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Delaware
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52-2314475
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(State or other jurisdiction
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(I.R.S. Employer
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of incorporation or organization)
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Identification No.)
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400 Collins Road NE
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Cedar Rapids, Iowa
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52498
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(Address of principal executive offices)
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(Zip Code)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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Title of each class
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Name of each exchange on which registered
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Common Stock, par value $.01 per share
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New York Stock Exchange
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SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
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Large accelerated filer
R
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Accelerated filer
£
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Non-accelerated filer
£
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(Do not check if a smaller reporting company)
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Smaller reporting company
£
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Page No.
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PART I
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Item 1.
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Business.
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•
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integrated avionics systems, such as Pro Line Fusion
®
, which provide advanced avionics capabilities to meet the challenges of operating in the next generation global airspace. Capabilities include synthetic and enhanced vision enabled flight displays, advanced flight and performance management systems, fly-by-wire integrated flight controls and information management solutions to improve operational efficiency
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•
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integrated cabin electronics systems, including cabin management systems, passenger connectivity and entertainment solutions, business support systems to improve passenger productivity and passenger flight information systems
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•
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communications systems and products, such as data link, high frequency (HF), very high frequency (VHF) and satellite communications systems
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•
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navigation systems and products, including landing sensors to enable fully automatic landings, radio navigation and geophysical sensors, as well as flight management systems
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•
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situational awareness and surveillance systems and products, such as synthetic and enhanced vision systems, surface surveillance and guidance solutions, head-up guidance systems, weather radar and collision avoidance systems
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•
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electro-mechanical systems, including integrated pilot control solutions and primary and secondary actuation systems
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•
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simulation and training systems, including full-flight simulators for crew training, visual system products, training systems and engineering services
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•
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maintenance, repair, parts, after-sales support services and aftermarket used equipment
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•
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communications systems and products designed to enable the transmission of information across the communications spectrum
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•
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navigation products and systems, including radio navigation products, global positioning system (GPS) equipment, handheld navigation devices and multi-mode receivers
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•
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avionics sub-systems for aircraft flight decks, including cockpit display products (multipurpose flat panel head-down displays, wide field of view head-up and helmet-mounted displays), flight controls, information/data processing and communications, navigation, safety and surveillance systems
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•
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precision targeting, electronic warfare and range and training systems
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•
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simulation and training systems, including visual system products, training systems and services
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•
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maintenance, repair, parts, after-sales support services and aftermarket used equipment
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•
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voice and data communication services, such as air-to-ground GLOBALink
SM
and ground-to-ground AviNet® services, which enable satellite, VHF and HF transmissions between the cockpit, the FAA, airline operation centers, reservation systems and other third parties ensuring safety and efficiency for commercial airlines and other related entities in the aviation ecosystem
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•
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around the clock global flight support services for business aircraft operators, under the ARINCDirect
SM
brand, including flight planning and datalink, international trip support, cabin connectivity solutions and flight operations management software
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•
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airport communications and information systems designed to ease congestion and improve airport efficiency via airline agent and passenger-facing check-in, baggage, boarding and access control solutions
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•
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train dispatching and information systems including solutions to support positive train control as mandated by the 2008 Railroad Safety Improvement Act
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•
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mission critical security command and control systems with security functions such as intrusion detection, access control, video and credential management and vehicle identification for nuclear power facilities
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•
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backup communications services for North American first responders and critical infrastructure, newly launched as UrgentLink
TM
, which improve communications performance during natural and man-made emergency situations
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September 30
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||||||
(in billions)
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2015
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2014
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||||
Commercial Systems
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$
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2.1
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$
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1.8
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Government Systems:
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||||
Funded orders
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2.5
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2.8
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Unfunded orders
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0.5
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0.3
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Information Management Services
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0.3
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0.3
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Total backlog
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$
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5.4
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$
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5.2
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•
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ACCEL (Tianjin) Flight Simulation Co., Ltd, a joint venture with Beijing Bluesky Aviation Technology, a subsidiary of the Aviation Industry Corporation of China (AVIC), to develop and build commercial flight simulators in China
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•
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ADARI Aviation Technology Limited, a joint venture with Aviation Data Communication Corporation Co., LTD, operates remote ground stations around China and develops certain content delivery management software
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•
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AVIC Leihua Rockwell Collins Avionics Company, a joint venture with China Leihua Electronic Technology Research Institute, a subsidiary of the Aviation Industry Corporation of China (AVIC), which provides integrated surveillance system products for the C919 aircraft in China
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•
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Data Link Solutions LLC, a joint venture with BAE Systems, plc, for joint pursuit of the worldwide military data link market
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•
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ESA Vision Systems LLC, a joint venture with Elbit Systems, Ltd., for joint pursuit of helmet-mounted cueing systems for the worldwide military fixed wing aircraft market
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•
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Integrated Guidance Systems LLC, a joint venture with Honeywell International, Inc., for joint pursuit of the development of weapons guidance and navigation solutions
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•
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Quest Flight Training Limited, a joint venture with Quadrant Group, plc, which provides aircrew training services primarily for the United Kingdom Ministry of Defence
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•
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Rockwell Collins CETC Avionics Co., Ltd. a joint venture with CETC Avionics Co., Ltd. to develop and deliver products for the C919 program
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•
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in August 2015, we acquired International Communications Group, Inc. (ICG), which provides satellite-based global voice and data communication products and services for the aviation industry
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•
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in March 2015, we acquired Pacific Avionics Pty. Limited (Pacific Avionics), which provides technologies used for wireless information distribution
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•
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in December 2013, we acquired ARINC, which provides communication services, systems integration and security solutions across the aviation, airport, rail, transit and nuclear security markets
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•
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in March 2015, we divested ARINC's Aerospace Systems Engineering and Support business (ASES), which provided military aircraft integration and modifications, maintenance, logistics and support
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•
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in July 2014, we divested our satellite communication systems business formerly known as Datapath, Inc. (Datapath), which designed, manufactured and provided services for ground-based satellite communication systems (primarily for military applications)
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•
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in November 2013, we divested our Kaiser Optical Systems, Inc. (KOSI) subsidiary, which supplied spectrographic instrumentation and applied holographic technology to customers
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(in millions)
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2015
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2014
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2013
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||||||
Customer-funded
(1)
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$
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578
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$
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504
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$
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481
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Company-funded
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272
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268
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291
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|||
Total research and development expense
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850
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772
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772
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|||
Increase in pre-production engineering costs, net
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136
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162
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145
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|||
Total research and development investment
(2)
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$
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986
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$
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934
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$
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917
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Item 1A.
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Risk Factors.
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•
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dependence on Congressional appropriations and administrative allotment of funds
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•
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the ability of the U.S. Government to terminate, without prior notice, partially completed government programs and contracts that were previously authorized
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•
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changes in governmental procurement legislation and regulations and other policies which may reflect military and political developments, including recent U.S. Government initiatives to narrow commercial item determinations and expand cost-based pricing arrangements
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•
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significant changes in contract scheduling or program structure, which generally result in delays or reductions in deliveries
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•
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intense competition for available U.S. Government business necessitating increases in time and investment for design and development
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•
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difficulty of forecasting costs and schedules when bidding on developmental and highly sophisticated technical work
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•
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changes over the life of U.S. Government contracts, particularly development contracts, which generally result in adjustments of contract prices
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•
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claims based on U.S. Government work and violation of associated compliance and other requirements, which may result in fines, the cancellation or suspension of payments or suspension or debarment proceedings affecting potential further business with the U.S. Government
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•
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reductions in demand for aircraft (for example, softness in demand for business jets) and delayed aircraft delivery schedules
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•
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bankruptcy or other significant financial difficulties of our existing and potential customers
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•
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reductions in the need for, or the deferral of, aircraft maintenance and repair services and spare parts support
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•
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retirement or storage of older generation aircraft, resulting in fewer retrofits and less demand for services for those aircraft, as well as the increased availability of used equipment on the market
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•
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limited availability of financing for airlines or aircraft
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•
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high fuel costs
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•
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disruptions to commercial air travel demand
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•
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delays in the development of the necessary satellite and ground infrastructure by the U.S. and other governments
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•
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delays in adopting national and international regulatory standards
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•
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competitors developing better products
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•
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failure of our product development investments in communications, navigation and surveillance products that enable airspace management technologies to coincide with market evolution to, and demand for, these products
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•
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the ability and desire of customers to invest in products enabling airspace management technologies
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•
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declines in revenues, profitability and cash flows from reduced orders, payment delays or other factors caused by the economic problems of our customers
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•
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adverse impacts on our access to short-term commercial paper borrowings or other credit sources
|
•
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supply problems associated with any financial constraints faced by our suppliers
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•
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laws, regulations and policies of non-U.S. governments relating to investments and operations, as well as U.S. laws affecting the activities of U.S. companies abroad
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•
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regulatory requirements and potential changes, including imposition of tariffs or embargoes, export controls and other trade restrictions and antitrust and data privacy requirements
|
•
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changes in government spending on defense programs, including spending decline in European countries
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•
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uncertainties and restrictions concerning the availability of funding, credit or guarantees
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•
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requirements of certain customers which obligate us to specified levels of in-country purchases, manufacturing or investments, known as offsets, and penalties in the event we fail to perform in accordance with the offset requirements
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•
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import and export licensing requirements and regulations
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•
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uncertainties as to local laws and enforcement of contract and intellectual property rights
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•
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rapid changes in government, economic and political policies, political or civil unrest or the threat of international boycotts or U.S. anti-boycott legislation
|
•
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difficulty in integrating newly-acquired businesses and commencing partnership operations in an efficient and cost-effective manner and the risk that we encounter significant unanticipated costs or other problems associated with integration or commencement
|
•
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challenges in achieving strategic objectives, cost and revenue synergies and other expected benefits
|
•
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risk that our markets do not evolve as anticipated and the targeted technologies do not prove to be those needed to be successful in those markets
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•
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risk that we assume significant liabilities that exceed the limitations of any applicable indemnification provisions or the financial resources of any indemnifying parties
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•
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potential loss of key employees of the acquired businesses or joint venture
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•
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risk of diverting the attention of senior management from our existing operations
|
•
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continued increases in medical costs related to current employees due to increased usage of medical benefits, medical inflation and the impact of recent U.S. Government health care legislation
|
•
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an increase in the average life span of retirees
|
•
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material changes in legislation or market dynamics impacting medical or pension matters
|
•
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the effect declines in the stock and bond markets have on our pension plan assets
|
•
|
potential reductions in the discount rate used to determine the present value of our retirement benefit obligations
|
•
|
adverse effects to future results due to the theft, destruction, loss, corruption or release of personal data, confidential information or intellectual property
|
•
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operational or business disruptions resulting from the failure of IT or other systems and subsequent mitigation activities
|
•
|
negative publicity resulting in reputation or brand damage with our customers, suppliers, employees, shareowners and others
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Item 1B.
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Unresolved Staff Comments.
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Item 2.
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Properties.
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Location (in thousands of square feet)
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|
Owned
Facilities
|
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Leased
Facilities
|
|
Total
|
|||
Commercial and Government Systems
|
|
|
|
|
|
|
|
|
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U.S.
|
|
3,339
|
|
|
2,163
|
|
|
5,502
|
|
Europe, Middle East and Africa
|
|
330
|
|
|
333
|
|
|
663
|
|
Canada and Mexico
|
|
—
|
|
|
131
|
|
|
131
|
|
Asia Pacific
|
|
—
|
|
|
240
|
|
|
240
|
|
South America
|
|
—
|
|
|
17
|
|
|
17
|
|
Total
|
|
3,669
|
|
|
2,884
|
|
|
6,553
|
|
|
|
|
|
|
|
|
|||
Information Management Services
|
|
|
|
|
|
|
|||
U.S.
|
|
31
|
|
|
544
|
|
|
575
|
|
Europe, Middle East and Africa
|
|
—
|
|
|
30
|
|
|
30
|
|
Canada and Mexico
|
|
—
|
|
|
1
|
|
|
1
|
|
Asia Pacific
|
|
—
|
|
|
26
|
|
|
26
|
|
South America
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
|
31
|
|
|
601
|
|
|
632
|
|
Combined Total
|
|
3,700
|
|
|
3,485
|
|
|
7,185
|
|
|
|
|
|
|
|
|
|||
Type of Facility (in thousands of square feet)
|
|
Owned
Facilities
|
|
Leased
Facilities
|
|
Total
|
|||
Commercial and Government Systems
|
|
|
|
|
|
|
|||
Manufacturing and service
|
|
1,265
|
|
|
884
|
|
|
2,149
|
|
Sales, engineering and general office space
|
|
2,404
|
|
|
2,000
|
|
|
4,404
|
|
|
|
|
|
|
|
|
|
|
|
Information Management Services
|
|
|
|
|
|
|
|||
Manufacturing and service
|
|
31
|
|
|
—
|
|
|
31
|
|
Sales, engineering and general office space
|
|
—
|
|
|
601
|
|
|
601
|
|
Combined Total
|
|
3,700
|
|
|
3,485
|
|
|
7,185
|
|
Item 3.
|
Legal Proceedings.
|
Item 4.
|
Mine Safety Disclosures.
|
Item 4A.
|
Executive Officers of the Company.
|
Name, Office and Position, and Principal Occupations and Employment
|
|
Age
|
|
Robert K. Ortberg
—Chairman of the Board of Directors since November 2015; Chief Executive Officer and a Director from August 2013 to November 2015; President since September 2012; Executive Vice President and Chief Operating Officer, Government Systems prior thereto
|
|
55
|
|
Patrick E. Allen
—Senior Vice President and Chief Financial Officer since January 2005
|
|
51
|
|
Tatum J. Buse
—Vice President, Finance and Corporate Controller since September 2013; Vice President Cost Optimization from September 2012 to September 2013; Vice President and Controller of International and Service Solutions from May 2011 to September 2012; Senior Director of Financial Planning and Analysis prior thereto
|
|
41
|
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Philip J. Jasper
—Executive Vice President and Chief Operating Officer, Government Systems since September 2012; Vice President, Business Development, Government Systems prior thereto
|
|
47
|
|
Bruce M. King
—Senior Vice President, Operations since May 2011; Vice President and General Manager Communications Products prior thereto
|
|
54
|
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Jeffrey D. MacLauchlan
—Senior Vice President, Corporate Development since September 2014; Vice President, Corporate Development of Lockheed Martin Corporation prior thereto
|
|
56
|
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Colin R. Mahoney
—Senior Vice President, International and Service Solutions since February 2013; Vice President of Commercial Systems Sales, Marketing and Customer Support prior thereto
|
|
50
|
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Nan Mattai
—Senior Vice President, Engineering and Information Technology since August 2015; Senior Vice President, Engineering and Technology prior thereto
|
|
63
|
|
Martha L. May
—Senior Vice President, Human Resources since April 2013; Senior Vice President and Chief Human Resources Officer of Bell Helicopter prior thereto
|
|
48
|
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Robert J. Perna
—Senior Vice President, General Counsel and Secretary since February 2014; Senior Vice President, General Counsel from January 2014 to February 2014; Vice President, General Counsel and Secretary for AM Castle & Co. prior thereto
|
|
51
|
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Jeffrey A. Standerski
—Senior Vice President, Information Management Services since December 2013; Vice President and General Manager, Business and Regional Systems from July 2013 to December 2013; Vice President and General Manager, Air Transport Systems prior thereto
|
|
49
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Kent L. Statler
—Executive Vice President and Chief Operating Officer, Commercial Systems since February 2010; Executive Vice President, Rockwell Collins Services prior thereto
|
|
50
|
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Douglas E. Stenske
—Vice President, Treasurer and Risk Management since September 2013; Vice President, Treasurer and Financial Planning from March 2011 to September 2013; Vice President and General Auditor prior thereto
|
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49
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Robert A. Sturgell
—Senior Vice President, Washington Operations
|
|
56
|
|
PART II
|
|
Item 5.
|
Market for the Company's Common Equity, Related Stockholder Matters and Company Purchases of Equity Securities.
|
|
|
2015
|
|
2014
|
||||||||||||
Fiscal Quarters
|
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
First
|
|
$
|
86.60
|
|
|
$
|
72.35
|
|
|
$
|
74.43
|
|
|
$
|
65.76
|
|
Second
|
|
97.49
|
|
|
83.00
|
|
|
84.06
|
|
|
72.95
|
|
||||
Third
|
|
99.37
|
|
|
92.22
|
|
|
81.47
|
|
|
75.79
|
|
||||
Fourth
|
|
93.89
|
|
|
78.15
|
|
|
81.90
|
|
|
71.89
|
|
Fiscal Quarters
|
|
2015
|
|
2014
|
||||
First
|
|
$
|
0.30
|
|
|
$
|
0.30
|
|
Second
|
|
0.30
|
|
|
0.30
|
|
||
Third
|
|
0.33
|
|
|
0.30
|
|
||
Fourth
|
|
0.33
|
|
|
0.30
|
|
Period
|
|
Total
Number of
Shares
Purchased
|
|
Average Price
Paid per Share
|
|
Total Number of
Shares Purchased as
Part of Publicly
Announced
Plans or Programs
|
|
Maximum Number
(or Approximate
Dollar Value) of
Shares that May Yet
Be Purchased Under the
Plans or Programs
(1)
|
|||||
July 1, 2015 through July 31, 2015
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
380 million
|
August 1, 2015 through August 31, 2015
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
380 million
|
September 1, 2015 through September 30, 2015
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
380 million
|
Total/Average
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
|
|
Item 6.
|
Selected Financial Data.
