Rockwell Collins Reports Fiscal Year 2009 Earnings Per Share of $3.73

http://www.businesswire.com/news/home/20091103005206/en

* Fiscal year 2009 sales of $4.47 billion decreased 6% and earnings per share of
$3.73 decreased 10% from 2008
* Fiscal year 2009 results include a $21 million restructuring charge ($14
million after-tax, or 9 cents per share)
* Fiscal year 2009 operating cash flow of $633 million increased 2 percent
compared to fiscal year 2008

CEDAR RAPIDS, Iowa--(Business Wire)--
Rockwell Collins, Inc. (NYSE: COL) today reported net income for the fiscal year
ended September 30, 2009 of $594 million, a decrease of $84 million, or 12
percent from fiscal year 2008 net income of $678 million. Earnings per share
decreased 10 percent to $3.73 compared to earnings per share of $4.16 a year
ago.

Fiscal year 2009 revenues decreased approximately $300 million, or 6 percent, to
$4.47 billion compared to revenues of $4.77 billion last year. Fiscal year 2009
total segment operating margin was 21.4 percent compared to 21.9 percent last
year.

For the fiscal year 2009 fourth quarter, net income decreased $48 million, or 26
percent, to $134 million from $182 million last year. Earnings per share
declined 29 cents, or 26 percent, to $0.84 compared to earnings per share of
$1.13 for the same period a year ago. Results for the fourth quarter of 2009
include a charge of $21 million ($14 million after-tax, or 9 cents per share)
primarily related to the closing of the company`s San Jose, California facility,
asset impairments and other restructuring activities. Results for the fourth
quarter of 2008 include a benefit related to a retroactive catch up for the
renewal of the Federal R&D Tax Credit, which, net of related incentive
compensation cost, increased earnings per share by about 8 cents. Excluding the
impact of these items, earnings per share would have declined 11%, from $1.05 in
the fourth quarter of 2008 to $0.93 in the fourth quarter of 2009. Revenues in
the quarter decreased $87 million, or 7%, to $1.19 billion from revenues of
$1.28 billion last year.

"During a year defined by significant challenges in the commercial aerospace
environment, our company continued to benefit from its structural balance and
diversification. Although our Commercial Systems business suffered from a
decline in revenues and profitability due to market circumstances beyond our
control, we were able to partially offset these impacts through the strength of
our Government Systems business which realized record levels of sales and
profitability," said Chairman, President and Chief Executive Officer Clay Jones.
"The benefits of this balance, as well as our focus on maximizing the efficiency
of our operations, led to the company generating a record level of operating
cash flow during 2009. This strong operating cash flow enabled us to continue
investments in both acquisition and organic growth opportunities."

"Despite continued economic uncertainty," continued Jones, "we are beginning to
see signs of stabilization in our commercial markets. We believe conditions will
improve sequentially through 2010, and expect the first fiscal quarter will be
the low water mark of this cycle."

Following is a discussion of fiscal year 2009 fourth quarter sales and earnings
for each business segment.

Government Systems

Government Systems, which provides communication and electronic systems,
products and services for airborne and surface applications to the U.S.
Department of Defense, other government agencies, civil agencies, defense
contractors and foreign ministries of defense, achieved fourth quarter sales of
$741 million, an increase of $105 million, or 17 percent, compared to the $636
million reported for the same period last year. Incremental sales from the
acquisitions of DataPath Inc. and SEOS Group Ltd. contributed a total of $66
million to Government Systems` revenue growth.

Airborne solutions` sales increased $16 million, or 3%, to $475 million.
Incremental sales from the acquisition of SEOS Group Ltd. contributed $5 million
to Airborne solutions` revenue growth. Organic sales increased $11 million, or
2%, due primarily to higher sales of head-down displays for F-15 aircraft and
increased Unmanned Aerial Vehicle (UAV) control systems revenues. Surface
solutions` sales increased $89 million, or 50%, to $266 million. Incremental
sales from the acquisition of DataPath, Inc. contributed $61 million to Surface
solutions` revenue growth. Organic sales increased $28 million, or 16%, as
higher sales from a United Kingdom Ministry of Defence precision targeting
system program, increased revenue from the Joint Tactical Radio System (JTRS)
program and higher Joint Precision Approach and Landing System (JPALS) program
revenue were partially offset by lower sales from Defense Advanced GPS Receiver
(DAGR) and Ground-Based GPS Receiver Application Module (GB-GRAM) products.

