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National Press Release
 | Johnson Controls Reports 2009 First Quarter Financial ResultsPublished 2009-01-16 07:00By Johnson Controls |
(Logo: http://www.newscom.com/cgi-bin/prnh/20081030/AQTH055ALOGO)
These results compare with net sales of
The $562 million of non-recurring charges include:
-- $110 million asset impairment in the automotive business
-- $152 million equity investment impairment in the North American
residential HVAC unitary products group
-- $300 million tax valuation allowance
"While we are disappointed to report a loss in the quarter, we are
addressing the challenges by improving our cost structure and preserving our
liquidity," said
Building Efficiency sales in the 2009 first quarter were
The Building Efficiency segment, excluding impairment charges of
During its first fiscal quarter, Johnson Controls was selected by the
United States Department of Energy as one of 16 companies to participate in an
Power Solutions sales in the first quarter were
Power Solutions segment income was
The company announced today a contract with O'Reilly Auto Parts, a new customer for Johnson Controls. Shipments will begin in February to more than 1,000 Checker Auto Parts, Kragen Auto Parts and Schuck's Auto Supply stores nationally.
Automotive Experience sales in the quarter declined 32% to
The Automotive Experience segment reported a loss of
Johnson Controls said it expects to report a overall loss in its fiscal second quarter similar in scale to the first quarter's operating loss but with improved performance by its Building Efficiency and Power Solutions businesses. It also said its previously announced restructuring program is progressing according to plan. It is expected that the financial benefits of the restructuring program will provide an accelerating accretive impact to earnings beginning in the company's 2009 second quarter.
"The market environment and uncertainties we face are expected to continue in the second quarter," Mr. Roell said. "We are implementing strategies to take advantage of opportunities in the marketplace. I would like to thank our employees worldwide for their dedication and commitment through these challenging times. With their help, we believe we will emerge from this economic cycle with a significantly advantaged competitive position."
Johnson Controls is the global leader that brings ingenuity to the places where people live, work and travel. By integrating technologies, products and services, we create smart environments that redefine the relationships between people and their surroundings. Our team of 140,000 employees creates a more comfortable, safe and sustainable world through our products and services for more than 200 million vehicles, 12 million homes and one million commercial buildings. Our commitment to sustainability drives our environmental stewardship, good corporate citizenship in our workplaces and communities, and the products and services we provide to customers. For additional information, please visit www.johnsoncontrols.com.
Johnson Controls, Inc. ("the Company") has made forward-looking statements
in this presentation pertaining to its financial results for fiscal 2009 and
beyond that are based on preliminary data and are subject to risks and
uncertainties. All statements other than statements of historical fact are
statements that are or could be deemed forward-looking statements and include
terms such as "outlook," "expectations," "estimates," or "forecasts." For
those statements, the Company cautions that numerous important factors, such
as automotive vehicle production levels, mix and schedules, financial distress
of key customers, energy prices, the strength of the U.S. or other economies,
currency exchange rates, cancellation of or changes to commercial contracts,
liquidity, the ability to execute on restructuring actions according to
anticipated timelines and costs as well as other factors discussed in Item 1A
of Part II of the Company's most recent Form 10-k filing (filed
JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data; unaudited)
Three Months Ended December 31,
2008 2007
Net sales $7,336 $9,484
Cost of sales 6,651 8,177
Gross profit 685 1,307
Selling, general and administrative
expenses (859) (950)
Financing charges -- net (56) (69)
Equity income (loss) (136) 17
Income (loss) from continuing
operations before income taxes
and minority interests (366) 305
Provision for income taxes 242 64
Minority interests in net earnings of
subsidiaries - 6
Net income (loss) $(608) $235
Diluted earnings (loss) per share $(1.02) $0.39
Diluted weighted average shares 594 603