|
|
|
Years Ended September 30
|
||||||||||||||||||
(dollars in millions, except per share amounts)
|
|
2015(a)
|
|
2014(b)
|
|
2013(c)
|
|
2012(d)
|
|
2011(e)
|
||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales
|
|
$
|
5,244
|
|
|
$
|
4,979
|
|
|
$
|
4,474
|
|
|
$
|
4,531
|
|
|
$
|
4,593
|
|
Cost of sales
|
|
3,630
|
|
|
3,469
|
|
|
3,103
|
|
|
3,168
|
|
|
3,263
|
|
|||||
Selling, general and administrative expenses
|
|
606
|
|
|
594
|
|
|
495
|
|
|
530
|
|
|
515
|
|
|||||
Income from continuing operations
|
|
694
|
|
|
618
|
|
|
630
|
|
|
589
|
|
|
595
|
|
|||||
Income (loss) from discontinued operations, net of taxes
|
|
(8
|
)
|
|
(14
|
)
|
|
2
|
|
|
20
|
|
|
39
|
|
|||||
Net income
|
|
686
|
|
|
604
|
|
|
632
|
|
|
609
|
|
|
634
|
|
|||||
Net income as a percent of sales
|
|
13.1
|
%
|
|
12.1
|
%
|
|
14.1
|
%
|
|
13.4
|
%
|
|
13.8
|
%
|
|||||
Diluted earnings per share from continuing operations
|
|
5.19
|
|
|
4.52
|
|
|
4.56
|
|
|
4.01
|
|
|
3.81
|
|
|||||
Statement of Financial Position Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital(f)
|
|
$
|
1,089
|
|
|
$
|
1,006
|
|
|
$
|
1,113
|
|
|
$
|
1,347
|
|
|
$
|
1,394
|
|
Property
|
|
964
|
|
|
919
|
|
|
773
|
|
|
773
|
|
|
754
|
|
|||||
Goodwill and intangible assets
|
|
2,607
|
|
|
2,551
|
|
|
1,067
|
|
|
1,071
|
|
|
1,088
|
|
|||||
Total assets
|
|
7,389
|
|
|
7,063
|
|
|
5,400
|
|
|
5,314
|
|
|
5,389
|
|
|||||
Short-term debt
|
|
448
|
|
|
504
|
|
|
436
|
|
|
—
|
|
|
—
|
|
|||||
Long-term debt, net
|
|
1,680
|
|
|
1,663
|
|
|
563
|
|
|
779
|
|
|
528
|
|
|||||
Shareowners' equity
|
|
1,875
|
|
|
1,884
|
|
|
1,618
|
|
|
1,259
|
|
|
1,523
|
|
|||||
Other Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
|
$
|
210
|
|
|
$
|
163
|
|
|
$
|
120
|
|
|
$
|
138
|
|
|
$
|
152
|
|
Depreciation and amortization
|
|
252
|
|
|
225
|
|
|
177
|
|
|
170
|
|
|
155
|
|
|||||
Dividends per share
|
|
1.26
|
|
|
1.20
|
|
|
1.20
|
|
|
1.08
|
|
|
0.96
|
|
|||||
Stock Price:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
High
|
|
$
|
99.37
|
|
|
$
|
84.06
|
|
|
$
|
75.25
|
|
|
$
|
61.46
|
|
|
$
|
67.29
|
|
Low
|
|
72.35
|
|
|
65.76
|
|
|
52.24
|
|
|
46.37
|
|
|
43.82
|
|
(a)
|
Income from continuing operations includes a $22 million income tax benefit from the retroactive reinstatement of the previously expired Federal Research and Development Tax Credit and a $16 million income tax benefit related to the remeasurement of certain prior year tax positions.
|
(b)
|
Income from continuing operations includes $18 million of restructuring, pension settlement and ARINC transaction costs ($25 million before income taxes). Approximately $18 million of the pre-tax expense was recorded in selling, general and administrative expenses, $4 million was included within cost of sales, and $3 million was classified as interest expense. Income from continuing operations also includes a $9 million gain ($10 million before income taxes) resulting from the sale of the KOSI business. On December 23, 2013, we acquired ARINC for $1.405 billion. This acquisition was funded through a combination of new long-term debt and short-term commercial paper borrowings.
|
(c)
|
Net income includes a $19 million income tax benefit related to the retroactive reinstatement of the previously expired Federal Research and Development Tax Credit. Short-term debt includes commercial paper borrowings incurred to fund a portion of our share repurchase program and also includes $200 million related to debt that matured in December 2013.
|
(d)
|
Net income includes $38 million of net restructuring and asset impairment charges ($58 million before income taxes), primarily related to employee severance costs and certain customer bankruptcy charges. Approximately $38 million of the pre-tax charge was recorded in cost of sales, $25 million was included within selling, general and administrative expenses and $5 million was classified as a gain within Other income. Net income also includes a $19 million income tax benefit related to the favorable resolution of certain tax matters in 2012.
|
(e)
|
Income from discontinued operations includes a $17 million gain ($27 million before income taxes) resulting from the sale of the Rollmet business. In addition, income from continuing operations includes $17 million of restructuring and asset impairment charges ($27 million before income taxes) primarily related to real estate lease and contract termination
|
(f)
|
Working capital consists of all current assets and liabilities, including cash and short-term debt.
|
Item 7.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations.
|
OVERVIEW AND OUTLOOK
|
|
|
FY15 Results
|
|
FY16 Guidance
|
Total sales
|
|
$5.24 billion
|
|
$5.3 billion to $5.4 billion
|
Diluted earnings per share from continuing operations
|
|
$5.19
|
|
$5.20 to $5.40
|
Operating cash flow from continuing operations
|
|
$749 million
|
|
$700 million to $800 million
|
Capital expenditures
|
|
$210 million
|
|
about $200 million
|
Total research and development investment
(1)
|
|
$986 million
|
|
about $1 billion
|
•
|
sales growth of mid-to-high single digits
|
•
|
earnings per share growth of low double digits
|
•
|
cash provided by operating activities growth of double digits, in excess of earnings per share growth as investments in pre-production engineering costs decline as new aircraft platforms enter into service
|
•
|
accelerate sales growth
|
•
|
expand operating margins and improve cash flow conversion
|
•
|
deploy capital with priorities on growth and shareowner return
|
RESULTS OF OPERATIONS
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
U.S.
|
|
$
|
3,174
|
|
|
$
|
2,993
|
|
|
$
|
2,827
|
|
Non-U.S.
(1)
|
|
2,070
|
|
|
1,986
|
|
|
1,647
|
|
|||
Total
|
|
$
|
5,244
|
|
|
$
|
4,979
|
|
|
$
|
4,474
|
|
Percent increase
|
|
5
|
%
|
|
11
|
%
|
|
|
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Total cost of sales
|
|
$
|
3,630
|
|
|
$
|
3,469
|
|
|
$
|
3,103
|
|
Percent of total sales
|
|
69.2
|
%
|
|
69.7
|
%
|
|
69.4
|
%
|
•
|
$91 million from inorganic sales growth attributable to ARINC
|
•
|
$18 million from higher employee incentive compensation costs
|
•
|
the remaining net increase of $52 million was driven primarily by higher organic sales volume within Commercial Systems and Information Management Services, partially offset by a corporate-level charge for employee severance recorded in 2014
|
•
|
$305 million of cost of sales from the acquisition of the ARINC business
|
•
|
partially offset by a $55 million reduction resulting from the combined impact of lower sales volume in Government Systems and lower company-funded R&D expense within Commercial Systems, as well as benefits obtained from headcount reductions and prior restructuring actions
|
•
|
the remaining net increase of $116 million was driven primarily by the higher organic sales volume within Commercial Systems and a corporate-level charge for employee severance recorded in 2014
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Customer-funded:
|
|
|
|
|
|
|
||||||
Commercial Systems
|
|
$
|
187
|
|
|
$
|
143
|
|
|
$
|
98
|
|
Government Systems
|
|
382
|
|
|
353
|
|
|
383
|
|
|||
Information Management Services
|
|
9
|
|
|
8
|
|
|
—
|
|
|||
Total customer-funded
|
|
578
|
|
|
504
|
|
|
481
|
|
|||
Company-funded:
|
|
|
|
|
|
|
|
|
||||
Commercial Systems
|
|
182
|
|
|
193
|
|
|
218
|
|
|||
Government Systems
|
|
88
|
|
|
74
|
|
|
73
|
|
|||
Information Management Services
|
|
2
|
|
|
1
|
|
|
—
|
|
|||
Total company-funded
|
|
272
|
|
|
268
|
|
|
291
|
|
|||
Total research and development expense
|
|
$
|
850
|
|
|
$
|
772
|
|
|
$
|
772
|
|
Percent of total sales
|
|
16.2
|
%
|
|
15.5
|
%
|
|
17.3
|
%
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Selling, general and administrative expenses
|
|
$
|
606
|
|
|
$
|
594
|
|
|
$
|
495
|
|
Percent of total sales
|
|
11.6
|
%
|
|
11.9
|
%
|
|
11.1
|
%
|
•
|
$19 million of inorganic SG&A cost growth from the acquired ARINC business
|
•
|
higher international business development and bid and proposal costs
|
•
|
partially offset by the absence of $13 million of transaction costs for legal, accounting and advisory fees resulting from the ARINC acquisition, as well as the absence of a pension settlement charge in 2014
|
•
|
$62 million of SG&A costs from the acquired ARINC business
|
•
|
$13 million in transaction costs for legal, accounting and advisory fees resulting from the ARINC acquisition
|
•
|
$8 million of the increase resulted from the combined impact of pension settlement charges and higher stock-based compensation expenses
|
•
|
the remaining net increase of $16 million was primarily due to higher bid and proposal costs and expenses related to the pursuit of new business opportunities internationally, partially offset by savings attributable to headcount reductions from prior restructuring actions
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Interest expense
|
|
$
|
61
|
|
|
$
|
59
|
|
|
$
|
28
|
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Other income, net
|
|
$
|
15
|
|
|
$
|
25
|
|
|
$
|
17
|
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Income tax expense
|
|
$
|
268
|
|
|
$
|
264
|
|
|
$
|
235
|
|
Effective income tax rate
|
|
27.9
|
%
|
|
29.9
|
%
|
|
27.2
|
%
|
|
|
2015
|
|
2014
|
|
2013
|
|||
Statutory tax rate
|
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Foreign rate differential
|
|
(1.0
|
)
|
|
(1.1
|
)
|
|
(1.2
|
)
|
State and local income taxes
|
|
1.2
|
|
|
1.3
|
|
|
1.3
|
|
Research and development credit
|
|
(3.2
|
)
|
|
(1.1
|
)
|
|
(5.1
|
)
|
Domestic manufacturing deduction
|
|
(2.0
|
)
|
|
(1.7
|
)
|
|
(2.0
|
)
|
Tax settlements
|
|
(1.6
|
)
|
|
(0.9
|
)
|
|
(0.1
|
)
|
Other
|
|
(0.5
|
)
|
|
(1.6
|
)
|
|
(0.7
|
)
|
Effective income tax rate
|
|
27.9
|
%
|
|
29.9
|
%
|
|
27.2
|
%
|
(in millions, except per share amounts)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Income from continuing operations
|
|
$
|
694
|
|
|
$
|
618
|
|
|
$
|
630
|
|
Percent of sales
|
|
13.2
|
%
|
|
12.4
|
%
|
|
14.1
|
%
|
|||
|
|
|
|
|
|
|
||||||
Income (loss) from discontinued operations, net of taxes
|
|
(8
|
)
|
|
(14
|
)
|
|
2
|
|
|||
Net income
|
|
$
|
686
|
|
|
$
|
604
|
|
|
$
|
632
|
|
|
|
|
|
|
|
|
||||||
Diluted earnings per share from continuing operations
|
|
$
|
5.19
|
|
|
$
|
4.52
|
|
|
$
|
4.56
|
|
Diluted earnings (loss) per share from discontinued operations
|
|
(0.06
|
)
|
|
(0.10
|
)
|
|
0.02
|
|
|||
Diluted earnings per share
|
|
$
|
5.13
|
|
|
$
|
4.42
|
|
|
$
|
4.58
|
|
|
|
|
|
|
|
|
||||||
Weighted average diluted common shares
|
|
133.7
|
|
|
136.7
|
|
|
138.1
|
|
•
|
higher operating earnings in Commercial Systems and Information Management Services
|
•
|
the retroactive reinstatement of the Federal Research and Development Tax Credit and the remeasurement of certain prior year tax positions
|
•
|
the absence of transaction costs incurred in connection with the ARINC acquisition as well as pension settlement and restructuring costs incurred in 2014
|
•
|
partially offset by lower operating earnings in Government Systems and the absence of the gain realized on the divestiture of KOSI in 2014
|
•
|
higher income tax and interest expense
|
•
|
transaction costs incurred in connection with the ARINC acquisition
|
•
|
pension settlement and restructuring charges recorded in 2014
|
•
|
lower operating earnings in Government Systems
|
•
|
partially offset by higher operating earnings in Commercial Systems and Information Management Services and the gain realized on the divestiture of KOSI
|
•
|
air transport aviation electronics sales are expected to grow high-single digits. Sales growth is expected to be paced by higher deliveries of Airbus A350 and Boeing 787 aircraft to support their projected production ramps, higher inorganic revenues related to business acquisitions, higher customer-funded development program sales and higher aftermarket service and support sales. These areas of growth will be partially offset by lower A330 sales due to OEM rate reductions and lower regulatory mandate sales
|
•
|
business and regional aviation electronics sales are expected to decrease mid-single digits. Sales are expected to decline primarily due to lower production rates of the Bombardier Global 5000/6000 as well as the expectation of production cuts on other business jet platforms, partially offset by increases for the Bombardier CSeries and Embraer Legacy 450/500 production ramps and higher aftermarket service and support and cabin retrofit sales
|
•
|
sales of wide-body in-flight entertainment products and services are expected to decrease by about 35 percent, or approximately $20 million
|
•
|
turbulence in global economic and financial markets could have an impact on demand for air travel, new aircraft and retrofits, as well as the availability of financing for new aircraft
|
•
|
occurrence of an unexpected geopolitical event, including terrorism or a pandemic, that could have a significant impact on demand for air travel and demand for new aircraft
|
•
|
our ability to win new business, develop products and execute on programs pursuant to contractual requirements
|
•
|
development and market segment acceptance of our products and systems
|
•
|
potential adverse impact from delays or reductions in OEM aircraft production, including delays in the entry-into-service date for new aircraft
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Air transport aviation electronics:
|
|
|
|
|
|
|
||||||
Original equipment
|
|
$
|
806
|
|
|
$
|
703
|
|
|
$
|
601
|
|
Aftermarket
|
|
522
|
|
|
512
|
|
|
497
|
|
|||
Wide-body in-flight entertainment
|
|
57
|
|
|
70
|
|
|
83
|
|
|||
Total air transport aviation electronics
|
|
1,385
|
|
|
1,285
|
|
|
1,181
|
|
|||
Business and regional aviation electronics:
|
|
|
|
|
|
|
|
|
||||
Original equipment
|
|
640
|
|
|
618
|
|
|
612
|
|
|||
Aftermarket
|
|
409
|
|
|
396
|
|
|
377
|
|
|||
Total business and regional aviation electronics
|
|
1,049
|
|
|
1,014
|
|
|
989
|
|
|||
Total
|
|
$
|
2,434
|
|
|
$
|
2,299
|
|
|
$
|
2,170
|
|
Percent increase
|
|
6
|
%
|
|
6
|
%
|
|
|
|
•
|
original equipment sales increased $103 million, or 15 percent, primarily due to higher OEM production rates, improved share of airline selectable equipment and higher customer-funded development program sales
|
•
|
aftermarket sales increased $10 million, or 2 percent, primarily driven by higher sales of used aircraft parts and higher customer-funded development program sales, partially offset by lower spares provisioning for the Boeing 787 program
|
•
|
wide-body IFE sales decreased $13 million, or 19 percent, as airlines decommissioned their legacy IFE systems
|
•
|
original equipment sales increased $22 million, or 4 percent, primarily due to higher customer-funded development program revenues and higher product deliveries for the Embraer Legacy 500 in support of entry into service
|
•
|
aftermarket sales increased $13 million, or 3 percent, driven by higher cabin retrofit activity and higher regulatory mandate upgrades partially offset by lower spares provisioning
|
•
|
original equipment sales increased $102 million, or 17 percent, primarily due to increased product deliveries from higher aircraft production rates for the Boeing 787 and 737 aircraft, as well as higher customer funded development program sales
|
•
|
aftermarket sales increased $15 million, or 3 percent, primarily driven by higher revenues from increased service and support activities and regulatory airspace mandates, partially offset by the absence of certain major retrofit programs that were completed in 2013
|
•
|
wide-body IFE sales decreased $13 million, or 16 percent, as airlines decommissioned their legacy IFE systems
|
•
|
original equipment sales increased $6 million, or 1 percent, as higher customer funded development program revenues were mostly offset by a reduction in sales at the light-end of the business jet market
|
•
|
aftermarket sales increased $19 million, or 5 percent, driven by higher service and support activities
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Segment operating earnings
|
|
$
|
554
|
|
|
$
|
509
|
|
|
$
|
472
|
|
Percent of sales
|
|
22.8
|
%
|
|
22.1
|
%
|
|
21.8
|
%
|
•
|
the $135 million increase in sales discussed in the Commercial Systems sales section above, which resulted in an $83 million increase in cost and incremental earnings of $52 million, or 39 percent of the higher sales volume. The margin from incremental sales benefited from favorable customer-funded development program adjustments
|
•
|
partially offset by $7 million of other net decreases to operating earnings, including higher employee incentive compensation costs of $8 million