Government Systems` fourth quarter operating earnings increased 27% to $159
million, resulting in an operating margin of 21.5%, compared to operating
earnings of $125 million, or an operating margin of 19.7%, for the same period
last year. The increase in operating earnings and margin were primarily due to
higher sales and lower employee incentive compensation costs, partially offset
by an increase in research and development costs.

Commercial Systems

Commercial Systems, which provides aviation electronics systems, products and
services to air transport, business and regional aircraft manufacturers and
airlines worldwide, achieved fourth quarter sales of $449 million, a decrease of
$192 million, or 30%, compared to sales of $641 million reported for the same
period last year.

Sales related to aircraft OEMs decreased $113 million, or 34%, to $220 million,
primarily as a result of reduced production rates at business jet OEMs.
Aftermarket sales decreased $60 million, or 23%, to $205 million due primarily
to lower retrofit and spares sales and reduced avionics service and support
revenues for both airlines and business jet operators. Sales of wide-body
in-flight entertainment products and systems decreased $19 million, or 44%, to
$24 million compared to the prior year period.

Commercial Systems` fourth quarter operating earnings decreased to $71 million,
resulting in an operating margin of 15.8%, compared to operating earnings of
$144 million, or an operating margin of 22.5%, for the same period a year ago.
The decrease in operating earnings was due primarily to lower sales volumes,
which were partially offset by reduced research and development expenses, lower
employee incentive compensation costs and other cost savings.

Corporate and Financial Highlights

General corporate expenses that are not allocated to the company`s business
segments decreased $8 million, or 44%, to $10 million during the fourth quarter
of fiscal year 2009 due to lower employee incentive compensation costs and other
cost containment initiatives. The company`s effective income tax rate of 29.5%
for the fourth quarter of fiscal year 2009 was higher than the rate of 24.5% for
the prior year period due primarily to the retroactive catch up for renewal of
the Federal R&D Tax Credit in the fourth quarter of fiscal year 2008.

Utilizing the strength of its balance sheet and operating cash flow, during
fiscal year 2009 the company continued executing on a capital deployment
strategy targeted at enhancing shareowner value.

* Cash deployed for acquisitions totaled $146 million for the purchases of
DataPath, Inc., a global leader in creating satellite-based communication
networks and SEOS Group Ltd., a leading global supplier of highly realistic
visual display solutions for commercial and military simulators.
* Dividends paid to shareowners in 2009 totaled $152 million, and the company
deployed $153 million to repurchase 3.9 million shares of its common stock.
During the fourth quarter, the company`s board of directors increased the share
repurchase authorization by $200 million and as of the 2009 fiscal year end the
company had $209 million of authorized share repurchases remaining.
* Contributions made to the company`s defined benefit pension plans totaled $139
million including a $50 million contribution made during the company`s fourth
quarter.

Fiscal Year 2010 Outlook

The following table is a complete summary of the company`s fiscal year 2010 financial guidance, which is unchanged from the financial guidance initially provided on September 17, 2009:

-- Total sales $4.6 Bil. to $4.8 Bil.

-- Total segment operating margins 18.5% to 19.5%

-- Earnings per share(1) $3.35 to $3.55

-- Cash flow from operations(2) $600 Mil. to $700 Mil.

-- Research & development costs $870 Mil. to $900 Mil.

-- Capital expenditures about $135 Mil.

(1) Based on an expected effective income tax rate in the range of 30% to 31%. The projected effective tax rate assumes the Federal Research and Development Tax Credit (Federal R&D Tax Credit) is available for the entire fiscal year, although legislation extending the Federal R&D Tax Credit beyond December 31, 2009 has yet to be enacted.
(2) Projected cash provided by operating activities range accommodates a qualified defined benefit pension plan contribution of $98 million that was made in the first week of the company`s fiscal year 2010.

