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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-5097
JOHNSON CONTROLS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WISCONSIN 39-0380010
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
5757 N. GREEN BAY AVENUE
P.O. BOX 591
MILWAUKEE, WISCONSIN 53201
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (414) 228-1200
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock, $.16 2/3 par value New York Stock Exchange
Rights to Purchase Common Stock New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
AGGREGATE MARKET VALUE NUMBER OF SHARES
OF NONAFFILIATES' SHARES OUTSTANDING AT
TITLE OF EACH CLASS AS OF DECEMBER 1, 1995 DECEMBER 1, 1995
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Common Stock, $.16 2/3 par value........................ $ 2,816,758,223 41,120,558
Series D Convertible Preferred Stock, $1.00 par value,
$512,000 liquidation value............................ $ 212,949,375 310.875
DOCUMENTS INCORPORATED BY REFERENCE
Parts I, II and IV incorporate by reference portions of the Annual Report
to shareholders for the year ended September 30, 1995.
Part III incorporates by reference portions of the Proxy Statement dated
December 20, 1995.
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JOHNSON CONTROLS, INC.
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Index to Annual Report on Form 10-K
Year Ended September 30, 1995
Page
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PART I.
ITEM 1. BUSINESS..................................................................... 3
ITEM 2. PROPERTIES................................................................... 13
ITEM 3. LEGAL PROCEEDINGS............................................................ 15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS........................................................ 18
EXECUTIVE OFFICERS OF THE REGISTRANT......................................... 19
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
AND RELATED STOCKHOLDER MATTERS........................................... 21
ITEM 6. SELECTED FINANCIAL DATA..................................................... 21
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS................................................................ 21
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................................. 21
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE................................................................ 21
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS............................................ 22
ITEM 11. EXECUTIVE COMPENSATION...................................................... 22
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT..................................................... 22
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.............................................................. 22
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K................................................... 22
INDEX TO EXHIBITS........................................................... 31-34
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PART I
ITEM 1 BUSINESS
General Development of Business
Johnson Controls, Inc. is a Wisconsin corporation organized in 1885. Its
principal office is located at 5757 N. Green Bay Avenue, Milwaukee, Wisconsin
53201-0591 (Telephone: 414-228-1200). From 1885 through 1978 the company's
operations were predominantly in the controls business. Through subsequent
business acquisitions the company's operations have been expanded to include
three additional business segments: battery, automotive and plastics.
In 1978 the company acquired Globe-Union, Inc. and thereby became a leading
domestic manufacturer of automotive batteries for the United States replacement
market and the combined domestic replacement and original equipment market.
In 1985 the company acquired Hoover Universal, Inc., a manufacturer of
automotive seating and seating components, plastic containers and plastics
blowmolding machinery. As a result of the acquisition, the company became the
leading independent producer of automotive seating systems and plastic beverage
bottles for these North American markets.
In 1989 the company acquired Pan Am World Services, Inc. (name subsequently
changed to Johnson Controls World Services Inc., "World Services"), a leading
provider of operations and maintenance services for military bases, space
centers and other government facilities worldwide. This acquisition
significantly expanded the controls segment's operations and maintenance
services business.
Financial Information About Business Segments
Business segment financial information on Pages 20 through 23 and Note 13
"Segment Information" of Notes to Consolidated Financial Statements on page 38
of the 1995 Annual Report to Shareholders is incorporated herein by reference.
Products and Services
Automotive Segment
The automotive segment is engaged in the design and manufacture of
complete seat systems, seating components and interior trim systems for North
American and European manufacturers of cars, vans and light trucks. In
addition to its U.S. operations, the segment has operations in Canada,
Europe, Mexico and South Africa through both wholly-owned and partially-owned
businesses. The segment operates 53 wholly-owned and 19 majority-owned
manufacturing or assembly facilities and is the largest independent
manufacturer of complete seating systems for both the North American and
European automotive industries. Worldwide, the segment is among the top 20
automotive suppliers, with complete seat
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sales to eight of the top ten automobile companies in the world, and
component sales to all of the top ten.
The segment has 30 wholly or majority-owned assembly plants that
supply automotive manufacturers with complete seats on a "just-in-time"
basis. All foam and metal seating components, covers and seat mechanisms
are shipped to these plants from the segment's production facilities or
outside suppliers. The seats are then assembled to specific order and
delivered on a predetermined schedule directly to an automotive assembly
line. Sales of complete seats account for approximately 75% of total
segment sales.
Other manufactured products for the original equipment market,
including seat frames, tracks, mechanisms, covers, foam cushions and
interior trim systems, account for the remaining 25% of segment sales.
In fiscal 1996, the company has acquired a majority
interest in Roth Freres S.A., a major supplier of seating and interior
components to the European automotive industry. Through the acquisition,
the company will become a majority owner of certain complete seat operations
and add to its headliner market share.
Controls Segment
The controls segment is a major worldwide supplier of control systems,
services and products providing energy management, temperature and
ventilation control, security and fire safety for nonresidential buildings.
Building control systems are sold, installed and serviced primarily by
employee sales engineers, application engineers and mechanics working out of
branch offices located in approximately 260 principal cities throughout the
world. Control system products are manufactured in five domestic and six
foreign facilities. The segment is also a leading supplier of integrated
facility management services for commercial buildings worldwide, as well as
for government facilities. Commercial operations and maintenance services
provide a wide range of on-site building support such as maintenance,
security, food services, etc. Government operations and maintenance services
are provided for military bases, space centers and other government
facilities. The segment also manufactures a broad line of electric and
electronic products for sale to original equipment manufacturers, wholesalers
and distributors of air-conditioning, refrigeration, commercial and
residential heating, water-pumping and gas-burning equipment. Overall,
approximately 85% of the controls segment's sales are derived from the
installation and service of control systems and the management of facility
operations for the existing worldwide building market, while 15% originates
from new construction.
Plastics Segment
The plastics segment is one of the world's largest producers of
polyethylene terephthalate (PET) plastic
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containers. Products include plastic soft drink bottles and plastic
containers for other beverages (isotonic sports drink, liquor, water and
juice), food, household and personal care items. High-heat technology, which
provides the ability to manufacture PET containers that can be filled at 185
degrees Fahrenheit, has expanded the segment's ability to serve the food,
sports drink and juice industries. Beverage bottles are molded at 15
domestic plants and are sold to bottlers. In addition, the segment produces
plastic preforms in both North America and Europe, which are blowmolded into
bottles by customers in their own facilities. The segment entered the
European plastic container market in fiscal 1989 by acquiring a Belgian
manufacturer. Through subsequent business acquisitions, the segment has
expanded its European container operations to Italy, France, the United
Kingdom and the Czech Republic.
The plastics segment is also the largest U.S. manufacturer of
blowmolding machinery and possesses the broadest range of blowmolding
machinery technology. Machinery is designed and manufactured for five
principal plastics processing systems: reciprocating extrusion blowmolding,
continuous extrusion blowmolding, injection blowmolding, accumulator head
blowmolding and structural foam. Molds for use in blowmolding and injection
molding machinery are also produced. Blowmolding machinery is manufactured
for North American, European and other markets through operations in the
Czech Republic, Germany, Italy and the United States.
Plastic products, including injection-molded gears, fan shrouds and
radiator end tanks, are produced by the segment for the North American
automotive original equipment market.
