Johnson Controls Reports Records for Second Quarter

MILWAUKEE (PROTEXT) - Johnson Controls, Inc. (JCI) (NYSE: JCI)today reported record sales and net income for its second fiscalquarter ended March 31, 1999, with its automotive and controlsbusinesses reporting double-digit increases in both sales andincome. Sales for the second quarter of fiscal 1999 rose 29% to$3,880.3 million from $3,007.3 million for the same quarter offiscal 1998. Operating income increased 26% to $159.7 millionfrom the prior year's $126.7 million. Net income rose to $65.8million, up 25% from $52.5 million for the second quarter offiscal 1998. On a diluted basis, earnings per share rose to $.70from $.56 a year ago. All fiscal 1999 amounts above exclude a one-time gainassociated with the sale of businesses which amounted to $54.6million pretax, $32.5 million aftertax or $.35 per diluted share. Sales by the company's Automotive Systems Group increased 31%to $2,859.4 million compared with $2,183.8 million for the periodone year ago. The company said that the sales increase reflectshigher demand for its seating and interior systems in NorthAmerica and Europe. The sales growth was particularly strong inEurope where the company is achieving increases in market sharefor its seating systems due to new contracts and itsparticipation in new vehicles which have been experiencinghealthy sales. The company's 1998 acquisition of an interiorsystems company in Europe also contributed to the higher sales inthat market. In North America, higher sales of seating andinterior systems were driven by increased domestic vehicleproduction levels, especially for new or newly redesignedvehicles. Automotive battery sales, which are primarily to theaftermarket, were also higher compared with a year ago reflectingincreased demand by its North American customers. JohnsonControls explained that while automotive income increasedsubstantially, operating margin was slightly lower due to thehigher proportion of lower margin European sales. Controls Group sales rose 24% to $1,020.9 million for thesecond quarter, up from 1998's $823.5 million. The growth wasdriven by higher sales of installed control systems, higherintegrated facility management revenues and the company'sexpanded position in the Japanese nonresidential buildingsmarket. The company said that the growth in system sales,including performance contracting, primarily resulted from ahigher level of activity in the North American market fornonresidential buildings. Johnson Controls' experience inperformance contracting, which enables building owners to pay forupgrades to their control systems out of the resulting energysavings, was a factor in the U.S. Environmental ProtectionAgency's recent naming of Johnson Controls as its 1999 EnergyStar Buildings "Ally of the Year." The company said that higherrevenues from integrated facility management activity was due tonew and expanded accounts in the commercial marketplace,primarily in North America. Johnson Controls also reported thatoperating income for the Controls Group increased at a ratehigher than sales, primarily due to improved quality in executingsystem installation contracts. Consolidated sales for the first six months of fiscal 1999rose 28% to $7,753.4 million from $6,063.6 million for the sameperiod of fiscal 1998. Operating income increased 25% to $342.9million from the prior year's $275.1 million. Net income rose to$145.5 million (before a one-time gain), up 24% from $117.8million for the first half of fiscal 1998. Diluted earnings pershare were $1.56 (before the one-time gain) versus $1.26 for1998. James H. Keyes, Johnson Controls chairman and chief executiveofficer, said, "Our results for the second quarter of fiscal 1999reflect our employees' commitment to achieve growth throughinnovative technology and market leadership while emphasizingquality of execution and customer service. These factors,together with relatively healthy economies in North America andEurope, are expected to continue for the balance of this year,and should enable Johnson Controls to achieve another record yearfor our shareholders." Johnson Controls is a global market leader in automotivesystems and facility management and control. In the automotivemarket, it is a major supplier of seating and interior systems,and batteries. For nonresidential facilities, Johnson Controlsprovides building control systems and services, energy managementand integrated facility management. Johnson Controls, founded in1885, has headquarters in Milwaukee, Wis. Its sales for 1998totaled $12.6 billion. The company has made forward-looking statements in thisdocument that are subject to risks and uncertainties. Forward-looking statements include information concerning possible orassumed future risks and may include words such as "believes,""expects," "anticipates" or similar expressions. For thosestatements, the company cautions that the numerous importantfactors discussed in the company's Form 8-K (dated November 13,1998) could affect the company's actual results and could causeits actual consolidated results to differ materially from thoseexpressed in any forward-looking statement made by, or on behalfof, the company. Johnson Controls, Inc.

CONSOLIDATED STATEMENT OF INCOME

(In millions, except per share data; unaudited)

For the Three Months For the SixMonths

Ended March 31,

Ended March 31,

1999

1998

1999 1998

Net sales

$3,880.3 $3,007.3 $7,753.4 $6,063.6

Cost of sales

3,352.4

2,591.0

6,697.0 5,213.1

Gross profit

527.9

416.3

1,056.4 850.5

Selling, general and

administrative expenses

368.2

289.6

713.5 575.4

Operating income

159.7

126.7

342.9 275.1

Interest income

4.8

2.5

7.9 4.8

Interest expense

(41.3)

(28.9)

(82.4) (59.0)

Gain on sale of businesses

(2)

54.6

-- 54.6

Miscellaneous - net

2.5

(0.9)

1.3 0.8

Other income (expense) 20.6

(27.3)

(18.6) (53.4)

Income before income taxes

and minority interests

180.3

99.4

324.3 221.7

Provision for income taxes 73.1

41.2

131.4 92.0

Minority interests in net

earnings of subsidiaries

8.9

5.7

14.9 11.9

Net income

$98.3

$52.5

$178.0 $117.8

Earnings available for

common shareholders

$95.9

$50.1

$173.3 $113.1

Earnings per share (a,d)

Basic

$1.13

$0.59

$2.04 $1.34

Diluted

$1.05

$0.56

$1.91 $1.26

(a) Earnings per share for both the three and six monthsended March 31, 1999 include a gain on sale of the AutomotiveSystems Group's Industrial Battery Division, net of a lossrelated to disposal of a small Controls Group operation in theUnited Kingdom, of $.38 per basic share and $.35 per dilutedshare. See footnote (b) below.

