e8vk - sec.gov | home. roell added that “our forecast for margin improvement reflects the...

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0000950137-07-015258.txt : 200710090000950137-07-015258.hdr.sgml : 2007100820071009164628ACCESSION NUMBER:0000950137-07-015258CONFORMED SUBMISSION TYPE:8-KPUBLIC DOCUMENT COUNT:123CONFORMED PERIOD OF REPORT:20071009ITEM INFORMATION:Results of Operations and Financial ConditionITEM INFORMATION:Financial Statements and ExhibitsFILED AS OF DATE:20071009DATE AS OF CHANGE:20071009

FILER:

COMPANY DATA:COMPANY CONFORMED NAME:JOHNSON CONTROLS INCCENTRAL INDEX KEY:0000053669STANDARD INDUSTRIAL CLASSIFICATION:PUBLIC BUILDING AND RELATED FURNITURE [2531]IRS NUMBER:390380010STATE OF INCORPORATION:WIFISCAL YEAR END:0930

FILING VALUES:FORM TYPE:8-KSEC ACT:1934 ActSEC FILE NUMBER:001-05097FILM NUMBER:071163076

BUSINESS ADDRESS:STREET 1:5757 N GREEN BAY AVENUESTREET 2:P O BOX 591CITY:MILWAUKEESTATE:WIZIP:53201BUSINESS PHONE:4145241200

MAIL ADDRESS:STREET 1:5757 N GREEN BAY AVENUESTREET 2:P O BOX 591CITY:MILWAUKEESTATE:WIZIP:53201

8-K1c19213e8vk.htmCURRENT REPORT

e8vk

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): October9, 2007

JOHNSON CONTROLS, INC.

(Exact name of registrant as specified in its charter)

Wisconsin

1-5097

39-0380010

(State or other jurisdiction
of incorporation)

5757 North Green Bay Avenue,

(Commission
File Number)

(I.R.S. Employer
Identification No.)

P.O. Box 591,
Milwaukee, Wisconsin
53201-0591

(Address of principal executiveoffices)

(Zip Code)

Registrants 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 thefiling obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule14d-2(b) under the Exchange Act (17 CFR240.14d-2(b))

o Pre-commencement communications pursuant to Rule13e-4(c) under the Exchange Act (17 CFR240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

Attached and incorporated herein by reference as Exhibit99.1 is a copy of the Johnson Controls,Inc. press release dated October9, 2007 reporting that the registrant affirms fiscal year 2007guidance and forecasts double-digit sales growth and double-digit earnings growth in fiscal year2008.

Attached and incorporated herein by reference as Exhibit99.2 is a copy of the Johnson Controls,Inc. Strategic Review and 2008 Outlook presentation for the analyst meeting held on October9,2007.

Item 9.01 Financial Statements and Exhibits

(d)Exhibits:

99.1 Press release of Johnson Controls, Inc., dated October9, 2007.

99.2 Strategic Review and 2008 Outlook presentation to analysts on October9, 2007.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly causedthis 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 9, 2007

EXHIBIT INDEX

Exhibit No. Description

99.1

Press release of Johnson Controls, Inc., dated October9, 2007.

99.2

Strategic Review and 2008 Outlook presentation to analysts on October9, 2007.

EX-99.12c19213exv99w1.htmPRESS RELEASE, DATED OCTOBER 9, 2007

exv99w1

Exhibit99.1

CONTACT: Glen Ponczak investors
414-524-2375
Monica Levy media
414-708-0490

JOHNSON CONTROLS FORECASTS 18% EARNINGS GROWTH FOR 2008

MILWAUKEE, Wisconsin. . .Oct. 9, 2007. . . Johnson Controls, Inc. (JCI)today forecastdiluted earnings per share from continuing operations for fiscal 2008 to increase by 18% to $2.45 -$2.50.

Johnson Controls, a diversified industrial company that makes buildings and vehicles morecomfortable, safe and sustainable, also said that it expects sales for 2008 to increase by 10%, toapproximately $38billion.

Johnson Controls near-term sales growth will be driven by a combination of our participationin growing markets and our ability to increase our market shares, said Stephen A. Roell, chiefexecutive officer.

In the buildings market, he said, we will continue to achieve double-digit growth ratesbased on delivering energy efficiency and sustainability solutions globally. In the automotivemarket we are benefiting from our exposure to emerging markets and increasing demand for higherlevels of interior comfort, convenience and connectivity. Concurrently, we have significantexposure to the steady building services and aftermarket battery sectors where we are enjoyingstrong growth. We are also in a strong position to make investments that will broaden our productportfolios, technical capabilities and market penetration.

Mr.Roell added that Our forecast for margin improvement reflects the continuation of ourdisciplined process for achieving improvements in quality and cost. Those achievements,combined with our increased revenue growth, will make 2008 another year of strong profitablegrowth for Johnson Controls.

The company confirmed its guidance for 2007 fourth-quarter earnings of $0.77 $0.78 perdiluted share from continuing operations, an increase of 24 26% from the prior year. For thefull year, earnings are expected to be approximately $2.08-$2.10 per diluted share from continuingoperations (excluding a non-recurring tax benefit of $0.06 per share), up 19% over 2006. Sales for2007 are expected to total $34.5billion, up 7%. These record results will mark the companys61st consecutive year of sales growth and 17th consecutive year of earningsgrowth.

The company will report its financial results for fiscal 2007 on October23, 2007. Allearnings forecasts reflect the companys 3-for-1 stock split on October2, 2007.

###

Johnson Controls (NYSE: JCI News) is the global leader that brings ingenuity tothe 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 ourproducts and services for more than 200million vehicles, 12million homes and one millioncommercial buildings. Our commitment to sustainability drives our environmental stewardship, goodcorporate citizenship in our workplaces and communities, and the products and services we provideto customers. For additional information, please visit http://www.johnsoncontrols.com.

###

Johnson Controls, Inc. (the Company) has made forward-looking statements in this documentpertaining to its financial results for fiscal years 2007, 2008 and beyond that are based onpreliminary data and are subject to risks and uncertainties. All statements other than statementsof historical fact are statements that are or could be deemed forward-looking statements. For thosestatements, the Company cautions that numerous important factors, such as automotive vehicleproduction levels and schedules, energy prices, the ability to mitigate the impact of higher rawmaterial costs, the strength of the U.S. or other economies, currency exchange rates, cancellationof commercial contracts, changes to domestic and foreign tax rates, labor interruptions, theability to realize acquisition related integration benefits, as well as those factors discussed inthe Companys most recent Form 10-K filing (dated December5, 2006) could affect the Companysactual results and could cause its actual consolidated results to differ materially from thoseexpressed in any forward-looking statement made by, or on behalf of, the Company.

