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Rockwell 1997 Earnings Up 12 Percent
PR News Wire via Dow Jones
COSTA MESA, Calif., Nov. 5 /PRNewswire/ -- Rockwell International Corporation
(NYSE: ROK) today reported 1997 earnings per share from continuing operations
increased 12 percent to $2.94 per share from $2.63 per share in 1996, before
acquisition-related special charges in both years. The related income from
continuing operations for 1997 increased to $628 million over comparable income
of $572 million in 1996. Sales increased seven percent to $7.8 billion in 1997
from $7.2 billion in 1996.
Fiscal fourth quarter earnings per share from continuing operations before
acquisition-related special charges amounted to 81 cents in 1997 compared to 80
cents in 1996. The related income was $169 million in 1997's fourth quarter,
down slightly from $174 million in 1996. The increase in 1997's fourth quarter
earnings per share reflects the company's continuing stock repurchase program.
Sales for the 1997 fourth quarter totaled $2.1 billion compared to $1.9 billion
in 1996.
Don H. Davis, president and chief executive officer, said "Our 1997 results
reflect excellent performances by our Avionics & Communications and Automation
businesses which offset the effects of significant product line transitions and
related research and new product development spending at Semiconductor Systems.
In this year's fourth quarter, Automation's earnings increased slightly over a
strong fourth quarter in 1996 while Avionics & Communications earnings grew by
33 percent. Both of these businesses had outstanding results in 1997,
capitalizing on strong global markets, increased market share and continuing
cost containment initiatives."
In discussing Rockwell's Semiconductor Systems business, Davis stated, "Our
Semiconductor Systems fourth quarter results reflected lower prices on the
mature V.34 product, continuing ramp-up of our K56flex product and very large
new product development investments to capitalize on our strong Digital Signal
Processing (DSP) capability in non-modem product lines including wireless
communications, personal imaging, digital infotainment and wide and local area
network access."
"Looking ahead to 1998," Davis said, "in our first full year as a primarily
commercial electronics company, we have planned a sixth consecutive year of
increased earnings per share. Assuming generally favorable economic conditions
in 1998, we expect earnings per share growth will be in the high single-digit
range from the $2.94 per share reported for 1997. Sales and earnings at our
Automation and Avionics and Communications businesses should be higher but
Semiconductor Systems will be facing continued uncertainty in unit volumes and
pricing in its served markets in 1998. We expect stronger performance in the
second half of fiscal year 1998 as our major investments in Semiconductor
Systems begin paying off and our leadership modem chipset business benefits from
an expected worldwide standard for the new 56 kilobit product. We expect to
return to our long-term growth targets in 1999."
Davis noted, "Rockwell's outstanding financial position was further
strengthened with the receipt of a $445 million payment in connection with the
spin-off of our Automotive business. With virtually no debt, we have
substantial flexibility for enhancing shareowner value. Rockwell's Board of
Directors recently authorized an additional $500 million stock repurchase
program, adding to the nearly completed $1 billion program announced last year.
We will also continue to use our financial strength to make acquisitions that
will bolster our product and geographic positions and enhance our global
franchise businesses."
Following is a discussion of sales and earnings for each of Rockwell's
electronics businesses for the 1997 fiscal year:
Automation, Rockwell's largest business, achieved an 11 percent increase in
operating earnings in 1997. In addition, earnings as a percent of sales
increased to 13.3 percent in 1997 from 12.9 percent in 1996. Automation sales
increased eight percent in 1997 to $4.5 billion. New orders in the month of
September were a record $491 million, up 17 percent from last September.
Avionics & Communications sales increased 15 percent, to $1.7 billion in 1997
from $1.5 billion in 1996. 1997 operating earnings were up 52 percent to a
record $253 million from $166 million in 1996. Earnings as a percent of sales
increased to 15.0 percent from 11.3 percent in 1996.
Semiconductor Systems earnings were 30 percent lower in 1997 on approximately
the same sales. Earnings as a percent of sales declined to 14.6 percent in 1997
from 20.7 percent in 1996, due primarily to the highly competitive transition to
the business' new high-speed K56flex personal computer modem which has
accelerated price reductions, particularly on the older V.34 modem.