|
•
|
$25 million related to lower company-funded R&D expenses
|
•
|
the $129 million increase in sales discussed in the Commercial Systems sales section above resulted in a $107 million increase in cost and incremental earnings of $22 million, or 17 percent of the higher sales volume. The margins on the incremental earnings were tempered by lower margin revenues on new products and customer-funded development programs
|
•
|
partially offset by other net reductions to operating earnings of $10 million, driven principally by higher employee benefit related costs
|
•
|
overall funding and prioritization of the U.S. and non-U.S. defense budgets, including unanticipated impacts from sequestration and the uncertain budgetary environment
|
•
|
delayed, reduced or canceled funding for programs we have won
|
•
|
potential impact of geopolitical and economic events
|
•
|
our ability to execute to our internal performance plans and cost reduction initiatives
|
•
|
our ability to win new business, successfully develop products and execute on programs pursuant to contractual and regulatory requirements
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Avionics
|
|
$
|
1,390
|
|
|
$
|
1,342
|
|
|
$
|
1,384
|
|
Communication products
|
|
401
|
|
|
455
|
|
|
450
|
|
|||
Surface solutions
|
|
200
|
|
|
234
|
|
|
232
|
|
|||
Navigation products
|
|
196
|
|
|
178
|
|
|
193
|
|
|||
Total
|
|
$
|
2,187
|
|
|
$
|
2,209
|
|
|
$
|
2,259
|
|
Percent (decrease)
|
|
(1
|
)%
|
|
(2
|
)%
|
|
|
|
•
|
$81 million increase from higher deliveries on various tanker transport and rotary wing platforms
|
•
|
partially offset by $33 million in other net decreases to revenue, including lower fighter aircraft and simulation and training sales
|
•
|
a $69 million decrease from lower development revenues on the KC-46, KC-10 and E-2 programs
|
•
|
partially offset by $27 million in other net increases to revenue, including higher deliveries for the Joint Helmet Mounted Cueing System program and F-15 aircraft
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Segment operating earnings
|
|
$
|
457
|
|
|
$
|
465
|
|
|
$
|
496
|
|
Percent of sales
|
|
20.9
|
%
|
|
21.1
|
%
|
|
22.0
|
%
|
•
|
a $14 million increase in company-funded R&D expense
|
•
|
an $8 million increase in employee incentive compensation costs
|
•
|
the $22 million reduction in sales volume resulted in lower earnings of $2 million, and a $20 million reduction to cost, favorably impacted by benefits from cost savings initiatives
|
•
|
partially offset by favorable development program adjustments
|
•
|
the $50 million reduction in sales volume resulted in lower earnings of $20 million, and a $30 million decrease to cost
|
•
|
an increase to operating earnings from lower warranty expense in 2014 was offset by the absence of certain favorable program adjustments that occurred in 2013
|
•
|
the remaining net decrease to operating earnings of $11 million was primarily due to the combined impact of higher employee benefit related costs and an increase in selling, general and administrative costs that resulted from various bid and proposal activities and pursuits of new business opportunities internationally
|
•
|
voice and data communication services, such as air-to-ground GLOBALink
SM
and ground-to-ground AviNet® services, which enable satellite, VHF and HF transmissions between the cockpit, the FAA, airline operation centers, reservation systems and other third parties ensuring safety and efficiency for commercial airlines and other related entities in the aviation ecosystem
|
•
|
around the clock global flight support services for business aircraft operators, under the ARINCDirect
SM
brand, including flight planning and datalink, international trip support, cabin connectivity solutions and flight operations management software
|
•
|
airport communications and information systems designed to ease congestion and improve airport efficiency via airline agent and passenger-facing check-in, baggage, boarding and access control solutions
|
•
|
train dispatching and information systems including solutions to support positive train control as mandated by the 2008 Railroad Safety Improvement Act
|
•
|
mission critical security command and control systems with security functions such as intrusion detection, access control, video and credential management and vehicle identification for nuclear power facilities
|
•
|
backup communications services for North American first responders and critical infrastructure, newly launched as UrgentLink
TM
, which improve communications performance during emergency situations
|
•
|
turbulence in global economic and financial markets could have a significant impact on demand for air travel, airport developments and retrofit of information enabled aircraft
|
•
|
occurrence of an unexpected geopolitical event, including terrorism or a pandemic, that could have a significant impact on demand for air travel and demand for new information enabled aircraft and reduce international business aviation travel
|
•
|
our ability to win new business, develop products and execute on programs pursuant to contractual requirements
|
•
|
significant reductions in U.S. rail transportation budgets could delay the implementation of Positive Train Control (PTC) mandate and other new starts and extension projects
|
•
|
disruption in the deployment of new satellite communication technology could impact future revenue growth from airline and business jet customers
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Sales
|
|
$
|
623
|
|
|
$
|
471
|
|
|
$
|
45
|
|
Percent increase
|
|
32
|
%
|
|
947
|
%
|
|
|
|
•
|
double-digit sales growth in aviation related sales, including GLOBALink
SM
and ARINCDirect
SM
|
•
|
higher rail related sales due to the absence of certain unfavorable contract adjustments recorded in 2014
|
•
|
partially offset by lower sales due to the exit of a certain non-aviation government program
|
•
|
growth in aviation related sales, including GLOBALink
SM
and ARINCDirect
SM
|
•
|
partially offset by the impact of a reduction to revenue from the completion of efforts on projects in ARINC's airport business
|
•
|
and lower sales in 2014 resulting from certain unfavorable rail related contract adjustments recorded in 2014
|
•
|
as well as lower sales in 2014 due to the exit of a certain non-aviation government program
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Segment operating earnings
|
|
$
|
95
|
|
|
$
|
62
|
|
|
$
|
5
|
|
Percent of sales
|
|
15.2
|
%
|
|
13.2
|
%
|
|
11.1
|
%
|
•
|
incremental earnings from the $21 million organic increase in sales discussed in the Information Management Services sales section above
|
•
|
the absence of certain licensing costs incurred in the prior year
|
•
|
partially offset by higher business development costs
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
General corporate, net
|
|
$
|
59
|
|
|
$
|
59
|
|
|
$
|
58
|
|
(in millions)
|
2015
|
|
2014
|
|
2013
|
||||||
Pension benefits
|
$
|
(6
|
)
|
|
$
|
10
|
|
|
$
|
7
|
|
Other retirement benefits
|
11
|
|
|
10
|
|
|
15
|
|
|||
Net benefit expense
|
$
|
5
|
|
|
$
|
20
|
|
|
$
|
22
|
|
FINANCIAL CONDITION AND LIQUIDITY
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Cash provided by operating activities from continuing operations
|
|
$
|
749
|
|
|
$
|
660
|
|
|
$
|
593
|
|
•
|
cash receipts from customers increased by $176 million to $5.215 billion in 2015 compared to $5.039 billion in 2014. The increase in cash receipts from customers was less than the sales volume increase of $265 million due to the timing of sales and collection of receivables
|
•
|
the above item was partially offset by higher payments for production inventory and other operating costs which increased $85 million to $4.102 billion in 2015 compared to $4.017 billion in 2014. The increased payments for operating costs primarily resulted from higher sales volume, partially offset by lower payroll related costs due to the timing of payroll and employee incentive payments
|
•
|
higher cash receipts from customers which increased by $636 million to $5.039 billion in 2014 compared to $4.403 billion in 2013. The increase was primarily attributable to higher sales volume associated with our acquisition of ARINC and higher collections of receivables from customers
|
•
|
payments to our pension plans were $47 million lower as we made contributions of $75 million in 2014 compared to $122 million in 2013
|
•
|
the above items were partially offset by higher payments for operating costs that increased by $502 million to $4.017 billion in 2014, compared to $3.515 billion in 2013. The increased payments for operating costs primarily resulted from the higher sales volume associated with our acquisition of ARINC. In addition, the operating cost payments for 2014 include approximately $13 million of payments that relate to ARINC transaction closing costs
|
•
|
cash payments for income taxes increased $76 million to $182 million in 2014 compared to $106 million in 2013. The increase is primarily due to the timing of tax deductions including a lower contribution to our pension plan in 2014 as compared to the prior year, differences in availability of the Federal R&D Tax Credit, which expired on December 31, 2013, and the payment of an IRS audit settlement in 2014
|
•
|
payments for employee incentive pay increased $60 million. Incentive pay is expensed in the year it is incurred and then it is paid in the first fiscal quarter of the following year. In 2014, $114 million was paid for employee incentive pay costs expensed during 2013. This compares to $54 million paid during 2013 for employee incentive pay costs expensed during 2012
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Cash used for investing activities from continuing operations
|
|
$
|
(294
|
)
|
|
$
|
(1,537
|
)
|
|
$
|
(118
|
)
|
•
|
the absence of $1.405 billion paid in 2014 for the acquisition of ARINC
|
•
|
the above item was partially offset by a $47 million increase to cash payments made for property additions to $210 million in 2015
|
•
|
in addition, we paid $50 million and $24 million in 2015 for the acquisitions of ICG and Pacific Avionics, respectively
|
•
|
also, we received $23 million in proceeds from the divestiture of our KOSI business in 2014
|
•
|
we paid $1.405 billion for the December 2013 acquisition of ARINC
|
•
|
cash payments for property additions increased $43 million to $163 million in 2014, due, in part, to capital expenditures for ARINC
|
•
|
partially offset by $23 million in proceeds from the divestiture of our KOSI business in 2014
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Cash provided by (used for) financing activities from continuing operations
|
|
$
|
(492
|
)
|
|
$
|
827
|
|
|
$
|
(448
|
)
|
•
|
the absence of proceeds from the December 2013 issuance of long-term debt of $1.089 billion. A portion of these proceeds were used to finance the acquisition of ARINC and the remainder was used to refinance $200 million of long-term debt that matured in December 2013
|
•
|
net proceeds from short-term commercial paper borrowings decreased $325 million. During 2015, net repayments of short-term commercial paper borrowings were $56 million, compared to net proceeds of $269 million during 2014. The incrementally higher proceeds in the prior year were used primarily to finance the acquisition of ARINC
|
•
|
cash repurchases of common stock increased $119 million to $330 million during 2015, compared to $211 million in 2014
|
•
|
in December 2013, we received net proceeds of $1.089 billion from the issuance of long-term debt. A portion of these proceeds were used to finance the acquisition of ARINC and the remainder was used to refinance $200 million of long-term debt that matured in December 2013
|
•
|
cash repurchases of common stock decreased $378 million to $211 million during 2014, compared to $589 million in 2013
|
(in millions, except per share amounts)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Amount of share repurchases
|
|
$
|
325
|
|
|
$
|
206
|
|
|
$
|
569
|
|
Number of shares repurchased
|
|
3.8
|
|
|
2.7
|
|
|
9.8
|
|
|||
Weighted average price per share
|
|
$
|
85.32
|
|
|
$
|
76.84
|
|
|
$
|
58.38
|
|
|
September 30
|
||||||
(in millions)
|
2015
|
|
2014
|
||||
Cash and cash equivalents
|
$
|
252
|
|
|
$
|
323
|
|
Short-term debt
(1)
|
(448
|
)
|
|
(504
|
)
|
||
Long-term debt, net
|
(1,680
|
)
|
|
(1,663
|
)
|
||
Net debt
(2)
|
$
|
(1,876
|
)
|
|
$
|
(1,844
|
)
|
Total equity
|
$
|
1,880
|
|
|
$
|
1,889
|
|
Debt to total capitalization
(3)
|
53
|
%
|
|
53
|
%
|
||
Net debt to total capitalization
(4)
|
50
|
%
|
|
49
|
%
|
Credit Rating Agency
|
|
Short-Term Rating
|
|
Long-Term Rating
|
|
Outlook
|
Fitch Ratings
|
|
F1
|
|
A
|
|
Negative
|
Moody’s Investors Service
|
|
P-2
|
|
A3
|
|
Stable
|
Standard & Poor’s
|
|
A-2
|
|
A-
|
|
Stable
|
|
|
Payments Due by Period
|
||||||||||||||||||
(in millions)
|
|
Total
|
|
Less than
1 Year
|
|
1 - 3
Years
|
|
4 - 5
Years
|
|
Thereafter
|
||||||||||
Long-term debt
|
|
$
|
1,650
|
|
|
$
|
—
|
|
|
$
|
300
|
|
|
$
|
300
|
|
|
$
|
1,050
|
|
Interest on long-term debt
|
|
790
|
|
|
59
|
|
|
116
|
|
|
100
|
|
|
515
|
|
|||||
Non-cancelable operating leases
|
|
330
|
|
|
59
|
|
|
89
|
|
|
56
|
|
|
126
|
|
|||||
Non-cancelable capital leases, including interest
|
|
82
|
|
|
6
|
|
|
12
|
|
|
11
|
|
|
53
|
|
|||||
Purchase obligations:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchase orders
|
|
1,351
|
|
|
977
|
|
|
335
|
|
|
36
|
|
|
3
|
|
|||||
Purchase contracts
|
|
138
|
|
|
45
|
|
|
41
|
|
|
28
|
|
|
24
|
|
|||||
Total
|
|
$
|
4,341
|
|
|
$
|
1,146
|
|
|
$
|
893
|
|
|
$
|
531
|
|
|
$
|
1,771
|
|
|
|
Amount of Commitment Expiration by Period
|
||||||||||||||||||
(in millions)
|
|
Total
Amount
Committed
|
|
Less than
1 Year
|
|
1 - 3
Years
|
|
4 - 5
Years
|
|
Thereafter
|
||||||||||
Letters of credit *
|
|
$
|
252
|
|
|
$
|
194
|
|
|
$
|
50
|
|
|
$
|
7
|
|
|
$
|
1
|
|
RECENTLY ISSUED ACCOUNTING STANDARDS
|
ENVIRONMENTAL
|
CRITICAL ACCOUNTING POLICIES
|
|
|
September 30
|
||||||
(in millions)
|
|
2015
|
|
2014
|
||||
Pre-production engineering costs
|
|
$
|
1,012
|
|
|
$
|
876
|
|
Up-front sales incentives
|
|
239
|
|
|
219
|
|
||
Total Program Investments
|
|
$
|
1,251
|
|
|
$
|
1,095
|
|
•
|
changes in market conditions may affect product sales under a program. In particular, the commercial aerospace market has been historically cyclical and subject to downturns during periods of weak economic conditions, which could be prompted or exacerbated by political or other domestic or international events
|
•
|
bankruptcy or other significant financial difficulties of our customers
|
•
|
our ability to produce products could be impacted by the performance of subcontractors, the availability of specialized materials and other production risks
|
(in millions)
|
2015
|
|
2014
|
|
2013
|
||||||
Amortization of pre-production engineering
|
$
|
47
|
|
|
$
|
36
|
|
|
$
|
25
|
|
Amortization of up-front sales incentives
|
15
|
|
|
12
|
|
|
9
|
|
|||
Total amortization of Program Investments
|
$
|
62
|
|
|
$
|
48
|
|
|
$
|
34
|
|
(in millions)
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
Thereafter
|
||||||||||||
Anticipated amortization expense for pre-production engineering costs
(1)
|
$
|
55
|
|
|
$
|
81
|
|
|
$
|
106
|
|
|
$
|
128
|
|
|
$
|
128
|
|
|
$
|
487
|
|
Anticipated amortization expense for up-front sales incentives
|
17
|
|
|
18
|
|
|
21
|
|
|
25
|
|
|
25
|
|
|
133
|
|
||||||
Total anticipated amortization for Program Investments
|
$
|
72
|
|
|
$
|
99
|
|
|
$
|
127
|
|
|
$
|
153
|
|
|
$
|
153
|
|
|
$
|
620
|
|
|
|
Change in Assumption (in millions)
|
||
Assumption
|
|
25 Basis Point Increase
|
|
25 Basis Point Decrease
|
Pension obligation discount rate
|
|
$111 pension projected benefit obligation decrease
|
|
$113 pension projected benefit obligation increase
|
Pension obligation discount rate
|
|
$1 pension expense increase
|
|
$1 pension expense decrease
|
Expected long-term rate of return on plan assets
|
|
$7 pension expense decrease
|
|
$7 pension expense increase
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk.
|
|
|
September 30, 2015
|
||||||||
(in millions)
|
|
Interest Rate
|
|
Carrying Value
|
|
Fair Value
|
||||
$400 Notes due 2043
|
|
4.80%
|
|
$
|
398
|
|
|
$
|
442
|
|
$400 Notes due 2023
|
|
3.70%
|
|
399
|
|
|
420
|
|
||
$250 Notes due 2021
|
|
3.10%
|
|
250
|
|
|
255
|
|
||
$300 Notes due 2019
|
|
5.25%
|
|
299
|
|
|
333
|
|
||
$300 Notes due 2016
|
|
3 month LIBOR plus 0.35%
|
|
300
|
|
|
300
|
|
Item 8.
|
Financial Statements and Supplementary Data.
