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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, 1996
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
- - --------------------------------------------- ---------------------------------------------

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 2, 1996 DECEMBER 2, 1996
- - -------------------------------------------------------- ------------------------- -----------------

Common Stock, $.16 2/3 par value........................ $ 3,191,868,603 41,520,242
Series D Convertible Preferred Stock, $1.00 par value,
$512,000 liquidation value............................ $ 230,924,505 300.3896

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, 1996.

Part III incorporates by reference portions of the Proxy Statement dated
December 13, 1996.
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2

JOHNSON CONTROLS, INC.
----------------------

Index to Annual Report on Form 10-K

Year Ended September 30, 1996

PART I.
Page
----

ITEM 1. BUSINESS..................................... 3

ITEM 2. PROPERTIES................................... 13

ITEM 3. LEGAL PROCEEDINGS............................ 16

ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS........................ 18

EXECUTIVE OFFICERS OF THE REGISTRANT......... 18

PART II.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
AND RELATED STOCKHOLDER MATTERS............ 20

ITEM 6. SELECTED FINANCIAL DATA...................... 20

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS................................. 20

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.. 30

ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE................................. 30

PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS............. 30

ITEM 11. EXECUTIVE COMPENSATION....................... 30

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT...................... 30

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS............................... 30

PART IV.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K.................... 31

INDEX TO EXHIBITS............................ 40-43

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 (see discussion under
Products and Services below). Through subsequent business acquisitions the
company's operations have been expanded to include three additional business
segments: battery, automotive and plastics, and its controls segment's
integrated facility management business.

In 1978 the company acquired Globe-Union, Inc. and thereby became a
leading domestic manufacturer of automotive batteries for the United States
replacement and original equipment markets.

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.

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 integrated facility management for military
bases, space centers and other government facilities worldwide. This
acquisition served as the foundation for the controls segment's entry into the
integrated facility management business which has subsequently been extended to
provide integrated facility management to the non-residential buildings market
worldwide.

On October 1, 1996, the company completed the acquisition of Prince
Holding Corporation (Prince), a major supplier of automotive interior systems
and components including overhead systems and consoles, door panels, floor
consoles, visors and armrests.

On December 9, 1996, the company announced it had signed a definitive
agreement to sell its plastic container business to Schmalbach-Lubeca
AG/Continental Can Europe (a member of the VIAG Group). The sale is subject to
approval by U.S. and European regulatory authorities.

Financial Information About Business Segments

Business segment financial information can be found on pages 20 through 30
of this Form 10-K and within the 1996 Annual Report to Shareholders, which is
incorporated herein by reference, on page 26 ("Business Segment" table) and on
page 41 (Note 12 "Segment Information" of Notes to Consolidated Financial
Statements).

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
manufacturers of cars and light trucks (including vans and sport utility
vehicles). In addition to its U.S. operations, the segment has operations
in the Asia/Pacific Rim, Canada, Europe, Mexico, South America, South Africa
and Australia through both wholly-owned and partially-owned businesses. The
segment operates 59 wholly-owned and 29 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 sales to eight of the top ten automobile
companies in the world, and component sales to all of the top ten.

The segment has 41 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,
headliners, door trim panels and interior trim systems account for the
remaining 25% of segment sales.

During 1996, the company acquired a majority interest in Roth Freres
S.A. which supplies headliners and other interior components, and formed
Intertec Systems, a joint venture with Inoac Corporation which supplies
instrument panels. As a result of these investments, and the acquisition of
Prince effective October 1, 1996, the company believes it is positioned to
be able to supply complete interior systems for automakers if this need
emerges in the future.

Controls Segment

Overall, approximately 40% of the controls segment's sales are derived
from the installation and service of control systems to the existing
worldwide commercial building market, 40% from integrated facility
management, while the remaining 20% originates from new construction.

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, and mechanical
equipment is serviced, primarily by employee sales engineers,

application engineers and mechanics working out of branch offices located in
approximately 260 principal cities throughout the world. The segment
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. Control system products are
manufactured in five domestic and five foreign facilities.

The segment is also a leading supplier of integrated facility
management for commercial buildings worldwide, as well as for government
facilities. Commercial facility management ensures the reliability of a
building's mechanical systems and energy supply, as well as provides a wide
range of on-site building support such as maintenance, security, food
services, etc. Government facility management services are provided for
military bases, space centers and other government facilities.

Plastics Segment

The plastics segment is one of the world's largest producers of
polyethylene terephthalate (PET) plastic containers. Products include
plastic soft drink bottles and plastic containers for other beverages
(isotonic sports drink, water, liquor 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. Plastic preforms and bottles are molded at 15 domestic plants
and are sold to bottle customers. In addition, the segment produces plastic
preforms in North America, Latin 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 investments, the segment has expanded its
container operations to the Czech Republic, France, Hungary, Italy, Mexico
and the United Kingdom.

The plastics segment is also the largest U.S. manufacturer of
blowmolding machinery for a variety of plastic resins other than PET, 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 and, via a joint
manufacturing agreement, in Brazil.

As previously noted, on December 9, 1996, the company announced it had
signed a definitive agreement to sell its plastic container business to
Schmalbach-Lubeca.

Battery Segment

The battery segment is a leading manufacturer of lead-acid automotive
batteries for the North American replacement and original equipment markets.
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 of batteries and plastic battery containers is
conducted at 11 plants in the U.S., one plant in Mexico and, via a
partially-owned affiliate, at a plant in China.

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, cable TV and other applications where a UPS system is
required.

