions) 2015 2014 2015 2014 Sales $ — $ 31 $ 18 $ 74 Loss from discontinued operations before income taxes — (13 ) (13 ) (17 ) Income tax benefit from discontinued operations — 8 5 9 During the first quarter of 2014, 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 . The divestiture of this business is part of the Company's 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 | 9 Months Ended |
Jun. 30, 2015 | |
Receivables [Abstract] | |
Receivables, Net | Receivables, Net Receivables, net are summarized as follows: (in millions) June 30, September 30, Billed $ 811 $ 758 Unbilled 428 485 Less progress payments (115 ) (198 ) Total 1,124 1,045 Less allowance for doubtful accounts (12 ) (12 ) Receivables, net $ 1,112 $ 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 $75 million and $76 million at June 30, 2015 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 | 9 Months Ended |
Jun. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories, Net | Inventories, Net Inventories, net are summarized as follows: (in millions) June 30, September 30, Finished goods $ 238 $ 218 Work in process 274 262 Raw materials, parts and supplies 365 361 Less progress payments (8 ) (8 ) Total 869 833 Pre-production engineering costs 975 876 Inventories, net $ 1,844 $ 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 $ 47 $ 55 $ 83 $ 103 $ 118 $ 604 Amortization expense for pre-production engineering costs for the three and nine months ended June 30, 2015 was $14 million and $35 million , respectively, compared to $10 million and $24 million for the three and nine months ended June 30, 2014 . As of June 30, 2015 , the weighted average amortization period remaining for pre-production engineering costs included in Inventories, net was approximately 11 years. |
Property
Property | 9 Months Ended |
Jun. 30, 2015 | |
Property, Plant and Equipment, Net [Abstract] | |
Property | Property Property is summarized as follows: (in millions) June 30, September 30, Land $ 15 $ 15 Buildings and improvements 419 406 Machinery and equipment 1,150 1,135 Information systems software and hardware 391 369 Furniture and fixtures 65 65 Capital leases 58 60 Construction in progress 167 142 Total 2,265 2,192 Less accumulated depreciation (1,332 ) (1,273 ) Property $ 933 $ 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 $5 million and $2 million as of June 30, 2015 and September 30, 2014 , respectively. Amortization of assets under capital lease is recorded as depreciation expense. As of June 30, 2015 , remaining minimum lease payments for property under capital leases total $84 million , including $26 million of interest. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Jun. 30, 2015 | |
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 Systems Commercial Systems Information Management Services Total Balance at September 30, 2014 $ 508 $ 262 $ 1,093 $ 1,863 Pacific Avionics acquisition — 15 — 15 ARINC acquisition adjustment — — (3 ) (3 ) Foreign currency translation adjustments and other (7 ) — — (7 ) Balance at June 30, 2015 $ 501 $ 277 $ 1,090 $ 1,868 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 and the Company's 2015 impairment test resulted in no impairment. Intangible assets are summarized as follows: June 30, 2015 September 30, 2014 (in millions) Gross Accum Amort Net Gross Accum Amort Net Intangible assets with finite lives: Developed technology and patents $ 322 $ (192 ) $ 130 $ 322 $ (178 ) $ 144 Backlog 5 (1 ) 4 5 (1 ) 4 Customer relationships: Acquired 336 (82 ) 254 336 (67 ) 269 Up-front sales incentives 281 (58 ) 223 266 (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 In process research and development 9 — 9 — — — Intangible assets $ 1,028 $ (356 ) $ 672 $ 1,004 $ (316 ) $ 688 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 June 30, 2015 , the weighted average amortization period remaining for up-front sales incentives was approximately 10 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 $ 14 $ 17 $ 17 $ 20 $ 23 $ 143 Anticipated amortization expense for all other intangible assets 41 39 36 31 29 246 Total $ 55 $ 56 $ 53 $ 51 $ 52 $ 389 Amortization expense for intangible assets for the three and nine months ended June 30, 2015 was $15 million and $40 million , respectively, compared to $13 million and $34 million for the three and nine months ended June 30, 2014 . The Company reviews intangible assets for impairment at least annually, or whenever potential indicators of impairment exist. |
Other Assets
Other Assets | 9 Months Ended |
Jun. 30, 2015 | |
Other Assets [Abstract] | |
Other Assets | Other Assets Other assets are summarized as follows: (in millions) June 30, September 30, Long-term receivables $ 98 $ 84 Investments in equity affiliates 14 8 Exchange and rental assets (net of accumulated depreciation of $98 at June 30, 2015 and $94 at September 30, 2014) 63 61 Other 148 135 Other assets $ 323 $ 288 Investments in Equity Affiliates Investments in equity affiliates primarily consist of eight 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. During the second quarter of 2015, the Company established a new joint venture, ACCEL (Tianjin) Flight Simulation Co., Ltd (ACCEL), to develop and deliver commercial flight simulators in China. ACCEL is a 50 percent owned joint venture with Beijing Bluesky Aviation Technology, an AVIC subsidiary. The Company's share of earnings or losses of ACCEL are included in the operating results of the Commercial Systems Segment. Consistent with the terms of the joint venture agreement, the Company expects to contribute cash totaling $7 million to the joint venture later in fiscal 2015 and fiscal 2016. The Company's remaining joint ventures are also 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 $ 51 million and $ 139 million for the three and nine months ended June 30, 2015 , respectively, and $42 million and $118 million for the three and nine months ended June 30, 2014 , respectively. The deferred portion of profit generated from sales to equity affiliates was $ 1 million at June 30, 2015 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 $7 million for the three and nine months ended June 30, 2015 , respectively, and $3 million and $8 million for the three and nine months ended June 30, 2014 , respectively. |
Debt
Debt | 9 Months Ended |
Jun. 30, 2015 | |
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 June 30, 2015 , short-term commercial paper borrowings outstanding were $745 million with a weighted-average interest rate and maturity period of 0.51 percent and 28 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 42 percent as of June 30, 2015 . 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 June 30, 2015 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 $39 million as of June 30, 2015 , of which $11 million was utilized to support commitments in the form of commercial letters of credit. At June 30, 2015 and September 30, 2014 , there were no short-term borrowings outstanding under the Company’s non-U.S. subsidiaries’ credit facilities. At June 30, 2015 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 June 30, 2015 the quarterly interest rate was 0.63 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 billion . Approximately $900 million was used to finance the ARINC acquisition and approximately $200 million was used to refinance 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 . In June 2015, the company entered into interest rate swap contracts which effectively converted the remaining $ 150 million of the 2019 Notes to floating rate debt based on three-month LIBOR plus 3.56 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 June 30, 2015 and September 30, 2014 . Long-term debt is summarized as follows: (in millions) June 30, September 30, 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) 21 18 Long-term debt, net $ 1,667 $ 1,663 Interest paid on debt for the nine months ended June 30, 2015 and 2014 was $47 million and $41 million , respectively. |
Retirement Benefits
Retirement Benefits | 9 Months Ended |
Jun. 30, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Retirement Benefits | 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 and nine months ended June 30, 2015 and June 30, 2014 are as follows: Three Months Ended Nine Months Ended June 30 June 30 (in millions) 2015 2014 2015 2014 Service cost $ 3 $ 3 $ 9 $ 8 Interest cost 39 43 117 126 Expected return on plan assets (61 ) (59 ) (182 ) (171 ) Amortization: Prior service credit (1 ) (3 ) (2 ) (9 ) Net actuarial loss 18 17 54 51 Net benefit expense (income) $ (2 ) $ 1 $ (4 ) $ 5 Other Retirement Benefits The components of expense for Other Retirement Benefits for the three and nine months ended June 30, 2015 and June 30, 2014 are as follows: Three Months Ended Nine Months Ended June 30 June 30 (in millions) 2015 2014 2015 2014 Service cost $ 1 $ — $ 2 $ 2 Interest cost 2 3 6 7 Expected return on plan assets — (1 ) (1 ) (1 ) Amortization: Prior service credit (2 ) (2 ) (4 ) (7 ) Net actuarial loss 2 2 5 6 Net benefit expense $ 3 $ 2 $ 8 $ 7 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. During the nine months ended June 30, 2015 , the Company made contributions to the non-U.S. plans and the U.S. non-qualified pension plan of $11 million . 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 June 30, 2015 . |