|
/s/ ROBERT K. ORTBERG
|
|
/s/ PATRICK E. ALLEN
|
Robert K. Ortberg
Chairman, President &
Chief Executive Officer
|
|
Patrick E. Allen
Senior Vice President &
Chief Financial Officer
|
|
September 30
|
||||||
|
2015
|
|
2014
|
||||
ASSETS
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
252
|
|
|
$
|
323
|
|
Receivables, net
|
1,038
|
|
|
1,033
|
|
||
Inventories, net
|
1,824
|
|
|
1,709
|
|
||
Current deferred income tax asset
|
9
|
|
|
9
|
|
||
Business held for sale
|
—
|
|
|
15
|
|
||
Other current assets
|
110
|
|
|
115
|
|
||
Total current assets
|
3,233
|
|
|
3,204
|
|
||
|
|
|
|
||||
Property
|
964
|
|
|
919
|
|
||
Goodwill
|
1,904
|
|
|
1,863
|
|
||
Intangible Assets
|
703
|
|
|
688
|
|
||
Long-term Deferred Income Taxes
|
241
|
|
|
101
|
|
||
Other Assets
|
344
|
|
|
288
|
|
||
TOTAL ASSETS
|
$
|
7,389
|
|
|
$
|
7,063
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
||
Current Liabilities:
|
|
|
|
|
|
||
Short-term debt
|
$
|
448
|
|
|
$
|
504
|
|
Accounts payable
|
487
|
|
|
535
|
|
||
Compensation and benefits
|
273
|
|
|
256
|
|
||
Advance payments from customers
|
365
|
|
|
359
|
|
||
Accrued customer incentives
|
232
|
|
|
202
|
|
||
Product warranty costs
|
89
|
|
|
104
|
|
||
Current deferred income tax liability
|
84
|
|
|
57
|
|
||
Liabilities associated with business held for sale
|
—
|
|
|
16
|
|
||
Other current liabilities
|
166
|
|
|
165
|
|
||
Total current liabilities
|
2,144
|
|
|
2,198
|
|
||
|
|
|
|
||||
Long-term Debt, Net
|
1,680
|
|
|
1,663
|
|
||
Retirement Benefits
|
1,466
|
|
|
1,096
|
|
||
Other Liabilities
|
219
|
|
|
217
|
|
||
|
|
|
|
||||
Equity:
|
|
|
|
|
|
||
Common stock ($0.01 par value; shares authorized: 1,000; shares issued as of September 30, 2015 and 2014: 183.8)
|
2
|
|
|
2
|
|
||
Additional paid-in capital
|
1,519
|
|
|
1,489
|
|
||
Retained earnings
|
5,124
|
|
|
4,605
|
|
||
Accumulated other comprehensive loss
|
(1,699
|
)
|
|
(1,366
|
)
|
||
Common stock in treasury, at cost (shares held: September 30, 2015, 51.9; September
30, 2014, 49.8)
|
(3,071
|
)
|
|
(2,846
|
)
|
||
Total shareowners’ equity
|
1,875
|
|
|
1,884
|
|
||
Noncontrolling interest
|
5
|
|
|
5
|
|
||
Total equity
|
1,880
|
|
|
1,889
|
|
||
TOTAL LIABILITIES AND EQUITY
|
$
|
7,389
|
|
|
$
|
7,063
|
|
|
Year Ended September 30
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Sales
|
|
|
|
|
|
||||||
Product sales
|
$
|
4,438
|
|
|
$
|
4,309
|
|
|
$
|
4,230
|
|
Service sales
|
806
|
|
|
670
|
|
|
244
|
|
|||
Total sales
|
5,244
|
|
|
4,979
|
|
|
4,474
|
|
|||
|
|
|
|
|
|
||||||
Costs, expenses and other:
|
|
|
|
|
|
|
|
||||
Product cost of sales
|
3,064
|
|
|
3,001
|
|
|
2,936
|
|
|||
Service cost of sales
|
566
|
|
|
468
|
|
|
167
|
|
|||
Selling, general and administrative expenses
|
606
|
|
|
594
|
|
|
495
|
|
|||
Interest expense
|
61
|
|
|
59
|
|
|
28
|
|
|||
Other income, net
|
(15
|
)
|
|
(25
|
)
|
|
(17
|
)
|
|||
Total costs, expenses and other
|
4,282
|
|
|
4,097
|
|
|
3,609
|
|
|||
|
|
|
|
|
|
||||||
Income from continuing operations before income taxes
|
962
|
|
|
882
|
|
|
865
|
|
|||
Income tax expense
|
268
|
|
|
264
|
|
|
235
|
|
|||
Income from continuing operations
|
694
|
|
|
618
|
|
|
630
|
|
|||
|
|
|
|
|
|
||||||
Income (loss) from discontinued operations, net of taxes
|
(8
|
)
|
|
(14
|
)
|
|
2
|
|
|||
|
|
|
|
|
|
||||||
Net income
|
$
|
686
|
|
|
$
|
604
|
|
|
$
|
632
|
|
|
|
|
|
|
|
||||||
Earnings (loss) per share:
|
|
|
|
|
|
|
|
||||
Basic
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
5.25
|
|
|
$
|
4.57
|
|
|
$
|
4.62
|
|
Discontinued operations
|
(0.06
|
)
|
|
(0.10
|
)
|
|
0.01
|
|
|||
Basic earnings per share
|
$
|
5.19
|
|
|
$
|
4.47
|
|
|
$
|
4.63
|
|
|
|
|
|
|
|
||||||
Diluted
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
5.19
|
|
|
$
|
4.52
|
|
|
$
|
4.56
|
|
Discontinued operations
|
(0.06
|
)
|
|
(0.10
|
)
|
|
0.02
|
|
|||
Diluted earnings per share
|
$
|
5.13
|
|
|
$
|
4.42
|
|
|
$
|
4.58
|
|
|
|
|
|
|
|
||||||
Weighted average common shares:
|
|
|
|
|
|
||||||
Basic
|
132.3
|
|
|
135.1
|
|
|
136.5
|
|
|||
Diluted
|
133.7
|
|
|
136.7
|
|
|
138.1
|
|
|||
|
|
|
|
|
|
||||||
Cash dividends per share
|
$
|
1.26
|
|
|
$
|
1.20
|
|
|
$
|
1.20
|
|
|
Year Ended September 30
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Net income
|
$
|
686
|
|
|
$
|
604
|
|
|
$
|
632
|
|
Unrealized foreign currency translation adjustments
|
(41
|
)
|
|
(27
|
)
|
|
2
|
|
|||
Pension and other retirement benefits adjustments (net of taxes: 2015, $169; 2014, $29; 2013, $(191))
|
(289
|
)
|
|
(55
|
)
|
|
326
|
|
|||
Foreign currency cash flow hedge adjustments (net of taxes: 2015, $(1); 2014, $1; 2013, $(2))
|
(3
|
)
|
|
3
|
|
|
(8
|
)
|
|||
Comprehensive income
|
$
|
353
|
|
|
$
|
525
|
|
|
$
|
952
|
|
|
Year Ended September 30
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
686
|
|
|
$
|
604
|
|
|
$
|
632
|
|
Income (loss) from discontinued operations, net of tax
|
(8
|
)
|
|
(14
|
)
|
|
2
|
|
|||
Income from continuing operations
|
694
|
|
|
618
|
|
|
630
|
|
|||
Adjustments to arrive at cash provided by operating activities:
|
|
|
|
|
|
||||||
Restructuring, asset impairment and other charges
|
—
|
|
|
9
|
|
|
—
|
|
|||
Gain on sale of business
|
—
|
|
|
(10
|
)
|
|
—
|
|
|||
Depreciation
|
152
|
|
|
141
|
|
|
124
|
|
|||
Amortization of intangible assets and pre-production engineering costs
|
100
|
|
|
84
|
|
|
53
|
|
|||
Stock-based compensation expense
|
24
|
|
|
24
|
|
|
20
|
|
|||
Compensation and benefits paid in common stock
|
50
|
|
|
50
|
|
|
53
|
|
|||
Excess tax benefit from stock-based compensation
|
(13
|
)
|
|
(6
|
)
|
|
(9
|
)
|
|||
Deferred income taxes
|
50
|
|
|
113
|
|
|
55
|
|
|||
Pension plan contributions
|
(69
|
)
|
|
(75
|
)
|
|
(122
|
)
|
|||
Changes in assets and liabilities, excluding effects of acquisitions and foreign currency adjustments:
|
|
|
|
|
|
||||||
Receivables
|
(46
|
)
|
|
67
|
|
|
(97
|
)
|
|||
Production inventory
|
(23
|
)
|
|
(84
|
)
|
|
(96
|
)
|
|||
Pre-production engineering costs
|
(183
|
)
|
|
(198
|
)
|
|
(170
|
)
|
|||
Accounts payable
|
(29
|
)
|
|
23
|
|
|
14
|
|
|||
Compensation and benefits
|
24
|
|
|
(60
|
)
|
|
33
|
|
|||
Advance payments from customers
|
16
|
|
|
(11
|
)
|
|
32
|
|
|||
Accrued customer incentives
|
30
|
|
|
18
|
|
|
10
|
|
|||
Product warranty costs
|
(14
|
)
|
|
(14
|
)
|
|
(5
|
)
|
|||
Income taxes
|
50
|
|
|
(21
|
)
|
|
70
|
|
|||
Other assets and liabilities
|
(64
|
)
|
|
(8
|
)
|
|
(2
|
)
|
|||
Cash Provided by Operating Activities from Continuing Operations
|
749
|
|
|
660
|
|
|
593
|
|
|||
Investing Activities:
|
|
|
|
|
|
|
|
||||
Property additions
|
(210
|
)
|
|
(163
|
)
|
|
(120
|
)
|
|||
Acquisition of businesses, net of cash acquired
|
(74
|
)
|
|
(1,405
|
)
|
|
—
|
|
|||
Proceeds from the disposition of property
|
—
|
|
|
—
|
|
|
3
|
|
|||
Acquisition of intangible assets
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Proceeds from business divestitures
|
—
|
|
|
24
|
|
|
—
|
|
|||
Other investing activities
|
(10
|
)
|
|
8
|
|
|
—
|
|
|||
Cash Used for Investing Activities from Continuing Operations
|
(294
|
)
|
|
(1,537
|
)
|
|
(118
|
)
|
|||
Financing Activities:
|
|
|
|
|
|
|
|
||||
Purchases of treasury stock
|
(330
|
)
|
|
(211
|
)
|
|
(589
|
)
|
|||
Cash dividends
|
(167
|
)
|
|
(162
|
)
|
|
(164
|
)
|
|||
Repayment of short-term borrowings
|
—
|
|
|
(200
|
)
|
|
—
|
|
|||
Increase (decrease) in short-term commercial paper borrowings, net
(1)
|
(56
|
)
|
|
269
|
|
|
235
|
|
|||
Increase in long-term borrowings
|
—
|
|
|
1,089
|
|
|
—
|
|
|||
Proceeds from the exercise of stock options
|
49
|
|
|
37
|
|
|
61
|
|
|||
Excess tax benefit from stock-based compensation
|
13
|
|
|
6
|
|
|
9
|
|
|||
Other financing activities
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|||
Cash Provided by (Used for) Financing Activities from Continuing Operations
|
(492
|
)
|
|
827
|
|
|
(448
|
)
|
|
Year Ended September 30
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Effect of exchange rate changes on cash and cash equivalents
|
(23
|
)
|
|
(12
|
)
|
|
5
|
|
|||
Discontinued Operations:
|
|
|
|
|
|
||||||
Operating activities
|
(14
|
)
|
|
(16
|
)
|
|
24
|
|
|||
Investing activities
|
3
|
|
|
10
|
|
|
—
|
|
|||
Cash provided by (used for) discontinued operations:
|
(11
|
)
|
|
(6
|
)
|
|
24
|
|
|||
Net Change in Cash and Cash Equivalents
|
(71
|
)
|
|
(68
|
)
|
|
56
|
|
|||
Cash and Cash Equivalents at Beginning of Period
|
323
|
|
|
391
|
|
|
335
|
|
|||
Cash and Cash Equivalents at End of Period
|
$
|
252
|
|
|
$
|
323
|
|
|
$
|
391
|
|
|
Year Ended September 30
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Gross borrowings of commercial paper with maturities greater than three months
|
$
|
—
|
|
|
$
|
265
|
|
|
$
|
—
|
|
Gross payments of commercial paper with maturities greater than three months
|
—
|
|
|
265
|
|
|
—
|
|
|||
Net borrowings of commercial paper with maturities greater than three months
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Year Ended September 30
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Common Stock
|
|
|
|
|
|
|
||||||
Beginning and ending balance
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
||||||
Additional Paid-In Capital
|
|
|
|
|
|
|
||||||
Beginning balance
|
|
1,489
|
|
|
1,469
|
|
|
1,460
|
|
|||
Tax benefit from stock-based compensation
|
|
12
|
|
|
3
|
|
|
11
|
|
|||
Shares issued under stock option and benefit plans
|
|
(6
|
)
|
|
(7
|
)
|
|
(22
|
)
|
|||
Stock-based compensation
|
|
24
|
|
|
24
|
|
|
20
|
|
|||
Ending balance
|
|
1,519
|
|
|
1,489
|
|
|
1,469
|
|
|||
|
|
|
|
|
|
|
||||||
Retained Earnings
|
|
|
|
|
|
|
||||||
Beginning balance
|
|
4,605
|
|
|
4,163
|
|
|
3,708
|
|
|||
Net income
|
|
686
|
|
|
604
|
|
|
632
|
|
|||
Cash dividends
|
|
(167
|
)
|
|
(162
|
)
|
|
(164
|
)
|
|||
Shares issued under stock option and benefit plans
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|||
Ending balance
|
|
5,124
|
|
|
4,605
|
|
|
4,163
|
|
|||
|
|
|
|
|
|
|
||||||
Accumulated Other Comprehensive Loss
|
|
|
|
|
|
|
||||||
Beginning balance
|
|
(1,366
|
)
|
|
(1,287
|
)
|
|
(1,607
|
)
|
|||
Pension and other retirement benefit adjustment
|
|
(289
|
)
|
|
(55
|
)
|
|
326
|
|
|||
Currency translation gain (loss)
|
|
(41
|
)
|
|
(27
|
)
|
|
2
|
|
|||
Unrealized gain (loss) from foreign currency cash flow hedges
|
|
(3
|
)
|
|
3
|
|
|
(8
|
)
|
|||
Ending balance
|
|
(1,699
|
)
|
|
(1,366
|
)
|
|
(1,287
|
)
|
|||
|
|
|
|
|
|
|
||||||
Common Stock in Treasury
|
|
|
|
|
|
|
||||||
Beginning balance
|
|
(2,846
|
)
|
|
(2,729
|
)
|
|
(2,304
|
)
|
|||
Share repurchases
|
|
(325
|
)
|
|
(206
|
)
|
|
(569
|
)
|
|||
Shares issued from treasury
|
|
100
|
|
|
89
|
|
|
144
|
|
|||
Ending balance
|
|
(3,071
|
)
|
|
(2,846
|
)
|
|
(2,729
|
)
|
|||
|
|
|
|
|
|
|
||||||
Total Shareowners' Equity
|
|
1,875
|
|
|
1,884
|
|
|
1,618
|
|
|||
|
|
|
|
|
|
|
||||||
Noncontrolling Interest
|
|
|
|
|
|
|
||||||
Beginning and ending balance
|
|
5
|
|
|
5
|
|
|
5
|
|
|||
Total Equity
|
|
$
|
1,880
|
|
|
$
|
1,889
|
|
|
$
|
1,623
|
|
1.
|
Business Description and Basis of Presentation
|
2.
|
Significant Accounting Policies
|
3.
|
Acquisitions
|
(in millions)
|
December 23, 2013
|
||
Restricted Cash
(1)
|
$
|
61
|
|
Receivables and Other current assets
|
216
|
|
|
Building held for sale
(2)
|
81
|
|
|
Business held for sale
(3)
|
15
|
|
|
Property
|
49
|
|
|
Intangible Assets
|
431
|
|
|
Other Assets
|
11
|
|
|
Total Identifiable Assets Acquired
|
864
|
|
|
Payable to ARINC option holders
(1)
|
(61
|
)
|
|
Current Liabilities
|
(171
|
)
|
|
Liability related to building held for sale
(2)
|
(81
|
)
|
|
Liabilities associated with business held for sale
(3)
|
(12
|
)
|
|
Long-term deferred income taxes
|
(182
|
)
|
|
Retirement Benefits and Other Long-term Liabilities
|
(39
|
)
|
|
Total Liabilities Assumed
|
(546
|
)
|
|
Net Identifiable Assets Acquired, excluding Goodwill
|
318
|
|
|
Goodwill
|
1,087
|
|
|
Net Assets Acquired
|
$
|
1,405
|
|
(in millions, except per share amounts)
|
|
2015 (as Reported)
|
|
2014 (Pro-forma)
|
|
2013 (Pro-forma)
|
||||||
Sales
|
|
$
|
5,244
|
|
|
$
|
5,085
|
|
|
$
|
4,980
|
|
Net income attributable to common shareowners from continuing operations
|
|
$
|
694
|
|
|
$
|
624
|
|
|
$
|
636
|
|
Basic earnings per share from continuing operations
|
|
$
|
5.25
|
|
|
$
|
4.62
|
|
|
$
|
4.66
|
|
Diluted earnings per share from continuing operations
|
|
$
|
5.19
|
|
|
$
|
4.56
|
|
|
$
|
4.61
|
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Increases / (decreases) to pro-forma net income:
|
|
|
|
|
|
|
||||||
Net reduction to depreciation resulting from fixed asset purchase accounting adjustments
(1)
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
8
|
|
Advisory, legal and accounting service fees
(2)
|
|
—
|
|
|
21
|
|
|
(21
|
)
|
|||
Amortization of acquired ARINC intangible assets, net
(3)
|
|
—
|
|
|
(4
|
)
|
|
(15
|
)
|
|||
Interest expense incurred on acquisition financing, net
(4)
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
4.
|
Discontinued Operations and Divestitures
|
|
|
Year Ended September 30
|
||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Sales
|
|
$
|
18
|
|
|
$
|
94
|
|
|
$
|
136
|
|
Income (loss) from discontinued operations before income taxes
|
|
(13
|
)
|
|
(29
|
)
|
|
3
|
|
|||
Income tax benefit (expense) from discontinued operations
|
|
5
|
|
|
15
|
|
|
(1
|
)
|
5.
|
Receivables, Net
|
(in millions)
|
September 30,
2015 |
|
September 30,
2014 |
||||
Billed
|
$
|
752
|
|
|
$
|
758
|
|
Unbilled
|
403
|
|
|
485
|
|
||
Less progress payments
|
(110
|
)
|
|
(198
|
)
|
||
Total
|
1,045
|
|
|
1,045
|
|
||
Less allowance for doubtful accounts
|
(7
|
)
|
|
(12
|
)
|
||
Receivables, net
|
$
|
1,038
|
|
|
$
|
1,033
|
|
6.
|
Inventories, Net
|
(in millions)
|
September 30,
2015 |
|
September 30,
2014 |
||||
Finished goods
|
$
|
216
|
|
|
$
|
218
|
|
Work in process
|
250
|
|
|
262
|
|
||
Raw materials, parts and supplies
|
353
|
|
|
361
|
|
||
Less progress payments
|
(7
|
)
|
|
(8
|
)
|
||
Total
|
812
|
|
|
833
|
|
||
Pre-production engineering costs
|
1,012
|
|
|
876
|
|
||
Inventories, net
|
$
|
1,824
|
|
|
$
|
1,709
|
|
(in millions)
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
Thereafter
|
||||||||||||
Anticipated amortization expense for pre-production engineering costs
(1)
|
$
|
55
|
|
|
$
|
81
|
|
|
$
|
106
|
|
|
$
|
128
|
|
|
$
|
128
|
|
|
$
|
487
|
|
7.
|
Property
|
(in millions)
|
September 30,
2015 |
|
September 30,
2014 |
||||
Land
|
$
|
15
|
|
|
$
|
15
|
|
Buildings and improvements
|
429
|
|
|
406
|
|
||
Machinery and equipment
|
1,164
|
|
|
1,135
|
|
||
Information systems software and hardware
|
406
|
|
|
369
|
|
||
Furniture and fixtures
|
66
|
|
|
65
|
|
||
Capital leases
|
58
|
|
|
60
|
|
||
Construction in progress
|
180
|
|
|
142
|
|
||
Total
|
2,318
|
|
|
2,192
|
|
||
Less accumulated depreciation
|
(1,354
|
)
|
|
(1,273
|
)
|
||
Property
|
$
|
964
|
|
|
$
|
919
|
|
8.
