Message from Stephen A. Roell, Chief Executive Officer

Johnson Controls, Inc. remains committed to the Ten Principles of the UN Global Compact. We believe a key ingredient of that commitment includes keeping stakeholders informed of our ongoing sustainability efforts.

This COP update, along with our sustainability reports and updates to our sustainability web site, should help our stakeholders more easily find specific information about Johnson Controls. This report and our GRI sustainability report are intended to provide the details often requested by various stakeholders, (i.e., non-government organizations, investment analysts, etc.). We encourage the more casual reader interested in a broader view about the company to read our 2008 Business and Sustainability Report. These reports along with the Form 10-K are available on our public web site.

This year we again wish to thank our employees for their contribution in helping us become a more sustainable company. We also wish to thank all of those who helped with our continued success, including several non-government organizations and social investor analysts for their continued support.

We remain committed to ‘Our Vision’ of creating a more comfortable, safe and sustainable world as it defines our businesses, our people and the way in which we work with our customers, suppliers and in our communities. And as such we will continue to implement the ten key sustainability strategies that our senior managers identified two years ago:

ECONOMIC PROSPERITY:
1. Ensure the ongoing financial viability of the business through strategic investments and management of risk.
2. Hold ourselves accountable to the highest standards of corporate and personal integrity and ethics.

ENVIRONMENTAL STEWARDSHIP:
3. Achieve competitive advantage from environmentally responsible products and services.
4. Reduce our global environmental footprint.
5. Work with our suppliers to improve the eco-efficiency of the supply chain.

SOCIAL RESPONSIBILITY:
6. Increase minority business development and supplier diversity.
7. Strive to attain a high performance work environment that is free of work place diseases and that is physically and emotionally safe.
8. Recognize and respect the human rights of our employees and community stakeholders.
9. Promote fair selection, development, engagement and recognition of our people to ensure a diverse, inclusive and sustainable work force.
10. Invest in the communities we serve through employee volunteerism and targeted philanthropic giving.

We continued to make considerable progress in implementing each strategy:

Economic:

In 2008, sales increased for the 62nd year, reaching $38.1 billion. We also achieved our 18th straight year of record earnings, $1.4 billion*, and our 33rd consecutive year of increasing dividends. This record year for Johnson Controls underscored our favorable global position and profitability, despite the unprecedented market challenges and economic volatility.

Each of our three businesses, Building Efficiency, Power Solutions and Automotive Experience, continued their global industry leading market positions and recorded increased revenues.

In Building Efficiency, we achieved double-digit growth in revenues, as we expanded our energy efficiency capabilities and focused on more renewable energy projects while adding to our offerings in advisory services. Our backlog of business at the end of fiscal 2008 is $4.7 billion, up 12% from what it was a year ago. We successfully launched a number of new products in both our commercial and residential sector. With over 1 million customers in 120 countries, Building Efficiency gives our company important business diversification. Its focus on customer service is unparalleled, with over 13,000 service technicians, twice that of any competitor. We continue to enjoy a leading position in China and are well-positioned in the Middle East and South America for continued growth.

Power Solutions is the largest provider of automotive batteries in the world, and in 2008, we continued to increase our market share. This included several important customer wins, and we continue to aggressively seek out opportunities in the emerging markets of Eastern Europe and Asia. We are gaining momentum in lithium ion hybrid battery development through the joint venture that we formed in 2006 with Saft. In 2008, through this joint venture, we opened the first production facility in the world for lithium-ion batteries for hybrid electric vehicles in Nersac, France. In 2009, we will be delivering products from this facility and believe that we will build on our leadership position in this important and growing market sector.

In Automotive Experience, we launched nearly $750 million in new business in 2008 and achieved a record three-year backlog of business of $4.5 billion, a 14% increase. We continued to gain share in both the mature markets of Europe and the emerging markets of Asia. In North America we doubled our margins in a declining market. In China we now have 26 manufacturing plants related to the automotive business and have in excess of a 50% share in the seating business. We have accomplished this through our disciplined commitment to our customers, delivering value in our product offerings and focus on cost.

Continuous process improvement remains a way of life at Johnson Controls. We reaped more than $500 million in savings in this area while making strides in both quality and efficiency. Through identifying best business practices across our global organization, we have reduced our transportation and logistics costs while making strides in safety. We continue to leverage our overall spend through vigilant monitoring of our supply chain and global sourcing arrangements. Going forward we will continue to be focused on continuous process improvements globally, as we seek out new and better ways to do business.

Environmental:

During 2008 we were successful in delivering new energy-saving solutions and products that also reduce greenhouse gases (GHG). In Building Efficiency, we acquired two information technology platforms focused on enterprise-wide energy and emissions management. In Automotive Experience we introduced lighter weight, recyclable interior components and focused on developing products using renewable materials. In Power Solutions we expanded the use of a proprietary lead acid battery manufacturing process that reduces our air emissions by 30%, and we continue to make important strides toward a market leadership position in battery systems for hybrid vehicles. In 2008 numerous energy-efficient and waste reduction practices were implemented within our own facilities globally, and we continue to partner with our suppliers to ensure that they are adopting sustainable practices. We continue to partner with several prestigious organizations focused on reducing greenhouse gas emissions, including the US Environmental Protection Agency (EPA) Climate Leaders, the Business Roundtable Climate RESOLVE, the Carbon Disclosure Project (CDP) Corporate Supply Chain Programme, the United Nations Global Compact’s “Caring for Climate Initiative and most recently the PEW Center’s Business Environmental Leadership Council. We continue to commit to reducing our global greenhouse gas intensity by 30% by 2012 from 2002 levels.

