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Form 8-K
JOHNSON CONTROLS INC - N/A
Filed: October 24, 2007 (period: October 23, 2007)
Report of unscheduled material events or corporate changes.
The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user
assumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot be
limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Table of Contents
8-K - CURRENT REPORT
Item 2.02 Results of Operations and Financial Condition
Item 7.01 Regulation FD Disclosure
Item 9.01 Financial Statements and Exhibits
SIGNATURES
EX-99.1 (PRESS RELEASE)
EX-99.2 (SLIDE PRESENTATION)
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): October 23, 2007
JOHNSON CONTROLS, INC.
(Exact name of registrant as specified in its charter)
Wisconsin
(State or other jurisdiction
of incorporation)
1-5097
(Commission
File Number)
39-0380010
(I.R.S. Employer
Identification No.)
5757 North Green Bay Avenue,
P.O. Box 591
Milwaukee, Wisconsin
(Address of principal executive
offices)
53201-0591
(Zip Code)
Registrant’s telephone number, including area code: 414-524-1200
Not Applicable
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions:
 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any
use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
TABLE OF CONTENTS
Item 2.02 Results of Operations and Financial Condition
Item 7.01 Regulation FD Disclosure
Item 9.01 Financial Statements and Exhibits
SIGNATURES
Press Release
Slide Presentation
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any
use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Table of Contents
Item 2.02 Results of Operations and Financial Condition
On October 23, 2007, Johnson Controls, Inc. (the “Company”) issued a press release containing information about the
Company’s results of operations for the three months and fiscal year ended September 30, 2007. A copy of this press
release is incorporated herein by reference as Exhibit 99.1.
Item 7.01 Regulation FD Disclosure
Attached and incorporated herein by reference as Exhibit 99.1 is a copy of the press release dated October 23, 2007
reporting the results of operations for the three months and fiscal year ended September 30, 2007 issued by the registrant
on October 23, 2007.
Attached and incorporated herein by reference as Exhibit 99.2 is a copy of the slide presentation for the fiscal year
2007 fourth quarter quarterly update conference call issued by the registrant on October 23, 2007.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits:
99.1
Press release issued by Johnson Controls, Inc., dated October 23, 2007.
99.2
Slide presentation for the fiscal year 2007 fourth quarter quarterly update conference call issued by
Johnson Controls, Inc., dated October 23, 2007.
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
JOHNSON CONTROLS, INC.
By: /s/ Susan M. Kreh
Name: Susan M. Kreh
Title: Vice President and
Corporate Controller
October 24, 2007
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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Exhibit 99.1
CONTACT:
Monica Levy (media)
414-524-2695
Glen Ponczak (investors)
414-524-2375
JOHNSON CONTROLS REPORTS 26% INCREASE IN FOURTH-QUARTER 2007
EARNINGS PER SHARE FROM CONTINUING OPERATIONS
Milwaukee, Wisc. October 23, 2007. . . Johnson Controls, Inc. today reported record sales and earnings for its 2007
fourth quarter. Diluted earnings per share from continuing operations totaled $0.78, up 26% from $0.62 last year.
Sales for the 2007 fourth quarter totaled $9.0 billion, up 11% from $8.2 billion in 2006 as the company increased its
share of its global markets. Income from continuing operations was $469 million versus $368 million last year, an increase
of 27% as a result of the higher revenues and increased operational efficiencies.
For the 2007 fiscal year, Johnson Controls sales totaled $34.6 billion compared with $32.2 billion for 2006, an increase
of 7%. Income from continuing operations increased 25% to $1.3 billion. Diluted earnings per share from continuing
operations in 2007 were $2.16 versus $1.75. Excluding a non-recurring tax benefit in the second quarter, 2007 diluted
earnings per share from continuing operations were $2.10. Fiscal year 2007 is the company’s 61 st consecutive year of
sales increases and 17 th consecutive year of earnings increases.
All earnings per share amounts reflect the company’s 3-for-1 stock split on October 2, 2007.
“We are pleased to deliver record results for the fourth quarter and for the full fiscal year,” said Chief Executive Officer
Stephen A. Roell. “We expect to continue to win share and grow at a faster pace than our underlying industries through
our innovation, cost advantages and world-class quality.”
-more-
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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He continued, “It is a core part of our company’s culture to understand customers’ emerging needs and to deliver
unique, practical solutions. Our employees around the world continue to show an outstanding commitment to our
customers, and I thank them for another record year.”
