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0001193125-12-172189.txt : 201204200001193125-12-172189.hdr.sgml : 2012042020120420104956ACCESSION NUMBER:0001193125-12-172189CONFORMED SUBMISSION TYPE:8-KPUBLIC DOCUMENT COUNT:18CONFORMED PERIOD OF REPORT:20120420ITEM INFORMATION:Results of Operations and Financial ConditionITEM INFORMATION:Regulation FD DisclosureITEM INFORMATION:Financial Statements and ExhibitsFILED AS OF DATE:20120420DATE AS OF CHANGE:20120420
FILER:
COMPANY DATA:COMPANY CONFORMED NAME:JOHNSON CONTROLS INCCENTRAL INDEX KEY:0000053669STANDARD INDUSTRIAL CLASSIFICATION:PUBLIC BUILDING AND RELATED FURNITURE [2531]IRS NUMBER:390380010STATE OF INCORPORATION:WIFISCAL YEAR END:0930
FILING VALUES:FORM TYPE:8-KSEC ACT:1934 ActSEC FILE NUMBER:001-05097FILM NUMBER:12769907
BUSINESS ADDRESS:STREET 1:5757 N GREEN BAY AVENUESTREET 2:P O BOX 591CITY:MILWAUKEESTATE:WIZIP:53201BUSINESS PHONE:4145241200
MAIL ADDRESS:STREET 1:5757 N GREEN BAY AVENUESTREET 2:P O BOX 591CITY:MILWAUKEESTATE:WIZIP:53201
8-K1d338001d8k.htm8-K
8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section13 or 15(d) of the
Securities Exchange Act of1934
Date of Report (Date of Earliest Event Reported): April20, 2012
JOHNSON CONTROLS, INC.
(Exact name of registrant as specified in its charter)
Wisconsin1-509739-0380010
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
5757 North Green Bay Avenue
Milwaukee Wisconsin
53209
(Address of principal executive offices)(Zip Code)
Registrants telephone number, including area code: 414-524-1200
Not Applicable
Former name or former address, if changed since last report
Check the appropriate box belowif the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item2.02Results of Operations and Financial Condition
On April20, 2012, Johnson Controls, Inc. (the Company) issued a press release containing information about the Companys results of operations for the three and six months endedMarch31, 2012. A copy of this press release is incorporated herein by reference as Exhibit 99.1.
Item7.01Regulation FD Disclosure
Attached andincorporated herein by reference as Exhibit 99.1 is a copy of the press release dated April20, 2012 reporting the results of operations for the three and six months ended March31, 2012 issued by the registrant on April20, 2012.
Attached and incorporated herein by reference as Exhibit 99.2 is a copy of the slide presentation for the fiscal year 2012 second quarterquarterly update conference call issued by the registrant on April20, 2012.
Item9.01Financial Statements and Exhibits
(d)Exhibits:
99.1Press release issued by Johnson Controls, Inc., dated April20, 2012.
99.2Slide presentation for the fiscal year 2012 second quarter quarterly update conference call issued by Johnson Controls, Inc., dated April 20, 2012.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
JOHNSON CONTROLS, INC.
April20, 2012By:/s/ Brian J.Stief
Name:Brian J. Stief
Title:Vice President and Corporate Controller
EX-99.12d338001dex991.htmEX-99.1
EX-99.1
Exhibit 99.1
FOR IMMEDIATE RELEASE
CONTACT:
GlenL.Ponczak(Investors)
(414)524-2375
April20, 2012
DavidL.Urban(Investors)
(414)524-2838
FraserEngerman(Media)
(414)524-2733
Johnson Controls Reports Second Quarter Earnings of $0.53 Per Share With 4% SalesGrowth
MILWAUKEE, April20, 2012. . . Johnson Controls, Inc. (NYSE: JCI)today announced earnings of $0.53 per diluted share,in-line with its previously announced financial guidance. Highlights of the companys second quarter of 2012 include:
Record net sales of $10.6 billion vs. $10.1 billion in Q2 2011, up 4%
Income from business segments of $559 million vs. $521 million in 2011. Excluding net non-recurring items in both the 2012 and 2011 second quarters,income from business segments was $558 million in the current quarter vs. $557 million last year.
Net income of $364 million or $0.53 per diluted share compared with $354 million or $0.51 per share in the 2011 second quarter. Excluding the netnon-recurring items, net income was $363 million or $0.53 per diluted share compared with net income of $383 million, or $0.56 per diluted share last year.
