MILWAUKEE -- Johnson Controls, Inc. (JCI) has reported record sales and income from continuing operations for the second quarter of fiscal 2007. Income from continuing operations increased 62 percent on a 4 percent increase in revenues. Diluted earnings per share from continuing operations were $1.31 versus 83 cents last year. Excluding the impact of non-recurring tax benefits, earnings per share from continuing operations totaled $1.12.

The company today also increased its full fiscal-year outlook to reflect the benefits of a lower base effective tax rate and improved operational efficiencies.

"We are pleased with our performance in the second quarter, which extends our track record for consistent, profitable growth. Our results also demonstrate how diversification helps us withstand short-term downturns in any single business or region. Building efficiency and power solutions had strong quarters, and with improved performance in automotive experience since earlier this year, we achieved strong double-digit earnings growth," said Chairman and Chief Executive Officer John Barth. "We continue to invest in our businesses on a global basis to extend our market leadership positions and take advantage of significant growth opportunities. I thank our employees worldwide for their support and dedication, which is the foundation of our success."

For the three months ended March 31, net sales increased 4 percent to a record $8.5 billion from $8.2 billion last year, reflecting higher building efficiency and power solutions revenues and the positive impact of foreign exchange, partially offset by lower automotive experience sales.

Income from continuing operations before income taxes and minority interests was $282 million, 35 percent higher than the prior year's $209 million. The increase reflects higher volume and margin expansion by building efficiency and power solutions, partially offset by lower North American automotive experience results.

The effective tax rate in the second quarter was 6 percent, reflecting a cumulative reduction in the annual base effective tax rate to 21 percent from 23 percent as well as a 19 cents per share non-recurring tax benefit. In the 2006 second quarter, the effective tax rate was 17.3 percent (see income taxes footnote). The company expects the base effective tax rate for the remainder of fiscal 2007 to be 21 percent.

Income from continuing operations totaled $262 million, an increase of 62 percent compared with $162 million last year. Diluted earnings per share from continuing operations were $1.31 versus 83 cents last year. Excluding the impact of non-recurring tax benefits in both the 2007 and 2006 quarters, earnings per share from continuing operations increased 37 percent to $1.12 from 82 cents.

For the second quarter of 2007, building efficiency sales increased 19 percent to $3 billion from $2.5 billion in 2006 primarily reflecting double-digit growth in North America, Europe and Asia for systems and services. The growth was driven by increased customer demand for Johnson Controls' full range of solutions to reduce building operating costs while improving comfort, safety and productivity. Global workplace solutions sales grew significantly in the quarter as the result of new contracts and the expansion of existing projects globally. Segment income increased 149 percent, to $137 million in 2007 from $55 million in the second quarter of 2006.

The increased profitability in the quarter was attributable to the higher volume, the growth of higher margin service revenues and the impact of improved operational efficiencies, including branch redesign initiatives in Europe, as well as the absence of prior-year acquisition-related costs. The backlog of uncompleted non-residential contracts was $3.9 billion, up 18 percent from $3.3 billion in the previous year, reflecting increased demand for systems and services in North America, Europe and Asia.

Power solutions sales were up 13 percent to $988 million from $874 million due to higher lead cost pass-throughs and favorable foreign currency. Unit shipments were slightly lower due to weaker European demand. Segment income increased 21 percent to $93 million from $77 million in the second quarter of 2006. A higher mix of premium products and improved operational efficiencies overcame the negative effects of record high lead costs.

Automotive experience sales for the second quarter of fiscal 2007 totaled $4.5 billion, 5 percent lower than in 2006 due primarily to lower North American volumes at most automakers. European sales increased primarily due to the favorable impact of foreign currency. Industry light vehicle production in North America was 8 percent lower while European production is estimated to have been flat. Segment income decreased 20 percent, to $121 million versus $152 million in the prior year. Europe and Asia reported higher segment income, but the increases were more than offset by lower North American results. North America's second-quarter performance improved to break-even versus its first-quarter 2007 loss. The sequential improvement in North America resulted from operational efficiencies and lower launch costs.

The company repaid approximately $270 million in debt in the quarter, bringing total debt to total capitalization at March 31 to 37 percent, versus 39 percent at Dec. 31, 2006.

Johnson Controls also reported that it had completed the sale of its Bristol Compressors business in the second quarter. Bristol had been accounted for as a discontinued operation since its acquisition as part of York International in December 2005.

The company increased its fiscal 2007 sales and earnings outlook and provided a forecast for third-quarter earnings.

In October 2006, Johnson Controls forecast that its diluted earnings per share from continuing operations for fiscal 2007 would increase 14 percent to approximately $6. It now expects earnings per share from continuing operations to increase 19 percent - 20 percent, to $6.25 to $6.30, excluding the second quarter non-recurring tax benefit of 19 cents per share.

The change reflects the lower base effective tax rate of 21 percent and improved operational efficiencies. The company also raised its revenue guidance for the year from $34 billion to approximately $34.5 billion.

Johnson Controls expects that its financial position will remain strong, and anticipates that its ratio of total debt to total capitalization will decline to approximately 30 percent by the end of fiscal 2007.

For the third quarter of 2007, the company anticipates diluted earnings per share from continuing operations of approximately $1.95, an increase of 15 percent over the third quarter of 2006.

"I am confident that Johnson Controls is on track to deliver another year of record revenues and earnings," Barth said. "As anticipated, the second half of the year will be stronger than the first half, due to the seasonality of our building efficiency business, the increasing cost synergies from the York acquisition and the recovery of our North American automotive business. We continue to focus on bringing new value to our customers and maintaining our disciplined approach to cost reduction and quality. Executing on these commitments will enable us to continue our track record for profitable growth in 2007 and beyond."

For more information about Johnson Controls, go to: http://www.johnsoncontrols.com.