Johnson Controls Reports Record Sales For Year
MILWAUKEE, Oct. 23 -- Johnson Controls, Inc.
(JCI) today reported record sales and net income for its year ended
September 30, 2001. Fiscal 2001 was the company's 55th consecutive year of
sales increases, its 11th straight year of record earnings and the 26th
consecutive year of dividend increases.
James H. Keyes, Johnson Controls chairman and chief executive officer,
said, "We appreciate the support of our customers, employees and suppliers in
this difficult environment. With their support and with the diversity of our
businesses and markets, we are pleased to have achieved another year of
improvement."
Full-Year Consolidated Results
Sales for the full year totaled $18.4 billion, up 7% from $17.2 billion
for 2000. Both of the company's business groups, automotive and controls,
achieved higher revenues. The effect of currency translation reduced Johnson
Controls sales for the year by approximately $600 million. Operating income
was $961 million compared with the prior year's $965 million as a decline in
operating income from the Automotive Systems Group more than offset an
increase in the Controls Group income. Net income for fiscal 2001 was
$478 million, up from $472 million. Net income for 2001 was aided by an
increase in equity income. Diluted earnings per share for 2001 were
$5.11 compared with $5.09 for the prior year.
Johnson Controls said that free cash flow totaled $373 million even though
capital expenditures were a record $621 million. The company's ratio of total
debt to total capitalization declined to 38% at September 30, 2001 from 41% at
the end of fiscal 2000.
4th Quarter Consolidated Results
Sales for the three months ended September 30, 2001 increased 14% to
$4.6 billion from $4.1 billion for the same period of fiscal 2000. Operating
income was $291 million in both years, reflecting an increase in controls
income being offset by a decline in automotive income. Net income rose 3% to
$156 million, up from $151 million for the fourth quarter of fiscal 2000,
while diluted earnings per share increased to $1.67 for 2001 from $1.63.
Automotive Systems Group
(dollars in millions) 4th Quarter Year
2001 2000 % 2001 2000 %
Sales $3,330.6 2,898.1 15 $13,620.5 12,738.5 7
Operating Income $204.0 220.3 (7) $720.5 765.2 (6)
The Automotive Systems Group achieved record sales for both the fourth
quarter and full year. Sales increases for both periods reflect new contracts
for interior systems and batteries as well as revenue associated with a
Japanese seat manufacturer acquired at the end of fiscal 2000. These
increases in volume were partially offset by currency translation rates and
lower levels of industry vehicle production. Industry production volumes in
North America are estimated to have declined 10%, and 11% respectively, for
the three and 12-month periods. Volumes in Europe are estimated to have
increased slightly over the prior year for both periods.
Johnson Controls said that for the fourth quarter, its North American
automotive interiors sales increased 7%, primarily associated with higher
shipments of systems for new sport utility vehicles and light trucks.
European sales increased by 4% (after currency translation) in the quarter,
largely due to higher shipment levels in Germany.
The operating margin for the automotive group decreased in both fiscal
2001 periods. The company said that in the quarter it experienced lower
margins that are typically associated with new vehicle programs, as well as
one-time costs associated with changes made to its network of manufacturing
operations. These issues more than offset the inclusion of results from the
Japanese seat manufacturer and an improvement in South American operations.
Controls Group
(dollars in millions) 4th Quarter Year
2001 2000 % 2001 2000 %
Sales $1,318.5 1,190.6 11 $4,806.7 4,416.1 9
Operating Income $87.0 70.3 24 $240.6 199.8 20
The Controls Group supplies nonresidential buildings with a broad line of
integrated systems, services and facility management to improve the quality of
indoor environments while reducing operating and energy costs. Sales and
operating income for both the year and the fourth quarter were records.
In the fourth quarter, sales in North America increased 9% due to higher
demand for installed systems, services and integrated facility management. In
Europe, sales were 50% higher as a result of double-digit organic growth and
the inclusion of the controls company MC International that was acquired
during the third quarter of fiscal 2001. Revenues in Asia declined by
approximately 40% reflecting the deconsolidation of a joint venture.
The company commented that demand for its controls offerings remains
strong, with orders during the fourth fiscal quarter exceeding the prior year.
Particular areas of strength for North American orders were the health care
and government retrofit markets, while demand for Johnson Controls Metasys(R)
systems was also high in the government and education new construction
markets. The backlog of uncompleted control system installation contracts at
the end of 2001 was 20% higher than one year ago.
Operating margins for the Controls Group increased in both the three and
12-month periods. The increases reflect the higher volume and the positive
effect of productivity and quality management tools.
Johnson Controls is a global market leader in automotive systems and
facility management and control. In the automotive market, it is a major
supplier of seating and interior systems, and batteries. For nonresidential
facilities, Johnson Controls provides building control systems and services,
energy management and integrated facility management. Johnson Controls,
founded in 1885, has headquarters in Milwaukee, Wis.
