1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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 North Green Bay Avenue, P.O. Box 591, Milwaukee, WI 53201
(Address of principal executive office)
Registrant's telephone number, including area code (414) 228-1200
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 ______
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at December 31, 1996
----- --------------------------------
Common Stock $.16 2/3 Par Value 41,615,821
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JOHNSON CONTROLS, INC.
FORM 10-Q
DECEMBER 31, 1996
REPORT INDEX
Page No.
--------
PART I. - FINANCIAL INFORMATION:
Consolidated Statement of Financial Position
at December 31, 1996, September 30, 1996 and
December 31, 1995 .......................................... 3
Consolidated Statement of Income for the Three-
Month Periods Ended December 31, 1996 and 1995 ............. 4
Consolidated Statement of Cash Flows for the Three-
Month Periods Ended December 31, 1996 and 1995 ............. 5
Notes to Consolidated Financial Statements ................... 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations ........................ 9
PART II. - OTHER INFORMATION:
Item 1. Legal Proceedings .................................... 12
Item 4. Results of Votes of Security Holders ................. 13
Item 6. Exhibits and Reports on Form 8-K ..................... 13
SIGNATURES ............................................................. 14
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JOHNSON CONTROLS, INC.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(In millions)
December 31, September 30, December 31,
1996 1996 1995
----------- ------------- -------------
(unaudited) (unaudited)
ASSETS
Cash and cash equivalents $ 139.4 $ 165.2 $ 115.0
Accounts receivable - net 1,808.9 1,589.0 1,424.6
Inventories 381.2 344.7 310.6
Net assets of discontinued operations 449.8 440.7 482.7
Other current assets 306.3 309.5 326.8
--------- --------- ----------
Current assets 3,085.6 2,849.1 2,659.7
Property, plant and equipment - net 1,519.5 1,320.2 1,226.6
Goodwill - net 1,626.8 548.2 552.5
Investments in partially-owned affiliates 132.9 128.4 121.3
Other noncurrent assets 249.7 145.3 198.4
--------- --------- ----------
Total assets $ 6,614.5 $ 4,991.2 $ 4,758.5
========= ========= ==========
LIABILITIES AND EQUITY
Short-term debt $ 1,499.8 $ 248.1 $ 254.4
Current portion of long-term debt 94.0 33.2 68.1
Accounts payable 1,225.3 1,178.2 969.2
Accrued compensation and benefits 266.5 238.4 256.1
Accrued income taxes 60.0 44.0 77.2
Billings in excess of costs and earnings
on uncompleted contracts 117.9 83.6 102.6
Other current liabilities 439.5 357.1 355.7
--------- --------- ----------
Current liabilities 3,703.0 2,182.6 2,083.3
Long-term debt 718.6 752.2 767.7
Postretirement health and other benefits 167.0 167.9 166.8
Other noncurrent liabilities 470.8 380.7 362.0
Shareholders' equity 1,555.1 1,507.8 1,378.7
--------- --------- ----------
Total liabilities and equity $ 6,614.5 $ 4,991.2 $ 4,758.5
========= ========= ==========
The accompanying notes are an integral part of the financial statements.
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JOHNSON CONTROLS, INC.