As we stated at the start of the quarter, Johnson Controls faced a mix of opportunities and challenges. Our businesses did a good job of managing through these conditions and our second quarterresults are consistent with our expectations, said Johnson Controls Chairman and Chief Executive Officer Steve Roell.
Businessresults excluding non-recurring items
Automotive Experience sales in the 2012 second quarter increased 7% to $5.6 billion versus $5.2billion last year due primarily to the incremental revenues associated with the 2011 acquisitions as well as launches of new automotive seating and interior programs. Revenues increased 12% in North America compared to a 17% increase in industryproduction. European sales were 4% higher versus an industry production decline of 4% while Asia sales were up 6%. Revenues in China, which are mostly generated through non-consolidated joint ventures, were 5% higher than the 2011 quarter, at $1.0billion.
Page 1
Automotive Experience reported segment income of $236 million in the current quarter, down 4% versus thesecond quarter of 2011. North America segment income fell 17% to $121 million versus $145 million in the same period last year. European segment income dropped 35% to $34 million compared to $52 million in the second quarter of 2011. In Asia, higherprofitability in Japan resulted in a segment income increase of 62% to $81 million versus $50 million last year.
As previously indicated,North America second quarter earnings were negatively impacted by costs associated with the start-up of a metals plant as well as higher engineering and launch costs associated with new business wins. European earnings were negatively impacted byoperating inefficiencies from certain programs launched over the past two years. The company has increased resources dedicated to improving its launch efficiencies and quality. Johnson Controls said it believes these actions will continue to make anincreasingly positive impact on earnings through the remainder of 2012 and beyond.
Building Efficiency sales in the 2012 second quarter were$3.6 billion, slightly higher than last year, led by a 10% revenue increase in Asia and 6% increase in North America Systems and Global Workplace Solutions. Sales in Europe were lower than last year, especially in southern Europe where the economiesare weakest. Residential HVAC sales declined by double-digits in the quarter, consistent with the year-over-year performance of the overall industry. Second quarter backlog increased 3% to a record $5.3 billion versus $5.1 billion in the year-agoquarter, with gains in Asia and North America being partially offset by lower demand in Europe.
Segment income of $127 million was down 4%compared with last year. Higher income and profitability in North America Systems, North America Service, Asia and Global Workplace Solutions was offset by lower results in Europe and residential HVAC. The company said the residential HVAC marketwas negatively impacted by unusually warm winter weather in North America, resulting in lower demand for furnaces.
Power Solutions sales inthe second quarter of 2012 were slightly higher at $1.4 billion as higher volumes in Europe and China and a favorable product mix were offset by lower North American demand. Unit shipments fell 6% in North America with lower aftermarket demand morethan offsetting higher sales of original equipment batteries. The company attributed the soft aftermarket demand to unseasonably warm winter temperatures which negatively impacted shipments in the current quarter. Johnson Controls said that customerinventory levels at the end of the quarter were comparable with the levels a year ago.
Power Solutions segment income was $195 million, up10% versus $178 million in the second quarter of 2011 as a result of a favorable product mix and the benefits of increased vertical integration. The increases were partially offset by costs of temporarily importing batteries to Chinese customersassociated with production interruptions at the companys Shanghai battery plant.
Page 2
Johnson Controls said that the construction of its recycling facility in South Carolina and its thirdChinese battery plant are proceeding on schedule. It also noted that it expects costs related to the Shanghai plant shutdown to be lower in the balance of 2012 as it finalizes a solution to the disruption. Demand continues to grow for thecompanys higher-margin AGM lead-acid batteries and plans to increase capacity are progressing as expected.
2012 Financial Outlook
Johnson Controls said there are a number of factors that support improved financial results in the second half of 2012 versus thefirst half of the year. They include:
Power Solutions
Pricing actions
Benefits of vertical integration (lead recycling)
Reduction in battery imports to China
Automotive Experience
The 2011 impact of the tsunami on Japanese auto production which negatively impacted last years second half results
Higher North America automotive production
Normal seasonality in profitability (2H higher than 1H)
Building Efficiency
Normal seasonality in profitability (2H higher than 1H)
SG&A cost reduction initiatives
Pricing actions
Improved performance in Service business
Johnson Controls said it was comfortable with the current sell-side consensus for the full fiscal year 2012. The company said that it expects its third quarter earnings to increase approximately 20% vs.the 2011 third quarter, and its fourth quarter earnings to increase approximately 25% from the prior year period.