Major Customers and Competition

All three of the company's business segments have sales to the
automotive industry. Each of four major automotive vehicle manufacturers
accounted for between approximately 5% and 12% of the company's net sales in
each of the fiscal years 1996, 1995 and 1994. Ford Motor Corporation
accounted for 12% of the company's net sales in fiscal 1996, 7% in 1995 and
8% in 1994. Chrysler Corporation accounted for 9%, 11% and 9% in 1996, 1995
and 1994, respectively. General Motors Corporation accounted for 8%, 10%
and 8% in 1996, 1995 and 1994, 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
increasingly important factors. The segment competes in North America with
two independent suppliers of complete seats, two independent suppliers of
foam seating components and six independent manufacturers of metal seating
components. In Europe, the segment primarily competes with automotive
manufacturers and two independent suppliers.

Roughly 65% of the automotive segment's sales over the last three years
were to 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 - 26).

Controls Segment

The controls segment conducts much of its system installation business
and its integrated 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 management
services are largely dependent upon numerous individual contracts with
various departments and agencies of the U.S. Federal Government. Although
the loss of any individual contract with the U.S. Federal Government would
not have a materially adverse effect on the company, it should be noted that
approximately 50% of the company's government contracts are up for re-bid in
fiscal 1997. 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 management
services 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 five 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
automotive 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 and
Western Auto. 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.

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,
----------------
1996 1995
------- -------
(in millions)

Backlog of uncompleted building
systems and services contracts $1,970 $1,872
Earned revenues on uncompleted
building systems and services
contracts 1,224 1,135
------- -------

Unearned backlog of building systems
and services contracts 746 737

Unearned backlog of government
integrated facility management
contracts 424 442

Unearned backlog of commercial
integrated facility management
contracts 422 385
------- -------

Total unearned backlog of contracts $1,592 $1,564
======= =======

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.

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.

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 by laws 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 within 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. Environmental considerations are a part of all
significant capital expenditures, however, expenditures in 1996 related solely
to environmental compliance were not material. It is management's opinion that
the amount of any future capital 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, 1996, the company employed approximately
65,800 employees, of whom 45,300 were hourly and 20,500 were salaried.

Seasonal Factors

The business of the controls segment is executed on a relatively
continuous basis. However, with the growing emphasis on performance
contracting, especially within schools, the relative weight of the fourth
fiscal quarter to overall revenues and earnings, is increasing.

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 is experiencing increasing seasonality due to the
peak demand for beverage containers in the summer period.

International Operations

The automotive segment has wholly and majority-owned manufacturing
facilities located outside the U.S., including plants in Argentina, Australia,
Austria, Belgium, Brazil, Canada, Czech Republic, France, Germany, Mexico, The
Netherlands, Portugal, South Africa, Spain and the United Kingdom. These
facilities produce complete seats, metal seating components, metal frames, seat
covers, foam seating components or headliners, depending on the location. The
segment also has several partially-owned operations in the Asia/Pacific Rim,
Europe and Mexico 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), and, in many cases, integrated facilities management services.
Offices are located in Australia, Austria, Belgium, Canada, China, Czech
Republic, Denmark, France, Germany, Hong Kong, Hungary, India, Italy, Malaysia,
Mexico, The Netherlands, Norway, Poland, Saudi Arabia, Singapore, Slovakia,
South Africa, Spain, Sweden, Switzerland, United Arab Emirates and the United
Kingdom. 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 and The
Netherlands, 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,
Hong Kong, Italy, Japan, Kuwait, Malaysia, Singapore, Switzerland and Thailand.

The battery segment has a manufacturing operation in Mexico and a
partially-owned affiliate in China which produce batteries. Licensing and
joint venture arrangements are also in effect with certain foreign
manufacturers of batteries and automotive parts.

The plastics segment operates two Italian manufacturers of continuous
extrusion blowmolding machinery and parts and another machinery manufacturer
located in Germany and the Czech Republic. Products from the machinery
companies are marketed in the U.S. by the plastics segment's sales force. The
segment also operates one Belgian, one French and one Italian manufacturer of
plastic containers and one Welsh manufacturer which supplies plastic preforms
to soft drink bottlers in the United Kingdom. The segment has expanded its PET
preform operations into Hungary and Spain.

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 1996, 1995 or 1994.

Financial Information About Geographic Areas

Note 12 "Segment Information" of Notes to Consolidated Financial
Statements on page 41 of the 1996 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 $165 million in 1996, $137 million in 1995 and $124 million in 1994. In
addition, the company expended $108 million in 1996, $76 million in 1995 and
$53 million in 1994 for research activities sponsored by customers.

ITEM 2 PROPERTIES

The company has numerous wholly or majority-owned manufacturing facilities
located in the U.S. Plants are also located in Argentina, Australia, Austria,
Belgium, Brazil, Canada, Czech Republic, France, Germany, Hungary, Italy,
Mexico, The Netherlands, Portugal, South Africa, Spain and the United Kingdom.

The company considers its facilities to be suitable and adequate. The
majority of 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 pages by industry segment and location
aggregate approximately 22 million square feet of floor space and are owned by
the company except as noted. 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.