EX-99.23c19213exv99w2.htmSTRATEGIC REVIEW AND 2008 OUTLOOK PRESENTATION TO ANALYSTS ON OCTOBER 9, 2007

exv99w2

Exhibit 99.2

Johnson Controls, Inc. ("the Company") has made forward-looking statements in this documentpertaining to its financial results for fiscal years 2007, 2008 and beyond that are based on preliminarydata and are subject to risks and uncertainties. All statements other than statements of historicalfact are statements that are or could be deemed forward-looking statements. For those statements,the Company cautions that numerous important factors, such as automotive vehicle production levelsand schedules, energy prices, the ability to mitigate the impact of higher raw material costs, thestrength of the U.S. or other economies, currency exchange rates, cancellation of commercialcontracts, changes to domestic and foreign tax rates, labor interruptions, the ability to realizeacquisition related integration benefits, as well as those factors discussed in the Company's mostrecent Form 10-K filing (dated December 5, 2006) could affect the Company's actual results andcould cause its actual consolidated results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, the Company.

CONTACT: Glen L. Ponczak

Director, financial communication

Johnson Controls, Inc.

414-524-2375

[email protected]

Forward-looking statement

Agenda 8:30 Opening commentsDenise ZutzVP Strategy, IR and Communication 8:40 TransformationJohn BarthChairman 8:55 Continuing our growthSteve RoellChief Executive Officer 9:25 Delivering sustainable growthKeith WandellPresident and Chief Operating Officer

9:55 Break 10:05 Automotive and Q/ABeda BolzeniusVP & President, Automotive Experience 10:40 Power and Q/AAlex MolinaroliVP & President, Power Solutions 11:00 Building and Q/ADave MyersVP & President, Building Efficiency 11:35 Financial reviewBruce McDonaldExecutive VP & CFO 11:55 Summary and Q/ASteve Roell

12:30 Lunch

Creating a more comfortable, safe and sustainable world

INGENUITY WELCOME

Transformation

October 2002

First meeting as CEO

Profitable growth

Diversify our businesses

Special focus on accelerating

growth in the controls business

Better leverage our resources

Diversity

Shareholder value

Transformation

Profitable growth

Consecutive years of record sales and earnings

2002

2007

Earnings

2002

2007

Sales

13%

CAGR

15%

CAGR

Transformation

More diversified, balanced portfolio

2007: Better able to withstandshort-term downturns in anyindustry or region

Sales and earningsdiversification

Power solutions

Expansion to Europe, Asia

Entered hybrid market

Building efficiency

Tripled available market -- morethan doubled business

Automotive experience

Significantly increasedgeographic presence andcustomer base

Automotive

Buildings

Power

Automotive

Buildings

Power

Sales

Earnings

Automotive

Buildings

Power

Automotive

Buildings

Power

2002

2007 (est.)

Transformation

Leveraging our scale, technology, talent

Management

Purchasing

Local market knowledge

Technology

Expertise in comfort, safety,sustainability

Leveraging the intersectionsbetween our businesses

Human machine interface

- -Transferring skills from auto interiors to

building controls

Hybrid battery systems

- -Leveraging automotive electronics

expertise

Distribution efficiency

- -Residential HVAC / batteries

Sustainability initiatives

Transformation

Benefiting from diversity

Sustainable businessadvantage due to minoritysupplier commitment

Billion Dollar Roundtable

$1.5 billion in diversepurchasing in 2007

Successful in cultures allaround the world

2002: 41 countries

2007: 75 countries

Local leadership

Transformation

Positioned for long-term global profitable growth

Diversification

Balanced portfolio

Leveraging our

resources

Diversity

Customer focused

Comfort

Leadership

Global

Safety

Sustainability

15 13 15 65 31 27

Consistent financial performance

Shareholder value

*as of 9/28/07

JCI

S&P 500

(stock price appreciation + re-invested dividends)*

MarketCapitalization

2002

2007

$7B

$23B

65%

31%

27%

16%

13%

15%

Total shareholder return

2007 Outlook*

Record sales and earnings

Consolidated net sales

Earnings per share

from continuing operations

Q4 2007 earnings will be released October 23, 2007

$34.5B + 7%

$2.08 - +19 - 20%

$2.10

*Estimated; EPS reflects 3-for-1 stock split on October 2, 2007

Continuing our success

Steve Roell

Chief Executive Officer

Keith Wandell President

and Chief Operating Officer

Stephen A. Roell


Thanks for your leadership

Looking to the future

A continued focus onprofitable growth

......by creating a more comfortable, safe andsustainable world

Sales Growth* > 10%

Earnings Growth* 10 - 15%

Growth objective

* Compounded annual growth rate

17th Consecutive Year of

Earnings Increases

61st Consecutive Year of

Sales Increases

Track record of success

CAGR15%

CAGR13%

Over the past decade we have achieved our goals

FY97

FY98

FY99

FY00

FY01

FY02

FY03

FY04

FY05

FY06

FY07E

FY97

FY98

FY99

FY00

FY01

FY02

FY03

FY04

FY05

FY06

FY07E

Johnson Controls growth

IndustryGrowth

Market ShareGains

Acquisitions


IndustryGrowth

Market ShareGains

Acquisitions

We participate in growing markets

5 year industry growth

Automotive +3%

Power +2%

Building +5%

Industry growth

Automotive Experience

65 million vehicles produced in 2007,growing to 76 million in 2012

Five-year average growth: 3% CAGR

Mature markets

North America 1.5%

Japan 0.6%

Western Europe 0.2%

Faster growth in emerging markets,especially China, India, SoutheastAsia, Eastern Europe, Russia

Richer mix and higher content pervehicle due to increasing penetrationof electronics

Global industry production volumes

2007

2012

65M 76M

Growth Markets

China

9.5%

India

18.3%

S.E. Asia

9.5%

E. Europe

6.1%

2007 2017 SA 22 29 Japan 25 25 Asia (ex Japan) 75 125 Europe 90 111 NA 110 115 ROW 15 15

2007

2017

337m

420m

Global industry unit volume

2% CAGR

Note: "Market" includes automotive, commercial, golf car,marine and utility batteries.(excludes motorcycles)

Industry growth

Power Solutions: lead-acid batteries

Limited car parc growth in maturemarkets

Longer battery lives

Quality improvement

Improved vehicle electrical structure

Strong new vehicle registrations inemerging markets

China

Largest automotive battery market in Asia

Highest annual growth rate in the world

at 8+%

Highly fragmented manufacturing base

Approximately 1,000 mfrs.