Fourth Quarter Results
Building efficiency sales were $3.6 billion, up 15% compared with 2006 revenues of $3.1 billion. The increase reflects
strong commercial buildings markets globally and higher demand for the company’s solutions to improve energy efficiency
and lower operating costs in non-residential buildings. Segment income increased 23% to $316 million from $257 million
as a result of the higher revenues as well as cost structure improvements associated with the company’s branch office
network and manufacturing operations. The backlog of uncompleted commercial systems and services contracts at
September 30, 2007 was $4.2 billion, an increase of 14% over the prior year amount, reflecting continued market share
gains.
Automotive experience sales in the quarter were $4.2 billion, 3% higher than $4.0 billion in 2006. North American sales
increased 2% and European sales rose 5%, approximately in line with overall vehicle production levels. Sales in the
Asia/Pacific region declined 3% due to lower volumes in Japan. Unconsolidated sales in China increased 48%. Segment
income was $183 million, up 24% from $148 million last year as a result of a substantial improvement in North American
profitability and a continued strong performance in Europe.
Power solutions sales increased 27%, to $1.3 billion from $1.0 billion last year due to higher unit prices resulting from
the pass-through of increased lead costs, as well as slightly higher unit shipments. Segment income increased to
$161 million, up 7% from $150 million in the 2006 fourth quarter due to the higher volume and improved operational
efficiencies.
The company said its net debt to total capitalization at September 30, 2007 was 30%, versus 35% at June 30, 2007.
-more-
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
2008 Outlook
On October 9, 2007, the company issued guidance on its expected financial performance in 2008. Johnson Controls
anticipates a sales increase of 10%, to approximately $38 billion. Income from continuing operations is estimated to
increase approximately 18%, to $2.45 — $2.50 per diluted share. The company said the strong performance will be the
result of its participation in growth markets, its exposure to non-cyclical sectors, its global capabilities and technology
leadership as well as its cost discipline.
For the first quarter of 2008, the company expects diluted earnings per share to increase 25% - 32% versus the 2007
first quarter, to a range of $0.35 to $0.37.
“We have excellent visibility to our expected 2008 sales through our large and growing backlogs of new business,”
Mr. Roell said. “We are executing well on our growth strategies and expect a strong start to 2008.”
###
Johnson Controls (NYSE: JCI — News) is the global leader that brings ingenuity to the places where people live, work
and travel. By integrating technologies, products and services, we create smart environments that redefine the
relationships between people and their surroundings. Our team of 140,000 employees creates a more comfortable, safe
and sustainable world through our products and services for more than 200 million vehicles, 12 million homes and one
million commercial buildings. Our commitment to sustainability drives our environmental stewardship, good corporate
citizenship in our workplaces and communities, and the products and services we provide to customers. For additional
information, please visit http://www.johnsoncontrols.com .
###
Johnson Controls, Inc. (“the Company”) has made forward-looking statements in this document pertaining to its financial
results for fiscal year 2008 and beyond that are based on preliminary data and are subject to risks and uncertainties. All
statements other than statements of historical fact are statements that are or could be deemed forward-looking
statements and include terms such as “outlook,” “expectations,” “estimates,” or “forecast.” For those statements, the
Company cautions that numerous important factors, such as automotive vehicle production levels and schedules, energy
prices, the ability to mitigate the impact of higher raw material costs, the strength of the U.S. or other economies, currency
exchange rates, cancellation of commercial contracts, changes to domestic and foreign tax rates, labor interruptions as
well as those factors discussed in the Company’s most recent Form 10-K filing (dated December 5, 2006) could affect the
Company’s actual results and could cause its actual consolidated results to differ materially from those expressed in any
forward-looking statement made by, or on behalf of, the Company.
