Johnson Controls Reports Record 1999 Results
19 October 1999
Johnson Controls Reports Record 1999 Results
MILWAUKEE, Oct. 19 -- Johnson Controls, Inc.
(JCI) today reported record sales and income for its fourth fiscal quarter and
full year ended September 30, 1999.
Sales for the full year totaled $16,139.4 million up 28% from
$12,586.8 million for 1998. Operating income increased 29% to $854.9 million
from the prior year's $664.0 million. Net income rose to $387.1 million, up
28% from $302.7 million for 1998. Diluted earnings per share for 1999 were
$4.13 versus $3.25 for the prior year. Income amounts for both years exclude
one-time gains associated with the sale of businesses.
Mr. James H. Keyes, Johnson Controls chairman and chief executive officer,
said, "We are pleased that 1999 became our 53rd consecutive year of sales
increases, our ninth straight year of record earnings and that we were able to
increase our common dividend for the 24th consecutive year. My thanks go to
our employees worldwide for their commitment to meeting and exceeding the
expectations of our customers and our shareholders."
Full year sales by the company's Automotive Systems Group were
$12,075.1 million, 30% higher than the $9,263.9 million for 1998. The sales
increase reflects new contracts for seating and interior systems and the
company's presence on many vehicles which experienced strong sales in 1999,
including popular domestic light trucks and new passenger car models in North
America and Europe. About one-third of the group's revenue growth was due to
the July 1998 acquisition of Becker Group, a major European supplier of
instrument and door panels. In addition, the group achieved a double-digit
increase in automotive battery shipments to the North American market,
primarily reflecting market share gains by its aftermarket customers and its
new agreement to supply Sears Roebuck & Co. with the DieHard and other lines
of batteries.
Operating income from the Automotive Systems Group totaled $682.4 million,
29% higher than the $529.7 million for the prior year. The higher volume of
seating and interior systems and batteries was responsible for the increase,
in addition to operating margin improvement from European operations.
Controls Group sales to the nonresidential buildings market increased 22%
to $4,064.3 million from 1998's $3,322.9 million. The increase reflects
acquisitions of companies in Japan, in addition to expanded facility
management and control systems and services activity. Growth in systems and
services sales was led by strength in the existing buildings market where
Johnson Controls improves the quality of the building environment while
reducing a building owner's operating costs. Methodist Health Care System in
Memphis, Tennessee, for example, recently awarded Johnson Controls a $16
million contract to construct a new central utilities plant and upgrade its
electrical, mechanical and control systems. Integrated facility management
system growth reflects the expansion of a number of existing contracts, in
addition to new accounts such as Xerox with whom Johnson Controls has recently
entered into a five-year partnership agreement valued at approximately $250
million. Operating income for the Controls Group was $172.5 million, 28%
higher than the $134.3 million a year ago. The increase reflects the higher
volume, together with improved productivity and quality. The backlog of
uncompleted control system installation contracts at the end of 1999 was 15%
higher than one year ago.
Johnson Controls said that cash flow from operations enabled it to improve
its ratio of total debt to total capitalization to approximately 45% at
September 30, 1999 from 55% at the end of fiscal 1998.
Sales for the three months ended September 30, 1999 rose 26% to $4,195.0
million from $3,333.7 million for the same period of fiscal 1998. Automotive
sales rose 27% on the strength of higher seating, interior and battery
shipments to $3,028.2 million from $2,381.0 million. Controls sales increased
22% to $1,166.8 million for 1999 from $952.7 million due to higher facility
management and control activity. Operating income was $273.1 million, 31%
higher than the prior year's $207.8 million. Net income rose to $130.5
million ($1.38 per diluted share), up 29% from $101.0 million ($1.09 per
diluted share) for the fourth quarter of fiscal 1998. Income amounts for 1998
exclude a gain associated with the sale of a business.