14
AUTOMOTIVE
- - --------------------------------------------------------------------------------

Alabama Cottondale (1) Argentina Escobar
Tuscaloosa Australia Adelade
California Livermore Thomastown
Modesto Austria Mandling
Stockton (1) Belgium Anderlecht (1)
Georgia John's Creek (1) Geel
Illinois Sycamore Vilvoore
Indiana Greencastle (1) Brazil Sao Bernardo
Ossian Canada Missisauga
Kentucky Bardstown Orangeville
Cadiz Saint Mary's
Georgetown (1) Stratford
Glasgow Tillsonburg
Harrodsburg Czech Republic Ceska Lipa
Maysville Mlada Boleslav
Nicholasville Roudnice (1)
Shelbyville (1) Straz Pod Ralskem
Louisiana Shreveport (1) France Melamare
Maryland Belcamp (2) Stasbourg (2)
North East (1) Rosny (1)
Michigan Ann Arbor Germany Betriebsgelande
Lapeer Bochum (1)
Livonia (1) Burscheid
Mt. Clemens (1) Espelkamp
Plymouth (2) Lahnwerk
Taylor (1) Opladen (1)
Missouri Jefferson City Radesomweld (1)
Kansas City (1) Schwalbach (1)
New Jersey Dayton (1) Waghausel
Ohio Greenfield Zwickau
Oberlin (1) Mexico Juarez (2)
Strongsville (1) Tlaxcala (2)
Pennsylvania Erie (1) The Netherlands Sitar
Tennessee Athens Portugal Nelas
Lexington (2) Portalegre
Lewisburg (2) South Africa Pretoria (1)
Linden Uitenhaige (1)
Murfreesboro (2) Spain Alagon
Pulaski Barcelona
Texas El Paso (1) Valencia
Virginia Chesapeake Zaragoza
United Kingdom Birmingham (1)
Chelmsford (1)
Dagenham (1)
Mansfield
Silloth
Speke (2)
Staffordshire
Wednesbury

(1) Leased
(2) Both owned and leased facilities

CONTROLS PLASTICS
- - ----------------------------------- -------------------------------------------

Florida Cape Canaveral (2) California Milpitas (1)
Georgia Atlanta Rancho Cucamonga (1)
Indiana Goshen Colorado Denver
Oklahoma Poteau Delaware New Castle
Wisconsin Milwaukee Florida Orlando
Watertown Georgia Atlanta
Germany Essen (1) Illinois Itasca (1)
Italy Lomagna Indiana Franklin
Mexico Juarez Kansas Lenexa (1)
Reynosa Kentucky Nicholasville
The Netherlands Leeuwarden Michigan Manchester (2)
United Kingdom Bournemouth (1) Novi (1)
Waterlooville (1) Williamston (1)
New Hampshire Merrimack (1)
New Jersey Pine Brook (1)
Somerville (1)
BATTERY Pennsylvania Erie
- - ----------------------------------- South Carolina Columbia (1)
California Fullerton Texas Ft. Worth (1)
Delaware Middletown Washington Tacoma (1)
Florida Tampa Belgium Brecht (1)
Illinois Geneva Czech Republic Prague (1)
Kentucky Florence (1) France Beaune (1)
Missouri St. Joseph (1) Germany Berlin (1)
North Carolina Winston-Salem Hungary Budapest (1)
Ohio Toledo Italy Ascoli
Oregon Canby (Portland) Bologna (1)
South Carolina Oconee Florence
Wisconsin Milwaukee (2) Milan
Mexico Torreon Modena (1)
Mexico Mexico City (1)
Spain Epila (1)
United Kingdom Banbury (1)
Mold, Wales (1)
CORPORATE
- - -----------------------------------
Wisconsin Milwaukee

(1) Leased
(2) Both owned and leased facilities

ITEM 3 LEGAL PROCEEDINGS

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.

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 1996 totalled $32 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 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.

Typically, site remediation matters are addressed at the administrative
agency level of the government. Occasionally, however, litigation is involved.
The most significant of such matters where litigation has been commenced by the
government or by private parties and remain pending 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 performed 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. The United States Environmental Protection Agency
(EPA) is determining what further work may be necessary to complete site
remediation and estimates that the cost of such work will range from $10
million to $13 million. The litigation, scheduled for trial in 1997, will
determine what portion of the expenses the company may be required to pay.

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 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. According to the
agency, the total cost, both past and future, will probably exceed $55
million. The company is vigorously defending this action.

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 suit
seeks 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 Wisconsin Supreme Court's ruling applies to the company's case against its
insurers and found for the insurers. The company has appealed the decision.
In the meantime, several cases in which the company is not a party are before
the Wisconsin Supreme Court. The results of these cases would impact the
company's case, and the company's appeal has been stayed by the Wisconsin
Supreme Court pending their outcome.

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None during the fourth quarter of the fiscal year covered by this report.

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 1997 Annual Meeting of
Shareholders.

James H. Keyes, 56, 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, 50, 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, 61, 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, 59, 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, 43, 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, 40, 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, 52, 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, 49, 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, 53, was elected a Corporate Vice President in
1989 and has been Secretary since 1987 and General Counsel since 1984 when he
joined the company.

William P. Killian, 62, 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, 42, was elected a Corporate Vice President in June,
1993, and serves as Vice President and General Manager of the automotive
seating operations in the Americas. 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, 46, 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, 46, 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, 47, 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, 45, 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, 52, was named Treasurer in 1991, when he joined the
company. Between 1984 and 1990 he served as Assistant Treasurer, and then
Treasurer, of Borg-Warner Corporation.

Stacy L. Fox, 43, was elected Assistant Secretary in November, 1996. She
joined the company in 1989 and serves as Vice President and Division General
Counsel of the Automotive Systems Group.

Jerome D. Okarma, 44, 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.

Franklin H. Smith, Jr., 45, was named Controller, with responsibility for
the Controls Group, effective October, 1995. Between 1991 and 1995, he served
as Corporate Controller, and from 1987 to 1991 he served as Director, Corporate
Taxes for the company. Mr. Smith joined the company in 1987.

Subhash (Sam) Valanju, 54, joined the company in 1996 and is presently the
Chief Information Officer. Prior to that time, Mr. Valanju was Director of
Information Systems for Rockwell Automotive.

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, 6 and 8, are incorporated
herein by reference to the company's 1996 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 23, and
Note 7 "Shareholders' Equity" on page 37 of Notes to Consolidated
Financial Statements of the 1996 Annual Report to Shareholders.

