Attached files
| file | filename |
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| 8-K - 8-K - JOHNSON CONTROLS INC | d430779d8k.htm |
| EX-99.2 - EX-99.2 - JOHNSON CONTROLS INC | d430779dex992.htm |
Exhibit 99.1
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FOR IMMEDIATE RELEASE
| CONTACT: | Glen L. Ponczak (Investors) (414) 524-2375
David L. Urban (Investors) (414) 524-2838
Fraser Engerman (Media) (414) 524-2733 |
October 30, 2012 |
Johnson Controls Reports 2012 Fourth Quarter Earnings In-Line with Previous Guidance and
Record Full-Year Results
MILWAUKEE, October 30, 2012 . . . For the fiscal 2012 fourth quarter, Johnson Controls reported a net loss of $8 million, or $0.01 per share, on $10.4 billion in revenues. Excluding restructuring and non-recurring items in the 2012 and 2011 fiscal fourth quarters, highlights include:
| • | Net revenues of $10.4 billion vs. $10.8 billion in Q4 2011, down 4 percent |
| – | Excluding the impact of foreign exchange, revenues increased 1 percent |
| • | Income from business segments of $726 million compared with $741 million a year ago, down 2 percent. |
| • | Net income of $526 million versus $523 million in Q4 2011 |
| • | Diluted earnings per share of $0.77 versus $0.76 in the same quarter last year |
Johnson Controls said it believes that using the adjusted numbers provides a more meaningful comparison of its underlying operating performance.
Previously announced items that impacted reported Q4 2012 and Q4 2011 earnings include:
2012 fourth quarter:
| • | A $245 million ($228 million after-tax) restructuring charge, resulting in a net charge of $0.33 per diluted share. |
| • | A non-cash mark-to-market charge of $447 million ($271 million after-tax) associated with an accounting change for pension and retiree medical benefits. The adjustment, resulting in a net charge of $0.40 per diluted share, was due to a significant year-over-year decline in discount rates used to estimate the associated liability. |
| • | A $35 million tax charge related to discontinuing lead-processing operations at its Shanghai, China battery plant. |
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2011 fourth quarter:
| • | Results have been revised to include a non-cash mark-to-market charge of $479 million ($313 million after tax) or $0.45 per diluted share. The revision is associated with the accounting change for pension and retiree medical benefits. |
| • | Restructuring charges, an equity affiliate net gain and a tax valuation allowance release had a net positive impact of $0.03 per diluted share. |
“While the macro-economic environment was challenging, in the fourth quarter we significantly improved profitability in Building Efficiency, Power Solutions and North America Automotive Experience. European automotive and buildings markets continued to soften in the quarter, offsetting our gains elsewhere,” said Stephen A. Roell, Johnson Controls Chairman and Chief Executive Officer. “In response to the challenges in some of our key markets, we recently announced restructuring actions. We believe these initiatives better align resources with our current strategies and will help us to increase profitability in what we expect will be a low-growth environment next year.”
Business segments, excluding restructuring and non-recurring items (non-GAAP)
Building Efficiency realized higher segment income despite a soft global market environment. Sales in the fiscal 2012 fourth quarter were $3.8 billion, declining 7 percent (down 4 percent excluding currency) from $4.1 billion in the same quarter last year as higher revenues in Asia were more than offset by lower sales in North America, Europe, and the Middle East. Residential HVAC sales increased 9 percent as demand was positively impacted by the record high temperatures in North America.
While orders in the quarter were 10 percent lower year-over-year, the backlog of projects at the end of the quarter, excluding foreign exchange, increased 3 percent to $5.2 billion led by strength in North America Systems and Asia.
Building Efficiency segment income was $327 million, up 15 percent from $285 million in the fiscal 2011 fourth quarter, boosted by SG&A reductions. North America Service segment income increased 62 percent due primarily to improved pricing and better labor utilization. North America Systems income was 22 percent higher due to improved productivity and operational efficiencies.