Battery Segment
The battery segment is a leading manufacturer of lead-acid automotive
batteries for the North American replacement market as well as for the
combined domestic replacement and original equipment market. Automotive
batteries, which account for over 90% of the segment's sales, are sold
primarily under private label to automotive replacement battery retailers
and distributors and to automobile manufacturers as original equipment.
Manufacturing is conducted at 12 plants in the U.S. and a plant in Mexico.
The battery segment also produces and markets lead-acid batteries for
use in a variety of industrial and consumer applications. The most
important are those based on gelled electrolyte technology and absorbent
glass mat (AGM) technology. The gelled electrolyte batteries are portable,
maintenance-free, rechargeable units used in various applications including
cable/telecommunication and deep cycling applications. The AGM batteries
are sealed, maintenance free, rechargeable units used mainly in
uninterruptible power supply (UPS) systems for computers,
telecommunications, and other applications where a UPS system is required.
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Major Customers and Competition
All four of the company's business segments have sales to the
automotive industry. Each of the four major automotive manufacturers
accounted for between approximately 5% and 11% of the company's net sales in
each of the fiscal years 1995, 1994 and 1993. Chrysler Corporation
accounted for 11% of the company's net sales in fiscal 1995, 9% in 1994 and
8% in 1993. General Motors Corporation accounted for 10%, 8% and 9% in
1995, 1994 and 1993, respectively.
Automotive Segment
As a supplier to the automotive original equipment market, the
segment faces competition from other automotive parts suppliers and,
with respect to certain products, from the automobile manufacturers which
themselves produce or have the capability to produce many of the products
supplied by the segment. Competition is based on quality, price and
just-in-time manufacturing and delivery. Design, engineering and product
planning are becoming increasingly important factors. The segment competes
in North America with four independent suppliers of complete seats, four
independent suppliers of foam seating components and six independent
manufacturers of metal seating components. In Europe, where there are fewer
independent complete seat suppliers, the segment primarily competes with
automotive manufacturers and three independent suppliers.
Roughly 60% of the automotive segment's sales over the last three
years were to the four major automobile manufacturers. Because of the
importance of new vehicle sales of major automotive manufacturers to its
operations, the segment is affected by general business conditions in this
industry. (See pages 20 - 21 of the company's 1995 Annual Report to
Shareholders.)
Controls Segment
The controls segment conducts much of its system installation
business and its facility management business through thousands of
individual contracts which are either negotiated or awarded on a competitive
basis. Key factors in awarding contracts include product and service
quality, price, reputation with respect to customer service, design,
application engineering capability and construction management expertise.
Although differences in corporate organization and product mix make
comparisons difficult, management believes that the controls segment's
domestic installed systems sales are approximately equal to those of its
next largest competitor. The integrated facility management services market
is highly fragmented, with no one company being dominant.
Sales of the segment's U.S. Federal Government facility operations
and maintenance services are largely dependent upon numerous individual
contracts with various departments and agencies of the U.S. Federal
Government. The controls and
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battery segments combined sales to the U.S. Federal Government accounted for
6% of the company's consolidated net sales in 1995, 9% in 1994 and 10% in
1993. The loss of all business with the U.S. Federal Government would,
therefore, have a material adverse effect on the company. However, the
likelihood of losing all business with the U.S. Federal Government is
remote, and the loss of any single contract with the U.S. Federal Government
would not have a material adverse effect on the company. Efforts by the
U.S. Federal Government to reduce spending have narrowed the scope of the
segment's activities at certain sites; however, increased U.S. Federal
Government outsourcing of facility operations and maintenance along with
increased expenditures for energy efficiency programs resulting from
increased Congressional funding and Presidential executive orders, have
created additional opportunities.
Plastics Segment
The plastic container business competes principally with four
domestic and two European independent suppliers. The segment competes
worldwide with approximately four domestic and five foreign companies in the
blowmolding machinery business. Quality, price and service are all key
competitive determinants to all of the segments operations.
Plastics segment sales are not dependent upon a single customer, or a
limited number of customers.
Battery Segment
Approximately 80% of the battery segment's total sales are to the
replacement market, with the remaining 20% to the original equipment market.
The segment is the principal supplier of automotive batteries to Interstate
Battery System of America ("Interstate") and AutoZone, and is a major
supplier of automotive batteries to Wal-Mart. Each of these customers sell
replacement batteries under their own brand labels. Original equipment and
replacement batteries are sold to a number of large manufacturers of motor
vehicles and heavy construction equipment. Replacement batteries are also
sold to battery distributors for resale to retail outlets.
Sales of the battery segment depend primarily on quality, price,
delivery and service, including marketing support and technical advice. The
segment primarily competes with three other battery manufacturers, one of
which is owned by a company having greater financial resources than Johnson
Controls.
Backlog
The company's backlog relates to the controls segment which derives a
significant portion of its revenues from long-term contracts which
are accounted for on the percentage-of-completion method. In accordance
with customary industry practice, the controls segment progress bills
customers on an estimated basis as work proceeds.
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Integrated facility management contracts generally contain yearly renewal
options; however, only the noncancellable portion of uncompleted contracts
which will be executed within the next fiscal year are reflected in the backlog
information below.
Information concerning contracts in progress for the controls segment is as
follows:
September 30,
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1995 1994
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(in millions)
Backlog of uncompleted building
systems and services contracts $1,872 $1,578
Earned revenues on uncompleted
building systems and services
contracts 1,135 941
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Unearned backlog of building systems
and services contracts 737 637
Unearned backlog of government
operations and maintenance
contracts 442 590
Unearned backlog of commercial
operations and maintenance
contracts 385 220
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Total unearned backlog of contracts $1,564 $1,447
====== ======
Certain of the company's manufacturing businesses also accumulate backlog
data, but the amounts, when considered in the aggregate, are not significant to
an understanding of these businesses.
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Raw Materials
Raw materials used in the automotive segment such as steel, urethane
chemicals and chromium, were readily available during the year and such
availability is expected to continue. The controls segment is not dependent
upon any single source of supply for essential materials, parts or components.
Principal raw materials used in the manufacture of automotive batteries are
lead, antimony, calcium, sulfuric acid and polypropylene, all of which are
generally available in the open market. The supply of plastic resins used in
the plastics segment were also available during the year and such availability
is expected to continue.
Intellectual Property
Generally, statutory protection is sought for most intellectual property
embodied in patents, trademarks and copyrights. Some intellectual property,
where appropriate or possible, is protected by contract, license, agreement or
hold-in-confidence undertaking.
The company owns numerous U.S. and counterpart foreign patents, the more
important of which cover those technologies and inventions embodied in current
products, or which are used in the manufacture of those products. While the
company believes patents are important to its business operations and in the
aggregate constitute a valuable asset, no single patent, or group of patents,
is critical to the success of the business. The company, from time to time,
grants licenses under its patents and technology and receives licenses under
patents and technology of others.
The company has numerous registered trademarks in the U.S. and in many
foreign countries. The most important of these marks are "JOHNSON CONTROLS"
(including a stylized version thereof) and "JOHNSON". These marks are
universally used in connection with certain of its product lines and services.
The trademarks and servicemarks "ALLIANCE", "BIGFOOT", "PENN", "BASO",
"UNI-TRIM", "COUNTERLINE", "UNILOY-SPRINGFIELD", "METASYS", and "UNILOY" are
used in connection with certain company product lines and services. Original
equipment and replacement automotive batteries are sold carrying customer-owned
private labels and trademarks. The company also markets automotive batteries
under the licensed trademarks "EVEREADY" and "ENERGIZER". Industrial batteries
for original equipment and/or replacement usage are sold carrying either
company or customer-owned trademarks, including the company mark "DYNASTY".