Number of Record Holders
Title of Class as of December 2, 1996
-------------- ------------------------
Common Stock, $.16-2/3 par value 46,263

ITEM 6 SELECTED FINANCIAL DATA - See "Five Year Summary" on page 44 of the
1996 Annual Report to Shareholders.

ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

FISCAL 1996 COMPARED TO FISCAL 1995

SALES

Consolidated net sales for 1996 reached a record $10,009 million, representing
a 20% increase over 1995 sales of $8,330 million. Higher sales of automotive
seating and seating components was the

primary contributor to the overall improvement. Automotive segment sales rose
35% to $5,308 million in 1996, principally due to the company's participation
in new and successful vehicle programs worldwide and the acquisition of Roth
Freres (Roth) during the year. New vehicle programs launched in 1996 included
Ford's F-Series truck in North America and Fiesta in Europe. Some of the more
successful vehicle programs in which the company participates include Ford's
Explorer, Chrysler's Jeep Cherokee and General Motor's Jimmy/Blazer. In
December 1995, the company completed the acquisition of approximately 75% of
Roth, a major supplier of seating and interior components to the European
automotive industry, which added approximately $500 million to 1996 sales.

Controls segment sales for 1996 were $2,960 million, 13% greater than 1995.
The increase was primarily generated by a higher level of activity in the
existing buildings market. Worldwide commercial integrated facilities
management sales improved substantially year-over-year. Sales of retrofit
control systems to the non-residential buildings market, primarily in the form
of performance contracts, also contributed to the increase. Construction sales
in Europe and the Pacific Rim were also higher than the year ago period.
Facilities management activity in the U.S. government market was lower than the
prior year.

Plastics segment sales declined 11% from 1995 to $968 million. The decrease
primarily stemmed from the pass-through of lower resin prices to customers
worldwide and competitive pricing pressures. Higher unit shipments of
single-serve soft drink containers and other custom units, primarily water,
were largely offset by a decline in two-liter soft drink container shipments.
Plastics machinery sales were slightly higher than the prior year.

Sales of the battery segment grew 15%, to $774 million, in 1996. The increase
resulted from the higher level of unit shipments to both replacement and
original equipment customers. Increased market penetration by the segment's
customers and the colder winter weather were key contributors to the increase
in replacement battery demand. In addition, higher lead costs, which are
passed through to customers in pricing, increased sales.

Assuming continued slow economic expansion in the U.S. and in Europe,
management projects consolidated net sales during 1997 to exceed 1996 levels.
Automotive seating sales are expected to increase approximately 30%-35%,
despite relatively stable vehicle production levels worldwide, due to the
acquisition of Prince Holding Corporation (Prince) effective October 1, 1996
(see Acquisition), a full year's impact of the Roth acquisition and the launch
of new business, both domestically and outside the U.S.

Management expects an increase in controls segment sales of approximately
10%-15%. The anticipated driver of this increase is a higher level of activity
in the existing buildings market, primarily in the area of commercial
integrated facilities management and performance contracting. At September 30,
1996, the unearned backlog of commercial building systems, services, and
integrated facilities management contracts to be executed within the next
fiscal year was $1,168 million. The increase from the

prior year amount of $1,122 million is primarily due to growth in orders for
integrated facilities management and performance contracting business. The
unearned backlog of government facilities management contracts, which reflects
only the noncancellable portion of uncompleted contracts, was $424 million at
September 30, 1996. This was 4% lower than the prior year as a result of scope
reductions on several U.S. government projects.

Plastics segment sales for 1997 are expected to be 5%-10% higher reflecting
increases in container unit volumes, primarily custom containers. The increase
in sales is expected to be less than the anticipated unit volume increase due
to the pass-through of lower resin prices to customers.

Battery segment sales are expected to improve approximately 10%-15% from 1996
levels as a result of increased sales to new and existing customers, including
Western Auto, for which shipments began in late 1996.

OPERATING INCOME

Consolidated operating income for 1996 was $500 million, an increase of 11%
over 1995. Three of the four business segments contributed to this overall
improvement. The automotive seating segment's operating income increased 28%,
to $299 million, in 1996. The segment benefited from higher volumes in both
North America and Europe. Operating margin improvements in North America and
Europe, associated with established vehicle program efficiencies, were more
than offset by start-up costs in the segment's emerging South American and
Asia/Pacific markets.

Operating income of the controls segment was $119 million, an increase of 12%
over the prior year. Income grew in line with the higher sales and primarily
resulted from the increased activity in the worldwide existing commercial
buildings market.

Plastics operating income decreased 62%, to $24 million, in 1996. The decline
was due to competitive pressures, declining resin prices and excess
manufacturing capacity resulting from the weaker than anticipated market
demand.

Battery operating income increased 26% in 1996, to $59 million, as a result of
the overall unit volume increase noted above. In addition, significant
reductions in operating costs benefited operating margins.

Consolidated operating income is expected to increase in 1997, with the
improvement derived primarily from the higher sales projections. The automotive
segment's operating income is anticipated to grow as a result of the
acquisition of Prince (see Acquisition), volume increases related to new
business and continued involvement in successful vehicle programs. Start-up
programs in South America and the Asia/Pacific region will continue to impact
operating income. The automotive segment has supply agreements with certain of
its customers that provide for annual productivity price reductions and, in
some instances, for the recovery of material and labor cost increases. The
segment has been, and anticipates it will continue to be, able to

significantly offset any sales price changes with cost reductions from design
changes, productivity improvements and similar programs with suppliers. The
controls segment will continue to benefit from the increasing activity in the
existing commercial buildings market, particularly in the integrated facilities
management and performance contracting markets. The plastics segment is
expected to show operating income improvement, assuming a stable resin
environment, resulting from higher unit shipments, primarily custom containers,
and continuing cost reduction programs. The battery segment's operating income
is expected to increase over 1996 reflecting continued unit shipment growth and
cost reduction efforts.