Expected to consolidate

Industry growth

Power Solutions: hybrid batteries

Demand growth driven by

Rising fuel costs

Emission reduction / legislation

Energy independence

Improved technology 2005 2010 2015 2020 North America 207 1172 2205 4500 Western Europe 18 200 920 1620 Japan 55 145 400 690 China 2 199 735 1570 Other 0 9 40 120

Projections continue to rise

Growth opportunities across all segments

Non-residential

HVAC services

$105 billion

Non-residential

HVAC systems

$35 billion

Residential

$35 billon

Global

Workplace

Solutions

$80 billion

4% annual growth

NA market ($11b)"normal" growth 6-8%

4-8% annual growth

Industry growth

Building Efficiency

8-12%

annual

growth

Global market size: $255 billion

Residential HVAC market growth

The ongoingreplacementcycle remains afavorablebackdrop forgrowth

Increased market demand for:

Advanced integrated technologies

to manage energy for a portfolio of buildingsincluding alternative energy sources

Advisory services

to develop energy management & sustainabilitystrategies for new and existing buildings

Technical services

that improve energy performance

in existing buildings

Solutions

that bundle systems and services to reduceenergy and operational costs

Building products

that use less energy and are commerciallyavailable today

Increasing energy prices

+ Energy independence

+ Green movement

+ Climate change concerns

+ Legislation, regulation &

incentives

Industry growth

Building efficiency

Growth in "green" demand

48% of survey participantsfeel environmentalresponsibility is at least asstrong a motivator as costreduction

Industry growth

Building efficiency 100% environmental responsibility Mostly for environmental responsibility Somewhat more for environment 50% cost savings/50% environmental Somewhat more for cost savings Mostly for cost savings 100% cost savings East 1 5 7 35 West 22 24 6

Motivation for energy efficiency investments

Energy efficiency indicator research, 1,250 respondents


IndustryGrowth

Market ShareGains

Acquisitions

We expect to continue growing at twicethe rate of our underlying industries

Improving comfort,safety, sustainability

Leveraging

competitive

advantages

Innovation

People


Automotive +3%

Power +2%

Building +5%

Growth driver: Creating amore comfortable, safe andsustainable world by creatingsmart environments

Effective

technology

Customer-

focused

Marketinsight &leadership

Creating Smart

Environments

Enable us to grow faster than ourunderlying businesses by:

Integrating technologies, products andservices

Redefining and enhancing therelationships between people and theirsurroundings

Anticipating changing needs anddeveloping practical solutions thatimprove workplaces, vehicles, homesand the global environment

Outperform our markets

Increasing comfort, safety and sustainability

"Cost Curve" for Carbon Abatement...

....the Most Effective Strategies

Outperforming our markets

Energy efficiency

2/3 of world's energy consumedin vehicles and buildings

Johnson Controls positioned toplay a critical role


Customer relationships andengagement

Emerging market leadership;partnering

Global program executioncapabilities

Product offering / level of verticalintegration

Complete interior capability

Knowledge of consumerpreferences

Cost advantaged solutions

Financial strength


Market share gain drivers

Power solutions

Product and process technologyleadership

Leading brands

Preferred supplier status

Operational excellence

Quality/cost leadership

Global presence

Financial strength



Building efficiency

Energy efficiencyknowledge/expertise

Branch network

Emerging market leadership

Targeted solutions offerings

Systems integration

Product technology




Leveraging our competitive advantages: Innovation

Improving......

Sustainability

Lithium Ion

hybrid battery

Comfort

MicroChannelresidential airconditioning

Safety

Mobile DeviceGateway

Recruit and retain ingenious people worldwide


Leveraging our competitive advantages: people








IndustryGrowth

Market ShareGains

Acquisitions

Financial strength to invest in thegrowth of all of our businesses

Improving comfort, safety,sustainability

Leveraging

competitive

advantages

Innovation

People


Automotive +3%

Power +2%

Building +5%


Acquisitions

Acquisitions are notconsidered growth, but rathera platform for growth

Strategic rationale

New technology/capabilities

New customers

New geographic markets

Maintain ROIC discipline

Areas of interest Buildingefficiency Powersolutions Automotive experience Mechanical serviceMid-marketGlobal residential marketsEnergy efficiency AsiaVertical integration Interior electronicsEmerging marketVertical integration

Long-term global growth

Sustained profitable growth oflarge companies is rare

Growth more influenced by thecontrollable than uncontrollable

Confident we can succeed

Participate in growing markets

Clear strategies to grow fasterthan underlying markets

Global positioning

Investments to sustain growth


Ingenuity

Why growth stalls

20% of the root causes areuncontrollable

Economic turndowns, regulatory / anti-trust actions

80% are controllable

Breakdown of innovation management

Misread customer needs/competitorcapabilities

Premature abandonment of corebusiness

Strategic diffusion

Senior team strength / depth

Organization design

Talent shortage


2008 outlook*

Consolidated net sales

Earnings per share

from continuing operations

$38B +10%

$2.45 - $2.50 +18%

*Estimated; EPS reflects 3-for-1 stock split on October 2, 2007

Strengthen customer relationships

Expansions in emerging markets

Broaden product scope and increase smartcontent

Win share through innovation, brand,quality, cost

Expand addressable markets

Build on sustainability leadership

Global leadership

Johnson Controls

Continued profitable growth

IndustryGrowth

MarketShare Gains

Acquisitions

Keith Wandell

Chief Operating Officer

Strategic focus

We have our vision

........growth through improving

comfort, safety and sustainability

We will make it happen

Delivering sustainable growth

Strategic "markers"

Integrity and ethics

Global growth

Global leadership and engagedemployees

Customer satisfaction

Continuous improvement

Innovation

Sustainability

Shareholder value


Integrity

Fundamental definition:

Honesty

Fairness

Respect

Safety

We go beyond thefundamental:

Cultural respect

Strength in

relationships

Global inclusion

Ethics: more relevant

and important than ever

New geographies

More people

Greater cultural diversity


Global leadership and engaged employees

Attracting, retaining and developing globalemployees and leaders to support our growthobjectives may be the biggest challenge we face

Our focus

Leadership development

Engagement

Diversity

Total employees 140,000 200,000 Leaders 10,000 14,000

2007

2010

2007-2010 growth

40% of sales fromemerging markets

80% of employeesoutside of the U.S.