Fourth Quarter Business Highlights

US Air Force selected Rockwell Collins KC-135 Block 45 upgrade program. The U.S.
Air Force selected Rockwell Collins for the Engineering, Manufacturing and
Development (EMD) phase of the KC-135 Block 45 cockpit upgrade program. During
the EMD phase, the company will modernize two prototype KC-135 refueling tanker
flight decks, establishing the production baseline for 415 additional KC-135
aircraft expected to receive the Block 45 upgrade.

Rockwell Collins delivered Ground Soldier Ensemble prototypes. Rockwell Collins,
together with its teammate Elbit Systems of America, created a full soldier
system prototype that improves upon combat-proven displays and navigation
systems originally developed for the Land Warrior program, and incorporates
superior video processing, mass storage, computing and information assurance
capabilities.

Rockwell Collins introduced the MicroDAGR GPS receiver. The MicroDAGR provides
dismounted soldiers with real-time position, navigation, moving maps and timing
information on a full-color touch screen display, and is small enough to be worn
on the wrist, attached to a lanyard or placed in a pocket.

Brazilian Ministry of Defense selected Rockwell Collins to provide SATCOM
terminals. Rockwell Collins, through its Swedish subsidiary (formerly SWE-DISH
Satellite Systems AB), was chosen by the Ministry of Defense of Brazil to
provide suitcase satellite communication (SATCOM) terminals. SWE-DISH Satellite
Systems AB, and its parent company DataPath Inc., were acquired by Rockwell
Collins in May 2009.

Rockwell Collins Pro Line Fusion underwent first customer test flight on Global
Express XRS. Pro Line FusionTM , Rockwell Collins` next-generation avionics
system for business and regional aircraft, has successfully completed the first
customer test flight on a Bombardier Global Express XRS aircraft. Rockwell
Collins serves as the avionics systems integrator for the Global Vision flight
deck on Bombardier's Global Express XRS and Global 5000 aircraft.

China Southern Airlines selected Rockwell Collins avionics. China Southern
Airlines selected Rockwell Collins to provide its MultiScan weather radar,
GLU-920 Multi-Mode Receiver (MMR) and advanced sensors for 10 Airbus A330
aircraft, with deliveries scheduled to start March 2010.

Three Twenty Holdings, Ltd. selected Rockwell Collins avionics for 25 new A320
aircraft. Three Twenty Holdings, Ltd. selected a full suite of Rockwell Collins
avionics, including the MultiScan Hazard Detection System, for installation on
25 new A320 aircraft. Deliveries began in September 2009.

Mesaba signed sixteen-year Dispatch service agreement with Rockwell Collins.
Mesaba Airlines, a Northwest/Delta operator, selected Rockwell Collins to
provide avionics service and support for its fleet of 41 CRJ900 and 19 CRJ200
aircraft. Under a 16 year Dispatch agreement, Rockwell Collins will provide
Mesaba with avionics component repairs and inventory that is pre-positioned at
multiple service locations.

Conference Call and Webcast Details

Rockwell Collins Chairman, President and CEO Clay Jones and Senior Vice
President and CFO Patrick Allen will conduct an earnings conference call at 9:00
a.m. Eastern Time on November 3, 2009. Individuals may listen to the call and
view management`s supporting slide presentation 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 December 5, 2009.

Rockwell Collins is a pioneer in the development and deployment of innovative
communication and aviation electronic solutions for both commercial and
government applications. Our expertise in flight deck avionics, cabin
electronics, mission communications, information management, and simulation and
training is delivered by nearly 20,000 employees, and a global service and
support network that crosses 27 countries. To find out more, please visit
www.rockwellcollins.com.