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share; unaudited)
For the Three Months
Ended December 31,
-----------------------------
1996 1995
-------- ---------
Net sales $2,761.3 $1,997.0
Cost of sales 2,354.6 1,693.8
--------- ---------
Gross profit 406.7 303.2
Selling, general and administrative expenses 276.8 200.9
--------- ---------
Operating income 129.9 102.3
Interest income 2.0 1.4
Interest expense (32.5) (14.6)
Miscellaneous - net 5.6 (0.3)
--------- ---------
Other income (expense) (24.9) (13.5)
--------- ---------
Income before income taxes and minority interests 105.0 88.8
Provision for income taxes 44.6 37.1
Minority interests in net earnings of subsidiaries 5.5 6.4
--------- ---------
Income from continuing operations 54.9 45.3
Discontinued operations
(Loss) income from discontinued operations, adjusted
for applicable (benefit) provision for income taxes of
($1.6) million and $1.0 million, respectively, and
minority interests (1.8) 1.7
--------- ---------
Net income $53.1 $47.0
========= =========
Earnings available for common shareholders $50.8 $44.6
========= =========
Earnings per share from continuing operations
Primary $1.26 $1.03
========= =========
Fully diluted $1.19 $0.98
========= =========
(Loss) earnings per share from discontinued operations
Primary ($0.04) $0.04
========= =========
Fully diluted ($0.04) $0.04
========= =========
Earnings per share
Primary $1.22 $1.07
========= =========
Fully diluted $1.15 $1.02
========= =========
Pro forma earnings per share (unaudited; see Note 9)
Earnings per share from continuing operations
Primary $0.63 $0.52
========= =========
Fully diluted $0.59 $0.49
========= =========
(Loss) earnings per share from discontinued operations
Primary ($0.02) $0.02
========= =========
Fully diluted ($0.02) $0.02
========= =========
Earnings per share
Primary $0.61 $0.54
========= =========
Fully diluted $0.57 $0.51
========= =========
The accompanying notes are an integral part of the financial statements.
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JOHNSON CONTROLS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions; unaudited)
For the Three Months
Ended December 31,
---------------------------
1996 1995
-------- ---------
OPERATING ACTIVITIES
Income from continuing operations $54.9 $45.3
Adjustments to reconcile income from continuing operations
to cash provided by operating activities of continuing operations
Depreciation 69.3 53.0
Amortization of intangibles 17.5 7.9
Equity in earnings of partially-owned affiliates (8.2) (3.2)
Deferred income taxes 0.4 (2.7)
Other 9.2 (0.7)
Changes in working capital, excluding acquisition of businesses
Accounts receivable (114.7) (76.6)
Inventories (24.5) (14.0)
Other current assets 11.9 18.3
Accounts payable and accrued liabilities (66.2) (10.3)
Accrued income taxes 15.2 43.5
Billings in excess of costs and earnings on
uncompleted contracts 16.3 14.9
--------- --------
Cash (used) provided by operating activities of continuing
operations (18.9) 75.4
Cash used by operating activities of discontinued
operations (6.0) (31.2)
--------- --------
Cash (used) provided by operating activities (24.9) 44.2
--------- --------
INVESTING ACTIVITIES
Capital expenditures (63.0) (71.2)
Sale of property, plant and equipment-net 0.8 7.8
(Acquisition) divestiture of business- net (1,149.1) (132.6)
Increase in long-term investments - net (6.8) (6.1)
Investing activities of discontinued operations (8.1) (5.4)
Other 0.0 0.9
--------- --------
Cash used by investing activities (1,226.2) (206.6)
--------- --------
FINANCING ACTIVITIES
Increase in short-term debt 1,249.5 51.8
Issuance of long-term debt 1.9 153.6
Repayment of long-term debt (12.2) (16.6)
Payment of cash dividends (20.9) (20.0)
Net financing activities of discontinued operations (2.8) 25.6
Other 9.8 2.5
--------- --------
Cash provided by financing activities 1,225.3 196.9
--------- --------
(Decrease) increase in cash and cash equivalents ($25.8) $34.5
========= ========
The accompanying notes are an integral part of the financial statements.
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JOHNSON CONTROLS, INC.
FORM 10-Q, DECEMBER 31, 1996
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Financial Statements
In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position, results
of operations, and cash flows for the periods presented. These financial
statements should be read in conjunction with the audited financial statements
and notes thereto contained in the Company's Annual Report to Shareholders for
the year ended September 30, 1996. The results of operations for the three
months are not necessarily indicative of the results which may be expected for
the Company's 1997 fiscal year because of seasonal and other factors.
