Exhibit 99
Media Contact: Nancy Glass
319.295.2123
Investor Contact: David Brehm
319.295.7575
ROCKWELL COLLINS REPORTS RECORD SALES AND EARNINGS
COMPANY PROVIDES SALES AND EPS GUIDANCE FOR FY 2002
CEDAR RAPIDS, IOWA (NOVEMBER 6, 2001) - Rockwell Collins, Inc. (NYSE: COL) today
reported record sales of $816 million for the fourth quarter ended September 30,
2001, which is an increase of $114 million or 16%, over the same period a year
ago. Revenues for the fiscal year 2001 were $2.8 billion compared with $2.5
billion for fiscal year 2000.
Net income for the fourth quarter of fiscal year 2001, before asset
impairment and restructuring charges, increased to $82 million or 45 cents per
share compared with $71 million, or 38 cents per share, in the fourth quarter of
fiscal year 2000. Pro forma net income for fiscal year 2001, before asset
impairment and restructuring charges, was $263 million, or $1.42 per share
compared with $257 million or $1.35 per share last year.
Free cash flow for the fourth quarter of fiscal year 2001 was
exceptionally strong at $159 million (194% of net income) due to the strong
fourth quarter financial results and an improvement in working capital.
Clay Jones, president and chief executive officer of Rockwell Collins
said, "We are very proud of our fourth quarter and full year performance.
Despite a difficult economic environment, we have produced solid results and
taken proactive steps to increase the efficiency of our operations while
ensuring that our operating infrastructure remains in line with the revenue
base."
In connection with the unexpected decline in the air transport market
caused by the events of September 11th, the Company has taken an asset
impairment charge in the fourth quarter of fiscal year 2001 of $149 million
($108 million after tax, or 59 cents per share), primarily related to its
in-flight entertainment product line. The Company also announced a comprehensive
restructuring plan to reduce its workforce by approximately 2,800 employees or
16% and to streamline operations. Approximately 90% of the workforce reduction
is expected to be completed by the end of the second quarter of fiscal year
2002. The restructuring charge taken in the fourth quarter of fiscal year 2001
amounted to $34
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million ($22 million after tax, or 12 cents per share). Net income after the
impairment and restructuring charge was $133 million or 72 cents per share for
fiscal year 2001 (on a pro forma basis) and a loss of $48 million or 26 cents
per share for the fourth quarter of fiscal year 2001.
Following is a discussion of sales and earnings for each of Rockwell
Collins' businesses for the fourth quarter and fiscal year 2001.
COMMERCIAL SYSTEMS
Commercial Systems, which provides aviation electronics and in-flight
entertainment products to air transport, business and regional aircraft
manufacturers and airlines worldwide, posted fourth quarter fiscal year 2001
sales of $487 million, an increase of $41 million or 9% higher than last year's
fourth quarter. Higher sales in the in-flight entertainment product line
accounted for the majority of the increase. Commercial Systems' operating margin
for the fourth quarter of fiscal year 2001 increased to 17.5% compared to 17.3%
last year despite an increase in bad debt expense in the fourth quarter of
fiscal 2001 of $7 million related to the increased risks associated with the
airline industry.
Revenues for fiscal year 2001 were $1.7 billion, an increase of $110
million or 7% higher than fiscal year 2000. The Sony Trans Com in-flight
entertainment business acquired in July 2000 accounted for $96 million of the
increase in revenues. Commercial Systems' operating margin for fiscal year 2001
was 17.2%, a decrease of 1.5 percentage points from the previous year primarily
due to higher warranty costs related to the in-flight entertainment product
line.
GOVERNMENT SYSTEMS
Government Systems, which provides aviation electronics and other
communications products to the United States government, foreign militaries and
manufacturers of military aircraft, reported fourth quarter fiscal year 2001
sales of $329 million, an increase of $73 million or 29% higher than last year.
The Kaiser business, which was acquired in December 2000, accounted for $69
million of the increase while higher sales in GPS and Data Link programs
partially offset the decline in sales on a KC-135 aircraft retrofit program
which was completed earlier in the year. Government Systems' operating margin
for the fourth quarter of fiscal year 2001 increased to 17.6% compared to 16.8%
in the prior year due primarily to lower operating costs.