Mr. Keyes stated, "As we enter fiscal 2000, we are anticipating another
year of improved performance. Total sales growth may be more modest than in
1999, however, we expect double-digit earnings improvement as we continue to
deliver innovative solutions to our customers and gain share in our global
markets. Our businesses should continue to generate positive cash flow,
enabling us to further strengthen our financial position."
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, Wisconsin. Its sales for 1999
totaled $16 billion.
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 11, 1999) 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 data)
Three Months Year Ended
Ended September 30, September 30,
1999 1998 1999 1998
(Unaudited)
Net sales $4,195.0 $3,333.7 $16,139.4 $12,586.8
Cost of sales 3,543.6 2,844.0 13,815.5 10,776.2
Gross profit 651.4 489.7 2,323.9 1,810.6
Selling, general and
administrative expenses 378.3 281.9 1,469.0 1,146.6
Operating income 273.1 207.8 854.9 664.0
Interest income 5.3 5.7 17.3 14.8
Interest expense (37.0) (41.0) (153.3) (133.5)
Gain on sale of
businesses (c) -- 59.9 54.6 59.9
Miscellaneous - net (1.4) 9.9 (3.6) 11.6
Other income (expense) (33.1) 34.5 (85.0) (47.2)
Income before income taxes
and minority interests 240.0 242.3 769.9 616.8
Provision for income taxes 97.1 100.6 311.7 256.0
Minority interests in net
earnings of subsidiaries 12.4 5.7 38.6 23.1
Net income $130.5 $136.0 $419.6 $337.7
Earnings available
for common shareholders $124.8 $133.6 $406.6 $328.2
Earnings per share (e)
Basic $1.47 $1.57(a) $4.78(b) $3.88(a)
Diluted $1.38 $1.47(a) $4.48(b) $3.63(a)
(a) Earnings per share (EPS) for both the three months and year ended
September 30, 1998 include a gain on sale of the Plastics Machinery
Division of $.41 per basic share and $.38 per diluted share. See
footnote (c).
(b) EPS for the year ended September 30, 1999 include a gain on sale of
the Automotive Systems Group's Industrial Battery Division, net of a
loss related to disposal of a small Controls Group operation in the
United Kingdom, of $.38 per basic share share and $.35 per diluted
share. See footnote (c).
(c) On March 1, 1999, the Company completed the sale of the Automotive
Systems Group's Industrial Battery Division for approximately
$135 million. The Industrial Battery Division had sales of
approximately $87 million for the fiscal year ended September 30,
1998. The Company also recorded a loss related to the disposal of a
small Controls Group operation in the United Kingdom. The net gain on
these transactions was $54.6 million ($32.5 million or $.38 per basic
share and $.35 per diluted share, after-tax).
On September 30, 1998, the Company completed the sale of its Plastics
Machinery Division for approximately $190 million. The Plastics
Machinery Division had annual sales of approximately $190 million.
The Company recorded a gain on the sale of $59.9 million
($35.0 million or $.41 per basic share and $.38 per diluted share,
after-tax).
(d) Effective July 1, 1998, the Company completed the acquisition of
Becker Group for approximately $548 million, plus the assumption of
approximately $372 million of debt. Becker Group is a major supplier
of automotive interior systems, particularly door systems and
instrument panels. The acquisition was accounted for as a purchase.
The excess of the purchase price over the estimated fair value of the
acquired net assets, which approximated $500 million at the date of
acquisition, was recorded as goodwill.
(e) 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 that would arise from the assumed
conversion of the Series D Convertible Preferred Stock, which was
$3.2 million and $1.3 million for the three months ended September 30,
1999 and 1998, respectively, and $6.9 million and $5.2 million for the
year ended September 30, 1999 and 1998, respectively. Diluted
weighted average shares assume the conversion of preferred stock, if
dilutive, plus the dilutive effect of common stock equivalents that
would arise from the exercise of stock options.
Three Months Ended Year Ended
September 30, September 30,
1999 1998 1999 1998
Weighted Average Shares (in millions)
Basic 85.4 84.7 85.1 84.5
Diluted 92.5 91.6 92.1 91.6