Stock-Based Compensation and Ea
Stock-Based Compensation and Earnings Per Share | 9 Months Ended |
Jun. 30, 2015 | |
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 Nine Months Ended June 30 June 30 (in millions) 2015 2014 2015 2014 Stock-based compensation expense included in: Product cost of sales $ 1 $ 1 $ 5 $ 5 Selling, general and administrative expenses 4 4 12 12 Total $ 5 $ 5 $ 17 $ 17 Income tax benefit $ 2 $ 2 $ 6 $ 6 The Company issued awards of equity instruments under the Company's various incentive plans for the nine months ended June 30, 2015 and 2014 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 Nine months ended June 30, 2015 561.3 $ 19.52 131.0 $ 82.30 67.8 $ 84.47 Nine months ended June 30, 2014 581.8 $ 18.54 150.6 $ 71.44 78.9 $ 72.33 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 313,000 . 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 0.5% - 2.6% 0.3% - 3.0% Expected dividend yield 1.6 % 1.9 % Expected volatility 24.0 % 28.0 % Expected life 7 years 7 years Employee Benefits Paid in Company Stock During the nine months ended June 30, 2015 and 2014 , 0.4 million and 0.5 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 $37 million for each of 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 Nine Months Ended June 30 June 30 (in millions, except per share amounts) 2015 2014 2015 2014 Numerator for basic and diluted earnings per share: Income from continuing operations $ 178 $ 163 $ 510 $ 445 (Loss) from discontinued operations, net of taxes — (5 ) (8 ) (8 ) Net income $ 178 $ 158 $ 502 $ 437 Denominator: Denominator for basic earnings per share – weighted average common shares 132.1 135.2 132.4 135.3 Effect of dilutive securities: Stock options 1.0 1.3 1.0 1.2 Performance shares, restricted stock and restricted stock units 0.5 0.4 0.5 0.4 Dilutive potential common shares 1.5 1.7 1.5 1.6 Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversion 133.6 136.9 133.9 136.9 Earnings (loss) per share: Basic Continuing operations $ 1.35 $ 1.21 $ 3.85 $ 3.29 Discontinued operations — (0.04 ) (0.06 ) (0.06 ) Basic earnings per share $ 1.35 $ 1.17 $ 3.79 $ 3.23 Diluted Continuing operations $ 1.33 $ 1.19 $ 3.81 $ 3.25 Discontinued operations — (0.04 ) (0.06 ) (0.06 ) Diluted earnings per share $ 1.33 $ 1.15 $ 3.75 $ 3.19 The average outstanding diluted shares calculation excludes options with an exercise price that exceeds the average market price of shares during the period. No stock options were excluded from the average outstanding diluted shares calculation for the three and nine months ended June 30, 2015 and 2014 , 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. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss Accumulated Other Comprehensive Loss | 9 Months Ended |
Jun. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive loss (AOCL), net of tax, by component for the nine months ended June 30, 2015 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 (27 ) — (5 ) (32 ) Amounts reclassified from accumulated other comprehensive loss — 33 3 36 Net current period other comprehensive income/(loss) (27 ) 33 (2 ) 4 Balance at June 30, 2015 $ (42 ) $ (1,315 ) $ (5 ) $ (1,362 ) (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 $ 53 million ($ 33 million net of tax) for the nine months ended June 30, 2015 . 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 | 9 Months Ended |
Jun. 30, 2015 | |
Nonoperating Income (Expense) [Abstract] | |
Other Income, Net | Other Income, Net Other income, net consists of the following: Three Months Ended Nine Months Ended June 30 June 30 (in millions) 2015 2014 2015 2014 Earnings from equity affiliates $ 1 $ 2 $ 2 $ 6 Gain from business divestiture — — — 10 Other 3 3 7 4 Other income, net $ 4 $ 5 $ 9 $ 20 |
Income Taxes
Income Taxes | 9 Months Ended |
Jun. 30, 2015 | |
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 June 30, 2015 and 2014 , the effective income tax rate from continuing operations was 24.9 percent and 28.8 percent, respectively. The lower current year effective income tax rate from continuing operations was primarily due to favorable adjustments related to the remeasurement of certain prior year tax positions. During the nine months ended June 30, 2015 and 2014 , the effective income tax rate from continuing operations was 26.7 percent and 29.3 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 and favorable remeasurement of certain prior year tax positions. These favorable adjustments were partially offset by the absence of the recognition of a tax benefit related to the Extraterritorial Income Exclusions claimed in prior years. 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 for the tax years ended December 31, 2008 and prior are closed to further adjustments by the IRS. The IRS is currently auditing ARINC's tax returns for tax years ended December 31, 2009 and December 31, 2012. 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 $124 million and $166 million during the nine months ended June 30, 2015 and 2014 , respectively. The Company has gross unrecognized tax benefits recorded within Other Liabilities in the Condensed Consolidated Statement of Financial Position of $42 million and $48 million as of June 30, 2015 and September 30, 2014 , respectively. The total amount of unrecognized tax benefits that, if recognized, would affect the effective income tax rate was $15 million and $25 million as of June 30, 2015 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 $15 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 June 30, 2015 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 and $ 1 million during the nine months ended June 30, 2015 and 2014 , respectively. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Jun. 30, 2015 | |
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 June 30, 2015 and September 30, 2014 are as follows: June 30, 2015 September 30, 2014 (in millions) Fair Value Hierarchy Fair Value Asset (Liability) Fair Value Asset (Liability) Deferred compensation plan investments Level 1 $ 52 $ 50 Interest rate swap assets Level 2 21 18 Foreign currency forward exchange contract assets Level 2 9 6 Foreign currency forward exchange contract liabilities Level 2 (13 ) (9 ) There were no nonfinancial assets or nonfinancial liabilities recognized at fair value on a nonrecurring basis and there were no transfers between Levels of the fair value hierarchy during the nine months ended June 30, 2015 or 2014 . The carrying amounts and fair values of the Company's financial instruments are as follows: Asset (Liability) June 30, 2015 September 30, 2014 (in millions) Carrying Amount Fair Value Carrying Amount Fair Value Cash and cash equivalents $ 294 $ 294 $ 323 $ 323 Short-term debt (745 ) (745 ) (504 ) (504 ) Long-term debt (1,646 ) (1,716 ) (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 Instrument
Derivative Financial Instruments | 9 Months Ended |
Jun. 30, 2015 | |
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. To help meet this objective, the Company may use financial instruments in the form of interest rate swaps. In January 2010, the Company entered into two interest rate swap contracts 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 . In June 2015, the Company entered into two interest rate swap contracts which expire on July 15, 2019 and effectively converted the remaining $ 150 million of the 2019 Notes to floating rate debt based on three-month LIBOR plus 3.56 percent (collectively the 2019 Swaps). 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 . The Company designated both the 2019 and the 2023 Swaps (the Swaps) as fair value hedges. The Swaps are recorded within Other Assets at a fair value of $21 million , offset by a fair value adjustment to Long-term Debt (Note 10) of $21 million at June 30, 2015 . 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 June 30, 2015 and September 30, 2014 , the Company had outstanding foreign currency forward exchange contracts with notional amounts of $339 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 June 30, 2015 and September 30, 2014 are as follows: Asset Derivatives (in millions) Classification June 30, September 30, 2014 Foreign currency forward exchange contracts Other current assets $ 9 $ 6 Interest rate swaps Other assets 21 18 Total $ 30 $ 24 Liability Derivatives (in millions) Classification June 30, September 30, 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 June 30, 2015 there were undesignated foreign currency forward exchange contracts classified within Other current assets of $1 million and Other current liabilities of $2 million . The effect of derivative instruments on the Condensed Consolidated Statement of Operations for the three and nine months ended June 30, 2015 and 2014 is as follows: Amount of Gain (Loss) Amount of Gain (Loss) Three Months Ended Nine Months Ended June 30 June 30 (in millions) Location of Gain (Loss) 2015 2014 2015 2014 Derivatives Designated as Hedging Instruments: Fair Value Hedges Interest rate swaps Interest expense $ 3 $ 2 $ 8 $ 6 Cash Flow Hedges Foreign currency forward exchange contracts: Amount of gain (loss) recognized in AOCL (effective portion, before deferred tax impact) AOCL (1 ) 2 (8 ) 1 Amount of gain (loss) reclassified from AOCL into income Cost of sales (1 ) — (4 ) — 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 — — (5 ) — There was no significant impact to the Company’s earnings related to the ineffective portion of any hedging instruments during the nine months ended June 30, 2015 . 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 and nine months ended June 30, 2015 . The Company did not have any hedges with credit-risk-related contingent features or that required the posting of collateral as of June 30, 2015 . The cash flows from derivative contracts are recorded in operating activities in the Condensed Consolidated Statement of Cash Flows. 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 June 30, 2015 was 61 months. |