2. Acquisition of Business
Effective October 1, 1996, the Company completed the acquisition of
Prince Holding Corporation (Prince) for 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.
The acquisition was accounted for as a purchase. The excess of the
purchase price over the fair value of the acquired net assets, which
approximates $1.1 billion, was recorded as goodwill. The acquisition was
initially financed with commercial paper.
The following unaudited pro forma results of operations of the Company
give effect to the acquisition of Prince as though the transaction had occurred
on October 1, 1995 (amounts in millions, except per share data).
For the Three Months
Ended December 31,
1995
--------
Net Sales $2,210.6
Income from continuing operations $ 45.6
Earnings per share from continuing
operations
Primary $ 1.04
Fully diluted $ .99
The unaudited pro forma financial information presented is not
necessarily indicative of either the results of operations that would have
occurred had the acquisition taken place on October 1, 1995 or the future
results of operations of the combined companies.
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JOHNSON CONTROLS, INC.
FORM 10-Q, DECEMBER 31, 1996
3. Discontinued Operations
On December 6, 1996, the Company and Schmalbach-Lubeca AG/Continental
Can Europe (a member of the VIAG Group) signed a definitive agreement under
which Schmalbach-Lubeca would purchase the Plastic Container division (PCD) of
the Company. The transaction is expected to be completed during the Company's
1997 second fiscal quarter.
The results of PCD have been reported separately as discontinued
operations in the Consolidated Statement of Income. The results of the
discontinued operations do not reflect any interest expense or management fees
allocated by the Company. Prior quarter consolidated financial statements have
been restated to present PCD as a discontinued operation.
Revenues of PCD were $142 million and $189 million for the three months
ended December 31, 1996 and 1995, respectively. These amounts are not included
in sales as reported in the Consolidated Statement of Income. Net assets of PCD
of $450 million at December 31, 1996 consisted primarily of property, plant and
equipment, inventories, accounts receivable and accounts payable.
4. Cash Flow
For purposes of the Consolidated Statement of Cash Flows, the Company
considers all investments with a maturity of three months or less at the time of
purchase to be cash equivalents.
Income taxes paid during the three months ended December 31, 1996 and
1995 (net of income tax refunds) totalled approximately $26 million and $12
million, respectively. Total interest paid on both long-term and short-term
debt was $42 million and $15 million for the quarter ended December 31, 1996 and
1995, respectively.
5. Inventories
Inventories are valued at the lower of cost or market. Cost is
determined using the last-in, first-out (LIFO) method for most inventories at
domestic locations. The cost of other inventories is determined on the
first-in, first-out (FIFO) method.
Inventories were comprised of the following:
December 31,
1996 1995
-------- --------
(in millions)
Raw materials and supplies $ 174.9 $ 120.7
Work-in-process 93.8 97.6
Finished goods 153.8 137.2
------- -------
FIFO inventories 422.5 355.5
LIFO reserve 41.3 44.9
------- -------
LIFO inventories $ 381.2 $ 310.6
======= =======
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JOHNSON CONTROLS, INC.
FORM 10-Q, DECEMBER 31, 1996
6. Income Taxes
The provision for income taxes is determined by applying an estimated
annual effective income tax rate to income before income taxes. The estimated
annual effective income tax rate is based on the most recent annualized forecast
of pretax income, permanent book/tax differences, and tax credits. It also
includes the effect of any valuation allowance expected to be necessary at the
end of the year.
7. Earnings Per Share
Primary earnings per share are computed by dividing net income, after
deducting dividend requirements on the Company's Series D Convertible Preferred
Stock, by the weighted average number of common shares and common stock
equivalents which would arise from the exercise of stock options. Fully diluted
earnings are computed by deducting from net income the after-tax compensation
expense which would arise from the assumed conversion of the Series D
Convertible Preferred Stock, which was $1.3 million and $1.4 million for the
three months ended December 31, 1996 and 1995, respectively. Fully diluted
weighted average shares assume the conversion of the Series D Convertible
Preferred Stock, if dilutive, plus the dilutive effect of the stock options.