Our second halfperformance forecast is not predicated on improvements in our markets. Our businesses are gaining market share and extending their market-leading positions, Mr.Roell said. We will continue the aggressive actions to improveefficiencies and to reduce costs, which will accrue increasing benefits throughout the rest of the year and beyond.
###
About Johnson Controls
Johnson Controls is a global diversified technology and industrial leader serving customers in more than 150 countries. Our 162,000 employees create quality products, services and solutions to optimizeenergy 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, withthe 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 2011, Corporate Responsibility Magazinerecognized Johnson Controls as the #1 company in its annual 100 Best Corporate Citizens list. For additional information, please visit http://www.johnsoncontrols.com.
###
Johnson Controls, Inc. hasmade forward-looking statements in this document pertaining to its financial results for fiscal 2012 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 cautionsthat numerous important factors, such as automotive vehicle production levels, mix and schedules, energy and commodity prices, the strength of the U.S. or other economies, currency exchange rates, cancellation of or changes to commercial contracts,changes in the levels or timing of investments in commercial buildings as well as other factors discussed in Item1A of Part I of the Companys most recent Form 10-k filing (filed November22, 2011) could affect the Companysactual 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.
April 20, 2012
page 5
JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data; unaudited)
Three Months EndedMarch 31,
20122011
Net sales
$10,565$10,144
Cost of sales
9,0168,670
Gross profit
1,5491,474
Selling, general and administrative expenses
(1,069)(1,014)
Net financing charges
(63)(46)
Equity income
7961
Income before income taxes
496475
Provision for income taxes
9490
Net income
402385
Less: income attributable to noncontrolling interests
3831
Net income attributable to JCI
$364$354
Diluted earnings per share
$0.53$0.51
Diluted weighted average shares
690691
Shares outstanding at period end
680678
April 20, 2012
page 6
JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data; unaudited)
Six Months EndedMarch 31,
20122011
Net sales
$20,982$19,681
Cost of sales
17,90116,793
Gross profit
3,0812,888
Selling, general and administrative expenses
(2,123)(1,961)
Net financing charges
(112)(81)
Equity income
199127
Income before income taxes
1,045973
Provision for income taxes
198185
Net income
847788
Less: income attributable to noncontrolling interests
7359
Net income attributable to JCI
$774$729
Diluted earnings per share
$1.12$1.06
Diluted weighted average shares
690689
Shares outstanding at period end
680678
April 20, 2012
page 7
JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in millions; unaudited)
March31,2012September30,2011March31,2011
ASSETS
Cash and cash equivalents
$240$257$401
Accounts receivablenet
7,4027,1516,946
Inventories
2,3742,3162,239
Other current assets
2,3462,2912,620
Current assets
12,36212,01512,206
Property, plant and equipmentnet
6,0865,6164,761
Goodwill
7,0407,0166,807
Other intangible assetsnet
966945832
Investments in partially-owned affiliates
961811864
Other noncurrent assets
3,5583,2733,198
Total assets
$30,973$29,676$28,668
LIABILITIES AND EQUITY
Short-term debt and current portion of long-term debt
$678$613$159
Accounts payable and accrued expenses
7,2697,4747,152
Other current liabilities
2,6082,6952,861
Current liabilities
10,55510,78210,172
Long-term debt
5,6454,5334,382
Other noncurrent liabilities
2,7102,9212,785
Redeemable noncontrolling interests
318260223
Shareholders' equity attributable to JCI
11,59511,04210,976
Noncontrolling interests
150138130
Total liabilities and equity
$30,973$29,676$28,668
April 20, 2012
page 8
JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
Three Months Ended March 31,
20122011
Operating Activities
Net income attributable to JCI
$364$354
Income attributable to noncontrolling interests
3831
Net income
402385
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization
200185
Equity in earnings of partially-owned affiliates, net of dividends received
(59)(51)
Deferred income taxes
(34)
Impairment charges
14
Gain on divestituresnet
(35)
Fair value adjustment of equity investment
(12)
Other
3918