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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Johnson Controls
October 23, 2007
Page 4
JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data; unaudited)
Three Months Ended September 30,
2007
2006
Net sales
Cost of sales
Gross profit
$
Selling, general and administrative expenses
Financing charges — net
Equity income
9,011
7,586
1,425
$
8,150
6,903
1,247
(786)
(68)
21
(732)
(77)
40
Income from continuing operations before income taxes and minority
interests
592
478
Provision for income taxes
Minority interests in net earnings (loss) of subsidiaries
124
(1)
100
10
Income from continuing operations
469
368
Loss from discontinued operations, net of income taxes
—
(1)
Loss on sale of discontinued operations, net of income taxes
(3)
—
Cumulative effect of a change in accounting principle, net of income taxes
—
(7)
Net income
$
466
$
360
Diluted earnings per share from continuing operations
$
0.78
$
0.62
Diluted earnings per share
$
0.77
$
0.61
Diluted weighted average shares
603
592
Shares outstanding at period end
594
587
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any
use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Johnson Controls
October 23, 2007
Page 5
JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data; unaudited)
Twelve Months Ended September 30,
2007
2006
Net sales
Cost of sales
Gross profit
$
Selling, general and administrative expenses
Restructuring costs
Financing charges — net
Equity income
Income from continuing operations before income taxes and minority
interests
Provision for income taxes
Minority interests in net earnings of subsidiaries
Income from continuing operations
34,624
29,548
5,076
$
32,235
27,806
4,429
(3,281)
—
(277)
89
(2,933)
(197)
(273)
112
1,607
1,138
300
12
63
42
1,295
1,033
Income (loss) from discontinued operations, net of income taxes
(10)
2
Loss on sale of discontinued operations, net of income taxes
(33)
—
—
(7)
Cumulative effect of a change in accounting principle, net of income taxes
Net income
$
1,252
$
1,028
Diluted earnings per share from continuing operations
$
2.16
$
1.75
Diluted earnings per share
$
2.09
$
1.74
Diluted weighted average shares
599
590
Shares outstanding at period end
594
587
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any
use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Johnson Controls
October 23, 2007
Page 6
JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in millions; unaudited)
September 30,
2007
ASSETS
Cash and cash equivalents
Accounts receivable — net
Inventories
Other current assets
Current assets
Property, plant and equipment — net
Goodwill
Other intangible assets — net
Investments in partially-owned affiliates
Other noncurrent assets
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Short-term debt and current portion of long-term debt
Accounts payable and accrued expenses
Other current liabilities
Current liabilities
Long-term debt
Minority interests in equity of subsidiaries
Other noncurrent liabilities
Shareholders’ equity
Total liabilities and shareholders’ equity
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
$
$
$
$
658
6,600
1,956
1,624
10,838
4,195
6,136
773
804
1,321
24,067
1,163
6,748
2,331
10,242
3,255
128
1,559
8,883
24,067
September 30,
2006
$
$
$
$
293
5,697
1,731
1,543
9,264
3,968
5,910
799
463
1,517
21,921
577
5,364
2,205
8,146
4,166
129
2,125
7,355
21,921
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Johnson Controls
October 23, 2007
Page 7
JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
Three Months Ended September 30,
2007
2006
Operating Activities
Net income
$
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization
Equity in earnings of partially-owned affiliates, net of dividends received
Minority interests in net earnings (loss) of subsidiaries
Loss on sale of discontinued operations
Deferred income taxes
Other — net
Changes in working capital, excluding acquisition and divestiture of
businesses:
Receivables
Inventories
Accounts payable and accrued liabilities
Change in other assets and liabilities
Cash provided by operating activities
466
$
360
163
16
(1)
3
(299)
17
181
(6)
10
—
(61)
47
(169)
31
501
383
1,111
170
83
(283)
(146)
355
Investing Activities
Capital expenditures
Sale of property, plant and equipment
Acquisition of businesses, net of cash acquired
Business divestitures
Other — net
Cash used in investing activities
(241)
38
1
54
(261)
(409)
(273)
77
(32)
—
130
(98)
Financing Activities
Decrease in short and long-term debt — net
Payment of cash dividends
Other — net
Cash used in financing activities
(220)
—
(13)
(233)
(282)
(55)
(6)
(343)
Increase (decrease) in cash and cash equivalents
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
$
469
$
(86)
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Johnson Controls
October 23, 2007
Page 8
JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
Twelve Months Ended September 30,
2007
2006
Operating Activities
Net income
$
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization
Equity in earnings of partially-owned affiliates, net of dividends received
Minority interests in net earnings of subsidiaries
Loss on sale of discontinued operations
Deferred income taxes
Non-cash restructuring costs
Other — net
Changes in working capital, excluding acquisition and divestiture of
businesses:
Receivables
Inventories
Accounts payable and accrued liabilities
Change in other assets and liabilities
Cash provided by operating activities
Investing Activities
Capital expenditures
Sale of property, plant and equipment
Acquisition of businesses, net of cash acquired
Business divestitures
Other — net
Cash used in investing activities
Financing Activities
Increase (decrease) in short and long-term debt — net
Payment of cash dividends
Other — net
Cash provided by (used in) financing activities
Increase in cash and cash equivalents