2010

At the core of our success for many years

We're raising the bar on our customer relationships

Improved customer connection

Listening, learning, problem solving,anticipating needs

Knowledge and experience

Understand customer needs / influencers /decision makers, to best deliver ingenioussolutions of greatest value

Relationships

Place the customer first, build trust, embracethe long-term view



Proven way to create value, sustainablegrowth and increased margins

Key driver of customer satisfaction

Greater discipline leading to increased

number of commercialized products/services,

brought to market faster

Focus on innovation that improves comfort,

safety, sustainability in all our businesses


Innovation


Sustainability

Achieving competitive advantage

Regulatory compliance

NOVs, fines, permits

Chess Safety system,auditing

Work Council training

Ethics training

Sustainability Actions

Value

Cost reduction

Waste management

Energy management

Design for environment

Material lightweighting

Competitive advantage

100% recycled

Design for Sustainability

Sustainability Dashboard

Supply chain automotivesystems management

Sustainability reporting

Hybrid commercialization

Diverse global talent

Stakeholder collaboration

Community investment

NGO dialogue

Employee engagement

Customer SocialResponsibility Initiative

Fundamental to all we do; part of ourcorporate DNA

Be better than anyone else on quality andcost...and keep getting better

Footprint optimization: manufacturing,engineering, shared services

"Global" footprint increases focus onlogistics/transportation costs

Safety

Standardized global product and processarchitectures

Supply chain management and globalsourcing

Utilization of BBP

$2B+ identified cost reduction opportunity

Working capital focus



We believe improvement isavailable in unlimited quantities

Best Business Practices process


Shareholder value

Invest in sustainable growth in allthree businesses

We will capitalize on the benefits ofbeing a global growth company,maximizing shareholder value by:

Increasing return on invested capital

Increasing our business diversification

Leveraging company-wide talent,technology, processes and marketleadership

Disciplined capital planning strategy

Achieving our goals

Clear plan

Clear expectations

Clearaccountability

Aligned leadership

Continuous

improvement

Global growth

Global leadership and

engaged employees

Sustainability

Innovation

Customer

satisfaction

Shareholder value

Integrity


Beda Bolzenius

President


Creating more comfortable, safe and sustainability vehicle interiors

Global provider of seating, overheadsystems, door and cockpit systems

Balanced business structure

Product portfolio, customer, geography

Increasing capability in electronics

Supplying over 30 million cars per year

250 locations in 30 countries worldwide

1/3 of all manufacturing in low-cost countries

North

America

42%

Europe

50%

Asia

8%

2007 sales (est.) $17.4 B

Seating

Interiors

Electronics

Competitive advantages

Strong track record for customersatisfaction

Global capabilities

Integrated low-cost country approach

Innovation to improve comfort, safetyand sustainability

Expertise to understand and deliveroptimal consumer value

Superior products from componentlevel through integrated systems

World-class craftsmanship and quality


Financial strength

Diversified customer base

BB

Automotive experience*

Diversified customer base

North America

Europe

Asia

Asian

OEs**

68%

European& NA

32%

Customer exposureapproximately mirrorsNorth Americanmarket

Broad customer diversityacross European, Asianand North American OEs

Supplying all major OEsin China

New relationships withemerging "independent"Chinese OEs

European

53%

Asian** &NA

47%

NorthAmerican

54%

Asian** &European

46%

*2007 sales, including non-consolidated

**Over $8 billion in sales in Asia and to Asian OEMs

Global automotive market environment

North America

Cautious consumer behavior

Increased focus on fuel efficiency

Changing OE market shares

Distressed suppliers

Asia

Booming market

Significant growth for both OEMs andsuppliers

Main markets - China and India

Europe

Innovation

Speed

Model proliferation

Growth in Eastern Europe and Russia

Sustainability

Global market trends

Increasing importance ofinteriors to consumerbuying decision

Global platforms

Standardization ofseating/interiorcomponents

Quality

Shift to emerging markets

Smallest cars as newmarket segment

Focus on execution andoperational excellence

Strategies for profitable growth

Customer orientation / focus

World-class products and technologies

Components, systems, modules

Increased electronics capabilities

Systems integration

Customer-oriented innovation

Sustainability

Regional strategies

Emerging market expansion: integrated approach

Best practices across all aspects of the business

Product

Growth

Customer

Growth

Continuous

Improvement

Regional

Growth

PROFITABLEGROWTH


Customer orientation / focus

Organizational alignment

Global customer business units

Customer-tailored business approach

Sourcing priorities

Components, modules, systems,

technology, price

Regional or global sourcing demands

Vehicle segment priorities

Customer-driven differentiated

innovation / co-innovation

Local market expertise

Aligning with the specific needs of each customer to best contribute to theirsuccess


World-class products and technologies

Electronics

Strengthen capabilities & scale for current products

Driver interaction, connectivity, body electronics, specialty products

Build regional capabilities (Eastern Europe, Asia)

Expand customer base for existing products

"New" customers: BMW, Ford, Honda, VW

Expand product portfolio: center stack, HMI (driver assist)

Seating

Best-in-class components

Frames, mechanisms, etc.

Opportunity for adding value

Small car

Super low-cost seat

Interiors

Standard design

Systems integration

SlimSeat technology

increasing second row

leg room while maintaining

front row comfort

Innovative materials and processes

Recyclability


Differentiated innovation

Leverage consumer research andmarket insight

Continuously fill the pipeline withdifferentiated solutions that willincrease consumer demand

Accelerate commercialization ofcustomer-driven innovation

Co-innovation with OEs, suppliersand other external parties

2007 Frankfurt auto show

more than 20 new products

I-3 concept vehicle

Frankfurt auto show innovations


Differentiated innovation

riACT

Active

safety

headrest

2-color RIM

Multi-colorparts in a singleprocessing step

Voice-activatedinterface

Mobile DeviceGateway

BlueConnectHomeLink

PP thin film

Variable surface finishes

Scratch and mark-resistant

Dual-modecluster

Digital informationsuperimposed overanalog dials


Innovation for sustainability

Products usingenvironmentally friendlymaterials

(e.g. Soy foam)

I N N O V A T I O N

Design for Recycling

(products and processes)

Environmental

design guidelines

(products and processes)

Avoidance of

hazardous materials

(e.g. Lead, mercury, cadmium

in electronics)

in Products and Processes

Lightweight products for

increased fuel efficiency

(e.g. Lightweight structures)


Regional: North America

Sustainable turnaround

Focus on core competencies andareas of greatest value as definedby customers

Selective bidding

Selective takeover of businessfrom distressed suppliers

Increased focus on electronics

Low-cost country (Mexico)expansion

Pricing discipline

GMC Acadia

Johnson Controls supplies the seating, overhead, door,instrument cluster, cargo management, electronics andbattery for the popular GM "Lambda" vehicles, whichinclude the GMC Acadia, the Saturn Outlook and the BuickEnclave. A Chevrolet model will be introduced in 2008.

Industry flat

Big 3 lower

2008 NA production outlook (est.)

New electronics customers

Winning business

Seating: BMW, PSA, Fiat, VW

Interiors: Ford, PSA, Audi/VW

Geographic: Russian OEs

Focus on customer-driveninnovation (+60% increase inpatents in 2007)

Evaluate further low-cost

country initiatives


Regional: Europe

CAGR 2007 - 2009 (est.)