Changes in assets and liabilities, excluding acquisitions and divestitures:
Accounts receivable
(277)(562)
Inventories
(74)(200)
Accounts payable and accrued liabilities
167366
Change in other assets and liabilities
(88)(105)
Cash provided by operating activities
24336
Investing Activities
Capital expenditures
(448)(275)
Sale of property, plant and equipment
37
Acquisition of businesses, net of cash acquired
(19)(534)
Business divestitures
91
Othernet
(7)(38)
Cash used by investing activities
(380)(840)
Financing Activities
Increase in short and long-term debtnet
313976
Stock repurchases
(33)
Payment of cash dividends
(123)(109)
Othernet
(1)21
Cash provided by financing activities
156888
Effect of exchange rate changes on cash and cash equivalents
(20)(4)
Increase (decrease) in cash and cash equivalents
$(1)$80
April 20, 2012
page 9
JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
Six Months Ended March31,
20122011
Operating Activities
Net income attributable to JCI
$774$729
Income attributable to noncontrolling interests
7359
Net income
847788
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization
396354
Equity in earnings of partially-owned affiliates, net of dividends received
(161)(73)
Deferred income taxes
26
Impairment charges
14
Gain on divestituresnet
(35)
Fair value adjustment of equity investment
(12)
Other
7636
Changes in assets and liabilities, excluding acquisitions and divestitures:
Accounts receivable
(71)(515)
Inventories
(69)(299)
Accounts payable and accrued liabilities
(479)56
Change in other assets and liabilities
(386)(218)
Cash provided by operating activities
146129
Investing Activities
Capital expenditures
(986)(535)
Sale of property, plant and equipment
618
Acquisition of businesses, net of cash acquired
(30)(629)
Business divestitures
91
Othernet
(92)(50)
Cash used by investing activities
(1,011)(1,196)
Financing Activities
Increase in short and long-term debtnet
1,121989
Stock repurchases
(33)
Payment of cash dividends
(232)(196)
Othernet
(19)101
Cash provided by financing activities
837894
Effect of exchange rate changes on cash and cash equivalents
1114
Decrease in cash and cash equivalents
$(17)$(159)
April 20, 2012
page 10
FOOTNOTES
1. Business Unit Summary
(in millions)Three Months EndedMarch31,(unaudited)Six Months EndedMarch31,(unaudited)
20122011%20122011%
Net Sales
Building efficiency
$3,556
$3,515
1%$7,098$6,9123%
Automotive experience
5,596
5,224
7%10,8579,80911%
Power solutions
1,413
1,405
1%3,0272,9602%
Net Sales
$10,565
$10,144
$20,982$19,681
Segment Income (2)
Building efficiency
$151
$132
14%$284$2715%
Automotive experience
227
211
8%4213889%
Power solutions
181
178
2%45239514%
Segment Income
$559(1)$521(1)
$1,157$1,054
Net financing charges
(63)
(46)
(112)(81)
Income before income taxes
$496
$475
$1,045$973
Net Sales
Products and systems
$8,495
$8,107
5%$16,829$15,7027%
Services
2,070
2,037
2%4,1533,9794%
$10,565
$10,144
$20,982$19,681
Cost of Sales
Products and systems
$7,302
$6,973
5%$14,464$13,5017%
Services
1,714
1,697
1%3,4373,2924%
$9,016
$8,670
$17,901$16,793
(1)These second quarter reported numbers include certain non-recurring items. The pre-taxnon-recurring items are reported in the segments as follows:
AutomotiveexperienceBuildingefficiencyPower solutionsConsolidated JCI
20122011201220112012201120122011
Segment income, as reported
$227$211$151$132$181$178$559$521
Non-recurring items:
Impairment charges
1414
Restructuring charges
936112036
Divestiture net gains
(35)(35)
Segment income, excluding one-time items
$236$247$127$132$195$178$558$557
(2)Management evaluates the performance of the segments based primarily on segment income, whichrepresents income from continuing operations before income taxes and noncontrolling interests, excluding net financing charges.
Building efficiencyProvides facility systems and services including comfort, energy and security management for thenon-residential buildings market and provides heating, ventilating, and air conditioning products and services for the residential and non-residential building markets.
Automotive experienceDesigns and manufactures interior systems and products for passenger cars and light trucks, including vans, pick-up trucks and sport/crossover utility vehicles.
Power solutionsServices both automotive original equipment manufacturers and the battery aftermarket by providing advancedbattery technology, coupled with systems engineering, marketing and service expertise.
