Fiscal year 2009 revenues decreased approximately $300 million, or 6 percent, to $4.47 billion compared to revenues of $4.77 billion last year. Fiscal year 2009 total segment operating margin was 21.4 percent compared to 21.9 percent last year.

For the fiscal year 2009 fourth quarter, net income decreased $48 million, or 26 percent, to $134 million from $182 million last year. Earnings per share declined 29 cents, or 26 percent, to $0.84 compared to earnings per share of $1.13 for the same period a year ago. Results for the fourth quarter of 2009 include a charge of $21 million ($14 million after-tax, or 9 cents per share) primarily related to the closing of the company's San Jose, California facility, asset impairments and other restructuring activities. Results for the fourth quarter of 2008 include a benefit related to a retroactive catch up for the renewal of the Federal R&D Tax Credit, which, net of related incentive compensation cost, increased earnings per share by about 8 cents. Excluding the impact of these items, earnings per share would have declined 11%, from $1.05 in the fourth quarter of 2008 to $0.93 in the fourth quarter of 2009. Revenues in the quarter decreased $87 million, or 7%, to $1.19 billion from revenues of $1.28 billion last year.

"During a year defined by significant challenges in the commercial aerospace environment, our company continued to benefit from its structural balance and diversification. Although our Commercial Systems business suffered from a decline in revenues and profitability due to market circumstances beyond our control, we were able to partially offset these impacts through the strength of our Government Systems business which realized record levels of sales and profitability," said Chairman, President and Chief Executive Officer Clay Jones. "The benefits of this balance, as well as our focus on maximizing the efficiency of our operations, led to the company generating a record level of operating cash flow during 2009. This strong operating cash flow enabled us to continue investments in both acquisition and organic growth opportunities."

"Despite continued economic uncertainty," continued Jones, "we are beginning to see signs of stabilization in our commercial markets. We believe conditions will improve sequentially through 2010, and expect the first fiscal quarter will be the low water mark of this cycle."

Following is a discussion of fiscal year 2009 fourth quarter sales and earnings for each business segment.

Government Systems

Government Systems, which provides communication and electronic systems, products and services for airborne and surface applications to the U.S. Department of Defense, other government agencies, civil agencies, defense contractors and foreign ministries of defense, achieved fourth quarter sales of $741 million, an increase of $105 million, or 17 percent, compared to the $636 million reported for the same period last year. Incremental sales from the acquisitions of DataPath Inc. and SEOS Group Ltd. contributed a total of $66 million to Government Systems' revenue growth.

Airborne solutions' sales increased $16 million, or 3%, to $475 million. Incremental sales from the acquisition of SEOS Group Ltd. contributed $5 million to Airborne solutions' revenue growth. Organic sales increased $11 million, or 2%, due primarily to higher sales of head-down displays for F-15 aircraft and increased Unmanned Aerial Vehicle (UAV) control systems revenues. Surface solutions' sales increased $89 million, or 50%, to $266 million. Incremental sales from the acquisition of DataPath, Inc. contributed $61 million to Surface solutions' revenue growth. Organic sales increased $28 million, or 16%, as higher sales from a United Kingdom Ministry of Defence precision targeting system program, increased revenue from the Joint Tactical Radio System (JTRS) program and higher Joint Precision Approach and Landing System (JPALS) program revenue were partially offset by lower sales from Defense Advanced GPS Receiver (DAGR) and Ground-Based GPS Receiver Application Module (GB-GRAM) products.

Government Systems' fourth quarter operating earnings increased 27% to $159 million, resulting in an operating margin of 21.5%, compared to operating earnings of $125 million, or an operating margin of 19.7%, for the same period last year. The increase in operating earnings and margin were primarily due to higher sales and lower employee incentive compensation costs, partially offset by an increase in research and development costs.

Commercial Systems

Commercial Systems, which provides aviation electronics systems, products and services to air transport, business and regional aircraft manufacturers and airlines worldwide, achieved fourth quarter sales of $449 million, a decrease of $192 million, or 30%, compared to sales of $641 million reported for the same period last year.

Sales related to aircraft OEMs decreased $113 million, or 34%, to $220 million, primarily as a result of reduced production rates at business jet OEMs. Aftermarket sales decreased $60 million, or 23%, to $205 million due primarily to lower retrofit and spares sales and reduced avionics service and support revenues for both airlines and business jet operators. Sales of wide-body in-flight entertainment products and systems decreased $19 million, or 44%, to $24 million compared to the prior year period.

Commercial Systems' fourth quarter operating earnings decreased to $71 million, resulting in an operating margin of 15.8%, compared to operating earnings of $144 million, or an operating margin of 22.5%, for the same period a year ago. The decrease in operating earnings was due primarily to lower sales volumes, which were partially offset by reduced research and development expenses, lower employee incentive compensation costs and other cost savings.

Corporate and Financial Highlights

General corporate expenses that are not allocated to the company's business segments decreased $8 million, or 44%, to $10 million during the fourth quarter of fiscal year 2009 due to lower employee incentive compensation costs and other cost containment initiatives. The company's effective income tax rate of 29.5% for the fourth quarter of fiscal year 2009 was higher than the rate of 24.5% for the prior year period due primarily to the retroactive catch up for renewal of the Federal R&D Tax Credit in the fourth quarter of fiscal year 2008.

Utilizing the strength of its balance sheet and operating cash flow, during fiscal year 2009 the company continued executing on a capital deployment strategy targeted at enhancing shareowner value.

Cash deployed for acquisitions totaled $146 million for the purchases of DataPath, Inc., a global leader in creating satellite-based communication networks and SEOS Group Ltd., a leading global supplier of highly realistic visual display solutions for commercial and military simulators.

