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Here's the response by JCI to the article regarding inventory and SG&A numbers:

The increases in inventory and SG&A are both attributable to our $3.2 billion acquisition of York International in December 2005. Whereas JCI has primarily been a Just-in-time manufacturer (hence, lower inventories), York makes large mechanical equipment which due to long lead times in the construction industry, sit in inventory. The SG&A also reflects the addition of a large sales staff. That being said, in the short time we've owned the company, we've integrated more than 300 JCI and York offices together and begun the process to reduce their manufacturing footprint from
35 plants to 23.

The expected cost synergies from the acquisition are targeted at $300
million by 2008. Both those areas account for a good portion of that
savings number. It just takes a while for it to happen; there's
severance and plant closing regulations (especially in Europe) that must be adhered to.


We have guided to the fact that our margins in the building efficiency business will rise in 2007 due to progress we are making on the synergies. BTW--We are releasing Q1 earnings tomorrow (Friday)morning.



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