Despite lower sales, Building Efficiency segment margin improved 160 basis points to 8.6 percent versus the same period last year, led by gains in North America Systems and North America Service.
Automotive Experience continued to be adversely affected by weakness in Europe. Sales in the quarter fell 2 percent (up 3 percent excluding currency) to $5.0 billion versus $5.1 billion last year as higher production volumes in North America and Asia and new program launches were more than offset by a weaker Euro and lower production volumes in Europe.
North American automotive revenues increased 13 percent to $2.2 billion from $1.9 billion last year, which is in line with the increase in overall industry production. European sales were down 15 percent to $2.2
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billion from $2.6 billion in the fiscal 2011 fourth quarter. Excluding the impact of foreign exchange, European sales were down 5 percent versus last year, compared with a 3 percent decline in industry production. Sales in Asia increased 2 percent (+4% excluding currency) to $663 million from $650 million in the fourth quarter of fiscal 2011. Total revenues in China, including non-consolidated joint ventures, rose 21 percent to $1.3 billion compared with $1.1 billion a year ago.
Automotive Experience reported segment income of $159 million in the current quarter, down 34 percent from $240 million the prior year. Significant improvement in North America and Asia was more than offset by lower European results. North America earnings improved significantly in the current quarter to $130 million from $83 million a year ago due primarily to the higher production levels and improved operational efficiencies. Segment income in Asia was $97 million, up 18 percent from the fiscal 2011 fourth quarter primarily due to higher revenues and stronger profitability in Japan and Korea. Automotive Europe reported a loss of $68 million in the quarter compared to a profit of $75 million last year as a result of the lower volumes, operational challenges and commercial negotiations.
Power Solutions posted solid income gains in the quarter. Sales in the fourth quarter of 2012 were unchanged (up 8 percent excluding currency and lead) at $1.6 billion versus the same period last year. Unit shipments rose 4 percent, split evenly between global aftermarket and OEM. Solid growth with North American OEMs, increased market share gains in the European aftermarket, and strength in Asia were partially offset by continued soft aftermarket demand in North America and lower shipments to European OEMs.
Power Solutions segment income rose 11 percent to $240 million versus $216 million in the fourth quarter of fiscal 2011 due primarily to the benefits of increased vertical integration and improved pricing. The company’s South Carolina lead recycling facility became operational during the quarter. Despite the headwind of higher year-over-year costs for battery cores used for recycling, Power Solutions segment margin rose 160 basis points to 15.4 percent versus the same period last year.
Fiscal 2013 outlook
Johnson Controls today gave a preliminary outlook of its market and financial expectations for fiscal 2013, saying it believes softening end markets and negative foreign currency will limit its ability to grow revenues and earnings in the upcoming year. It also anticipates a higher effective tax rate of 20% in 2013 due to an increased percentage of total earnings coming from the United States. The company expects 2013 first-half earnings to be significantly lower than the same period of 2012 with higher year-over-year earnings in the second half of the year. It added that it believes the financial benefits of the restructuring announced in the current quarter will begin to accrue in the second half of fiscal 2013. The company expects full-year 2013 earnings to be flat to slightly higher than 2012. Johnson Controls will provide additional fiscal year 2013 guidance at its annual New York analyst day on December 19, 2012.
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“As we look forward to fiscal 2013, we are expecting continued challenges in our end markets. We will benefit from our automotive and buildings backlogs, but we expect limited opportunity for top-line growth in the coming year,” said Mr. Roell. “We will be diligent in controlling costs, but remain committed to making investments that support our long-term growth and profitability strategies and will drive improvements in shareholder value.”
“Lastly, I would like to thank our 170,000 Johnson Controls employees around the world for delivering record sales and earnings in fiscal 2012 in a difficult environment,” Mr. Roell said.