Most works of authorship produced for the company, such as computer
programs, catalogs and sales literature, carry appropriate notices indicating
the company's claim to copyright protection under U.S. law and appropriate
international treaties.
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ENVIRONMENTAL AND HEALTH AND SAFETY MATTERS
The company's domestic operations are governed by a variety of laws intended
to protect the environment, principally the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), the Clean Water Act, the Clean Air Act and the state counterparts
of these laws (collectively, "Environmental Laws"), and bylaws addressing
workers' safety administered by both the Occupational Safety and Health
Administration and similar state agencies and federal and state laws regulating
health (collectively "Worker Safety Laws"). The Environmental Laws implemented
by the United States Environmental Protection Agency and state agencies govern
the generation and management of hazardous and toxic materials, the discharge
of pollutants into the air and into surface and underground waters, the
construction of new discharge sources, and environmental reporting and record
keeping, among other things. These laws govern ongoing operations, require
remediation of sites associated with past operations, and provide for civil and
criminal penalties and fines, as well as injunctive and remedial relief, for
noncompliance or cleanup.
The company's policy is to comply with applicable Environmental Laws and
Worker Safety Laws, and the company maintains procedures designed to foster and
ensure compliance. The company has expended substantial resources, both
financial and managerial, to ensure compliance with Environmental Laws and
Worker Safety Laws. Certain of the company's businesses are and have been
engaged in the handling or use of substances or compounds that may be
considered toxic or hazardous with the meaning of the Environmental Laws and
Worker Safety Laws. While this creates the risk of environmental liability
rising out of the company's operations and products, the company is committed
to protect the environment and comply with all such applicable laws utilizing
available technology.
The company's operations and facilities have been, and in the future may
become, the subject of formal or informal enforcement actions or
proceedings for noncompliance with such laws. Resolution of such
matters typically has been achieved by negotiation with the regulatory
authorities resulting in commitments to compliance or abatement programs and
payment of penalties. Historically, neither such commitments nor such
penalties have been material. (See Item 3 "Legal Proceedings" of this report
for a discussion of the company's potential environmental liabilities.)
Although the company believes that its operations are in substantial compliance
with such laws, there are no assurances that substantial additional costs for
compliance will not be incurred in the future.
Environmental Capital Expenditures
The company's ongoing environmental compliance program often results in
capital expenditures. While environmental considerations are a part of all
significant capital expenditures, in excess of $2 million of the company's
total capital expenditures in 1995 related solely to environmental compliance.
It is management's opinion that the amount of any future capital
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expenditures would not have a materially adverse effect on the company's
financial results or competitive position in any one year.
Employees
As of September 30, 1995, the company employed approximately
59,200 employees, of whom 39,500 were hourly and 19,700 were salaried.
Seasonal Factors
The business of the controls segment is executed on a relatively continuous
basis, thereby resulting in no significant fluctuation in employment levels or
revenues, on a percentage-of-completion basis, during the year.
The automotive replacement battery market is affected by weather patterns
because batteries are more likely to fail when extremely low temperatures place
substantial additional power requirements upon a vehicle's electrical system.
Also, battery life is shortened by extremely high temperatures which accelerate
corrosion rates. Therefore, either mild winter or moderate summer temperatures
may adversely affect automotive replacement battery sales.
Sales of batteries and seating to automobile manufacturers for
use as original equipment are dependent upon the demand for new automobiles.
Management believes that demand for new automobiles generally reflects
sensitivity to overall economic conditions with no material seasonal effect.
The plastics segment experiences some seasonality due to the peak demand for
beverage containers in the summer period.
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International Operations
The automotive segment has 38 wholly or majority-owned manufacturing
facilities located outside the U.S., including plants in Austria, Belgium,
Canada, Czech Republic, Germany, Mexico, Portugal, South Africa, Spain and the
United Kingdom. These facilities produce complete seats, metal seating
components, metal frames, seat covers or foam seating components, depending on
the location. The segment also has several partially-owned operations in
Europe which manufacture either complete seats, headliners and/or seating
components.
Through a number of foreign subsidiaries and branches, the controls segment
operates fully-staffed sales offices, offering engineering, installation and
service capabilities (the counterpart to the domestic controls operations) in
Australia, Austria, Belgium, Canada, China, Czech Republic, Denmark, France,
Germany, Hong Kong, Hungary, Italy, Malaysia, Mexico, The Netherlands, Norway,
Poland, Russia, Saudi Arabia, Singapore, Slovakia, South Africa, Spain, Sweden,
Switzerland, United Arab Emirates and the United Kingdom. The company acquired
a United Kingdom facility management services provider in 1994, and a contract
to operate six United Kingdom Atomic Energy Authority sites in 1995. In
addition, controls segment products are marketed through distributors
represented in approximately 40 countries. Products are manufactured in plants
located in China, Germany, Italy, Mexico, The Netherlands and the United
Kingdom, with the remainder of the product line supplied from the U.S. The
controls segment also has joint venture operations in the U.S., Brazil, China,
Italy, Japan, Malyasia, Singapore, and Thailand.
Battery manufacturing equipment, which incorporates the company's process
technology, is sold worldwide through the battery segment's international
operation. Licensing and joint venture arrangements are also in effect with
certain foreign manufacturers of batteries and automotive parts.
The plastics segment has two Italian manufacturers of continuous extrusion
blowmolding machinery and parts, one Belgian and one Italian manufacturer of
plastic containers and one Welsh manufacturer which supplies plastic preforms
to soft drink bottlers in the United Kingdom. The Italian plastic container
manufacturer is one of the largest manufacturers of PET plastic bottles in
Europe. Products from the Italian blowmolding machinery companies are also
marketed in the U.S. by the plastics segment's sales force. The company has a
majority interest in a French PET manufacturer which produces plastic preforms,
bottles and other containers. In 1995, the company acquired B&W
Kunststoffmaschinenbau Handelsgesellschaft mbH, a plastics machinery
manufacturer located in Germany and the Czech Republic.
The financial results of all foreign operations are subject to currency
exchange rate fluctuations. Gains and losses from the translation of most
foreign currency financial statements are accumulated as a separate component
of shareholders' equity. Net foreign currency transaction losses included in
miscellaneous expense were not significant in 1995, 1994 or 1993.
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Financial Information About Geographic Areas
Note 13 "Segment Information" of Notes to Consolidated Financial Statements
on page 38 of the 1995 Annual Report to Shareholders is incorporated herein by
reference.
Research and Development Expenditures
Expenditures for research activities relating to product development and
improvement are charged against income as incurred. Such expenditures amounted
to $137 million in 1995, $124 million in 1994 and $95 million in 1993. In
addition, the company expended $76 million in 1995, $53 million in 1994 and $58
million in 1993 for research activities sponsored by customers.
ITEM 2 PROPERTIES
The company has numerous manufacturing facilities located in the U.S.
Plants are also located in Austria, Belgium, Canada, Czech Republic, Germany,
France, Italy, Mexico, The Netherlands, Portugal, Spain and the United Kingdom.
The company considers its facilities to be suitable and adequate.
Substantially all of the company's facilities are operating at normal levels
based on capacity.
