CEDAR RAPIDS (KWWL) - Rockwell Collins will cut 600 jobs, including 200 people in Iowa according Rockwell's media contact Pam Tvrdy.
President and CEO Clay Jones made the announcement during an investor conference call to discuss earnings for the first quarter of the fiscal year.
Below is a Rockwell Collins statement of the fiscal year 2009 first quarter earnings:
Rockwell Collins earnings per share increases to 95 cents for first quarter 2009
CEDAR RAPIDS, Iowa (February 03, 2009) - Rockwell Collins, Inc. (NYSE: COL) today reported earnings per share of 95 cents for the first quarter of fiscal year 2009, an improvement of 2 cents compared to earnings per share of 93 cents last year. Earnings per share grew despite a first quarter fiscal year 2009 sales decline of $54 million, or 5%, to $1.058 billion compared to sales of $1.112 billion a year ago. The decline in revenues was due to the impact on the company's Commercial Systems business from the labor strike and production issues at Boeing as well as lower air transport aftermarket sales. Incremental sales from business acquisitions contributed $9 million to total revenues.
Total segment operating margins were 22.4% despite the decline in revenues. Cash provided by operating activities for the first three months of fiscal year 2009 totaled $21 million compared to $32 million reported for the same period last year.
"Given the challenges we faced in our commercial markets, I am very pleased with our performance in the first quarter," said Rockwell Collins Chairman, President and Chief Executive Officer Clay Jones. "Not only did Government Systems hit record profit levels, but Commercial Systems maintained their margins at 20% despite 14% lower sales due to a Boeing strike and airline capacity reductions. Once again, our balanced portfolio and efficient shared services operating model served us well."
Following is a discussion of fiscal year 2009 first quarter sales and earnings for each business segment.
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 first quarter sales of $574 million, an increase of $27 million, or 5%, compared to the $547 million reported for the same period last year. Incremental sales from acquisitions contributed a total of $8 million, or 1 percentage point of the Government Systems revenue growth.
Airborne solutions sales increased $28 million, or 7%, to $403 million. Incremental sales from the acquisitions of Athena Technologies Inc. and SEOS Group Ltd. contributed a total of $8 million, or 2 percentage points of the Airborne solutions revenue growth. The 5 percent organic sales increase was due primarily to higher sales from simulation and training solutions, higher production sales on the Eurofighter Tranche 2 program, and higher development program revenues on the Common Range Integrated Instrumentation System (CRIIS) program. Surface solutions sales were relatively flat at $171 million. Higher development program sales from the Joint Precision Approach and Landing System (JPALS) program were offset by lower production volume from the Multifunctional Information Distribution System-Low Volume Terminal (MIDS-LVT) program and lower development program sales from the Joint Tactical Radio System - Ground Mobile Radio (JTRS-GMR) program.
Government Systems' first quarter operating earnings totaled $140 million, resulting in an operating margin of 24.4%, compared to operating earnings of $115 million, or an operating margin of 21.0%, for the same period last year. The increase in operating earnings and margin were primarily due to a favorable mix of higher margin hardware sales, lower research and development costs, incremental margin on higher sales, and lower employee incentive compensation costs.
Commercial Systems, which provides aviation electronics systems, products and services to air transport, business and regional aircraft manufacturers and airlines worldwide, achieved first quarter sales of $484 million, a decrease of $81 million, or 14%, compared to sales of $565 million reported for the same period last year.
Sales to airlines and aircraft OEMs related to new aircraft production decreased $39 million, or 14%, to $244 million, due primarily to lower original equipment manufacturer (OEM) sales as a result of Boeing's labor strike and their aircraft production issues. Aftermarket revenues decreased $22 million, or 9%, to $219 million due primarily to lower Boeing 787 simulator equipment sales as well as lower air transport service and support sales. Wide-body in-flight entertainment products and systems sales declined $20 million, or 49%, to $21 million due to the company's decision in 2005 to cease investing in those products.
