Johnson Controls Reports Record Fourth-Quarter and Full Year Results
20 October 1997
Johnson Controls Reports Record Fourth-Quarter and Full Year Results
MILWAUKEE, Wis., Oct. 20 -- Johnson Controls, Inc.
today reported that earnings from continuing operations for its
fourth fiscal quarter reached a record $1.00 per fully diluted share, up 18%
from $.85 for the prior year. For the full year, income from continuing
operations per fully diluted share rose to $2.81 for 1997, up 16% from $2.42
for 1996.
The 1997 full year amount is before the effect of a $.44 per share
restructuring charge and a $.76 per share gain on the sale of the Plastic
Container Division, both of which were recorded during the quarter ended March
31, 1997. All prior year amounts have been restated to reflect the Plastic
Container Division as a discontinued operation and to reflect the 2-for-1
stock split on March 31, 1997.
Sales for the twelve months ended September 30, 1997 rose 21% to
$11,145.4 million from $9,210.0 million for 1996. Operating income increased
25% to $597.1* million from the prior year's $478.9 million. Income from
continuing operations rose to $260.9* million, up 17% from
$222.7 million for 1996.
Full year sales by the company's Automotive Systems Group were
$8,022.1 million, 28% higher than the $6,250.2 million for 1996. Major
contributors to the volume increase were the October 1996 acquisition of
Prince, an interior systems company based in Michigan; new seating programs
in North America, Europe and South America; and, higher levels of automotive
battery shipments. Operating income totaled $477.6* million compared
with $361.2 million for the prior year. The increase primarily reflects the
inclusion of Prince earnings and improved efficiencies in European seating
operations. Johnson Controls said that new seating programs would propel its
automotive growth in 1998. It said that sales associated with these programs,
which involve products to be manufactured in North America, Europe and South
America, are expected to total approximately $700 million in the coming year.
Controls Group sales increased 6% to $3,123.3 million from 1996's
$2,959.8 million while operating income was $119.5* million versus
$117.7 million a year ago. The increases primarily reflect a higher level of
integrated facilities management activity in the commercial buildings market.
In 1997 Johnson Controls was awarded the responsibility to operate and
maintain buildings for a number of new customers including KeyCorp, Microsoft,
Pharmacia & Upjohn and Charles Schwab. Sales during the year were also higher
in the nonresidential construction markets in the Asia/Pacific region and the
United States. The company said that North American sales of control systems
through performance contracts to owners of existing buildings were
approximately level with the prior year. Worldwide orders for installed
control systems were also on a par with the 1996 level as higher demand in the
Asia/Pacific region and in the domestic health care and industrial sectors
were offset by lower orders from the U.S. school market. Johnson Controls
said that it expects the U.S. Federal Government to be a major source of
future control system sales given its announced plan to spend $5.5 billion on
energy conservation programs. The company announced today that it has been
awarded a contract to replace the entire building control system for the
Pentagon, the world's largest office building with 6.6 million square feet and
20,000 occupants.
Sales for the three months ended September 30, 1997 rose 11% to
$2,761.2 million from $2,485.5 million for the same period of fiscal 1996.
Operating income increased 23% to $193.5 million from the prior year's
$156.9 million. Income from continuing operations rose to $93.0 million
($1.00 per fully diluted share), up 20% from $77.6 million ($.85 per fully
diluted share) for the fourth quarter of fiscal 1996.
Mr. James H. Keyes, Johnson Controls chairman and chief executive officer,
said that, "We are pleased that Johnson Controls and our employees have
produced another fine year for our customers and our shareholders. In
addition to achieving strong financial results, we made progress on a number
of fronts that will return benefits to the company in the years ahead."
Mr. Keyes added, "The integration of Prince has gone smoothly and we
remain convinced of the substantial opportunity for growth in automotive
interior systems. Also during the year, our Automotive Systems Group made
major headway toward establishing our leadership position in the emerging
markets. In the Controls Group, we have successfully refined our strategy for
the commercial facilities management market, while in the government
market, we are able to move from a year where we needed to concentrate on
rebidding existing contracts to seeking incremental volume for 1998 and
beyond. Demand in the domestic control systems market was softer than
expected in 1997, but I am confident that the fundamental need for building
owners to improve the quality of their indoor environments and to reduce their
energy and operating costs will result in growth for this segment of our
business."
Johnson Controls is a global market leader in automotive systems and
building controls. Through its Automotive Systems Group, it supplies seating
systems, interior systems and batteries. The Controls Group serves the
nonresidential buildings market with control systems and services, and
integrated facility management. Founded in 1885, it operates from more than
500 locations worldwide. Johnson Controls (JCI) securities are listed on the
New York Stock Exchange.
*Before the restructuring charge of $70.0 million pre-tax or $40.3 million
after tax.
