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Johnson Controls Third Quarter EPS Up 14%

MILWAUKEE, July 18

Johnson Controls, Inc., a global leader in automotive systems and facility management and control, today reported record sales and earnings for its third quarter of fiscal 2002.

Sales for the three months ended June 30, 2002 increased 11% to $5.3 billion from $4.7 billion for the same quarter of fiscal 2001. Operating income was $320 million, up 11% over the prior year's $288 million. Net income was a record $175 million, up 15% over the $153 million for the third quarter of fiscal 2001. Diluted earnings per share were $1.85, 14% over the $1.62 earned last year.

Income comparisons are with last year's results that have been adjusted to exclude the effects of goodwill amortization expense.

    Automotive Systems Group

    (dollars in millions)
    Three Months Ended
    June 30,                            2002       2001
                                                               %
    Sales                             $4,003.7   $3,529.4     13
    Operating Income                    $253.5     $226.0     12



Sales by the company's Automotive Systems Group increased 13%. In North America, sales growth of interior systems and batteries was 5% reflecting new interiors and battery business, an increase in domestic industry vehicle production and stronger demand by existing battery customers.

Revenues from European interiors and battery operations were 33% higher than in the prior year. Most of the increase was due to the inclusion of an electronics business and a battery business that were acquired in October 2001 and the effect of favorable currency rates. Revenues excluding those factors rose 8% due to newly launched interiors systems business.

Sales in Asia were modestly higher while revenue in South America declined due to depressed market conditions.

Operating income for the group increased 12% to $254 million from $226 million for the comparative quarter. Income increased in North America reflecting the higher volumes and improvements in quality and costs. In Europe, operating margins were lower as the result of higher new program launch and engineering costs.

    Controls Group

    (dollars in millions)
    Three Months Ended
    June 30,                     2002       2001
                                                        %
    Sales                      $1,253.3   $1,192.7      5
    Operating Income              $66.9      $62.3      7



Controls Group sales to the nonresidential buildings market for the third quarter increased 5%. Excluding acquisitions and the deconsolidation of a joint venture in Japan, sales for the quarter would have been 8% higher year- over-year.

North American sales increased 11% reflecting a higher level of activity associated with control system installation contracts. Revenues associated with control services and facility management, especially for the federal government, were also higher.

Sales in Europe were 15% higher reflecting a higher level of facility management activity and revenue associated with an acquisition completed late in the third quarter of fiscal 2001. In Asia, sales declined substantially due to the joint venture deconsolidation.

Operating income rose 7% over the year ago quarter, and higher operating margins were achieved in both North America and Europe due to quality and cost improvements.

Johnson Controls said that the backlog of uncompleted contracts for installed systems was 13% higher than at June 30 one year ago. An increase in orders for installed systems reflects strength in demand in the North American health care, education and office building sectors.

Year-To-Date Results and Outlook

Sales for the first nine months of fiscal 2002 rose 8% to $14.9 billion from $13.8 billion for the same period of fiscal 2001. Operating income increased 7% to $778 million from the prior year's $724 million. Net income was 11% higher at $410 million versus $370 million for the first nine months of fiscal 2001. Diluted earnings per share were $4.33, 10% above the $3.95 for 2001.

James H. Keyes, chairman and chief executive officer, said, "With nine months of our fiscal year complete, we are pleased to confirm our full-year outlook for record sales and earnings. We are confident that we will be able to exceed our forecast for 6% sales growth by our automotive group due to strength in the domestic vehicle market. We continue to look for automotive operating margins to approximate last year's level. Sales growth for our controls group is estimated to be at the lower end of the previously estimated 6-10% range, with modest margin improvement. In addition, our free cash flow is strong as evidenced by our total debt to total capitalization decreasing to 39% at June 30, 2002 as compared with 41% three months earlier.

"I would like to thank our employees for their commitment to exceed our customers' expectations, as well as our shareholders for their support as we anticipate achieving our 12th consecutive year of record earnings."

    Supplemental Full-Year Financial Estimates   (dollars in millions)

                                                 FY2001    FY2002
                                                 Actual    Estimates
    Capital expenditures                          $621     $575-600
    Depreciation                                   434     $490-510
    Amortization of intangibles                    $13*         $20 (approx.)
    Total debt to total capitalization              38%          38% (approx.)
    Interest expense, net of interest income       110     $110-115
    Effective income tax rate                     36.6%*       34.8%
    Minority interests in net earnings
     of subsidiaries                               $53       $60-70


    *Adjusted to exclude the effects of goodwill amortization



Johnson Controls is a global market leader in automotive systems and facility management and control. In the automotive market, it is a major supplier of seating and interior systems, and batteries. For nonresidential facilities, Johnson Controls provides building control systems and services, energy management and integrated facility management. Johnson Controls, founded in 1885, has headquarters in Milwaukee, Wisconsin. Its sales for 2001 totaled $18.4 billion.

