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To: blankmind who wrote (23774)	4/19/2006 10:18:40 AM
From: Fuzzy	Respond to of 78753

JCI keeps plugging along:: Johnson Controls Reports Record Quarterly Results, Updates Earnings Guidance for Full-Year 2006 Wednesday April 19, 7:00 am ET MILWAUKEE, April 19 /PRNewswire-FirstCall/ -- Johnson Controls, Inc. (NYSE: JCI - News) today reported record results for the second quarter of fiscal 2006. In addition, the company increased its full-year earnings outlook. ADVERTISEMENT (Logo: newscom.com ) Chairman and Chief Executive Officer John M. Barth said, "The quarterly operating performance was in line with our expectations. Our strategies for profitable growth and disciplined approach to cost reduction and quality improvements continue to enable us to achieve our financial commitments. We remain confident that we will extend our track record for consecutive years of record sales and earnings in 2006." Mr. Barth continued, "We have 136,000 employees around the world who are devoted to our customers, to continuous improvement and to innovation. They make us successful, and I commend them for their efforts." Second-Quarter Results For the three months ended March 31, 2006, sales increased 18% to a record $8.2 billion from $6.9 billion last year, primarily reflecting increases in the building efficiency and power solutions businesses. The negative effect of foreign currency in the quarter reduced sales by approximately $315 million. Operating income was a record $266 million versus $43 million which was reduced by a 2005 restructuring charge of $210 million. The tax rate in the 2006 quarter was 17.3%, reflecting a cumulative reduction in the annual base effective tax rate to 21% from 24.3% (see tax note). This reduction principally reflects a higher proportion of 2006 earnings coming from lower tax jurisdictions. The company expects the tax rate in 2007 to be within the range of 23% to 24%. Income from continuing operations in the current quarter was $162 million versus $54 million in the prior year. Diluted earnings per share from continuing operations were $0.83 compared with $0.28 in the prior year. Second-Quarter Results Excluding Special Items (Non-GAAP) The following discussion focuses on the performance of the ongoing operations of the company and therefore excludes 2005 special items such as restructuring costs, gains from businesses divested, and a tax credit. A reconciliation to GAAP measures is provided in the footnotes to the attached Condensed Consolidated Financial Statements. Operating income was 5% higher than the prior year due to increased earnings from the building efficiency and power solutions businesses. Income from continuing operations of $162 million compares with $165 million for 2005, as the net interest expense and acquisition accounting related to the December 2005 York acquisition more than offset York's earnings and the benefit of the lower base effective tax rate. Diluted earnings per share from continuing operations were $0.83 versus $0.85 in the prior year. Interior experience sales for the second quarter of 2006 totaled $4.8 billion, approximately level with sales in 2005 while operating income was $135 million, 1% lower than in the prior year. Excluding the negative effect of foreign currency, sales increased 5% and operating income increased 8%. Industry light vehicle production in North America was approximately 4% higher; European production is estimated to have been up 2%. The European interiors operating margin increased over the prior year. The North American operating margin declined year-over-year due to commodity pressures and a negative vehicle mix, but improved slightly compared to the first quarter of 2006. Power solutions sales were up 29% to $874 million from $680 million due to the impact of the July 2005 acquisition of Delphi's battery business as well as higher organic shipments. Operating income increased 14% to $75 million from $66 million due to the higher volume and improved operational efficiencies. Operating margin declined due to record high lead costs, most of which are expected to be recovered in customer pricing, as well as the Delphi battery acquisition. Building efficiency sales increased 74% to $2.5 billion from $1.4 billion in 2005 primarily reflecting the York acquisition as well as increased sales of control systems and services for non-residential buildings in North America. Operating income increased 10% to $56 million from $51 million due to the higher volume. Excluding non-recurring acquisition costs of $22 million, operating income was up 53%. York's results improved over its 2005 second quarter, led by a strong performance by its residential air conditioning business. The backlog of uncompleted contracts was $3.3 billion, up 8% from the previous year (pro-forma including York). 2006 Full Year and Third-Quarter Outlook Johnson Controls forecast that its diluted earnings per share from continuing operations for 2006 would be in a range of $5.25 - $5.35, including a $0.22 to $0.24 benefit from the lower effective tax rate. The company previously provided earnings guidance of $5.00 to $5.15 per share from continuing operations. Sales expectations for the year are unchanged at approximately $32 billion. For the third quarter of 2006 the company anticipates diluted earnings per share from continuing operations of $1.65 to $1.70, an increase of 26% to 30% over the $1.31 per share earned in the third quarter of 2005. Johnson Controls said the expected substantial increase in earnings in the second half of 2006 is primarily attributable to its building efficiency business, reflecting the absence of York acquisition accounting costs, the positive seasonality of the air conditioning industry and increased customer demand. The company said it also expects a continued strong performance by its European interiors and power solutions businesses. The company expects that its financial position will remain strong. It anticipates that its ratio of total debt to total capitalization will decline to approximately 40% by the end of 2006 from 45% at March 31, 2006. "We continued to make progress transforming our businesses to take advantage of the global growth opportunities," Mr. Barth said. "The underlying performance of each of our businesses continues to improve. Additionally, as we improve our cost structure, we continue to identify more opportunity to deliver greater value to our customers."