Financial overview

(in million USD)	FY2007	FY2006	Rate of change (%)	Main Factors
Overall
Sales	34,624	32,235	7.4%	Growth in the building efficiency business (2.0 billion USD), partially offset by lower sales in the automotive experience business (1.6 billion USD) reflecting weaker North American and European automotive markets.
Segment income	1,884	1,608	17.1%	Higher volumes and margins in the building efficiency business (272 million USD), partially offset by the impact of lower North American and European automotive markets
Automotive Experience
Sales	17,552	18,274	(4.0%)	See Automotive Experience (By region)
Segment income	519	605	(14.2%)
Power solutions
Sales	4,335	3,716	16.7%	-Higher unit prices resulting from significant increases in the cost of lead (375 million USD) -Unit sales of automotive batteries were consistent with prior year levels
Segment income	515	459	12.2%	-Favorable price/mix, operational performance and integration benefits associated with the fiscal 2005 acquisition of Delphi's battery business

* Beginning in fiscal 2007, the Company's management adjusted its measurement of business unit performance, changing from operating income to segment income, which represents income from continuing operations before income taxes and minority interests excluding net financing charges, restructing costs.

Automotive Experience (By region)

(in million USD)	FY2007	FY2006	Rate of change (%)	Factors
North America
Sales	7,276	8,041	(9.5%)	Volume reductions with all major US automakers mainly in the full-size pick-up truck, minivan and sport utility vehicle platforms
Segment income	72	188	(61.7%)	Lower sales volume (165 million USD), partially offset by lower net engineering expenses and cost reduction programs, the benefit of restructuring activities and other operational efficiencies
Europe
Sales	8,878	8,774	1.2%	Favorable impact of foreign currency translation (810 million USD) offset by lower volumes with all major customer platforms (700 million USD)
Segment income	445	405	9.9%	Favorable impact of foreign currency translation (53 million USD), cost reduction programs, the benefit of restructuring activities and other operational efficiencies (100 million USD), partially offset by lower volume and unfavorable vehicle sales mix (53 million USD) and higher net engineering costs (20 million USD) to support new business
Asia
Sales	1,398	1,459	(4.2%)	Lower volumes in Japan, partially offset by the favorable impact of foreign currency translation (40 million USD)
Segment income	2	12	(83.3%)	Lower volumes (30 million USD), mainly in Japan and Malaysia, partially offset by operational efficiencies (20 million USD), mainly in Japan and Korea

In fiscal 2007, the Company's three largerst customers were Ford, General Motors and DaimlerChrysler AG (now Daimler AG and Chrysler LLP), with consolidated global net sales to these customers representing approximately 28% of the Company's total net sales. Sales to the Detroit 3 originating in the US represented approximately 10% of its consolidated net sales in fiscal 2007.

Joint-ventures
The Company has joined with Proseat (joint venture between Recticel and Canadian company Woodbridge) to set up a new manufacturing joint venture for the production of molded foam seating cushions in Slovakia and Poland. The two plants are located in Lucenec, Slovakia and Zory, Poland. It will hold a majority 65% stake in the joint venture with Proseat holding the remaining 35%. The cooperation enables both companies to meet the rising demand in Eastern Europe in the future by producing close to the customer and cost-efficiently. In Slovakia, the joint venture will use the existing manufacturing capacity at the Company's plant in Lucenec. The new plant in Poland will be operational in November 2007 and will employ around 130 people. Proseat, which currently has 13 production sites in nine countries, is one of the main producers of polyurethane moulded foam for automotive seating in Europe. The Company has been continually expanding its presence in the new Eastern Europe since the early 1990s. (From a press release on May 29, 2007)

The Company announced it has signed a memorandum of understanding with Fengfan Ltd of Baoding, HeBei province to establish a joint venture agreement for the design, manufacture, sales and service of maintenance free lead acid batteries for the automotive market in China. Today, the Company operates a lead acid battery plant in Shanghai built in 1997 and offers its VartaR brand product to both original equipment manufacturers and the Chinese automotive aftermarket. This relationship with Fengfan further reflects the Company's commitment to growth and support for its customers in China. Baoding Jin Fengfan Storage Battery Company Ltd was founded in 1958 and is a publicly traded state-owned company majority owned by China Shipbuilding Industry Corporation (CSIC). Fengfan is the largest manufacturer of industrial and transportation batteries in the People's Republic of China with market share exceeding 20%. (From a press release on July 19, 2007)