FORWARD-LOOKING STATEMENTS
Johnson Controls, Inc. has made statements in this document that are forward-looking and, therefore, are subject to risks and uncertainties. All statements in this document other than statements of historical fact are statements that are, or could be, deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In this document, statements regarding future financial position, sales, costs, earnings, cash flows, other measures of results of operations, capital expenditures or debt levels and plans, objectives, outlook, targets, guidance or goals are forward-looking statements. Words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “forecast,” “project” or “plan” or terms of similar meaning are also generally intended to identify forward-looking statements. Johnson Controls cautions that these statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond the company’s control, that could cause Johnson Controls’ actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include the strength of the U.S. or other economies, automotive vehicle production levels, mix and schedules, energy and commodity prices, availability of raw materials and component products, currency exchange rates, and cancellation of or changes to commercial contracts, as well as other factors discussed in Item 1A of Part I of Johnson Controls’ most recent Annual Report on Form 10-K for the year ended September 30, 2011 and Johnson Controls’ subsequent Quarterly Reports on Form 10-Q. Shareholders, potential investors and others should consider these factors in evaluating the forward-looking statements and should not place undue reliance on such statements. The forward-looking statements included in this document are only made as of the date of this document, and Johnson Controls assumes no obligation, and disclaims any obligation, to update forward-looking statements to reflect events or circumstances occurring after the date of this document.
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About Johnson Controls
Johnson Controls is a global diversified technology and industrial leader serving customers in more than 150 countries. Our 170,000 employees create quality products, services and solutions to optimize energy and operational efficiencies of buildings; lead-acid automotive batteries and advanced batteries for hybrid and electric vehicles; and interior systems for automobiles. Our commitment to sustainability dates back to our roots in 1885, with the invention of the first electric room thermostat. Through our growth strategies and by increasing market share we are committed to delivering value to shareholders and making our customers successful. In 2012, Corporate Responsibility Magazine recognized Johnson Controls as the #5 company in its annual “100 Best Corporate Citizens” list. For additional information, please visit http://www.johnsoncontrols.com.
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October 30, 2012
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JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data; unaudited)
| Three Months Ended September 30, |
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| 2012 | 2011 (Revised) | |||||||
| Net sales |
$ | 10,392 | $ | 10,788 | ||||
| Cost of sales |
8,804 | 9,174 | ||||||
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| Gross profit |
1,588 | 1,614 | ||||||
| Selling, general and administrative expenses |
(1,380 | ) | (1,473 | ) | ||||
| Restructuring costs |
(245 | ) | — | |||||
| Net financing charges |
(62 | ) | (50 | ) | ||||
| Equity income |
71 | 115 | ||||||
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| Income before income taxes |
(28 | ) | 206 | |||||
| Provision (benefit) for income taxes |
(49 | ) | (63 | ) | ||||
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| Net income |
21 | 269 | ||||||
| Less: income attributable to noncontrolling interests |
29 | 35 | ||||||
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| Net income (loss) attributable to JCI |
$ | (8 | ) | $ | 234 | |||
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| Diluted earnings (loss) per share |
$ | (0.01 | ) | $ | 0.34 | |||
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| Diluted weighted average shares |
683 | 690 | ||||||
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| Shares outstanding at period end |
682 | 680 | ||||||
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October 30, 2012
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JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data; unaudited)
| Twelve Months Ended September 30, |
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| 2012 (Revised) | 2011 (Revised) | |||||||
| Net sales |
$ | 41,955 | $ | 40,833 | ||||
| Cost of sales |
35,737 | 34,775 | ||||||
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| Gross profit |
6,218 | 6,058 | ||||||
