Johnson Controls Reports $.95 EPS for Its Second Quarter, 36% Higher Than in 1999
17 April 2000
Johnson Controls Reports $.95 EPS for Its Second Quarter, 36% Higher Than in 1999
MILWAUKEE, April 17 Record second-quarter results were
announced by Johnson Controls, Inc. (JCI), (NYSE: JCI) a global leader in
automotive systems and facility management and control. It also said that
both of its businesses reported double-digit sales increases and improved
margins compared with the three months ended March 31, 1999.
Total sales for the second quarter of fiscal 2000 rose 12% to
$4,358.3 million from $3,880.3 million for the same quarter of fiscal 1999.
Operating income increased 20% to $192.4 million from the prior year's
$159.7 million. Net income rose to $88.8 million, up 35% from
$65.8 million for the second quarter of fiscal 1999. On a diluted basis,
earnings per share rose to $.95 from $.70 a year ago.
All fiscal 1999 amounts above exclude a one-time gain associated with the
sale of businesses which amounted to $54.6 million pretax, $32.5 million
after-tax or $.35 per diluted share.
Sales by the company's Automotive Systems Group increased 12% to
$3,216.3 million compared with $2,859.4 million for the period one year ago.
Strong sales of seating and interior systems in the North American market was
the largest contributor to the increase in revenue. The company explained that
its positive domestic results were from a combination of its increasing
content on cars and light trucks and an estimated 7% increase in overall
industry vehicle production. An unfavorable currency translation effect caused
reported sales by its European seating and interiors operations to remain
level with the prior year. Automotive battery sales were also higher compared
with a year ago reflecting higher unit shipments to North American customers.
Operating income for the Automotive Systems Group increased 22% to $146.9
million from $120.3 million for the prior year period. The company said that
the improvement stemmed from the higher volumes and operating improvements in
North America, Europe and South America.
Controls Group sales rose 12% to $1,142.0 million for the second quarter,
up from 1999's $1,020.9 million. Double digit sales increases were achieved
across the business' offerings to the nonresidential buildings market
including installed control systems, services and integrated facility
management. Johnson Controls also reported that operating income for the
Controls Group increased to $45.5 million, up 15% from $39.4 million for the
second quarter of 1999, reflecting the higher level of activity and improved
execution on customer contracts. It said that demand for its services that
improve the workplace environment and reduce a building owner's operating and
energy costs continues to increase, noting that it received a number of major
orders in the just ended quarter. In addition, its backlog of orders for
installed control systems was 15% higher than one year ago.
Total sales for the first six months of fiscal 2000 rose 12% to
$8,676.6 million from $7,753.4 million for the same period of fiscal 1999.
Operating income increased 19% to $407.4 million from the prior year's
$342.9 million. Net income rose to $187.8 million, up 29% from $145.5 million
(before a one-time gain), for the first half of fiscal 1999. Diluted earnings
per share were $2.01 versus $1.56 (before the one-time gain) for 1999.
James H. Keyes, Johnson Controls chairman and chief executive officer
said, "It is gratifying when our investments in technology, innovation and
process improvement return higher levels of customer satisfaction and
financial results. In addition to growth in sales and earnings during the
first half of the year, we have reduced our total debt to total capitalization
ratio to 42.0% from 48.5% a year ago and improved our return on invested
capital. We continue to have confidence in the near and long-term outlook for
Johnson Controls."
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; unaudited)
For the Three Months For the Six Months
Ended March 31, Ended March 31,
2000 1999 2000 1999
Net sales $4,358.3 $3,880.3 $8,676.6 $7,753.4
Cost of sales 3,746.3 3,352.4 7,439.5 6,697.0
Gross profit 612.0 527.9 1,237.1 1,056.4
Selling, general
and administrative
expenses 419.6 368.2 829.7 713.5
Operating income 192.4 159.7 407.4 342.9
Interest income 4.3 4.8 7.8 7.9
Interest expense (33.4) (41.3) (66.6) (82.4)
Gain on sale
of businesses (b) -- 54.6 -- 54.6
Miscellaneous -- net 2.6 2.5 0.6 1.3
Other income
(expense) (26.5) 20.6 (58.2) (18.6)
Income before
income taxes
and minority
interests 165.9 180.3 349.2 324.3
Provision for
income taxes 65.7 73.1 138.3 131.4
Minority interests
in net earnings
of subsidiaries 11.4 8.9 23.1 14.9
Net income $88.8 $98.3 $187.8 $178.0
Earnings available
for common
shareholders $86.4 $95.9 $183.0 $173.3
Earnings per share (d)
Basic $1.01 $1.13 $2.14 $2.04
Diluted $0.95 $1.05 $2.01 $1.91
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(in millions)
March 31, September 30, March 31,
2000 1999 1999
(unaudited) (unaudited)
ASSETS
Cash and cash equivalents $244.2 $276.2 $268.8
Accounts receivable -- net 2,383.0 2,147.5 2,008.0
Costs and earnings
in excess of billings
on uncompleted contracts 235.4 208.7 207.7
Inventories 502.9 524.6 469.3
Net assets held for sale (c) -- -- 46.8
Other current assets 682.5 691.5 597.3
Current assets 4,048.0 3,848.5 3,597.9
Property, plant
and equipment -- net 2,042.9 1,996.0 1,981.0
Goodwill -- net 2,058.4 2,096.9 2,126.5
Investments in
partially-owned affiliates 226.3 215.1 219.0
Other noncurrent assets 406.2 457.7 447.7
Total assets $8,781.8 $8,614.2 $8,372.1
LIABILITIES AND EQUITY
Short-term debt $475.0 $477.0 $630.1
Current portion
of long-term debt 44.1 94.8 91.7
Accounts payable 2,131.5 1,998.5 1,935.7
Accrued compensation
and benefits 431.3 446.9 377.9
Accrued income taxes 125.4 231.2 108.2
Billings in excess
of costs and earnings
on uncompleted contracts 183.0 159.2 150.3
Other current liabilities 944.4 859.0 878.3
Current liabilities 4,334.7 4,266.6 4,172.2
Long-term debt 1,229.0 1,283.3 1,292.3
Postretirement health
and other benefits 167.7 166.4 166.8
Other noncurrent liabilities 648.3 627.9 600.7
Shareholders' equity 2,402.1 2,270.0 2,140.1
Total liabilities and equity $8,781.8 $8,614.2 $8,372.1
See additional footnotes below.
ADDITIONAL FOOTNOTES
b. 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).
c. Certain businesses acquired as part of the Company's July 1998
acquisition of Becker Group were classified as net assets held for
sale in the Consolidated Statement of Financial Position at
March 31, 1999. At the date of acquisition, the Company identified
three businesses of Becker Group that were outside of its core
operations and, as such, would be sold. The net assets of the
businesses were recorded at fair value less estimated costs to sell,
including cash flows during the holding period. The Company completed
the sale of these businesses during fiscal 1999. No gain or loss was
recorded upon their sale.
d. 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 $1.0 million
and $1.3 million for the three months ended March 31, 2000 and 1999,
respectively, and $2.1 million and $2.4 million for the six months
ended March 31, 2000 and 1999, 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.
For the Three Months For the Six Months
Ended March 31, Ended March 31,
2000 1999 2000 1999
Weighted Average (in millions)
Shares
Basic 85.6 85.1 85.5 84.9
Diluted 91.9 92.2 92.0 91.9