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
$
1,252
$
1,028
731
(8)
12
33
(345)
—
72
705
(15)
42
—
(404)
51
85
(648)
(161)
901
119
1,958
244
(77)
(385)
143
1,417
(823)
83
(16)
89
(379)
(1,046)
(711)
90
(2,629)
—
174
(3,076)
(432)
(195)
80
(547)
1,849
(218)
150
1,781
365
$
122
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Johnson Controls
October 23, 2007
Page 9
FOOTNOTES
1. Business Unit Summary
(in millions)
Net Sales
Building efficiency
Automotive experience
Power solutions
Net Sales
Segment Income
Building efficiency
Automotive experience
Power solutions
Segment Income
2007
$
$
$
$
Financing charges — net
Restructuring costs
Income from continuing
operations before
income taxes and
minority interests
Net Sales
Products and systems
Services
3,605
4,156
1,250
9,011
$
316
183
161
660
$
$
$
(68)
—
%
2007
3,124
4,045
981
8,150
15%
3%
27%
257
148
150
555
23%
24%
7%
(77)
—
478
$
7,117
1,894
9,011
$
6,450
1,700
8,150
10%
11%
6,107
1,479
7,586
$
5,571
1,332
6,903
10%
11%
$
$
Twelve Months Ended
September 30,
(unaudited)
2006
12,737
17,552
4,335
34,624
850
519
515
1,884
$ 10,245
18,274
3,716
$ 32,235
$
$
(277)
—
$
$
$
$
592
$
$
$
$
$
Cost of Sales
Products and systems
Services
Three Months Ended
September 30,
(unaudited)
2006
544
605
459
1,608
%
24%
-4%
17%
56%
-14%
12%
(273)
(197)
$
1,607
$
27,849
6,775
34,624
$ 27,108
5,127
$ 32,235
3%
32%
24,253
5,295
29,548
$ 23,861
3,945
$ 27,806
2%
34%
$
$
$
$
1,138
Building efficiency - Provides facility systems and services including comfort, energy and security management for the
non-residential buildings market and provides heating, ventilating, and air conditioning products and services for the
residential and non-residential building markets.
Automotive experience - Designs and manufactures interior systems and products for passenger cars and light trucks,
including vans, pick-up trucks and sport/crossover utility vehicles.
Power solutions - Services both automotive original equipment manufacturers and the battery aftermarket by providing
advanced battery technology, coupled with systems engineering, marketing and service expertise.
Beginning in fiscal year 2007, Company management, including the chief operating decision maker, adjusted their
measurement of business unit performance, changing from operating income to segment income, which represents
income from continuing operations before income taxes and minority interests excluding restructuring charges and net
financing charges. The primary reason for the modification was to reflect equity income in earnings for each business
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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operation given its growing significance to the Company’s global business strategies.
2. Acquisitions
In December 2005, the Company completed its acquisition of York International Corporation. The Company paid $56.50
for each outstanding share of common stock. The total cost of the acquisition, excluding cash acquired, was
approximately $3.1 billion, including approximately $563 million of debt.
3. Discontinued Operations
In the second quarter and fourth quarter of fiscal year 2007, the Company recorded losses of approximately $48 million
($30 million after-tax) and $5 million ($3 million after-tax), respectively, related to the sale of businesses reported as
discontinued operations, primarily Bristol Compressors.
4. Income Taxes
In the second quarter and fourth quarters of fiscal year 2007, the Company reduced its income tax liability by $15 million
and $13 million, respectively, due to the favorable resolution of certain tax audits. The Company’s federal income tax
returns and certain foreign income tax returns for various fiscal years remain under various stages of audit by the Internal
Revenue Service and respective foreign tax authorities. Although the outcome of tax audits is always uncertain,
management believes that it has appropriate support for the positions taken on its tax returns and that its annual tax
provisions included amounts sufficient to pay assessments, if any, which may be proposed by the taxing authorities. At
September 30, 2007, the Company has recorded a liability for its best estimate of the probable loss on certain of its tax
positions, the majority of which is included in other noncurrent liabilities in the condensed consolidated statements of
financial position. Nonetheless, the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing
authorities, may differ materially from the amounts accrued for each year.
In the second quarter of fiscal year 2007, the tax provision decreased as a result of a $22 million tax benefit realized by a
change in tax status of an automotive experience subsidiary in the Netherlands. In the third quarter of fiscal year 2006, the
tax provision decreased as a result of an $11 million tax benefit realized by a change in tax status of an automotive
experience subsidiary in Hungary and a building efficiency subsidiary in the Netherlands.
In the fourth quarter of fiscal year 2007, the tax provision increased $20 million as a result of a change in the German
federal income tax rate.
In the fourth quarter of fiscal year 2007, the tax provision decreased $7 million due to a nonrecurring tax benefit related to
the use of a valuation allowance with a joint venture.
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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Johnson Controls
October 23, 2007
Page 10
4. Income Taxes (continued)
In the third quarter of fiscal year 2006, the Company recorded a $10 million tax benefit related to a favorable tax audit
resolution in a foreign jurisdiction.
In the third quarter of fiscal year 2006, the tax provision decreased due to a $4 million nonrecurring tax benefit related to a
$9 million gain from the disposition of the Company’s interest in a German joint venture.
