CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (USD $) | ||
In Millions | Jun. 30, 2009
| Sep. 30, 2008
|
Current Assets: | ||
Cash and cash equivalents | $218 | $175 |
Receivables, net | 907 | 950 |
Inventories | 998 | 970 |
Current deferred income taxes | 151 | 139 |
Other current assets | 118 | 104 |
Total current assets | 2,392 | 2,338 |
Property | 714 | 680 |
Intangible Assets | 259 | 198 |
Goodwill | 688 | 609 |
Other Assets | 319 | 319 |
TOTAL ASSETS | 4,372 | 4,144 |
Current Liabilities: | ||
Short-term debt | 117 | 287 |
Accounts payable | 350 | 419 |
Compensation and benefits | 174 | 295 |
Advance payments from customers | 331 | 308 |
Product warranty costs | 221 | 226 |
Other current liabilities | 234 | 205 |
Total current liabilities | 1,427 | 1,740 |
Long-Term Debt, net | 530 | 228 |
Retirement Benefits | 490 | 600 |
Other Liabilities | 191 | 168 |
Shareowners' Equity: | ||
Common stock ($0.01 par value; shares authorized: 1,000; shares issued: 183.8) | 2 | 2 |
Additional paid-in capital | 1,391 | 1,378 |
Retained earnings | 2,359 | 2,058 |
Accumulated other comprehensive loss | (572) | (578) |
Common stock in treasury, at cost (shares held: June 30, 2009, 26.0; September 30, 2008, 25.2) | (1,446) | (1,452) |
Total shareowners' equity | 1,734 | 1,408 |
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY | $4,372 | $4,144 |
1_CONDENSED CONSOLIDATED STATEM
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Parenthetical) (USD $) | ||
Share data in Millions | Jun. 30, 2009
| Sep. 30, 2008
|
Condensed Consolidated Statement of Financial Position (Parenthetical) [Abstract] | ||
Common stock, par value | 0.01 | 0.01 |
Common stock, shares authorized | 1,000 | 1,000 |
Common stock, shares issued | 183.8 | 183.8 |
Common stock shares held in treasury | 26 | 25.2 |
2_CONDENSED CONSOLIDATED STATEM
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (USD $) | ||||
In Millions, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 9 Months Ended
Jun. 30, 2009 | 9 Months Ended
Jun. 30, 2008 |
Sales: | ||||
Product sales | $978 | $1,086 | $2,965 | $3,170 |
Service sales | 106 | 108 | 315 | 322 |
Total sales | 1,084 | 1,194 | 3,280 | 3,492 |
Costs, expenses and other: | ||||
Product cost of sales | 687 | 754 | 2,062 | 2,218 |
Service cost of sales | 72 | 73 | 214 | 218 |
Selling, general, and administrative expenses | 108 | 119 | 331 | 350 |
Interest expense | 5 | 5 | 12 | 15 |
Other income, net | (3) | (5) | (16) | (21) |
Total costs, expenses and other | 869 | 946 | 2,603 | 2,780 |
Income before income taxes | 215 | 248 | 677 | 712 |
Income tax provision | 70 | 74 | 217 | 216 |
Net income | $145 | $174 | $460 | $496 |
Earnings per share: | ||||
Basic | 0.92 | 1.09 | 2.91 | 3.07 |
Diluted | 0.91 | 1.07 | 2.89 | 3.03 |
Weighted average common shares: | ||||
Basic | 158 | 160.3 | 158 | 161.5 |
Diluted | 159.7 | 162.4 | 159.4 | 163.7 |
Cash dividends per share | 0.24 | 0.24 | 0.72 | 0.56 |
3_CONDENSED CONSOLIDATED STATEM
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) | ||
In Millions | 9 Months Ended
Jun. 30, 2009 | 9 Months Ended
Jun. 30, 2008 |
Operating Activities: | ||
Net income | $460 | $496 |
Adjustments to arrive at cash provided by operating activities: | ||
Depreciation | 84 | 76 |
Amortization of intangible assets | 20 | 18 |
Stock-based compensation | 15 | 15 |
Compensation and benefits paid in common stock | 49 | 46 |
Tax benefit from the exercise of stock options | 1 | 7 |
Excess tax benefit from stock-based compensation | (1) | (7) |
Deferred income taxes | 27 | 17 |
Pension plan contributions | (87) | (11) |
Change in assets and liabilities, excluding effects of acquisitions and foreign currency adjustments: | ||
Receivables | 60 | (60) |
Inventories | (33) | (161) |
Accounts payable | (73) | (12) |
Compensation and benefits | (139) | (31) |
Advance payments from customers | 7 | (6) |
Income Taxes | 14 | (53) |
Other assets and liabilities | (23) | (24) |
Cash Provided by Operating Activities | 381 | 310 |
Investing Activities: | ||
Property additions | (117) | (114) |
Acquisition of businesses, net of cash acquired | (146) | (107) |
Acquisition of intangible assets | (1) | (6) |
Other investing activities | (1) | 1 |
Cash Used for Investing Activities | (265) | (226) |
Financing Activities: | ||
Purchases of treasury stock | (95) | (492) |
Cash dividends | (114) | (91) |
(Decrease) increase in short-term borrowings | (170) | 429 |
Net proceeds from the issuance of long-term debt | 296 | 0 |
Proceeds from exercise of stock options | 10 | 16 |
Excess tax benefit from stock-based compensation | 1 | 7 |
Cash Used for Financing Activities | (72) | (131) |
Effect of exchange rates on cash and cash equivalents | (1) | 3 |
Net Change in Cash and Cash Equivalents | 43 | (44) |
Cash and Cash Equivalents, at Carrying Value, Beginning Balance | 175 | 231 |
Cash and Cash Equivalents, at Carrying Value, Ending Balance | $218 | $187 |
Business Description and Basis
Business Description and Basis of Presentation | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Business Description and Basis of Presentation [Abstract] | |