The principal manufacturing, administrative, and research and development
facilities listed on the following page by industry segment and location
aggregate approximately 19 million square feet of floor space and are owned by
the company except as noted on the following page. In addition, approximately
260 controls segment branch offices in major cities throughout the world are
either owned or leased. These offices vary in size in proportion to the volume
of business in the particular locality.
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Controls Automotive
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Florida Cape Canaveral (2) California Livermore
Georgia Atlanta Modesto
Indiana Goshen Stockton (1)
Oklahoma Poteau Illinois Sycamore
Pennsylvania Pittsburgh (1) Indiana Greencastle (1)
Wisconsin Milwaukee Ossian
Watertown Vincennes (1)
Germany Essen (1) Kentucky Bardstown
Italy Lomagna Cadiz
Mexico Juarez Georgetown (1)
Reynosa Glasgow
The Netherlands Leeuwarden Harrodsburg
United Kingdom Bournemouth (1) Lemons Mill
Waterlooville (1) Maysville
Glasgow, Scotland Nicholasville
Shelbyville (1)
Plastics Louisiana Shreveport (1)
- - ----------------------------------------- Suwannee (1)
Alabama Tuscaloosa Maryland Belcamp (2)
California Los Angeles (1) North East (1)
Milpitas (1) Michigan Ann Arbor
Rancho Cucamonga (1) Lapeer
Colorado Denver Livonia (1)
Delaware New Castle Mt. Clemens (1)
Florida Orlando Plymouth (2)
Georgia Atlanta Saline
Illinois Itasca (1) Taylor (1)
Indiana Franklin Missouri Jefferson City
Kansas Lenexa (1) Kansas City (1)
Kentucky Nicholasville New Jersey Dayton (1)
Michigan Manchester (2) Ohio Greenfield
Novi (1) Strongsville (1)
Williamston (1) Pennsylvania Erie (1)
New Hampshire Merrimack (1) Tennessee Athens
New Jersey Pine Brook (1) Lexington
Somerville (1) Lewisburg (2)
Pennsylvania Erie Linden
South Carolina Columbia (1) Murfreesboro (2)
Texas Ft. Worth (1) Pulaski
Washington Tacoma (1) Virginia Chesapeake
Belgium Brecht (1) Austria Mandling
Czech Republic Palicka Boriny Belgium Geel
France Beaune (1) Canada Orangeville
Germany Berlin (1) Stratford
Italy Ascoli Tillsonburg
Florence Czech Republic Ceska Lipa
Milan Roundnice (1)
Mexico Mexico City (1) Straz Pod Ralskem
United Kingdom Banbury (1) Germany Bochum (1)
Mold, Wales (1) Espelkamp
Lahnwerk
Battery Opladen (1)
- - ------------------------------------- Radesomweld (1)
California Fullerton Remscheid (1)
Delaware Middletown Schwallbach (1)
Florida Tampa Sendiffinjer
Illinois Geneva Wermelskirchen (1)
Kentucky Florence (1) Zwickau
Louisville Mexico Juarez (2)
Missouri St. Joseph (1) Portugal Nelas
North Carolina Winston-Salem Portalegre
Ohio Toledo Spain Barcelona
Oregon Canby (Portland) Valencia
South Carolina Oconee Zaragoza
Wisconsin Milwaukee (2) South Africa Uitenhage (1)
Mexico Torreon United Kingdom Birmingham (1)
Essex (2)
Corporate Liverpool
- - ---------------------------------------- Mansfield
Wisconsin Milwaukee Silloth
Shropshire (2)
(1) Leased Staffordshire
(2) Both owned and leased facilities Wednesbury
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ITEM 3 LEGAL PROCEEDINGS
Fire Retardant Treated Wood Litigation. As of September 28, 1983, Hoover
Universal, Inc. ("Hoover") sold the assets of its Wood Preserving Division to
Hoover Treated Wood Products, Inc. ("HTWP"), a subsidiary of Ply-Gem
Industries, Inc. ("PLY-GEM"). The agreement provided that Hoover retain
certain liabilities relating to that business including liability for products
shipped prior to October 1, 1983. One of the products of the Wood Preserving
Division was fire retardant treated wood. In May 1985, Hoover became a
subsidiary of the company.
The company and its subsidiary, Hoover, have received claims related to fire
retardant treated wood sold and used in a number of structures primarily in the
eastern half of the United States. These claims allege that the fire retardant
treated wood loses its structural integrity under some circumstances over time.
Plywood manufacturers, architects, wood treaters, builders, lumber suppliers,
chemical suppliers and others are also involved in these claims.
A mediation process that includes many of these parties and their insurers
is ongoing in New Jersey, where a number of these claims are located. The
efforts have been successful in resolving much of that litigation.
The company and its subsidiary are vigorously defending these claims and
have been successful on certain of their defenses asserted in these claims to
date. During 1993, the company entered into agreements with two insurance
carriers to provide a total of $65 million of insurance coverage on potential
fire retardant treated wood claims. With respect to the underlying claims, the
company's ultimate liability cannot be reasonably estimated at this time.
However, it is management's opinion that this matter will not have a materially
adverse effect on the company's financial position, results of operations or
cash flows.
In recent developments, the Pulte v. Hoover Treated Wood Products litigation
which involved a $23 million verdict against Hoover Treated Wood Products has
been resolved in a manner which will not require the payment of sums of money
by the company or subsidiaries in that litigation. Additionally, the dismissal
of claims against the company and Hoover in a class action filed in Maryland
has recently been affirmed by Maryland's highest court. In the opinion of
management, the balance of the litigation which currently exists or is
anticipated for the future is not anticipated to exceed the insurance coverage
structure which has been disclosed above.
Environmental Litigation and Proceedings. As noted previously, the
activities of the company are subject to various environmental laws and worker
safety laws. Liabilities potentially arise under these laws for any activities
which are not in compliance with such laws and for the cleanup of sites where
hazardous or toxic materials are present.
Regarding potential claims of noncompliance, the State of Ohio Environmental
Protection Agency has informed the company that it
15
16
will seek civil penalties for alleged noncompliance with state laws governing
air permits and emissions at the company's Greenfield, Ohio plant. The
matter arose after the company learned of the possible deficiency while
preparing an air permit application, and voluntarily disclosed such information
to the state. The state issued a Notice of Violation on December 8, 1994, and
on December 5, 1995 proposed a penalty of $553,480. The company has not agreed
to pay the proposed penalty amount, and the parties continue to negotiate the
matter.
With respect to the cleanup of hazardous or toxic materials, the company's
activities have led to allegations that the company is responsible for
performing cleanups, or for the repayment of costs spent by governmental
entities or others performing cleanups at approximately 40 sites. Many of
these sites are landfills used by the company in the past for the disposal of
waste materials; others are secondary lead smelters and lead recycling sites
where the company returned lead-containing materials for recycling; a few
involve the cleanup of company manufacturing facilities; and the remaining fall
into miscellaneous categories. Furthermore, the company may face similar
claims of liability at additional sites in the future as a result of the
company's past or future operations.