In the third quarter of fiscal year 2006, the Company completed an analysis of its German operations and, based on
cumulative income over a 36-month period, an assessment of expected future profitability in Germany and finalization of
the 2006 Plan, determined that it was more likely than not that the tax benefits of certain operating loss and tax credit
carryforwards in Germany would be utilized in the future. As such, the Company reversed $131 million attributable to
these operating loss and tax credit carryforwards in the quarter ended June 30, 2006 as a credit to income tax expense,
net of remaining valuation allowances at certain German subsidiaries and tax reserve requirements.
Based on the Company’s cumulative operating results through the six months ended March 31, 2006 and an assessment
of expected future profitability in Mexico, the Company concluded that it was more likely than not that the tax benefits of
its operating loss and tax credit carryforwards in Mexico would be utilized in the future. During the second quarter of fiscal
year 2006, the Company completed a tax reorganization in Mexico which will allow operating loss and tax credit
carryforwards to be offset against the future taxable income of the reorganized entities. As such, in the quarter ended
March 31, 2006, the Company reversed the entire valuation allowance of $32 million attributable to these operating loss
and tax credit carryforwards as a credit to income tax expense.
In October 2004, the President signed the American Jobs Creation Act of 2004 (AJCA). The AJCA creates a temporary
incentive for U.S. corporations to repatriate accumulated income earned abroad by providing an 85 percent dividends
received deduction for certain dividends from controlled foreign operations. The deduction is subject to a number of
limitations. During the quarter ended March 31, 2006, the Company completed its evaluation of its repatriation plans and
approximately $674 million of foreign earnings were designated for repatriation to the U.S. pursuant to the provisions of
the AJCA. The increase in income tax liability related to the Company’s AJCA initiatives totaled $42 million. The Company
recorded $31 million of net income tax expense in the quarter ended March 31, 2006 as $11 million had been previously
recorded by York prior to the acquisition in accordance with York’s approved repatriation plan.
In the third quarter of fiscal year 2006, the Company recorded a $19 million discrete period tax benefit related to third
quarter 2006 restructuring costs using a blended statutory tax rate of 30.6%.
The tables below show a reconciliation of the provision for income taxes for the years ended September 30, 2007 and
2006 (in millions):
Year Ended
September 30, 2007
Amount
Tax Rate
(unaudited)
Federal, state and foreign income tax expense
Uncertain tax positions
Change in tax status of foreign subsidiary
Change in statutory tax rates
Disposition of a joint venture
Valuation allowance adjustments
Foreign dividend repatriation
Restructuring charge
Provision for income taxes
$
337
$
(28)
(22)
20
—
(7)
—
—
300
21.0%
18.7%
Year Ended
September 30, 2006
Amount
Tax Rate
$
239
21.0%
$
(10)
(11)
—
(4)
(163)
31
(19)
63
5.5%
5. New Accounting Standards
In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 158, “Employer’s Accounting for
Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106 and
132(R).” SFAS No. 158 requires recognition of the overfunded or underfunded status of defined benefit and retiree
medical plans as an asset or liability in the balance sheet, with changes in the funded status recognized through other
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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comprehensive income in the year in which they occur. In September 2007, the Company adopted SFAS No. 158,
including the measurement of the funded status of defined benefit and retiree medical plans as of the fiscal year-end date.
The following table summarizes the initial adoption of SFAS No. 158 (in millions):
Prior to
SFAS No. 158
Adjustment
Accrued benefit liability — net
Intangible pension asset
Deferred tax assets (benefit plan related)
Accumulated other comprehensive income (benefit plan
related)
$
(657)
6
—
144
SFAS No. 158
Adjustment
$ (112)
(6)
43
75
Post
SFAS No. 158
Adjustment
$
(769)
—
43
219
6. Stock Split
On July 25, 2007, the Company’s Board of Directors declared a three-for-one split of the Company’s common stock
payable October 2, 2007 to shareholders of record on September 14, 2007. All share and per share amounts disclosed in
this document have been restated to reflect the three-for-one stock split. The stock split resulted in the issuance of
approximately 396 million additional shares of common stock. In connection with the stock split, the par value of the
common stock was changed from $.04 1/6 per share to $.01 7/18 per share.
