Rockwell Collins Reports Earnings for the First Time as a Public Company; Sales Increase 16 Percent in Third Quarter

CEDAR RAPIDS, Iowa (July 25, 2001) - Rockwell Collins, Inc. (NYSE: COL) today reported record sales of $727 million for its third quarter ended June 30, 2001. Sales increased $100 million, or 16 percent, over the same period a year ago. Pro forma net income for the third quarter increased to $67 million, or 36 cents per share, compared to $66 million, or 35 cents per share, in last year's third quarter, consistent with the company's recent guidance. Rockwell Collins, a leading provider of aviation electronics and airborne and mobile communication systems, became an independent and publicly-traded company on June 29, 2001 following its spin-off from Rockwell International Corporation (NYSE: ROK).

Clay Jones, president and chief executive officer, said, "Both our Commercial Systems and Government Systems businesses delivered solid results in our third quarter. Commercial Systems had increased sales and strong operating margins despite softening in the commercial aircraft market. Government Systems posted significantly higher sales and operating earnings, due in large measure to the contributions of our recently acquired Kaiser Aerospace and Electronics business. In addition, service revenue across the businesses rose more than 10%, as we continue to aggressively expand our service offerings."

"We are well positioned to continue the profitable growth that Rockwell Collins has delivered over the past five years," Jones continued. "Despite the recent difficult economic conditions, we expect to post significant increases in both sales and earnings in our fourth quarter as compared to the same period a year ago. This performance will be fueled by increased deliveries related to certain government contracts and in-flight entertainment products. We remain confident with our estimate of full year earnings per share in the range of $1.40 to $1.45 on a pro forma basis."

Following is a discussion of sales and earnings for each of Rockwell Collins' businesses for the third quarter:

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 third quarter sales of $413 million, $17 million or 4 percent higher than last year's third quarter. The Sony Trans Com in-flight entertainment business, acquired in July 2000, added $23 million. Excluding this acquisition, sales were down slightly, due primarily to lower sales of avionics and in-flight entertainment products into the commercial airline retrofit market. Commercial Systems' operating margin for the quarter was 17.2 percent, 1.2 points lower than last year's third quarter, due to the lower margin Sony Trans Com sales and higher product development spending.

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 sales of $314 million, an increase of $83 million or 36 percent over last year's third quarter, including $60 million related to Kaiser. Excluding the effect of the Kaiser acquisition, sales for the quarter rose 10 percent over the comparable period a year ago, due principally to strong international sales. Government Systems' operating margin decreased to 15.9 percent in the third quarter compared to 17.3 percent a year ago, as we increased investment in Flight2^TM, our next generation integrated avionics architecture for the defense market.

Corporate Expenses and Pro Forma Adjustments

General corporate expenses are primarily costs allocated by Rockwell International for centrally provided management services, including corporate oversight, financial, tax, corporate communications, human resources and legal. We believe that these costs approximate those we would have incurred had we been an independent company for the periods presented.

Our calculation of pro forma net income and earnings per share includes certain adjustments necessary to present the results of Rockwell Collins as if the spin-off transaction had occurred at the beginning of the periods presented. Pro forma earnings per share has been calculated based on Rockwell International's average outstanding shares for all periods presented. Net income for the third quarter excluding these pro forma adjustments was $68 million, compared to $69 million in the third quarter of 2000.

In addition to the successful completion of our spin-off, we had the following business highlights during the quarter:

• Standard & Poor's added Rockwell Collins to the S&P 500 Index effective at the close of business on June 29, 2001.
• Airbus selected Rockwell Collins to provide the Avionics Full Duplex Ethernet (AFDX) switch for the new A380 aircraft. The AFDX switch provides the communications infrastructure to connect aircraft systems, including displays, radios and navigation sensors. This award is the first sole source selection for the new aircraft avionics suite.
• Raytheon Aircraft selected Rockwell Collins' Pro Line 21 integrated avionics system into the Hawker 800XP. Collins Pro Line avionics currently fly onboard Raytheon's Beechjet 400A and the King Air and Hawker families of aircraft. Collins Pro Line 21 is also being integrated into several new-generation business jets, and was recently certified on the Raytheon Premier I.
• Rockwell Collins was selected to provide key avionics systems to The Boeing Company as part of the U.S. Air Force C-130 Avionics Modernization Program. The contract award is estimated to be $500 million and the company will supply systems for approximately 500 USAF C-130 aircraft, with deliveries beginning in 2004 and continuing for ten years.
• Rockwell Collins, through its Kaiser subsidiary, was selected by The Boeing Company to supply the Flat Panel Color Displays for the U.S. Air Force Boeing F-15E program.

A conference call to discuss these financial results will take place at 10:00 am Eastern Time on July 25. The call will be webcast and accessible via the Rockwell Collins website (www.rockwellcollins.com).

This news release contains statements relating to future results that are "forward-looking" 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, those detailed from time to time in the company's Securities and Exchange Commission filings.

Rockwell Collins is a world leader in the design, production and support of communications and aviation electronics solutions for commercial and government customers worldwide. The company employs a global workforce of 17,500 people and has estimated fiscal 2001 sales of approximately $2.9 billion. Rockwell Collins common stock is traded on the New York Stock Exchange under the ticker symbol COL. For more information, visit the Company's website (www.rockwellcollins.com).

ROCKWELL COLLINS, INC.
SALES AND EARNINGS INFORMATION
THREE MONTHS ENDED JUNE 30
(in millions, except per share amounts)

ROCKWELL COLLINS, INC.
SALES AND EARNINGS INFORMATION
NINE MONTHS ENDED JUNE 30
(in millions, except per share amounts)

ROCKWELL COLLINS, INC.
SUMMARY BALANCE SHEET
(in millions)

ROCKWELL COLLINS, INC.
CONDENSED CASH FLOW INFORMATION
NINE MONTHS ENDED JUNE 30, 2001
(in millions)

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