| Selling, general and administrative expenses |
(4,438 | ) | (4,393 | ) | ||||
| Restructuring costs |
(297 | ) | — | |||||
| Net financing charges |
(233 | ) | (174 | ) | ||||
| Equity income |
340 | 298 | ||||||
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| Income before income taxes |
1,590 | 1,789 | ||||||
| Provision for income taxes |
237 | 257 | ||||||
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| Net income |
1,353 | 1,532 | ||||||
| Less: income attributable to noncontrolling interests |
127 | 117 | ||||||
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| Net income attributable to JCI |
$ | 1,226 | $ | 1,415 | ||||
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| Diluted earnings per share |
$ | 1.78 | $ | 2.06 | ||||
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| Diluted weighted average shares |
689 | 690 | ||||||
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| Shares outstanding at period end |
682 | 680 | ||||||
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October 30, 2012
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JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in millions; unaudited)
| September 30, 2012 |
September 30, 2011 |
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| ASSETS |
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| Cash and cash equivalents |
$ | 265 | $ | 257 | ||||
| Accounts receivable - net |
7,308 | 7,151 | ||||||
| Inventories |
2,227 | 2,316 | ||||||
| Other current assets |
2,873 | 2,291 | ||||||
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| Current assets |
12,673 | 12,015 | ||||||
| Property, plant and equipment - net |
6,440 | 5,616 | ||||||
| Goodwill |
6,982 | 7,016 | ||||||
| Other intangible assets - net |
947 | 945 | ||||||
| Investments in partially-owned affiliates |
948 | 811 | ||||||
| Other noncurrent assets |
2,894 | 3,273 | ||||||
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| Total assets |
$ | 30,884 | $ | 29,676 | ||||
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| LIABILITIES AND EQUITY |
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| Short-term debt and current portion of long-term debt |
$ | 747 | $ | 613 | ||||
| Accounts payable and accrued expenses |
7,204 | 7,474 | ||||||
| Other current liabilities |
2,904 | 2,695 | ||||||
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| Current liabilities |
10,855 | 10,782 | ||||||
| Long-term debt |
5,321 | 4,533 | ||||||
| Other noncurrent liabilities |
2,752 | 2,921 | ||||||
| Redeemable noncontrolling interests |
253 | 260 | ||||||
| Shareholders’ equity attributable to JCI |
11,555 | 11,042 | ||||||
| Noncontrolling interests |
148 | 138 | ||||||
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| Total liabilities and equity |
$ | 30,884 | $ | 29,676 | ||||
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October 30, 2012
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JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
| Three Months Ended September 30, | ||||||||
| 2012 | 2011 (Revised) | |||||||
| Operating Activities |
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| Net income (loss) attributable to JCI |
$ | (8 | ) | $ | 234 | |||
| Income attributable to noncontrolling interests |
29 | 35 | ||||||
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| Net income |
21 | 269 | ||||||
| Adjustments to reconcile net income to cash provided by operating activities: |
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| Depreciation and amortization |
221 | 184 | ||||||
| Pension, postretirement health and other benefit expense |
455 | 490 | ||||||
| Pension, postretirement health and other benefit contributions |
(26 | ) | (200 | ) | ||||
| Equity in earnings of partially-owned affiliates, net of dividends received |
68 | 65 | ||||||
| Deferred income taxes |
(329 | ) | (208 | ) | ||||
| Impairment charges |
39 | — | ||||||
| Gain on divestitures - net |
(5 | ) | — | |||||
| Fair value adjustment of equity investment |
— | (89 | ) | |||||
| Other |
2 | 20 | ||||||
| Changes in assets and liabilities, excluding acquisitions and divestitures: |
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| Accounts receivable |
(59 | ) | (305 | ) | ||||
| Inventories |
169 | 45 | ||||||
| Restructuring reserves |
172 | (11 | ) | |||||
| Accounts payable and accrued liabilities |
(30 | ) | 206 | |||||
| Change in other assets and liabilities |
96 | 121 | ||||||
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| Cash provided by operating activities |
794 | 587 | ||||||
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| Investing Activities |
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| Capital expenditures |
(398 | ) | (425 | ) | ||||
| Sale of property, plant and equipment |
46 | 18 | ||||||
| Acquisition of businesses, net of cash acquired |
— | (139 | ) | |||||