Business Description and Basis of Presentation | 1. Business Description and Basis of Presentation Rockwell Collins, Inc. (the Company or Rockwell Collins) designs, produces, and supports communications and aviation electronics for commercial and military customers worldwide. The Company operates on a 52/53 week fiscal year ending on the Friday closest to the last day of the quarter.For ease of presentation, June 30 and September 30 are utilized consistently throughout these financial statements and notes to represent the period end date. 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 Companys Annual Report on Form 10-K for the year ended September 30, 2008. 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, 2009 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.Management has evaluated subsequent events through July 30, 2009, the date the Companys Form 10-Q was filed with the Securities and Exchange Commission. |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Recently Issued Accounting Standards [Abstract] | |
Recently Issued Accounting Standards | 2. Recently Issued Accounting Standards In June 2009, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 168, FASB Accounting Standards Codification (Codification) and the Hierarchy of Generally Accepted Accounting Principles a replacement of FASB Statement No. 162 (SFAS 168).The purpose of the Codification is to provide a single source of authoritative U.S. GAAP.SFAS 168 is effective for the Company in the fourth quarter of fiscal year 2009.The adoption of SFAS 168 is not expected to have a material effect on the Companys financial statements. In November 2008, the FASB ratified Emerging Issues Task Force (EITF) Issue No. 08-7, Accounting for Defensive Intangible Assets (EITF 08-7).EITF 08-7 provides guidance for accounting for defensive intangible assets subsequent to their acquisition in accordance with SFAS 141R and also provides guidance on establishing the estimated useful life for such assets.Acquired defensive intangible assets include assets that an entity does not intend to actively use, but does intend to hold or lock up such that others are prevented from using the asset.EITF 08-7 is effective for the Company at the beginning of fiscal year 2010.The adoption of EITF 08-7 is not expected to materially affect the Companys financial position, results of operations, or cash flows on the date the standard becomes effective; however, the standard could have a significant effect on defensive intangible assets the Company acquires beginning in fiscal year 2010. In June 2008, the FASB issued Staff Position No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (FSP EITF 03-6-1).FSP EITF 03-6-1 specifies that unvested share-based awards that contain nonforfeitable rights to dividends or dividend equivalents are participating securities and should therefore be included in the computation of earnings per share (EPS) pursuant to the two-class method.FSP EITF 03-6-1 is effective for the Company at the beginning of fiscal year 2010.The Company does not expect this standard will have a material impact on the Companys financial statements or computation of EPS. In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (SFAS 141R).SFAS 141R significantly changes the way companies account for business combinations and will generally require more assets acquired and liabilities assumed to be measured at their acquisition-date fair value.Under SFAS 141R, legal fees and other transaction-related costs are expensed as incurred and are no longer included in goodwill as a cost of acquiring the business.SFAS 141R also requires, among other things, acquirers to estimate the acquisition-date fair value of any contingent consideration and to recognize any subsequent changes in the fair value of contingent consideration in earnings.In addition, restructuring costs the acquirer expects, but is not obligated to incur, will be recognized separately from the business acquisition.This accounting standard is applied prospectively and is effective for the Company at the beginning of |
Acquisitions
Acquisitions | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Acquisitions [Abstract] | |
Acquisitions | 3. Acquisitions DataPath, Inc. On May 29, 2009, the Company acquired all the shares of DataPath, Inc. (DataPath).DataPath, with operations in the United States and Sweden, is a global leader in creating satellite-based communication solutions, primarily for military applications.The purchase price, net of cash acquired, was approximately $125 million, of which $118 million was paid in cash during the three months ended June 30, 2009 and $7 million is related to certain change in control related liabilities to be paid within the next two years.The Company is in the process of allocating the purchase price and obtaining a valuation for acquired intangible assets.Based on the Companys preliminary allocation of the purchase price, $50 million has been allocated to goodwill and $26 million to finite-lived intangible