OTHER INCOME/EXPENSE

Net interest expense (interest expense net of interest income) in 1996 was $69
million, $18 million higher than the prior year. The increase primarily
resulted from the financing associated with the Roth acquisition and the debt
assumed with the purchase. Net interest expense for 1997 is expected to
increase substantially as a result of the financing associated with the Prince
acquisition (see Acquisition).

Miscellaneous-net income of $12 million compares to an expense of $10 million
in the prior year. The company recorded $14 million more in equity income in
1996 than in 1995. The majority of this improvement related to the company's
Mexican affiliates which benefited from both improved operating results and the
absence of prior year losses associated with the Mexican Peso devaluation.
Other miscellaneous income items included gains associated with the sale of
certain assets and foreign currency transactions.

PROVISION FOR INCOME TAXES

The effective income tax rate for 1996 was 41%, slightly lower than the 1995
rate of 42%. The effective rate declined due to improved performance by
certain of the company's consolidated subsidiaries and European operations,
offset by start-up operations in emerging markets. The effective rate for the
fiscal year remained higher than the combined federal and state statutory rate
of approximately 39%, principally due to overall higher foreign effective
rates. The effective rate for 1997 is expected to be 42.5%, taking into
account the non-deductible goodwill amortization associated with the
acquisition of Prince (see Acquisition).

MINORITY INTERESTS

Minority interests in net earnings of subsidiaries decreased $3 million to $27
million in 1996 due to declines in income of certain automotive and plastics
segment consolidated subsidiaries.

NET INCOME

Net income rose 20% in 1996 to $235 million as a result of the improvements in
operating and equity income, offset by the increase in interest expense.
Primary and fully diluted earnings per share were $5.39 and $5.10,
respectively, for 1996, up from $4.53 and $4.27 in 1995.

FISCAL 1995 COMPARED TO FISCAL 1994

SALES

Consolidated net sales for 1995 were $8,330 million, a 21% increase from 1994.
A substantial portion of the increase reflects higher sales of automotive
seating. A 32% increase in automotive segment sales to $3,945 million was
primarily generated by the company's participation in new and successful
vehicle programs worldwide and continued strong North American vehicle
production levels. New vehicle programs launched in 1995 in which the company
participated included Chrysler's Cirrus/Stratus sedans and Jeep Cherokee,
General Motors' Jimmy/Blazer and Toyota's Avalon. In January 1995 the company
acquired the remaining interest in a domestic seating business which produces
rear seats for the Ford Explorer. The consolidation of this business also
contributed to the year-over-year increase. European seating sales increased
substantially as a result of the success of new business for customers
including Ford, Rover and Skoda, and favorable currency translation rates.

Controls segment sales for 1995 were $2,630 million, 16% greater than in 1994.
This increase stemmed from a higher level of activity in the existing buildings
market. Strong growth within the worldwide integrated facilities management
market was largely due to the acquisitions of Procord, a United Kingdom
facility management services provider, in September 1994. A contract to
operate six United Kingdom Atomic Energy Authority sites in March 1995, was
also a major contributor to the sales increase. Sales of retrofit control
systems to the non-residential buildings market, primarily in the form of
performance contracts, also contributed to the increase. Facility management
activity in the U.S. government market was lower year-over-year.

Plastics segment sales rose 22% over the 1994 level to $1,083 million. The
improvement resulted from the pass-through of higher resin prices to customers
worldwide and higher unit shipments of water, other beverage and single-serve
soft drink containers in both North America and Europe. Increased sales to
emerging Latin American markets and favorable currency translation rates also
contributed to the sales improvement. Sales of plastics machinery improved
modestly as compared to the prior year, partially due to the acquisition in the
third quarter of 1995 of B&W, a plastics machinery manufacturer located in
Germany and the Czech Republic.

Sales of the battery segment declined 9% to $672 million in 1995. Total unit
shipments were lower due to the loss of the supply contract to Sears, Roebuck &
Company, for which final shipments were made in September 1994. Several
factors helped offset a portion of this decline. The segment's unit shipments
to existing

customers, both in the aftermarket and to original equipment manufacturers,
increased approximately 8%. In addition, higher lead costs, which are passed
through to customers in pricing, increased sales.

OPERATING INCOME

Consolidated operating income was $449 million for 1995, an increase of 23%
over 1994. The increase can be attributed to the strong improvement in
consolidated net sales.

The automotive seating segment's operating income of $233 million was 52%
higher than the prior year. The segment benefited from higher volumes in both
North America and Europe, and successful cost containment initiatives which
lowered manufacturing expense. The segment's European operations generated
income during 1995 as compared with a loss in the prior year, reflecting a
number of new programs moving from the start-up phase into production.

Operating income of the controls segment improved 12% to $106 million as a
result of the increased activity in the worldwide existing buildings market.
Income grew at a lesser rate than sales primarily due to the high level of
investments associated with supporting the rapid integrated facilities
management growth and the assimilation of acquisitions.

Plastics operating income of $64 million rose 2% over the prior year due to the
increases in European container and worldwide plastics machinery volumes. In
North America, container operating margins declined due to unabsorbed fixed
costs which resulted from weaker than anticipated market demand. The company
was successful in recovering resin price increases from customers; however,
these increases also lowered the operating margin percentage.

