Johnson Controls 2014 Annual Report Download - page 43

Download and view the complete annual report

Please find page 43 of the 2014 Johnson Controls annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 122

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122

43
to Note 16, "Significant Restructuring and Impairment Costs," of the notes to consolidated financial statements for additional
information. The impairment was measured, depending on the asset, either under an income approach utilizing forecasted discounted
cash flows or a market approach utilizing an appraisal to determine fair values of the impairment assets. These methods are
consistent with the methods the Company employed in prior periods to value other long-lived assets. The inputs utilized in the
analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement."
In the second quarter of fiscal 2012, the Company recorded an impairment charge related to an investment in marketable common
stock due to the investee’s bankruptcy announcement in March 2012. As a result, the Company recorded a $14 million impairment
charge within selling, general, and administrative expenses in the Power Solutions segment. The impairment reduced the investment
to zero and was measured under a market approach using the publicized share price. The inputs utilized in the analysis are classified
as Level 1 inputs within the fair value hierarchy as defined in ASC 820.
Investments in partially-owned affiliates ("affiliates") at September 30, 2014 were $1.0 billion, $6 million lower than the prior
year. The decrease was primarily due to acquisitions of the controlling interest in formerly unconsolidated Building Efficiency
and Power Solutions affiliates, partially offset by positive earnings at certain Automotive Experience affiliates.
LIQUIDITY AND CAPITAL RESOURCES
Working Capital
September 30,
2014 September 30,
2013(in millions) Change
Current assets $ 13,107 $ 13,698
Current liabilities (11,694)(12,117)
1,413 1,581 -11%
Less: Cash 409 1,055
Add: Short-term debt 183 119
Add: Current portion of long-term debt 140 819
Less: Assets held for sale 2,157 804
Add: Liabilities held for sale 1,801 402
Working capital $ 971 $ 1,062 -9%
Accounts receivable 5,871 7,206 -19%
Inventories 2,477 2,325 7%
Accounts payable 5,270 6,318 -17%
• The Company defines working capital as current assets less current liabilities, excluding cash, short-term debt, the current
portion of long-term debt, and the current portion of assets and liabilities held for sale. Management believes that this
measure of working capital, which excludes financing-related items, provides a more useful measurement of the Company’s
operating performance.
• Excluding the impact of amounts classified as held for sale, the decrease in working capital at September 30, 2014 as
compared to September 30, 2013 was primarily due to higher accounts payable and an increase in other current liabilities
related to accrued income taxes, partially offset by higher inventory levels.
• The Company’s days sales in accounts receivable at September 30, 2014 were 54, a slight increase from 51 at September 30,
2013. There has been no significant adverse change in the level of overdue receivables or changes in revenue recognition
methods.
• The Company’s inventory turns for the year ended September 30, 2014 were lower than the comparable period ended
September 30, 2013 primarily due to higher inventory production to meet higher sales levels.
• Days in accounts payable at September 30, 2014 were 74, a slight increase from 72 at September 30, 2013.