Guarantees and Indemnifications
Guarantees and Indemnifications | 9 Months Ended |
Jun. 30, 2015 | |
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: Nine Months Ended June 30 (in millions) 2015 2014 Balance at beginning of year $ 104 $ 121 Warranty costs incurred (34 ) (35 ) Product warranty accrual 33 36 Changes in estimates for prior years (7 ) (12 ) Foreign currency translation adjustments and other (2 ) (1 ) Balance at June 30 $ 94 $ 109 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 June 30, 2015 , 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 June 30, 2015 , 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 June 30, 2015 were $ 269 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 | 9 Months Ended |
Jun. 30, 2015 | |
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 June 30, 2015 , 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 June 30, 2015 , 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 | 9 Months Ended |
Jun. 30, 2015 | |
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 | 9 Months Ended |
Jun. 30, 2015 | |
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 June 30, 2015 , the Company has completed all cash payments associated with these actions. 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 June 30, 2015 , the Company has made cash severance payments of approximately $31 million related to the 2012 restructuring action. As of June 30, 2015 , $4 million of employee separation costs related to the 2012 action remain to be paid in future periods. |
Business Segment Information
Business Segment Information | 9 Months Ended |
Jun. 30, 2015 | |
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 Nine Months Ended June 30 June 30 (in millions) 2015 2014 2015 2014 Sales: Commercial Systems $ 611 $ 583 $ 1,798 $ 1,660 Government Systems 530 535 1,606 1,604 Information Management Services 152 146 456 313 Total sales $ 1,293 $ 1,264 $ 3,860 $ 3,577 Segment operating earnings: Commercial Systems $ 141 $ 130 $ 408 $ 368 Government Systems 108 112 328 328 Information Management Services 23 21 66 41 Total segment operating earnings 272 263 802 737 Interest expense (1) (15 ) (15 ) (45 ) (43 ) Stock-based compensation (5 ) (5 ) (17 ) (17 ) General corporate, net (15 ) (14 ) (44 ) (45 ) Gain on divestiture of business — — — 10 ARINC transaction costs (1) — — — (13 ) Income from continuing operations before income taxes 237 229 696 629 Income tax expense (59 ) (66 ) (186 ) (184 ) Income from continuing operations $ 178 $ 163 $ 510 $ 445 (1) During the nine months ended June 30, 2014 , the Company incurred $3 million of bridge credit facility fees related to the acquisition of ARINC. These costs are included in interest expense; total transaction costs related to the acquisition of ARINC during this period were $16 million . 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 and nine months ended June 30, 2015 and 2014 : Three Months Ended Nine Months Ended June 30 June 30 (in millions) 2015 2014 2015 2014 Commercial Systems sales categories: Air transport aviation electronics $ 337 $ 325 $ 1,030 $ 942 Business and regional aviation electronics 274 258 768 718 Commercial Systems sales 611 583 1,798 1,660 Government Systems sales categories: Avionics 328 317 1,009 967 Communication products 107 107 309 327 Surface solutions 43 68 147 182 Navigation products 52 43 141 128 Government Systems sales 530 535 1,606 1,604 Information Management Services sales 152 146 456 313 Total sales $ 1,293 $ 1,264 $ 3,860 $ 3,577 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 and nine months ended June 30, 2015 , sales for air transport aviation electronics include revenue from wide-body in-flight entertainment products and services of $ 13 million and $ 44 million , respectively, compared to $17 million and $54 million for the three and nine months ended June 30, 2014 . Sales categories for Government Systems are delineated based upon differences in the underlying product and service technologies and markets served. |
Business Description and Basi30
Business Description and Basis of Presentation Business Description and Basis of Presentation (Policies) | 9 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Preproduction Engineering Costs Policy | 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. |
Customer Incentives, Policy | 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. |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
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) December 23, 2013 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 divested, as detailed in Note 4. |
Business Acquisition, Pro Forma Information | Three Months Ended Nine Months Ended June 30 June 30 (in millions, except per share amounts) 2015 (as Reported) 2014 (Pro-forma) 2015 (as Reported) 2014 (Pro-forma) Sales $ 1,293 $ 1,264 $ 3,860 $ 3,683 Net income attributable to common shareowners from continuing operations $ 178 $ 163 $ 510 $ 451 Basic earnings per share from continuing operations $ 1.35 $ 1.21 $ 3.85 $ 3.33 Diluted earnings per share from continuing operations $ 1.33 $ 1.19 $ 3.81 $ 3.29 |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustments | Three Months Ended Nine Months Ended June 30 June 30 (in millions) 2015 2014 2015 2014 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) — — — 21 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 D32
Discontinued Operations and Divestitures (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Discontinued Operations | Results of discontinued operations are as follows: Three Months Ended Nine Months Ended June 30 June 30 (in millions) 2015 2014 2015 2014 Sales $ — $ 31 $ 18 $ 74 Loss from discontinued operations before income taxes — (13 ) (13 ) (17 ) Income tax benefit from discontinued operations — 8 5 9 |
Receivables, Net (Tables)
Receivables, Net (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable | Receivables, net are summarized as follows: (in millions) June 30, September 30, Billed $ 811 $ 758 Unbilled 428 485 Less progress payments (115 ) (198 ) Total 1,124 1,045 Less allowance for doubtful accounts (12 ) (12 ) Receivables, net $ 1,112 $ 1,033 |
Inventories, Net (Tables)
Inventories, Net (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories, net are summarized as follows: (in millions) June 30, September 30, Finished goods $ 238 $ 218 Work in process 274 262 Raw materials, parts and supplies 365 361 Less progress payments (8 ) (8 ) Total 869 833 Pre-production engineering costs 975 876 Inventories, net $ 1,844 $ 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 $ 47 $ 55 $ 83 $ 103 $ 118 $ 604 |
Property (Tables)
Property (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Property, Plant and Equipment, Net [Abstract] | |
Property | Property is summarized as follows: (in millions) June 30, September 30, Land $ 15 $ 15 Buildings and improvements 419 406 Machinery and equipment 1,150 1,135 Information systems software and hardware 391 369 Furniture and fixtures 65 65 Capital leases 58 60 Construction in progress 167 142 Total 2,265 2,192 Less accumulated depreciation (1,332 ) (1,273 ) Property $ 933 $ 919 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Changes in the carrying amount of goodwill are summarized as follows: (in millions) Government Systems Commercial Systems Information Management Services Total Balance at September 30, 2014 $ 508 $ 262 $ 1,093 $ 1,863 Pacific Avionics acquisition — 15 — 15 ARINC acquisition adjustment — — (3 ) (3 ) Foreign currency translation adjustments and other (7 ) — — (7 ) Balance at June 30, 2015 $ 501 $ 277 $ 1,090 $ 1,868 |
Summary of Intangible Assets | Intangible assets are summarized as follows: June 30, 2015 September 30, 2014 (in millions) Gross Accum Amort Net Gross Accum Amort Net Intangible assets with finite lives: Developed technology and patents $ 322 $ (192 ) $ 130 $ 322 $ (178 ) $ 144 Backlog 5 (1 ) 4 5 (1 ) 4 Customer relationships: Acquired 336 (82 ) 254 336 (67 ) 269 Up-front sales incentives 281 (58 ) 223 266 (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 In process research and development 9 — 9 — — — Intangible assets $ 1,028 $ (356 ) $ 672 $ 1,004 $ (316 ) $ 688 |