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 financial condition of our customers (including major
U.S. airlines); the health of the global economy, including potential
deterioration in the currently volatile economic and financial market
conditions; delays related to the award of domestic and international contracts;
the continued support for military transformation and modernization programs;
potential adverse impact of oil prices on the commercial aerospace industry; the
impact of the global war on terrorism and declining defense budgets on
government military procurement expenditures and budgets; changes in domestic
and foreign government spending, budgetary and trade policies adverse to our
businesses; market acceptance of our new and existing technologies, products and
services; reliability of and customer satisfaction with our products and
services; favorable outcomes on or potential cancellation or restructuring of
contracts, orders or program priorities by our customers; customer bankruptcies
and profitability; recruitment and retention of qualified personnel; regulatory
restrictions on air travel due to environmental concerns; effective negotiation
of collective bargaining agreements by us and our customers; performance of our
suppliers and subcontractors; risks inherent in development and fixed price
contracts, particularly the risk of cost overruns; risk of significant reduction
to air travel or aircraft capacity beyond our forecasts; our ability to execute
to our internal performance plans such as our productivity improvement and cost
reduction initiatives; achievement of our acquisition and related integration
plans; continuing to maintain our planned effective tax rates; risk that
legislation extending the Federal Research & Development Tax Credit beyond
December 31, 2009 is not passed during this fiscal year; our ability to develop
contract compliant systems and products on schedule and within anticipated cost
estimates; risk of fines and penalties related to noncompliance with export
control regulations; risk of asset impairments; our ability to win new business
and convert those orders to sales within the fiscal year in accordance with our
annual operating plan; and the uncertainties of the outcome of litigation, as
well as other risks and uncertainties, including but not limited to those
detailed herein and from time to time in our 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.

ROCKWELL COLLINS, INC.
SEGMENT SALES AND EARNINGS INFORMATION
(Unaudited)
(in millions, except per share amounts)

Three Months Ended Years Ended
Sept. 30 Sept. 30
2009 2008 2009 2008

Sales
Government Systems $ 741 $ 636 $ 2,579 $ 2,366
Commercial Systems 449 641 1,891 2,403
Total sales $ 1,190 $ 1,277 $ 4,470 $ 4,769

Segment operating earnings
Government Systems $ 159 $ 125 $ 602 $ 486
Commercial Systems 71 144 353 560
Total segment operating earnings 230 269 955 1,046

Interest expense (6 ) (6 ) (18 ) (21 )
Stock-based compensation (3 ) (4 ) (18 ) (19 )
General corporate, net (10 ) (18 ) (31 ) (53 )
Restructuring and asset impairment charges (1) (21 ) - (21 ) -
Income before income taxes 190 241 867 953

Income tax provision (2)(3) (56 ) (59 ) (273 ) (275 )
Net income $ 134 $ 182 $ 594 $ 678

Diluted earnings per share $ .84 $ 1.13 $ 3.73 $ 4.16

Weighted average diluted shares outstanding 159.2 160.6 159.4 162.9

The company operates on a 52/53 week fiscal year ending on the Friday closest to September 30. For ease of presentation September 30 is utilized to represent the fiscal year end date. 2009 was a 52 week fiscal year and the fourth quarter of 2009 was a 13 week quarter. 2008 was a 53 week fiscal year and the fourth quarter of 2008 was a 14 week quarter.

(1) Represents severance and asset impairment charges primarily related to the company`s plans to reduce workforce and close its San Jose, California facility and relocate engineering, service and production work to other locations.

(2) The company`s effective income tax rate for the fourth quarter of fiscal year 2009 was 29.5% compared to 24.5% for the fourth quarter of fiscal year 2008. The lower effective income tax rate in the fiscal year 2008 fourth quarter was primarily due to the recognition of approximately an 8 percentage point tax benefit related to the renewal of the Federal R&D Tax Credit which was retroactive to January 1, 2008 as a result of legislation signed into law during that quarter.

(3) The company`s effective income tax rate for fiscal year 2009 was 31.5% compared to 28.9% for the same period a year ago. The effective income tax rate for fiscal year 2008 reflects the benefit related to the favorable resolution of certain tax settlements.

Use of Non-GAAP Financial Information

The non-GAAP earnings per share information included and reconciled to GAAP in
the 3rd paragraph of this press release is believed to be useful to investors`
understanding and assessment of our ongoing operations. These non-GAAP earnings
per share results are intended to clarify the impact that the 2009 restructuring
charge and the 2008 tax-related items had on our year-over-year comparative
results.