Commercial Systems' first quarter operating earnings decreased $40 million to $97 million, delivering an operating margin of 20.0%, compared to operating earnings of $137 million, or an operating margin of 24.2%, for the same period a year ago. The decrease in operating earnings was due primarily to lower sales volumes and the absence of a favorable adjustment related to a contract option exercise benefiting the first quarter of 2008, partially offset by lower research and development costs and lower employee incentive compensation costs.
During the first quarter of fiscal year 2009, the company repurchased 1.2 million shares of its common stock at a total cost of $43 million. Total authorized share repurchases available beyond December 31, 2008 are $122 million. The company also paid dividends to shareholders totaling $38 million, or 24 cents per share on its common stock.
Fiscal Year 2009 Outlook
Commenting on the outlook for the remainder of 2009, Mr. Jones said, "We are operating in a time of extraordinary volatility, making it very difficult to predict future business conditions. While market conditions for our Government Systems business and the Air Transport portion of our Commercial Systems business are tracking to expectations, we have seen a significant deterioration in the business aviation market. Significant increases in the available inventory of relatively young used business aircraft and sharp reductions in utilization indicate that we will see pressure in our OEM and aftermarket business jet revenues."
Regarding updates to the fiscal year 2009 outlook, Mr. Jones said, "With the business conditions as we see them today, and anticipating risk to the business over the coming quarters, we are adjusting our 2009 sales expectations to reflect our updated assessment of market conditions. In response to these changes, we are instituting a number of action plans to appropriately size our business and maintain margins. We continue to believe that our credit and cash flow profile provide us the ability to continue funding a comprehensive research and development program, to pursue strategic acquisition opportunities such as our recent acquisition of SEOS, and to return excess funds to investors through dividends and share repurchases."
The following table is a complete summary of the company's fiscal year 2009 financial guidance, which is updated from the guidance provided on November 3, 2008:
about $4.7 bil.
- Updated from
$4.9 bil. to $4.95 bil.
Segment sales growth / (decline)
- Commercial Systems
- Government Systems
Total segment operating margins
- Updated from
22.5% to 23.0%
Earnings per share
$4.10 to $4.30
- Updated from
$4.25 to $4.45
Cash provided by operating activities(1)
$675 mil. to $725 mil.
- Updated from
$725 mil. to $775 mil.
Research & development costs
about $900 mil.
- Updated from
$925 mil. to $975 mil.
about $150 mil.
- Updated from
about $170 mil.
(1) The projected cash provided by operating activities range includes a U.S. qualified defined benefit pension plan contribution of $75 million, which was made in January 2009.
Rockwell Collins delivered TacNet data link to Raytheon for Joint Standoff Weapon
Rockwell Collins delivered the first TacNet data link as part of the U.S. Navy's Strike Common Weapon Data Link Program. Raytheon Company recently approved final testing and accepted delivery of TacNet for integration into their weapon systems. The contract is valued at $18 million.
Rockwell Collins completed the acquisition of visual display provider SEOS
Rockwell Collins completed its acquisition of SEOS Group Ltd., a leading global supplier of highly realistic visual display solutions for commercial and military simulators. SEOS provides complete design, development, production, and installation of displays and related support services that are used worldwide in simulators for military and commercial flight, air traffic control, marine and surface transportation.
Rockwell Collins inked service pact with Airbus for Singapore Airlines A330s
Rockwell Collins was selected by Airbus to provide its Dispatch Program for Singapore Airlines to maintain its future fleet of 19 leased A330 aircraft. The Dispatch Program, Rockwell Collins' total life cycle service solution, includes spares management, distribution, component repair and overhaul, and component reliability improvements.
All Nippon Airways selected Rockwell Collins' Dispatch Program to provide long term B787 avionics support
All Nippon Airways (ANA) selected Rockwell Collins' Dispatch Program for their fleet of Boeing 787 aircraft. The program is scheduled to begin upon delivery of the first Boeing 787 to ANA. The 10-year fixed price per flight hour agreement provides guaranteed dispatch levels through spares management, logistical support and component reliability improvements for Rockwell Collins' comprehensive suite of displays, communication, surveillance and pilot control systems.