Schedule of Intangible Asset Expected Amortization Expense | 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 $ 14 $ 17 $ 17 $ 20 $ 23 $ 143 Anticipated amortization expense for all other intangible assets 41 39 36 31 29 246 Total $ 55 $ 56 $ 53 $ 51 $ 52 $ 389 |
Other Assets (Tables)
Other Assets (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Other Assets [Abstract] | |
Other Assets | Other assets are summarized as follows: (in millions) June 30, September 30, Long-term receivables $ 98 $ 84 Investments in equity affiliates 14 8 Exchange and rental assets (net of accumulated depreciation of $98 at June 30, 2015 and $94 at September 30, 2014) 63 61 Other 148 135 Other assets $ 323 $ 288 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Long-Term Debt Reconciliation to Carrying Amount | Long-term debt is summarized as follows: (in millions) June 30, September 30, 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) 21 18 Long-term debt, net $ 1,667 $ 1,663 |
Retirement Benefits (Tables)
Retirement Benefits (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Pension Plans, Defined Benefit [Member] | |
Defined Benefit Plan Disclosure | |
Schedule of Defined Benefit Plans Components of Expense Income | The components of expense (income) for Pension Benefits for the three and nine months ended June 30, 2015 and June 30, 2014 are as follows: Three Months Ended Nine Months Ended June 30 June 30 (in millions) 2015 2014 2015 2014 Service cost $ 3 $ 3 $ 9 $ 8 Interest cost 39 43 117 126 Expected return on plan assets (61 ) (59 ) (182 ) (171 ) Amortization: Prior service credit (1 ) (3 ) (2 ) (9 ) Net actuarial loss 18 17 54 51 Net benefit expense (income) $ (2 ) $ 1 $ (4 ) $ 5 |
Other Postretirement Benefit Plans, Defined Benefit [Member] | |
Defined Benefit Plan Disclosure | |
Schedule of Defined Benefit Plans Components of Expense Income | The components of expense for Other Retirement Benefits for the three and nine months ended June 30, 2015 and June 30, 2014 are as follows: Three Months Ended Nine Months Ended June 30 June 30 (in millions) 2015 2014 2015 2014 Service cost $ 1 $ — $ 2 $ 2 Interest cost 2 3 6 7 Expected return on plan assets — (1 ) (1 ) (1 ) Amortization: Prior service credit (2 ) (2 ) (4 ) (7 ) Net actuarial loss 2 2 5 6 Net benefit expense $ 3 $ 2 $ 8 $ 7 |
Stock-Based Compensation and 40
Stock-Based Compensation and Earnings Per Share (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
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 Nine Months Ended June 30 June 30 (in millions) 2015 2014 2015 2014 Stock-based compensation expense included in: Product cost of sales $ 1 $ 1 $ 5 $ 5 Selling, general and administrative expenses 4 4 12 12 Total $ 5 $ 5 $ 17 $ 17 Income tax benefit $ 2 $ 2 $ 6 $ 6 |
Schedule of Stock Option Activity | The Company issued awards of equity instruments under the Company's various incentive plans for the nine months ended June 30, 2015 and 2014 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 Nine months ended June 30, 2015 561.3 $ 19.52 131.0 $ 82.30 67.8 $ 84.47 Nine months ended June 30, 2014 581.8 $ 18.54 150.6 $ 71.44 78.9 $ 72.33 |
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 0.5% - 2.6% 0.3% - 3.0% Expected dividend yield 1.6 % 1.9 % Expected volatility 24.0 % 28.0 % 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 Nine Months Ended June 30 June 30 (in millions, except per share amounts) 2015 2014 2015 2014 Numerator for basic and diluted earnings per share: Income from continuing operations $ 178 $ 163 $ 510 $ 445 (Loss) from discontinued operations, net of taxes — (5 ) (8 ) (8 ) Net income $ 178 $ 158 $ 502 $ 437 Denominator: Denominator for basic earnings per share – weighted average common shares 132.1 135.2 132.4 135.3 Effect of dilutive securities: Stock options 1.0 1.3 1.0 1.2 Performance shares, restricted stock and restricted stock units 0.5 0.4 0.5 0.4 Dilutive potential common shares 1.5 1.7 1.5 1.6 Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversion 133.6 136.9 133.9 136.9 Earnings (loss) per share: Basic Continuing operations $ 1.35 $ 1.21 $ 3.85 $ 3.29 Discontinued operations — (0.04 ) (0.06 ) (0.06 ) Basic earnings per share $ 1.35 $ 1.17 $ 3.79 $ 3.23 Diluted Continuing operations $ 1.33 $ 1.19 $ 3.81 $ 3.25 Discontinued operations — (0.04 ) (0.06 ) (0.06 ) Diluted earnings per share $ 1.33 $ 1.15 $ 3.75 $ 3.19 |
Accumulated Other Comprehensi41
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | |
Schedule of Accumulated Other Comprehensive Loss [Table Text Block] | Changes in accumulated other comprehensive loss (AOCL), net of tax, by component for the nine months ended June 30, 2015 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 (27 ) — (5 ) (32 ) Amounts reclassified from accumulated other comprehensive loss — 33 3 36 Net current period other comprehensive income/(loss) (27 ) 33 (2 ) 4 Balance at June 30, 2015 $ (42 ) $ (1,315 ) $ (5 ) $ (1,362 ) (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 $ 53 million ($ 33 million net of tax) for the nine months ended June 30, 2015 . 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) | 9 Months Ended |
Jun. 30, 2015 | |
Nonoperating Income (Expense) [Abstract] | |
Summary of Other Income, Net | Other income, net consists of the following: Three Months Ended Nine Months Ended June 30 June 30 (in millions) 2015 2014 2015 2014 Earnings from equity affiliates $ 1 $ 2 $ 2 $ 6 Gain from business divestiture — — — 10 Other 3 3 7 4 Other income, net $ 4 $ 5 $ 9 $ 20 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
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 June 30, 2015 and September 30, 2014 are as follows: June 30, 2015 September 30, 2014 (in millions) Fair Value Hierarchy Fair Value Asset (Liability) Fair Value Asset (Liability) Deferred compensation plan investments Level 1 $ 52 $ 50 Interest rate swap assets Level 2 21 18 Foreign currency forward exchange contract assets Level 2 9 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) June 30, 2015 September 30, 2014 (in millions) Carrying Amount Fair Value Carrying Amount Fair Value Cash and cash equivalents $ 294 $ 294 $ 323 $ 323 Short-term debt (745 ) (745 ) (504 ) (504 ) Long-term debt (1,646 ) (1,716 ) (1,645 ) (1,747 ) |
Derivative Financial Instrume44
Derivative Financial Instruments (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
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 June 30, 2015 and September 30, 2014 are as follows: Asset Derivatives (in millions) Classification June 30, September 30, 2014 Foreign currency forward exchange contracts Other current assets $ 9 $ 6 Interest rate swaps Other assets 21 18 Total $ 30 $ 24 Liability Derivatives (in millions) Classification June 30, September 30, 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 and nine months ended June 30, 2015 and 2014 is as follows: Amount of Gain (Loss) Amount of Gain (Loss) Three Months Ended Nine Months Ended June 30 June 30 (in millions) Location of Gain (Loss) 2015 2014 2015 2014 Derivatives Designated as Hedging Instruments: Fair Value Hedges Interest rate swaps Interest expense $ 3 $ 2 $ 8 $ 6 Cash Flow Hedges Foreign currency forward exchange contracts: Amount of gain (loss) recognized in AOCL (effective portion, before deferred tax impact) AOCL (1 ) 2 (8 ) 1 Amount of gain (loss) reclassified from AOCL into income Cost of sales (1 ) — (4 ) — 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 — — (5 ) — |
Guarantees and Indemnificatio45
Guarantees and Indemnifications (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
Guarantees and Indemnifications Abstract | |
Changes in Accrued Product Warranty Costs | Changes in the carrying amount of accrued product warranty costs are summarized as follows: Nine Months Ended June 30 (in millions) 2015 2014 Balance at beginning of year $ 104 $ 121 Warranty costs incurred (34 ) (35 ) Product warranty accrual 33 36 Changes in estimates for prior years (7 ) (12 ) Foreign currency translation adjustments and other (2 ) (1 ) Balance at June 30 $ 94 $ 109 |
Business Segment Information (T
Business Segment Information (Tables) | 9 Months Ended |
Jun. 30, 2015 | |
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 Nine Months Ended June 30 June 30 (in millions) 2015 2014 2015 2014 Sales: Commercial Systems $ 611 $ 583 $ 1,798 $ 1,660 Government Systems 530 535 1,606 1,604 Information Management Services 152 146 456 313 Total sales $ 1,293 $ 1,264 $ 3,860 $ 3,577 Segment operating earnings: Commercial Systems $ 141 $ 130 $ 408 $ 368 Government Systems 108 112 328 328 Information Management Services 23 21 66 41 Total segment operating earnings 272 263 802 737 Interest expense (1) (15 ) (15 ) (45 ) (43 ) Stock-based compensation (5 ) (5 ) (17 ) (17 ) General corporate, net (15 ) (14 ) (44 ) (45 ) Gain on divestiture of business — — — 10 ARINC transaction costs (1) — — — (13 ) Income from continuing operations before income taxes 237 229 696 629 Income tax expense (59 ) (66 ) (186 ) (184 ) Income from continuing operations $ 178 $ 163 $ 510 $ 445 (1) During the nine months ended June 30, 2014 , the Company incurred $3 million of bridge credit facility fees related to the acquisition of ARINC. These costs are included in interest expense; total transaction costs related to the acquisition of ARINC during this period were $16 million . |
