Johnson Controls 2000 EPS Up 23%
19 October 2000
Johnson Controls 2000 EPS Up 23%
MILWAUKEE, Oct. 19 Johnson Controls, Inc.
(JCI) today reported record sales and income for its fiscal year ended
September 30, 2000. The year 2000 was the company's 54th consecutive year of
sales increases, its tenth straight year of record earnings and the 25th
consecutive year of dividend increases.
Mr. James H. Keyes, Johnson Controls chairman and chief executive officer,
said, "I am gratified by the performance of Johnson Controls employees who
have demonstrated their ability to continuously improve and deliver on our
commitments to our customers and our shareholders. In 2000, as in years past,
our success can be attributed, not to any single event or program, but to the
combined achievements of Johnson Controls 100,000 employees."
Full-Year Consolidated Results
Sales for the full year totaled $17,154.6 million, up 6% from $16,139.4
million for 1999. Operating income increased 13% to $965.0 million from the
prior year's $854.9 million. Net income rose to $472.4 million, up 22% from
$387.1 million for 1999. The net income increase was aided by a decline in
interest expense due to strong cash flow from operations. Diluted earnings
per share for 2000 were 23% higher, reaching $5.09 compared with $4.13 for the
prior year. Income amounts for fiscal 1999 exclude a one-time gain realized
in the second quarter associated with the sale of businesses.
Johnson Controls said that its cash flow from operations enabled it to
improve its ratio of total debt to total capitalization to approximately 41%
at September 30, 2000 from 45% at the end of fiscal 1999. In addition, the
company reported that its return on invested capital improved over the prior
year.
4th Quarter Consolidated Results
Sales for the three months ended September 30, 2000 declined 3% to
$4,088.7 million from $4,195.0 million for the same period of fiscal 1999.
Before the effect of currency translation, sales were approximately level with
the prior year. Operating income was $290.6 million, 6% higher than the prior
year's $273.1 million. Net income rose to $151.2 million ($1.63 per diluted
share), up 16% from $130.5 million ($1.38 per diluted share) for the fourth
quarter of fiscal 1999.
Automotive Systems Group
4th Quarter Year
2000 1999 % 2000 1999 %
Sales $2,898.1 3,028.2 (4) 12,738.5 12,075.1 5
Operating
Income $220.3 209.7 5 765.2 682.4 12
The Automotive Systems Group achieved record sales and operating income
for fiscal 2000, as well as improvements in operating margins for both the
fourth quarter and full year.
The full-year sales increase reflects slightly higher industry vehicle
production in North America and Europe, new seating and interiors contracts
and higher sales of batteries. The effect of currency translation from the
Euro reduced automotive sales by approximately $480 million for the year 2000.
In the fourth quarter, the 4% decline in sales was due to the effect of
currency translation on European sales and a slight decline in the domestic
vehicle production. The company said that sales for the periods ended
September 30 do not include any revenues associated with the acquisition of
Ikeda Bussan, a Japanese seat supplier, which was completed in September 2000
and is expected to add approximately $1.2 billion in sales in fiscal 2001.
Operating margin for the automotive segment increased to 6.0% from 5.7%
for the full year and to 7.6% from 6.9% for the fourth quarter. The
improvements are attributed to effective quality and cost initiatives
worldwide, which more than offset higher spending associated with new product
technology and engineering in support of future growth.
Controls Group
4th Quarter Year
2000 1999 % 2000 1999 %
Sales $1,190.6 1,166.8 2 4,416.1 4,064.3 9
Operating
Income $70.3 63.4 11 199.8 172.5 16
The Controls Group supplies nonresidential buildings with a broad line of
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 three and twelve months ended September 30, 2000 were
record highs. The increased revenues primarily reflect growth in North
America associated with a higher level of control system installation activity
for both the new construction and existing buildings market. Integrated
facility management growth reflects the expansion and addition of contracts,
principally in the North American and Japanese commercial markets.
Operating margins for the Controls Group increased to 4.5% from 4.2% for
the full year and to 5.9% from 5.4% for the fourth quarter. The increases
reflect the higher volume, together with improved productivity and quality.