assets with a weighted average life of approximately 7 years.The excess purchase price over net assets acquired reflects the Companys view that this acquisition will augment the Companys networked communication offerings.The Company is currently evaluating the portion of the goodwill that may be tax deductible.DataPath goodwill is included within the Government Systems segment. SEOS Group Limited On November 24, 2008, the Company acquired all the shares of SEOS Group Limited (SEOS).SEOS, with operations in the United Kingdom and United States, is a leading global supplier of highly realistic visual display solutions for commercial and military flight simulators.SEOS is included within the results of both the Government Systems and Commercial Systems segments.The cash purchase price, net of cash acquired, was $28 million.Additional consideration of up to $8 million may be paid post-closing, contingent upon the achievement of certain milestones.Any such additional consideration will be accounted for as goodwill.The Company is in the process of allocating the purchase price and obtaining a valuation for acquired intangible assets.Based on the Companys preliminary allocation of the purchase price, $28 million has been allocated to goodwill and $7 million to finite-lived intangible assets with a weighted average life of approximately 7 years.The excess purchase price over net assets acquired reflects the Companys view that this acquisition will further enhance the Companys simulation and training capabilities and provide more innovative and integrated solutions for the Companys customers.The Company currently estimates that none of the goodwill resulting from the acquisition is tax deductible.$20 million of goodwill is included in the Government Systems segment and $8 million of goodwill is included in the Commercial Systems segment. Athena Technologies, Inc. On April 4, 2008, the Company acquired all the shares of Athena Technologies, Inc. (Athena).Athena, located in Warrenton, Virginia, is a provider of navigation and control solutions, primarily to the Unmanned Aerial Vehicle market segment.The total cash purchase price, net of cash acquired, was $107 million.In the first quarter of fiscal year 2009, the purchase price allocation was finalized with $66 million allocated to goodwill and $46 million t |
Receivables
Receivables | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Receivables [Abstract] | |
Receivables | 4. Receivables Receivables are summarized as follows (in millions): June30, September30, 2009 2008 Billed $ 699 $ 726 Unbilled 243 254 Less progress payments (24 ) (21 ) Total receivables 918 959 Less allowance for doubtful accounts (11 ) (9 ) Receivables, net $ 907 $ 950 The Company expects to collect net receivables as of June 30, 2009 within the next twelve months. 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
Inventories | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Inventories [Abstract] | |
Inventories | 5. Inventories Inventories are summarized as follows (in millions): June30, September30, 2009 2008 Finished goods $ 193 $ 244 Work in process 282 270 Pre-production engineering costs 222 166 Raw materials, parts, and supplies 372 362 Total 1,069 1,042 Less progress payments (71 ) (72 ) Inventories $ 998 $ 970 The Company defers certain pre-production engineering costs during the development phase of an aircraft 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, up to 15 years, as a component of Cost of Sales.The estimated useful life is limited to the amount of time the Company is virtually assured to earn revenues through a contractually enforceable right included in long-term supply arrangements with the Companys customers.Pre-production engineering costs incurred pursuant to supply arrangements that do not contain customer guarantees for reimbursement are expensed as incurred.Beginning in the second quarter of 2009, pre-production engineering costs have been presented separately within Inventories.In prior years, such amounts had been presented within work in process Inventories.Prior year amounts have been reclassified to conform to the current year presentation. |
Property
Property | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Property [Abstract] | |
Property | 6. Property Property is summarized as follows (in millions): June 30, September 30, 2009 2008 Land $ 31 $ 30 Buildings and improvements 354 342 Machinery and equipment 852 807 Information systems software and hardware 250 243 Furniture and fixtures 62 60 Construction in progress 112 99 Total 1,661 1,581 Less accumulated depreciation (947 ) (901 ) Property $ 714 $ 680 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Goodwill and Intangible Assets [Abstract] | |