2. Acquisitions/Divestitures
In the second quarter of fiscal 2012, the Company completed the sale of two of its Building efficiency non-core businesses. The Company received cash ofapproximately $91 million from the divestitures and recorded net gains of $35 million.
In the second quarter of fiscal 2011, the Companyacquired the C. Rob. Hammerstein Group, a leading global supplier of high-quality metal seat structures, components and mechanisms based in Solingen, Germany. The Company paid approximately $581 million (excluding cash acquired of $60million).As a result of the acquisition, in the second quarter of fiscal 2011 the Company recorded non-recurring acquisition and related costs of $36 million.
April 20, 2012
page 11
3. Income Taxes
The Company's effective tax rate for the second quarter of fiscal 2012 and fiscal 2011 is 19.0 percent.
4. Earnings per Share
The following table reconciles the numerators and denominators usedto calculate basic and diluted earning per share (in millions):
ThreeMonthsEndedMarch31,Six Months EndedMarch31,
2012201120122011
(unaudited)(unaudited)
Income Available to Common Shareholders
Basic income available to common shareholders
$364$354$774$729
Interest expense, net of tax
112
Diluted income available to common shareholders
$364$355$775$731
Weighted Average Shares Outstanding
Basic weighted average shares outstanding
680.0677.3679.9676.3
Effect of dilutive securities:
Stock options
6.29.25.98.6
Convertible senior notes
Equity units
3.74.53.74.5
Diluted weighted average shares outstanding
689.9691.0689.5689.4
EX-99.23d338001dex992.htmEX-99.2
EX-99.2
April20, 2012 Quarterly updateFY 2012 second quarterExhibit 99.2
AgendaIntroductionGlen Ponczak, Vice President, Global Investor RelationsOverviewSteve Roell, Chairman and Chief Executive OfficerBusiness results and financial reviewBruce McDonald, Executive Vice President and Chief Financial OfficerQ&AFORWARD-LOOKING STATEMENTJohnson Controls, Inc. has made forward-looking statements in this documentpertaining to its financial results for fiscal 2012 and beyond that are based on preliminary data and are subject to risks and uncertainties. Allstatements, other than statements of historical fact, are statements that are,orcouldbe,deemed"forward-looking"statementsandincludetermssuchas"outlook,""expectations,""estimates"or"forecasts."Forthose statements, the Company cautions that numerous important factors, such asautomotive vehicle production levels, mix and schedules, energy and commodityprices,thestrengthoftheU.S.orothereconomies,currencyexchangerates,cancellationoforchangestocommercialcontracts, changes in the levels or timing of investments in commercial buildings as well asother factors discussed in Item 1A of Part I of the Company's most recentForm 10-k filing (filed November 22, 2011) 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 madeby, or on behalf of, the Company. 2
2012second quarter Macro environmentMixed automotive industry production
Higher production (17%) in North America
Lower production (-4%) in Europe but with some strength in luxury segments
Slightly higher production (2%) in ChinaUnseasonably warm winter temperatures in North America
Negative impact on North American aftermarket battery demand
European weather normalized in Jan/Feb; aftermarket battery demand recovered 3
2012second quarter Macro environmentMixed non-residential buildings markets
Expansion continues in China (Tier 2 and 3 cities), Middle East expansion
Some recovery in North America, though institutional market likely slightly lower in 2H 2012
Architectural Billings Indexfive months of expansion after four years of decline
Pipeline of bidding activity higher than a year ago
Lower U.S. industry residential HVAC demand
2012 warm temperature negatively impacted furnace sales4
2012second quarter* Sales: $10.6 billion vs. $10.1 billion in 2011Segment income: $558 million vs. $557 million in Q2 2011Net income: $363 million vs. $383 million in Q1 2011 EPS: $0.53 per diluted share vs. $0.56 in Q1 20115Results are consistent with January 19, 2012 financial guidance
FY2012 Second half vs. first halfFactors why 2012 second half results are expected to be better than the firsthalf Power Solutions
Pricing actions
Benefits of vertical integration
Reduction in battery imports to serve Chinese customersAutomotive Experience
Higher North American production rate
2H 2011 results negatively impacted by Japanese earthquake / tsunami
Seasonality (2H more profitable than 1H)Building Efficiency