|
Goodwill and Intangible Assets
|
(in millions)
|
Government
Systems
|
|
Commercial
Systems
|
|
Information Management Services
|
|
Total
|
||||||||
Balance at September 30, 2013
|
$
|
513
|
|
|
$
|
266
|
|
|
$
|
—
|
|
|
$
|
779
|
|
ARINC acquisition
|
—
|
|
|
—
|
|
|
1,089
|
|
|
1,089
|
|
||||
Reclassification from Commercial Systems to Information Management Services
|
—
|
|
|
(4
|
)
|
|
4
|
|
|
—
|
|
||||
Disposition of Datapath
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||
Foreign currency translation adjustments and other
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
||||
Balance at September 30, 2014
|
508
|
|
|
262
|
|
|
1,093
|
|
|
1,863
|
|
||||
ICG acquisition
|
—
|
|
|
38
|
|
|
—
|
|
|
38
|
|
||||
Pacific Avionics acquisition
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
||||
ARINC acquisition adjustment
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
||||
Foreign currency translation adjustments and other
|
(8
|
)
|
|
(1
|
)
|
|
—
|
|
|
(9
|
)
|
||||
Balance at September 30, 2015
|
$
|
500
|
|
|
$
|
314
|
|
|
$
|
1,090
|
|
|
$
|
1,904
|
|
|
September 30, 2015
|
|
September 30, 2014
|
||||||||||||||||||||
(in millions)
|
Gross
|
|
Accum
Amort
|
|
Net
|
|
Gross
|
|
Accum
Amort
|
|
Net
|
||||||||||||
Intangible assets with finite lives:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Developed technology and patents
|
$
|
346
|
|
|
$
|
(195
|
)
|
|
$
|
151
|
|
|
$
|
322
|
|
|
$
|
(178
|
)
|
|
$
|
144
|
|
Backlog
|
5
|
|
|
(2
|
)
|
|
3
|
|
|
5
|
|
|
(1
|
)
|
|
4
|
|
||||||
Customer relationships:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Acquired
|
338
|
|
|
(87
|
)
|
|
251
|
|
|
336
|
|
|
(67
|
)
|
|
269
|
|
||||||
Up-front sales incentives
|
301
|
|
|
(62
|
)
|
|
239
|
|
|
266
|
|
|
(47
|
)
|
|
219
|
|
||||||
License agreements
|
13
|
|
|
(9
|
)
|
|
4
|
|
|
13
|
|
|
(9
|
)
|
|
4
|
|
||||||
Trademarks and tradenames
|
15
|
|
|
(14
|
)
|
|
1
|
|
|
15
|
|
|
(14
|
)
|
|
1
|
|
||||||
Intangible assets with indefinite lives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Trademarks and tradenames
|
47
|
|
|
—
|
|
|
47
|
|
|
47
|
|
|
—
|
|
|
47
|
|
||||||
In process research and development
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Intangible assets
|
$
|
1,072
|
|
|
$
|
(369
|
)
|
|
$
|
703
|
|
|
$
|
1,004
|
|
|
$
|
(316
|
)
|
|
$
|
688
|
|
(in millions)
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
Thereafter
|
||||||||||||
Anticipated amortization expense for up-front sales incentives
|
$
|
17
|
|
|
$
|
18
|
|
|
$
|
21
|
|
|
$
|
25
|
|
|
$
|
25
|
|
|
$
|
133
|
|
Anticipated amortization expense for all other intangible assets
|
44
|
|
|
40
|
|
|
38
|
|
|
34
|
|
|
32
|
|
|
222
|
|
||||||
Total
|
$
|
61
|
|
|
$
|
58
|
|
|
$
|
59
|
|
|
$
|
59
|
|
|
$
|
57
|
|
|
$
|
355
|
|
9.
|
Other Assets
|
(in millions)
|
September 30,
2015 |
|
September 30,
2014 |
||||
Long-term receivables
|
$
|
109
|
|
|
$
|
84
|
|
Investments in equity affiliates
|
13
|
|
|
8
|
|
||
Exchange and rental assets (net of accumulated depreciation of $97 at September 30, 2015 and $94 at September 30, 2014)
|
66
|
|
|
61
|
|
||
Other
|
156
|
|
|
135
|
|
||
Other assets
|
$
|
344
|
|
|
$
|
288
|
|
•
|
ACCEL (Tianjin) Flight Simulation Co., Ltd (ACCEL): ACCEL is a joint venture with Beijing Bluesky Aviation Technology (a subsidiary of the Aviation Industry Corporation of China, or AVIC), that will develop and deliver commercial flight simulators in China
|
•
|
ADARI Aviation Technology Limited (ADARI): ADARI is a joint venture with Aviation Data Communication Corporation Co., LTD, that operates remote ground stations around China and develops certain content delivery management software
|
•
|
AVIC Leihua Rockwell Collins Avionics Company (ALRAC): ALRAC is a joint venture with China Leihua Electronic Technology Research Institute (an AVIC subsidiary), for the joint production of integrated surveillance system products for the C919 aircraft in China
|
•
|
Data Link Solutions LLC (DLS): DLS is a joint venture with BAE Systems, plc for the joint pursuit of the worldwide military data link market
|
•
|
ESA Vision Systems LLC (ESA): ESA is a joint venture with Elbit Systems, Ltd. for the joint pursuit of helmet-mounted cueing systems for the worldwide military fixed wing aircraft market
|
•
|
Integrated Guidance Systems LLC (IGS): IGS is a joint venture with Honeywell International Inc. for the joint pursuit of integrated precision guidance solutions for worldwide guided weapons systems
|
•
|
Quest Flight Training Limited (Quest): Quest is a joint venture with Quadrant Group plc that provides aircrew training services primarily for the United Kingdom Ministry of Defence
|
•
|
Rockwell Collins CETC Avionics Co., Ltd (RCCAC): RCCAC is a joint venture with CETC Avionics Co., Ltd (CETCA) for the development and delivery of products related to the C919 program
|
10.
|
Debt
|
(in millions)
|
September 30,
2015 |
|
September 30,
2014 |
||||
Principal amount of 2043 Notes, net of discount
|
$
|
398
|
|
|
$
|
398
|
|
Principal amount of 2023 Notes, net of discount
|
399
|
|
|
399
|
|
||
Principal amount of 2021 Notes, net of discount
|
250
|
|
|
249
|
|
||
Principal amount of 2019 Notes, net of discount
|
299
|
|
|
299
|
|
||
Principal amount of 2016 Notes
|
300
|
|
|
300
|
|
||
Fair value swap adjustment (Notes 16 and 17)
|
34
|
|
|
18
|
|
||
Long-term debt, net
|
$
|
1,680
|
|
|
$
|
1,663
|
|
11.
|
Retirement Benefits
|
|
Pension Benefits
|
|
Other Retirement Benefits
|
||||||||||||||||||||
(in millions)
|
2015
|
|
2014
|
|
2013
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||
Service cost
|
$
|
12
|
|
|
$
|
10
|
|
|
$
|
10
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
4
|
|
Interest cost
|
155
|
|
|
168
|
|
|
139
|
|
|
7
|
|
|
9
|
|
|
8
|
|
||||||
Expected return on plan assets
|
(242
|
)
|
|
(228
|
)
|
|
(203
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Prior service credit
|
(3
|
)
|
|
(12
|
)
|
|
(18
|
)
|
|
(5
|
)
|
|
(9
|
)
|
|
(8
|
)
|
||||||
Net actuarial loss
|
72
|
|
|
72
|
|
|
79
|
|
|
7
|
|
|
8
|
|
|
12
|
|
||||||
Net benefit expense (income)
|
$
|
(6
|
)
|
|
$
|
10
|
|
|
$
|
7
|
|
|
$
|
11
|
|
|
$
|
10
|
|
|
$
|
15
|
|
|
|
Pension Benefits
|
|
Other
Retirement Benefits
|
||||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
PBO at beginning of period
|
|
$
|
4,086
|
|
|
$
|
3,660
|
|
|
$
|
213
|
|
|
$
|
214
|
|
Service cost
|
|
12
|
|
|
10
|
|
|
3
|
|
|
3
|
|
||||
Interest cost
|
|
155
|
|
|
168
|
|
|
7
|
|
|
9
|
|
||||
Discount rate and other assumption changes
|
|
315
|
|
|
228
|
|
|
6
|
|
|
7
|
|
||||
Actuarial losses (gains)
|
|
(52
|
)
|
|
—
|
|
|
7
|
|
|
(13
|
)
|
||||
Plan participant contributions
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||
Benefits paid
|
|
(330
|
)
|
|
(211
|
)
|
|
(18
|
)
|
|
(18
|
)
|
||||
ARINC acquisition
|
|
—
|
|
|
274
|
|
|
—
|
|
|
8
|
|
||||
Settlements
|
|
—
|
|
|
(36
|
)
|
|
—
|
|
|
—
|
|
||||
Other
|
|
(19
|
)
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
||||
PBO at end of period
|
|
4,167
|
|
|
4,086
|
|
|
221
|
|
|
213
|
|
||||
Plan assets at beginning of period
|
|
3,185
|
|
|
2,779
|
|
|
18
|
|
|
14
|
|
||||
Actual return on plan assets
|
|
(16
|
)
|
|
304
|
|
|
—
|
|
|
1
|
|
||||
Company contributions
|
|
69
|
|
|
75
|
|
|
16
|
|
|
18
|
|
||||
Plan participant contributions
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||
Benefits paid
|
|
(330
|
)
|
|
(211
|
)
|
|
(18
|
)
|
|
(18
|
)
|
||||
ARINC acquisition
|
|
—
|
|
|
273
|
|
|
—
|
|
|
—
|
|
||||
Settlements
|
|
—
|
|
|
(36
|
)
|
|
—
|
|
|
—
|
|
||||
Other
|
|
(6
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Plan assets at end of period
|
|
2,902
|
|
|
3,185
|
|
|
19
|
|
|
18
|
|
||||
Funded status of plans
|
|
$
|
(1,265
|
)
|
|
$
|
(901
|
)
|
|
$
|
(202
|
)
|
|
$
|
(195
|
)
|
Funded status consists of:
|
|
|
|
|
|
|
|
|
||||||||
Retirement benefits liability
|
|
$
|
(1,264
|
)
|
|
$
|
(901
|
)
|
|
$
|
(202
|
)
|
|
$
|
(195
|
)
|
Compensation and benefits liability
|
|
(11
|
)
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
||||
Other assets
|
|
10
|
|
|
11
|
|
|
—
|
|
|
—
|
|
||||
Net liability
|
|
$
|
(1,265
|
)
|
|
$
|
(901
|
)
|
|
$
|
(202
|
)
|
|
$
|
(195
|
)
|
|
|
Pension Benefits
|
|
Other
Retirement Benefits
|
||||||||||||
(in millions)
|
|
Prior Service
Cost (Credit)
|
|
Net Actuarial
Loss
|
|
Prior Service
Cost (Credit)
|
|
Net Actuarial
Loss
|
||||||||
Balance at September 30, 2013
|
|
$
|
(6
|
)
|
|
$
|
1,958
|
|
|
$
|
(18
|
)
|
|
$
|
113
|
|
Current year net actuarial (gain)/loss
|
|
—
|
|
|
149
|
|
|
—
|
|
|
(6
|
)
|
||||
Amortization of prior service cost
|
|
12
|
|
|
—
|
|
|
9
|
|
|
—
|
|
||||
Amortization of actuarial loss
|
|
—
|
|
|
(72
|
)
|
|
—
|
|
|
(8
|
)
|
||||
Balance at September 30, 2014
|
|
6
|
|
|
2,035
|
|
|
(9
|
)
|
|
99
|
|
||||
Current year net actuarial loss
|
|
—
|
|
|
515
|
|
|
—
|
|
|
14
|
|
||||
Amortization of prior service cost
|
|
3
|
|
|
—
|
|
|
5
|
|
|
—
|
|
||||
Amortization of actuarial loss
|
|
—
|
|
|
(72
|
)
|
|
—
|
|
|
(7
|
)
|
||||
Balance at September 30, 2015
|
|
$
|
9
|
|
|
$
|
2,478
|
|
|
$
|
(4
|
)
|
|
$
|
106
|
|
(in millions)
|
|
Pension
Benefits
|
|
Other
Retirement
Benefits
|
|
Total
|
||||||
Prior service cost
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
Net actuarial loss
|
|
78
|
|
|
8
|
|
|
86
|
|
|||
Total
|
|
$
|
77
|
|
|
$
|
7
|
|
|
$
|
84
|
|
|
|
Pension Benefits
|
|
Other
Retirement Benefits
|
||||||||||||||
|
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||
Discount rate
|
|
3.96
|
%
|
|
3.96
|
%
|
|
2.94
|
%
|
|
3.15
|
%
|
|
3.73
|
%
|
|
3.70
|
%
|
Compensation increase rate
|
|
4.00
|
%
|
|
4.00
|
%
|
|
3.04
|
%
|
|
3.48
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
|
|
Pension Benefits
|
|
Other
Retirement Benefits
|
||||||||||||||
|
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||
Discount rate
|
|
3.96
|
%
|
|
4.51
|
%
|
|
3.15
|
%
|
|
3.93
|
%
|
|
3.70
|
%
|
|
4.14
|
%
|
Expected long-term return on plan assets
|
|
8.23
|
%
|
|
8.23
|
%
|
|
6.70
|
%
|
|
8.17
|
%
|
|
8.25
|
%
|
|
8.25
|
%
|
Compensation increase rate
|
|
4.00
|
%
|
|
4.00
|
%
|
|
3.48
|
%
|
|
3.45
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
Health care cost gross trend rate
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.48
|
%
|
|
7.97
|
%
|
Ultimate trend rate
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.98
|
%
|
|
4.98
|
%
|
Year that trend reaches ultimate rate
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2019
|
|
|
2019
|
|
|
|
Target Mix
|
|
2015
|
|
2014
|
||||
Equities
|
|
40%
|
-
|
70%
|
|
54
|
%
|
|
55
|
%
|
Fixed income
|
|
25%
|
-
|
60%
|
|
44
|
%
|
|
42
|
%
|
Alternative investments
|
|
0%
|
-
|
15%
|
|
0
|
%
|
|
0
|
%
|
Cash
|
|
0%
|
-
|
5%
|
|
2
|
%
|
|
3
|
%
|
|
|
September 30, 2015
|
|
September 30, 2014
|
||||||||||||||||||||||||||||
Asset category (in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. equity
|
|
$
|
533
|
|
|
$
|
362
|
|
|
$
|
—
|
|
|
$
|
895
|
|
|
$
|
670
|
|
|
$
|
359
|
|
|
$
|
—
|
|
|
$
|
1,029
|
|
Non-U.S. equity
|
|
575
|
|
|
93
|
|
|
—
|
|
|
668
|
|
|
630
|
|
|
97
|
|
|
—
|
|
|
727
|
|
||||||||
Fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Corporate
|
|
—
|
|
|
1,088
|
|
|
—
|
|
|
1,088
|
|
|
—
|
|
|
1,103
|
|
|
—
|
|
|
1,103
|
|
||||||||
U.S. government
|
|
65
|
|
|
83
|
|
|
—
|
|
|
148
|
|
|
52
|
|
|
91
|
|
|
—
|
|
|
143
|
|
||||||||
Emerging market
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|
50
|
|
||||||||
Mortgage and asset-backed
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||||||
Other
|
|
—
|
|
|
40
|
|
|
3
|
|
|
43
|
|
|
—
|
|
|
42
|
|
|
3
|
|
|
45
|
|
||||||||
Cash and cash equivalents
|
|
—
|
|
|
55
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
81
|
|
|
—
|
|
|
81
|
|
||||||||
Sub-total
|
|
1,173
|
|
|
1,723
|
|
|
3
|
|
|
2,899
|
|
|
1,352
|
|
|
1,826
|
|
|
3
|
|
|
3,181
|
|
||||||||
Net receivables related to investment transactions
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
4
|
|
|||||||||||
Total
|
|
|
|
|
|
|
|
|
|
|
$
|
2,902
|
|
|
|
|
|
|
|
|
$
|
3,185
|
|
|
|
September 30, 2015
|
|
September 30, 2014
|
||||||||||||||||||||||||||||
Asset category (in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. equity
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7
|
|
Fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Corporate
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||||||
U.S. government
|
|
2
|
|
|
1
|
|
|
—
|
|
|
3
|
|
|
2
|
|
|
1
|
|
|
—
|
|
|
3
|
|
||||||||
Mortgage and asset-backed
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||||
Cash and cash equivalents
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||||||
Total
|
|
$
|
9
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
9
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
18
|
|
(in millions)
|
|
2015
|
|
2014
|
||||
Contributions to U.S. qualified plan
|
|
$
|
55
|
|
|
$
|
55
|
|
Contributions to U.S. non-qualified plan
|
|
9
|
|
|
14
|
|
||
Contributions to non-U.S. plans
|
|
5
|
|
|
6
|
|
||
Total
|
|
$
|
69
|
|
|
$
|
75
|
|
(in millions)
|
|
Pension
Benefits
|
|
Other
Retirement
Benefits
|
||||
2016
|
|
$
|
224
|
|
|
$
|
15
|
|
2017
|
|
227
|
|
|
15
|
|
||
2018
|
|
232
|
|
|
17
|
|
||
2019
|
|
238
|
|
|
17
|
|
||
2020
|
|
242
|
|
|
17
|
|
||
2021 - 2025
|
|
1,248
|
|
|
78
|
|
|
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
(in millions)
|
|
Shares
|
|
Expense
|
|
Shares
|
|
Expense
|
|
Shares
|
|
Expense
|
|||||||||
Contribution in shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Defined contribution savings plans
|
|
0.4
|
|
|
$
|
39
|
|
|
0.5
|
|
|
$
|
40
|
|
|
0.7
|
|
|
$
|
43
|
|
Contribution in cash:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Retirement contributions
|
|
|
|
|
47
|
|
|
|
|
|
50
|
|
|
|
|
|
42
|
|
|||
Total
|
|
|
|
|
$
|
86
|
|
|
|
|
|
$
|
90
|
|
|
|
|
|
$
|
85
|
|
12.