Goodwill and Intangible Assets | 7. Goodwill and Intangible Assets Changes in the carrying amount of goodwill for the nine months ended June 30, 2009 are summarized as follows (in millions): Government Commercial Systems Systems Total Balance at September 30, 2008 $ 418 $ 191 $ 609 SEOS acquisition 20 8 28 DataPath acquisition 50 - 50 Foreign currency translation adjustment 2 - 2 Other adjustments to goodwill (1 ) - (1 ) Balance at June 30, 2009 $ 489 $ 199 $ 688 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 of potential impairment.The Companys 2009 impairment tests resulted in no impairment. Intangible assets are summarized as follows (in millions): June 30, 2009 September 30, 2008 Accum Accum Gross Amort Net Gross Amort Net Intangible assets with finite lives: Developed technology and patents $ 199 $ (99 ) $ 100 $ 181 $ (87 ) $ 94 License agreements 21 (5 ) 16 20 (4 ) 16 Customer relationships 158 (31 ) 127 105 (25 ) 80 Trademarks and tradenames 23 (9 ) 14 14 (8 ) 6 Intangible assets with indefinite lives: Trademarks and tradenames 2 - 2 2 - 2 Intangible assets $ 403 $ (144 ) $ 259 $ 322 $ (124 ) $ 198 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 amortized over the period the Company has received a contractually enforceable right related to the incentives.Up-front sales incentives consisting of cash payments or customer account credits are amortized as a reduction of sales whereas incentives consisting of free product are amortized as cost of sales.The net book value of sales incentives included in Customer Relationship Intangible Assets was $100 million and $56million at June 30, 2009 and September30, 2008, respectively. Amortization expense for intangible assets for the three and nine months ended June 30, 2009 was $8 million and $20 million, respectively, compared to $6 million and $18 million for the three and nine months ended June 30, 2008.Annual amortization expense for intangible assets for 2009, 2010, 2011, 2012, and 2013 is expected to be $29 million, $36 million, $38 million, $35 million, and $33 million, respectively. |
Other Assets
Other Assets | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Other Assets [Abstract] | |
Other Assets | 8. Other Assets Other assets are summarized as follows (in millions): June30, September30, 2009 2008 Long-term deferred income taxes $ 112 $ 144 Long-term receivables 89 71 Investments in equity affiliates 10 9 Exchange and rental assets, net of accumulated depreciation of $104 at June 30, 2009 and $98 at September 30, 2008 48 41 Other 60 54 Other assets $ 319 $ 319 Investments in equity affiliates primarily consist of four joint ventures: Vision Systems International, LLC, Data Link Solutions, LLC, Integrated Guidance Systems, LLC, and Quest Flight Training Limited (Quest).Each joint venture is 50 percent owned by the Company and accounted for under the equity method. 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 $33 million and $70 million for the three and nine months ended June 30, 2009, respectively, and $32 million and $96 million for the three and nine months ended June 30, 2008, respectively.The deferred portion of profit generated from sales to equity affiliates was $2 million at June 30, 2009 and $4 million at September 30, 2008. |
Other Current Liabilities
Other Current Liabilities | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Other Current Liabilities [Abstract] | |
Other Current Liabilities | 9. Other Current Liabilities Other current liabilities are summarized as follows (in millions): June30, September30, 2009 2008 Customer incentives $ 123 $ 119 Contract reserves 11 13 Income taxes payable 10 2 Other 90 71 Other current liabilities $ 234 $ 205 The Company provides sales incentives to certain commercial customers in connection with sales contracts. Incentives earned by customers based on purchases of Company products or services are recognized as a liability when the related sale is recorded. Incentives consisting of cash payments or customer account credits are recognized as a reduction of sales while incentives consisting of free of charge hardware and account credits where the customers use is restricted to future purchases are recognized as cost of sales. |
Debt
Debt | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Debt [Abstract] | |
Debt | 10. Debt Short-term Debt Under the Companys commercial paper program, the Company may sell up to $850 million 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.At June 30, 2009, short-term commercial paper borrowings outstanding were $113 million with a weighted average interest rate and maturity period of 0.24 percent and 9 days, respectively. Revolving Credit Facilities The Company has an $850 million unsecured revolving credit facility with various banks through March 2012.The credit facility has options to extend the term for up to two one-year periods and/or increase the aggregate principal amount up to $1.2 billion.These options are subject to the approval of the lenders.This credit facility exists primarily to support the Companys commercial paper program, but may be used for other corporate purposes in the event access to the commercial paper market is impaired or eliminated.The credit facility includes 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 accumulated other comprehensive loss equity impact related to defined benefit retirements plans.The ratio