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Revenues for the fiscal year 2001 were $1.1 billion, an increase of
$200 million or 22% higher than fiscal year 2000. Kaiser added $207 million in
revenues for the year and higher communication and navigation sales partially
offset the 6% decline in revenue from the KC-135 aircraft retrofit program.
Government Systems' operating margin for the fiscal year 2001 was 16.6%, one
percentage point higher than last year due to a favorable resolution of a U.S.
Government contract dispute in the current year and lower operating costs.
FIRST QUARTER AND FISCAL 2002 OUTLOOK
"There exists an unusual number of risks and uncertainties in our
commercial markets, including the financial condition of the airline industry
and demand for air travel due to the events of September 11th," said Clay Jones.
"However, we saw tremendous growth in our Government Systems business in both
the fourth quarter and fiscal year 2001. This solid performance coupled with the
restructuring actions taken in the fourth quarter, significant free cash flow
generation, strong balance sheet and Rockwell Collins' lean operating culture
allows us to move into fiscal year 2002 with confidence in the diversity and
depth of our businesses to generate value for our shareowners."
For fiscal year 2002, the Company currently anticipates revenues of
approximately $2.5 billion with earnings per share between $1.15 and $1.25 after
considering the effect of adopting the new accounting standard under which
goodwill and certain intangibles will no longer be amortized. Free cash flow
generation will be approximately $200 to $250 million for fiscal year 2002,
excluding a non-recurring pension contribution to be made as a result of the
spin-off. For the first quarter of fiscal year 2002, Rockwell Collins
anticipates revenues of approximately $500 million and earnings per share
between 20 and 25 cents.
The fiscal year 2002 revenues and earnings per share estimates are
based on the following assumptions:
o Commercial Systems is expecting to see a revenue decline of
approximately 20%.
- For the air transport original equipment manufacturers
market, we project Boeing and Airbus new aircraft production
to be about 650 in the aggregate. The Company's aftermarket
revenues in the air transport product line are anticipated
to decline approximately 25%. The in-flight entertainment
product line revenues are anticipated to decline
approximately 40%.
- Business and regional original equipment manufacturer
aircraft build levels are projected to decline approximately
10%; however, due to the favorable
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mix of aircraft where we have higher avionics content, our
revenues will remain flat with fiscal year 2001. The
Company's aftermarket revenues in the business and regional
market are also anticipated to remain flat with fiscal year
2001.
o Government Systems is expecting to see a revenue increase in the
mid single digit range and will represent approximately 45% of
total revenues for fiscal year 2002. The Company anticipates
significant growth in the military aircraft display marketplace
and modest growth in GPS applications and Data Link products
which will help offset the decline in revenues related to a
KC-135 aircraft retrofit program.
"Despite the declines in our commercial business we still remain committed to
our research and development efforts that will position us for future growth,"
said Clay Jones. Company funded research and development as a percentage of
sales will be approximately 10% for fiscal year 2002, the same as fiscal year
2001.
Rockwell Collins President and CEO Clay Jones and Senior Vice
President and CFO Larry Erickson will conduct a earnings conference call at
10:00 a.m. EST on November 6, 2001. Individuals may listen to the call on the
Internet at www.rockwellcollins.com. Listeners are encouraged to go to the
Investor Relations portion of the web site at least 15 minutes prior to the call
to download and install any necessary software.
This press release contains statements (including certain projections
and business trends) that are forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995. Actual results may differ
materially from those projected as a result of certain risks and uncertainties,
including, but not limited to the impact of the terrorist attacks on September
11, 2001 and their aftermath; the timing related to restoring consumer
confidence in air travel; the health of the commercial aerospace industry;
domestic and foreign government spending, budgetary and trade policies; economic
and political changes in international markets where the Company competes, such
as changes in currency exchange rates, inflation rates, recession, foreign
ownership restrictions and other external factors over which the Company has no
control; demand for and market acceptance of new and existing products,
including potential cancellation of orders by commercial customers; successful
development of advanced technologies; competitive product and pricing
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pressures; and the uncertainities of litigation, as well as other risks and
uncertainties, including but not limited to those detailed from time to time in
the Company's Securities and Exchange Commission filings. These forward-looking
statements are made only as of the date hereof.