See additional footnotes below.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(In millions)

March 31, September 30, March31,

1999

1998

1998

(unaudited) (unaudited)

ASSETS

Cash and cash equivalents

$268.8

$134.0 $161.7

Accounts receivable - net

2,008.0

1,821.1 1,645.1

Costs and earnings in excess

of billings on uncompleted

contracts

207.7

191.7 191.8

Inventories

469.3

428.2 389.2

Net assets held for sale (c)

46.8

231.9 --

Other current assets

597.3

597.3 437.1

Current assets

3,597.9

3,404.2 2,824.9

Property, plant and

equipment - net

1,981.0

1,882.9 1,564.1

Goodwill - net

2,126.5

2,084.5 1,543.0

Investments in partially-owned

affiliates

219.0

166.2 170.3

Other noncurrent assets

447.7

404.3 273.3

Total assets

$8,372.1

$7,942.1$6,375.6

LIABILITIES AND EQUITY

Short-term debt

$630.1

$1,289.5 $552.5

Current portion of long-term

debt

91.7

39.4 28.1

Accounts payable

1,935.7

1,625.2 1,486.5

Accrued compensation and benefits 377.9

376.1 325.9

Accrued income taxes

108.2

119.6 30.7

Billings in excess of costs

and earnings on uncompleted

contracts

150.3

127.5 126.4

Other current liabilities

878.3

711.1 503.3

Current liabilities

4,172.2

4,288.4 3,053.4

Long-term debt

1,292.3

997.5 962.6

Postretirement health and

other benefits

166.8

166.7 167.7

Other noncurrent liabilities

600.7

548.1 412.4

Shareholders' equity

2,140.1

1,941.4 1,779.5

Total liabilities and equity $8,372.1

$7,942.1$6,375.6

See additional footnotes below.

ADDITIONAL FOOTNOTES

(b) On March 1, 1999, the Company completed the sale of theAutomotive Systems Group's Industrial Battery Division forapproximately $135 million. The Industrial Battery Division hadsales of approximately $87 million for the fiscal year endedSeptember 30, 1998. The Company also recorded a loss related tothe disposal of a small Controls Group operation in the UnitedKingdom. The net gain on these transactions was $54.6 million($32.5 million or $.38 per basic share and $.35 per dilutedshare, after-tax).

(c) Effective July 1, 1998, the Company completed theacquisition of Becker Group for approximately $548 million, plusthe assumption of approximately $372 million of debt. BeckerGroup, based in Michigan and Germany, is a major supplier ofautomotive interior systems, particularly door systems andinstrument panels. The acquisition was accounted for as apurchase. The excess of the purchase price over the estimatedfair value of the acquired net assets, which approximated $500million, was recorded as goodwill.

Certain businesses acquired in the Becker Group purchase havebeen classified as net assets held for sale in the ConsolidatedStatement of Financial Position. At the date of acquisition, theCompany identified three businesses of Becker Group that wereoutside of the Company's core operations and, as such, would besold. The net assets of the businesses were valued at fair valueless estimated costs to sell, including cash flows during theholding period. The Company has completed the sale of two ofthese businesses during the first six months of fiscal 1999 andexpects to complete the sale of the final business within thecurrent year. No gain or loss resulted from these transactions.

(d) Basic earnings per share are computed by dividing netincome, after deducting dividend requirements on the Series DConvertible Preferred Stock, by the weighted average number ofcommon shares outstanding. Diluted earnings are computed bydeducting from net income the after-tax compensation expensewhich would arise from the assumed conversion of the Series DConvertible Preferred Stock, which was $1.3 million for the threemonths ended March 31, 1999 and 1998 and $2.4 million and $2.6million for the six months ended March 31, 1999 and 1998,respectively. Diluted weighted average shares assume theconversion of the Series D Convertible Preferred Stock, ifdilutive, plus the dilutive effect of common stock equivalentswhich would arise from the exercise of stock options.

For the Three Months For the SixMonths

Ended March 31,

Ended March31,

1999

1998

1999 1998

Weighted Average Shares

(in millions)

Basic

85.1

84.4

84.9 84.2

Diluted

92.2

91.6

91.9 91.4 ots Original Text Service: Johnson Controls Internet:http://www.newsaktuell.de Contact: Glen Ponczak, 414-228-2375,or Denise Zutz, 414-228-3155, both of Johnson Controls CompanyNews On-Call: http://www.prnewswire.com/comp/473547.html or fax,800-758-5804, ext. 473547 Web site:http://www.johnsoncontrols.com

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