Johnson Controls Reports Record Sales, Earnings for Fourth Quarter

MILWAUKEE, WISCONSIN, October 24, 2005 … Johnson Controls, Inc. (JCI) today reported that its fourth quarter 2005 earnings from continuing operations rose 15% on a sales increase of 7%.

John M. Barth, Chairman and Chief Executive Officer, said “We are pleased to report record quarterly and full-year results, continuing our track record for growth. In 2005 we broadened our capabilities, expanded our addressable markets and strengthened the foundation for improved profitability. Our company enters 2006 as the global leader in each of our businesses and with a strong financial position. We appreciate the efforts of our employees and their commitment to increase the value we deliver to our customers and our shareholders.”

Johnson Controls sales for the 2005 fourth quarter totaled $6.9 billion, up 7% from $6.4 billion last year. Operating income was $436 million, up 14% from $384 million last year. Income from continuing operations totaled $293 million, up 15% from $255 million in the 2004 period. Diluted earnings per share from continuing operations for the 2005 fourth quarter were $1.50 versus $1.31 in the prior year.

During the fourth quarter, the company recorded an $8.7 million adjustment, net of tax, reducing the gain on sale of discontinued operations in the second quarter of 2005. Including this one-time reduction, diluted earnings per share were $1.45, up from $1.41.

Interior experience sales were $4.5 billion, up 4% from the $4.4 billion in the prior year. The increase was associated with the launch of new business which was partially offset by the deconsolidation of a North American joint venture during the third quarter of 2005. Excluding the deconsolidation, sales for the fourth quarter would have increased 9%. Industry light vehicle production in North America is estimated to have been approximately 3% higher than the prior year amount while European production is estimated to have been 2-3% lower. Operating income declined 13%, to $206 million versus $238 million for the 2004 fourth quarter, primarily due to higher commodity costs which more than offset the benefit of operational improvements.

Power solutions sales increased 37% to $864 million from $632 million last year as a result of organic growth in North America and Europe, the impact of the Delphi battery acquisition and the consolidation of a Latin American joint venture in late 2004. Operating income rose 79% to $114 million from $64 million, reflecting the higher volume, favorable product mix, improved quality and operational efficiencies.

Building efficiency sales increased 5% to $1.5 billion for the fourth quarter from $1.4 billion in 2004, primarily due to higher North American systems and services activity for both new construction and existing buildings. Operating income was $115 million, 40% above the 2004 amount of $83 million, reflecting growth of higher-margin service business and the timing of benefits associated with efficiency and cost improvement initiatives in the North American branch office network. The backlog of uncompleted contracts at the end of 2005 was 5% higher than one year ago.

Financial Position

Capital expenditures for the 2005 fiscal year decreased to $675 million, in line with earlier guidance. At September 30, 2005, the company’s total debt to total capitalization declined to 28% from 34% at the prior year-end, despite funding acquisitions and the company’s voluntary $180 million contribution to its U.S. pension plans in July.

Fiscal 2006 Guidance
On October 11, 2005, Johnson Controls issued guidance on its expected performance for 2006. Fiscal 2006 sales are anticipated to increase approximately 15%, to $32 billion. Earnings per share from continuing operations are estimated to increase 13 to 17%, to a range of $5.00 to $5.15. For the first quarter of 2006, Johnson Controls said it anticipates sales of $6.8 billion and earnings per share from continuing operations of $0.82 to $0.85.

The company said it expects that its previously announced acquisition of York International will be completed in December 2005.

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