Summary of Sales by Product Category | The following table summarizes sales by category for the three and nine months ended June 30, 2015 and 2014 : Three Months Ended Nine Months Ended June 30 June 30 (in millions) 2015 2014 2015 2014 Commercial Systems sales categories: Air transport aviation electronics $ 337 $ 325 $ 1,030 $ 942 Business and regional aviation electronics 274 258 768 718 Commercial Systems sales 611 583 1,798 1,660 Government Systems sales categories: Avionics 328 317 1,009 967 Communication products 107 107 309 327 Surface solutions 43 68 147 182 Navigation products 52 43 141 128 Government Systems sales 530 535 1,606 1,604 Information Management Services sales 152 146 456 313 Total sales $ 1,293 $ 1,264 $ 3,860 $ 3,577 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Millions | Mar. 20, 2015 | Dec. 23, 2013 | Jun. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Sep. 30, 2014 | |
Business Acquisition [Line Items] | ||||||||||
Payments to acquire businesses, net of cash acquired | $ 24 | $ 1,405 | ||||||||
Goodwill | $ 1,868 | 1,868 | $ 1,863 | |||||||
Total sales | 1,293 | $ 1,264 | 3,860 | 3,577 | ||||||
Net income | 178 | 158 | 502 | 437 | ||||||
Pacific Avionics [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Voting interests acquired (percent) | 100.00% | |||||||||
Payments to acquire businesses, net of cash acquired | $ 24 | |||||||||
Indefinite-Lived Intangible Assets (Excluding Goodwill) | 9 | |||||||||
Goodwill | 15 | |||||||||
Goodwill, expected tax deductible amount | $ 0 | |||||||||
ARINC [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Voting interests acquired (percent) | 100.00% | |||||||||
Payments to acquire businesses, net of cash acquired | $ 1,405 | |||||||||
Goodwill | $ 1,087 | |||||||||
Goodwill, expected tax deductible amount | 0 | |||||||||
Intangible assets recognized | $ 431 | |||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years | |||||||||
Cash received for post-closing matters | $ 10 | |||||||||
Payable to ARINC option holders | [1] | $ 61 | ||||||||
Restricted Cash | [1] | 61 | ||||||||
Total sales | 140 | 134 | 421 | 277 | ||||||
Net income | $ 21 | $ 12 | $ 47 | $ 22 | ||||||
Building held for sale | [2] | 81 | ||||||||
Liabilities for Real Estate Held-for-sale | [2] | $ 81 | ||||||||
Proceeds from Sale of Property Held-for-sale | $ 81 | |||||||||
[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 $61 million and a current liability payable to the ARINC option holders for an equal amount. | |||||||||
[2] | On March 28, 2014, the Company sold the building which was classified as held for sale at the acquisition date. For more information related to the Building held for sale, see discussion below. |
Acquisition Assets Acquired and
Acquisition Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | Jun. 30, 2015 | Sep. 30, 2014 | Dec. 23, 2013 | |
Business Acquisition [Line Items] | ||||
Business held for sale | $ 0 | $ 15 | ||
Liabilities associated with business held for sale | 0 | (16) | ||
Goodwill | $ 1,868 | $ 1,863 | ||
ARINC [Member] | ||||
Business Acquisition [Line Items] | ||||
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 $61 million and a current liability payable to the ARINC option holders for an equal amount. | |||
[2] | On March 28, 2014, the Company sold the building which was classified as held for sale at the acquisition date. For more information related to the Building held for sale, see discussion below. | |||
[3] | Assets and liabilities associated with the Business held for sale relate to ASES, which the Company divested, as detailed in Note 4. |
Proforma Results (Details)
Proforma Results (Details) - ARINC [Member] - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Business Acquisition [Line Items] | ||||
Sales | $ 1,293 | $ 1,264 | $ 3,860 | $ 3,683 |
Net income attributable to common shareowners from continuing operations | $ 178 | $ 163 | $ 510 | $ 451 |
Basic earnings per share from continuing operations | $ 1.35 | $ 1.21 | $ 3.85 | $ 3.33 |
Diluted earnings per share from continuing operations | $ 1.33 | $ 1.19 | $ 3.81 | $ 3.29 |
Proforma Nonrecurring Adjustmen
Proforma Nonrecurring Adjustments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | ||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |||||
Net reduction to depreciation resulting from fixed asset purchase accounting adjustments | $ (114) | $ (102) | |||
Amortization of acquired ARINC intangible assets, net | $ (15) | $ (13) | (40) | (34) | |
ARINC [Member] | |||||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |||||
Net reduction to depreciation resulting from fixed asset purchase accounting adjustments | [1] | 0 | 0 | 0 | 2 |
Advisory, legal and accounting service fees | [2] | 0 | 0 | 0 | 21 |
Amortization of acquired ARINC intangible assets, net | [3] | $ 0 | $ 0 | $ 0 | $ (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 D51
Discontinued Operations and Divestitures (Details) - USD ($) $ in Millions | Mar. 10, 2015 | Jul. 25, 2014 | Nov. 22, 2013 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 |
Discontinued Operations | |||||||
Proceeds from divestiture of businesses | $ 0 | $ 24 | |||||
Gain (loss) from business divestiture | $ 0 | $ 0 | 0 | 10 | |||
Sales | 0 | 31 | 18 | 74 | |||
Loss from discontinued operations before income taxes | 0 | (13) | (13) | (17) | |||
Income tax benefit from discontinued operations | 0 | $ 8 | 5 | $ 9 | |||
ASES [Member] | |||||||
Discontinued Operations | |||||||
Proceeds from divestiture of businesses | $ 3 | ||||||
Disposal Group, Post Closing Consideration that May Be Received | $ 4 | $ 4 | |||||
Gain (loss) from business divestiture | (5) | ||||||
Loss on sale of business, net of tax | $ 3 | ||||||
Datapath [Member] | |||||||
Discontinued Operations | |||||||
Proceeds from divestiture of businesses | $ 10 | ||||||
Gain (loss) from business divestiture | (12) | ||||||
Loss on sale of business, net of tax | $ 2 | ||||||
KOSI [Member] | |||||||
Discontinued Operations | |||||||
Proceeds from divestiture of businesses | $ 23 | ||||||
Gain (loss) from business divestiture | $ 10 |
Receivables, Net (Details)
Receivables, Net (Details) - USD ($) $ in Millions | Jun. 30, 2015 | Sep. 30, 2014 |
Receivables, Net | ||
Billed | $ 811 | $ 758 |
Unbilled | 428 | 485 |
Less progress payments | (115) | (198) |
Total | 1,124 | 1,045 |
Less allowance for doubtful accounts | (12) | (12) |
Receivables, net | 1,112 | 1,033 |
Receivables, net due from equity affiliates | $ 75 | $ 76 |
Inventories, Net (Details)
Inventories, Net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Sep. 30, 2014 | |
Inventories, Net | |||||
Finished goods | $ 238 | $ 238 | $ 218 | ||
Work in process | 274 | 274 | 262 | ||
Raw materials, parts and supplies | 365 | 365 | 361 | ||
Less progress payments | (8) | (8) | (8) | ||
Total | 869 | 869 | 833 | ||
Pre-production engineering costs | 975 | 975 | 876 | ||
Inventories, net | 1,844 | $ 1,844 | $ 1,709 | ||
Preproduction Engineering Costs Useful Life Maximum | 15 years | ||||
Pre-production engineering amortization expense | $ 14 | $ 10 | $ 35 | $ 24 | |
Capitalized pre-production engineering weighted average amortization period remaining | 11 years | ||||
Anticipated Amortization Expense for Pre-production Engineering Costs [Abstract] | |||||
2,015 | $ 47 | ||||
2,016 | 55 | ||||
2,017 | 83 | ||||
2,018 | 103 | ||||
2,019 | 118 | ||||
Thereafter | $ 604 |
Property (Details)
Property (Details) - USD ($) $ in Millions | Jun. 30, 2015 | Sep. 30, 2014 |
Property | ||
Property, Total | $ 2,265 | $ 2,192 |
Less accumulated depreciation | (1,332) | (1,273) |
Property | 933 | 919 |
Remaining minimum lease payments under capital lease | 84 | |
Remaining minimum interest payments under capital lease | 26 | |
Land [Member] | ||
Property | ||
Property, Total | 15 | 15 |
Building and Improvements [Member] | ||
Property | ||
Property, Total | 419 | 406 |
Machinery and Equipment [Member] | ||
Property | ||
Property, Total | 1,150 | 1,135 |
Information Systems Software and Hardware [Member] | ||
Property | ||
Property, Total | 391 | 369 |
Furniture and Fixtures [Member] | ||
Property | ||
Property, Total | 65 | 65 |
Capital Leases [Member] | ||
Property | ||
Property, Total | 58 | 60 |
Less accumulated depreciation | (5) | (2) |
Construction in Progress [Member] | ||
Property | ||
Property, Total | $ 167 | $ 142 |
Goodwill and Intangible Asset55
Goodwill and Intangible Assets (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Goodwill impairment loss | $ 0 | |||
Up Front Sales Incentives Amortization Period Maximum | 15 years | |||
Up-front sales incentives weighted average amortization period remaining, in years | 10 years | |||
Amortization expense | $ 15 | $ 13 | $ 40 | $ 34 |
Goodwill and Intangible Asset56
Goodwill and Intangible Assets (Changes in the carrying amount of goodwill) (Details) $ in Millions | 9 Months Ended |
Jun. 30, 2015USD ($) | |
Goodwill | |
Goodwill beginning balance | $ 1,863 |
Foreign currency translation adjustments and other | (7) |
Goodwill ending balance | 1,868 |
Government Systems [Member] | |
Goodwill | |
Goodwill beginning balance | 508 |