The company has made forward-looking statements in this document that are subject to risks and uncertainties. Forward-looking statements include information concerning possible or assumed future risks and may include words such as "believes," "expects," "anticipates" or similar expressions. For those statements the company cautions that numerous important factors, including industry vehicle production levels, US dollar exchange rates and those discussed in the company's Form 8-K (dated November 9, 2001), 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.

                       CONSOLIDATED STATEMENT OF INCOME
               (in millions, except per share data; unaudited)

                                               Three Months Ended June 30,
                                                        Adjusted
                                               2002       2001*        2001

     Net sales                              $5,257.0    $4,722.1    $4,722.1
     Cost of sales                           4,509.0     4,046.0     4,046.0
       Gross profit                            748.0       676.1       676.1

     Selling, general and administrative
      expenses                                 427.6       387.8       405.8
       Operating income                        320.4       288.3       270.3

     Interest income                             2.5         3.7         3.7
     Interest expense                          (29.8)      (31.1)      (31.1)
     Equity income                              11.3         9.4         9.4
     Miscellaneous - net                       (11.3)       (4.0)       (4.0)
       Other income (expense)                  (27.3)      (22.0)      (22.0)

     Income before income taxes and
      minority interests                       293.1       266.3       248.3

     Provision for income taxes                102.0        97.9        96.0
     Minority interests in net earnings
      of subsidiaries                           15.8        15.8        15.8

     Net income                               $175.3      $152.6      $136.5

     Earnings available for common
      shareholders                            $173.4      $150.5      $134.4

     Earnings per share
       Basic                                   $1.96       $1.73       $1.54
       Diluted                                 $1.85       $1.62       $1.45


    * The adjusted information for the three and nine months ended
      June 30, 2001 is presented as if FAS 142 (see Note 1) had been adopted
      October 1, 2000.  Results have been adjusted to exclude goodwill
      amortization expense ($18.0 million and $53.4 million in the three
      and nine months ended June 30, 2001, respectively) and the related
      income tax effect.


                       CONSOLIDATED STATEMENT OF INCOME
               (in millions, except per share data; unaudited)

                                               Nine Months Ended June 30,
                                                        Adjusted
                                              2002        2001*       2001

     Net sales                             $14,885.2   $13,778.1   $13,778.1
     Cost of sales                          12,816.8    11,840.8    11,840.8
       Gross profit                          2,068.4     1,937.3     1,937.3

     Selling, general and administrative
      expenses                               1,290.8     1,213.8     1,267.2
       Operating income                        777.6       723.5       670.1

     Interest income                             8.5        14.1        14.1
     Interest expense                          (91.9)      (99.0)      (99.0)
     Equity income                              25.7        19.2        19.2
     Miscellaneous - net                       (26.5)      (10.8)      (10.8)
       Other income (expense)                  (84.2)      (76.5)      (76.5)

     Income before income taxes and
      minority interests                       693.4       647.0       593.6

     Provision for income taxes                241.3       235.3       229.7
     Minority interests in net earnings
      of subsidiaries                           42.1        41.9        41.9

     Net income                               $410.0      $369.8      $322.0

     Earnings available for common
      shareholders                            $404.2      $363.1      $315.3

     Earnings per share
       Basic                                   $4.58       $4.20       $3.64
       Diluted                                 $4.33       $3.95       $3.44


    * The adjusted information for the three and nine months ended
      June 30, 2001 is presented as if FAS 142 (see Note 1) had been adopted
      October 1, 2000.  Results have been adjusted to exclude goodwill
      amortization expense ($18.0 million and $53.4 million in the three
      and nine months ended June 30, 2001, respectively) and the related
      income tax effect.


                 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                                (in millions)

                                          June 30,   September 30,  June 30,
                                            2002         2001         2001
                                        (unaudited)                (unaudited)

    ASSETS
    Cash and cash equivalents             $206.8        $374.6       $298.8
    Accounts receivable - net            3,000.2       2,673.4      2,523.7
    Costs and earnings in excess of
     billings on uncompleted contracts     330.7         254.9        213.4
    Inventories                            650.1         577.6        545.0
    Other current assets                   649.2         663.5        723.6
      Current assets                     4,837.0       4,544.0      4,304.5

    Property, plant and equipment - net  2,435.9       2,379.8      2,411.7
    Goodwill - net                       2,707.5       2,247.3      2,235.7
    Other intangible assets - net          247.7         135.4        132.6
    Investments in partially-owned
     affiliates                            337.8         300.5        252.3
    Other noncurrent assets                348.3         304.5        392.8
      Total assets                     $10,914.2      $9,911.5     $9,729.6

    LIABILITIES AND EQUITY
    Short-term debt                       $152.0        $379.9       $249.7
    Current portion of long-term debt       37.9          45.3         47.4
    Accounts payable                     2,672.7       2,437.3      2,336.0
    Accrued compensation and benefits      468.9         436.3        412.1
    Accrued income taxes                   101.3         137.8        119.5
    Billings in excess of costs and
     earnings on uncompleted contracts     209.8         163.0        181.7
    Other current liabilities            1,007.0         980.1      1,031.8
      Current liabilities                4,649.6       4,579.7      4,378.2