|
Shareowners' Equity
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Amount of share repurchases
|
|
$
|
325
|
|
|
$
|
206
|
|
|
$
|
569
|
|
Number of shares repurchased
|
|
3.8
|
|
|
2.7
|
|
|
9.8
|
|
|
|
September 30
|
||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Unamortized pension and other retirement benefits (net of taxes of $952 for 2015, $783 for 2014 and $754 for 2013)
|
|
$
|
(1,637
|
)
|
|
$
|
(1,348
|
)
|
|
$
|
(1,293
|
)
|
Foreign currency translation adjustment
|
|
(56
|
)
|
|
(15
|
)
|
|
12
|
|
|||
Foreign currency cash flow hedge adjustment
|
|
(6
|
)
|
|
(3
|
)
|
|
(6
|
)
|
|||
Accumulated other comprehensive loss
|
|
$
|
(1,699
|
)
|
|
$
|
(1,366
|
)
|
|
$
|
(1,287
|
)
|
|
|
Foreign Exchange Translation Adjustment
|
|
Pension and Other Postretirement Adjustments
(1)
|
|
Change in the Fair Value of Effective Cash Flow Hedges
|
|
Total
|
||||||||
Balance at September 30, 2014
|
|
$
|
(15
|
)
|
|
$
|
(1,348
|
)
|
|
$
|
(3
|
)
|
|
$
|
(1,366
|
)
|
Other comprehensive income before reclassifications
|
|
(41
|
)
|
|
(334
|
)
|
|
(7
|
)
|
|
(382
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income
|
|
—
|
|
|
45
|
|
|
4
|
|
|
49
|
|
||||
Net current period other comprehensive income
|
|
(41
|
)
|
|
(289
|
)
|
|
(3
|
)
|
|
(333
|
)
|
||||
Balance at September 30, 2015
|
|
$
|
(56
|
)
|
|
$
|
(1,637
|
)
|
|
$
|
(6
|
)
|
|
$
|
(1,699
|
)
|
13.
|
Stock-Based Compensation and Earnings Per Share
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Stock-based compensation expense included in:
|
|
|
|
|
|
|
||||||
Product cost of sales
|
|
$
|
7
|
|
|
$
|
7
|
|
|
$
|
6
|
|
Selling, general and administrative expenses
|
|
17
|
|
|
17
|
|
|
14
|
|
|||
Total
|
|
$
|
24
|
|
|
$
|
24
|
|
|
$
|
20
|
|
Income tax benefit
|
|
$
|
8
|
|
|
$
|
8
|
|
|
$
|
7
|
|
|
|
Shares (in thousands)
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Life
(in years)
|
|
Aggregate
Intrinsic
Value
(in millions)
|
|||||
Outstanding at September 30, 2014
|
|
4,320
|
|
|
$
|
54.18
|
|
|
|
|
|
|
|
Granted
|
|
562
|
|
|
83.81
|
|
|
|
|
|
|
||
Exercised
|
|
(1,094
|
)
|
|
46.02
|
|
|
|
|
|
|
||
Forfeited or expired
|
|
(89
|
)
|
|
57.06
|
|
|
|
|
|
|
||
Outstanding at September 30, 2015
|
|
3,699
|
|
|
$
|
61.02
|
|
|
5.9
|
|
$
|
79
|
|
Vested or expected to vest
(1)
|
|
3,688
|
|
|
$
|
60.97
|
|
|
5.8
|
|
$
|
79
|
|
Exercisable at September 30, 2015
|
|
2,548
|
|
|
$
|
55.01
|
|
|
4.7
|
|
$
|
69
|
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Weighted-average fair value per share of options granted
|
|
$
|
19.59
|
|
|
$
|
18.60
|
|
|
$
|
12.81
|
|
Intrinsic value of options exercised (in millions)
(2)
|
|
$
|
48
|
|
|
$
|
26
|
|
|
$
|
43
|
|
|
2015 Grants
|
|
2014 Grants
|
|
2013 Grants
|
|||
Risk-free interest rate
|
0.5% - 2.6%
|
|
|
0.3% - 3.0%
|
|
|
0.3% - 2.9%
|
|
Expected dividend yield
|
1.6
|
%
|
|
1.9
|
%
|
|
2.0
|
%
|
Expected volatility
|
24.0
|
%
|
|
28.0
|
%
|
|
27.0
|
%
|
Expected life
|
7 years
|
|
|
7 years
|
|
|
8 years
|
|
|
|
Performance
Shares
|
|
Restricted
Stock
|
|
Restricted
Stock Units
|
|||||||||||||||
(shares in thousands)
|
|
Shares
|
|
Weighted
Average
Grant Date Fair Value
|
|
Shares
|
|
Weighted
Average
Grant Date Fair Value
|
|
Shares
|
|
Weighted
Average
Grant Date Fair Value
|
|||||||||
Nonvested at September 30, 2014
|
|
478
|
|
|
$
|
60.46
|
|
|
23
|
|
|
$
|
30.24
|
|
|
331
|
|
|
$
|
58.78
|
|
Granted
|
|
131
|
|
|
82.76
|
|
|
—
|
|
|
—
|
|
|
72
|
|
|
84.63
|
|
|||
Vested
|
|
(158
|
)
|
|
55.01
|
|
|
—
|
|
|
—
|
|
|
(57
|
)
|
|
55.01
|
|
|||
Forfeited
|
|
(13
|
)
|
|
66.78
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
67.38
|
|
|||
Nonvested at September 30, 2015
|
|
438
|
|
|
$
|
68.92
|
|
|
23
|
|
|
$
|
30.24
|
|
|
340
|
|
|
$
|
64.34
|
|
(in millions)
|
|
Performance Shares
|
|
Restricted Stock
|
|
Restricted Stock Units
|
||||||
Total unrecognized compensation costs at September 30, 2015
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
5
|
|
Weighted-average life remaining at September 30, 2015, in years
|
|
0.9
|
|
|
0
|
|
|
1.0
|
|
|||
Weighted-average fair value per share granted in 2014
|
|
$
|
71.63
|
|
|
$
|
—
|
|
|
$
|
72.42
|
|
Weighted-average fair value per share granted in 2013
|
|
$
|
55.69
|
|
|
$
|
—
|
|
|
$
|
56.04
|
|
(in millions, except per share amounts)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Numerator for basic and diluted earnings per share:
|
|
|
|
|
|
|
||||||
Income from continuing operations
|
|
$
|
694
|
|
|
$
|
618
|
|
|
$
|
630
|
|
Income (loss) from discontinued operations, net of taxes
|
|
(8
|
)
|
|
(14
|
)
|
|
2
|
|
|||
Net income
|
|
$
|
686
|
|
|
$
|
604
|
|
|
$
|
632
|
|
Denominator:
|
|
|
|
|
|
|
|
|
||||
Denominator for basic earnings per share – weighted average common shares
|
|
132.3
|
|
|
135.1
|
|
|
136.5
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
|
||||||
Stock options
|
|
1.0
|
|
|
1.2
|
|
|
1.2
|
|
|||
Performance shares, restricted stock and restricted stock units
|
|
0.4
|
|
|
0.4
|
|
|
0.4
|
|
|||
Dilutive potential common shares
|
|
1.4
|
|
|
1.6
|
|
|
1.6
|
|
|||
Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversion
|
|
133.7
|
|
|
136.7
|
|
|
138.1
|
|
|||
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
||||
Basic
|
|
|
|
|
|
|
||||||
Continuing operations
|
|
$
|
5.25
|
|
|
$
|
4.57
|
|
|
$
|
4.62
|
|
Discontinued operations
|
|
(0.06
|
)
|
|
(0.10
|
)
|
|
0.01
|
|
|||
Basic earnings per share
|
|
$
|
5.19
|
|
|
$
|
4.47
|
|
|
$
|
4.63
|
|
Diluted
|
|
|
|
|
|
|
||||||
Continuing operations
|
|
$
|
5.19
|
|
|
$
|
4.52
|
|
|
$
|
4.56
|
|
Discontinued operations
|
|
(0.06
|
)
|
|
(0.10
|
)
|
|
0.02
|
|
|||
Diluted earnings per share
|
|
$
|
5.13
|
|
|
$
|
4.42
|
|
|
$
|
4.58
|
|
14.
|
Other Income, Net
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Earnings from equity affiliates
|
|
$
|
3
|
|
|
$
|
7
|
|
|
$
|
13
|
|
Gain from business divestiture
|
|
—
|
|
|
10
|
|
|
—
|
|
|||
Other
|
|
12
|
|
|
8
|
|
|
4
|
|
|||
Other income, net
|
|
$
|
15
|
|
|
$
|
25
|
|
|
$
|
17
|
|
15.
|
Income Taxes
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Current:
|
|
|
|
|
|
|
||||||
U.S. federal
|
|
$
|
169
|
|
|
$
|
110
|
|
|
$
|
151
|
|
Non-U.S.
|
|
38
|
|
|
37
|
|
|
18
|
|
|||
U.S. state and local
|
|
11
|
|
|
4
|
|
|
11
|
|
|||
Total current
|
|
218
|
|
|
151
|
|
|
180
|
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
U.S. federal
|
|
49
|
|
|
105
|
|
|
53
|
|
|||
Non-U.S.
|
|
(4
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|||
U.S. state and local
|
|
5
|
|
|
10
|
|
|
5
|
|
|||
Total deferred
|
|
50
|
|
|
113
|
|
|
55
|
|
|||
Income tax expense
|
|
$
|
268
|
|
|
$
|
264
|
|
|
$
|
235
|
|
|
|
September 30
|
||||||
(in millions)
|
|
2015
|
|
2014
|
||||
Inventory
|
|
$
|
(226
|
)
|
|
$
|
(191
|
)
|
Product warranty costs
|
|
29
|
|
|
32
|
|
||
Customer incentives
|
|
62
|
|
|
53
|
|
||
Contract reserves
|
|
11
|
|
|
14
|
|
||
Compensation and benefits
|
|
29
|
|
|
24
|
|
||
Valuation allowance
|
|
(8
|
)
|
|
(10
|
)
|
||
Other
|
|
28
|
|
|
30
|
|
||
Current deferred income taxes, net
|
|
$
|
(75
|
)
|
|
$
|
(48
|
)
|
|
|
September 30
|
||||||
(in millions)
|
|
2015
|
|
2014
|
||||
Retirement benefits
|
|
$
|
487
|
|
|
$
|
346
|
|
Intangibles
|
|
(177
|
)
|
|
(183
|
)
|
||
Capital lease liability
|
|
21
|
|
|
22
|
|
||
Property
|
|
(154
|
)
|
|
(151
|
)
|
||
Stock-based compensation
|
|
30
|
|
|
29
|
|
||
Deferred compensation
|
|
15
|
|
|
13
|
|
||
Capital loss carryover
|
|
42
|
|
|
43
|
|
||
Valuation allowance
|
|
(34
|
)
|
|
(33
|
)
|
||
Other
|
|
7
|
|
|
14
|
|
||
Long-term deferred income taxes, net
|
|
$
|
237
|
|
|
$
|
100
|
|
|
|
September 30
|
||||||
(in millions)
|
|
2015
|
|
2014
|
||||
Current deferred income tax asset
|
|
$
|
9
|
|
|
$
|
9
|
|
Current deferred income tax liability
|
|
(84
|
)
|
|
(57
|
)
|
||
Current deferred income taxes, net
|
|
$
|
(75
|
)
|
|
$
|
(48
|
)
|
Long-term deferred income taxes
|
|
$
|
241
|
|
|
$
|
101
|
|
Other liabilities
|
|
(4
|
)
|
|
(1
|
)
|
||
Long-term deferred income taxes, net
|
|
$
|
237
|
|
|
$
|
100
|
|
|
September 30
|
||||||||||
(in millions)
|
2015
|
|
2014
|
|
2013
|
||||||
Balance at beginning of year
|
$
|
43
|
|
|
$
|
11
|
|
|
$
|
19
|
|
Charged to costs and expenses
|
—
|
|
|
32
|
|
|
—
|
|
|||
Deductions
|
(1
|
)
|
|
—
|
|
|
(8
|
)
|
|||
Balance at September 30
|
$
|
42
|
|
|
$
|
43
|
|
|
$
|
11
|
|
|
|
2015
|
|
2014
|
|
2013
|
|||
Statutory tax rate
|
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Foreign rate differential
|
|
(1.0
|
)
|
|
(1.1
|
)
|
|
(1.2
|
)
|
State and local income taxes
|
|
1.2
|
|
|
1.3
|
|
|
1.3
|
|
Research and development credit
|
|
(3.2
|
)
|
|
(1.1
|
)
|
|
(5.1
|
)
|
Domestic manufacturing deduction
|
|
(2.0
|
)
|
|
(1.7
|
)
|
|
(2.0
|
)
|
Tax settlements
|
|
(1.6
|
)
|
|
(0.9
|
)
|
|
(0.1
|
)
|
Other
|
|
(0.5
|
)
|
|
(1.6
|
)
|
|
(0.7
|
)
|
Effective income tax rate
|
|
27.9
|
%
|
|
29.9
|
%
|
|
27.2
|
%
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
U.S. income
|
|
$
|
835
|
|
|
$
|
754
|
|
|
$
|
755
|
|
Non-U.S. income
|
|
127
|
|
|
128
|
|
|
110
|
|
|||
Total
|
|
$
|
962
|
|
|
$
|
882
|
|
|
$
|
865
|
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Beginning balance
|
|
$
|
48
|
|
|
$
|
56
|
|
|
$
|
42
|
|
Additions for tax positions related to the current year
|
|
8
|
|
|
13
|
|
|
15
|
|
|||
Additions for tax positions of prior years
|
|
6
|
|
|
1
|
|
|
3
|
|
|||
Additions for tax positions related to acquisitions
|
|
—
|
|
|
8
|
|
|
—
|
|
|||
Reductions for tax positions of prior years
|
|
(17
|
)
|
|
(17
|
)
|
|
(1
|
)
|
|||
Reductions for tax positions of prior years related to lapse of statute of limitations
|
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|||
Reductions for tax positions related to settlements with taxing authorities
|
|
(5
|
)
|
|
(11
|
)
|
|
(1
|
)
|
|||
Ending balance
|
|
$
|
39
|
|
|
$
|
48
|
|
|
$
|
56
|
|
16.
|
Fair Value Measurements
|
Level 1 -
|
quoted prices (unadjusted) in active markets for identical assets or liabilities
|
Level 2 -
|
quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument
|
Level 3 -
|
unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value
|
|
|
|
September 30, 2015
|
|
September 30, 2014
|
||||
(in millions)
|
Fair Value
Hierarchy
|
|
Fair Value
Asset (Liability)
|
|
Fair Value
Asset (Liability)
|
||||
Deferred compensation plan investments
|
Level 1
|
|
$
|
50
|
|
|
$
|
50
|
|
Interest rate swap assets
|
Level 2
|
|
34
|
|
|
18
|
|
||
Foreign currency forward exchange contract assets
|
Level 2
|
|
7
|
|
|
6
|
|
||
Foreign currency forward exchange contract liabilities
|
Level 2
|
|
(11
|
)
|
|
(9
|
)
|
||
Contingent consideration for ICG acquisition
|
Level 3
|
|
(12
|
)
|
|
—
|
|
|
Asset (Liability)
|
||||||||||||||
|
September 30, 2015
|
|
September 30, 2014
|
||||||||||||
(in millions)
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
Cash and cash equivalents
|
$
|
252
|
|
|
$
|
252
|
|
|
$
|
323
|
|
|
$
|
323
|
|
Short-term debt
|
(448
|
)
|
|
(448
|
)
|
|
(504
|
)
|
|
(504
|
)
|
||||
Long-term debt
|
(1,646
|
)
|
|
(1,750
|
)
|
|
(1,645
|
)
|
|
(1,747
|
)
|
17.
|
Derivative Financial Instruments
|
|
|
|
Asset Derivatives
|
||||||
(in millions)
|
Classification
|
|
September 30,
2015 |
|
September 30,
2014 |
||||
Foreign currency forward exchange contracts
|
Other current assets
|
|
$
|
7
|
|
|
$
|
6
|
|
Interest rate swaps
|
Other assets
|
|
34
|
|
|
18
|
|
||
Total
|
|
|
$
|
41
|
|
|
$
|
24
|
|
|
|
|
Liability Derivatives
|
||||||
(in millions)
|
Classification
|
|
September 30,
2015 |
|
September 30,
2014 |
||||
Foreign currency forward exchange contracts
|
Other current liabilities
|
|
$
|
11
|
|
|
$
|
9
|
|
Total
|
|
|
$
|
11
|
|
|
$
|
9
|
|
|
|
|
Amount of Gain (Loss)
|
||||||
(in millions)
|
Location of Gain (Loss)
|
|
September 30,
2015 |
|
September 30,
2014 |
||||
Derivatives Designated as Hedging Instruments:
|
|
|
|
|
|
||||
Fair Value Hedges
|
|
|
|
|
|
||||
Interest rate swaps
|
Interest expense
|
|
$
|
11
|
|
|
$
|
8
|
|
Cash Flow Hedges
|
|
|
|
|
|
||||
Foreign currency forward exchange contracts:
|
|
|
|
|
|
||||
Amount of gain (loss) recognized in AOCL (effective portion, before deferred tax impact)
|
AOCL
|
|
$
|
(10
|
)
|
|
$
|
—
|
|
Amount of gain (loss) reclassified from AOCL into income
|
Cost of sales
|
|
(6
|
)
|
|
(1
|
)
|
||
Forward starting interest rate swaps:
|
|
|
|
|
|
||||
Amount of gain (loss) recognized in AOCL (effective portion, before deferred tax impact)
|
AOCL
|
|
—
|
|
|
3
|
|
||
Derivatives Not Designated as Hedging Instruments:
|
|
|
|
|
|
||||
Foreign currency forward exchange contracts
|
Cost of sales
|
|
(8
|
)
|
|
(1
|
)
|
18.