Liability for investigation and remediation costs exists regardless of fault
or legality at the time of disposal, and it is joint and several, meaning that
any one of the companies responsible for disposing materials at the site may be
responsible for all of the cleanup expenses. Nevertheless, any responsible
party that has paid more than its fair share of site costs may recover fair
shares of its expenditures from other responsible parties. Thus, with respect
to many of the sites for which the company has potential liabilities, there are
other parties who the company believes will be required and have the ability to
bear a significant share of site cleanup costs. At any given site, the
liability and costs to be allocated among the parties depend on such factors as
the number of parties, the willingness of governmental agencies to contribute
public funds to the cleanup, the volume of material delivered to the site by
each party, the nature of each party's materials, the costs of the site cleanup
and the financial strength of the parties. Where the company is alleged to be
responsible for performing cleanup or for costs, it pursues a course of action
intended to mitigate its potential liabilities.
The company's policy is to accrue for potential environmental losses for
cleanup consistent with generally accepted accounting principles. In that
regard, the company accrues for potential environmental losses when it is
probable a loss has been incurred and the amount of the loss is reasonably
estimable. Its reserves for environmental related costs at the end of fiscal
year 1995 totalled $33 million. The company reviews the status of the sites on
a quarterly basis and adjusts its reserves accordingly. Such potential
liabilities accrued by the company are undiscounted and do not take into
consideration possible recoveries of future insurance proceeds. They do,
however, take into account the likely share other parties will bear at the
site. It is difficult to estimate the company's ultimate level of liability
for the
16
17
sites due to the large number of other parties that may be involved,
the complexity of determining the relative liability among those parties, the
uncertainty as to the nature and scope of the investigations and remediation to
be conducted, uncertainty in the application of law and risk assessment, the
various choices and costs associated with diverse technologies that may be used
in corrective actions at the sites, and the often quite lengthy periods over
which eventual remediation may occur. Nevertheless, the company has no reason
to believe at the present time that any claims, penalties or costs in
connection with known environmental remediation matters will have a material
adverse effect on the company's financial position, results of operations or
cash flows.
This year, the company has modified its previous format of providing
detailed, case-specific information on a number of sites, and will be providing
such case-specific information only as to the matters set forth below. The
company believes this modification is appropriate because it has no reason to
believe at the present time that any of these matters (including the matters
discussed below) will likely have a material adverse effect on the company's
financial position, results of operations or cash flows. In addition, the
company believes the information contained in this Environmental Litigation and
Proceedings section, discussing all sites in the aggregate, provides
shareholders with sufficient information on these matters.
Typically, site remediation matters are addressed at the administrative
agency level of the government. Occasionally, however, litigation is
involved. The most significant such matters where litigation has been
commenced by the government or by private parties against the company are as
follows:
Gould, Inc. v. NL Industries, Inc., Case No. CV 91-1091 JE (United States
District Court for the District of Oregon), filed December , 1992.
Plaintiff is the owner of a site once used for secondary lead smelting. It
has sued certain site customers (including the company), the former owner
and several owners of adjacent properties seeking an allocation of cleanup
costs associated with the site among them. Plaintiff and many of the
defendants are performing work at the site pursuant to an administrative
order issued on January 23, 1992. Approximately $24 million has been
expended by the parties at the site, and the United States Environmental
Protection Agency (EPA) is determining what further work may be necessary to
complete site remediation.
United States v. NL Industries, Inc., Case No. 91-CV-00578-WDS (United
States District Court for the Southern District of Illinois), filed July 31,
1991. The EPA seeks to enforce an administrative order issued on November
27, 1990 against Johnson Controls and other defendants requiring performance
of a cleanup at a secondary smelter facility in Granite City, Illinois. The
company, the other defendants and the other parties to the 1990 order have
chosen not to perform on the basis that the administrative record of
decision underlying that order does not support the remedy the agency is
requiring. The complaint alleges that the defendants should pay penalties
(up to $25,000 per day and three times
17
18
the cost of work the government performs) for failing to comply with the
order. It also alleges the company should be responsible for past
government expenditures, which currently total in excess of $10 million.
According to the agency, the remaining cleanup could cost in excess of $40
million.
Schuylkill Metals of Plant City, Inc. v. Johnson Controls, Inc., Case No.
95-610-CN-T-23B (United States District Court for the Middle District of
Florida), filed in April, 1995. The plaintiff is the owner of property once
used as a battery breaking facility. Plaintiff contends that the company
was a major customer and should pay an unspecified, equitable share of the
estimated $20 million the plaintiff expects to spend to clean up the site.
United States v. Johnson Controls, Inc., Case No. 93-335 (United District
Court for the District of Delaware), filed in July, 1993. The United States
alleged in its complaint that Johnson Controls should be responsible for $1.8
million of costs the government had incurred at the Wildcat Landfill
Superfund Site in Kent County, Delaware. The company has settled its
liability in this case for the amount of $172,500.
The company is also currently involved in litigation against its insurers to
recover cleanup costs and other damages for which it may be adjudged
responsible at many of the sites. The suit, Johnson Controls, Inc. v.
Employers Insurance of Wausau (Case No. 89-CV-016174), was filed in 1989 in
Milwaukee County Circuit Court. The company also filed a suit in New Jersey in
1995 against the same insurers alleging coverage for a site in New Jersey in
1995 against the same insurers alleging coverage for a site in New Jersey.
Johnson Controls, Inc. v. Employers Insurance of Wausau, (Docket No. L-223-95,
Superior Court, Middlesex County). The suits seek costs of defense and
indemnity payments under the policies and also declaratory judgments for future
costs. In 1994, the Wisconsin Supreme Court ruled that many types of cleanup
costs are not recoverable under common comprehensive general liability
insurance policies, such as those at issue in the company's cases. In 1995,
the Milwaukee County Circuit Court decided that the Supreme Court's ruling
applies to the company's case against its insurers and found for the insurers.
Similarly, the district court in New Jersey has very recently ruled that the
Wisconsin case is dispositive of the New Jersey case and found for the
insurers. The company is appealing the Milwaukee County Circuit Court
decision, but it has decided not to appeal the New Jersey decision.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None during the fourth quarter of the fiscal year covered by this report.
18
19
EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General Instruction of G(3) of Form 10-K, the following list is
included as an unnumbered Item in Part I of this report in lieu of being
included in the company's Proxy Statement for its 1996 Annual Meeting of
Shareholders.
James H. Keyes, 55, was elected Chairman of the Board in January, 1993, and
Chief Executive Officer in 1988. He has served as President since 1986. Mr.
Keyes joined the company in 1966.
John M. Barth, 49, was elected an Executive Vice President in 1992, with
responsibility for the Automotive Systems Group, the Plastics Technology Group
and the Battery Group. Previously, he served as Vice President, Automotive
Systems Group, since 1990 and as Vice President, Plastics Technology Group,
since 1986. Mr. Barth joined the company in 1969.
Joseph W. Lewis, 60, was elected an Executive Vice President in 1992 and has
served as Vice President, Controls Group, since 1986. Mr. Lewis joined the
company in 1958.
Dr. Steven J. Bomba, 58, was elected Vice President, Corporate Technology in
1990. From 1987 to 1990 he was Vice President, Advanced Manufacturing
Technologies, for Rockwell International.
Susan F. Davis, 42, was elected Vice President, Human Resources, in April
1994. From August 1993, she served as Vice President of Organizational
Development for the Automotive Systems Group, the Plastics Technology Group and
the Battery Group. Ms. Davis joined the company in 1983.
Robert C. Dickhaus, 39, was elected Vice President and General Manager of
the Controls Group's Integrated Facility Management business in September 1995.
Mr. Dickhaus joined the company in 1991.
Giovanni (John) Fiori, 51, was elected a Corporate Vice President in 1992
and serves as Vice President and General Manager of the automotive seating
operations in Europe. Previously, he served as Vice President, Plastics
Technology Group. Mr. Fiori joined the company in 1987.