The following tables summarize total sales by product category and Commercial
Systems` sales by type of product or service for the three months and years
ended September 30, 2009 and 2008 (unaudited, in millions):

Three Months Ended Years Ended
Sept. 30 Sept. 30
2009 2008 2009 2008

Government Systems` sales by product category:
Airborne solutions $ 475 $ 459 $ 1,761 $ 1,662
Surface solutions 266 177 818 704
Total $ 741 $ 636 $ 2,579 $ 2,366

Commercial Systems` sales by product category:
Wide-body in-flight entertainment products $ 24 $ 43 $ 85 $ 142
All other air transport aviation electronics 239 287 901 1,115
Total air transport aviation electronics 263 330 986 1,257
Business and regional aviation electronics 186 311 905 1,146
Total $ 449 $ 641 $ 1,891 $ 2,403

Commercial Systems` sales by type of product or service:
Original equipment $ 220 $ 333 $ 970 $ 1,269
Aftermarket 205 265 836 992
Wide-body in-flight entertainment products 24 43 85 142
Total Commercial Systems sales $ 449 $ 641 $ 1,891 $ 2,403

Wide-body in-flight entertainment (Wide-body IFE) products relate to sales of twin-aisle IFE products and systems to customers in the air transport aviation electronics market. Ongoing air transport aviation electronics relate to all other air transport sales, including service and support sales for installed Wide-body IFE products. The company has separated out its Wide-body IFE products sales to reflect the company`s decision in 2005 to shift research and development resources away from these products.

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

Sept. 30, Sept. 30,
2009 2008
Assets
Cash and cash equivalents $ 235 $ 175
Receivables, net 913 950
Inventories, net 943 970
Current deferred income taxes 154 139
Other current assets 117 104
Total current assets 2,362 2,338

Property 719 680
Goodwill and intangible assets 964 807
Long-term deferred income taxes 371 144
Other assets 229 175
Total assets $ 4,645 $ 4,144

Liabilities and shareowners` equity
Short-term debt $ - $ 287
Accounts payable 366 419
Compensation and benefits 199 295
Advance payments from customers 349 308
Product warranty costs 217 226
Other current liabilities 228 205
Total current liabilities 1,359 1,740

Long-term debt, net 532 228
Retirement benefits 1,254 600
Other liabilities 208 168

Shareowners' equity 1,292 1,408
Total liabilities and shareowners` equity $ 4,645 $ 4,144

ROCKWELL COLLINS, INC.
CONDENSED CASH FLOW INFORMATION
(Unaudited)
(in millions)

Years Ended
Sept. 30
2009 2008
Operating Activities:

Net income $ 594 $ 678
Adjustments to arrive at cash provided by operating activities:
Restructuring and asset impairment charge 21 -
Depreciation 114 106
Amortization of intangible assets 30 23
Stock-based compensation 18 19
Compensation and benefits paid in common stock 63 65
Tax benefit from stock-based compensation 2 8
Excess tax benefit from stock-based compensation (2 ) (8 )
Deferred income taxes 88 73
Pension plan contributions (139 ) (14 )
Changes in assets and liabilities, excluding effects of acquisitions and foreign currency adjustments:
Receivables 39 (68 )
Inventories 12 (176 )
Accounts payable (63 ) 26
Compensation and benefits (122 ) (10 )
Advance payments from customers 15 4
Income taxes - (67 )
Other assets and liabilities (37 ) (39 )
Cash Provided by Operating Activities 633 620

Investing Activities:

Property additions (153 ) (171 )
Acquisition of businesses, net of cash acquired (146 ) (105 )
Acquisition of intangible assets (2 ) (8 )
Proceeds from disposition of property - 1
Other investing activities (1 ) (1 )
Cash Used for Investing Activities (302 ) (284 )

Financing Activities:

Purchases of treasury stock (153 ) (576 )
Cash dividends (152 ) (129 )
(Decrease) increase in short-term borrowings (287 ) 287
Increase in long-term borrowings 296 -
Proceeds from exercise of stock options 19 17
Excess tax benefit from stock-based compensation 2 8
Cash Used for Financing Activities (275 ) (393 )

Effect of exchange rate changes on cash and cash equivalents 4 1

Net Change in Cash and Cash Equivalents 60 (56 )

Cash and Cash Equivalents at Beginning of Period 175 231
Cash and Cash Equivalents at End of Period $ 235 $ 175

Rockwell Collins, Inc.
Media Contact:
Pam Tvrdy, 319-295-0591
pjtvrdy@rockwellcollins.com
or
Investor Contact:
Dan Swenson, 319-295-7575
investorrelations@rockwellcollins.com

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