Rockwell Collins Inc. Reports Operating Results (10-Q)
Rockwell Collins Inc. has a market cap of $9 billion; its shares were traded at around $57.16 with a P/E ratio of 16.3 and P/S ratio of 2. The dividend yield of Rockwell Collins Inc. stocks is 1.7%.COL is in the portfolios of Andreas Halvorsen of Viking Global Investors LP, Sarah Ketterer of CAUSEWAY CAPITAL MANAGEMENT LLC, RS Investment Management, Jean-Marie Eveillard of First Eagle Investment Management, LLC, Jeremy Grantham of GMO LLC, John Buckingham of Al Frank Asset Management, Inc., Chuck Royce of Royce& Associates, George Soros of Soros Fund Management LLC, Kenneth Fisher of Fisher Asset Management, LLC.
Highlight of Business Operations:Total sales for the three months ended June 30, 2010 increased $130 million compared to the three months ended June 30, 2009 comprised of a $103 million increase in Government Systems sales and a $27 million increase in Commercial Systems sales. Incremental sales from the May 2009 acquisition of DataPath, Inc. (DataPath) and the December 2009 acquisition of AR Group, Inc. (Air Routing) contributed a total of $43 million, or 4 percentage points, of revenue growth. See the following Government Systems and Commercial Systems Financial Results sections for further discussion of sales.
R&D expense for the three months ended June 30, 2010 increased $12 million from the same period last year primarily due to higher customer-funded R&D within Government Systems. The increase in Government Systems customer-funded R&D was primarily due to costs from the vehicle electronics integration program described in the Government Systems Financial Results section below. A $6 million increase in company-funded R&D expense within Government Systems was partially offset by a $2 million reduction in company-funded R&D expense within Commercial Systems. The higher company-funded R&D expense within Government Systems was primarily related to the DataPath acquisition and increased spending on other anticipated programs.
Total SG&A expenses for the three months ended June 30, 2010 increased $11 million, or 10 percent, compared to the same period of 2009. The $11 million increase in total SG&A expenses was primarily due to the following:
Net income for the three months ended June 30, 2010 decreased 2 percent to $142 million, or 11.7 percent of sales, from net income of $145 million, or 13.4 percent of sales, for the three months ended June 30, 2009. Diluted earnings per share decreased 2 percent to $0.89 for the three months ended June 30, 2010 compared to $0.91 for the three months ended June 30, 2009. The decrease in net income and diluted earnings per share was primarily the result of (i) lower earnings from Government Systems as discussed in the Government Systems Financial Results section below, (ii) higher general corporate, net expense driven by an increase in pension and employee incentive costs, (iii) partially offset by a reduction in the effective income tax rate discussed in the Income Taxes section below.
Government Systems operating earnings were $153 million, or 20.3 percent of sales, for the three months ended June 30, 2010 compared to operating earnings of $158 million, or 24.3 percent of sales, for the same period one year ago. The $5 million reduction in Government Systems operating earnings was primarily due to the following:
Commercial Systems operating earnings for the three months ended June 30, 2010 were $75 million, or 16.3 percent of sales, compared to operating earnings of $75 million, or 17.3 percent of sales, for the three months ended June 30, 2009. Commercial Systems operating earnings were level with the prior year and were primarily impacted by the following:
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