Social:

Johnson Controls has a proud history of social responsibility. During the past year we achieved some important milestones and were recognized for those efforts. In 2008 we set a new record of $1.6 billion of purchases from minority- and women- owned businesses. Johnson Controls continues to be one of only 15 U.S. firms in the Billion Dollar Roundtable, a group of companies that spend $1 billion or more each year with certified women- and minority- owned suppliers. The National Minority Supplier Development Council, for the second time, named Johnson Controls its “2008 Corporation of the Year.” In all regions of the world, we foster community involvement by our employees through our Blue Sky Involve employee volunteer program, demonstrating our social conscience to improve the communities in which we live, work and operate. In 2008, 530 of our locations and 13,000 employees around the world participated in 110,000 hours active in initiatives aimed to improve the environment and develop the leadership capabilities of the partner organizations and also of our employees. $530,000 was distributed in grants of $1,000 throughout the world for these employee-driven volunteer projects. In 2008 Johnson Controls donated $12 million to nonprofit and community organizations focused on the performing arts, the environment, social services, and scholarships. In 2008 we expanded our successful U.S. Conservation Leadership Corps (CLC) initiative beyond Milwaukee and Baltimore to include Detroit. CLC is operated in partnership with the Student Conservation Association. It offers summer conservation jobs for a diverse group of nearly 200 high school students. CLC participants restore and maintain natural areas and parklands, and engage in an environmental education curriculum, as well as valuable job readiness training to prepare them for their futures. In the aftermath of the devastating 2008 earthquake in China, Johnson Controls, its employees, and joint-venture partners in China donated more than $1.4 million toward relief efforts there.

Recognition:

We are proud of being recognized by independent third parties for our corporate performance in various areas. Fortune magazine recognized us for the third consecutive year as one of America’s Most Admired Companies, and the leader in our industry category. Ethisphere Magazine named us one of World’s Most Ethical Companies for a second year in a row. Industry Week named us again as one of the 100 Best-Managed Companies and 50 Best Manufacturing Companies. CRO (Corporate Responsibility Officer) listed us for a third consecutive year as one of the 100 Best Corporate Citizens. We also received the U.S. Department of Commerce Export Achievement Award, America’s Most Shareholder-friendly companies by Institutional Investor Magazine, and ranked number one (of 2500) U.S. firms as Military-Friendly Employer.

Our sustainability performance has been recognized by inclusion in several of the most respected corporate social responsibility and sustainability investment indices, including: DJSI World and DJSI North America, FTSE4Good Index Series, Carbon Disclosure Leadership Index, Domini 400 Social Index, KLD Global Climate 100 Index and eight other KLD social indexes. In addition, this year we were recognized as one of the world’s leading companies for sustainability by Sustainable Asset Management (SAM) and PriceWaterhouseCoopers.

These accomplishments and the financial results that we achieved in 2008 would not be possible without the commitment and dedication of all our employees around the world. These people are focused on bringing the best experience to our customers and delivering value in all that they do. We would like to extend our sincere thanks to the employees of Johnson Controls around the world for all of their contributions throughout the year, each and every day.

Challenges for the future
The world we live in today is markedly different than it was a year ago. We continue to see unprecedented volatility in the financial markets, with steep declines in consumer confidence globally. There is more uncertainty and risk in the broad economic landscape than has been seen in decades. Accordingly, in September we announced restructuring activities as we responded to the challenges. Our primary focus is to ensure that we perform well in a protracted economic slowdown and emerge even stronger. We are in an advantageous position of having strong access to capital. Our strong liquidity position is a major differentiator for us. It allows us to do things differently. It gives us a broad spectrum of opportunities. It allows us to invest for our future growth. We will continue to invest in our sales professionals, technology and innovation that are vital to our market position and future. We believe these investments that we are making in our people and technology will improve our productivity and competitive position.

Outlook
We will continue to drive down our cost structure while balancing investments for long term growth. The global market mega-trends in energy efficiency, sustainability and greenhouse gas reduction favorably position us for future growth. In this economic climate we are facing new terrain as a leadership team. Despite these uncertainties, we believe that we will be able to capitalize on our market leadership position. Our financial strength, record backlogs, business diversification, geographic reach and customer base allow us to face the uncertainties of today with confidence for tomorrow, and we will emerge even stronger and more competitive.

For example, the automotive industry conditions have adversely affected the supply base, causing financial distress to the extent that some have filed for bankruptcy or ceased operations. This has required us to provide financial support to distressed suppliers or take other measures to ensure uninterrupted production. In addition, recent and any future increases in energy costs to power commercial buildings causes financial challenges for our customers, but creates an opportunity for our building efficiency business to provide energy and cost saving solutions.

We will continue to proactively invest in building a strong internal leadership for the future. Each year, 40 of the company's high potential managers are selected to participate in our eXtreme Learning Program (XLP). The XLP program is a developmental program designed to meet one of our strategic objectives of "Develop the Next Generation of Global Leaders" for our corporation. Teams are assembled to address key business issues, including sustainability, safety, supply chain, global governance, and best practice sharing. Overall, this effort is giving our future leaders a broader look and inviting their input on the future of the company. In addition, in 2008 the company dedicated Vision Week to sustainability, which involves every employee getting involved in learning sessions and other events to broaden their understanding of the topic.

As a result of the many initiatives that continue throughout the company, my senior management team kicked off the Global Environmental Sustainability Council, which is comprised of our internal experts from across the company and have been tasked with guiding our sustainability effort to ensure Johnson Controls maintains its leadership role in this area.

Lastly, results presented herein are presented as completely and accurately as we can with the data available. We appreciate your interest in Johnson Controls, and we welcome your suggestions on how we can continue to improve.

Thank you for your support.

Sincerely,
Stephen A. Roell
Chairman and Chief Executive Officer