Shares outstanding at period end 594 594
JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in millions; unaudited)
December September December
31, 30, 31,
2008 2008 2007
ASSETS
Cash and cash equivalents $202 $384 $407
Accounts receivable -- net 5,063 6,472 6,180
Inventories 1,935 2,099 2,070
Other current assets 1,546 1,721 1,572
Current assets 8,746 10,676 10,229
Property, plant and equipment -- net 4,131 4,389 4,214
Goodwill 6,392 6,513 6,251
Other intangible assets -- net 757 769 775
Investments in partially-owned
affiliates 703 863 812
Other noncurrent assets 1,657 1,777 1,522
Total assets $22,386 $24,987 $23,803
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term debt and current portion
of long-term debt $1,437 $743 $1,075
Accounts payable and accrued expenses 4,650 6,366 5,894
Other current liabilities 2,478 2,701 2,283
Current liabilities 8,565 9,810 9,252
Long-term debt 3,176 3,201 3,249
Minority interests in equity of
subsidiaries 229 236 133
Other noncurrent liabilities 2,142 2,316 2,099
Shareholders' equity 8,274 9,424 9,070
Total liabilities and
shareholders' equity $22,386 $24,987 $23,803
JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
Three Months Ended December 31,
2008 2007
Operating Activities
Net income (loss) $(608) $235
Adjustments to reconcile net income
to cash provided by operating
activities:
Depreciation and amortization 190 191
Equity in earnings of partially-
owned affiliates, net of
dividends received 15 22
Minority interests in net
earnings of subsidiaries - 6
Deferred income taxes 300 9
Non-cash impairment of long-lived
assets 110 -
Non-cash impairment of equity
investment 152 -
Other -- net 35 39
Changes in working capital,
excluding acquisition and
divestiture
of businesses:
Receivables 1,128 486
Inventories 78 (82)
Restructuring reserves (52) (14)
Accounts payable and accrued
liabilities (1,764) (810)
Change in other assets and
liabilities 91 96
Cash provided (used) by
operating activities (325) 178
Investing Activities
Capital expenditures (268) (187)
Sale of property, plant and
equipment 3 15
Acquisition of businesses, net of
cash acquired (22) (26)
Other -- net (62) (48)
Cash used by investing
activities (349) (246)
Diluted earnings (loss) per share
Increase (decrease) in short and
long-term debt -- net 540 (107)
Payment of cash dividends (77) (65)
Other -- net 29 (27)
Cash provided (used) by
financing activities 492 (199)
Decrease in cash and cash
equivalents $(182) $(267)
FOOTNOTES
1. Business Unit Summary
Three Months Ended
December 31,
(in millions) (unaudited)
2008 2007 %
Net Sales
Building efficiency $3,087 $3,244 -5%
Automotive experience 3,131 4,589 -32%
Power solutions 1,118 1,651 -32%
Net Sales $7,336 $9,484
Segment Income (1)
Building efficiency $(21) $163 -113%
Automotive experience (329) 78 -522%
Power solutions 40 133 -70%
Segment Income $(310) $374
Financing charges - net (56) (69)
Income from continuing operations
before income taxes and minority
interests $(366) $305
Net Sales
Products and systems $5,647 $7,709 -27%
Services 1,689 1,775 -5%
$7,336 $9,484
Cost of Sales
Products and systems $5,273 $6,742 -22%
Services 1,378 1,435 -4%
$6,651 $8,177
(1) Management evaluates the performance of the segments based primarily
on segment income, which represents income from continuing operations
before income taxes and minority interest, excluding net financing
charges and restructuring costs.
Building efficiency -- Provides facility systems and services
including comfort, energy and security management for the non-
residential buildings market and provides heating, ventilating, and
air conditioning products and services for the residential and non-
residential building markets.
Automotive experience -- Designs and manufactures interior systems and
products for passenger cars and light trucks, including vans, pick-up
trucks and sport/crossover utility vehicles.
Power solutions -- Services both automotive original equipment
manufacturers and the battery aftermarket by providing advanced
battery technology, coupled with systems engineering, marketing and
service expertise.
2. Impairment Charges
The Company reviews long-lived assets, including property, plant and
equipment and other intangible assets with definite lives, for
impairment whenever events or changes in circumstances indicate that
its carrying amounts may not be recoverable. At December 31, 2008,
the Company recorded a $77 million and $33 million impairment charge
related to property, plant and equipment in the automotive experience
business in North America and Europe, respectively. The impairment
charge is included in cost of sales in the accompanying Condensed
Consolidated Statements of Income.