Western Europe flat

Eastern Europe +8%

Eastern Europe is key to growth

Johnson Controls launched a new interiors program in 2007for the Volvo V70

Strengthen market share positions inChina

Solidify leading share in seating

Grow share in other interior zones,especially electronics, cockpit andoverhead

Localize R&D and componentmanufacturing to serve global markets

Build total interior systems integrationcapability

Johnson Controls China presence

$1.5 billion in 2007 sales (mostly unconsolidated)

19 joint ventures

Customers include all major OEs: BAIC, Chery,

China Brilliance, Dongfeng, FAW, Geely, SAIC, etc.

JE


Regional: Asia

Johnson Controls will launch three newjoint ventures with Chery in 2008,providing interiors for five vehicle modelsin China.

CAGR 2007 - 2009 (est.)

China + 14%



Product &ProcessTechnology

Commodity

Management

SupplyChainManagement

ManufacturingOperations

OptimizedFootprint

LeverageFixed Assets

SG&A

Best BusinessPractices and SixSigma

JW

World-class cost & quality leadership

Low cost countries: integrated approach

Purchasing, manufacturing, engineering, partners

Manufacturing: 33% in 2007, 38% in 2010

Best business practices

$1.5 billion global savings opportunity

30% gap closure targeted annually

Engineering productivity

Purchasing excellence

Global commodity management, low-cost countrysourcing, e-procurement

Standardized products and processes

Incremental backlog of new business

$3.9 billion, up 11% fromlast year's level

2008-2010 net backlog* FY 2008 FY 2009 FY 2010 North America 0.3 0.5 0.225 Europe 0.2 0.45 0.675 Asia 0.4 0.55 0.6

$0.9B

$1.5B

$1.5B

- - Fiat

- - Peugeot

- - Russian OEMs

- - Chery

North America

Dodge Ram pick-up;

Journey CUV seats

Toyota CUV

Seats, overhead, door panels

Europe

Fiat 500 compact

Seats, door panels

Volvo XC50 CUV

Seats, overhead systems

Asia

VW Passat sedan

Seats

Chery A13 sedan

Seats, interiors

75% of backlog outside

of North America

Significant wins with

under-represented OEMs:

N. America

Europe

Asia

2008 - 2010 launches

*Based on vehicle platform volumeprojections; stable economic environment; netof discontinued programs; includes $1B ofunconsolidated sales


Outpacing the market

Increased focus on customersatisfaction

Emerging market growth

Customer-driven innovation

Sustainability focus


and continuous improvement

Power Solutions

Alex Molinaroli

President

Item 1 57.4 OE 22 Aftermarket 78

2007 sales (est.): $4.3 Billion

Original

Equipment

Aftermarket

Power Solutions

Largest global provider of lead acidbatteries

Leading independent provider of hybridautomotive battery systems

World-class customer base in stableaftermarket

Original Equipment (OE) batteries sold toevery major automaker in the world

Item 1 57.4 Americas 64 Asia 3 Europe 33

Asia

Americas

Europe

Johnson Controls produced 121 million leadacid batteries globally in 2007


Unmatched knowledge of automotive applications

100 years of under-the-hood experience, more than1.3 billion batteries produced

Unmatched quality and cost leadership

Solutions approach

Cells, systems, distribution, value-added services

Wide range of technologies: lead acid, absorbentglass mat (AGM), nickel metal hydride, lithium ion

Strongest portfolio of recognized brands

Amaron, Bosch, Champion, Delkor, Energizer, Heliar,LTH, Optima, Varta

Only truly global footprint

Close, long-term customer relationships

Sustainability: lead acid battery recycling andhybrid expertise


Lead acid market growth

Targeted specific market segments in maturemarkets

Geographic expansion: focus on Eastern Europe,Russia, and China

Value added services: consumer research,category management

Technology leadership: longer life, improvedquality

Operational excellence: manufacturing processquality and cost focus

Sustainability: closed-loop recycling

Hybrid systems

Co-development with global OEs

Technology leadership: full system and multiplechemistry capabilities

Automotive application experience

Manufacturing process expertise for reliability and cost reduction


Lead acid: Americas

U.S. / Canada

Wholesale channel opportunity

Focus on products, distribution, and cost

Leverage 'Interstate Battery' distribution,branding, service and consignment capabilities

Maintain share at key national retailers

(examples: Advance Auto, Les Schwab, AutoZone,Blain's Farm & Fleet, Costco, Kmart, Pep Boys, Sam'sClub, Sears, Wal*Mart)

Value-added services

Quality focus

National-brand access and support

Supplying desired niche products (Optima)

Mexico/South America

Leverage strong LTH and Heliar brands

Improve wholesale distribution coverage

in South America

Increase motorcycle battery production

Johnson Controls market share: 51%

Leverage Varta and Bosch brand strength

Leverage OEM program success andtechnology leadership into aftermarket

Focus on the wholesale segment

Optimize distribution by country

Product redesign: reduce complexity

Brand repositioning

Technology differentiation: Powerframe(tm)implementation

Enter Eastern Europe, Turkey

and Russia

Annual auto build expected to grow

to >8M units by 2017


Lead acid: Europe



Asia

Focus on China

Market growing 8% annually

1,000 manufacturers today

Strategic partnership with #1 automotivebattery manufacturer and brand in China(Baoding Fengfan Co., Ltd.)

Further develop Varta and BOSCH brands

Global and OE technology leader, "Western"technology made in Asia

Increase product differentiation

Powerframe(tm) implementation

Maintenance free and high heat design

Introduce Optima

Enter adjacent lead-acid batteryapplications

Shanghai, China battery store



Absorptive Glass Mat (AGM) technology

AGM technology advantages

- - Deep cycle, increased powerdensity, vibration resistance,zero leakage

Leverage Optima U.S. brand loyalty (90%+)

Retail price range $155 to $250

Expand Optima distribution in Europe,

Asia, Latin America

Target specialty markets - highperformance marine and heavy duty

Further develop flat-plate AGM (vlies.tec)capabilities for OE and aftermarket

Johnson Controls AGM utilized for

start/stop hybrid applications today

Vlies.tec flat plate AGM

Optima(r) spiral-wound AGM



Provide highest quality while driving lower cost through world-class leadership in productand process technology, quality, service, footprint, and increased vertical integration

Product

EngineeringOptimizedMaterialreduction

Supply ChainManagement

ProcessEngineering

Productivity &standardization

Manufacturing& DistributionOperations

OptimizedFootprint

Acquisition

Integration

SG&A


Cost Savings

$225M

30% quality and cost improvement

targeted annually

U.S. average automotive battery life (2001-2006)