The backlog of uncompleted control system installation contracts at the end of
2000 was 15% higher than one year ago.
Outlook
For fiscal 2001, Johnson Controls anticipates achieving double-digit
growth in sales and net income. Mr. Keyes added that, "Sales by both our
automotive and controls groups are expected to grow by over 10% on a full-year
basis as we integrate the acquisition of Ikeda Bussan and launch new contracts
in the automotive and facilities markets. I am also confident that the
investments we are making in product and process technology, including
electronics and internet based systems, will improve our ability to offer our
global customers innovative ways to increase their success."
JOHNSON CONTROLS
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data; unaudited)
Three Months
Ended September 30, Year Ended September 30,
2000 1999 2000 1999
Net sales $4,088.7 $4,195.0 $17,154.6 $16,139.4
Cost of sales 3,407.5 3,543.6 14,560.1 13,815.5
Gross profit 681.2 651.4 2,594.5 2,323.9
Selling, general
and administrative
expenses 390.6 378.3 1,629.5 1,469.0
Operating income 290.6 273.1 965.0 854.9
Interest income 4.5 5.3 16.1 17.3
Interest expense (31.7) (37.0) (127.6) (153.3)
Gain on sale of
businesses (c) -- -- -- 54.6
Miscellaneous - net 2.1 (1.4) 2.2 (3.6)
Other income (expense) (25.1) (33.1) (109.3) (85.0)
Income before income
taxes and minority
interests 265.5 240.0 855.7 769.9
Provision for
income taxes 105.2 97.1 338.9 311.7
Minority interests
in net earnings
of subsidiaries 9.1 12.4 44.4 38.6
Net income $151.2 $130.5 $472.4 $419.6
Earnings available
for common
shareholders $148.7 $124.7 $462.6 $406.6
Earnings per
share (a, d)
Basic $1.73 $1.47 $5.40 $4.78
Diluted $1.63 $1.38 $5.09 $4.48
a. Earnings per share for the year ended September 30, 1999 include a
gain on the sale of the Automotive Systems Group's Industrial Battery
Division, net of a loss related to the disposal of a small Controls
Group operation in the United Kingdom, of $.38 per basic share and
$.35 per diluted share. See footnote 3 on page 5.
SUPPLEMENTAL DATA
(dollars in millions; unaudited)
Three Months Year Ended
Ended September 30, September 30,
2000 1999 2000 1999
Depreciation $96 $91 $385 $363
Amortization
of intangibles $19 $23 $77 $82
Capital expenditures $164 $184 $547 $514
Free cash flow
(Net income plus
depreciation and
amortization,
minus capital
expenditures) $102 $60 $388 $319*
Total debt to
total capitalization 41% 45% 41% 45%
* Free cash flow for the year ended September 30, 1999 excludes a
one-time gain on the sale of businesses of $32.5 million, after-tax.
See footnote c.
ADDITIONAL FOOTNOTES
b. Effective September 1, 2000, the Company completed the acquisition of a
controlling interest in Ikeda Bussan Co. Ltd. (Ikeda), a Japanese supplier of
automotive seating. Ikeda is the primary supplier of seating to the Nissan
group and had consolidated net sales in 1999 of approximately $1.2 billion.
The closing followed the expiration of the friendly tender offer for Ikeda's
shares, with the Company paying approximately $70 million, plus the assumption
of $115 million of debt, for approximately 90% of the outstanding shares. 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
$160 million at the date of acquisition, was recorded as goodwill. The
operating results of Ikeda for September 2000, which were not material, have
not been included in the Consolidated Statement of Income. The acquisition
will be financed with yen-denominated long-term debt.
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).
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 $1.1 million and $3.2 million for the three months
ended September 30, 2000 and 1999, respectively, and $4.4 million and $6.9
million for the year ended September 30, 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.
Three Months Ended Year Ended
September 30, September 30,
2000 1999 2000 1999
Weighted
Average Shares (in millions)
Basic 85.9 85.4 85.7 85.1
Diluted 92.0 92.5 91.9 92.1