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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Exhibit 99.2
Johns on Contr ols, Inc. ("the C ompany") has made for ward-l ooki ng statements in this doc ument pertaini ng to its fi nancial res ults for fisc al year 2008 and beyond that are bas ed on preli minar y data and are subject to ris ks and uncertainties . All statements other than statements of historical fac t are s tatements that ar e or coul d be deemed for war d-looking s tatements and incl ude ter ms suc h as " outlook," "expectati ons," " esti mates," or "forecas ts." For thos e s tatements, th e C ompany c auti ons that numerous i mportant fac tors , s uc h as automoti ve vehicle producti on levels and schedul es, energ y prices, the ability to mitigate the i mpact of higher raw materi al c osts, the str ength of the U .S. or other economi es, c urrenc y exc hange rates, canc ellation of c ommercial c o ntracts, changes to domestic and foreign tax rates , labor interrupti ons as well as those factors disc uss ed in the C ompany's most r ec ent F orm 10-K filing (dated D ecember 5, 2006) could affect the C ompany's actual res ults and c oul d c ause its actual c ons olidated res ults to differ materi ally fr om those expressed i n any for war d-looking
statement made by, or on behal f of, the C ompany. Quarterl y update F Y 2007 four th q uarter October 23, 2007 Exhi bit 99.2
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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Agenda Overview Steve Roell - Ch ief Executive Officer Q4 Busines s Resu lts Keith Wandell - President and Chief Operating Officer Financial Review Bruce McDonald - Executive Vice President and Chief Financial Officer Q&A (conclude at noon Eastern time)
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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2007 Sustained, prof itable growth Record financial performance Sales up 7% to $34 .6 billio n Income from continuing operations up 25% to $1.3 billion O utperformed our markets: too k share through innovation, quality , cost Increased earnings diversification Delivered above-average shareholder returns 1 y ear total shareholder return: 67% (vs. S&P 500: 16%*) Sales $9. 0 B +11% EP S from continuing operation s** $0. 78 +26% 200 7 fourth quarter Automotive Bu ildings Power Automotive Buildin gs Power Sales Earning s *As of September 30, 2007. Inclu des share price appreciation and re-invested dividends **Reflects 3-for-1 stock split on October 2, 2007
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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2007 hig hlig hts Au tomotive Experience Increasing backlog* $3. 9 billion for 2008-2010 , up 11% vs. las t y ear JVs with Chery for multiple programs in China Sustained improvements in Europe Bu ild ing Efficiency Global market share gain in H VAC equ ipment 14% increase in buildin g efficiency backlog: $4.2 B Named to Clin ton Climate Initiative Major residential HVA C dis tribution w ins d istrib ution wins distr ibution win s dis tribu tion w ins d istrib ution wins distr ibution win s dis tribu tion w ins d istrib utio n wins distr ibution win s dis tribu tion w ins Power So lutions Major new OE and aftermarket battery customers Strategic partnership with #1 automotive battery manufacturer and brand in China (Baod ing Fengfan Co., L td.) Hy brid: 12 development contracts for lithium -ion plug-in 3 productio n contracts *Includes u nconsolidated joint ven tures
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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Sign ificant growth opportun ities in each of our businesses: improv ing comfort, safety and sustainability Energy efficiency /environment Hy brid vehicles Automotive electronics Emerging markets Investing in innovation; product and process techno logies Cus tomer focus; strong relatio nships Discipline of c ontinuo us improvement in all as pects of our glo bal organization Cos t, quality , productivity , execution Focu s on margin improvement Financial strength to continue inves ting and increasing share versus weake r competitors A diversified grow th company Johnson Controls 3
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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Fourth-quarter 2007 Buildin g Efficiency Market environment Glo bal service market continues to grow Nor th America construction* Non-residen tial spend ing up 19% Res idential construction down 19% Co nstruction remains strong in key emerging markets Increased customer demand for energy efficiency / green solutions Increasing demand for "one-sto p" so lutions: equipment / con trols / services 2007 Sales $3.6 B $ 3.1 B $3.1 B +15% Non-residential: do uble-dig it increases All g lobal regio ns Sy stems and services North America residential down 8% Non-residential: dou ble-digit increases All g lobal regions Sy stems and services North America residential down 8% N on-residential: doub le-digit increases All global regions Sy stems and services North America residential down 8% No n-residential: double-digit increases All global regions Sy stems and services North America residential down 8% Non-resid ential: dou ble-digit increases All g lobal region s Sy stems and services North America residential down 8% N on-residential: doub le-digit increases All glo bal regions Sy stems and services North America residential down 8% Segment income $316 M $ 257 M +23% + 23% Higher vo lume Cost