Rockwell Collins (NYSE: COL) is a world leader in the design,
production and support of communications and aviation electronics solutions for
commercial and government customers worldwide. Additional information is
available at www.rockwellcollins.com.
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ROCKWELL COLLINS, INC.
SALES AND EARNINGS INFORMATION
FOURTH QUARTER ENDED SEPTEMBER 30
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
REPORTED PRO FORMA
---------------------- ---------------------
2001 2000 2001 2000 (1)
--------- --------- --------- ---------
SALES
Commercial Systems $ 487 $ 446 $ 487 $ 446
Government Systems 329 256 329 256
--------- --------- --------- ---------
Total sales $ 816 $ 702 $ 816 $ 702
========= ========= ========= =========
SEGMENT OPERATING EARNINGS
Commercial Systems $ 85 $ 77 $ 85 $ 77
Government Systems 58 43 58 43
--------- --------- --------- ---------
Total segment operating earnings 143 120 143 120
Goodwill and purchase accounting amortization (9) (6) (9) (6)
Interest expense (3) - (3) (5)
Earnings (losses) from equity affiliates - (1) - (1)
Restructuring and asset impairment charges (183) - (183) -
General corporate - net (9) (4) (9) (3)
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES (61) 109 (61) 105
Income tax provision 13 (35) 13 (34)
--------- --------- --------- ---------
NET (LOSS) INCOME $ (48) $ 74 $ (48) $ 71
========= ========= ========= =========
NET (LOSS) INCOME RECONCILIATION:
Net income before restructuring and asset impairment charges $ 82 $ 71
Restructuring and asset impairment charges, net of taxes (130) -
--------- ---------
Net (loss) income $ (48) $ 71
========= =========
DILUTED (LOSS) EARNINGS PER SHARE:
Earnings per share before restructuring and asset impairment charges $ .45 $ .38
Restructuring and asset impairment charges (.71) -
--------- ---------
Diluted (Loss) earnings per share $ (.26) $ .38
========= =========
Average outstanding diluted shares (2) 183.6 185.9
========= =========
1) Pro forma net income for the fourth quarter ended September 30, 2000
includes adjustments necessary to present the Company's results of
operations as if the spin-off of the Company from Rockwell
International on June 29, 2001 had occurred at the beginning of each
of the periods presented. These adjustments include interest expense
on $300 million of commercial paper borrowings used to fund the
pre-distribution payment to Rockwell International, and income and
costs for retirement benefit assets and liabilities unrelated to the
Rockwell Collins business, which were assumed in connection with the
spin-off.
2) Average outstanding diluted shares for the fourth quarter ended
September 30, 2000 are based on Rockwell International's common shares
and common share equivalents outstanding over the period presented,
adjusted for the distribution ratio of one share of Rockwell Collins
common stock for every one share of Rockwell International common
stock. Diluted per share amounts are anti-dilutive for loss periods
and as a result, diluted outstanding shares and per share amounts
equal basic outstanding shares and per share amounts, respectively,
for the fourth quarter 2001.
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ROCKWELL COLLINS, INC.