was 22 percent as of June 30, 2009.In addition, the credit facility contains 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 this credit facility bear interest at the London Interbank Offered Rate (LIBOR) plus a variable margin based on the Companys unsecured long-term debt rating or, at the Companys option, rates determined by competitive bid.At June 30, 2009 and September 30, 2008, there were no outstanding borrowings under this revolving credit facility. In addition, short-term credit facilities available to foreign subsidiaries amounted to $60 million as of June 30, 2009, of which $22 million was utilized to support commitments in the form of letters of credit.As of June 30, 2009, there were $4 million of short-term borrowings outstanding under the Companys foreign subsidiaries credit facilities.At June 30, 2009 and September 30, 2008, there were no significant commitment fees or compensating balance requirements under any of the Companys credit facilities. Long-term Debt In addition to the Companys credit facilities and commercial paper program, the Company has a shelf registration statement filed with the Securities and Exchange Commission pursuant to which the Company can publicly offer and sell securities from time to time.This shelf registration covers an unlimited amount of debt securities, common stock, preferred stock or warrants that may be offered in one or more offerings on terms to be determined at the time of sale. On May 6, 2009, the Company issued $300 million aggregate principal amount of 5.25 percent fixed rate unsecured debt due July 15, 2019 in an underwritten public off |
Retirement Benefits
Retirement Benefits | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Retirement Benefits [Abstract] | |
Retirement Benefits | 11. Retirement Benefits The Company sponsors defined benefit pension (Pension Benefits) and other postretirement (Other Retirement Benefits) plans covering most of its U.S. employees and certain employees in foreign countries that 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, 2009 and 2008 are as follows (in millions): Three Months Ended Nine Months Ended June 30 June 30 2009 2008 2009 2008 Service cost $ 1 $ 2 $ 4 $ 6 Interest cost 42 41 126 122 Expected return on plan assets (51 ) (50 ) (151 ) (151 ) Amortization: Prior service cost (5 ) (5 ) (14 ) (14 ) Net actuarial loss 8 12 22 35 Net benefit income $ (5 ) $ - $ (13 ) $ (2 ) Other Retirement Benefits The components of expense / (income) for Other Retirement Benefits for the three and nine months ended June 30, 2009 and 2008 are as follows (in millions): Three Months Ended Nine Months Ended June 30 June 30 2009 2008 2009 2008 Service cost $ 1 $ 1 $ 2 $ 3 Interest cost 4 3 11 11 Expected return on plan assets (1 ) - (1 ) (1 ) Amortization: Prior service cost (5 ) (8 ) (16 ) (25 ) Net actuarial loss 2 3 7 10 Net benefit expense / (income) $ 1 $ (1 ) $ 3 $ (2 ) Pension Plan Funding The Companys 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.The Company made a discretionary contribution of $75 million to its U.S. qualified pension plan in January 2009.The Company does not anticipate it will be required to make further contributions to its U.S. qualified pension plan by governmental regulations in fiscal year 2009.Contributions to the Companys international plans and the U.S. non-qualified plan are expected to total $14million in fiscal year 2009.For the nine months ended June 30, 2009 and 2008, the Company made contributions to its international plans and the U.S. non-qualified pension plan of $12 million and $11 million, respectively. |
Stock-Based Compensation
Stock-Based Compensation | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Stock-Based Compensation [Abstract] | |
Stock-Based Compensation | 12. Stock-Based Compensation Total stock-based compensation expense included within the Condensed Consolidated Statement of Operations is as follows (in millions): Three Months Ended Nine Months Ended June 30 June 30 2009 2008 2009 2008 Stock-based compensation expense included in: Product cost of sales $ 1 $ 1 $ 3 $ 3 Service cost of sales - - 1 1 Selling, general and administrative expenses 4 4 11 11 Total $ 5 $ 5 $ 15 $ 15 The Company issued awards of equity instruments under the Companys various incentive plans for the nine months ended June 30, 2009 and 2008 as follows: Performance Restricted Restricted Options Shares Stock Stock Units Weighted Weighted Weighted Weighted Number Average Number Average Number Average Number Average Issued Fair Value Issued Fair Value Issued Fair Value Issued Fair Value Ninemonthsended June 30, 2009 1,327,860 $ 7.12 308,705 $ 30.61 98,670 $ 30.39 40,902 $ 35.83 Nine months ended June 30, 2008 355,440 $ 23.36 112,491 $ 73.37 45,900 $ 72.12 19,828 $ 66.19 The maximum number of shares of common stock that can be issued with respect to the performance shares granted in 2009 based on the achievement of performance targets for fiscal years 2009 through 2011 is 739,903. The fair value of each option granted by the Company was estimated using a binomial lattice pricing model and the following assumptions: 2009 2008 Grants Grants Risk-free interest rate (U.S. Treasury zero coupon issues) 2.37 % 3.86 % Expected dividend yield 1.59 % 0.98 % Expected volatility 0.24 0.30 Expected life 6.4 years 6.0 years Employee Benefits Paid in Company Stock During the nine months ended June 30, 2009 and 2008, 1.4 million and 0.7 million shares, respectively, of Company common stock were issued to employees under the Companys employee stock purchase and defined contribution savings plans at a value of $49 million and $46 million for the respective periods. |
