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Rockwell Collins Third Quarter 2013 Earnings Per Share Increased 5% To $1.20

Following is a discussion of fiscal year 2013 third quarter sales and earnings for each business segment.

Commercial Systems

Commercial Systems, which provides aviation electronics systems, products and services to air transport, business and regional aircraft manufacturers and airlines worldwide, achieved 2013 third quarter results as summarized below.

(dollars in millions)   Q3 FY13   Q3 FY12   Inc/(Dec)
Commercial Systems sales
Original equipment $ 309 $ 295 5 %
Aftermarket 235 208 13 %
Wide-body in-flight entertainment 19   23   (17 )%
Total Commercial Systems sales $ 563   $ 526   7 %
 
Operating earnings $ 132 $ 105 26 %
Operating margin rate 23.4 % 20.0 % 340 bps
 
  • Sales to aircraft original equipment manufacturers increased from higher deliveries for the Bombardier Global and Challenger aircraft, and a full quarter of production for Beechcraft King Air aircraft, which was partially offset by fewer deliveries for Cessna business jets.
  • Aftermarket sales increased from higher spares sales and increased retrofits related to airspace mandates.
  • Operating earnings and margin increased primarily due to higher sales volume and lower company-funded research and development expense. Although company-funded research and development expense declined $10 million, total research and development investment, which includes pre-production engineering programs, increased $3 million primarily driven by the Boeing 737 MAX program.

Government Systems

Government Systems provides a broad range of electronic products, systems and services to customers including the U.S. Department of Defense, other government agencies, civil agencies, defense contractors and ministries of defense around the world. Results from the third quarter of 2013 are summarized below.

(dollars in millions)   Q3 FY13   Q3 FY12   Inc/(Dec)
Government Systems sales
Avionics $ 341 $ 393 (13 )%
Communication products 153 178 (14 )%
Surface solutions 62 50 24 %
Navigation products 46   58   (21 )%
Total Government Systems sales $ 602   $ 679   (11 )%
 
Operating earnings $ 129 $ 148 (13 )%
Operating margin rate 21.4 % 21.8 % (40) bps
 
  • Avionics revenue decreased from lower sales for development programs which are completing or transitioning to production, simulator award delays, and reduced sales for Eurofighter and helmet mounted displays for various fixed wing aircraft.
  • Communication product sales declined due to lower satellite communication and datalink product sales, partially offset by increased deliveries of JTRS Manpack radios.
  • Surface solutions sales increased from higher international Firestorm targeting systems sales.
  • Navigation product sales declined due to fewer deliveries of Defense Advanced GPS Receivers.
  • Operating earnings and margin decreased primarily due to lower sales, which was partially offset by the benefit from cost reduction actions.

Corporate and Financial Highlights

General corporate expenses not allocated to the company's business segments increased $4 million to $14 million primarily driven by increased compensation and pension expenses.

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