Michael F. Johnston, 48, was elected a Corporate Vice President in July
1993, and was named Vice President and General Manager, Battery Group, in
October 1993. Previously, he served as Vice President and General Manager of
the Battery Group's Starting, Lighting and Ignition Division since 1991 and as
Vice President and General Manager of the Battery Group's Specialty Battery
Division since 1989. Mr. Johnston joined the company in 1989.
John P. Kennedy, 52, was elected a Corporate Vice President in
1989 and has been Secretary since 1987 and General Counsel since 1984 when he
joined the company.
19
20
William P. Killian, 60, was elected Vice President, Corporate Development
and Strategy in 1988, and served as Vice President, Corporate Development, from
1985 to 1988. Mr. Killian joined the company in 1977.
Charles G. McClure, 41, was elected a Corporate Vice President in June,
1993, and serves as Vice President and General Manager of the automotive
seating operations in North America. Previously he served as Vice President
and General Manager of the automotive seating operations in Europe. Mr.
McClure joined the company in 1983.
James H. Pell, 45, was elected Vice President and General Manager of the
Plastics Technology Group in June 1995. Prior to his current position, he
served as Vice President and General Manager of the Plastic Container Division
of the Plastics Technology Group. Mr. Pell joined the company in 1981.
Stephen A. Roell, 45, was elected Vice President and Chief Financial Officer
in 1991. Since 1990 he served as Corporate Controller and Assistant Secretary.
He served as Treasurer from 1987 to 1991. Mr. Roell joined the company in
1982.
Brian J. Stark, 46, was elected Vice President and General Manager of the
Controls Group's Systems and Services business in September 1995. Since
joining the company in 1971, Mr. Stark has served as a Branch and Regional
Manager within the Systems and Services field organization.
Denise M. Zutz, 44, was elected Vice President, Communication in 1991. She
previously served as Director of Corporate Communication and had served in
other communication positions since joining the company in 1973.
Ben C.M. Bastianen, 51, was named Treasurer in 1991. Between 1984 and 1990
he served as Assistant Treasurer, and then Treasurer, of Borg-Warner
Corporation.
Franklin H. Smith, Jr., 44, was named Controller of the Controls Group,
effective October, 1995. Between 1991 and 1995, he served as Corporate
Controller, and from 1987 to 1991 he served as Director of Taxes for the
company. Mr. Smith joined the company in 1987.
Jerome D. Okarma, 43, was elected Assistant Secretary in 1990. He has
served as Assistant General Counsel since joining the company in 1989 and as
Vice President and General Counsel of the Controls Group and Vice President and
General Counsel of the Battery Group since 1993. Mr. Okarma previously served
as Assistant Secretary and Senior Attorney for Borg-Warner Corporation.
Michael P. O'Rourke, 41, was elected Assistant Secretary in January 1994.
He has served as Vice President and General Counsel of the Plastics Technology
Group since 1993 and was Vice President of Administration and Law for the
Automotive Systems Group since 1991. Mr. O'Rourke joined the company in 1983.
20
21
There are no family relationships, as defined by the instructions to this
item, between the above executive officers.
All officers are elected for terms which expire on the date of the meeting
of the Board of Directors following the Annual Meeting of Shareholders or until
their successors are elected and qualified.
PART II
The information required by Part II, Items 5 through 8, is incorporated
herein by reference to the company's 1995 Annual Report to Shareholders as
follows:
ITEM 5 MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS - See price range and dividend information on page 22, and
Note 7 "Shareholders' Equity" on page 34 of Notes to Consolidated
Financial Statements of the 1995 Annual Report to Shareholders.
Number of Record Holders
Title of Class as of December 1, 1995
-------------- ---------------------
Common Stock, $.16-2/3 par value 38,613
ITEM 6 SELECTED FINANCIAL DATA - See "Five Year Summary" on page 40 of the
1995 Annual Report to Shareholders.
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - See pages 20 through 26 of the 1995 Annual
Report to Shareholders.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - See pages 27 through 39
of the 1995 Annual Report to Shareholders.
ITEM 9 DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
21
22
PART III
All information required by Items 10 through 13 of Part III, with the
exception of information on the Executive Officers which appears on pages 19-21
of Part I of this report, is incorporated by reference to pages 1-16 of the
company's Proxy Statement for its 1996 Annual Meeting of Shareholders.
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Page in
Annual Report*
(a) The following documents are filed as part
of this report:
(1) Financial Statements
Consolidated Statement of Income
for the years ended September 30,
1995, 1994 and 1993 .................... 27
Consolidated Statement of Financial
Position at September 30, 1995
and 1994................................ 28
Consolidated Statement of Cash Flows
for the years ended September 30, 1995,
1994 and 1993........................... 29
Consolidated Statement of Shareholders'
Equity for the years ended September 30,
1995, 1994 and 1993..................... 30
Notes to Consolidated Financial
Statements.............................. 31-38
Report of Independent Accountants......... 39
*Incorporated by reference from the indicated pages of the 1995 Annual
Report to Shareholders.
22
23
Page in
Form 10-K
---------
(2) Financial Statement Schedules
Report of Independent Accountants on
Financial Statement Schedules........... 28
For the years ended September 30,
1995, 1994 and 1993:
II. Valuation and Qualifying Accounts.. 30
All other schedules are omitted because they are not applicable, or
the required information is shown in the financial statements or notes
thereto.
Financial statements of 50% or less-owned companies have been omitted
because the proportionate share of their profit before income taxes and
total assets are less than 20% of the respective consolidated amounts, and
investments in such companies are less than 20% of consolidated total
assets.
(3) EXHIBITS
3.(i) Restated Articles of Incorporation of Johnson Controls, Inc. (incorporated by reference to Exhibit 3.A
to Johnson Controls, Inc. Annual Report on Form 10-K for the year ended September 30, 1987).
3.(ii) By-laws of Johnson Controls, Inc., as amended November 16, 1994 (incorporated by reference to Exhibit
3.(ii) to Johnson Controls, Inc. Annual Report on Form 10-K for the year ended September 30, 1994).
4.A Miscellaneous long-term debt agreements and financing leases with banks and other creditors and
debenture indentures.*
4.B Miscellaneous industrial development bond long-term debt issues and related loan agreements and leases.*
4.C Rights Agreement between Johnson Controls, Inc. and Firstar Trust Company (Rights Agent) as amended
November 16, 1994 (incorporated by reference to Exhibit 4.C to Johnson Controls, Inc. Annual Report on
Form 10-K for the year ended September 30, 1994).
23
24
(3) EXHIBITS (Continued)
4.D Certificate of the Relative Rights and Preferences of the Series D Convertible Preferred Stock of Johnson
Controls, Inc. (incorporated by reference to an exhibit to the Form 8-K dated May 26, 1989).
4.E Note and Guaranty Agreement dated June 19, 1989 between Johnson Controls, Inc., as Guarantor, and Johnson
Controls, Inc. Employee Stock Ownership Trust, acting by and through LaSalle National Bank, as trustee, as
issuer (incorporated by reference to Exhibit 4.E to Johnson Controls, Inc. Annual Report on Form 10-K for the
year ended September 30, 1990).