Comprehensive Income
Comprehensive Income | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Comprehensive Income [Abstract] | |
Comprehensive Income | 13. Comprehensive Income Comprehensive income consists of the following (in millions): Three Months Ended Nine Months Ended June 30 June 30 2009 2008 2009 2008 Net income $ 145 $ 174 $ 460 $ 496 Unrealized foreign currency translation adjustment 15 3 1 14 Foreign currency cash flow hedge adjustment 4 (2 ) 2 (2 ) Amortization of defined benefit plan costs 3 3 3 5 Comprehensive income $ 167 $ 178 $ 466 $ 513 |
Other Income, Net
Other Income, Net | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Other Income, Net [Abstract] | |
Other Income, Net | 14. Other Income, Net Other income, net consists of the following (in millions): Three Months Ended Nine Months Ended June 30 June 30 2009 2008 2009 2008 Royalty income $ 2 $ 1 $ 6 $ 10 Earnings from equity affiliates 1 3 5 7 Interest income 1 2 4 6 Other (1 ) (1 ) 1 (2 ) Other income, net $ 3 $ 5 $ 16 $ 21 |
Income Taxes
Income Taxes | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Income Taxes [Abstract] | |
Income Taxes | 15. 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, 2009 and 2008, the effective income tax rate was 32.6 percent and 29.8 percent, respectively.During the nine months ended June 30, 2009 and 2008 the effective income tax rate was 32.1 percent and 30.3 percent, respectively. The Federal Research and Development Tax Credit (Federal RD Tax Credit) expired December 31, 2007.On the last day of fiscal year 2008, the Emergency Economic Stabilization Act of 2008 was enacted, which retroactively reinstated and extended the Federal RD Tax Credit from January 1, 2008 to December 31, 2009.The effective income tax rate for the three and nine months ended June 30, 2009 reflects a full year benefit from the Federal RD Tax Credit in the estimate of the annual effective income tax rate.The effective income tax rate for the three and nine months ended June 30, 2008 reflects the unfavorable impact of lower Federal RD Tax Credits as a result of pro-rating the three months of available Federal RD Tax Credits over the full 2008 fiscal year. The effective income tax rate for the three and nine months ended June 30, 2008 reflects the favorable impact of the resolution of certain tax matters resulting in a benefit to the effective income tax rate for both the three and nine months ended June 30, 2008 of about 3 percentage points. The effective income tax rate for the three and nine months ended June 30, 2009 and June 30, 2008 include a tax benefit related to the Domestic Manufacturing Deduction (DMD).The DMD tax benefit available in fiscal year 2009 and fiscal year 2008 is two-thirds of the full benefit that will be available in fiscal year 2011. The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48) at the beginning of fiscal year 2008.The $5 million cumulative effect of adopting FIN 48 was recorded as a reduction to retained earnings in the first quarter of 2008.At September 30, 2008, the Company had gross unrecognized tax benefits of $73 million recorded within Other Liabilities in the Consolidated Statement of Financial Position, of which $41 million would affect the effective income tax rate if recognized.At June 30, 2009, the Company had gross unrecognized tax benefits of $89 million recorded within Other Liabilities in the Condensed Consolidated Statement of Financial Position, of which $52 million would affect the effective income tax rate if recognized.Although the timing and outcome of tax settlements are uncertain, it is reasonably possible that during the next twelve months a reduction in unrecognized tax benefits may occur in the range of $0 to $36 million, a significant portion of which would not impact the effective income tax rat |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Fair Value of Financial Instruments [Abstract] | |
