Rockwell Collins Releases 1Q Fiscal Year 2010 Earnings

Rockwell Collins, Inc. has reported net income of $121 million for its fiscal year 2010 first quarter ended December 31, a decrease of $30 million, or 20 percent, from fiscal year 2009 first quarter net income of $151 million.

In a release on January 28, the Company noted that earnings per share were $0.76, a decrease of $0.19, or 20 percent, from earnings per share of $0.95 for the same period in 2009.

First quarter 2010 sales decreased $31 million, or 3 percent, to $1.027 billion compared to sales of $1.058 billion for the same period a year ago. Incremental sales from the acquisitions of DataPath, Inc. and SEOS Group contributed $69 million of revenue growth. The organic revenue decline of $100 million resulted primarily from continued weakness in business jet OEM revenues, lower commercial aerospace aftermarket revenues and a decline in sales of Defense Advance GPS Receivers within Government Systems. Total segment operating margins were 19.7 percent for the first quarter of 2010 compared to 22.4 percent for the first quarter of 2009.

Cash provided by operating activities for the first three months of 2010 totaled $84 million compared to the $21 million reported for the same period last year. The increase resulted from working capital improvements as well as lower employee incentive compensation payments, partially offset by higher pension plan contributions and lower net income.

"After effects of the global recession and delays in passing the fiscal year 2010 Defense Appropriations bill impacted our first quarter revenues largely as we expected," said Rockwell Collins Chairman, President and Chief Executive Officer Clay Jones. "Although revenues declined on a year-over-year basis we realized an increase in operating cash flow through working capital performance and minimized the impact to operating margins through effective cost containment."

Jones went on to state, "Improvements in commercial aerospace conditions and general developments in the formulation of defense budgets world-wide reinforce my confidence that we should see sequential growth in sales and profitability throughout the year which will allow us to achieve our full year forecast."

Corporate and Financial Highlights

General corporate expenses that are not allocated to the company's business segments increased $5 million to $11 million during the first quarter of 2010 due to higher pension expense. The company's effective income tax rate of 33.1 percent for the first quarter of 2010 was higher than the rate of 32.0 percent for the prior year period primarily due to the unfavorable impact of the expiration of the Federal Research and Development Tax Credit (Federal R&D Tax Credit) on December 31.

During the first quarter of 2010 the company repurchased 0.5 million shares of its common stock at a total cost of $28 million, leaving $181 million available for authorized share repurchases. The company also paid dividends totaling $38 million, or 24 cents per share, on its common stock.

Rockwell Collins is a company engaged in the development and deployment of communication and aviation electronic solutions for both commercial and government applications.

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