End-of-life battery return analysis

Battery average life

JohnsonControls

Competitor

One

Competitor

Two

10 months

13 months


Lead economics

Lead is more than 72% of a lead acidbattery cost ... and increasing

LME lead is at all-time high

in real dollars

Global lead supply is lagging demand

China demand growing

Increased hedge fund and mutual fundparticipation

Critical success factors

Manage pricing to mirror lead volatility

Collection of spent cores

Secure incremental smelting capacity

Global LME financial hedging

Time Monthly Real 1/1/2000 472 Feb 452 Mar 441 Apr 421 May 412 Jun 420 Jul 452 Aug 473 Sep 487 Oct 486 Nov 468 Dec 462 1/1/2007 478 Feb 502 Mar 498 Apr 477 May 469 Jun 445 Jul 462 Aug 483 Sep 465 Oct 468 Nov 487 Dec 483 1/2/2007 513 Feb 480 Mar 480 Apr 472 May 452 Jun 440 Jul 446 Aug 423 Sep 421 Oct 418 Nov 442 Dec 444 1/3/2007 445 Feb 476 Mar 457 Apr 437 May 464 Jun 468 Jul 515 Aug 497 Sep 521 Oct 587 Nov 622 Dec 692 1/4/2007 758 Feb 888 Mar 886 Apr 754 May 809 Jun 870 Jul 940 Aug 922 Sep 935 Oct 933 Nov 968 Dec 975 1/5/2007 953 Feb 978 Mar 1006 Apr 986 May 988 Jun 986 Jul 855 Aug 887 Sep 933 Oct 1005 Nov 1018 Dec 1123 1/6/2007 1256 Feb 1277 Mar 1192 Apr 1170 May 1167 Jun 964 Jul 1052 Aug 1117 Sep 1339 Oct 1531 Nov 1625 Dec 1726 1/7/2007 1666 Feb 1780 Mar 1914 Apr 2001 May 2101 Jun 2426 Jul 3084 Aug 3119 Sept 3112 Oct 3670

Lead LME Real Dollars: Monthly Average

Jan 2000 - Sep 2007

In USD


Environmental sustainability

Closed loop recycling provides bothcustomers and Johnson Controlswith significant benefits

Added-value disposal service to ourcustomers

Linkage of pricing between new unitand spent cores

Environmental stewardship

Johnson Controls strategies

Develop proven closed loop recyclingprocess for emerging markets

Promote recycling changes in EasternEurope and Asia

Ensure sufficient regional tollingcapacity

In 2007, Johnson Controls hosted Chinese governmentofficials on an educational tour of battery smelting andrecycling centers in Europe and North America


Hybrid battery systems

Industry winners must have

Multiple cell chemistries for varying applications

Battery system integration and vehicle systemintegration electronics

High volume manufacturing expertise

OE confidence

Aftermarket support network

Hybrid battery systems leader -apply and integrate superiortechnologies

Innovation and functionality

Safety first

Quality and cost focus

Architecture flexibility and reusability

Manufacturing process capability

Ability to recycle

Take advantage of our automotivecustomer relationships globally

Johnson Controls lithium ion battery system

Johnson Controls battery systems will beapplied in over 750,000 hybrid productionvehicles in 2008

AGM

Nickel metal hydride

Lithium ion

Hybrid progress

Executing Li-Ion (HEV) production programs

for Mercedes S-Class, E-Class and C-Class

.....additional yet-to-be announced European OEproduction contract underway

2008 and 2009 production

Plug-in hybrid (PHEV) Li-Ion development

contracts

12 active contracts

Saturn Vue Green Line (plug-in)

DCX Sprinter van

Chinese market

Production contract for initial HEV system forChery (2008 launch)

Partnership agreement in place to develop andproduce all HEV applications for additional OE

Manufacturing and regional engineering investments

European lithium-ion production and Asian assemblyplant - 2007/08

Shanghai engineering and technical center

Extending Milwaukee test facility capabilities

The Mercedes S-Class will be offered as ahybrid using Johnson Controls lithium-ionbatteries starting in 2008. It will be the firstproduction hybrid to use lithium-ion.

Power solutions summary

Continue global lead acid market sharegrowth in all regions

Aggressively expand in emerging andadjacent markets

Continued quality and cost leadership

Further lead management capabilities

Supporting multiple chemistries forhybrid applications

Developing world-class lithiumtechnology and manufacturing

Building Efficiency

Dave Myers

President

Building efficiency

Delivering improved energy efficiency, comfort and safety

Non-residential buildings

Diverse customers; huge globalinstalled base

Systems, products, services andsolutions offerings

Low cyclicality due to largeservice/renovation volume

Benefits from high energy costenvironment

Residential and light commercial

Air conditioning and heating,

65% replacement

Retrofit

75%

New

Construction

Europe

29%

North

America

54%

Asia

17%

Non-

residential

91%

Residential

Services

Systems

2007 Sales: $12.7 Billion (est.)


Leadership in energy management capability

Demand and supply side energy solutions

Systems, products

Solutions / performance contracting

Project management

Technology and capabilities

HVAC depth: unmatched equipment

and controls offering

Market-leading integration capabilities

Predictive maintenance

Local branch network

Installed base of customers

unmatched in the industry

Branch and site managers with personal

relationships

500+ building efficiency locations

125 countries

1 million-plus customers


Service depth

13,000 HVAC technicians and front-liners

12,000 global workplace solutions service

delivery personnel

Wide range of capabilities to service

customer needs

Strong brand

Reliable products and services

Deliver proven solutions

Financial strength

Manufacturing footprint

30+ global manufacturing plants on four continents

with substantial presence in low-cost countries

Best practices shared globally

Building efficiency

Industry environment

Rising demand for energy, resulting inincreased prices and volatility

Increased energy efficiency legislativerequirements worldwide

Increasing non-residential newconstruction levels globally

Favorable HVAC equipmentreplacement cycle

Fragmented technical services market

Greater customer demand for

one-stop-shop solutions

North America residential: near-termlower demand in both new constructionand replacement markets


Grow the systems business globally

Complex buildings: cross/joint sell, product bundling

Mid market

Expand global service leadership

Technical services

Solutions

Global Workplace Solutions

Focus on growth markets

Energy efficiency

Emerging markets

Grow residential market share


FY07 equipment cross-sell wins


Grow the systems business globally: complex buildings

Participationacross theglobe

Middle

East

4%

Asia

9%

Latin

America

9%

Europe

16%

North

America

62%

Cross-sell equipment and controls

Opportunity continues for years to come

2007 cross-sell wins: $500 million

Broaden product offering

Create optimal HVAC system (chillers, airhandlers, controls, fans, pumps, etc.)

