Johnson Controls 2010 Annual Report Download - page 34

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34
The decrease in North America service was primarily due to lower net volumes ($62 million) and the
unfavorable impact of foreign currency translation ($3 million), partially offset by lower SG&A expenses
($45 million).
The decrease in North America unitary products was primarily due to an equity investment impairment
charge ($152 million), incremental warranty charges ($105 million), lower volumes ($18 million), and
unfavorable margin rates ($56 million), partially offset by lower SG&A expenses ($5 million). The
incremental warranty charges were due to a specific product issue and an adjustment to the pre-existing
warranty accruals based on analysis of recent actual return rates.
The decrease in global workplace solutions was primarily due to higher bad debt expense associated with a
customer bankruptcy ($8 million), the unfavorable impact of foreign currency translation ($7 million) and
lower volumes and unfavorable mix in North America ($11 million), partially offset by lower SG&A
expenses ($12 million).
The decrease in Europe was primarily due to lower volumes ($61 million), the unfavorable impact of
foreign currency translation ($16 million) and unfavorable margin rates ($37 million), partially offset by
lower SG&A costs ($41 million).
The decrease in rest of world was primarily due to lower volumes ($53 million), prior year gains on sales of
a business and investments ($8 million) and higher SG&A costs ($67 million), partially offset by the
favorable impact of foreign currency translation ($6 million).
Automotive Experience
Net Sales
Segment Income
for the Year Ended
for the Year Ended
September 30,
September 30,
(in millions)
2009
2008
Change
2009
2008
Change
North America
$
4,631
$
6,723
-31%
$
(333)
$
79
*
Europe
6,287
9,854
-36%
(212)
464
*
Asia
1,098
1,514
-27%
4
36
-89%
$
12,016
$
18,091
-34%
$
(541)
$
579
*
* Measure not meaningful
Net Sales:
The decrease in North America was primarily due to the significantly reduced industry production volumes
by all of the Company’s major OEM customers ($2.5 billion), partially offset by the acquisition of the
interior product assets of Plastech Engineered Products, Inc. in July 2008, which had a favorable impact of
$299 million in fiscal 2009, and net favorable commercial settlements and pricing ($63 million).
The decrease in Europe was primarily due to lower industry production volumes across all customers ($2.5
billion), the unfavorable impact of foreign currency translation ($1.0 billion) and higher prior year
commercial recoveries ($89 million).
The decrease in Asia was primarily due to lower production volumes mainly in Korea and Japan ($329
million) and the unfavorable impact of foreign currency translation ($87 million).
Segment Income:
The decrease in North America was primarily due to lower industry production volumes ($517 million), the
unfavorable impact of the acquisition of the interior product assets of Plastech Engineered Products, Inc.
($55 million), an impairment charge on fixed assets in the first quarter ($77 million) and lower equity
earnings ($44 million). These factors were partially offset by lower operational and SG&A costs ($154
million) including the benefits of cost reduction initiatives, favorable purchasing and commercial costs
($72 million), and lower engineering expenses ($55 million).
The decrease in Europe was primarily due to lower industry production volumes ($497 million), pricing
and material costs ($93 million), higher operational costs ($73 million), the unfavorable impact of foreign