| Business divestitures |
14 | — | ||||||
| Other |
4 | (12 | ) | |||||
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| Cash used by investing activities |
(334 | ) | (558 | ) | ||||
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| Financing Activities |
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| Increase (decrease) in short and long-term debt - net |
(606 | ) | 11 | |||||
| Stock repurchases |
(60 | ) | — | |||||
| Payment of cash dividends |
(123 | ) | (109 | ) | ||||
| Other |
1 | (20 | ) | |||||
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| Cash used by financing activities |
(788 | ) | (118 | ) | ||||
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| Effect of exchange rate changes on cash and cash equivalents |
(9 | ) | 11 | |||||
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| Decrease in cash and cash equivalents |
$ | (337 | ) | $ | (78 | ) | ||
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October 30, 2012
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JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
| Twelve Months Ended September 30, | ||||||||
| 2012 (Revised) | 2011 (Revised) | |||||||
| Operating Activities |
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| Net income attributable to JCI |
$ | 1,226 | $ | 1,415 | ||||
| Income attributable to noncontrolling interests |
127 | 117 | ||||||
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| Net income |
1,353 | 1,532 | ||||||
| Adjustments to reconcile net income to cash provided by operating activities: |
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| Depreciation and amortization |
824 | 731 | ||||||
| Pension, postretirement health and other benefit expense |
479 | 410 | ||||||
| Pension, postretirement health and other benefit contributions |
(414 | ) | (451 | ) | ||||
| Equity in earnings of partially-owned affiliates, net of dividends received |
(138 | ) | (15 | ) | ||||
| Deferred income taxes |
(244 | ) | (257 | ) | ||||
| Impairment charges |
53 | — | ||||||
| Gain on divestitures - net |
(40 | ) | — | |||||
| Fair value adjustment of equity investment |
(12 | ) | (89 | ) | ||||
| Other |
45 | 61 | ||||||
| Changes in assets and liabilities, excluding acquisitions and divestitures: |
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| Accounts receivable |
(114 | ) | (721 | ) | ||||
| Inventories |
39 | (387 | ) | |||||
| Restructuring reserves |
196 | (94 | ) | |||||
| Accounts payable and accrued liabilities |
(64 | ) | 343 | |||||
| Change in other assets and liabilities |
(404 | ) | 13 | |||||
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| Cash provided by operating activities |
1,559 | 1,076 | ||||||
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| Investing Activities |
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| Capital expenditures |
(1,831 | ) | (1,325 | ) | ||||
| Sale of property, plant and equipment |
58 | 54 | ||||||
| Acquisition of businesses, net of cash acquired |
(30 | ) | (1,226 | ) | ||||
| Business divestitures |
105 | — | ||||||
| Other |
(94 | ) | (140 | ) | ||||
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| Cash used by investing activities |
(1,792 | ) | (2,637 | ) | ||||
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| Financing Activities |
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| Increase in short and long-term debt - net |
922 | 1,575 | ||||||
| Stock repurchases |
(102 | ) | — | |||||
| Payment of cash dividends |
(477 | ) | (413 | ) | ||||
| Other |
(136 | ) | 77 | |||||
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| Cash provided by financing activities |
207 | 1,239 | ||||||
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| Effect of exchange rate changes on cash and cash equivalents |
34 | 19 | ||||||
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| Increase (decrease) in cash and cash equivalents |
$ | 8 | $ | (303 | ) | |||
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October 30, 2012
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FOOTNOTES
1. Business Unit Summary
In the fourth quarter of fiscal 2012, the Company changed its method of accounting for pension and postretirement benefits which required retrospective application to current and prior year financial statements. As a result of this accounting change, the segment income amounts shown below reflect a pension and postretirement expense reduction of $23 million ($0.02) and $92 million ($0.08) for the fiscal 2012 fourth quarter and full year, respectively, and $16 million ($0.01) and $62 million ($0.06) for the fiscal 2011 fourth quarter and full year, respectively. In addition, the pension and postretirement mark-to-market charge for each period resulting from this accounting change is treated as a non-recurring item in the tables below (Refer to footnote 5 for more detail regarding this accounting change).