Certain matters discussed in this news release are "forward looking
statements" as defined in the Private Securities Litigation Reform Act (PSLRA)
of 1995, which involve risks and uncertainties, and are subject to change
based on various important factors. Johnson Controls wishes to take advantage
of the "safe harbor" provisions of the PSLRA by cautioning that numerous
important factors as outlined in the Company's Form 8-K (filed with the SEC on
9/27/96), among others, in some cases have affected, and in the future
could affect, the Company's actual results and could cause its actual
consolidated results to differ materially from those expressed in this
release.
JOHNSON CONTROLS, INC.
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share)
For the Three Months For the Year
Ended September 30, Ended September 30,
1997 1996 1997 1996
(Unaudited)
Net sales $2,761.2 $2,485.5 $11,145.4 $9,210.0
Cost of sales 2,316.8 2,105.8 9,485.6 7,878.3
Gross profit 444.4 379.7 1,659.8 1,331.7
Selling, general and
administrative expenses 250.9 222.8 1,062.7 852.8
Restructuring charges (c) 0.00 0.00 70.0 0.00
Operating income 193.5 156.9 527.1 478.9
Interest income 3.8 2.4 9.9 7.9
Interest expense (28.2) (19.5) (122.7) (73.4)
Miscellaneous - net 0.00 2.3 11.3 8.1
Other income (expense) (24.4) (14.8) (101.5) (57.4)
Income before income taxes
and minority interests 169.1 142.1 425.6 421.5
Provision for income taxes71.9 57.9 180.9 171.8
Minority interests in net
earnings of subsidiaries 4.2 6.6 24.1 27.0
Income from continuing
operations 93.0 77.6 220.6 222.7
Discontinued operations (b)
Income (loss) from
discontinued operations,
adjusted for applicable
provision (benefit) for
income taxes of $0, $3.7,
($1.0), and $9.8,
respectively, and
minority interests 0.00 4.4 (1.1) 12.0
Gain on sale of discontinued
operations, net of $66.0
in income taxes 0.00 0.00 69.0 0.00
Net income $93.0 $82.0 $288.5 $234.7
Earnings available for
common shareholders $90.7 $79.6 $279.0 $225.2
Earnings per share from
continuing operations (d)
Primary $1.06 $0.90 $2.48 $2.55
Fully diluted $1.00 $0.85 $2.37 $2.42
Earnings (loss) per share
from discontinued
operations (d)
Primary 0.00 $0.05 ($0.01) $0.14
Fully diluted 0.00 $0.04 ($0.01) $0.13
Earnings per share from gain
on sale of discontinued
operations (d)
Primary 0.00 0.00 $0.82 0.00
Fully diluted 0.00 0.00 $0.76 0.00
Earnings per share (d)
Primary $1.06 $0.95 $3.29 $2.69
Fully diluted $1.00 $0.89 $3.12 $2.55
See Footnotes
FOOTNOTES
a. Effective October 1, 1996, the Company completed the acquisition of
Prince Holding Corporation (Prince) for approximately $1.3 billion. Prince,
based in Holland, Michigan, supplies automotive interior systems and
components including overhead systems and consoles, door panels, floor
consoles, visors and armrests. The acquisition was accounted for as a
purchase. The excess of the purchase price over the fair value of the
acquired net assets, which approximated $1.1 billion, was recorded as
goodwill.
b. On February 28, 1997, the Company completed the sale of its Plastic
Container division (PCD) to Schmalbach-Lubeca AG/Continental Can Europe (a
member of the VIAG Group) for approximately $650 million, a portion of which
is deferred. The Company recorded a gain on the sale of $135 million
($69 million or $.82 per primary share and $.76 per fully diluted share,
after-tax). Prior year results have been restated to reflect PCD as a
discontinued operation.
c. In the second quarter of fiscal 1997, the Company recorded a
restructuring charge, including related asset writedowns, of $70 million ($40
million or $.44 per share - fully diluted, after-tax). The restructuring
initiatives involve its automotive and controls groups. The automotive charge
primarily relates to its European operations where certain manufacturing
capacity is being realigned with future customer sourcing requirements, and
product development resources are being consolidated. The charge associated
with its controls business principally addresses the Company's decision to
exit certain low-margin service activities which are outside its core controls
and facilities management businesses which serve the commercial and government
markets.
d. Primary 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 and common stock equivalents
which would arise from the exercise of stock options. Fully 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 $1.4 million for the three
months ended September 30, 1997 and 1996 and $5.5 million and $5.6 million for
the year ended September 30, 1997 and 1996, respectively. Fully diluted
weighted average shares assume the conversion of the Series D Convertible
Preferred Stock, if dilutive, plus the dilutive effect of the stock options.
e. All share and per share information has been restated to reflect a
two-for-one split of the Company's common stock paid on March 31, 1997 to
shareholders of record on March 7, 1997.
For the Three Months Ended For the Year Ended
September 30, September 30,
1997 1996 1997 1996
Weighted Average Shares (in millions)
Primary 85.4 84.0 84.8 83.6
Fully Diluted 91.3 90.1 90.9 89.9
SOURCE Johnson Controls