Increased controls integration capability

Expand technology leadership

Metasys system

Connectivity: PDA, internet

Energy tracking, central plant capabilities

Wireless systems: Integrate with broaderrange of building systems at lower cost

Next generation high efficiency HVACcompressor/drivelines: variable frequencydrives, frictionless bearings

Embedded controls to improve total systeminstalled cost

Budapest, Hungary

Palace Hotel

Metasys, security,fire systems, chillers,fan coil units, airhandling units

Product development and acquisitionsto meet customer requirements

Heat pumps, VAV & fan coils, coolingtowers, energy recovery units, fans, low-tier rooftop units

Gaining share, increasing capabilities

Cost competitive rooftop

Self-installed control systems

Enhance distribution through thirdparty distributors to complementbranch structure

Develop easy-to-use design / salestools

Simplify process for our customers

Improve productivity of our sales team


Grow the systems business globally: mid-market

Mid-market buying decisions

Total installed cost

Responsiveness and relationship

Availability, speed and ease of

transaction

Variable air volume (VAV) box with

embedded controls

One equipment piece

One Site

Entire Portfolio





Technical services

Use scale to drive growth

10,000 front-liners; double the size of #2competitor

Cross-sell HVAC and controls service

Global workplace solutions

Expand global Fortune 1000 channel

Expand penetration of high-valueofferings

Solutions: expanded scope & highvalue offerings

Energy, green buildings, sustainability,renewable energy solutions coupledwith performance contracting

New York

Philadelphia

Houston

Los Angeles

Chicago

Toronto

London

Paris

Madrid

Berlin

Rome

Warsaw

Istanbul

Beijing

Shanghai

Hong Kong

Manilla

Hanoi

Bangkok

Jakarta

Delhi

Mumbay

Karachi

Dhaka

Sydney

Melbourne

Cairo

Johannesburg

Lagos

Nairobi

Addis Abeba

Mexico City

Buenos Aires

Sao Paulo

Caracas

Lima

Bogota

Rio de Janeiro

Santiago

Moscow

San Francisco

Seattle

Portland

Austin

Salt Lake City

Curitiba

Rotterdam

Stockholm

Copenhagen

Heidelberg

Johnson Controls selected in 2007 toparticipate in the Clinton Climate Initiative

- Goal: generate energy savings and

greenhouse gas reductions through

performance contracting in 40 cities

globally

-Up to $5 billion in available project funding

Clinton Climate Initiative Cities

Energy DemandManagement

How can I be sure thatI am running myfacilities in the mostenergy efficient mannerpossible?

How do I buildemployee awarenessaround energy usage?

What is the best way tofinance new assets?

Products

Supply Side

Advisory

Utility Bill Management

Energy Analytics &Optimization

Regulatory Compliance& Sustainability

Strategic Energy Planning - How do I put together an overall strategic plan for energy usage in my facilities?

How can I ensure thatmy utility bills are correctand paid on time?

How can I recoverincorrect energy billcharges and eliminatelate fees?

How can I benchmark myenergy costs against mycompetitors?

How do I monitorand optimize energyusage in my facilities?

How do I trackcompliance withregulatoryrequirements?

How do I design mybuildings to meetenergy-relatedcertifications?

Program Management - How do I manage all the aspects of my energy program?

What is the best price Ican get for energy?

How can I make sure Iget the most favorablecontracts with utilitycompanies?

Do renewabletechnologies makesense for my business?

Which products will bebest for my facilityneeds?

Can I use alternativeenergy sources?


High value solutions offerings

Energy and environment/sustainability solutions

Customer: "Why should we do this" replaced by "How can we get it done"

Customers often ill-equipped to manage growing complexities

Multiple specialists, highly fragmented

Rapid changes in technology, regulations, NGO/stakeholder expectations

Johnson Controls is uniquely positioned to serve growing global customer demand

Increase penetration of emerginggeographic markets: China,Middle East, Latin America

Growth rates at least 2x maturemarkets

Filling gaps in existing offerings

Building distribution / channel


Focus on growth markets

Sheraton Xiamen Hotel

Guangzhou International

Convention Center

Skyplaza South office,

Hong Kong Airport

100,000 customers in China

Recent cross-sell equipment projects


Grow residential HVAC market share

Expand residential distribution network

Residential systems sold primarily

through local third-party HVAC contractors

Increasing distribution density and taking share

Dealers want to travel less than 30 minutes todistributor to pick up product

Increase competitive advantage throughtechnology

Microchannel: 30% smaller than standard unit

US Airconditioning distribution

High efficiency furnaces

Investigate global market opportunities

$24 billion market, 7% annual growth

Mini-split technology vs. ducted systems

2007 distribution gainsSuccessfully converted majordistributors in the Northeast,Indiana, and California to carryYork residential HVAC systems



Manufacturing employees

2006 2008

Low-cost countries 38% 54%

Combining and leveraging platforms

Air cooled chillers: 15 to 9 platforms

Water cooled chillers: 8 to 6 platforms

Heat pump products: 10 to 7 platforms

Redesigning equipment to reduce cost,weight and size

Embedded controls to improve totalsystem installed cost

Purchasing and supply chain initiatives

Manufacturing footprint optimization /low-cost country shift

Product

EngineeringOptimizedMaterialreduction

Supply ChainManagement

ProcessEngineering

Productivity &standardization

Manufacturing& DistributionOperations

OptimizedFootprint

Acquisition

Integration

SG&A


Cost Savings

$500 Million

Building efficiency summary

Significant competitive advantages

Solutions for every type of business,opportunities available at any point in buildinglifecycle

Leading positions in several key global markets

Opportunity to create leadership position in manyothers

Positioned to grow at twice the rate of ourunderlying markets

Margin improvement through improved mix andoperational improvements

Financial

93

Bruce McDonald

CFO

Fiscal 2007 outlook

October 2006guidance Outlook vs. guidance Consolidated net sales Approx $34B(up 6%) Exceeded EPS from continuing operations(post 3-for-1 split) Approx $2.00(Up 14%) Exceeded Capital expenditures 1.2:1 reinvestment ratio Improved Total debt-to-capitalization(at Sept. 30) Approx 30% Affirmed

Fourth quarter: reaffirming EPS of $0.77 - $0.78 (Up 24 - 26%)

Diverse business model

Diverse customer base

Building Efficiency

One million customers in 125countries

Power Solutions

Thousands across all regions


Global customer base

Two-thirds of sales to European andAsian OEMs

10% of total consolidated sales to"Detroit 3" in North America

Building21% $1.25 EUR Series 1 Interior 0.45000000013148 Power 0.16 Building 0.39

AutomotiveExperience

45%

BuildingEfficiency39%

PowerSolutions16% $1.25 EUR Series 1 North America 0.49 Europe 0.4 ROW 0.11

N. A.48%

ROW12%

Europe40%

Business

Region EBIT @ $1.25 EUR Series 1 IE 0.29 PS 0.23 BE 0.48

AutomotiveExperience

BuildingEfficiency

PowerSolutions

2008e sales

2008e earnings

A diversified growth company


Financial strength

Long-standing "A" credit rating

Dividends paid since 1887; dividendincreased for 32 consecutive years

Financial strength to reinvest in thebusiness:

