|
Rockwell Collins reports EPS of 43 cents for the third quarter of FY 2003; remains confident of achieving full year EPS of
$1.40 to $1.45 after one-time gain
CEDAR RAPIDS, Iowa (July 17, 2003) - Rockwell Collins, Inc. (NYSE: COL) today reported net income for the third quarter of fiscal year 2003 of $77 million, an
increase of $17 million from the same period last year. Earnings per share for the third quarter of fiscal year 2003 were
43 cents, an increase of 10 cents from the 33 cents reported last year. Included in earnings for the current quarter was a
one-time gain of $12 million after-tax (7 cents per share) that was recorded after receiving a favorable tax ruling from the
Internal Revenue Service related to the elimination of an excise tax for an over funded life insurance fund.
Sales for the third quarter of fiscal year 2003 were $620 million versus $623 million in the same period a year ago. Cash
flow from operations for the first nine months of fiscal year 2003 was $203 million versus $231 million reported for the first
nine months last year. Free cash flow for the first nine months of fiscal year 2003 was $163 million versus $197 million reported
for the same period last year. A table reconciling cash flow from operating activities to free cash flow is included in the
condensed cash flow information in this release.
"The company's strong quarterly results were driven by the continued outstanding performance of our Government Systems business,
where year over year sales rose 15% and operating margins were in excess of 18% for the fourth consecutive quarter," said
Rockwell Collins Chairman, President and Chief Executive Officer Clay Jones. "Once again, the strength of our Government Systems
business has offset the weakness in our Commercial Systems' markets. This reinforces the value of our company's balanced business
model."
Following is a discussion of sales and earnings for each business segment.
Commercial Systems
Commercial Systems, which provides aviation electronics and in-flight entertainment products and services to air transport,
business and regional aircraft manufacturers and airlines worldwide, reported third quarter sales of $291 million, a decrease
of $45 million or 13% from the same period last year. The Airshow, Inc., acquisition provided $14 million of incremental sales
in the current quarter.
Sales of commercial avionics to air transport OEM's declined in the current quarter due to lower new aircraft build rates.
Aftermarket sales to the air transport market in the current quarter were comparable to sales for the same period last year.
Sales of in-flight entertainment products declined in the current quarter due to the anticipated reduction in wide body aircraft
build rates and lower retrofit activity.
As anticipated, sales of commercial avionics to the business jet marketplace declined significantly in the current quarter
due to lower new aircraft build rates. The decline was partially offset by higher sales of regional jet avionics compared
to the same period last year due to the occurrence of a strike at Bombardier in 2002.
Commercial Systems' operating margin for the third quarter of fiscal year 2003 declined to 12.0%, compared with 13.1% for
the same period in 2002. This margin decline was primarily a result of higher marketing expenses on lower sales volume.
Government Systems
Government Systems, which provides aviation electronics, navigation and precision guidance and communications products and
services to the United States government, foreign militaries and manufacturers of military platforms, reported third quarter
sales of $329 million, an increase of $42 million or 15% from the same period last year. The sales increase is attributable
to the Joint Tactical Radio System (JTRS) and the Joint Strike Fighter (JSF) development programs along with higher sales
in GPS navigation products.
Government Systems' operating margin for the third quarter of fiscal year 2003 increased to 19.5% compared with 17.4% for
the same period in fiscal year 2002. This increase in margins was a result of the business holding its operating expenses
flat on higher sales volume along with the continued shift from company-funded to customer-funded research and development
expenses, which more than offset the lower operating margins on the JTRS and JSF development contracts.
Corporate
The third quarter of fiscal year 2003 benefited from a pre-tax gain of $20 million (after-tax gain of $12 million, or 7 cents
per share) after receiving a favorable tax ruling from the Internal Revenue Service related to the elimination of an excise
tax for an over funded life insurance reserve fund.
The third quarter of fiscal year 2002 benefited from a favorable resolution of a legal matter associated with the sale of
a business which increased earnings per share by approximately 1 cent.