Battery operating income decreased 15% in 1995 to $47 million as a result of
the overall unit volume decline noted above. The segment was successful at
reducing costs to partially offset the effect of a volume decline. The
segment's fourth quarter operating income exceeded the prior year's results
despite the loss of the Sears account, reflecting the segment's success in
reducing costs.

OTHER INCOME/EXPENSE

Net interest expense in 1995 was $51 million, $15 million higher than the prior
year. The increase resulted from the financing associated with acquisitions
and higher short-term interest rates.

Miscellaneous-net expense of $10 million was $7 million higher than the prior
year because of a decline in equity income. The lower equity income was
primarily due to the approximately $6 million impact of the devaluation of the
Mexican Peso on the company's unconsolidated Mexican affiliates.

PROVISION FOR INCOME TAXES

The effective income tax rate for 1995 was 42%, slightly lower than the 1994
rate of 43%. The effective rate declined due to improved performance by the
company's European operations. The

effective rate for the fiscal year remained higher than the combined federal
and state statutory rate of approximately 40%, due in part to overall higher
foreign effective rates.

MINORITY INTERESTS

Minority interests in net earnings of subsidiaries increased $8 million to $29
million in 1995. The increase relates to higher earnings from certain of the
company's North American automotive seating consolidated subsidiaries.

NET INCOME

Net income rose 19% in 1995 to $196 million as a result of the increase in
operating income, offset by the increases in interest and other
miscellaneous-net expenses. Primary and fully diluted earnings per share were
$4.53 and $4.27, respectively, for 1995, up from $3.80 and $3.60 in 1994.

CAPITAL EXPENDITURES AND OTHER INVESTMENTS

Capital expenditures were $370 million, $451 million and $348 million in 1996,
1995 and 1994, respectively. Approximately one half of the spending in 1996 was
focused on the automotive segment, and was related to the expansion of
automotive facilities and product lines worldwide. The remaining spending was
divided equally among the other three segments, and primarily represented cost
reduction projects. Capital expenditures for 1997 are projected to approximate
$450-$475 million. The majority of the spending will again be focused on
automotive seating and interior expansion, with spending for the controls
segment information technology and cost reduction programs among all segments
making up the remainder of the spending.

Goodwill increased $84 million to $603 million at September 30, 1996. The
increase is attributable to business acquisitions during 1996, most notably the
acquisition of Roth at the end of the company's first fiscal quarter. All
acquisitions were accounted for as purchases, and as such, operating results
are included since the respective acquisition dates. Goodwill is expected to
increase significantly in 1997 in conjunction with the acquisition of Prince
(see Acquisition).

Investments in partially-owned affiliates of $128 million were approximately
$38 million higher than the prior year. Notable increases during 1996 included
the recording of the affiliate investment held by Roth and the initial
investment in a battery segment joint venture in China. The company recorded
approximately $16 million of equity income for the year.

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOW

Cash provided by operating activities was $468 million during 1996 compared to
$370 million in 1995. This increase was generated by higher net income as
adjusted for depreciation and amortization of intangibles. Total working
capital increased to $291 million at

September 30, 1996 compared to $154 million at September 30, 1995. This
increase reflects the impact of the Roth purchase.

CAPITALIZATION

The company's capitalization of $2,550 million at September 30, 1996 included
short-term debt of $250 million, long-term debt, including the current portion,
of $792 million and shareholders' equity of $1,508 million. Total debt as a
percentage of total capitalization increased to 41% from 38% at September 30,
1995. In December 1995, the company issued $125 million of 6.95%, 50-year
debentures, the proceeds of which were used to finance the acquisition of Roth.
The company expects total capitalization to increase substantially in fiscal
1997 as a result of the Prince acquisition financing (see Acquisition).

In September 1996, the company entered into two new revolving credit
facilities, one for $500 million maturing in May 2001 and one for $1.1 billion
maturing in September 1997. The credit facilities support the issuance of
commercial paper, including amounts issued for interim financing of the Prince
acquisition (see Acquisition). At September 30, 1996, $250 million of
short-term borrowings were outstanding compared to $130 million in 1995.
Additional unused credit facilities of approximately $444 million are available
to the company's international subsidiaries.

A shelf registration statement is on file with the Securities and Exchange
Commission (SEC) under which the company can issue a total of $350 million in
debt securities. Since the filing, $299 million of various debt securities have
been issued under the registration. On October 4, 1996, the company filed a
universal shelf registration for $1.5 billion with the SEC. The registration,
currently under review by the SEC, covers issuance of a variety of debt and
equity instruments.

High credit ratings from Moody's (A2), Fitch (A) and Standard & Poor's (A -
credit watch) have been maintained on the company's long-term debt.

The company's capital resources and liquidity position are considered
sufficient to meet projected needs. Requirements for working capital, capital
expenditures, dividends and debt maturities in fiscal 1997 will continue to be
funded from operations, supplemented by short-term or long-term borrowings, if
required.

Because of its global operations, the company participates in the foreign
exchange markets in order to minimize the company's risk of loss from
fluctuations in exchange rates. The company closely monitors its exposure to
fluctuations in currencies and, where cost-justified, adopts strategies to
reduce the impact of these fluctuations on the company's financial performance.
These strategies include engaging in various hedging activities to manage
income and cash flows denominated in foreign currencies, and using foreign
currency borrowings when appropriate to finance investments outside the United
States.

ACQUISITION

The company completed its acquisition of Prince effective October 1, 1996, for
a cash purchase price of approximately $1.3 billion. Prince, based in Holland,
Michigan, supplies automotive interior systems and components including
overhead systems and consoles, door panels, floor consoles, visors and
armrests. Prince had consolidated net sales of $867 million for the fiscal year
ended September 30, 1996.

The acquisition will be accounted for as a purchase. As such, the excess of
the purchase price over the estimated fair value of the acquired net assets,
which approximates $1.1 billion, will be recorded as goodwill.