The special charges in 1997 were write-offs of purchased research and
development of $23 million, or 11 cents per share, in the fourth quarter related
to completion of the acquisition of an Automation software business and $19
million, or nine cents per share, in the third quarter in connection with a
Semiconductor Systems acquisition. The special charge in the fourth quarter of
1996 consisted of the write-off of purchased research and development of $121
million, or 56 cents per share, related to another Semiconductor Systems
acquisition. Including these special charges, income from continuing operations
for the 1997 fourth quarter was $146 million, or 70 cents per share compared to
$53 million, or 24 cents per share in the fourth quarter of 1996. Similarly,
income from continuing operations for the full 1997 year was $586 million, or
$2.74 per share, compared with 1996 income from continuing operations of $451
million, or $2.07 per share.
Discontinued Operations
The spin-off of the company's Automotive business, Meritor Automotive, Inc.,
was completed on September 30, 1997. Automotive's results for the fourth
quarter of 1997 include a $48 million charge, or 22 cents per share, for
transaction and separation-related costs. Automotive's 1997 fourth quarter
operating results also include a charge of $15 million, or seven cents per
share, related to staff reductions and plant and product line consolidations.
Rockwell's 1997 fourth quarter net income, including discontinued operations,
totaled $109 million, or 53 cents per share and full year 1997 net income was
$644 million, or $3.01 per share. Net income for the fourth quarter of 1996 was
$97 million, or 45 cents per share. Net Income for the full 1996 fiscal year
was $726 million, or $3.34 per share, including 79 cents per share related to
the discontinued Aerospace & Defense, Automation and Graphic Systems businesses.
Following are fourth quarter highlights:
Rockwell Automation opened a Hong Kong-based Industry Development Center to
provide customer solutions for infrastructure projects in the Asia-Pacific
region. The Hong Kong Air Cargo Terminals Ltd. Project, in which Rockwell is
providing automation control equipment for a major new freight terminal at Hong
Kong's Chek Lap Kok Airport, is an example of the capabilities of this center.
Rockwell Collins has become a subcontractor to Honeywell to supply 1,800
liquid crystal flight displays for integration by Honeywell into Boeing 737 and
777 airplanes. The subcontract reflects increasingly strong demand for Rockwell
Collins LCD technology throughout the aviation industry.
Support continues to grow for Rockwell Collins multi-mode receiver (MMR)
technology, which provides leading airlines with Global Navigation Satellite
System capabilities. Air China recently joined Continental, United Airlines,
British Airways, Air France and others in making the Collins MMR a fleet
standard. Boeing and Airbus have adopted the system as the standard approach to
equipping new production aircraft with "Free Flight" technology essential to new
navigation and landing operations.
Rockwell Electronics Commerce Division's call center partner, Ameritech,
installed its first integrated call center solution at Central Illinois Light
Company (CILCO), an Illinois utility. Under a new distribution agreement,
Ameritech provided CILCO with a single source, state-of-the-art solution built
around the Rockwell Spectrum integrated call center system, the fastest growing
product in the industry.
Rockwell's Electronic Commerce Division will provide South Africa's national
telephone company, Telkom, with the Rockwell Spectrum integrated call center
system in a more than $20 million contract.
Rockwell Semiconductor Systems highlights, which focus on the successful
deployment of the K56flex product and new products for high growth non-modem
markets, include:
In September, Rockwell Semiconductor Systems achieved a significant milestone
as the unit installed base of K56flex surpassed that of the 3Com/U.S. Robotics
x2 technology. According to information contained in the Dell'Oro industry
report, a single Rockwell-based ISP equipment supplier -- Ascend Communications
-- had alone shipped and upgraded more K56flex central- site modem ports than x2
ports shipped or upgraded by 3Com. This does not even take into account
significant K56flex port shipments by other major K56flex-based ISP equipment
suppliers, including Cisco, Microcom, Shiva and Livingston. K56flex is offered
by a large majority of the world's top modem makers and, according to DataQuest,
is supported by PC manufacturers who account for over 70 percent of all PCs sold
worldwide.
Semiconductor Systems technology was recently selected by Intel for inclusion
in its important Audio Codec '97 2.0 specification, helping to usher in
multimedia capabilities that will enable PCs to deliver audio quality comparable
to consumer electronics devices. Rockwell's selection will help the PC industry
move more quickly toward a cost-effective means to add multimedia modem
functions to next-generation PCs.
8202 11/05/97 09:01 EST HT |