| (in millions) | Three Months Ended September 30, (unaudited) |
Twelve Months Ended September 30, (unaudited) |
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| 2012 | 2011 (Revised) | % | 2012 (Revised) | 2011 (Revised) | % | |||||||||||||||||||
| Net Sales |
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| Building Efficiency |
$ | 3,817 | $ | 4,088 | -7 | % | $ | 14,715 | $ | 14,893 | -1 | % | ||||||||||||
| Automotive Experience |
5,012 | 5,138 | -2 | % | 21,334 | 20,065 | 6 | % | ||||||||||||||||
| Power Solutions |
1,563 | 1,562 | 0 | % | 5,906 | 5,875 | 1 | % | ||||||||||||||||
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| Net Sales |
$ | 10,392 | $ | 10,788 | $ | 41,955 | $ | 40,833 | ||||||||||||||||
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| Segment Income (2) |
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| Building Efficiency |
$ | 327 | $ | 245 | 33 | % | $ | 910 | $ | 746 | 22 | % | ||||||||||||
| Automotive Experience |
159 | 237 | -33 | % | 803 | 780 | 3 | % | ||||||||||||||||
| Power Solutions |
240 | 253 | -5 | % | 854 | 821 | 4 | % | ||||||||||||||||
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| Segment Income |
$ | 726 | $ | 735 | (1) | $ | 2,567 | $ | 2,347 | |||||||||||||||
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| Restructuring costs |
$ | (245 | ) | $ | — | $ | (297 | ) | $ | — | ||||||||||||||
| Mark-to-market charge for pension and postretirement plans |
(447 | ) | (479 | ) | (447 | ) | (384 | ) | ||||||||||||||||
| Net financing charges |
(62 | ) | (50 | ) | (233 | ) | (174 | ) | ||||||||||||||||
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| Income before income taxes |
$ | (28 | ) | $ | 206 | $ | 1,590 | $ | 1,789 | |||||||||||||||
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| Net Sales |
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| Products and systems |
$ | 8,268 | $ | 8,516 | -3 | % | $ | 33,561 | $ | 32,420 | 4 | % | ||||||||||||
| Services |
2,124 | 2,272 | -7 | % | 8,394 | 8,413 | 0 | % | ||||||||||||||||
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| $ | 10,392 | $ | 10,788 | $ | 41,955 | $ | 40,833 | |||||||||||||||||
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| Cost of Sales |
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| Products and systems |
$ | 7,094 | $ | 7,225 | -2 | % | $ | 28,839 | $ | 27,675 | 4 | % | ||||||||||||
| Services |
1,710 | 1,949 | -12 | % | 6,898 | 7,100 | -3 | % | ||||||||||||||||
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| $ | 8,804 | $ | 9,174 | $ | 35,737 | $ | 34,775 | |||||||||||||||||
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| (1) | The fiscal 2011 fourth quarter reported amounts include restructuring costs of $43 million and equity affiliate net gains of $37 million which impacted Automotive Experience, Building Efficiency and Power Solutions by $3 million, $40 million and ($37) million, respectively. |
| (2) | Management evaluates the performance of the business units based primarily on segment income, which represents income from continuing operations before income taxes and noncontrolling interests, excluding net financing charges, significant restructuring costs, and the net mark-to-market adjustments related to pension and postretirement plans. |
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. Earnings Per Share Reconciliation
A reconciliation of earnings per share, as reported, to earnings per share, excluding restructuring charges and one-time items, for the respective quarters and annual periods is shown below:
| Three Months Ended September 30, |
Twelve Months Ended September 30, |
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| 2012 | 2011 (Revised) | 2012 (Revised) | 2011 (Revised) | |||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Earnings per share, as reported |
$ | (0.01 | ) | $ | 0.34 | $ | 1.78 | $ | 2.06 | |||||||
| Non-recurring items: |
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| Restructuring charges |
0.33 | — | 0.40 | — | ||||||||||||
| Mark-to-market charge for pension and postretirement plans |
0.40 | 0.45 | 0.39 | 0.36 | ||||||||||||
| Tax valuation allowance |
0.05 | (0.04 | ) | 0.02 | (0.04 | ) | ||||||||||
| Other items, net |
— | 0.01 | — | 0.08 | ||||||||||||
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| Earnings per share, excluding one-time items |
$ | 0.77 | $ | 0.76 | $ | 2.59 | $ | 2.46 | ||||||||
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October 30, 2012
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3. Income Taxes
The fiscal 2012 fourth quarter provision for income taxes reflects a $35 million ($0.05) valuation allowance increase. The fiscal 2011 fourth quarter provision for income taxes reflects a $30 ($0.04) million valuation allowance release. The full year fiscal 2012 provision for income taxes reflects a net ($0.02) tax expense consisting of the ($0.05) fourth quarter valuation allowance increase and a $22 million ($0.03) third quarter tax benefit related to a release of reserves for uncertain tax positions at international locations.