|
Guarantees and Indemnifications
|
|
September 30
|
||||||||||
(in millions)
|
2015
|
|
2014
|
|
2013
|
||||||
Balance at beginning of year
|
$
|
104
|
|
|
$
|
121
|
|
|
$
|
126
|
|
Warranty costs incurred
|
(46
|
)
|
|
(47
|
)
|
|
(46
|
)
|
|||
Product warranty accrual
|
42
|
|
|
46
|
|
|
48
|
|
|||
Changes in estimates for prior years
|
(10
|
)
|
|
(15
|
)
|
|
(7
|
)
|
|||
Increase from acquisitions
|
1
|
|
|
—
|
|
|
—
|
|
|||
Foreign currency translation adjustments and other
|
(2
|
)
|
|
(1
|
)
|
|
—
|
|
|||
Balance at September 30
|
$
|
89
|
|
|
$
|
104
|
|
|
$
|
121
|
|
19.
|
Contractual Obligations and Other Commitments
|
|
|
Payments Due By Period
|
||||||||||||||||||||||||||
(in millions)
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
Thereafter
|
|
Total
|
||||||||||||||
Non-cancelable operating leases
|
|
$
|
59
|
|
|
$
|
49
|
|
|
$
|
40
|
|
|
$
|
31
|
|
|
$
|
25
|
|
|
$
|
126
|
|
|
$
|
330
|
|
Purchase contracts
|
|
45
|
|
|
23
|
|
|
18
|
|
|
19
|
|
|
9
|
|
|
24
|
|
|
138
|
|
|||||||
Long-term debt
|
|
—
|
|
|
300
|
|
|
—
|
|
|
300
|
|
|
—
|
|
|
1,050
|
|
|
1,650
|
|
|||||||
Interest on long-term debt
|
|
59
|
|
|
58
|
|
|
58
|
|
|
58
|
|
|
42
|
|
|
515
|
|
|
790
|
|
|||||||
Total
|
|
$
|
163
|
|
|
$
|
430
|
|
|
$
|
116
|
|
|
$
|
408
|
|
|
$
|
76
|
|
|
$
|
1,715
|
|
|
$
|
2,908
|
|
20.
|
Environmental Matters
|
21.
|
Legal Matters
|
22.
|
Restructuring, Pension Settlement and Asset Impairment Charges, Net
|
23.
|
Business Segment Information
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Sales:
|
|
|
|
|
|
|
||||||
Commercial Systems
|
|
$
|
2,434
|
|
|
$
|
2,299
|
|
|
$
|
2,170
|
|
Government Systems
|
|
2,187
|
|
|
2,209
|
|
|
2,259
|
|
|||
Information Management Services
|
|
623
|
|
|
471
|
|
|
45
|
|
|||
Total sales
|
|
$
|
5,244
|
|
|
$
|
4,979
|
|
|
$
|
4,474
|
|
|
|
|
|
|
|
|
||||||
Segment operating earnings:
|
|
|
|
|
|
|
|
|
||||
Commercial Systems
|
|
$
|
554
|
|
|
$
|
509
|
|
|
$
|
472
|
|
Government Systems
|
|
457
|
|
|
465
|
|
|
496
|
|
|||
Information Management Services
|
|
95
|
|
|
62
|
|
|
5
|
|
|||
Total segment operating earnings
|
|
1,106
|
|
|
1,036
|
|
|
973
|
|
|||
|
|
|
|
|
|
|
||||||
Interest expense
(1)
|
|
(61
|
)
|
|
(59
|
)
|
|
(28
|
)
|
|||
Stock-based compensation
|
|
(24
|
)
|
|
(24
|
)
|
|
(20
|
)
|
|||
General corporate, net
|
|
(59
|
)
|
|
(59
|
)
|
|
(58
|
)
|
|||
Gain on divestiture of business
|
|
—
|
|
|
10
|
|
|
—
|
|
|||
ARINC transaction costs
(1)
|
|
—
|
|
|
(13
|
)
|
|
(2
|
)
|
|||
Restructuring, pension settlement and asset impairment charges, net
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|||
Income from continuing operations before income taxes
|
|
962
|
|
|
882
|
|
|
865
|
|
|||
Income tax expense
|
|
(268
|
)
|
|
(264
|
)
|
|
(235
|
)
|
|||
Income from continuing operations
|
|
$
|
694
|
|
|
$
|
618
|
|
|
$
|
630
|
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Identifiable assets:
|
|
|
|
|
|
|
||||||
Commercial Systems
|
|
$
|
2,906
|
|
|
$
|
2,655
|
|
|
$
|
2,465
|
|
Government Systems
|
|
1,953
|
|
|
1,938
|
|
|
2,174
|
|
|||
Information Management Services
|
|
1,886
|
|
|
1,885
|
|
|
—
|
|
|||
Corporate
|
|
644
|
|
|
585
|
|
|
761
|
|
|||
Total identifiable assets
|
|
$
|
7,389
|
|
|
$
|
7,063
|
|
|
$
|
5,400
|
|
Investments in equity affiliates:
|
|
|
|
|
|
|
||||||
Commercial Systems
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Government Systems
|
|
6
|
|
|
8
|
|
|
22
|
|
|||
Information Management Services
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total investments in equity affiliates
|
|
$
|
13
|
|
|
$
|
8
|
|
|
$
|
22
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
||||||
Commercial Systems
|
|
$
|
117
|
|
|
$
|
108
|
|
|
$
|
92
|
|
Government Systems
|
|
83
|
|
|
80
|
|
|
81
|
|
|||
Information Management Services
|
|
52
|
|
|
37
|
|
|
4
|
|
|||
Total depreciation and amortization
|
|
$
|
252
|
|
|
$
|
225
|
|
|
$
|
177
|
|
Capital expenditures for property:
|
|
|
|
|
|
|
||||||
Commercial Systems
|
|
$
|
90
|
|
|
$
|
68
|
|
|
$
|
58
|
|
Government Systems
|
|
81
|
|
|
66
|
|
|
62
|
|
|||
Information Management Services
|
|
39
|
|
|
29
|
|
|
—
|
|
|||
Total capital expenditures for property
|
|
$
|
210
|
|
|
$
|
163
|
|
|
$
|
120
|
|
Earnings from equity affiliates:
|
|
|
|
|
|
|
||||||
Commercial Systems
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Government Systems
|
|
3
|
|
|
7
|
|
|
13
|
|
|||
Information Management Services
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total earnings from equity affiliates
|
|
$
|
3
|
|
|
$
|
7
|
|
|
$
|
13
|
|
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Commercial Systems product categories:
|
|
|
|
|
|
|
||||||
Air transport aviation electronics
|
|
$
|
1,385
|
|
|
$
|
1,285
|
|
|
$
|
1,181
|
|
Business and regional aviation electronics
|
|
1,049
|
|
|
1,014
|
|
|
989
|
|
|||
Commercial Systems sales
|
|
2,434
|
|
|
2,299
|
|
|
2,170
|
|
|||
|
|
|
|
|
|
|
||||||
Government Systems product categories:
|
|
|
|
|
|
|
|
|||||
Avionics
|
|
1,390
|
|
|
1,342
|
|
|
1,384
|
|
|||
Communication products
|
|
401
|
|
|
455
|
|
|
450
|
|
|||
Surface solutions
|
|
200
|
|
|
234
|
|
|
232
|
|
|||
Navigation products
|
|
196
|
|
|
178
|
|
|
193
|
|
|||
Government Systems sales
|
|
2,187
|
|
|
2,209
|
|
|
2,259
|
|
|||
|
|
|
|
|
|
|
||||||
Information Management Services sales
|
|
623
|
|
|
471
|
|
|
45
|
|
|||
|
|
|
|
|
|
|
||||||
Total sales
|
|
$
|
5,244
|
|
|
$
|
4,979
|
|
|
$
|
4,474
|
|
|
|
Sales
|
|
Property
|
||||||||||||||||||||
(in millions)
|
|
2015
|
|
2014
|
|
2013
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||
U.S.
(1)
|
|
$
|
3,174
|
|
|
$
|
2,993
|
|
|
$
|
2,827
|
|
|
$
|
861
|
|
|
$
|
805
|
|
|
$
|
679
|
|
Europe
|
|
915
|
|
|
881
|
|
|
772
|
|
|
83
|
|
|
89
|
|
|
75
|
|
||||||
Asia-Pacific
|
|
503
|
|
|
486
|
|
|
371
|
|
|
15
|
|
|
19
|
|
|
14
|
|
||||||
Canada
|
|
369
|
|
|
349
|
|
|
322
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||||
Africa / Middle East
|
|
155
|
|
|
159
|
|
|
97
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||||
Latin America
|
|
128
|
|
|
111
|
|
|
85
|
|
|
4
|
|
|
4
|
|
|
4
|
|
||||||
International
|
|
2,070
|
|
|
1,986
|
|
|
1,647
|
|
|
103
|
|
|
114
|
|
|
94
|
|
||||||
Total
|
|
$
|
5,244
|
|
|
$
|
4,979
|
|
|
$
|
4,474
|
|
|
$
|
964
|
|
|
$
|
919
|
|
|
$
|
773
|
|
24.
|
Quarterly Financial Information (Unaudited)
|
|
|
2015 Quarters
|
||||||||||||||||||
(in millions, except per share amounts)
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Total
|
||||||||||
Sales
|
|
$
|
1,226
|
|
|
$
|
1,341
|
|
|
$
|
1,293
|
|
|
$
|
1,384
|
|
|
$
|
5,244
|
|
Gross profit (total sales less product and service cost of sales)
|
|
369
|
|
|
404
|
|
|
405
|
|
|
436
|
|
|
1,614
|
|
|||||
Income from continuing operations
|
|
169
|
|
|
163
|
|
|
178
|
|
|
184
|
|
|
694
|
|
|||||
Income (loss) from discontinued operations, net of taxes
|
|
(2
|
)
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|||||
Net income
|
|
$
|
167
|
|
|
$
|
157
|
|
|
$
|
178
|
|
|
$
|
184
|
|
|
$
|
686
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
|
$
|
1.28
|
|
|
$
|
1.23
|
|
|
$
|
1.35
|
|
|
$
|
1.40
|
|
|
$
|
5.25
|
|
Discontinued operations
|
|
(0.02
|
)
|
|
(0.04
|
)
|
|
—
|
|
|
—
|
|
|
(0.06
|
)
|
|||||
Basic earnings per share
|
|
$
|
1.26
|
|
|
$
|
1.19
|
|
|
$
|
1.35
|
|
|
$
|
1.40
|
|
|
$
|
5.19
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
|
$
|
1.26
|
|
|
$
|
1.22
|
|
|
$
|
1.33
|
|
|
$
|
1.38
|
|
|
$
|
5.19
|
|
Discontinued operations
|
|
(0.02
|
)
|
|
(0.05
|
)
|
|
—
|
|
|
—
|
|
|
(0.06
|
)
|
|||||
Diluted earnings per share
|
|
$
|
1.24
|
|
|
$
|
1.17
|
|
|
$
|
1.33
|
|
|
$
|
1.38
|
|
|
$
|
5.13
|
|
|
|
2014 Quarters
|
||||||||||||||||||
(in millions, except per share amounts)
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Total
|
||||||||||
Sales
|
|
$
|
1,054
|
|
|
$
|
1,259
|
|
|
$
|
1,264
|
|
|
$
|
1,402
|
|
|
$
|
4,979
|
|
Gross profit (total sales less product and service cost of sales)
|
|
317
|
|
|
378
|
|
|
387
|
|
|
428
|
|
|
1,510
|
|
|||||
Income from continuing operations
|
|
134
|
|
|
148
|
|
|
163
|
|
|
173
|
|
|
618
|
|
|||||
Income (loss) from discontinued operations, net of taxes
|
|
(3
|
)
|
|
—
|
|
|
(5
|
)
|
|
(6
|
)
|
|
(14
|
)
|
|||||
Net income
|
|
$
|
131
|
|
|
$
|
148
|
|
|
$
|
158
|
|
|
$
|
167
|
|
|
$
|
604
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
|
$
|
0.99
|
|
|
$
|
1.09
|
|
|
$
|
1.21
|
|
|
$
|
1.28
|
|
|
$
|
4.57
|
|
Discontinued operations
|
|
(0.02
|
)
|
|
—
|
|
|
(0.04
|
)
|
|
(0.04
|
)
|
|
(0.10
|
)
|
|||||
Basic earnings per share
|
|
$
|
0.97
|
|
|
$
|
1.09
|
|
|
$
|
1.17
|
|
|
$
|
1.24
|
|
|
$
|
4.47
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
|
$
|
0.98
|
|
|
$
|
1.08
|
|
|
$
|
1.19
|
|
|
$
|
1.27
|
|
|
$
|
4.52
|
|
Discontinued operations
|
|
(0.02
|
)
|
|
—
|
|
|
(0.04
|
)
|
|
(0.04
|
)
|
|
(0.10
|
)
|
|||||
Diluted earnings per share
|
|
$
|
0.96
|
|
|
$
|
1.08
|
|
|
$
|
1.15
|
|
|
$
|
1.23
|
|
|
$
|
4.42
|
|
25.
|
Subsequent Event
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
|
Item 9A.
|
Controls and Procedures.
|
Item 9B.
|
Other Information.
|
PART III
|
|
Item 10.
|
Directors, Executive Officers and Corporate Governance.
|
Item 11.
|
Executive Compensation.
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
Plan Category
|
|
(a)
Number Of
Securities To Be Issued
Upon Exercise Of
Outstanding Options,
Warrants And Rights
|
|
(b)
Weighted-Average
Exercise Price Of
Outstanding Options,
Warrants And Rights
|
|
(c)
Number Of Securities
Remaining Available For
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected In Column (a))
|
||||||
Equity Compensation Plans Approved By Security Holders
(1)
|
|
4,816,254
|
|
(2)
|
|
$
|
61.02
|
|
|
13,560,877
|
|
(3)(4)
|
Equity Compensation Plans Not Approved By Security Holders
|
|
0
|
|
|
|
0
|
|
|
0
|
|
|
|
Total
|
|
4,816,254
|
|
|
|
$
|
61.02
|
|
|
13,560,877
|
|
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
Item 14.
|
Principal Accounting Fees and Services.
|
PART IV
|
|
Item 15.
|
Exhibits and Financial Statement Schedules.
|
(a)
|
|
|
|
Financial Statements, Financial Statement Schedules and Exhibits.
|
|
|
|
(1
|
)
|
|
Financial Statements
|
|
|
|
|
|
The financial statements are included under Item 8 of this Annual Report on Form 10-K:
|
|
|
|
|
|
Consolidated Statement of Financial Position, as of September 30, 2015 and 2014
|
|
|
|
|
|
Consolidated Statement of Operations, years ended September 30, 2015, 2014 and 2013
|
|
|
|
|
Consolidated Statement of Comprehensive Income, years ended September 30, 2015, 2014 and 2013
|
|
|
|
|
|
|
Consolidated Statement of Cash Flows, years ended September 30, 2015, 2014 and 2013
|
|
|
|
|
|
Consolidated Statement of Equity, years ended September 30, 2015, 2014 and 2013
|
|
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
|
|
|
All other schedules not filed herewith are omitted because of the absence of conditions under which they are required or because the information called for is shown in the financial statements or notes thereto.
|
|
|
|
|
|
Exhibits
|
|
|
|
3-a-1
|
|
|
Restated Certificate of Incorporation of the Company, as amended, filed as Exhibit 3-a-1 to the Company's Form 10-K for year ended September 30, 2001, is incorporated herein by reference.
|
|
|
3-a-2
|
|
|
Certificate of Merger effecting name change of the Company from "New Rockwell Collins, Inc." to "Rockwell Collins, Inc.", filed as Exhibit 3-a-2 to the Company's Form 10-K for year ended September 30, 2001, is incorporated herein by reference.
|
|
|
3-b-1
|
|
|
By-Laws of the Company, as amended and restated effective September 20, 2012, filed as Exhibit 3-b-1 to the Company's Form 8-K dated September 20, 2012, is incorporated herein by reference.
|
|
|
4-a-1
|
|
|
Indenture dated as of November 1, 2001 between the Company and Citibank, N.A., as Trustee, filed as Exhibit 4.b to the Company's Registration Statement on Form S-3 (No. 333-72914), is incorporated herein by reference.
|
|
|
4-a-2
|
|
|
Form of certificate for the Company's 4
3
/
4
% Notes due 2013, filed as Exhibit 4-a to the Company's Form 8-K dated November 21, 2003, is incorporated herein by reference.
|
|
|
4-a-3
|
|
|
Form of Supplemental Indenture dated as of December 4, 2006 between the Company and The Bank of New York Trust Company, N.A. (as incoming trustee), filed as Exhibit 4-a-4 to the Company's Form 8-K dated November 9, 2006, is incorporated herein by reference.
|
|
|
4-a-4
|
|
|
Form of certificate for the Company's 5.25% Notes due July 15, 2019, filed as Exhibit 4 to the Company's Form 8-K dated May 1, 2009, is incorporated herein by reference.
|
|
|
4-a-5
|
|
|
Underwriting Agreements, dated November 16, 2011, between the Company and Citigroup Global Markets Inc., Merril Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC, as representatives of the several Underwriters named in Schedule 1 to the Underwriting Agreement, filed as Exhibit 1 to the Company's Form 8-K dated November 16, 2011, is incorporated herein by reference.
|
|
|
4-a-6
|
|
|
Form of certificate for the Company's 3.100% notes due November 15, 2021, filed as Exhibit 4 to the Company's Form 8-K dated November 16, 2011, is incorporated herein by reference.
|
|
|
4-a-7
|
|
|
Underwriting Agreement, dated December 11, 2013, between the Company and Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC, as representitives of the several Underwriters named in Schedule 1 to the Underwriting Agreement, filed as Exhibit 1 to the Company's Form 8-K dated December 17, 2013, is incorporated herein by reference.
|
|
|
4-a-8
|
|
|
Form of certificate for the Company's Floating Rate Notes due 2016, filed as Exhibit 4.1 to the Company's Form 8-K dated December 17, 2013, is incorporated herein by reference.
