EXHIBIT 99
[JOHNSON CONTROLS LOGO] NEWS RELEASE
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Johnson Controls, Inc., 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 (NYSE:
JCI), founded in 1885, has headquarters in Milwaukee, Wisconsin.
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CONTACT: Glen Ponczak RELEASE: July 18, 2002
(414) 524-2375
Denise Zutz
(414) 524-3155
JOHNSON CONTROLS THIRD QUARTER EPS UP 14%
MILWAUKEE, WISCONSIN, July 18, 2002... Johnson Controls, Inc. (JCI), 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
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(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.
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Johnson Controls, Inc.
July 18, 2002
Page 2
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
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(dollars in millions)
Three Months Ended
June 30,
2002 2001
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%
---
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.
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Johnson Controls, Inc.
July 18, 2002
Page 3
Year-To-Date Results and Outlook
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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)
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FY2001 FY2002
Actual Estimates
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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, $110 $110-115
net of interest income
Effective income tax rate 36.6%* 34.8%
Minority interests in net earnings $ 53 $ 60-70
of subsidiaries
*Adjusted to exclude the effects of goodwill amortization
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Johnson Controls, Inc
July 18, 2002
Page 4
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 (NYSE: JCI),
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.
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CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data; unaudited)
Three Months Ended June 30, Nine Months Ended June 30,
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Adjusted Adjusted
2002 2001* 2001 2002 2001* 2001
---------- --------- --------- ---------- ---------- ----------
Net sales $ 5,257.0 $ 4,722.1 $ 4,722.1 $ 14,885.2 $ 13,778.1 $ 13,778.1
Cost of sales 4,509.0 4,046.0 4,046.0 12,816.8 11,840.8 11,840.8
--------- --------- --------- ---------- ---------- ----------
Gross profit 748.0 676.1 676.1 2,068.4 1,937.3 1,937.3
Selling, general and administrative expenses 427.6 387.8 405.8 1,290.8 1,213.8 1,267.2
--------- --------- --------- ---------- ---------- ----------
Operating income 320.4 288.3 270.3 777.6 723.5 670.1
Interest income 2.5 3.7 3.7 8.5 14.1 14.1
Interest expense (29.8) (31.1) (31.1) (91.9) (99.0) (99.0)
Equity income 11.3 9.4 9.4 25.7 19.2 19.2
Miscellaneous - net (11.3) (4.0) (4.0) (26.5) (10.8) (10.8)
--------- --------- --------- ---------- ---------- ----------
Other income (expense) (27.3) (22.0) (22.0) (84.2) (76.5) (76.5)
--------- --------- --------- ---------- ---------- ----------
Income before income taxes and minority interests 293.1 266.3 248.3 693.4 647.0 593.6
Provision for income taxes 102.0 97.9 96.0 241.3 235.3 229.7
Minority interests in net earnings of subsidiaries 15.8 15.8 15.8 42.1 41.9 41.9
--------- --------- --------- ---------- ---------- ----------
Net income $ 175.3 $ 152.6 $ 136.5 $ 410.0 $ 369.8 $ 322.0
========= ========= ========= ========== ========== ==========
Earnings available for common shareholders $ 173.4 $ 150.5 $ 134.4 $ 404.2 $ 363.1 $ 315.3
========= ========= ========= ========== ========== ==========
Earnings per share
Basic $ 1.96 $ 1.73 $ 1.54 $ 4.58 $ 4.20 $ 3.64
========= ========= ========= ========== ========== ==========
Diluted $ 1.85 $ 1.62 $ 1.45 $ 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.
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(in millions)
June 30, September 30, June 30,
2002 2001 2001
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(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
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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
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Total assets $10,914.2 $9,911.5 $9,729.6
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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
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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
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Total liabilities and equity $10,914.2 $9,911.5 $9,729.6
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CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions; unaudited)
Three Months Nine Months
Ended June 30, Ended June 30,
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2002 2001 2002 2001
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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
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Cash provided by operating activities 323.5 446.8 646.9 852.3
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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)
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Cash used by investing activities (183.4) (323.9) (982.7) (713.0)
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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
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Cash (used) provided by financing activities (149.4) (96.8) 168.0 (116.1)
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(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS $ (9.3) $ 26.1 $(167.8) $ 23.2
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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,
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2002 2001 2002 2001
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Weighted Average Shares
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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
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