Foreign currency translation adjustments and other | (7) |
Goodwill ending balance | 501 |
Commercial Systems [Member] | |
Goodwill | |
Goodwill beginning balance | 262 |
Foreign currency translation adjustments and other | 0 |
Goodwill ending balance | 277 |
Information Management Services [Member] | |
Goodwill | |
Goodwill beginning balance | 1,093 |
Foreign currency translation adjustments and other | 0 |
Goodwill ending balance | 1,090 |
Pacific Avionics [Member] | |
Goodwill | |
Pacific Avionics acquisition | 15 |
Pacific Avionics [Member] | Government Systems [Member] | |
Goodwill | |
Pacific Avionics acquisition | 0 |
Pacific Avionics [Member] | Commercial Systems [Member] | |
Goodwill | |
Pacific Avionics acquisition | 15 |
Pacific Avionics [Member] | Information Management Services [Member] | |
Goodwill | |
Pacific Avionics acquisition | 0 |
ARINC [Member] | |
Goodwill | |
ARINC acquisition adjustment | (3) |
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 Asset57
Goodwill and Intangible Assets (Summary of intangible assets) (Details) - USD ($) $ in Millions | Jun. 30, 2015 | Sep. 30, 2014 |
Intangible Assets | ||
Accumulated Amortization | $ (356) | $ (316) |
Finite-lived and Indefinite-lived Intangible Assets, Gross | 1,028 | 1,004 |
Net | 672 | 688 |
Developed technology and patents [Member] | ||
Intangible Assets | ||
Gross | 322 | 322 |
Accumulated Amortization | (192) | (178) |
Finite-Lived Intangible Assets, Net | 130 | 144 |
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 | (82) | (67) |
Finite-Lived Intangible Assets, Net | 254 | 269 |
Customer relationships: Up-front sales incentives [Member] | ||
Intangible Assets | ||
Gross | 281 | 266 |
Accumulated Amortization | (58) | (47) |
Finite-Lived Intangible Assets, Net | 223 | 219 |
License 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 |
In process research and development [Member] | ||
Intangible Assets | ||
Indefinite-Lived Intangible Assets (Excluding Goodwill) | $ 9 | $ 0 |
Goodwill and Intangible Asset58
Goodwill and Intangible Assets (Expected annual amortization expense for intangible assets) (Details) $ in Millions | Jun. 30, 2015USD ($) |
Anticipated Future Amortization Expense [Abstract] | |
2,015 | $ 55 |
2,016 | 56 |
2,017 | 53 |
2,018 | 51 |
2,019 | 52 |
Thereafter | 389 |
Up-front sales incentives [Member] | |
Anticipated Future Amortization Expense [Abstract] | |
2,015 | 14 |
2,016 | 17 |
2,017 | 17 |
2,018 | 20 |
2,019 | 23 |
Thereafter | 143 |
Intangible Assets Excluding Up Front Sales Incentives [Member] | |
Anticipated Future Amortization Expense [Abstract] | |
2,015 | 41 |
2,016 | 39 |
2,017 | 36 |
2,018 | 31 |
2,019 | 29 |
Thereafter | $ 246 |
Other Assets (Narrative) (Detai
Other Assets (Narrative) (Details) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Jun. 30, 2015USD ($)Joint_Venture | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)Joint_Venture | Jun. 30, 2014USD ($) | Sep. 30, 2014USD ($) | |
Schedule of Investments [Line Items] | |||||
Number of equity affiliates (joint ventures) | Joint_Venture | 8 | 8 | |||
Ownership Percentage | 50.00% | 50.00% | |||
Sales to equity affiliates | $ 51 | $ 42 | $ 139 | $ 118 | |
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 | $ 3 | $ 7 | $ 8 | |
ACCEL Flight Simulation Co., Ltd [Member] | |||||
Schedule of Investments [Line Items] | |||||
Ownership Percentage | 50.00% | 50.00% | |||
Future Payments to Acquire Equity Method Investment | $ 7 | $ 7 |
Other Assets (Summary of other
Other Assets (Summary of other assets) (Details) - USD ($) $ in Millions | Jun. 30, 2015 | Sep. 30, 2014 |
Other Assets [Abstract] | ||
Long-term receivables | $ 98 | $ 84 |
Investments in equity affiliates | 14 | 8 |
Exchange and rental assets (net of accumulated depreciation of $98 at June 30, 2015 and $94 at September 30, 2014) | 63 | 61 |
Other | 148 | 135 |
Other assets | 323 | 288 |
Accumulated Depreciation Exchange And Rental Assets | $ 98 | $ 94 |
Debt (Commercial Paper Borrowin
Debt (Commercial Paper Borrowings) (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Jun. 30, 2015 | Sep. 30, 2014 | 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 | $ 745,000,000 | $ 504,000,000 | |
Weighted Average Interest Rate | 0.51% | 0.32% | |
Weighted average maturity period | 28 days | 29 days |
Debt (Revolving Credit Faciliti
Debt (Revolving Credit Facilities) (Details) - USD ($) | 3 Months Ended | ||
Dec. 23, 2013 | Jun. 30, 2015 | Sep. 30, 2014 | |
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 or expired | $ 850,000,000 | ||
Maximum debt to total capitalization ratio per the debt covenants | 60.00% | ||
Debt to total capitalization ratio | 42.00% | ||
Line of Credit Facility, Amount Outstanding | $ 0 | 0 | |
Debt Instrument, Issuance Date | Dec. 23, 2013 | ||
Short term Credit Facility [Member] | |||
Revolving Credit Facility [Line Items] | |||
Revolving credit facility terminated or expired | $ 200,000,000 | ||
Line of Credit Facility, Amount Outstanding | 0 | 0 | |
Debt Instrument, Issuance Date | Dec. 23, 2013 | ||
Short term Credit Facility Non US Subs [Member] | |||
Revolving Credit Facility [Line Items] | |||
Line of credit facility, maximum borrowing capacity | 39,000,000 | ||
Amount utilized to support commitments in the form of letters of credit | 11,000,000 | ||
Line of Credit Facility, Amount Outstanding | $ 0 | $ 0 |
Debt (December 2013 Long-term D
Debt (December 2013 Long-term Debt Issuances) (Details) - USD ($) | Dec. 16, 2013 | Jun. 30, 2015 | Mar. 31, 2014 | Jan. 31, 2010 | Dec. 16, 2013 | Jun. 30, 2015 | Jun. 30, 2014 |
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 | three-month LIBOR | one-month LIBOR | six-month LIBOR | ||||
Unsecured Notes [Member] | 2016 Notes [Member] | |||||||
Long-term Debt | |||||||
Debt Instrument, Issuance Date | Dec. 16, 2013 | ||||||
Face amount | 300,000,000 | $ 300,000,000 | |||||
Long-term Debt, Percentage Bearing Variable Interest, Percentage Rate | 0.63% | 0.63% | |||||
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 | Dec. 16, 2013 | ||||||
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 | Dec. 16, 2013 | ||||||
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 Long-Term Debt) (De
Debt (Other Long-Term Debt) (Details) - Unsecured Notes [Member] - USD ($) | 1 Months Ended | 2 Months Ended | 7 Months Ended | ||
Jun. 30, 2015 | Mar. 31, 2014 | Jan. 31, 2010 | Nov. 16, 2011 | May. 06, 2009 | |
Long-term Debt | |||||
Description of variable rate basis | three-month LIBOR | one-month LIBOR | six-month LIBOR | ||
2021 Notes [Member] | |||||
Long-term Debt | |||||
Face amount | $ 250,000,000 | ||||
Interest rate | 3.10% | ||||
Debt Instrument, Issuance Date | Nov. 16, 2011 | ||||
Debt Instrument, Maturity Date, Description | November 15, 2021 | ||||
2019 Notes [Member] | |||||
Long-term Debt | |||||
Face amount | $ 300,000,000 | ||||
Interest rate | 5.25% | ||||
Derivative amount of hedged item | $ 150,000,000 | $ 150,000,000 | |||
Derivative basis spread on variable rate | 3.56% | 1.235% | |||
Debt Instrument, Issuance Date | May 6, 2009 | ||||
Debt Instrument, Maturity Date, Description | 7/15/2019 | ||||
2019 Notes [Member] | Six month LIBOR [Member] | |||||
Long-term Debt | |||||
Derivative basis spread on variable rate | 1.235% | ||||
Description of variable rate basis | six-month LIBOR | ||||
2019 Notes [Member] | Three month LIBOR [Member] | |||||
Long-term Debt | |||||
Derivative basis spread on variable rate | 3.56% | ||||
Description of variable rate basis | three-month LIBOR |
Debt (Summary of long-term debt
Debt (Summary of long-term debt and a reconciliation to the carrying amount) (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Sep. 30, 2014 | |
Long-term Debt | |||
Fair value, swap adjustment | $ 21 | $ 18 | |
Long-term Debt, Excluding Current Maturities | 1,667 | 1,663 | |
Interest Paid | 47 | $ 41 | |
Unsecured Notes [Member] | |||
Long-term Debt | |||
Fair value, swap adjustment | 18 | ||
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 ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Pension Plans, Defined Benefit [Member] | ||||
Components of Expense (Income) | ||||
Service cost | $ 3 | $ 3 | $ 9 | $ 8 |
Interest cost | 39 | 43 | 117 | 126 |
Expected return on plan assets | (61) | (59) | (182) | (171) |
Prior service credit | (1) | (3) | (2) | (9) |
Net actuarial loss | 18 | 17 | 54 | 51 |
Net benefit expense (income) | (2) | 1 | (4) | 5 |
Other Postretirement Benefit Plans, Defined Benefit [Member] | ||||
Components of Expense (Income) | ||||
Service cost | 1 | 0 | 2 | 2 |
Interest cost | 2 | 3 | 6 | 7 |
Expected return on plan assets | 0 | (1) | (1) | (1) |
Prior service credit | (2) | (2) | (4) | (7) |
Net actuarial loss | 2 | 2 | 5 | 6 |
Net benefit expense (income) | $ 3 | $ 2 | $ 8 | $ 7 |
Retirement Benefits Retirement
Retirement Benefits Retirement Benefits (Narrative) (Details) (Details) - USD ($) $ in Millions | 9 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Defined Benefit Plan Disclosure | ||
Pension Contributions | $ 66 | $ 66 |
U S Qualified Pension Plan [Member] | ||
Defined Benefit Plan Disclosure | ||
Pension Contributions | 55 | |
Non-US Plans and US Non Qualified Plans | ||