The weighted average number of shares used in the computations of
primary and fully diluted earnings per share were as follows:
Three Months Ended
December 31,
1996 1995
-------- -------
(in millions)
Primary 41.9 41.5
Fully diluted 45.1 44.7
8. Contingencies
The Company is involved in a number of proceedings and potential
proceedings relating to environmental matters. Although it is difficult to
estimate the liability of the Company related to these environmental matters,
the Company believes that these matters will not have a materially adverse
effect upon its capital expenditures, earnings or competitive position.
Additionally, the Company is involved in a number of product liability
and various other suits incident to the operation of its businesses. Insurance
coverages are maintained and estimated costs are recorded for claims and suits
of this nature. It is management's opinion that none of these will have a
materially adverse effect on the Company's financial position, results of
operations or cash flows.
9. Subsequent Event
On January 22, 1997, the Company's Board of Directors authorized a
two-for-one stock split to be distributed on March 31, 1997 to shareholders of
record on March 7, 1997. Unaudited pro forma earnings per share, giving effect
to the stock split, is presented on the Consolidated Statement of Income.
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JOHNSON CONTROLS, INC.
FORM 10-Q, DECEMBER 31, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
COMPARISON OF OPERATING RESULTS FOR THE THREE-MONTH PERIODS ENDED DECEMBER 31,
1996 AND DECEMBER 31, 1995
DISCONTINUED OPERATIONS
On December 6, 1996, the Company and Schmalbach-Lubeca/AG Continental
Can (a member of the VIAG Group) signed a definitive agreement under which
Schmalbach-Lubeca would purchase the Plastic Container division (PCD) of the
Company. The transaction is expected to be completed during the Company's 1997
second fiscal quarter.
Operating results, net assets and cash flows of PCD have been segregated
as discontinued operations in the accompanying consolidated financial
statements. Net (loss)earnings of PCD were ($1.8) million (($.04) per share on
a fully diluted basis) and $1.7 million ($.04 per share on a fully diluted
basis) on sales of $142 million and $189 million for the three months ended
December 31, 1996 and 1995, respectively.
CONTINUING OPERATIONS
Consolidated net sales for the first quarter of fiscal 1997 rose 38% to
$2,761 million, up from $1,997 million for the prior year quarter.
Automotive segment sales for the first quarter of $2,030 million were
49% higher than the prior year's $1,364 million. Approximately two-thirds of
the increase reflects the acquisitions of Prince, the interior systems company
acquired in October 1996, and Roth Freres, the seating and interior systems
company acquired in December 1995. North American seating sales experienced
growth, despite an approximate 2% decline in industry vehicle production levels,
resulting from the Company's participation with new and successful vehicle
models such as Ford's Expedition and F-150 light trucks and General Motors'
minivans. European seating sales were also higher reflecting new programs with
Ford, Chrysler and Volkswagen. Sales of automotive batteries were up over the
prior year period due to higher unit shipments to the replacement market,
including new customer, Western Auto.
Controls segment sales increased 16% to $731 million from $633 million
in the prior year. Commercial integrated facilities management sales grew in
both the North American and European markets. The segment also experienced an
increase in the nonresidential new construction market, primarily in North
America and the Pacific Rim. Orders from the commercial buildings market in the
first quarter of fiscal 1997 were slightly higher than a year ago, led by
worldwide new construction activity.
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JOHNSON CONTROLS, INC.
FORM 10-Q, DECEMBER 31, 1996
The overall sales growth experienced in the first quarter is expected to
continue throughout fiscal 1997. Automotive segment sales are expected to
increase approximately 25%-30%, despite an anticipated flat vehicle production
level worldwide. The projected increase is due to the Prince acquisition
(October 1996), the first quarter impact of the Roth acquisition (December
1995), the launch of new seating business, both domestically and outside the
U.S., and higher battery sales to new and existing customers. 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, and in the new construction market.