Business Highlights
- Rockwell Collins was selected by Boeing to provide key avionics and support for the new 767 Tanker Transport program. The
100 aircraft global tanker program is anticipated to be worth $260 million in sales to Rockwell Collins over a 10 year period.
The U.S. Department of Defense has approved the lease of 100 KC-767A tankers. The lease details are being reviewed by Congress.
- VT Merlin Communications awarded Rockwell Collins a communications solutions contract for the U.K. Defence High Frequency
Communications Service program. Under this contract, valued at $30 million, the company will provide high frequency radios,
command and control software and support services over a 15 year period.
- The US Army Communications-Electronics Command (CECOM) selected Rockwell Collins as the standard supplier of GPS engines to
the U.S. Army enabling support of soldiers on the three-dimensional digital battle space. The two-year contract has an estimated
value of $30 million assuming the exercise of additional options.
- AVIC I Commercial Aircraft Co. (ACAC) Ltd. of China has selected Rockwell Collins to use the Pro Line 21 avionics package
and act as the avionics system integrator for its new ARJ21 regional jet. ACAC has estimated the market for this 79 to 99
seat regional aircraft in China and globally at 500 aircraft.
- The Pro Line 21 advanced avionics system received U.S. Federal Aviation Administration and Transport Canada certification
onboard the new Bombardier Challenger 300 super-midsize aircraft. Pro Line 21 will provide advanced avionics such as four
12 by 10-inch liquid crystal flight displays, TCAS II, turbulence-detection weather radar and 3-D Flight Management System
navigation maps to the aircraft.
- Boeing selected Rockwell Collins to supply global airborne information management equipment which will provide a variety of
operational, crew and passenger capabilities, including email and Internet access for its e-Enabled Advantage initiative which
was unveiled at the Paris Air Show in June.
Fiscal Year 2003 Outlook
For fiscal year 2003, the company continues to anticipate revenues of approximately $2.55 billion and earnings per share between
$1.40 and $1.45 after including the one-time gain of 7 cents per share related to a favorable tax ruling regarding an over
funded life insurance reserve fund recorded in the third quarter.
Free cash flow for fiscal year 2003 is now projected to be $15 million higher than our previous guidance due to an anticipated
reduction in capital expenditures for the year from $95 million to $80 million. Free cash flow is now anticipated to be in
the range of $240 to $290 million for fiscal year 2003. Free cash flow consists of cash flow from operations, which is projected
to be in the range of $315 to $365 million, less capital expenditures of approximately $80 million plus proceeds from the
disposition of property of approximately $5 million.
Conference Call and Webcast Details
Rockwell Collins' Chairman, President and CEO Clay Jones and Senior Vice President and CFO Larry Erickson will conduct an
earnings conference call at 9 a.m. EDT on July 17, 2003. Individuals may listen on the Internet at www.rockwellcollins.com . Listeners are encouraged to go to the Investor Relations portion of the web site at least 15 minutes prior to the call to
download and install any necessary software. The call will be available for replay on the Internet at www.rockwellcollins.com through August 18, 2003.
Rockwell Collins 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 .
This press release contains statements (including certain projections and business forecasts) 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 length of the war in Iraq, the consequence
of past and future terrorist attacks; political turmoil in the Middle East; the timing related to restoring consumer confidence
in air travel; the health of the global economy as well as the commercial aerospace industry; domestic and foreign government
spending, budgetary and trade policies; economic and political changes in international markets where the company competes;
demand for and market acceptance of new and existing products; potential cancellation or delay of orders by our customers;
customer bankruptcies; labor work stoppages; market performance of our pension assets; recruitment and retention of qualified
personnel; our ability to successfully execute to our internal performance plans; favorable outcomes of certain customer procurements
and Congressional approvals; changes to government policies and regulations; new aircraft build rates; product reliability
and cost of repairs; successful execution of our acquisition, strategic and integration plans; and the uncertainties of the
outcome 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 and the company assumes no obligation to update any forward-looking statement.
 
# # #
|
