Johnson Controls Reports Record 2008 Results


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MILWAUKEE, October 23, 2008: Johnson Controls, Inc. today reported record sales of $38.1 billion for its 2008 fiscal year, up 10% from $34.6 billion in 2007, reflecting growth in the company's Building Efficiency, Power Solutions and Automotive Experience businesses.

"We achieved a record year with solid profitability despite the unprecedented market challenges and economic volatility," said Chairman and Chief Executive Officer Stephen A. Roell. "In recognition of the difficult environment, we took pre-emptive action in the fourth fiscal quarter to improve and better align our cost structure with future market conditions. This will improve our long-term profitability and further enhance our competitive advantage."

Net income for the year totaled $979 million with diluted earnings per share from continuing operations of $1.63.

Segment income, which excludes the previously announced $495 million restructuring charge, increased 10% to $2.1 billion versus $1.9 billion last year. Excluding the charge, net income totaled $1.4 billion, up 8% from $1.3 billion in 2007. Diluted earnings per share from continuing operations were $2.33 compared to $2.10 ($2.16 including the impact of 2007 non-recurring tax adjustments).

Fourth Quarter Results

For the 2008 fourth quarter, the company reported record sales of $9.3 billion, an increase of 3% versus $9.0 billion last year as a result of higher Building Efficiency and Power Solutions revenues. Net income was $16 million, with diluted earnings per share of $0.03.

Segment income for the 2008 quarter was $605 million, down 8% from $660 million in 2007. Net income excluding the restructuring charge was $439 million, 6% lower than $466 million in the prior year. Diluted earnings per share from continuing operations were $0.73 versus $0.78 last year, in-line with the company's forecasts. As expected, higher commodity costs and costs associated with the Plastech joint venture reduced earnings by a total of $0.09 in the 2008 quarter.

Building efficiency sales were $3.9 billion, up 8% compared with 2007 revenues of $3.6 billion. The increase reflects higher Global Workplace Solutions and North American systems sales as well as growth in Europe and other international markets. Segment income was $316 million, level with 2007 as the benefits of higher volume and improved underlying margins were offset by the timing of commodity cost recoveries and the costs associated with growth investments in its sales force and information technology. The backlog of uncompleted commercial systems and services contracts at September 30, 2008 was $4.7 billion, 12% higher than the prior year amount reflecting increasing demand for energy efficiency projects, particularly in the U.S. Federal government and education markets.

Automotive experience sales in the quarter were $4.1 billion, 2% lower than $4.2 billion in 2007. North American sales decreased 12%, less than the overall industry vehicle production decrease of 17% due to the incremental revenues associated with the Plastech joint venture. European sales increased 4%, however, excluding the impact of currency, sales decreased 6%, approximately in line with industry production. Sales in the Asia/Pacific region increased 8% due to higher volumes in Japan. Segment income was $147 million, down 20% from $183 million last year. The decrease reflects the impacts of the lower North American volume, the costs associated with Plastech and higher launch costs in support of new automotive interior programs, which more than offset significant improvements in operating performance globally.

Power solutions sales increased 7% in the 2008 quarter to $1.34 billion from $1.25 billion last year due to higher unit selling prices. Unit volumes were slightly lower due to lower automotive production levels. Segment income declined to $142 million, down 12% from $161 million in the 2007 fourth quarter due to higher non-lead commodity costs.

2009 Outlook

The company re-affirmed the fiscal 2009 guidance it provided on October 14, 2008, for diluted earnings per share of $1.95 to $2.10.

For the first quarter of fiscal 2009, the company said it expects earnings of $0.22 to $0.24 per diluted share, down from $0.39 in the 2008 quarter.

The first quarter forecast reflects expected increases in Building Efficiency and Power Solutions income due to higher underlying revenues and operational improvements in both businesses. These improvements are expected to be more than offset by a loss in the Automotive Experience business as a result of sharply lower automotive production in North America and Europe and the costs associated with restructuring initiatives. The company forecasts that its automotive results will improve sequentially throughout the year as vehicle production stabilizes, commodity prices decrease and cost reductions gain momentum.

"While we face uncertainties in 2009, we begin the year in a strong position with record backlogs in our automotive and buildings businesses, global market leadership and our proven ability to improve our cost structure," said Mr. Roell. "Johnson Controls will aggressively execute on our strategies and continue to invest for sustainable long-term growth."

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