CEDAR RAPIDS, Iowa—(BUSINESS WIRE)—Rockwell Collins, Inc. (NYSE: COL) today reaffirmed all aspects of its fiscal year 2011 guidance including revenue of $4.80 billion to $4.85 billion, cash flow from operations of about $650 million and earnings per share from continuing operations of $4.00 to $4.10, which excludes the gain on sale of Rollmet and any impact from potential restructuring actions.

For fiscal year 2012 the company anticipates revenues between $4.9 billion and $5.0 billion, earnings per share in the range of $4.40 to $4.60, and cash flow from operations of $625 million to $725 million. Total segment operating margins are expected to be in the range of 20.5% to 21.5%. The company’s earnings per share growth will be accelerated through a more aggressive share repurchase plan. Today, the Board of Directors increased the share repurchase authorization by $700 million, which will be funded through cash flow from operations and the incurrence of approximately $250 million of debt.

“Strong growth in Commercial Systems is anticipated to more than offset a modest revenue decline for Government Systems in fiscal year 2012. The structural balance our company maintains between these two businesses has served us well during previous market cycles and should continue to enable stable, positive growth in the year ahead, despite weaker conditions in our U.S. Government markets,” said Rockwell Collins Chairman, President and Chief Executive Officer, Clay Jones. “While we anticipate revenue volatility to continue in Government Systems, we believe the high margin and cash flow that is typical of this business can be maintained. With the expanding incremental margins provided by a rapidly growing Commercial Systems business and a more aggressive share repurchase program, we expect to increase earnings per share at more than three times the rate of overall revenue growth.”

Details related to the projected performance of the company’s Commercial and Government Systems businesses for fiscal year 2012 are as follows:

Commercial Systems

Commercial Systems provides aviation electronics systems, products and services to air transport, business and regional aircraft manufacturers and airlines worldwide. Commercial Systems fiscal year 2012 revenue is expected to increase by low double digits.

Original Equipment
Sales to aircraft Original Equipment Manufacturers (OEMs) are expected to increase in the low teens across the air transport, and business and regional markets. Sales to air transport aircraft OEMs should benefit from the introduction of Boeing’s 787 and 747-8 airplanes and planned production rate increases of other Boeing and Airbus aircraft. Overall production rates of business aircraft should increase in the coming year, with a full year of Bombardier Global family deliveries and the introduction of Gulfstream’s G-280 boosting our revenues.

Aftermarket Sales
Aftermarket sales are expected to increase in the low double digits. Aftermarket sales related to air transport aircraft should increase due to initial sparing for the new Boeing platforms and stronger airline profitability leading to higher demand for retrofit and spare products. Business and regional jet aircraft aftermarket sales are projected to benefit from continued improvement in aircraft utilization and higher demand for retrofit and spare products.

Sales of wide-body in-flight entertainment products and services are expected to decrease about 15%, or approximately $20 million, due to the company’s decision in 2005 to cease investing in this product area.

Government Systems

Government Systems provides avionics, communication and navigation products, and surface solutions to the U.S. Department of Defense, state and local governments, other government agencies, civil agencies, defense contractors and foreign ministries of defense around the world. Government Systems fiscal year 2012 revenue is expected to decrease by low single digits driven by approximately $75 million of lower Defense Advanced GPS Receiver (DAGR) products sales and a $60 million unfavorable impact from three previously disclosed programs cancelled for convenience in 2011, partially offset by anticipated growth in sales of avionics. The majority of these unfavorable impacts are anticipated to be experienced in the first half of fiscal year 2012 with a low double-digit revenue decrease, which should be followed by mid-single digit growth in the second half.

Avionics
Avionics represent approximately 51% of Government Systems 2011 sales and should increase by mid-single digits as a result of higher tanker, fighter and simulation and training program revenue. Specific programs contributing to this growth include the KC-46, KC-390 and KC-10 tanker programs, F-15 foreign military sales and simulation and training solutions for E-2C.

Communication Products
Communication products represent approximately 25% of Government Systems 2011 sales and are expected to be down mid-single digits in fiscal year 2012 as a result of the full year impact from a program cancellation and lower revenue for the Ground Mobile Radio variant of the Joint Tactical Radio System program.

Surface Solutions
Surface solutions, representing approximately 13% of Government Systems 2011 sales, are projected to be down by low double digits resulting from lower sales of public safety vehicle systems and the full year impact of two program cancellations, partially offset by increased sales of hardware for international targeting integration systems.

Navigation Products
Navigation products, which make up approximately 11% of Government Systems 2011 sales and are primarily comprised of global positioning systems based products are expected to be down approximately 25% in fiscal year 2012 resulting from the reduced procurement of our DAGR products as troop deployments wind-down in Afghanistan and Iraq.

Expense and Cash Flow Assumptions

Other assumptions integral to the development of the company’s projected financial guidance for fiscal year 2012 are as follows:

Combined segment operating margins are expected to be in the range of 20.5% to 21.5%. Government Systems operating margins should remain relatively steady from 2011 to 2012 and Commercial Systems operating margins are anticipated to expand approximately 250 basis points driven by the anticipated sales increase.
Research and development (R&D) expenditures are planned to be approximately $900 million, or about 18% of total company sales.
The company’s effective income tax rate is expected to be about 30% and assumes that the Federal Research & Development Tax Credit benefit is not extended beyond December 31, 2011. The effective tax rate also assumes an expected benefit from the completion of IRS examinations for certain open taxable years.
Cash flow from operations is projected to be in the range of $625 million to $725 million and includes:
A $110 million contribution to the company’s qualified defined benefit pension plan.
A $130 million net increase in pre-production engineering costs as the company continues to fund development projects on which its customers have provided contractual guarantees for reimbursement. The programs primarily driving the increase include the Airbus A350 and multiple Bombardier platforms.
Capital expenditures are projected to total about $150 million for fiscal year 2012.