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
Three Months Ended Year Ended
September 30, September 30,
2001 2000 2001 2000
(unaudited)
Net sales $4,649.1 $4,088.7 $18,427.2 $17,154.6
Cost of sales 3,982.4 3,407.5 15,823.2 14,560.1
Gross profit 666.7 681.2 2,604.0 2,594.5
Selling, general and
administrative expenses 375.7 390.6 1,642.9 1,629.5
Operating income 291.0 290.6 961.1 965.0
Interest income 5.3 4.5 19.4 16.1
Interest expense (30.4) (31.7) (129.4) (127.6)
Equity income 12.6 9.4 31.8 26.6
Miscellaneous - net (5.0) (7.3) (15.8) (24.4)
Other income (expense) (17.5) (25.1) (94.0) (109.3)
Income before income taxes
and minority interests 273.5 265.5 867.1 855.7
Provision for income taxes 105.8 105.2 335.5 338.9
Minority interests in net
earnings of subsidiaries 11.4 9.1 53.3 44.4
Net income $156.3 $151.2 $478.3 $472.4
Earnings available for common
shareholders $154.2 $148.7 $469.5 $462.6
Earnings per share
Basic $1.77 $1.73 $5.41 $5.40
Diluted $1.67 $1.63 $5.11 $5.09
FOOTNOTES
Earnings per Share
Basic earnings per share are computed by dividing net income, after
deducting dividend requirements on the Series D Convertible Preferred Stock,
by the weighted average number of common shares outstanding. Diluted earnings
are computed by deducting from net income the after-tax compensation expense
which would arise from the assumed conversion of the Series D Convertible
Preferred Stock, which was $.8 million and $1.2 million for the three months
ended September 30, 2001 and 2000, respectively, and $3.4 million and
$4.4 million for the year ended September 30, 2001 and 2000, respectively.
Diluted weighted average shares assume the conversion of the Series D
Convertible Preferred Stock, if dilutive, plus the dilutive effect of common
stock equivalents which would arise from the exercise of stock options.
Three Months Ended Year Ended
(in millions) September 30, September 30,
2001 2000 2001 2000
Weighted Average Shares
Basic 87.4 85.9 86.8 85.7
Diluted 93.8 92.0 93.0 91.9
Outstanding at year end 87.5 86.0
Foreign Currency Translation
The effect of foreign currency translation rates reduced sales for the
three months ended September 30, 2001 by approximately $60 million and diluted
earnings per share by $.01. Sales were reduced by approximately $600 million
and diluted earnings per share by $.12 for the year ended September 30, 2001.
SUPPLEMENTAL DATA
Three Months Ended Year Ended
(dollars in millions; unaudited) September 30, September 30,
2001 2000 2001 2000
Depreciation $115 $96 $434 $385
Amortization of intangibles $21 $19 $82 $77
Capital expenditures $161 $164 $621 $547
Free cash flow $131 $102 $373 $387
(Net income plus depreciation
and amortization, minus
capital expenditures)
Total debt to total capitalization 38% 41% 38% 41%
SUPPLEMENTAL DATA (continued)
Pro Forma Financial Information
Johnson Controls, Inc. will adopt the FASB's Statement of Financial
Accounting Standards No. 142 "Goodwill and Other Intangible Assets" in October
2001, the beginning of its 2002 fiscal year.
Under the new FASB statement, goodwill will no longer be amortized,
however, it must be tested for impairment at least annually. Amortization
will continue to be recorded for other intangible assets with determinable
lives. The Company anticipates that the goodwill impairment provisions of the
statement will not, upon adoption, have a significant impact on its financial
position.
Following is pro forma information, which assumes the application of FAS
142 at the beginning of fiscal 2000. The elimination of goodwill amortization
would have reduced selling, general and administrative expenses by
$70.8 million and $66.5 million for the years ended September 30, 2001 and
2000, respectively. The effective income tax rate would have been 36.6% in
2001 and 37.6% in 2000.
Pro Forma FAS 142
(in millions, except per share data; unaudited)
Year ended September 30,
First Second Third Fourth Full
2001 Quarter Quarter Quarter Quarter Year
Operating Income
Automotive Systems Group $183.0 $152.7 $226.0 $218.3 $780.0
Controls Group 43.7 55.8 62.3 90.1 251.9
Total $226.7 $208.5 $288.3 $308.4 $1,031.9
Net income $118.2 $99.0 $152.6 $171.9 $541.7
Earnings per share
Basic $1.35 $1.12 $1.73 $1.94 $6.14
Diluted $1.27 $1.06 $1.62 $1.84 $5.79
2000
Operating Income
Automotive Systems Group $193.0 $160.7 $234.0 $234.6 $822.3
Controls Group 39.2 48.0 49.1 72.9 209.2
Total $232.2 $208.7 $283.1 $307.5 $1,031.5
Net income $114.2 $103.3 $147.6 $166.2 $531.3
Earnings per share
Basic $1.31 $1.18 $1.69 $1.91 $6.09
Diluted $1.23 $1.11 $1.60 $1.79 $5.73