Defined Benefit Plan Disclosure | ||
Pension Contributions | 11 | |
Defined Benefit Plans, Estimated Future Employer Contributions in Current Fiscal Year | $ 14 |
Stock-Based Compensation and 68
Stock-Based Compensation and Earnings Per Share (Stock-Based Compensation Expense) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Stock-Based Compensation | ||||
Stock-based compensation expense | $ 5 | $ 5 | $ 17 | $ 17 |
Income tax benefit | 2 | 2 | 6 | 6 |
Employee Share Based Compensation Allocation Of Recognized Expense Cost Of Sales [Member] | ||||
Stock-Based Compensation | ||||
Stock-based compensation expense | 1 | 1 | 5 | 5 |
Employee Service Share Based Compensation Allocation Of Recognized Expense Selling General and Administrative [Member] | ||||
Stock-Based Compensation | ||||
Stock-based compensation expense | $ 4 | $ 4 | $ 12 | $ 12 |
Stock-Based Compensation and 69
Stock-Based Compensation and Earnings Per Share (Awards of Equity Instruments) (Details) - $ / shares | 9 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Stock-Based Compensation | ||
Maximum Number of Common Stock Shares that can be issued in respect of performance shares granted | 313,000 | |
Options [Member] | ||
Stock-Based Compensation | ||
Number Issued, Options | 561,300 | 581,800 |
Weighted Average Fair Value, Options | $ 19.52 | $ 18.54 |
Performance Shares [Member] | ||
Stock-Based Compensation | ||
Number Issued | 131,000 | 150,600 |
Weighted Average Fair Value | $ 82.30 | $ 71.44 |
Restricted Stock Units [Member] | ||
Stock-Based Compensation | ||
Number Issued | 67,800 | 78,900 |
Weighted Average Fair Value | $ 84.47 | $ 72.33 |
Stock-Based Compensation and 70
Stock-Based Compensation and Earnings Per Share (Stock Option Fair Value Information) (Details) - USD ($) shares in Millions, $ in Millions | 9 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Options Assumptions [Line Items] | ||
Risk Free Interest Rate, Minimum | 0.50% | 0.30% |
Risk Free Interest Rate, Maximum | 2.60% | 3.00% |
Expected dividend yield | 1.60% | 1.90% |
Expected volatility | 24.00% | 28.00% |
Expected life | 7 years | 7 years |
Company Common Stock Shares Issued To Employees Under Employee Stock Purchase And Defined Contribution Savings Plans | 0.4 | 0.5 |
Compensation and benefits paid in common stock | $ 37 | $ 37 |
Stock-Based Compensation and 71
Stock-Based Compensation and Earnings Per Share (Earnings Per Share and Diluted Share Equivalents) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Computation of Basic and Diluted Earnings Per Share | ||||
Income from continuing operations | $ 178 | $ 163 | $ 510 | $ 445 |
(Loss) from discontinued operations, net of taxes | 0 | (5) | (8) | (8) |
Net income | $ 178 | $ 158 | $ 502 | $ 437 |
Denominator: | ||||
Denominator for basic earnings per share – weighted average common shares | 132.1 | 135.2 | 132.4 | 135.3 |
Stock options | 1 | 1.3 | 1 | 1.2 |
Performance shares, restricted stock and restricted stock units | 0.5 | 0.4 | 0.5 | 0.4 |
Dilutive potential common shares | 1.5 | 1.7 | 1.5 | 1.6 |
Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversion | 133.6 | 136.9 | 133.9 | 136.9 |
Basic | ||||
Continuing operations | $ 1.35 | $ 1.21 | $ 3.85 | $ 3.29 |
Discontinued operations | 0 | (0.04) | (0.06) | (0.06) |
Basic earnings per share | 1.35 | 1.17 | 3.79 | 3.23 |
Diluted | ||||
Continuing operations | 1.33 | 1.19 | 3.81 | 3.25 |
Discontinued operations | 0 | (0.04) | (0.06) | (0.06) |
Diluted earnings per share | $ 1.33 | $ 1.15 | $ 3.75 | $ 3.19 |
Employee Stock Option [Member] | ||||
Diluted | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 0 | 0 | 0 |
Accumulated Other Comprehensi72
Accumulated Other Comprehensive Loss (Details) $ in Millions | 9 Months Ended | |
Jun. 30, 2015USD ($) | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Accumulated other comprehensive loss | $ (1,366) | |
Other comprehensive loss before reclassifications | (32) | |
Amounts reclassified from accumulated other comprehensive loss | 36 | |
Net current period other comprehensive income/(loss) | 4 | |
Accumulated other comprehensive loss | (1,362) | |
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 | (27) | |
Amounts reclassified from accumulated other comprehensive loss | 0 | |
Net current period other comprehensive income/(loss) | (27) | |
Accumulated other comprehensive loss | (42) | |
Pension and Other Postretirement Adjustments [Member] | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Accumulated other comprehensive loss | [1] | (1,348) |
Other comprehensive loss before reclassifications | [1] | 0 |
Amounts reclassified from accumulated other comprehensive loss | [1] | 33 |
Net current period other comprehensive income/(loss) | [1] | 33 |
Accumulated other comprehensive loss | [1] | (1,315) |
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Adjustment, before Tax | 53 | |
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Adjustment, Net of Tax | 33 | |
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 | 3 | |
Net current period other comprehensive income/(loss) | (2) | |
Accumulated other comprehensive loss | $ (5) | |
[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 $53 million ($33 million net of tax) for the nine months ended June 30, 2015. The reclassifications are included in the computation of net benefit expense. See Note 11, Retirement Benefits, for additional details. |
Other Income, Net (Details)
Other Income, Net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Nonoperating Income (Expense) [Abstract] | ||||
Earnings from equity affiliates | $ 1 | $ 2 | $ 2 | $ 6 |
Gain from business divestiture | 0 | 0 | 0 | 10 |
Other | 3 | 3 | 7 | 4 |
Other income, net | $ 4 | $ 5 | $ 9 | $ 20 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Sep. 30, 2014 | |
Income Taxes | |||||
Effective Income Tax Rate, Continuing Operations | 24.90% | 28.80% | 26.70% | 29.30% | |
Statute of Limitations, Range, Minimum (in years) | 3 years | ||||
Statute of Limitations, Range, Maximum (in years) | 5 years | ||||
Income Taxes Paid | $ 124 | $ 166 | |||
Unrecognized Tax Benefits | $ 42 | 42 | $ 48 | ||
Unrecognized tax benefits that, if recognized, would impact the effective income tax rate | 15 | 15 | 25 | ||
Accrued Income tax penalties and interest | 2 | 2 | $ 1 | ||
Interest and penalties expense (income) | 0 | $ 1 | |||
Minimum [Member] | |||||
Income Taxes | |||||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit | 0 | 0 | |||
Maximum [Member] | |||||
Income Taxes | |||||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit | $ 15 | $ 15 |
Fair Value Measurements (Fair V
Fair Value Measurements (Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis) (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Sep. 30, 2014 | |
Fair Value of Assets and Liabilities Measured on Recurring Basis | |||
Fair Value Nonfinancial Assets Measured on Nonrecurring Basis | $ 0 | $ 0 | |
Fair Value Nonfinancial Liabilities Measured on Nonrecurring Basis | 0 | 0 | |
Fair Value, Liabilities, Level 2 to Level 1 Transfers, Amount | 0 | 0 | |
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount | 0 | 0 | |
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount | 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 | 52 | $ 50 | |
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) | (9) | |
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 | 21 | 18 | |
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 | $ 9 | $ 6 |
Fair Value Measurements (Carryi
Fair Value Measurements (Carrying Amounts and Fair Values of Financial Instruments) (Details) - USD ($) $ in Millions | Jun. 30, 2015 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2013 |
Carrying Amounts and Fair Value of Financial Instruments | ||||
Cash and cash equivalents | $ 294 | $ 323 | $ 450 | $ 391 |
Long-term debt | (1,667) | (1,663) | ||
Carrying Amount [Member] | ||||
Carrying Amounts and Fair Value of Financial Instruments | ||||
Cash and cash equivalents | 294 | 323 | ||
Short-term Debt | (745) | (504) | ||
Long-term debt | (1,646) | (1,645) | ||
Fair Value [Member] | ||||
Carrying Amounts and Fair Value of Financial Instruments | ||||
Cash and cash equivalents | 294 | 323 | ||
Short-term Debt | (745) | (504) | ||
Long-term debt | $ (1,716) | $ (1,747) |
Derivative Financial Instrume77
Derivative Financial Instruments (Narrative) (Details) - USD ($) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 9 Months Ended | |||||||
Jun. 30, 2015 | Mar. 31, 2014 | Jan. 31, 2010 | Nov. 20, 2003 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 16, 2013 | Jun. 30, 2015 | Jun. 30, 2014 | Sep. 30, 2014 | Oct. 31, 2013 | |
Derivative Financial Instruments | |||||||||||
Derivative Credit Risk Valuation Adjustment, Derivative Liabilities | $ 21,000,000 | $ 21,000,000 | $ 21,000,000 | $ 18,000,000 | |||||||
Derivative, Lower Fixed Interest Rate Range | 2.815% | ||||||||||
Derivative, Higher Fixed Interest Rate Range | 3.8775% | ||||||||||
Amount of cash flow hedge gain (loss) to be reclassified into earnings over next 12 months | 6,000,000 | 6,000,000 | $ 6,000,000 | ||||||||
Maximum duration of a foreign currency cash flow hedge contract in months | 61 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 | $ 21,000,000 | 21,000,000 | 21,000,000 | 18,000,000 | |||||||