4. Earnings Per Share
The following table reconciles the numerators and denominators used to calculate basic and diluted earning per share (in millions):
| Three Months Ended September 30, |
Twelve Months Ended September 30, |
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| 2012 | 2011 (Revised) | 2012 (Revised) | 2011 (Revised) | |||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Income Available to Common Shareholders |
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| Basic income (loss) available to common shareholders |
$ | (8 | ) | $ | 234 | $ | 1,226 | $ | 1,415 | |||||||
| Interest expense, net of tax |
— | 1 | 1 | 3 | ||||||||||||
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| Diluted income (loss) available to common shareholders |
$ | (8 | ) | $ | 235 | $ | 1,227 | $ | 1,418 | |||||||
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| Weighted Average Shares Outstanding |
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| Basic weighted average shares outstanding |
682.6 | 679.5 | 681.5 | 677.7 | ||||||||||||
| Effect of dilutive securities: |
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| Stock options |
— | 6.8 | 5.2 | 8.1 | ||||||||||||
| Equity units |
— | 3.7 | 1.9 | 4.1 | ||||||||||||
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| Diluted weighted average shares outstanding |
682.6 | 690.0 | 688.6 | 689.9 | ||||||||||||
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October 30, 2012
Page 12
5. Pension and Postretirement Benefit Accounting Change
In the fourth quarter of fiscal 2012, Johnson Controls changed its accounting method for recognizing pension and postretirement benefit expenses. The new mark-to-market accounting method recognizes pension / postretirement actuarial and investment gains or losses in the fourth quarter of each fiscal year. The prior method amortized deferred actuarial gains or losses and smoothed asset returns over a number of years.
This change is reported through retrospective application to all periods presented. The only impact to the consolidated balance sheet were reclassifications between accumulated other comprehensive income and retained earnings. The impacts of adjustments made to the fiscal 2012 and 2011 consolidated statements of income and cash flows are summarized below:
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data; unaudited)
| Twelve Months Ended September 30, 2012 | ||||||||||||
| Previously Reported* | Revised | Effect of Change | ||||||||||
| Cost of sales |
$ | 35,718 | $ | 35,737 | $ | 19 | ||||||
| Gross profit |
6,237 | 6,218 | (19 | ) | ||||||||
| Selling, general and administrative expenses |
4,102 | 4,438 | 336 | |||||||||
| Income before income taxes |
1,945 | 1,590 | (355 | ) | ||||||||
| Provision for income taxes |
378 | 237 | (141 | ) | ||||||||
| Net income |
1,567 | 1,353 | (214 | ) | ||||||||
| Net income attributable to JCI |
1,440 | 1,226 | (214 | ) | ||||||||
| Diluted earnings per share |
2.09 | 1.78 | (0.31 | ) | ||||||||
| Three Months Ended September 30, 2011 | ||||||||||||
| Previously Reported | Revised | Effect of Change | ||||||||||
| Cost of sales |
$ | 9,056 | $ | 9,174 | $ | 118 | ||||||
| Gross profit |
1,732 | 1,614 | (118 | ) | ||||||||
| Selling, general and administrative expenses |
1,128 | 1,473 | 345 | |||||||||
| Income before income taxes |
669 | 206 | (463 | ) | ||||||||
| Provision (benefit) for income taxes |
96 | (63 | ) | (159 | ) | |||||||
| Net income |
573 | 269 | (304 | ) | ||||||||
| Net income attributable to JCI |
538 | 234 | (304 | ) | ||||||||
| Diluted earnings per share |