The acquisition was initially financed with commercial paper. Various
permanent financing alternatives are still under consideration.

FUTURE ACCOUNTING CHANGES

In March 1995, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 121 "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This
Statement establishes accounting standards for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to those assets
to be held and used, and for long-lived assets and certain identifiable
intangibles to be disposed of. The Statement is effective for the company's
1997 fiscal year. The financial statement effect of adoption is currently
under review.

In October 1995, the FASB issued SFAS No. 123 "Accounting for Stock Based
Compensation." This Statement requires either recognition of compensation
expense in the financial statements for those companies that adopt the fair
value based accounting method or expanded disclosure of pro forma net income
and earnings per share information for those companies that retain the current
accounting method set forth in Accounting Principles Board (APB) Opinion 25,
"Accounting for Stock Issued to Employees." The company plans to retain the
current accounting method set forth in APB 25 and will begin expanded
disclosure in its fiscal 1997 financial statements.

ENVIRONMENTAL, HEALTH AND SAFETY MATTERS

The company's U.S. operations are governed by federal environmental laws,
principally the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA), the Clean Air
Act, and the Clean Water Act, as well as state counterparts ("Environmental
Laws"), and by federal and state laws addressing worker safety and health
("Worker Safety Laws"). These laws govern ongoing operations and the
remediation of sites associated with past operations. Under certain
circumstances these laws provide for civil and criminal penalties and fines, as
well as injunctive and remedial relief.

The company's policy is to comply with applicable Environmental Laws and Worker
Safety Laws, and it has expended substantial resources, both financial and
managerial, to comply with such laws and for measures designed to protect the
environment and maximize worker protection and safety.

The company believes it is in substantial compliance with such laws, and
maintains procedures designed to ensure compliance. However, the company has
been, and in the future may become, the subject of formal or informal
enforcement actions or proceedings. Such matters typically are resolved by
negotiation with regulatory authorities resulting in commitments to compliance
or abatement programs and payment of penalties. Historically, neither such
commitments nor penalties imposed on the company have been material.

Environmental Laws require that certain parties fund remedial actions
regardless of fault, legality of original disposal or ownership of the site.
The company is currently participating in environmental assessment and
remediation at a number of sites under these laws, and it is likely that in the
future the company will be involved in additional environmental assessments and
remediations. Such sites include facilities that had been engaged in the
recycling of lead batteries.

Future remediation expenses at these and other sites are subject to a number of
uncertainties, including the method and extent of remediation (dependent, in
part, on existing laws and technology), the percentage and type of material
attributable to the company, the financial viability of site owners and the
other parties, and the availability of insurance coverage. A charge to earnings
is recorded for sites when it is probable that a liability has been incurred
and the cost can be reasonably estimated.

Environmental considerations are a part of all significant capital expenditure
decisions; however, expenditures in 1996 related solely to environmental
compliance were not material. Environmental remediation, compliance and
management expenses incurred by the company in 1996 were approximately $18
million. At September 30, 1996, an accrued liability of approximately $32
million was maintained relating to environmental matters. The company's
environmental liabilities are undiscounted and do not take into consideration
any possible recoveries of future insurance proceeds. Because of the
uncertainties associated with environmental assessment and remediation
activities, future expenses to remediate the currently identified sites could
be considerably higher than the accrued liability. However, while neither the
timing nor the amount of ultimate costs associated with known environmental
assessment and remediation matters can be determined at this time, the company
does not expect that these matters will have a material adverse effect on its
financial position, results of operations or cash flows.

On June 30, 1995, the company appealed to the Wisconsin Court of Appeals, the
Milwaukee County Circuit Court's order granting the summary judgement motion of
the Employers Insurance of Wausau and dismissing Johnson Controls' complaint
seeking to recover environmental response costs at 21 sites. The Circuit Court
based

its decision on the reasoning of a 1994 Wisconsin Supreme Court case that held
that under the law of Wisconsin, response costs under CERCLA are not "damages"
as that term is used in comprehensive general liability policies. This appeal
is still pending. The company has not recorded any anticipated recoveries of
future insurance proceeds, and therefore, the outcome of this case should have
no significant impact on the company's consolidated financial statements.

If future Environmental and Worker Safety Laws contain more stringent
requirements than currently anticipated, expenditures may have a more
significant effect on the company's financial position, results of operations
or cash flows. In general, the company's competitors face the same laws, and,
accordingly, the company should not be placed at a competitive disadvantage.

RISK FACTORS

Except for the historical information contained herein, certain matters
discussed in this "Management's Discussion and Analysis" are "forward looking
statements" as defined in the Private Securities Litigation Reform Act (PSLRA)
of 1995, which involve risks and uncertainties, and are subject to change based
on various important factors. The company wishes to take advantage of the
"safe harbor" provisions of the PSLRA by cautioning that numerous important
factors as discussed in the company's Form 8-K filing (dated September 27,
1996), among others, in some cases have affected, and in the future could
affect, the company's actual results and could cause its actual consolidated
results to differ materially from those expressed in any forward-looking
statement made by, or on behalf of, the company.

ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - See pages 30 through 42
of the 1996 Annual Report to Shareholders.

ITEM 9 DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None

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 18-20
of Part I of this report, is incorporated by reference to pages 1-15 of the
company's Proxy Statement for its 1997 Annual Meeting of Shareholders.

31
PART IV

ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULE 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,
1996, 1995 and 1994 .................... 30

Consolidated Statement of Financial
Position at September 30, 1996
and 1995................................ 31

Consolidated Statement of Cash Flows
for the years ended September 30, 1996,
1995 and 1994........................... 32

Consolidated Statement of Shareholders'
Equity for the years ended September 30,
1996, 1995 and 1994..................... 33

Notes to Consolidated Financial
Statements.............................. 34-42

Report of Independent Accountants......... 43

*Incorporated by reference from the indicated pages of the
1996 Annual Report to Shareholders.

