Johnson Controls booking 4Q restructuring charge

MILWAUKEE -- Auto parts and building equipment maker Johnson Controls Inc. said Monday that it expects to book a pretax charge between $225 million and $275 million in its fiscal fourth quarter, reflecting costs related to restructuring efforts.

The company is streamlining its global operations and adopting a new accounting method for its pension and post-retirement benefits. Part of the plan includes cost-cutting measures such as job cuts and consolidating facilities in its automotive, building and other businesses.

Johnson did not specify how many jobs it is cutting as part of the restructuring effort. Employee-related costs, such as severance, amount to as much as $210 million of the projected fourth-quarter charge, Johnson said.

Johnson expects to complete the restructuring plan by the end of fiscal 2014. Future cash expenses for these actions are expected to total about $190 million to $220 million.

The company also has changed its accounting policy for recognizing pension and other post-retirement benefits. Beginning in the fourth quarter, it will follow market-to-market accounting, which recognizes pension and other retirement actuarial and investment gains or losses during the final quarter of each fiscal year.

The prior method spread out the gains or losses and smoothed asset returns over several years. The change doesn't impact funding or benefits paid to retirees.

Johnson estimates that the fourth-quarter, pretax mark-to-market adjustment will range between $425 million and $475 million due to a significant annual decline in discount rates.

The company recently agreed to buy battery maker A123 Systems' automotive assets, a move that will give Johnson access to new lithium battery technology.

A123 Systems Inc. filed for bankruptcy protection earlier this month. Johnson plans to keep A123 plants open and sell the company's lithium-ion battery technology.

Shares of Johnson Controls, based in Milwaukee, ended regular trading up 23 cents at $26.42. The stock dipped 16 cents to $26.26 in extended trading.