At December 31, 2008, the Company also recorded a $152 million charge
related to an impairment of an equity investment in a 48%-owned joint
venture with US Airconditioning Distributors, Inc. in the Company's
building efficiency business. This impairment charge is included in
equity loss in the accompanying Condensed Consolidated Statements of
Income.
3. Income Taxes
In June 2006, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation No. 48, ''Accounting for Uncertainty in Income
Taxes -- an interpretation of FASB Statement No. 109" (FIN 48). FIN
48 prescribes a comprehensive model for how a company should
recognize, measure, present, and disclose in its financial statements
uncertain tax positions that a company has taken or expects to take on
a tax return. The Company adopted FIN 48 as of October 1, 2007. Upon
adoption, the Company increased its existing reserves for uncertain
tax positions by $93 million. The increase was recorded as a
cumulative effect adjustment to shareholders' equity of $68 million
and an increase to goodwill of $25 million related to business
combinations in prior years. As of the adoption date, the Company had
gross tax affected unrecognized tax benefits of $616 million of which
$475 million, if recognized, would affect the effective tax rate. Also
as of the adoption date, the Company had accrued interest expense and
penalties related to the unrecognized tax benefits of $75 million (net
of tax benefit). The net change in interest and penalties during the
three months ended December 31, 2008 was not material. The Company
recognizes interest and penalties related to unrecognized tax benefits
as a component of income tax expense or goodwill, when applicable.
The Company's federal income tax returns and certain foreign income
tax returns for various fiscal years remain under various stages of
audit by the Internal Revenue Service and respective foreign tax
authorities. Although the outcome of tax audits is always uncertain,
management believes that it has appropriate support for the positions
taken on its tax returns and that its annual tax provisions included
amounts sufficient to pay assessments, if any, which may be proposed
by the taxing authorities. At December 31, 2008, the Company has
recorded a liability for its best estimate of the probable loss on
certain of its tax positions, the majority of which is included in
other noncurrent liabilities in the accompanying Condensed
Consolidated Statements of Financial Position. It is likely that the
resolution of certain tax examinations will occur within the current
fiscal year which may result in favorable tax reserve adjustments in
an amount not to exceed $100 million.
In the first quarter of fiscal year 2009, the Company recorded a $30
million discrete period tax adjustment related to first quarter 2009
impairment costs using a blended statutory tax rate of 12.6%.
The Company reviews its deferred tax asset valuation allowances on a
quarterly basis, or whenever events or changes in circumstances
indicate that a review is required. In determining the requirement for
a valuation allowance, the historical and projected financial results
of the legal entity or consolidated group recording the net deferred
tax asset is considered, along with any other positive or negative
evidence. Since future financial results may differ from previous
estimates, periodic adjustments to the Company's valuation allowance
may be necessary.
In the first quarter of fiscal 2009, the Company performed an analysis
of its worldwide deferred tax assets. It was determined that it was
more likely than not that the deferred tax assets would not be
utilized in several jurisdictions including France, Mexico, Spain and
the United Kingdom. Therefore, the Company recorded a $300 million
valuation allowance as income tax expense.
In calculating the provision for income taxes, the Company uses an
estimate of the annual effective tax rate based upon the facts and
circumstances known at each interim period. On a quarterly basis, the
actual effective tax rate is adjusted, as appropriate, based upon
changed facts and circumstances, if any, as compared to those
forecasted at the beginning of the fiscal year and each interim period
thereafter. In the current fiscal quarter, the Company increased its
estimated annual effective income tax rate for continuing operations
from 21% to 24%, primarily due to losses in jurisdictions for which no
tax benefit is recognized.
The tables below show a reconciliation of the provision for income
taxes for the three months ended December 31, 2008 and 2007 (in
millions):
Three months ended Three months ended
December 31, 2008 December 31, 2007
Amount Tax Rate Amount Tax Rate
(unaudited) (unaudited)
Federal, state and foreign
income tax expense $(88) 24.0% $64 21.0%
Valuation allowance adjustments 300 -
Impairment charges 30 -
Provision for income taxes $242 -66.1% $64 21.0%
SOURCE Johnson Controls