Consolidated operating income for the first fiscal quarter of 1997 of
$130 million represents a 27% improvement over the prior year's $102 million.
The automotive segment's operating income grew as a result of the volumes
increases, however, at a lower rate than sales. Margins were impacted by
several factors including the General Motors strike, start-up and engineering
investments related to new seating programs, and start-up investments in the
emerging South American and Pacific Rim markets.
Operating income for the controls segment improved at a rate slightly
less than sales. Operating margins associated with the segment's rapidly
growing integrated facility management business are lower than those of the
systems installation and service businesses.
Other expense increased $11 million over the comparable prior year
quarter. Net interest expense increased $17 million as a result of the
financing associated with the Prince acquisition. Miscellaneous income
increased approximately $6 million due to an increase in equity earnings,
primarily associated with the automotive segment's European and Mexican seating
affiliates.
The effective income tax rate on continuing operations was 42.5% for the
three-month period ended December 31, 1996 compared to 41.8% for the comparable
quarter last year. The increase primarily reflects the non-deductible goodwill
amortization associated with the acquisition of Prince.
The Company's first quarter income from continuing operations of $55
million was 21% higher than the prior year's $45 million. This increase was due
to the improvements in operating income, offset by higher interest expense, as
noted above. Primary and fully diluted earnings per share from continuing
operations for the quarter ended December 31, 1996, were $1.26 and $1.19,
respectively, up from $1.03 and $.98 in the prior year.
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JOHNSON CONTROLS, INC.
FORM 10-Q, DECEMBER 31, 1996
COMPARISON OF FINANCIAL CONDITION
Working Capital and Cash Flow
The Company's working capital (excluding "Net assets of discontinued
operations") totalled ($1,067) million at December 31, 1996, compared with $226
million and $94 million at September 30, 1996 and December 31, 1995,
respectively. The large decrease in working capital relates to the increase in
short-term debt used to finance the acquisition of Prince. Working capital
excluding debt and cash was higher than the comparable prior year periods
primarily due to higher accounts receivable.
Operating activities of the continuing operations used cash of $19
million for the first quarter compared to cash provided of $75 million in the
prior year. Working capital changes, primarily accounts receivable and accounts
payable, utilized the Company's cash.
Capital Expenditures and Other Investments
Capital expenditures for property, plant and equipment related to
continuing operations were approximately $63 million for the first quarter of
fiscal 1997, a decline of $8 million from the $71 million incurred during the
first quarter of fiscal 1996. Management projects that capital spending for the
full year will be approximately $375-$400 million. The majority of the spending
will be focused on new automotive seating and interior product lines and
facilities. Cost reduction projects in both segments are planned for fiscal
1997.
Goodwill of $1,627 million at December 31, 1996 was $1,079 million
higher than at September 30 due to the acquisition of Prince.
Investments in partially-owned affiliates of $133 million were
approximately $5 million higher than the September 30, 1996 balance. The
increase primarily relates to the recording of equity income.
Capitalization
The Company's total capitalization at December 31, 1996 of $3,868
million included short-term debt of $1,500 million, long-term debt, including
current portion, of $813 million and shareholders' equity of $1,555 million.
Total capitalization at September 30, 1996 and December 31, 1995 was $2,541
million and $2,469 million, respectively. Total debt as a percentage of total
capitalization increased to 60% from 41% at the 1996 fiscal year-end and 44% one
year ago. The increase is attributable to the issuance of commercial paper in
conjunction with the Prince acquisition. The Company intends to use the
after-tax proceeds from the sale of PCD to repay a portion of this short-term
debt. A portion of the remaining commercial paper will then be permanently
refinanced under the $1.5 billion shelf registration statement on file with the
Securities and Exchange Commission. The Company expects its debt to
capitalization ratio to approximate 45%-50% by the end of fiscal 1997.