Acquisition
The Company announced that it has discontinued its efforts to acquire Fiamm's automotive battery business as the two firms were unable to reach an agreement on commercial terms. The company announced in October 2006 that it had reached a preliminary understanding concerning the acquisition of Fiamm's automotive battery business. (From a press release on Apr. 30, 2007)

R&D Structrure

Technology Centers for Automotive Experience
-Plymouth, Michigan, USA
-Holland, Michigan, USA
-Burscheid, Germany
-Grefrath, Germany
-Karlsruhe, Germany
-Pontoise, France
-Sofia, Bulgaria
-Trencin, Slovakia
-Ayase, Japan

Battery Technology Centers for Power Solutions
-Plymouth, Michigan, USA
-Milwaukee, Wisconsin, USA
-Hannover, Germany
-Monterrey, Mexico
-Sorocaba, Brazil
-Shanghai, China

R&D Expenditures

(in million USD)	FY2007	FY2006	FY2005
Total	767	743	817
Sponsored by customers	276	323	402

New Product Development
The Company has developed a new type of foam pads used in automotive seats that are comprised of five percent soy-based products and 95 percent polyurethane. Soy-based seat systems from the company will be featured on numerous model-year 2008 production vehicles. (From a press release by the company on Jan. 9, 2007)

Johnson Controls-Saft Advanced Power Solutions (JCS), is gearing up to supply lithium-ion batteries for tomorrow's hybrid-electric vehicles (HEVs), plug-in hybrid-electric vehicles (PHEVs) and electric vehicles (EVs). JCS has been awarded an advanced battery development contract by General Motors to design and test lithium-ion batteries for use in the Saturn Vue Green Line plug-in hybrid SUV. (From a press release by the company on Jan. 9, 2007)

Through an alliance designed to identify global best practices in automotive battery recycling, the Company and the Chinese National Government are touring world-class four smelter sites located in Germany, Spain, Mexico and North America as well as state-of-the-art battery manufacturing and distribution facilities. The Company is hosting the 10-day tour that will illustrate the most efficient and effective processes for lead acid and advanced chemistry transportation battery recycling.In the summer of 2006, the Company agreed to sponsor a study that will eventually help China adopt a better closed-loop recycling system in which manufacturers reclaim the lead, plastic and acid that comprise each battery, thereby standardizing the process and helping to cut down on pollution and related health risks. (From a press release on June 12, 2007)

A fleet of advanced, Dodge Sprinter plug-in hybrid delivery vans will be operating within the United States, powered by Lithium-ion (Li-ion) batteries developed by Johnson Controls-Saft Advanced Power Solutions (JCS). Fleets of Sprinter plug-in hybrids were put into service in 2006 during the first phase of Chrysler and Daimler's plug-in hybrid development program. Powered by Johnson Controls-Saft nickel-metal hydride (NiMH) and Li-ion battery packs, the Sprinter vans have provided valuable data to accelerate the development of future battery technology. The Li-ion battery packs in Sprinter plug-in hybrids will be 47 percent lighter compared to previous NiMH systems and deliver more power than today's conventional hybrid batteries. (From a press release on Aug. 21, 2007)

Technological Alliance
TomTom, a leading navigation solution provider, and the Company announced a joint development relationship which will enable TomTom satellite navigation devices to become truly integrated into vehicle electronic systems. The Company has created a 'Bluetooth Mobile Device Gateway' targeted for production in 2008 model year vehicles. This technology enables an electronic device -- such as a TomTom satellite navigation system -- to communicate with the car's communication network, resulting in innovative and safe navigation. (From a press release by the company on Oct. 2, 2006)

Capital Expenditure (Year ended September 30)

(USD in million)	FY2007	FY2006	FY2005
Overall	828	711	664
Automotive Experience	347	425	526
- North America	116	218	267
- Europe	217	182	203
- Asia	14	25	56
Power solutions	336	197	97

Domestic Investment
The Company announced expansion and remodeling plans for its global headquarters campus in Glendale.The first phase of the project launches in August 2007. In addition to serving as the company's global Corporate headquarters, the campus is also the headquarters for its Power Solutions business. As the world's largest supplier of automotive batteries, the Company has also emerged as a leader in lithium-ion technology, which will power the next generation of hybrid-electric vehicles. A Battery Technology Center and the North American lithium-ion Battery Research Center are also on the 33-acre site. Approximately 700 employees currently work at the Glendale campus. (From a press release on Jul. 31, 2007)