China Cargo Airlines selected Rockwell Collins' avionics for 10 Boeing 777s
China Cargo Airlines selected Rockwell Collins to provide a comprehensive package of communication, navigation and surveillance avionics for 10 Boeing 777 aircraft. Deliveries of these aircraft are scheduled to begin in December 2009 and continue through 2013.
Saudi Arabian Airlines selected Rockwell Collins communication, navigation and surveillance systems
Saudi Arabian Airlines selected Rockwell Collins to provide a comprehensive package of communication, navigation and surveillance avionics for 50 new Airbus A320 family aircraft. These aircraft are scheduled to be delivered from 2009 through 2013.
U. S. Air Force flight tested Rockwell Collins battlespace information solution on AC-130 Gunship
The U.S. Air Force's AC-130 Gunship fleet recently completed the successful first flight of a modified AC-130 with Rockwell Collins' battlespace information systems. The upgrade features the Rockwell Collins Data Link Processor and OpenEdge net-enablement software, hosted on an Integrated Processing Cabinet to provide seamless integration of Link 16 and Cursor on Target functionality.
Rockwell Collins received $85 million Air Force air traffic control subcontract
Rockwell Collins was selected to provide the SMART Blade Radio to upgrade the U.S. Air Force worldwide air traffic control (ATC) radio communication network. The subcontract, potentially valued at more than $85 million, was awarded by Science Applications International Corporation (SAIC), the prime integrator for the U.S. Air Force's ATC Radio Upgrade program. The subcontract is for the First Article System to be installed at Wright-Patterson Air Force Base.
Data Link Solutions completes tests of Naval Tactical Radio System
Data Link Solutions, a joint venture between Rockwell Collins and BAE Systems, and the U.S. Naval Air Warfare Center have completed the first flight test of the Multifunctional Information Distribution System Joint Tactical Radio System (MIDS-JTRS). The test demonstrated the system's ability to interoperate with other communications, situational awareness, and navigation systems for increased mission effectiveness and survivability.
Rockwell Collins reached milestone with German Army CH-53G helicopter
Rockwell Collins recently completed a major milestone in the German Army CH-53G program with the installation of a System Integration Lab (SIL) in Heidelberg, Germany. The SIL is a helicopter simulation environment that features a cockpit mockup and several different systems and components that communicate with the German Avionics Management System.
Aer Lingus selected Rockwell Collins to provide suite of avionics
Aer Lingus selected Rockwell Collins to provide a comprehensive suite of avionics, including MultiScan weather radar, the GLU-920 Multi-Mode Receiver and a full range of communication and navigation offerings, on six Airbus A330 aircraft. Deliveries are scheduled to begin in 2009.
Raytheon and Rockwell Collins selected for Joint Precision Approach and Landing System (JPALS)
Rockwell Collins, as a member of the Raytheon, Rockwell Collins, Northrop Grumman and SAIC team, was selected by the U.S. Navy to execute the Joint Precision Approach and Landing System (JPALS) Increment 1 program. The program value for Rockwell Collins is $94 million. Rockwell Collins will provide Global Positioning System (GPS) and communications subsystems, systems engineering, test and logistics support.
Gulfstream G250 to feature Rockwell Collins Pro Line Fusion avionics
Rockwell Collins announced that its Pro Line Fusion avionics will be a key feature of the new Gulfstream G250 super mid-size business jet. Pro Line Fusion provides an integrated flight deck to ensure interoperability between systems and features high resolution 15-inch LCD displays working in concert with Head-Up Guidance Systems, graphical flight planning, synthetic and enhanced vision and Rockwell Collins' award-winning MultiScanTM Hazard Detection system. First deliveries expected to begin in 2011.
Rockwell Collins products featured on two Hawker Beechcraft aircraft
Hawker Beechcraft selected Rockwell Collins products for two of their aircraft, the new light jet Hawker 450XP and the new King Air 350i. The Hawker 450XP, will feature Rockwell Collins' Pro Line 21 avionics with significant enhancements in communication, navigation and surveillance capabilities, as well as the company's Venue high definition cabin management system. The King Air 350i will include Rockwell Collins Venue cabin management system.
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