structure improvements Branch network redesign: sy stems & services Product standardization Manufacturing operations Higher volume Cost s tructure improvements Branch networ k redesign: sy stems & services Product standardization Manufacturing operation s Higher vo lume Cost structure improvements Branch networ k redesign : sy stems & services Product standardization Manufacturing operations H igher volume Cos t structure improvements Branch network redesig n: sy stems & services Product standa rdization Manufacturin g operations H igher volume Co st s tructure improvements Branch networ k redesign: sy stems & services Product standardization Manufacturing operations H igher volume Co st s tructure improvements Branch networ k redesign: sy stems & services Product standardization Manufacturing operation s 2006 *McGraw-Hill Dodge Report, Aug ust 2 007 (Average SAAR June-Augus t 2007 v s. June-Augus t 2006) Commercial Backlog $ 4.2 B +14% Growth in all region s Commercial orders: Strength in N.A. healthcare, government, office and in rest-of-world
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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Fourth-quarter 2007 Power Solutions Market environment Aftermarket demand flat to slightly lower Ever -higher peaks for lead prices Q4 average LME: $3,1 40/ton 164% increase over Q4 2006 OEs increasingly committed to hy brid technology 20+ hy brid vehicle announcements at 2007 Frankfurt auto sh ow Improving operational efficiencies Higher volume Le ad negative to margin +7% $150 M $161 M Segment income Higher unit prices due to lead pass-through Higher unit shipments Higher OE in Europe Lower OE and aftermarket in North America Asia up double-digits +27% $ 1.0 B $1.3 B Sales 200 7 2006
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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Fourth-quarter 2007 A utomotive Experience Market enviro nment Industry vehicle production N orth America up 4% Cars down 2% Ligh t truc k up 8% Europe up 3%* Japan down 9%* China up 25%* Commodities stabilizing Steel Foam chemicals Resin 2007 Sales $4.2 B $ 4.0 B +3% +3% Nor th America: up 2% Sales slig htly lower to Detroit 3; higher to transplants Higher volume: GM Lambda (GMC Acadia, Saturn O utlo o k, Buic k Enclave), Toy ota Tundra, Ford Edge Lower: GM Lacrosse, Chry sler 300/ Magnum, Nissan Quest (Discontinued: Sierra/Silverado) Europe: up 5% Higher: Volvo S80 , Kia Ce e'd Lower: Opel Zafira, Renault Clio (Discon tinued: Mitsubishi Colt, BMW Mini, Hon da CRV , VW Golf) Ch ina: uncon solidated sales up 4 8% North America: up 2% Sales slightly lower to Detro it 3; higher to transplants Higher vo lume: GM Lambda (GMC Acadia, Saturn Outloo k, Buic k Enclave), Toy ota Tundra, Ford Edge Lower: G M Lacrosse, Chry sler 300/ Magnum, Nissan Ques t (Discontinued: Sierra/Silverado) Europe: up 5% H igher: Volvo S80, Kia Cee'd Lower: Opel Zafira, Renault Clio (Discontin ued: M itsub ish i Co lt, BMW M ini, H onda CRV , VW Go lf) China: unconso lidated sales
up 48% North America: up 2% Sales slightly lower to Detroit 3 ; higher to transplants Higher vo lume: GM Lambda (GMC Acadia, Sa turn Outloo k, Buic k Enc lave), Toy ota Tundra, Ford Edge Lower: G M Lacrosse, Chry sler 300/ Magnum, Nissan Ques t (Discontinued: Sierra/Silverado) Europe: up 5% H igh er: Volvo S80, Kia Cee'd Lower: Opel Zafira, Renault Clio (Di scontin ued: Mitsub ishi Co lt, BMW M ini, H onda CRV, VW Golf) China: unconsolidated sales up 48% North America: up 2% Sales slightly lower to Detroit 3 ; hig her to transplan ts Hig her volume: GM Lambda (GMC Acadia, Saturn Outloo k, Buic k Enclave), Toy ota Tundra, Ford Edge Lower: GM Lacrosse, Chry sler 300/ Magnum, Nissan Quest (D iscontinued: Sierra/Silverado) Europe: up 5% Higher: Volvo S8 0, Kia Cee'd Lower: Opel Zafira, Renault Clio (Discon tinued: Mitsubishi Colt, BMW Mini, Hon da CRV, VW Golf) China: uncon solid ate d sales up 48% North America: up 2% Sales slightly lower to Detroit 3 ; higher to transp lants Higher volume: GM Lambda (GMC Ac adia, Saturn Ou tloo k, Bu ick Enclave), Toy ota Tundra, Ford Edge Lower: G M Lacrosse, Chry sler 300/ Magnum, Nissan Q uest (Discon tinued:
