Johnson Controls Inc. Reports Operating Results (10-Q)

Johnson Controls Inc. (JCI, Financial) filed Quarterly Report for the period ended 2009-12-31.

Johnson Controls Inc. has a market cap of $19.48 billion; its shares were traded at around $29.02 with a P/E ratio of 29.3 and P/S ratio of 0.7. The dividend yield of Johnson Controls Inc. stocks is 1.8%. Johnson Controls Inc. had an annual average earning growth of 7.9% over the past 10 years.JCI is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC, Jeremy Grantham of GMO LLC, George Soros of Soros Fund Management LLC, Chris Davis of Davis Selected Advisers, Manning & Napier Advisors, Inc.

Highlight of Business Operations:

On January 22, 2010, the Company updated its fiscal 2010 guidance previously issued on October 13, 2009. The Company expects fiscal 2010 net sales to increase to $33 billion (compared to previously issued guidance of $31 billion), which would represent a 16% increase from prior year net sales, based on anticipated higher vehicle production in North America, increased power solutions aftermarket volumes and year over year growth in building efficiency later in fiscal 2010. Building efficiency segment margins are expected to be 5.6% 5.8%, consistent with previously issued guidance. Automotive experience segment margins are expected to increase to 2.0% 2.2%, and power solutions segment margins are expected to increase to 11.8% 12.0%. Earnings are expected to increase to approximately $1.70 $1.75 per diluted share (compared to previously issued guidance of $1.35 $1.45 per diluted share), which is higher than fiscal 2009, primarily based on profitable conversion of increased net sales.

The Companys debt financial covenants require a minimum consolidated shareholders equity attributable to Johnson Controls, Inc. of at least $1.31 billion at all times and allow a maximum aggregated amount of 10% of consolidated shareholders equity attributable to Johnson Controls, Inc. for liens and pledges. For purposes of calculating the Companys covenants, consolidated shareholders equity attributable to Johnson Controls, Inc. is calculated without giving effect to (i) the application of Accounting Standards Codification (ASC) 715-60, Defined Benefit Plans - Other Postretirement, or (ii) the cumulative foreign currency translation adjustment. As of December 31, 2009, consolidated shareholders equity attributable to Johnson Controls, Inc. as defined per the Companys debt financial covenants was $8.8 billion and there were no outstanding amounts for liens and pledges. The Company expects to remain in compliance with all covenants and other requirements set forth in its credit agreements and indentures for the foreseeable future. None of the Companys debt agreements limit access to stated borrowing levels or require accelerated repayment in the event of a decrease in the Companys credit rating.

Since the announcement of the 2009 Plan in March 2009, the Company has experienced lower employee severance and termination benefit cash payouts than previously calculated for automotive experience Europe of approximately $43 million, of which $15 million was identified in the quarter ended December 31, 2009, due to favorable severance negotiations and the decision to not close one of the previously planned plants in response to customer demand. In response to the depressed automotive industry in Europe, the Company has committed to the consolidation of one additional plant in Europe since the announcement of its 2009 Plan. The underspend of the initial 2009 Plan reserves will be utilized for this plant consolidation which is expected to occur in late fiscal 2010 and for additional costs to be incurred as part of power solutions and automotive experience Europes original cost reduction initiatives. The planned workforce reductions disclosed for the 2009 Plan have been updated for the Companys revised actions.

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