Fair Value of Financial Instruments | 16. Fair Value of Financial Instruments Fair Value Measurements The Company adopted the recognition and disclosure provisions of SFAS 157 as of October 1, 2008 for financial assets and liabilities.In accordance with FASB Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157 (FSP FAS 157-2), the Company elected to defer until October 1, 2009 the adoption of SFAS 157 for all nonfinancial assets and nonfinancial liabilities not recognized or disclosed at fair value in the financial statements on a recurring basis.Nonfinancial assets and nonfinancial liabilities for which we have not applied the provisions of SFAS 157 include those measured at fair value in goodwill impairment testing, indefinite-lived intangible assets measured at fair value for impairment testing, and those non-recurring nonfinancial assets and nonfinancial liabilities initially measured at fair value in a business combination.The adoption of SFAS 157 for those assets and liabilities within the scope of FSP FAS 157-2 is not expected to have a material impact on the Companys financial position, results of operations or cash flows. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands the related disclosure requirements.The statement indicates, among other things, that a fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability.SFAS 157 establishes a valuation hierarchy for disclosure of the inputs to valuation techniques used to measure fair value.This hierarchy prioritizes the inputs into three broad levels as follows: 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 Companys own assumptions used to measure assets and liabilities at fair value A financial asset or liabilitys 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 Companys financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2009 are as follows (in millions): Carrying Quoted prices Significant other Significant Amount in active observable unobservable Asset markets inputs inputs (Liability) (Level 1) (Level 2) (Level 3) Deferred compensation plan investments $ 31 $ 31 $ - $ - Interest rate swaps 7 - 7 - Foreign currency forward exchange contracts, net 1 - 1 - Valuation Techniques The deferred compe |
Derivative Financial Instrument
Derivative Financial Instruments | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Derivative Financial Instruments [Abstract] | |
Derivative Financial Instruments | 17. Derivative Financial Instruments The Company uses derivative financial instruments in the form of foreign currency forward exchange contracts and interest rate swap contracts for the purpose of minimizing exposure to changes in foreign currency exchange rates on business transactions and interest rates, respectively.The Companys policy is to execute such instruments with banks the Company believes to be creditworthy and not to enter into derivative financial instruments for speculative purposes or to manage exposure for net investments in foreign subsidiaries.These derivative financial instruments do not subject the Company to undue risk as gains and losses on these instruments generally offset gains and losses on the underlying assets, liabilities, or anticipated transactions that are being hedged. All derivative financial instruments are recorded at fair value in the Condensed Consolidated Statement of Financial Position.For a derivative that has not been designated as an accounting hedge, the change in the fair value is recognized immediately through earnings.For a derivative that has been designated as an accounting hedge of an existing asset or liability (a fair value hedge), the change in the fair value of both the derivative and underlying asset or liability is recognized immediately through earnings.For a derivative designated as an accounting hedge of an anticipated transaction (a cash flow hedge), the change in the fair value is recorded on the Condensed Consolidated Statement of Financial Position in Accumulated Other Comprehensive Loss (AOCL) to the extent the derivative is effective in mitigating the exposure related to the anticipated transaction.The change in the fair value related to the ineffective portion of the hedge, if any, is immediately recognized in earnings.The amount recorded within AOCL is reclassified into earnings in the same period during which the underlying hedged transaction affects earnings.The Company does not exclude any amounts from the measure of effectiveness for both fair value and cash flow hedges.All of the Companys derivatives were designated as accounting hedges as of June 30, 2009. 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.The Company does not have any hedges with credit-risk-related contingent features or that required the posting of collateral as of June 30, 2009.The cash flows from derivative contracts are recorded in operating activities in the Condensed Consolidated Statement of Cash Flows. Interest Rate Swaps The Company manages its exposure to interest rate risk by maintaining an appropriate mix of fixed and variable rate debt, which over time should moderate the costs of debt financing.When considered necessary, the Company may use financial instruments in the form of interest rate swaps to help meet this objective.On November 20, 2003, the Company entered into two interest rate swap contracts (the Swaps) which expire on December 1, 2013 and effectively convert $100 million of the 4.75 percent fixed rate long-term notes |
Guarantees and Indemnifications
Guarantees and Indemnifications | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Guarantees and Indemnifications [Abstract] | |