Sierra/Silverado) Europe: up 5% Higher: Volvo S8 0, Kia Cee'd Lower: Opel Zafira, Renault Clio (Discon tinued: Mitsubishi Colt, BMW Mini, Hon da CRV, VW Golf) China: uncon solidated sales up 48% North America: up 2% Sales slightly lower to Detro it 3; higher to transplants Higher vo lume: GM La mbda (GMC Acadia, Saturn Ou tloo k, Bu ick Enclave), Toy ota Tundra, Ford Edge L ower: GM Lacrosse, Chry sler 300/ Magnum, Nissan Q uest (Discon tinued: Sierra/Silverado) Europe: up 5% Higher: Vo lvo S80, K ia Cee'd Lower: Opel Za fira, Renault Clio (D iscontinued: Mits ubish i Colt, BMW Mini, Hon da CRV, VW Go lf) China: unconso lidated sales up 48% Segment income $183 M $148 M $148 M +24% North America up 78% Europe: con tinued strong performance Asia: flat as growth investments in Ch ina mask u nderly ing improvements North America up 78% Europe: continued stron g performance Asia: flat as growth inves tments in China mas k underly ing improvements North America up 78% Europe: con tinued s trong performance Asia: flat as growth in vestments in Chi na mask un derly ing improvements North America up 78% Europe: contin ued strong performance Asia: flat as growth
investments in Ch ina mask un derly ing improvements North America up 78% Europe: contin ued strong performance Asia: flat as growth investments in Ch ina mask underly ing improvements North America up 78% Europe: continued stro ng performance Asia: flat as growth investments in China mas k und erly ing improvements 2006 *Estimated
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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Fourth-quarter 2007 Financial high ligh ts FX - Euro at $1. 37 vs $ 1.27 Sales - Double-digit sales growth from building efficiency (+15%) and power solution s (+27%); automotive experience sales down s ligh tly excluding FX SG&A - Continued growth initiatives at building efficiency ; automotive engineering investments in Europe Equ ity income - Hy brid battery development costs; start-up and launch costs related to As ian automotive programs; stro ng Q4 las t y ear to Asian automotive programs; stron g Q4 las t y ear to Asian automotive programs; strong Q 4 last y ear to Asian automotive programs; strong Q4 last y ear to Asian automotive programs; strong Q4 last y ear to Asian automotive programs; strong Q 4 last y ear to Asian automotive programs; strong Q4 last y ear to Asian automotive programs; s trong Q4 last y ear
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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Fourth-quarter 2007 Financial high ligh ts Financing charges - Lower reflecting the benefit of de-leveraging M inority in terests - Deduction lower: costs related to new Toy ota Tundra program; lower earnings at certain international operations Earnings per share - 26% increase Earnings per share - 26% increase Earnings per share - 26% increase Earnings per share - 26% increase Earnings per share - 26% increase Earnings per share reflect the 3-for-1 stock sp lit effective October 2, 200 7
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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$658 million cash on-hand at y ear-end No commercial paper outstanding at September 30th Near-term debt maturities Q4:0 5 Q1:06 Q2:06 Q 3:06 Q 4:06 Q1 :07 Q2 :07 Q3 :07 Q4 :07 0.2 64 0.45 6 0.442 0.401 0 .377 Column 2 0 .38 0.3 63 0.34 8 0.297 Capital spending of $823 millio n Rein vestment ratio of 1.1 to 1 Improved from targeted level Working capital positive for full y ear Net debt-to-capitalization declines to 3 0% at Sep tember 30, 2007 Leverage below targeted level $700 million of debt reduction during the y ear; $200 million investment in join t venture with U.S. Airconditioning Flexibility for investm ent in growth initiatives $500 million in January 2008 $175 millio n in February 2008 Fiscal 20 07 Balance sheet and cash flow highlights
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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2008 guidance 10% increase in sales 18% increase in earnings Lower net financing charges Comparable effective tax rate $1.1 - $1.3 billion free cash flow (cash from operations less capital expend itures) No change to October 9 th guidance Q1 outloo k: Diluted earnings per share of $0.35 - $0.37 per share Increase of 25 - 32% in earnings from continuing operations Continued growth in b uild ing efficiency Sustained recovery in North American automotive operations Sales Margin Build ing +15% 7 .3 - 7.5% Power +40% 9.0 - 9.5% Au tomotive level 3.4 - 3.8% (+10% ex lead) North American production do wn sligh tly in Q1 2 008 ou tloo k Fu ll-y ear
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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2008 Outloo k Profitable grow th continues - 62nd con secutive y ear of sales increases - 18th consecutive y ear of earnings increases Contin ued track record for profitable growth Power - Recurring revenue, profitable growth Au tomotive - sus tained recovery Strong backlog; revenue sy nergies continue Cost structure optimization: manufacturing, purchasin g, branch networ k, scale Gainin g market share - European/Asian emphasis Benefiting from inves tments in capacity NA turnaround - further cost reduction s European profitability continues to strengthen Building - H igh rate of growth con tinues
Source: JOHNSON CONTROLS INC, 8-K, October 24, 2007
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