Dividends paid to shareowners in 2009 totaled $152 million, and the company deployed $153 million to repurchase 3.9 million shares of its common stock. During the fourth quarter, the company's board of directors increased the share repurchase authorization by $200 million and as of the 2009 fiscal year end the company had $209 million of authorized share repurchases remaining.

Contributions made to the company's defined benefit pension plans totaled $139 million including a $50 million contribution made during the company's fourth quarter.

                                                                                                                                                                                                                                                                                                                                                     
 Fiscal Year 2010 Outlook                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                                     
 The following table is a complete summary of the company's fiscal year 2010 financial guidance, which is unchanged from the financial guidance initially provided on September 17, 2009:                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                                     
 -- Total sales                       $4.6 Bil. to $4.8 Bil.                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                                                                                                                     
 -- Total segment operating margins   18.5% to 19.5%                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                                                                                                     
 -- Earnings per share((1))           $3.35 to $3.55                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                                                                                                     
 -- Cash flow from operations((2))    $600 Mil. to $700 Mil.                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                                                                                                                     
 -- Research & development costs      $870 Mil. to $900 Mil.                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                                                                                                                     
 -- Capital expenditures              about $135 Mil.                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                     
 (1) Based on an expected effective income tax rate in the range of 30% to 31%. The projected effective tax rate assumes the Federal Research and Development Tax Credit (Federal R&D Tax Credit) is available for the entire fiscal year, although legislation extending the Federal R&D Tax Credit beyond December 31, 2009 has yet to be enacted. 
 (2) Projected cash provided by operating activities range accommodates a qualified defined benefit pension plan contribution of $98 million that was made in the first week of the company's fiscal year 2010.                                                                                                                                      
                                                                                                                                                                                                                                                                                                                                                     


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Fourth Quarter Business Highlights

US Air Force selected Rockwell Collins KC-135 Block 45 upgrade program. The U.S. Air Force selected Rockwell Collins for the Engineering, Manufacturing and Development (EMD) phase of the KC-135 Block 45 cockpit upgrade program. During the EMD phase, the company will modernize two prototype KC-135 refueling tanker flight decks, establishing the production baseline for 415 additional KC-135 aircraft expected to receive the Block 45 upgrade.

Rockwell Collins delivered Ground Soldier Ensemble prototypes. Rockwell Collins, together with its teammate Elbit Systems of America, created a full soldier system prototype that improves upon combat-proven displays and navigation systems originally developed for the Land Warrior program, and incorporates superior video processing, mass storage, computing and information assurance capabilities.

Rockwell Collins introduced the MicroDAGR GPS receiver. The MicroDAGR provides dismounted soldiers with real-time position, navigation, moving maps and timing information on a full-color touch screen display, and is small enough to be worn on the wrist, attached to a lanyard or placed in a pocket.

Brazilian Ministry of Defense selected Rockwell Collins to provide SATCOM terminals. Rockwell Collins, through its Swedish subsidiary (formerly SWE-DISH Satellite Systems AB), was chosen by the Ministry of Defense of Brazil to provide suitcase satellite communication (SATCOM) terminals. SWE-DISH Satellite Systems AB, and its parent company DataPath Inc., were acquired by Rockwell Collins in May 2009.

Rockwell Collins Pro Line Fusion underwent first customer test flight on Global Express XRS. Pro Line FusionTM , Rockwell Collins' next-generation avionics system for business and regional aircraft, has successfully completed the first customer test flight on a Bombardier Global Express XRS aircraft. Rockwell Collins serves as the avionics systems integrator for the Global Vision flight deck on Bombardier's Global Express XRS and Global 5000 aircraft.

China Southern Airlines selected Rockwell Collins avionics. China Southern Airlines selected Rockwell Collins to provide its MultiScan weather radar, GLU-920 Multi-Mode Receiver (MMR) and advanced sensors for 10 Airbus A330 aircraft, with deliveries scheduled to start March 2010.

Three Twenty Holdings, Ltd. selected Rockwell Collins avionics for 25 new A320 aircraft. Three Twenty Holdings, Ltd. selected a full suite of Rockwell Collins avionics, including the MultiScan Hazard Detection System, for installation on 25 new A320 aircraft. Deliveries began in September 2009.

Mesaba signed sixteen-year Dispatch service agreement with Rockwell Collins. Mesaba Airlines, a Northwest/Delta operator, selected Rockwell Collins to provide avionics service and support for its fleet of 41 CRJ900 and 19 CRJ200 aircraft. Under a 16 year Dispatch agreement, Rockwell Collins will provide Mesaba with avionics component repairs and inventory that is pre-positioned at multiple service locations.

Conference Call and Webcast Details

Rockwell Collins Chairman, President and CEO Clay Jones and Senior Vice President and CFO Patrick Allen will conduct an earnings conference call at 9:00 a.m. Eastern Time on November 3, 2009. Individuals may listen to the call and view management's supporting slide presentation on the Internet at www.rockwellcollins.com. Listeners are encouraged to go to the Investor Relations portion of the web site at least 15 minutes prior to the call to download and install any necessary software. The call will be available for replay on the Internet at www.rockwellcollins.com through December 5, 2009.

Rockwell Collins is a pioneer in the development and deployment of innovative communication and aviation electronic solutions for both commercial and government applications. Our expertise in flight deck avionics, cabin electronics, mission communications, information management, and simulation and training is delivered by nearly 20,000 employees, and a global service and support network that crosses 27 countries. To find out more, please visit www.rockwellcollins.com.

This press release 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 major U.S.