|
|
|
4-a-9
|
|
|
Form of certificate for the Company's 3.700% Notes due 2023, filed as Exhibit 4.2 to the Company's Form 8-K dated December 17, 2013, is incorporated herein by reference.
|
|
|
4-a-10
|
|
|
Form of certificate for the Company's 4.800% Notes due 2043, filed as Exhibit 4.3 to the Company's Form 8-K dated December 17, 2013, is incorporated herein by reference.
|
|
|
*10-a-1
|
|
|
The Company's 2001 Long-Term Incentives Plan, as amended, filed as Exhibit 10-a-9 to the Company's Form 10-K for year ended September 30, 2007, is incorporated herein by reference.
|
|
|
*10-a-2
|
|
|
Forms of Stock Option Agreements under the Company's 2001 Long-Term Incentives Plan, filed as Exhibit 10-a-2 to the Company's Form 10-K for year ended September 30, 2001, are incorporated herein by reference.
|
|
|
*10-a-3
|
|
|
Form of Restricted Stock Agreement under the Company's 2001 Long-Term Incentives Plan for restricted stock grants to the non-executive Chairman of the Board of Directors, filed as Exhibit 10-a-4 to the Company's Form 10-K for year ended September 30, 2001, is incorporated herein by reference.
|
|
|
*10-a-4
|
|
|
The Company's 2006 Long-Term Incentives Plan, as amended, filed as Appendix A to the Company's Notice and Proxy Statement dated December 18, 2009, is incorporated herein by reference.
|
|
|
*10-a-5
|
|
|
The Company's First Amendment to the Amended and Restated 2006 Long-Term Incentives Plan, as amended, filed as Exhibit 10-a-1 to the Company's Form 10-Q for the quarter ended June 30, 2012, is incorporated herein by reference.
|
|
|
*10-a-6
|
|
|
Form of Restricted Stock Unit Award under the Company's 2006 Long-Term Incentives Plan, filed as Exhibit 10.1 to the Company's Form 8-K dated February 7, 2006, is incorporated herein by reference.
|
|
|
*10-a-7
|
|
|
Forms of Stock Option Agreements under the Company's 2006 Long-Term Incentives Plan filed as Exhibit 10-a-8 to the Company's Form 10-K for year ended September 30, 2006, is incorporated herein by reference.
|
|
|
*10-a-8
|
|
|
The Company's 2006 Annual Incentive Compensation Plan for Senior Executives, as amended, filed as Exhibit 10-a-11 to the Company's Form 10-K for year ended September 30, 2007, is incorporated herein by reference.
|
|
|
*10-a-9
|
|
|
Forms of Stock Option Agreements, adopted November 20, 2009, under the Company's 2006 Long-Term Incentives Plan, filed as Exhibit 10-a-9 to the Company's Form 10-K for year ended September 30, 2009, is incorporated herein by reference.
|
|
|
*10-a-10
|
|
|
The Company’s 2015 Long-Term Incentives Plan filed as Appendix B to the Company’s Notice and Proxy Statement dated December 17, 2014, is incorporated herein by reference.
|
|
|
*10-a-11
|
|
|
Form of Stock Option Agreement under the Company’s 2006 and 2015 Long-Term Incentives Plans, filed as Exhibit 10-a-1 to the Company’s Form 10-Q for the quarter ended December 31, 2014, is incorporated herein by reference.
|
|
|
*10-a-12
|
|
|
Form of Performance Share Agreement under the Company’s 2006 and 2015 Long-Term Incentives Plans, filed as Exhibit 10-a-2 to the Company’s Form 10-Q for the quarter ended December 31, 2014, is incorporated herein by reference.
|
|
|
*10-a-13
|
|
|
Form of Restricted Stock Unit Award for Non-Employee Directors under the Company’s 2015 Long-Term Incentives Plan.
|
|
|
*10-b-1
|
|
|
The Company's Directors Stock Plan, adopted by the Company's Board of Directors on June 1, 2001 and approved by the Company's shareowners at the 2002 Annual Meeting of Shareowners, filed as Exhibit 10.2 to the Company's Registration Statement on Form 10 (File No. 001-16445) (the "Form 10"), is incorporated herein by reference.
|
|
|
*10-b-2
|
|
|
Form of Stock Option Agreement under the Company's Directors Stock Plan, filed as Exhibit 10-b-2 to the Company's Form 10-K for year ended September 30, 2001, is incorporated herein by reference.
|
|
|
*10-b-3
|
|
|
Form of Restricted Stock Agreement under the Company's Directors Stock Plan, filed as Exhibit 10-b-3 to the Company's Form 10-K for year ended September 30, 2001, is incorporated herein by reference.
|
|
|
*10-c-1
|
|
|
Compensation Recovery Policy acknowledgment and agreement filed as Exhibit 10-c-1 to the Company's Form 10-Q for the quarter ended December 31, 2012, is incorporated herein by reference.
|
|
|
*10-d-1
|
|
|
The Company's Incentive Compensation Plan, as amended, filed as Exhibit 10-d-2 to the Company's Form 10-K for year ended September 30, 2007, is incorporated herein by reference.
|
|
|
*10-f-1
|
|
|
The Company's Deferred Compensation Plan, as amended, filed as Exhibit 10-f-2 to the Company's Form 10-K for year ended September 30, 2007, is incorporated herein by reference.
|
|
|
*10-f-2
|
|
|
The Company's 2005 Deferred Compensation Plan, as amended and restated, filed as Exhibit 10-f-1 to the Company's Form 10-Q for quarter ended March 31, 2014, is incorporated herein by reference.
|
|
|
*10-f-3
|
|
|
The Company’s First Amendment to the 2005 Deferred Compensation Plan, as amended and restated.
|
|
|
*10-g-1
|
|
|
The Company's Non-Qualified Savings Plan, as amended, filed as Exhibit 10-g-2 to the Company's Form 10-K for year ended September 30, 2007, is incorporated herein by reference.
|
|
|
*10-g-2
|
|
|
The Company's 2005 Non-Qualified Retirement Savings Plan, as amended, filed as Exhibit 10-g-3 to the Company's Form 10-Q for quarter ended December 31, 2010, is incorporated herein by reference.
|
|
|
*10-h-1
|
|
|
The Company's 2005 Non-Qualified Pension Plan, as amended, filed as Exhibit 10-h-1 to the Company's Form 10-Q for quarter ended June 30, 2012, is incorporated herein by reference.
|
|
|
*10-h-2
|
|
|
The Company's Non-Qualified Pension Plan, as amended, filed as Exhibit 10-h-3 to the Company's Form 10-K for the year ended September 30, 2008, is incorporated herein by reference.
|
|
|
*10-i-1
|
|
|
The Company's Master Trust, as amended, filed as Exhibit 10-i-2 to the Company's Form 10-K for year ended September 30, 2007, is incorporated herein by reference.
|
|
|
10-k-1
|
|
|
Distribution Agreement dated as of June 29, 2001 by and among Rockwell International Corporation, the Company and Rockwell Scientific Company LLC, filed as Exhibit 2.1 to the Company's Form 8-K dated July 11, 2001, is incorporated herein by reference.
|
|
|
10-l-1
|
|
|
Employee Matters Agreement dated as of June 29, 2001 by and among Rockwell International Corporation, the Company and Rockwell Scientific Company LLC, filed as Exhibit 2.2 to the Company's Form 8-K dated July 11, 2001, is incorporated herein by reference.
|
|
|
10-m-1
|
|
|
Tax Allocation Agreement dated as of June 29, 2001 by and between Rockwell International Corporation and the Company, filed as Exhibit 2.3 to the Company's Form 8-K dated July 11, 2001, is incorporated herein by reference.
|
|
|
*10-n-1
|
|
|
Form of Change of Control Agreement between the Company and certain executives of the Company (Three-Year Agreement), as amended, filed as Exhibit 10-n-1 to the Company's Form 8-K dated April 21, 2009, is incorporated herein by reference.
|
|
|
*10-n-2
|
|
|
Schedule identifying executives of the Company who are party to a Change of Control Agreement.
|
|
|
10-o-3
|
|
|
Five-Year Credit Agreement dated as of September 24, 2013 among us, the Banks listed therein, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A., as Syndication Agent, Credit Agricole Corporate & Investment Bank, Mizuho Bank Ltd., The Bank of New York Mellon, U.S. Bank National Association and Wells Fargo Bank, N.A., as Co-Documentation Agents, and Citigroup Global Markets Inc. and J.P. Morgan Securities LLC, as Joint Lead Arrangers and Bookrunners, filed as Exhibit 10.2 to the Company's Form 8-K dated September 24, 2013, is incorporated herein by reference.
|
|
|
10-o-4
|
|
|
364-Day Credit Agreement dated as of September 24, 2013 among us, the Banks listed therein, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A., as Syndication Agent, Bank of America, N.A. Credit Agricole Corporate & Investment Bank, Mizuho Bank (USA), The Bank of New York Mellon, U.S. Bank National Association and Wells Fargo Bank, N.A., as Co-Documentation Agents, and Citigroup Global Markets Inc. and J.P. Morgan Securities LLC, as Joint Lead Arrangers and Bookrunners, filed as Exhibit 10.3 to the Company's Form 8-K dated September 24, 2013, is incorporated herein by reference.
|
|
|
*10-p-1
|
|
|
Transition and Consulting Agreement between the Company and Clayton M. Jones dated July 31, 2013 filed as Exhibit 10-p-1 to the Company's Form 10-K for the year ended September 30, 2013, is incorporated herein by reference.
|
|
|
10-p-2
|
|
|
Consulting Agreement between the Company and Gary R. Chadick dated February 6, 2014 filed as Exhibit 10-p-2 to the Company's Form 10-Q for the quarter ended March 31, 2014, is incorporated herein by reference.
|
|
|
*10-q-7
|
|
|
Forms of Three-Year Performance Share Agreements, adopted on November 20, 2009, filed as Exhibit 10-q-7 to the Company's Form 10-K for year ended September 30, 2009, is incorporated herein by reference.
|
|
|
*10-q-8
|
|
|
Forms of Three-Year Performance Share Agreements, adopted on November 14, 2011, filed as Exhibit 10-q-8 to the Company's Form 10-K for year ended September 30, 2011, is incorporated herein by reference.
|
|
|
10-t-1
|
|
|
Agreement and Plan of Merger, dated as of August 10, 2013, by and among Rockwell Collins, Inc., Avatar Merger Sub, Inc., Radio Holdings, Inc. and TC Group IV Managing GP, L.L.C., filed as Exhibit 99.1 to the Company's Form 8-K dated November 12, 2013, is incorporated herein by reference.
|
|
|
12
|
|
|
Statement re: Computation of Ratio of Earnings to Fixed Charges.
|
|
|
21
|
|
|
List of subsidiaries of the Company.
|
|
|
23
|
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
24
|
|
|
Powers of Attorney authorizing certain persons to sign this Annual Report on Form 10-K on behalf of certain directors and officers of the Company.
|
|
|
31.1
|
|
|
Section 302 Certification of Chief Executive Officer.
|
|
|
31.2
|
|
|
Section 302 Certification of Chief Financial Officer.
|
|
|
32.1
|
|
|
Section 906 Certification of Chief Executive Officer.
|
|
|
32.2
|
|
|
Section 906 Certification of Chief Financial Officer.
|
|
|
101.INS
|
|
|
XBRL Instance Document.
|
|
|
101.SCH
|
|
|
XBRL Taxonomy Extension Schema.
|
|
|
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation Linkbase.
|
|
|
101.DEF
|
|
|
XBRL Taxonomy Extension Definition Linkbase.
|
|
|
101.LAB
|
|
|
XBRL Taxonomy Extension Label Linkbase.
|
|
|
101.PRE
|
|
|
XBRL Taxonomy Extension Presentation Linkbase.
|
|
|
|
|
|
|
ROCKWELL COLLINS, INC.
|
|
|
|
By
|
/s/ ROBERT J. PERNA
|
|
|
|
Robert J. Perna
Senior Vice President, General Counsel and Secretary
|
|
|
|
|
|
/s/ ROBERT K. ORTBERG
|
|
Chairman, President and Chief Executive Officer (principal executive officer)
|
||
Robert K. Ortberg
|
|
|||
ANTHONY J. CARBONE*
|
|
Director
|
||
CHRIS A. DAVIS*
|
|
Director
|
||
RALPH E. EBERHART*
|
|
Director
|
||
JOHN A. EDWARDSON*
|
|
Director
|
||
DAVID LILLEY*
|
|
Director
|
||
ANDREW J. POLICANO*
|
|
Director
|
||
CHERYL L. SHAVERS*
|
|
Director
|
||
JEFFREY L. TURNER*
|
|
Director
|
||
|
|
|
||
/s/ PATRICK E. ALLEN
|
|
Senior Vice President and Chief Financial Officer (principal financial officer)
|
||
Patrick E. Allen
|
|
|||
/s/ TATUM J. BUSE
|
|
Vice President, Finance and Controller (principal accounting officer)
|
||
Tatum J. Buse
|
|
|||
*By
|
/s/ ROBERT J. PERNA
|
|
|
|
|
Robert J. Perna, Attorney-in-fact**
|
|
|
1.
|
Effective as of the date hereof, the last sentence of Section 1.210 of the Plan (“Eligible Employee”) is hereby amended and restated to provide as follows:
|
2.
|
Effective January 1, 2016, the last sentence of Section 1.210 of the Plan (“Eligible Employee”) is hereby deleted.
|
1.
|
Patrick E. Allen
|
2.
|
Bruce M. King
|
3.
|
Nan Mattai
|
4.
|
Robert K. Ortberg
|
5.
|
Kent L. Statler
|
6.
|
Robert A. Sturgell
|
1.
|
Tatum J. Buse
|
2.
|
Philip J. Jasper
|
3.
|
Jeffrey D. MacLauchlan
|
4.
|
Colin R. Mahoney
|
5.
|
Martha L. May
|
6.
|
Robert J. Perna
|
7.
|
Jeffrey A. Standerski
|
8.
|
Douglas E. Stenske
|
|
|
2015
(2)
|
|
2014
(2)
|
|
2013
(2)
|
|
2012
(2)
|
|
2011
(2)
|
||||||||||
Earnings available for fixed charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations before income taxes
|
|
$
|
962
|
|
|
$
|
882
|
|
|
$
|
865
|
|
|
$
|
832
|
|
|
$
|
824
|
|
Add / (Deduct):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings from equity affiliates, net of distributions
|
|
1
|
|
|
14
|
|
|
(3
|
)
|
|
(8
|
)
|
|
—
|
|
|||||
Gain on sale of equity affiliate
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||||
|
|
963
|
|
|
896
|
|
|
862
|
|
|
824
|
|
|
821
|
|
|||||
Add fixed charges included in earnings:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
|
61
|
|
|
59
|
|
|
28
|
|
|
27
|
|
|
19
|
|
|||||
Interest element of rentals
|
|
25
|
|
|
22
|
|
|
23
|
|
|
24
|
|
|
24
|
|
|||||
Total earnings available for fixed charges
|
|
$
|
1,049
|
|
|
$
|
977
|
|
|
$
|
913
|
|
|
$
|
875
|
|
|
$
|
864
|
|
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed charges included in earnings
|
|
$
|
86
|
|
|
$
|
81
|
|
|
$
|
51
|
|
|
$
|
51
|
|
|
$
|
43
|
|
Capitalized interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total fixed charges
|
|
$
|
86
|
|
|
$
|
81
|
|
|
$
|
51
|
|
|
$
|
51
|
|
|
$
|
43
|
|
Ratio of earnings to fixed charges
(1)
|
|
12
|
|
|
12
|
|
|
18
|
|
|
17
|
|
|
20
|
|
|
|
State/Country of
|
Name
|
|
Incorporation
|
|
|
|
ARINC Incorporated
|
|
Delaware
|
|
|
|
Radio Holdings, Inc.
|
|
Delaware
|
|
|
|
Rockwell Collins EUMEA Holdings SAS
|
|
France
|
|
|
|
Rockwell Collins European Holdings S.à r.l.
|
|
Luxembourg
|
|
|
|
Rockwell Collins International Financing S.à r.l.
|
|
Luxembourg
|
|
|
|
Rockwell Collins International Holdings S.à r.l.
|
|
Luxembourg
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
/s/ Robert K. Ortberg
|
|
Chairman, President and Chief Executive Officer
|
|
November 10, 2015
|
Robert K. Ortberg
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Anthony J. Carbone
|
|
Director
|
|
November 10, 2015
|
Anthony J. Carbone
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Chris A Davis
|
|
Director
|
|
November 10, 2015
|
Chris A. Davis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Ralph E. Eberhart
|
|
Director
|
|
November 10, 2015
|
Ralph E. Eberhart
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ John A. Edwardson
|
|
Director
|
|
November 10, 2015
|
John A. Edwardson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ David Lilley
|
|
Director
|
|
November 10, 2015
|
David Lilley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Andrew J. Policano
|
|
Director
|
|
November 10, 2015
|
Andrew J. Policano
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Cheryl L. Shavers
|
|
Director
|
|
November 10, 2015
|
Cheryl L. Shavers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Jeffrey L. Turner
|
|
Director
|
|
November 10, 2015
|
Jeffrey L. Turner
|
|
|
|
|
1.
|
I have reviewed the annual report on Form 10-K for the fiscal year ended
September 30, 2015
of Rockwell Collins, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: November 17, 2015
|
/s/ Robert K. Ortberg
|
|
Robert K. Ortberg
|
|
Chairman, President and Chief Executive Officer
|
1.
|
I have reviewed the annual report on Form 10-K for the fiscal year ended
September 30, 2015
of Rockwell Collins, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date: November 17, 2015
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/s/ Patrick E. Allen
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Patrick E. Allen
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Senior Vice President and
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Chief Financial Officer
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(1)
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The Company’s Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: November 17, 2015
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/s/ Robert K. Ortberg
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Robert K. Ortberg
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Chairman, President and Chief Executive Officer
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(1)
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The Company’s Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: November 17, 2015
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/s/ Patrick E. Allen
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Patrick E. Allen
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Senior Vice President and
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Chief Financial Officer
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