Johnson Controls Has Record EPS of $.70 vs $.59 for First Quarter
16 January 1998
Johnson Controls Has Record EPS of $.70 vs $.59 for First Quarter
MILWAUKEE, Jan. 15 -- Johnson Controls, Inc. (JCI)
today reported record sales and income for the three months ended
December 31, 1997.
Sales rose 11% to $3,056.3 million from $2,761.3 million for the first
quarter of fiscal 1997. Operating income for the fiscal 1998 first quarter
increased to $148.4 million, 14% higher than the prior year's $129.9 million.
Income from continuing operations rose to $65.3 million, up 19% from
$54.9 million for the first quarter of fiscal 1997. Diluted earnings per
share from continuing operations were also up 19%, reaching $.70 compared with
$.59 last year.
James H. Keyes, chairman and chief executive officer of Johnson Controls,
said, "We are pleased with our ability to extend our track record for
double-digit growth in sales and income. It is also significant that both our
Automotive Systems and Controls Groups attained modest improvements in
operating margin. Our results this quarter reflect our employees' commitment
to continuous improvements in customer satisfaction, technology and quality."
The company's Automotive Systems Group had sales of $2,328.7 million for
the first quarter of fiscal 1998, an increase of 15% over the prior year's
$2,030.1 million. Johnson Controls said that the increase reflected new
seating and interior program launches worldwide and strong vehicle production
levels in the North American and European automotive markets. In North
America, the company's sales were substantially higher and benefited from its
strong presence in the sport utility and light truck markets and the fact that
it is participating in many of the most sought after new vehicles. European
sales, before the effects of currency translation, were also higher than the
prior year due to new supply contracts and increased vehicle demand. The
company added that its automotive battery sales increased as a result of
higher unit shipments to the North American replacement and original equipment
markets, as well as from the start of shipments of the Sears DieHard Gold
battery.
First-quarter operating income and margin for the Automotive Systems Group
increased from the prior year levels. The company explained that the major
factor was an improved performance in Europe where engineering and other
operating costs are lower. This improvement, together with the relatively
healthy vehicle production levels in North America and Europe, enabled it to
more than offset the start-up costs it is incurring in establishing a leading
market position in South America.
Controls Group sales to the nonresidential buildings market of
$727.6 million were about level with the prior year's $731.2 million. The
company said that the lack of growth was anticipated because of the level of
its contract backlog for systems and services entering the quarter, and the
timing of new facilities management contracts. Operating income and margin
for the group were higher than in the fiscal 1997 first quarter. The company
said that the increases resulted from a more profitable mix of business in its
domestic systems and services and U.S. facilities management businesses, and
lower overhead spending in Europe. Worldwide orders for installed control
systems were approximately 10% higher than in the prior year, primarily
reflecting double-digit growth in North America as well as in the Asia/Pacific
region. Johnson Controls said that the strength in the North American market
involved orders from a broad cross-section of the existing buildings market
where it serves educational, industrial, health care, government and other
types of buildings through performance and retrofit contracts. The company
said that it is also encouraged by the pipeline for new facilities management
contracts.
"In conclusion," Mr. Keyes said, "we believe that the company's outlook
for fiscal 1998 is positive and remains consistent with our financial plan for
the year."
The company's financial statements reflect the Plastic Container Division,
which was sold in February 1997, as a discontinued operation and the
two-for-one split of the Company's common stock in March 1997.
Johnson Controls is a global market leader in automotive systems and
controls. Through its Automotive Systems Group, it supplies seating systems,
interior systems and batteries to the automotive original equipment and
replacement automotive markets. 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.
The company has made forward-looking statements in this document that are
subject to risks and uncertainties. Forward-looking statements include
information concerning possible or assumed future risks and may include words
such as "believes," "expects," "anticipates" or similar expressions. For
those statements, the company cautions that the numerous important factors
discussed in the company's Form 8-K (dated October 30, 1997) could affect the
company's actual results and could cause its actual consolidated results to
differ materially from those expressed in any forward-looking statement made
by, or on behalf of, the company.
Johnson Controls, Inc.
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share; unaudited)
For the Three Months
Ended December 31,
1997 1996 % Change
Net sales $3,056.3 $2,761.3 11%
Cost of sales 2,622.1 2,354.6
Gross profit 434.2 406.7
Selling, general and administrative expenses 285.8 276.8
Operating income 148.4 129.9 14%
Interest income 2.3 2.0
Interest expense (30.1) (32.5)
Miscellaneous - net 1.7 5.6
Other income (expense) (26.1) (24.9)
Income before income taxes and minority
interests 122.3 105.0
Provision for income taxes 50.8 44.6
Minority interests in net earnings of
subsidiaries 6.2 5.5
Income from continuing operations 65.3 54.9 19%
Discontinued operations (a)
Loss from discontinued operations, adjusted
for income tax benefit of $1.6 and minority
interests 0.00 (1.8)
Net income $65.3 $53.1
Earnings available for common shareholders $63.0 $50.8
Earnings per share from continuing
operations (b)
Basic $0.75 $0.64
Diluted $0.70 $0.59 19%
Earnings per share (b)
Basic $0.75 $0.62
Diluted $0.70 $0.57
See Footnotes below.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(In millions)
December 31, September 30, December 31,
1997 1997 1996
(unaudited) (unaudited)
ASSETS
Cash and cash equivalents $248.1 $111.8 $139.4
Accounts receivable - net 1,644.6 1,467.4 1,586.0
Costs and earnings in excess of
billings on uncompleted contracts 199.1 217.2 222.9
Inventories 390.0 373.4 381.2
Net assets of discontinued operations 0.00 0.00 449.8
Other current assets 402.1 359.5 306.3
Current assets 2,883.9 2,529.3 3,085.6
Property, plant and equipment - net 1,548.1 1,533.0 1,519.5
Goodwill - net 1,558.0 1,560.3 1,626.8
Investments in partially-owned
affiliates 155.8 144.6 132.9
Other noncurrent assets 262.7 281.4 249.7
Total assets $6,408.5 $6,048.6 $6,614.5
LIABILITIES AND EQUITY
Short-term debt $789.5 $537.8 $1,499.8
Current portion of long-term debt 58.3 118.4 94.0
Accounts payable 1,428.1 1,341.9 1,225.3
Accrued compensation and benefits 282.4 303.3 266.5
Accrued income taxes 86.2 78.8 60.0
Billings in excess of costs and
earnings on uncompleted contracts 130.8 107.6 100.0
Other current liabilities 515.7 484.9 457.4
Current liabilities 3,291.0 2,972.7 3,703.0
Long-term debt 789.8 806.4 718.6
Postretirement health and other
benefits 167.5 167.2 167.0
Other noncurrent liabilities 412.0 414.4 470.8
Shareholders' equity 1,748.2 1,687.9 1,555.1
Total liabilities and equity $6,408.5 $6,048.6 $6,614.5
See Footnotes below.
FOOTNOTES
a. 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). Accordingly, prior year results reflect PCD
as a discontinued operation. The loss per basic and diluted share from
discontinued operations was $(.02) for the three months ended December 31,
1996.
b. 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 $1.3 million and
$1.4 million for the three months ended December 31, 1997 and 1996,
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.
c. Prior year 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
December 31,
1997 1996
Weighted Average Shares (in millions)
Basic 84.1 82.8
Diluted 91.2 90.1
SOURCE Johnson Controls