Guarantees and Indemnifications | 18. Guarantees and Indemnifications Product warranty costs Accrued liabilities are recorded to reflect the Companys 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 (in millions): Nine Months Ended June 30 2009 2008 Balance at beginning of year $ 226 $ 213 Warranty costs incurred (39 ) (38 ) Product warranty accrual 34 50 Increase from acquisitions 2 1 Pre-existing warranty adjustments (2 ) (1 ) Balance at June 30 $ 221 $ 225 Guarantees In connection with the fiscal year 2006 acquisition of the Quest joint venture (see Note 8) the Company entered into a parent company guarantee related to various obligations of 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, 2009, the outstanding loan balance was approximately $6million.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, 2009, the Quest guarantees are not reflected on the Companys 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 Companys 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, 2009 were $109 million.These commitments are not reflected as liabilities on the Companys Condensed Consolidated Statement of Financial Position. Indemnifications The Company enters into indemnifications with lenders, counterparties in |
Environmental Matters
Environmental Matters | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Environmental Matters [Abstract] | |
Environmental Matters | 19. 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 Companys 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, 2009, 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 $8 million.The Company has recorded environmental reserves for this site of $3 million as of June 30, 2009, which represents managements 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 Companys 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 adverse effect on the Companys business or financial position, but could possibly be material to the results of operations or cash flows of any one quarter. |
Legal Matters
Legal Matters | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Legal Matters [Abstract] | |
Legal Matters | 20. 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 Companys 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 the disposition of matters that are pending or asserted are not expected to have a material adverse effect on the Companys business or financial position, but could possibly be material to the results of operations or cash flows of any one quarter. |
Business Segment Information
Business Segment Information | |
9 Months Ended
Jun. 30, 2009 USD / shares | |
Business Segment Information [Abstract] | |
Business Segment Information | 21. Business Segment Information The sales and results of operations of the Companys operating segments are summarized as follows (in millions): Three Months Ended Nine Months Ended June 30 June 30 2009 2008 2009 2008 Sales: Government Systems $ 651 $ 607 $ 1,838 $ 1,730 Commercial Systems 433 587 1,442 1,762 Total sales $ 1,084 $ 1,194 $ 3,280 $ 3,492 Segment operating earnings: Government Systems $ 158 $ 131 $ 443 $ 361 Commercial Systems 75 139 282 416 Total segment operating earnings 233 270 725 777 Interest expense (5 ) (5 ) (12 ) (15 ) Stock-based compensation (5 ) (5 ) (15 ) (15 ) General corporate, net (8 ) (12 ) (21 ) (35 ) Income before income taxes 215 248 677 712 Income tax provision (70 ) (74 ) (217 ) (216 ) Net income $ 145 $ 174 $ 460 $ 496 The Company evaluates performance and allocates resources based upon, among other considerations, segment operating earnings.The Companys 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, non-recurring charges resulting from purchase accounting such as purchased research and development charges, 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 product category for the three and nine months ended June 30, 2009 and 2008 (in millions): Three Months Ended Nine Months Ended June 30 June 30 2009 2008 2009 2008 Government Systems product categories: Airborne solutions $ 452 $ 429 $ 1,286 $ 1,203 Surface solutions 199 178 552 527 Total Government Systems sales $ 651 $ 607 $ 1,838 $ 1,730 Commercial Systems product categories: Air transport aviation electronics $ 244 $ 306 $ 723 $ 927 Business and regional aviation electronics 189 281 719 835 Total Commercial Systems sales $ 433 $ 587 $ 1,442 $ 1,762 Product category sales for defense-related products in the Government Systems segment are delineated based upon the difference in underlying customer base and market served. The air transport |
Document and Entity Information
Document and Entity Information (USD $) | |||
In Millions | 9 Months Ended
Jun. 30, 2009 | Jul. 13, 2009
| Mar. 31, 2008
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Rockwell Collins, Inc. | ||
Entity Central Index Key | 0001137411 | ||
Trading Symbol | COL | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float as of March 31, 2008 | $8,920 | ||
Common stock outstanding on July 13, 2009 | 157,646,365 | ||
Document Type | 10-Q | ||
Amendment Flag | false | ||
Document Period End Date | 2009-06-30 |