New technology / capital expenditures

Acquisitions / joint ventures

2008 margin expansion

Building efficiency growth

Automotive turnaround in North America

Cost focus: Significant additionalopportunities through BBP / Six Sigma /Lean

FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07E Data 10.4 11.7 15.3 16.2 17.4 18.8 21.2 24.6 27.5 32.2 34.4

FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07E Data 304 343 438 525 535 584 645 729 857 1032 1258

13%

CAGR

2007: 17th consecutive increase

2007: 61st consecutive increase

Consistent financial performance

15%

CAGR


Earnings visibility...and stability


$3.9 billion three-year backlog of netnew incremental business

Power Solutions

Recurring aftermarket volumecomprises 78% of sales

Building Efficiency

55% recurring revenue

$4.2 billion backlog at September 30

Effective income tax rate

Effective income tax rate

Financial targets

Target 2008 Outlook Sales growth > 10% 10% Earnings growth 10 - 15 % 18% ROIC increasing to 15 - 16% 150 bpincrease Debt/capitalization 35 - 40% Acquisition dependent

Fiscal 2008 key assumptions Automotive production North America 14.8 - 15.0M (flat) Europe 21.0M (+2%) Construction spending Non-residentialDomesticInternational+1%+7% U.S. Residential -4% Commodities outlook Steel Lead: 25-year high $3,000 per metric ton Volatility continues Foam chemicals Lead: 25-year high $3,000 per metric ton Volatility continues Resin Lead: 25-year high $3,000 per metric ton Volatility continues Copper Lead: 25-year high $3,000 per metric ton Volatility continues Other assumptions Tax rate 21% - level with underlying 2007 rate Euro exchange rate $1.35

Stable

Fiscal 2008 outlook Consolidated net salesApprox. $38B (up 10%) Growing faster than underlying marketsFocus on growth in emerging marketsLead inflation in Power Solutions EPSApprox. $2.45 - $2.50 (up 18%)Double-digit earnings growth for the 6th consecutive year Segment income marginHigher Underlying margin improvement in all businesses Net financing chargesApprox. $30 million lower Seasonality of cash flow Capital expenditures1:1 reinvestment ratio Capital spending declines from 2007Power Solutions spending normalizesInvestments in emerging markets Total debt-to-capitalizationAcquisition dependent Free cash flow generation of $1.1 - $1.3 billionIncrease payout ratioCapacity for strategic acquisitions


Financial outlook

2008 projections

Sales approximately level with 2007

Growth in emerging markets largely via unconsolidated jointventures (China +30%)

Higher backlog

Unfavorable mix

Segment income margin increase to 3.4 - 3.8%

North American profitability: Approximately 3x 2007 level

Strong European performance continues

Asian results stronger despite ongoing investments

Asian results stronger despite ongoing investmentsAsian results stronger despite ongoing investmentsAsian results stronger despite ongoing investmentsAsian results stronger despite ongoing investmentsAsian results stronger despite ongoing investmentsAsian results stronger despite ongoing investmentsAsian results stronger despite ongoing investmentsAsian results stronger despite ongoing investmentsAsian results stronger despite ongoing investmentsAsian results stronger despite ongoing investmentsAsian results stronger despite ongoing investments

Mid-term margin potential: 5%

North America: 100 bp per year improvement

Europe: Modest improvement through 2009; 2010+ revenue growth resumes

Asia: Profitability improvement partially offset by growth investments

Power Solutions

Financial outlook

Lead Impact

Rapid escalation of lead pricesincreases both sales and cost levels

Even though profitability is maintainedvia lead cost pass-throughs, significantreduction of margin as a percentage ofsales

Lead hedging program protectsearnings as price adjustmentmechanisms lag LME

FY 2007

Pro Forma Impact

$3,000/MT

LME 2007 actual @ $1,900/MT 2007 pro forma @ $3,000/MT 2008 estimate @ $3,000/MT Revenue $4.3B $5.5B Approx. $6.0B Segment margin 12.0% 9.4% 9.0 - 9.5%

Power Solutions

Financial outlook

2008 projections

Sales up approximately 40%

10% increase excluding lead

Strong worldwide volume growth

New contract wins

Growing customers

Benefit of global capacity expansion

Segment income margin 9.0 - 9.5%, level

excluding lead impact

Lead: pricing, recycling, hedging strategies

Best-in-class operational execution

Growing investment in hybrid technology

Mid-term margin potential:

Continued increase (cumulative 100 - 150 bp) driven by benefit of manufacturinginvestments and improved product mix

Building Efficiency

Financial outlook

2008 projections

Sales up approximately 15%

Strong backlog; revenue synergies

Non-residential domestic market solid; limited exposure toretail/lodging/manufacturing sectors

Well positioned in faster growing non-residential emerging markets

Growth in residential despite U.S. market downturn: distributionexpansion

Segment income margin increase to 7.3 - 7.5%

Dilutive impact of GWS 130 bp

Benefits of global volume growth, scale

Deployment of best practices, manufacturing footprintrationalization, supply chain management

Mid-term margin potential: 10% (excluding GWS)

Steadily increasing margins

Benefit of economies of scale

Infrastructure/emerging market investments

Cash flow priorities

Cash flow deployment

Reinvest in the businesses

Increase payout ratio

Acquisitions / joint ventures thatprovide access to new:

Markets

Customers

Technology

....and meet our ROIC requirements

150 bp increase in ROIC in 2008

+100 bp

+150 bp

State of the company

Profitable growth continues

Power - Recurring revenue, profitable growth

Automotive - Sustained recovery

Favorable economic environment:

Strong backlog; revenue synergies continue

Cost structure optimization: manufacturing,purchasing, branch network, scale

Energy

Economic cycle mixed ... net positive

Emerging market exposure

Gaining market share - European/Asianemphasis

Benefiting from investments in capacity

NA turnaround - further cost reductions

European profitability continues tostrengthen

Building - High rate of growth continues

18% earnings growth ... strong start to year (Q1 earnings up 25 - 30%)

Successful de-leveraging provides financial strength to invest in all three businesses

Significant emerging market growth

Double-digit increase in backlog

Significant hybrid contract wins

Making the necessary investments to sustain top-line growth

Stephen A. Roell


Johnson Controls

Sustainable, profitable growth

Our culture is a key competitive advantage

Results focused

Customer focused

Competitive

Positioned to outperform

our underlying industries

Expand in emerging markets

Win share through innovation,

quality, cost

Broaden product scope

Expand addressable markets

Leverage customer intimacy

Strong cash flows to fund acquisitions that supportthese growth strategies

Diverse portfolio withstandsshort-term market disruptions

Strong leadership

Clear path to achieving our goals

Integrity and ethics

Global growth

Global leadership

and engaged employees



Innovation

Sustainability

Shareholder value

Johnson Controls

Sustainable, profitable growth

INGENUITY WELCOME

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begin 644 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e8vk - sec.gov | home. roell added that “our forecast for margin improvement reflects the...

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