Investor Overview Presentation

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Investor Overview
Q4 FY13

© 2013 Rockwell Collins.

All rights reserved.

Safe Harbor Statement
This presentation contains statements, including certain projections and business trends, that are forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result
of certain risks and uncertainties, including but not limited to the financial condition of our customers, including bankruptcies; the
health of the global economy, including potential deterioration in economic and financial market conditions; the rate of recovery of
the commercial OEM production rates and the aftermarket; the impacts of natural disasters, including operational disruption,
potential supply shortages and other economic impacts; cybersecurity threats, including the potential misappropriation of assets or
sensitive information, corruption of data or operational disruption; delays related to the award of domestic and international
contracts; delays in customer programs; unanticipated impacts of sequestration and other provisions of the Budget Control Act of
2011; the continued support for military transformation and modernization programs; potential adverse impact of oil prices on the
commercial aerospace industry; the impact of terrorist events on the commercial aerospace industry; declining defense budgets
resulting from budget deficits in the U.S. and abroad; changes in domestic and foreign government spending, budgetary,
procurement and trade policies adverse to our businesses; market acceptance of our new and existing technologies, products and
services; reliability of and customer satisfaction with our products and services; favorable outcomes on or potential cancellation or
restructuring of contracts, orders or program priorities by our customers; recruitment and retention of qualified personnel;
regulatory restrictions on air travel due to environmental concerns; effective negotiation of collective bargaining agreements by us
and our customers; performance of our customers and subcontractors; risks inherent in development and fixed-price contracts,
particularly the risk of cost overruns; risk of significant reduction to air travel or aircraft capacity beyond our forecasts; our ability to
execute to our internal performance plans such as our productivity and quality improvements and cost reduction initiatives;
achievement of our acquisition and related integration plans; continuing to maintain our planned effective tax rates; our ability to
develop contract compliant systems and products on schedule and within anticipated cost estimates; risk of fines and penalties
related to noncompliance with laws and regulations including export control and environmental regulations; risk of asset
impairments; our ability to win new business and convert those orders to sales within the fiscal year in accordance with our annual
operating plan; and the uncertainties of the outcome of lawsuits, claims and legal proceedings, as well as other risks and
uncertainties, including but not limited to those detailed herein and from time to time in our Securities and Exchange Commission
filings. These forward-looking statements are made only as of the date hereof and the company assumes no obligation to update
any forward-looking statement.



2

What we do
Communications and electronics products,
systems and solutions for commercial aviation
and military applications worldwide

52%

Avionics
58%

48%

Commercial

Air transport
~50%

‣

Navigation

‣

Automated flight control
Displays/surveillance

‣

Aviation services

‣

Government

Communications

‣

2013 Sales: $4.61 Billion

‣

Integrated electronic
solutions

‣

Information management
systems

‣

Comm products
24%

Simulation and training

Business & regional
~46%

Surface sol 10%
Nav products 8%


Wide-body IFE 4%


3

Strong performance through market cycles
Results since 2002

24%

12%

6%

CAGR

CAGR

Revenue growth

EPS growth

Average ROIC

Returned $5.7 Billion to Shareholders through
Dividends and Share Repurchases


4

How did we do it?

1

2

3
Increased segment
operating margins

650 bps
GS 7%
sales CAGR

CS 4%
sales CAGR

Balanced & diversified
business model



Lean focus and
operating model drive
margin performance

Invested

19%

of sales in research
and development

Sustained investment
in new products

5

Historically returned > 70% cash to Shareowners
through dividends & share repurchases
$ Billions

2007-2013

Cash generated

$

Net increase in debt

4.4

Capital Allocation
19%

19%

0.8

Cash to deploy

$

5.2

Dividend

$

8%

1.0

Share repurchase

2.8

Acquisitions

0.4

Capital expenditures

1.0
$



5.2

54%
Dividend
Share repurchases
Acquisitions
Capital expenditures
6

Strengths of the Government Systems business
‣ 90%+ fixed price contracts
‣ Leverage commercial
technologies
‣ Highly exportable products
‣ 75% of revenue from legacy
platforms and products



Value Created:
>20% operating
margins
Strong cash flow
generation

7

Avionics – characteristics

‣ Civil airspace interoperability
‣ Comprehensive product lines
‣ Commercial platform positions
‣ Program execution acumen
‣ Incumbent positions



8

Avionics – drivers
‣

Tanker & Transport
KC-46
KC-10/KC-135

‣

Rotary Wing
CH-47 Chinook
UH-60 Blackhawk

‣

AW Family (AW 101/149/169/189)
Civil Dual Use (ex. S-70/92, EC135)

Fighters
International F-15
F-35

‣

C130 Upgrades
KC-390

Legacy Upgrades (EFA, Gripen, F-18)

Special Mission /Unmanned Aerial Systems
AWACS
E-6
Shadow
Predator
Manned/Unmanned Convergence

‣

Simulation and Training
F-35
UH-60 Blackhawk


E-2D Hawkeye


9

Communication Products
‣ Characteristics:
‣ Large airborne installed base
‣ Broad Networked Connectivity capabilities

‣ Position on ground modernization program

‣ Communication Products:
‣ Airborne radios (ARC-210)

‣ Networked data links (Link 16, TTNT)
‣ Ground radios (JTRS HMS, SATCOM)



10

Navigation Products
‣ Market leader in military GPS products
‣ Portfolio in transition
‣ Position on modernization program

‣ Navigation Products:
‣ Handheld GPS (DAGR, MicroDAGR)
‣ Modernized GPS User Equipment (MGUE)
‣ Miniaturized GPS products (MicroGRAM)



11

Surface Solutions
‣ Specialized systems integration leveraging
core capabilities
‣ More entrepreneurial segment of business

‣ Surface Solutions:
‣ Firestorm targeting systems
‣ Electronic warfare (Signals Intelligence
Receivers)
‣ Range system upgrades (CRIIS)

‣ Precision landing systems (JPALS)



12

Strengths of the Commercial Systems business

‣ Long-cycle business
Value Created:
‣ High barriers to entry

‣ Leveraged operating model

Revenue growth

40-50% incremental
margins

‣ Strong IP portfolio



13

Commercial Systems FY13 sales
Wide-Body IFE
4%

Wide-Body IFE
4%

Air
Transport
~ 50%


Bus. &
Regional
Jets
~ 46%


OEM
~ 55%

Aftermarket
~ 41%

14

Market outlook
‣ Air Transport
‣ Robust OEM backlog
‣ Increasing production rates

‣ Business & Regional
‣ Mixed market environment with
strength at high-end
‣ Light jet demand recovery
continues to lag


New aircraft driving OEM revenue growth
737 Max
Displays

787 Rate
Increase

Boeing
Airbus

A350

Irkut

MC-21

COMAC
Mitsubishi

MRJ*
CSeries* &
Learjet 85*

Bombardier
Gulfstream

C919

ARJ-21

Global 7000* &
8000*

G280* &
G650

Embraer

Legacy 500*

Legacy 450*

Piaggio Aero

MPA

Unannounced
platforms

3 Platforms*

2012

2013


2014

2015

* Pro Line Fusion Platforms

2 Platforms*

2016

2017+
16

Growth drivers – Aftermarket

‣

Robust & increasing install base
driving service & support demand

‣

Sparing for new aircraft

‣

Avionics & cabin upgrades

‣

Regulatory mandates

‣

Next Gen airspace modernization



17

Long-term value creation
Organic sales growth

EPS growth

Operating cash flow as
percent of PAT
Return on invested capital



Mid-single digit

Low double-digit
100%-125%
20%-25%
18

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