4.F Letter of agreement dated December 6, 1990 between Johnson Controls, Inc., LaSalle National Trust, N.A. and
Fidelity Management Trust Company which replaces LaSalle National Trust, N.A. as Trustee of the Johnson
Controls, Inc. Employee Stock Ownership Plan Trust with Fidelity Management Trust Company as Successor Trustee,
effective January 1, 1991 (incorporated by reference to Exhibit 4.F to Johnson Controls, Inc. Annual Report on
Form 10-K for the year ended September 30, 1991).
4.G Indenture for debt securities dated February 22, 1995 between Johnson Controls, Inc. and Chemical Bank Delaware,
trustee (Incorporated by reference to the Form S-3 filed February 13, 1995, which became effective February 17,
1995).
10.A Johnson Controls, Inc., 1992 Stock Option Plan as amended through September 22, 1993 (Incorporated by reference
to Exhibit 10.A to Johnson Controls, Inc. Annual Report on Form 10-K for the year ended September 30, 1993).
10.B Johnson Controls, Inc., 1984 Stock Option Plan as amended through September 22, 1993 (Incorporated by reference
to Exhibit 10.B to Johnson Controls, Inc. Annual Report on Form 10-K for the year ended September 30, 1993).
10.C Johnson Controls, Inc., 1992 Stock Plan for Outside Directors, (incorporated by reference to Exhibit 10.D to
Johnson Controls, Inc. Annual Report on Form 10-K for the year ended September 30, 1992).
24
25
(3) EXHIBITS (Continued)
10.D Johnson Controls, Inc., Deferred Compensation Plan for Certain Directors as amended through September 25, 1991
(incorporated by reference to Exhibit 10.C to Johnson Controls, Inc. Annual Report on Form 10-K for the year
ended September 30, 1991).
10.E Johnson Controls, Inc., Directors Retirement Plan as amended through July 26, 1989 (incorporated by reference to
Exhibit 10.D to Johnson Controls, Inc. Annual Report on Form 10-K for the year ended September 30, 1989).
10.F Johnson Controls, Inc., Executive Incentive Compensation Plan Deferred Option as amended March 21, 1995, filed
herewith.
10.G Johnson Controls, Inc., Executive Incentive Compensation Plan as amended through September 22, 1993,
(incorporated by reference to Exhibit 10.H to Johnson Controls, Inc. Annual Report on Form 10-K for the year
ended September 30, 1993).
10.H Johnson Controls, Inc., Executive Incentive Compensation Plan, Deferred Option, Qualified Plan effective
September 28, 1994, (incorporated by reference to Exhibit 10.I to Johnson Controls, Inc. Annual Report on Form
10-K for the year ended September 30, 1994).
10.I Johnson Controls, Inc., Long-Term Performance Plan, as amended through September 28, 1994, (incorporated by
reference to Exhibit 10.J to Johnson Controls, Inc. Annual Report on Form 10-K for the year ended September 30,
1994).
10.J Johnson Controls, Inc., Executive Survivor Benefits Plan, as amended through January 1, 1989, (incorporated by
reference to Exhibit 10.K to Johnson Controls, Inc. Annual Report on Form 10-K for the year ended September 30,
1994).
10.K Form of employment agreement as amended through October 1, 1991 between Johnson Controls, Inc. and Messrs. Barth,
Kennedy, Keyes, Lewis and Roell, (incorporated by reference to Exhibit 10.K to Johnson Controls, Inc. Annual
Report on Form 10-K for the year ended September 30, 1992).
25
26
(3) EXHIBITS (Continued)
10.L Form of indemnity agreement, as amended, between Johnson Controls, Inc. and Messrs. Barth, Kennedy, Keyes,
Lewis and Roell, (incorporated by reference to Exhibit 10.K to Johnson Controls, Inc. Annual Report on Form
10-K for the year ended September 30, 1991).
11 Statement regarding computation of earnings per share for the years ended September 30, 1995, 1994 and 1993,
filed herewith.
12 Statement regarding computation of ratio of earnings to fixed charges for the year ended September 30, 1995,
filed herewith.
13 1995 Annual Report to Shareholders, filed herewith.
21 Subsidiaries of the Registrant, filed herewith.
23 Consent of Independent Accountants dated December 20, 1995, filed herewith.
27 Financial Data Schedule (electric filing only).
99 Proxy Statement for Annual Meeting of Shareholders of Johnson Controls, Inc., to be held January 24, 1996, filed
herewith.
*These instruments are not being filed as exhibits herewith
because none of the long-term debt instruments authorizes the
issuance of debt in excess of ten percent of the total assets of
Johnson Controls, Inc., and its subsidiaries on a consolidated
basis. Johnson Controls, Inc. agrees to furnish a copy of each
such agreement to the Securities and Exchange Commission upon
request.
(b) A Form 8-K Current Report was filed on December 7, 1995 to facilitate
the Company's issuance of $125 million of 6.95% debentures.
Other Matters
For the purposes of complying with the amendments to the rules governing
Form S-8 under the Securities Act of 1933, the undersigned registrant hereby
undertakes as follows, which undertaking shall be incorporated by reference
into registrant's Registration Statements on Form S-8 Nos. 33-30309, 33-31271,
33-58092, 33-58094 and 33-49862.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and
26
27
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
27
28
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Directors and Shareholders
of Johnson Controls, Inc.
Our audits of the consolidated financial statements referred to in our report
dated October 23, 1995 appearing on page 39 of the 1995 Annual Report to
Shareholders of Johnson Controls, Inc. (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedules listed in Item
14(a) of this Form 10-K. In our opinion, these Financial Statement Schedules
present fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
As discussed in the Notes to Consolidated Financial Statements appearing on
pages 31 to 38 of the 1995 Annual Report to Shareholders of Johnson Controls,
Inc., the Company changed its method of accounting for postretirement benefits
other than pensions, postemployment benefits and income taxes effective October
1, 1992.
PRICE WATERHOUSE, LLP
Milwaukee, Wisconsin
October 23, 1995
28
29
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
JOHNSON CONTROLS, INC.
BY Stephen A. Roell,
Vice President and
Chief Financial Officer
Date: December 20, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below as of December 20, 1995, by the following persons
on behalf of the registrant and in the capacities indicated:
James H. Keyes, Chairman and Stephen A. Roell,
Chief Executive Officer Vice President and Chief
Financial Officer
Franklin H. Smith, Jr.
Corporate Controller
Gilbert R. Whitaker, Jr. Paul A. Brunner
Director Director
Robert L. Barnett Willie D. Davis
Director Director
R. Douglas Ziegler Fred L. Brengel
Director Director
29
30
JOHNSON CONTROLS, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in millions)
Year Ended September 30, 1995 1994 1993
-------------------------------------------
Accounts Receivable - Allowance for Doubtful Accounts
Balance at beginning of period $23.4 $17.2 $12.5
Provision charged to costs and expenses 5.7 9.6 9.3
Acquisition of businesses 0.0 0.7 0.2
Recoveries on accounts previously charged off (0.4) (0.8) 0.2
Currency translation 0.5 0.6 (1.3)
Accounts charged off (6.4) (3.8) (4.6)
Other (0.6) (0.1) 0.9
-------------------------------------------
Balance at end of period $22.2 $23.4 $17.2
===========================================
Deferred Tax Assets - Valuation Allowance
Balance at beginning of period $27.0 $11.2 $ --
Establishment of SFAS No. 109
valuation allowance -- -- 11.2
Allowance established for new
loss carryforwards and tax credits 8.5 18.0 --
Allowance reversed for loss
carryforwards utilized (3.7) (2.2) --
-------------------------------------------
Balance at end of period $31.8 $27.0 $11.2
===========================================
30
31
JOHNSON CONTROLS, INC.