SALES AND EARNINGS INFORMATION
YEAR ENDED SEPTEMBER 30
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
REPORTED PRO FORMA (1)
---------------------- ---------------------
2001 2000 2001 2000
--------- --------- --------- ---------
SALES
Commercial Systems $ 1,696 $ 1,586 $ 1,696 $ 1,586
Government Systems 1,124 924 1,124 924
--------- --------- --------- ---------
Total Sales $ 2,820 $ 2,510 $ 2,820 $ 2,510
========= ========= ========= =========
SEGMENT OPERATING EARNINGS
Commercial Systems $ 292 $ 296 $ 292 $ 296
Government Systems 187 144 187 144
--------- --------- --------- ---------
Total segment operating earnings 479 440 479 440
Goodwill and purchase accounting amortization (39) (15) (39) (15)
Interest expense (3) - (17) (20)
Earnings (losses) from equity affiliates 1 (3) 1 (3)
Restructuring and asset impairment charges (183) - (183) -
General corporate - net (31) (23) (26) (21)
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 224 399 215 381
Income tax provision (85) (130) (82) (124)
--------- --------- --------- ---------
NET INCOME $ 139 $ 269 $ 133 $ 257
========= ========= ========= =========
NET INCOME RECONCILIATION:
Net income before restructuring and asset impairment charges $ 263 $ 257
Restructuring and asset impairment charges, net of taxes (130) -
--------- ---------
Net income $ 133 $ 257
========= =========
DILUTED EARNINGS PER SHARE:
Earnings per share before restructuring and asset impairment charges $ 1.42 $ 1.35
Restructuring and asset impairment charges (.70) -
--------- ---------
Diluted earnings per share $ .72 $ 1.35
========= =========
Average outstanding diluted shares (2) 185.5 190.6
========= =========
1) Pro forma net income includes adjustments necessary to present the
Company's results of operations as if the spin-off of the Company from
Rockwell International on June 29, 2001 had occurred at the beginning
of each of the periods presented. These adjustments include interest
expense on $300 million of commercial paper borrowings used to fund
the pre-distribution payment to Rockwell International, and income and
costs for retirement benefit assets and liabilities unrelated to the
Rockwell Collins business, which were assumed in connection with the
spin-off.
2) Average outstanding diluted shares for the year ended September 30,
2000 are based on Rockwell International's common shares and common
share equivalents outstanding over the period presented, adjusted for
the distribution ratio of one share of Rockwell Collins common stock
for every one share of Rockwell International common stock. Average
outstanding diluted shares for the year ended September 30, 2001 are
based upon the average of (1) Rockwell International common shares and
share equivalents outstanding for the first through third quarters
adjusted as previously described, and (2) the actual Rockwell Collins
share activity for the fourth quarter.
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ROCKWELL COLLINS, INC.
SUMMARY BALANCE SHEET
(IN MILLIONS)
SEPTEMBER 30, SEPTEMBER 30,
2001 2000
------------- -------------
ASSETS
Cash $ 60 $ 20
Other current assets 1,579 1,291
Net property 448 393
Other assets 541 396
--------- ---------
Total assets $ 2,628 $ 2,100
========= =========
LIABILITIES AND SHAREOWNERS' EQUITY
Short-term debt $ 202 $ -
Other current liabilities 933 803
Other liabilities 383 389
Shareowners' equity 1,110 908
--------- ---------
Total liabilities and shareowners' equity $ 2,628 $ 2,100
========= =========
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ROCKWELL COLLINS, INC.
CONDENSED CASH FLOW INFORMATION
YEAR ENDED SEPTEMBER 30, 2001
(IN MILLIONS)
OPERATING ACTIVITIES:
Net income $ 139
Adjustments to arrive at cash provided by
operating activities:
Depreciation and amortization 131
Asset impairment charges 149
Receivables (104)
Inventories (49)
Accounts payable 19
Compensation and benefits 9
Other (101)
---------
CASH PROVIDED BY OPERATING ACTIVITIES 193
---------
INVESTING ACTIVITIES:
Property additions (110)
Acquisitions of businesses, net of cash acquired (292)
Investments in affiliates (3)
---------
CASH USED FOR INVESTING ACTIVITIES (405)
---------
FINANCING ACTIVITIES:
Proceeds from short-term borrowings 202
Cash dividends (17)
Pre-distribution payment to Rockwell International (300)
Net transfers from Rockwell International 366
---------
CASH PROVIDED BY FINANCING ACTIVITIES 251
---------
Effect of exchange rate on cash 1
---------
CHANGE IN CASH 40
CASH AT BEGINNING OF YEAR 20
---------
CASH AT END OF YEAR $ 60
=========