Positive impact from SG&A cost containment / reductions
Pricing actions
Seasonality (2H more profitable than 1H)
Improved performance in Service business6
Ourmid- to long-term strategies and outlook are intactStrong market position in SLI batteries; ability to drive higher margins through vertical integrationInvestments in AGM battery technology to support customer demand for start-stop vehiclesEmerging market leadership in all three businessesHigher automotive margins via seating metals strategy and core product portfolio / standardizationBuilding Efficiency market share gains through our ability to help customers improve energy efficiency and reduce greenhouse gas footprint7
2012second quarter Automotive Experience20122011Net sales$5.6B$5.2B7%Total sales up 4%, excluding acquisitions and currency12% increase in North America vs. 17% higher productionEurope up 8% (excluding currency) vs. lower industryproduction; Asia +6%China sales (mostly non-consolidated): up 5% to $1.0 billion Segment income*$236M$247M(4%)Higher production volumes Impact of 2011 acquisitionsHigher Asia profitabilityCosts associated with launch difficulties trending sequentially (vs. Q1 2012) lower8Return on sales by geography*N. America: 5%Europe: 1%Asia: 13%New 3-D multi-layer cluster introduced at the 2012 Consumer Electronics Show*Excludes non-recurring items
2012second quarter Building Efficiency20122011Net sales$3.6B$3.5B1%Higher revenues in Asia, North America Systems, GWS
Asia up 10%
North America Systems and Global Workplace Solutions up 6%North America Service down 4% due to discretionary service and maintenance deferralsEurope, Latin America and residential HVAC lowerSegment income*$127M$132M(4%)Margin improvement in North America Systems & Service and Asia
Lower in Europe, Latin America and residential HVACAccelerating SG&A cost reduction initiatives9Commercial backlog (at March 31, 2012)Record $5.3B, up 3%*Excludes non-recurring items
2012second quarter Power Solutions20122011Net sales$1.4B$1.4B1%Shipments: OE up 6%; aftermarket down 1%Favorable product mixSegment income*$195M$178M 10%Increased vertical integrationImproved product mixCost of importing batteries to ChinaHybrid battery joint venture consolidation in 201210*Excludes non-recurring itemsFlorence, S.C. recycling facility nearing construction completionChangxing, China Facility
(in millions)2012* (excluding items)2011* (excluding items)% change2012(reported)2011(reported)Sales$10,565$10,1444%$10,565$10,144Gross profit% of sales1,54914.7%1,47414.5%5%1,54914.7%1,47414.5%SG&A expenses1,0709789%1,0691,014Equity income796130%7961Segment income$558$557-$559$5215.3%5.5%5.3%5.1%Second quarter 2012Financial highlights11FX Euro to U.S. dollar average exchange rate at $1.31 in Q2 2012 vs. $1.37 in2011 Sales Excluding FX, sales up 6%Gross profit Higher volumes and product mixSG&A
Impactfrom2011acquisitionsandinvestmentsininnovationandemergingmarketsEquity income
Consolidation of hybrid business in 2012* 2012 excludes a net gain related to the divestitures of two businesses of $35million offset by a write-down of an investment of $14 million andrestructuring charges of $20 million; 2011 excludes acquisition related costs of $36 million
Secondquarter 2012 Financial highlightsFinancingcharges-net
HigherdebtlevelsIncometaxprovision
Underlying2012taxrateof19%,consistentwith2011Non-controllinginterests
ImprovedprofitabilityinconsolidatedPowerSolutionsJVs12(in millions, except earnings per share)2012* (excluding items)2011* (excluding items)2012(reported)2011 (reported)Segment income$558$557$559$521Financing charges -net63466346Income before taxes495511496475Income tax provision94979490Net income401414402385Income attributable to non-controlling interests38313831Net income attributable to JCI$363 $383 $364$354Diluted earnings per share$0.53$0.56$0.53$0.51* 2012 excludes a net gain related to the divestitures of two businesses of $35million offset by a write-down of an investment of $14 million andrestructuring charges of $20 million; 2011 excludes net acquisition related costs of $29 million
2012second quarter Balance sheet13Cash provided by operations increased $207 million from Q2 2011Increased capital spending to $448 million, $173 million higher than Q2 2011Continue to focus on improvements in trade working capitalNet debt / total capitalization 34%2012 outlookComfortable with current fullyear sell-side consensusQ3 earnings up approximately 20% y/yQ4 earnings up approximately 25% y/y
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