Unsecured Notes [Member] | |||||||||||
Derivative Financial Instruments | |||||||||||
Derivative Credit Risk Valuation Adjustment, Derivative Liabilities | 18,000,000 | ||||||||||
Description of variable rate basis | three-month LIBOR | one-month LIBOR | six-month LIBOR | ||||||||
Swap expiration date | Dec. 15, 2023 | Jul. 15, 2019 | |||||||||
Unsecured Notes [Member] | Other Assets [Member] | |||||||||||
Derivative Financial Instruments | |||||||||||
Interest rate swap assets | $ 21,000,000 | 21,000,000 | 21,000,000 | 18,000,000 | |||||||
Derivative Credit Risk Valuation Adjustment, Derivative Liabilities | 21,000,000 | 21,000,000 | 21,000,000 | ||||||||
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 | $ 150,000,000 | $ 150,000,000 | $ 150,000,000 | |||||||
Basis spread on variable rate | 3.56% | 1.235% | 3.56% | 3.56% | |||||||
Unsecured Notes [Member] | |||||||||||
Derivative Financial Instruments | |||||||||||
Description of variable rate basis | six-month LIBOR | ||||||||||
Swap expiration date | Dec. 1, 2013 | ||||||||||
Derivative, Inception Date | Nov. 20, 2003 | ||||||||||
Forward Starting Interest Rate Swap [Member] | |||||||||||
Derivative Financial Instruments | |||||||||||
Notional amount of foreign currency derivatives | $ 200,000,000 | $ 200,000,000 | $ 200,000,000 | $ 300,000,000 | |||||||
Foreign Exchange Contract [Member] | |||||||||||
Derivative Financial Instruments | |||||||||||
Notional amount of foreign currency derivatives | 339,000,000 | 339,000,000 | 339,000,000 | $ 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 | 1,000,000 | 1,000,000 | 1,000,000 | ||||||||
Foreign Exchange Contract [Member] | Other Current Liabilities [Member] | |||||||||||
Derivative Financial Instruments | |||||||||||
Derivative Instruments Not Designated as Hedging Instruments, Liability, at Fair Value | $ 2,000,000 | 2,000,000 | 2,000,000 | ||||||||
Cash Flow Hedging [Member] | AOCL [Member] | |||||||||||
Derivative Financial Instruments | |||||||||||
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net | $ 0 | $ 0 | $ 2,000,000 | $ 0 | $ (3,000,000) |
Derivative Financial Instrume78
Derivative Financial Instruments (Fair Values of Derivative Instruments) (Details) - USD ($) $ in Millions | Jun. 30, 2015 | Sep. 30, 2014 |
Derivative Financial Instruments | ||
Total | $ 30 | $ 24 |
Other Current Assets [Member] | ||
Derivative Financial Instruments | ||
Foreign currency forward exchange contracts | 9 | 6 |
Other Assets [Member] | ||
Derivative Financial Instruments | ||
Interest rate swaps | 21 | 18 |
Other Current Liabilities [Member] | ||
Derivative Financial Instruments | ||
Foreign currency forward exchange contracts | $ 13 | $ 9 |
Derivative Financial Instrume79
Derivative Financial Instruments (Effect of Derivative Instruments) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Dec. 16, 2013 | Jun. 30, 2015 | Jun. 30, 2014 | |
Cost of Sales [Member] | |||||
Derivative Financial Instruments | |||||
Gain (Loss) on Foreign Currency Derivative Instruments Not Designated as Hedging Instruments | $ 0 | $ 0 | $ (5) | $ 0 | |
Fair Value Hedging [Member] | Interest Expense [Member] | |||||
Derivative Financial Instruments | |||||
Gain (loss) recognized from interest rate swaps | 3 | 2 | 8 | 6 | |
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) | 0 | (4) | 0 | |
Cash Flow Hedging [Member] | AOCL [Member] | |||||
Derivative Financial Instruments | |||||
Amount of gain (loss) recognized in AOCL (effective portion, before deferred tax impact) | (1) | 2 | (8) | 1 | |
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net | $ 0 | $ 0 | $ (2) | $ 0 | $ 3 |
Guarantees and Indemnificatio80
Guarantees and Indemnifications (Details) - USD ($) $ in Millions | 9 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Guarantees and Indemnifications | ||
Balance at beginning of year | $ 104 | $ 121 |
Warranty costs incurred | (34) | (35) |
Product warranty accrual | 33 | 36 |
Changes in estimates for prior years | (7) | (12) |
Foreign currency translation adjustments and other | (2) | (1) |
Balance at June 30 | $ 94 | $ 109 |
Ownership Percentage | 50.00% | |
Outstanding letters of credit | $ 269 | |
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) - Jun. 30, 2015 $ in Millions | USD ($)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 Settle82
Restructuring, Pension Settlement and Asset Impairment Charges, Net (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | 33 Months Ended |
Sep. 30, 2014 | Sep. 30, 2012 | Jun. 30, 2015 | |
2014 Restructuring [Member] | |||
Restructuring and Asset Impairment Charges [Line Items] | |||
Pension Settlement and Restructuring Charges | $ 9 | ||
Pension Settlement | 5 | ||
2012 Restructuring [Member] | |||
Restructuring and Asset Impairment Charges [Line Items] | |||
Restructuring, Settlement and Impairment Provisions | $ 58 | ||
Employee Severance [Member] | 2014 Restructuring [Member] | |||
Restructuring and Asset Impairment Charges [Line Items] | |||
Employee separation costs | $ 4 | ||
Employee Severance [Member] | 2012 Restructuring [Member] | |||
Restructuring and Asset Impairment Charges [Line Items] | |||
Employee separation costs | $ 35 | ||
Restructuring Reserve, Settled with Cash | $ 31 | ||
Restructuring Reserve | $ 4 |
Business Segment Information (N
Business Segment Information (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Business Segment Information | ||||
Total sales | $ 1,293 | $ 1,264 | $ 3,860 | $ 3,577 |
Commercial Systems [Member] | ||||
Business Segment Information | ||||
Total sales | 611 | 583 | 1,798 | 1,660 |
Wide Body In Flight Entertainment Products and Services [Member] | Commercial Systems [Member] | ||||
Business Segment Information | ||||
Total sales | $ 13 | $ 17 | $ 44 | $ 54 |
Business Segment Information (S
Business Segment Information (Sales and Earnings of Operating Segments) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Sep. 30, 2014 | ||
Business Segment Information | ||||||
Debt Instrument, Fee Amount | $ 0 | $ 0 | $ 0 | |||
Sales: | 1,293 | $ 1,264 | 3,860 | $ 3,577 | ||
Segment operating earnings: | 272 | 263 | 802 | 737 | ||
Interest expense | [1] | (15) | (15) | (45) | (43) | |
Stock-based compensation | (5) | (5) | (17) | (17) | ||
General corporate, net | (15) | (14) | (44) | (45) | ||
Gain on divestiture of business | 0 | 0 | 0 | 10 | ||
ARINC transaction costs | [1] | 0 | 0 | 0 | (13) | |
Income from continuing operations before income taxes | 237 | 229 | 696 | 629 | ||
Income tax expense | (59) | (66) | (186) | (184) | ||
Income from continuing operations | 178 | 163 | 510 | 445 | ||
Commercial Systems [Member] | ||||||
Business Segment Information | ||||||
Sales: | 611 | 583 | 1,798 | 1,660 | ||
Segment operating earnings: | 141 | 130 | 408 | 368 | ||
Government Systems [Member] | ||||||
Business Segment Information | ||||||
Sales: | 530 | 535 | 1,606 | 1,604 | ||
Segment operating earnings: | 108 | 112 | 328 | 328 | ||
Information Management Services [Member] | ||||||
Business Segment Information | ||||||
Sales: | 152 | 146 | 456 | 313 | ||
Segment operating earnings: | 23 | 21 | 66 | 41 | ||
ARINC [Member] | ||||||
Business Segment Information | ||||||
Sales: | 140 | $ 134 | 421 | 277 | ||
ARINC transaction costs | $ (16) | |||||
ARINC [Member] | Interest Expense [Member] | Bridge Loan [Member] | ||||||
Business Segment Information | ||||||
Debt Instrument, Fee Amount | $ 3 | $ 3 | ||||
[1] | During the nine months ended June 30, 2014, the Company incurred $3 million of bridge credit facility fees related to the acquisition of ARINC. These costs are included in interest expense; total transaction costs related to the acquisition of ARINC during this period were $16 million. |
Business Segment Information 85
Business Segment Information (Summary of Sales by Product Category) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Business Segment Information | ||||
Sales: | $ 1,293 | $ 1,264 | $ 3,860 | $ 3,577 |
Commercial Systems [Member] | ||||
Business Segment Information | ||||
Sales: | 611 | 583 | 1,798 | 1,660 |
Government Systems [Member] | ||||
Business Segment Information | ||||
Sales: | 530 | 535 | 1,606 | 1,604 |
Information Management Services [Member] | ||||
Business Segment Information | ||||
Sales: | 152 | 146 | 456 | 313 |
Air Transport Aviation Electronics [Member] | Commercial Systems [Member] | ||||
Business Segment Information | ||||
Sales: | 337 | 325 | 1,030 | 942 |
Business And Regional Aviation Electronics [Member] | Commercial Systems [Member] | ||||
Business Segment Information | ||||
Sales: | 274 | 258 | 768 | 718 |
Avionics [Member] | Government Systems [Member] | ||||
Business Segment Information | ||||
Sales: | 328 | 317 | 1,009 | 967 |
Communication products [Member] | Government Systems [Member] | ||||
Business Segment Information | ||||
Sales: | 107 | 107 | 309 | 327 |
Surface Solutions [Member] | Government Systems [Member] | ||||
Business Segment Information | ||||
Sales: | 43 | 68 | 147 | 182 |
Navigation Products [Member] | Government Systems [Member] | ||||
Business Segment Information | ||||
Sales: | $ 52 | $ 43 | $ 141 | $ 128 |