Page in
Form 10-K
---------

(2) Financial Statement Schedule

Report of Independent Accountants on
Financial Statement Schedule............. 37

For the years ended September 30,
1996, 1995 and 1994:

II. Valuation and Qualifying Accounts.... 39

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 March 27, 1996,
filed herewith.

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).

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).

(3) EXHIBITS (Continued)

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 January 24, 1996, filed herewith.

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).

10.D Johnson Controls, Inc., Common Stock Purchase Plan for
Executives approved January 24, 1996, filed herewith.

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).

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 (incorporated by
reference to Exhibit 10.F to Johnson Controls, Inc. Annual Report
on Form 10-K for the year ended September 30, 1995).

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).

(3) EXHIBITS (Continued)

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,
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.L Johnson Controls, Inc., Equalization Benefit Plan as
amended through May 24, 1989, filed herewith.

10.M 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.N 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, 1996, 1995 and 1994, filed herewith.

12 Statement regarding computation of ratio of earnings to
fixed charges for the year ended September 30, 1996, filed
herewith.

13 1996 Annual Report to Shareholders (incorporated sections
only in electronic filing), filed herewith.

21 Subsidiaries of the Registrant, filed herewith.

23 Consent of Independent Accountants dated December 13,
1996, filed herewith.

(3) EXHIBITS (Continued)

27 Financial Data Schedule (electronic filing only).

99 Proxy Statement for Annual Meeting of Shareholders of
Johnson Controls, Inc., to be held January 22, 1997, 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) The following Form 8-K's were filed during the fourth quarter of the
company's 1996 fiscal year or thereafter through the date of this Form
10-K:

(1) On July 19, 1996 the company filed a Form 8-K announcing the
acquisition of Prince.

(2) On September 27, 1996 the company filed a Form 8-K in order to take
advantage of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995.

(3) On October 4, 1996, the company filed a Form 8-K which included the
historical financial statements of Prince and pro forma financial
information.

(4) On December 10, 1996, the company filed a Form 8-K announcing the sale
of the plastic container division.

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, 33-49862 and 333-10707.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and 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.

37
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE

To the Board of Directors and Shareholders
of Johnson Controls, Inc.

Our audits of the consolidated financial statements referred to in our report
dated October 21, 1996 appearing on page 43 of the 1996 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 Schedule listed in Item 14(a)
of this Form 10-K. In our opinion, this Financial Statement Schedule presents
fairly, in all material respects, the information set forth therein when read
in conjunction with the related consolidated financial statements.

PRICE WATERHOUSE, LLP

Milwaukee, Wisconsin
October 21, 1996

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 13, 1996

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below as of December 13, 1996, 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

Robert W. Smith
Assistant Corporate Controller

Southwood J. Morcott R. Douglas Ziegler
Director Director

Richard F. Teerlink Fred L. Brengel
Director Director

Paul A. Brunner William F. Andrews
Director Director

39
JOHNSON CONTROLS, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in millions)
================================================================================

YEAR ENDED SEPTEMBER 30, 1996 1995 1994
-----------------------------------

ACCOUNTS RECEIVABLE - ALLOWANCE FOR DOUBTFUL ACCOUNTS

Balance at beginning of period $22.2 $23.4 $17.2

Provision charged to costs and expenses 7.3 5.7 9.6

Accounts charged off (6.9) (6.4) (3.8)

Acquisition of businesses 1.0 -- 0.7

Recoveries on accounts previously charged off (1.1) (0.4) (0.8)

Currency translation (0.1) 0.5 0.6

Other 0.2 (0.6) (0.1)
-----------------------------------
Balance at end of period $22.6 $22.2 $23.4
===================================

DEFERRED TAX ASSET - VALUATION ALLOWANCE

Balance at beginning of period $31.8 $27.0 $11.2

Allowance established for new
loss carryforwards and tax credits 34.4 8.5 18.0

Allowance reversed for loss
carryforwards utilized (4.8) (3.7) (2.2)
-----------------------------------

Balance at end of period $61.4 $31.8 $27.0
===================================

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 March 24, 1996, filed herewith. 44-66

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).

40
41

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 January 24, 1996,
herewith. 67-85

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).

10.D Johnson Controls, Inc., Common Stock Purchase
Plan for Executives, approved January 24,
1996, filed herewith. 86-88

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).

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 (incorporated by reference to
Exhibit 10.F to Johnson Controls, Inc. Annual
Report on Form 10-K for the year ended
September 30, 1995).

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 Johnson Controls, Inc., Equalization Benefit
Plan dated May 24, 1989, filed herewith. 89-95

10.M 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).

42
43

JOHNSON CONTROLS, INC.
INDEX TO EXHIBITS

EXHIBITS TITLE PAGE
-------- ------------------------------------------------ -------

10.N 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,
1996, 1995 and 1994, filed herewith. 96

12 Statement regarding computation of ratio of
earnings to fixed charges for the year ended
September 30, 1996, filed herewith. 97

13 1996 Annual Report to Shareholders
(incorporated sections only in electronic
filing), filed herewith. 98-144

21 Subsidiaries of the Registrant, filed
herewith. 145-155

23 Consent of Independent Accountants dated
December 13, 1996, filed herewith. 156

27 Financial Data Schedule, (electronic
filing only.)

99 Proxy Statement for Annual Meeting of
Shareholders of Johnson Controls, Inc.,
to be held January 22, 1997, filed herewith. 157-180

*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.