Johnson Controls 2015 Annual Report Download - page 4

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4
Financial Information About Business Segments
Accounting Standards Codification (ASC) 280, "Segment Reporting," establishes the standards for reporting information about
segments in financial statements. In applying the criteria set forth in ASC 280, the Company has determined that it has six reportable
segments for financial reporting purposes. The Company’s six reportable segments are presented in the context of its three primary
businesses - Building Efficiency, Automotive Experience and Power Solutions.
Refer to Note 19, "Segment Information," of the notes to consolidated financial statements for financial information about business
segments.
For the purpose of the following discussion of the Company’s businesses, the three Building Efficiency reportable segments and
the two Automotive Experience reportable segments are presented together due to their similar customers and the similar nature
of their products, production processes and distribution channels.
Products/Systems and Services
Building Efficiency
Building Efficiency is a global leader in delivering integrated control systems, mechanical equipment, products and services
designed to improve the comfort, safety and energy efficiency of non-residential buildings and residential properties with operations
in 52 countries. Revenues come from technical services, and the replacement and upgrade of HVAC controls and mechanical
equipment in the existing buildings market, where the Company’s large base of current customers leads to repeat business, as well
as with installing controls and equipment during the construction of new buildings. Customer relationships often span entire
building lifecycles.
Building Efficiency sells its control systems, mechanical equipment and services primarily through the Company’s extensive global
network of sales and service offices. Some building controls, products and mechanical systems are sold to distributors of air-
conditioning, refrigeration and commercial heating systems throughout the world. In fiscal 2015, approximately 65% of Building
Efficiency’s sales were derived from HVAC products and installed control systems for construction and retrofit markets, including
14% of total sales related to new commercial construction. Approximately 35% of its sales in fiscal 2015 originated from its service
offerings. In fiscal 2015, Building Efficiency accounted for 28% of the Company’s consolidated net sales.
The Company’s systems include York® chillers, industrial refrigeration products, air handlers and other HVAC mechanical
equipment that provide heating and cooling in non-residential buildings. The Metasys® control system monitors and integrates
HVAC equipment with other critical building systems to maximize comfort while reducing energy and operating costs. The
Company also produces air conditioning and heating equipment and products, including Titus® and Ruskin® brands, for the
residential market. As the largest global supplier of HVAC technical services, Building Efficiency staffs, optimizes and repairs
building systems made by the Company and its competitors. The Company offers a wide range of solutions such as performance
contracting under which guaranteed energy savings are used by the customer to fund project costs over a number of years.
Automotive Experience
Automotive Experience designs and manufactures interior products and systems for passenger cars and light trucks, including
vans, pick-up trucks and sport/crossover utility vehicles. The business produces automotive interior systems for OEMs and operates
approximately 230 wholly- and majority-owned manufacturing or assembly plants, with operations in 32 countries worldwide.
Beginning in the fourth quarter of fiscal 2015, the Automotive Experience Interiors business is predominantly in an unconsolidated
partially-owned affiliate. Additionally, the business has other partially-owned affiliates in Asia, Europe, North America and South
America.
Automotive Experience products and systems include complete seating systems and interior components, including instrument
panels, floor consoles, and door systems. In fiscal 2015, Automotive Experience accounted for 54% of the Company’s consolidated
net sales.
The business operates assembly plants that supply automotive OEMs with complete seats on a "just-in-time/in-sequence" basis.
Seats are assembled to specific order and delivered on a predetermined schedule directly to an automotive assembly line. Certain
of the business’s other automotive interior systems are also supplied on a "just-in-time/in-sequence" basis. Foam, metal and plastic
seating components, seat covers, seat mechanisms and other components are shipped to these plants from the business’s production
facilities or outside suppliers.