INDEX TO EXHIBITS
EXHIBITS TITLE PAGE
- - -------- --------------------------------------------- ----
3.(i) Restated Articles of Incorporation of
Johnson Controls, Inc. (incorporated by
reference to Exhibit 3.A to Johnson
Controls, Inc. Annual Report on Form 10-K
for the year ended September 30, 1987).
3.(ii) By-laws of Johnson Controls, Inc., as
amended November 16, 1994, (incorporated
by reference to Exhibit 3.(ii) to Johnson
Controls, Inc. Annual Report on Form 10-K
for the year ended September 30, 1994).
4.A Miscellaneous long-term debt agreements
and financing leases with banks and
other creditors and debenture indentures.*
4.B Miscellaneous industrial development bond
long-term debt issues and related loan agreements
and leases.*
4.C Rights Agreement between Johnson Controls,
Inc. and Firstar Trust Company
(Rights Agent), as amended November 16,
1994, (incorporate by reference to Exhibit
4.C to Johnson Controls, Inc. Annual Report
on Form 10-K for the year ended September 30,
1994).
4.D Certificate of the Relative Rights and
Preferences of the Series D Convertible
Preferred Stock of Johnson Controls, Inc.
(incorporated by reference to an exhibit
to the Form 8-K dated May 26, 1989).
4.E Note and Guaranty Agreement dated June 19,
1989 between Johnson Controls, Inc., as
Guarantor, and Johnson Controls, Inc.
Employee Stock Ownership Trust, acting by
and through Lasalle National Bank, as
trustee, as issuer, (Incorporated by
reference to Exhibit 4.E to Johnson Controls,
Inc. Annual Report on Form 10-K for the year
ended September 30, 1990).
31
32
JOHNSON CONTROLS, INC.
INDEX TO EXHIBITS
EXHIBITS TITLE PAGE
- - -------- --------------------------------------------- ----
4.F Letter of agreement dated December 6, 1990
between Johnson Controls, Inc., LaSalle
National Trust, N.A. and Fidelity Management
Trust Company which replaces LaSalle National
Trust, N.A. as Trustee of the Johnson Controls,
Inc. Employee Stock Ownership Plan Trust
with Fidelity Management Trust Company as
Successor Trustee, effective January 1, 1991
(incorporated by reference to Exhibit 4.F to Johnson
Controls, Inc. Annual Report on Form 10-K for the
year ended September 30, 1991).
4.G Indenture for debt securities dated
September 1, 1989 between Johnson Controls,
Inc. and Chemical Bank Delaware, trustee
(incorporated by reference to the Form S-3
dated September 20, 1989).
10.A Johnson Controls, Inc., 1992 Stock Option
Plan as amended through September 22, 1993
(incorporated by reference to Exhibit 10.A
to Johnson Controls, Inc. Annual Report on
Form 10-K for the year ended September 30,
1993).
10.B Johnson Controls, Inc., 1984 Stock Option
Plan as amended through September 22, 1993
(incorporated by reference to Exhibit 10.B
to Johnson Controls, Inc. Annual Report on
Form 10-K for the year ended September 30,
1993).
10.C Johnson Controls, Inc., 1982 Stock Option
Plan as amended through May 24, 1989
(incorporated by reference to Exhibit 10.B
to Johnson Controls, Inc. Annual Report on
Form 10-K for the year ended September 30, 1989).
10.D Johnson Controls, Inc., 1992 Stock Plan for
Outside Directors, (incorporated by reference
to Exhibit 10.D to Johnson Controls, Inc.
Annual Report on Form 10-K for the year ended
September 30, 1992).
10.E Johnson Controls, Inc., Deferred Compensation
Plan for Certain Directors as amended through
September 25, 1991 (incorporated by reference
to Exhibit 10.C to Johnson Controls, Inc. Annual
Report on Form 10-K for the year ended September 30,
1991).
32
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JOHNSON CONTROLS, INC.
INDEX TO EXHIBITS
EXHIBITS TITLE PAGE
- - -------- --------------------------------------------- ----
10.F Johnson Controls, Inc., Directors Retirement
Plan as amended through July 26, 1989
(incorporated by reference to Exhibit 10.D
to Johnson Controls, Inc. Annual Report on
Form 10-K for the year ended September 30,
1989).
10.G Johnson Controls, Inc., Executive Incentive
Compensation Plan Deferred Option as amended
March 21, 1995, filed herewith. 35-51
10.H Johnson Controls, Inc., Executive Incentive
Compensation Plan as amended through September
22, 1993 (incorporated by reference to
Exhibit 10.H to Johnson Controls, Inc. Annual
Report on Form 10-K for the year ended
September 30, 1993).
10.I Johnson Controls, Inc., Executive Incentive
Compensation Plan, Deferred Option, Qualified
Plan effective September 28, 1994, (incorporated
by reference to Exhibit 10.I to Johnson Controls,
Inc. Annual Report on Form 10-K for the year
ended September 30, 1994).
10.J Johnson Controls, Inc., Long-Term Performance
Plan as amended through September 28, 1994,
(incorporated by reference to Exhibit 10.J to
Johnson Controls, Inc. Annual Report on Form
10-K for the year ended September 30, 1994).
10.K Johnson Controls, Inc., Executive Survivor
Benefits Plan amended through January 1, 1989,
(incorporated by reference to Exhibit 10.K to
Johnson Controls, Inc. Annual Report on Form
10-K for the year ended September 30, 1994).
10.L Form of employment agreement, as amended
through October 1, 1991, between Johnson
Controls, Inc. and Messrs. Barth, Kennedy,
Keyes, Lewis and Roell, (incorporated by
reference to Exhibit 10.K to Johnson
Controls, Inc. Annual Report on Form 10-K
for the year ended September 30, 1992).
10.M Form of indemnity agreement, as amended,
between Johnson Controls, Inc. and Messrs.
Barth, Kennedy, Keyes, Lewis and Roell,
(incorporated by reference to Exhibit 10.K
to Johnson Controls, Inc. Annual Report on
Form 10-K for the year ended September 30,
1991).
33
34
JOHNSON CONTROLS, INC.
INDEX TO EXHIBITS
EXHIBITS TITLE PAGE
- - -------- --------------------------------------------- ----
11 Statement regarding computation of earnings
per share for the years ended September 30,
1995, 1994 and 1993, filed herewith. 52
12 Statement regarding computation of ratio of
earnings to fixed charges for the year ended
September 30, 1995, filed herewith. 53
13 1995 Annual Report to Shareholders, filed
herewith. 54-97
21 Subsidiaries of the Registrant, filed
herewith. 98-106
23 Consent of Independent Accountants dated
December 20, 1995, filed herewith. 107
27 Financial Data Schedule, (electronic
filing only.)
99 Proxy Statement for Annual Meeting of
Shareholders of Johnson Controls, Inc.,
to be held January 24, 1996, filed herewith. 108-146
*These instruments are not being filed as exhibits herewith
because none of the long-term debt instruments authorizes
the issuance of debt in excess of ten percent of the total assets
of Johnson Controls, Inc., and its subsidiaries on a
consolidated basis. Johnson Controls, Inc. agrees to furnish a
copy of each such agreement to the Securities and Exchange
Commission upon request.
34