0.78 | 0.34 | (0.44 | ) | ||||||||
| Twelve Months Ended September 30, 2011 | ||||||||||||
| Previously Reported | Revised | Effect of Change | ||||||||||
| Cost of sales |
$ | 34,663 | $ | 34,775 | $ | 112 | ||||||
| Gross profit |
6,170 | 6,058 | (112 | ) | ||||||||
| Selling, general and administrative expenses |
4,183 | 4,393 | 210 | |||||||||
| Income before income taxes |
2,111 | 1,789 | (322 | ) | ||||||||
| Provision for income taxes |
370 | 257 | (113 | ) | ||||||||
| Net income |
1,741 | 1,532 | (209 | ) | ||||||||
| Net income attributable to JCI |
1,624 | 1,415 | (209 | ) | ||||||||
| Diluted earnings per share |
2.36 | 2.06 | (0.30 | ) | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
| Twelve Months Ended September 30, 2012 | ||||||||||||
| Previously Reported* | Revised | Effect of Change | ||||||||||
| Cash flows from operating activities: |
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| Net income attributable to JCI |
$ | 1,440 | $ | 1,226 | $ | (214 | ) | |||||
| Net income |
1,567 | 1,353 | (214 | ) | ||||||||
| Pension, postretirement health and other benefit expense (1) |
— | 479 | 479 | |||||||||
| Pension, postretirement health and other benefit contributions (2) |
— | (414 | ) | (414 | ) | |||||||
| Deferred income taxes |
(103 | ) | (244 | ) | (141 | ) | ||||||
| Other |
131 | 45 | (86 | ) | ||||||||
| Accounts payable and accrued liabilities |
(440 | ) | (64 | ) | 376 | |||||||
| Three Months Ended September 30, 2011 | ||||||||||||
| Previously Reported | Revised | Effect of Change | ||||||||||
| Cash flows from operating activities: |
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| Net income attributable to JCI |
$ | 538 | $ | 234 | $ | (304 | ) | |||||
| Net income |
573 | 269 | (304 | ) | ||||||||
| Pension, postretirement health and other benefit expense (1) |
— | 490 | 490 | |||||||||
| Pension, postretirement health and other benefit contributions (2) |
— | (200 | ) | (200 | ) | |||||||
| Deferred income taxes |
(49 | ) | (208 | ) | (159 | ) | ||||||
| Other |
33 | 20 | (13 | ) | ||||||||
| Accounts payable and accrued liabilities |
20 | 206 | 186 | |||||||||
| Twelve Months Ended September 30, 2011 | ||||||||||||
| Previously Reported | Revised | Effect of Change | ||||||||||
| Cash flows from operating activities: |
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| Net income attributable to JCI |
$ | 1,624 | $ | 1,415 | $ | (209 | ) | |||||
| Net income |
1,741 | 1,532 | (209 | ) | ||||||||
| Pension, postretirement health and other benefit expense (1) |
— | 410 | 410 | |||||||||
| Pension, postretirement health and other benefit contributions (2) |
— | (451 | ) | (451 | ) | |||||||
| Deferred income taxes |
(144 | ) | (257 | ) | (113 | ) | ||||||
| Other |
96 | 61 | (35 | ) | ||||||||
| Accounts payable and accrued liabilities |
(55 | ) | 343 | 398 | ||||||||
| (1) | Pension, postretirement health and other benefit expense was previously included in different lines on the condensed consolidated statement of cash flows. The amortization of amounts from accumulated other comprehensive income was previously included in the other line. The remaining expense was included in the accounts payable and accrued liabilities line. |
| (2) | Pension, postretirement health and other benefit contributions were previously included in the accounts payable and accrued liabilities line on the condensed consolidated statement of cash flows. |
| * | Reflects previously reported amounts for nine months ended June 30, 2012 plus amounts for quarter ended September 30, 2012. |
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