    Long-term debt                       1,936.3       1,394.8      1,443.3
    Postretirement health and other
     benefits                              163.6         162.5        161.7
    Minority interests in equity of
     subsidiaries                          196.7         207.3        280.1
    Other noncurrent liabilities           623.0         581.8        660.5
    Shareholders' equity                 3,345.0       2,985.4      2,805.8
      Total liabilities and equity     $10,914.2      $9,911.5     $9,729.6


                     CONSOLIDATED STATEMENT OF CASH FLOWS
                           (in millions; unaudited)

                                           Three Months       Nine Months
                                          Ended June 30,     Ended June 30,
                                           2002    2001     2002       2001
    Operating Activities
    Net income                            $175.3  $136.5   $410.0     $322.0

    Adjustments to reconcile net income
     to cash provided by operating
     activities
      Depreciation                         124.2   107.4    365.5      319.2
      Amortization of intangibles            3.3    20.5     13.0       61.6
      Equity in earnings of partially-
       owned affiliates, net of dividends
       received                             (2.7)   (5.6)   (16.1)     (10.3)
      Minority interests in net earnings
       of subsidiaries                      15.8    15.8     42.1       41.9
      Deferred income taxes                  8.6     7.6     33.7       27.8
      Other                                  1.9     4.2     (3.8)      (9.2)
      Changes in working capital,
       excluding acquisition of
       businesses
        Receivables                       (119.6)   19.4   (198.4)    (117.4)
        Inventories                          0.1    27.0     15.2       28.4
        Other current assets               (11.5)  (11.4)    13.9       95.6
        Accounts payable and accrued
         liabilities                       125.6   105.6    (35.5)      70.9
        Accrued income taxes                (4.5)   20.0    (36.5)       6.6
        Billings in excess of costs and
         earnings on uncompleted contracts   7.0    (0.2)    43.8       15.2
        Cash provided by operating
         activities                        323.5   446.8    646.9      852.3

    Investing Activities
    Capital expenditures                  (105.6) (179.5)  (333.1)    (460.6)
    Sale of property, plant and equipment   11.7    13.5     38.2       26.9
    Acquisition of businesses, net of
     cash acquired                         (62.5) (144.0)  (643.3)    (207.3)
    Changes in long-term investments -
     net                                   (27.0)  (13.9)   (44.5)     (72.0)
        Cash used by investing activities (183.4) (323.9)  (982.7)    (713.0)

    Financing Activities
    Decrease in short-term debt - net      (70.7)  (69.2)  (251.8)    (224.7)
    Increase in long-term debt               0.5     5.4    606.2      241.9
    Repayment of long-term debt            (37.7)   (6.5)   (87.5)     (75.1)
    Payment of cash dividends              (31.3)  (29.9)   (94.0)     (88.1)
    Other                                  (10.2)    3.4     (4.9)      29.9
        Cash (used) provided by financing
         activities                       (149.4)  (96.8)   168.0     (116.1)

    (Decrease) increase in cash and cash
     equivalents                           $(9.3)  $26.1  $(167.8)     $23.2


                                  FOOTNOTES


1. The Company adopted Statement of Financial Accounting Standards (FAS) No. 142 "Goodwill and Other Intangible Assets", effective October 1, 2001. Under FAS 142 goodwill will no longer be amortized; however, it must be tested for impairment at least annually. Amortization will continue to be recorded for other intangible assets with determinable lives. The Company's financial statements include comparative adjusted information which assumes FAS 142 had been adopted October 1, 2000.

2. Effective October 1, 2001, the Company completed the acquisition of the automotive electronics business of France-based Sagem SA and the German automotive battery manufacturer Hoppecke Automotive GmbH & Co. KG. Both acquisitions were accounted for as purchases. The acquisitions, with an initial combined purchase price of approximately $575 million, were financed with long-term debt. Independent appraisals and other studies necessary to allocate purchase price to the acquired net assets are in progress. Pending completion of the appraisals and studies, the excess of purchase price over the estimated fair value of the acquired net assets has been reported as goodwill.

3. Basic earnings per share is computed by dividing net income, after deducting dividend requirements on the Series D Convertible Preferred Stock, by the weighted average number of common shares outstanding. Diluted earnings are computed by deducting from net income the after-tax compensation expense which would arise from the assumed conversion of the Series D Convertible Preferred Stock, which was $0.6 million and $0.8 million for the three months ended June 30, 2002 and 2001, respectively, and $2.1 million and $2.6 million for the nine months ended June 30, 2002 and 2001, respectively. Diluted weighted average shares assume the conversion of the Series D Convertible Preferred Stock, if dilutive, plus the dilutive effect of common stock equivalents which would arise from the exercise of stock options.

                                           Three Months      Nine Months
    (in millions)                         Ended June 30,    Ended June 30,
                                           2002    2001     2002      2001
    Weighted Average Shares
    Basic                                  88.7    87.1     88.2      86.6
    Diluted                                94.7    93.5     94.1      92.8
    Outstanding at period end                               88.8      87.3