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JOHNSON CONTROLS, INC.
FORM 10-Q, DECEMBER 31, 1996
The Company believes its capital resources and liquidity position at
December 31, 1996 are adequate 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
borrowings, if required, to meet peak seasonal needs.
Backlog
The unearned backlog of commercial building systems, services and
integrated facilities management contracts to be executed within the next year
at December 31, 1996 was $1,207 million, compared with $1,168 million at
September 30, 1996 and $1,174 million at December 31, 1995. The increase from
September 30 primarily represents strong new construction and integrated
facilities management activity worldwide.
The unearned backlog of government facilities management contracts,
which reflects only the noncancellable portion of uncompleted contracts was $339
million compared to $424 million at September 30, 1996 and $364 million last
year. The decrease from September 30 primarily reflects the timing of contract
renewals. The reduction from last year reflects the loss of certain contracts.
Risk Factors
Except for the historical information contained herein, certain matters
discussed in this Form 10-Q 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.
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings
There have been no significant changes in status since the last Report.
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JOHNSON CONTROLS, INC.
FORM 10-Q, DECEMBER 31, 1996
Item 4. Results of Votes of Security Holders
The registrant held its Annual Meeting of Shareholders on January 22,
1997. Proxies for the meeting were solicited pursuant to Regulation 14; there
was no solicitation in opposition to management's nominees for directors as
listed in the Proxy Statement, and all such nominees (Paul A. Brunner, Southwood
J. Morcott, Martha R. Seger and Gilbert R. Whitaker, Jr.) were elected. Of the
38,771,709 shares voted, at least 38,114,446 granted authority to vote for these
directors and no more than 657,263 shares withheld such authority.
The retention of Price Waterhouse LLP as auditors was approved by the
shareholders with 38,420,129 shares voted for such appointment, 152,972 shares
voted against, and 198,608 shares abstained.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 Statement regarding computation of primary and fully diluted
earnings per share.
12 Statement regarding the computation of the ratio of earnings to
fixed charges.
27 Financial Data Schedule (electronic filing only).
(b) The following Form 8-K's were filed during the first quarter or
thereafter through the date of this report:
(i) On October 4, 1996, the Company filed a Form 8-K which
included the historical financial statements of Prince
and pro forma financial information.
(ii) On December 10, 1996, the Company filed a Form 8-K announcing the
sale of the Plastic Container division.
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JOHNSON CONTROLS, INC.
FORM 10-Q, DECEMBER 31, 1996
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
JOHNSON CONTROLS, INC.
Date: February 14, 1997 By: Stephen A. Roell
Vice President and
Chief Financial Officer
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EXHIBIT 11
JOHNSON CONTROLS, INC.
COMPUTATION OF PRIMARY AND FULLY DILUTED
EARNINGS PER SHARE
(In millions, except per share data)
For the Three Months
Ended December 31,
---------------------------
1996 1995
----- -----
PRIMARY EARNINGS PER SHARE
Net Income $53.1 $47.0
Preferred dividends, net of tax
benefit (2.3) (2.4)
----- -----
Earnings available for common
shareholders $50.8 $44.6
----- -----
Average common shares outstanding
Common stock 41.4 41.1
Common stock equivalents -
Assumed exercise of stock options 0.5 0.4
----- -----
41.9 41.5
----- -----
Primary earnings per share $1.22 $1.07
===== =====
FULLY DILUTED EARNINGS PER SHARE
Net Income $53.1 $47.0
After tax compensation expense
which would arise from the assumed
conversion of the Series D
Convertible Preferred Stock (1.3) (1.4)
----- -----
Fully diluted earnings $51.8 $45.6
----- -----
Average common shares outstanding
Common stock 41.4 41.1
Conversion of Series D Convertible
Preferred Stock 3.0 3.1
Common stock equivalents -
Assumed exercise of stock options 0.7 0.5
----- -----
45.1 44.7
----- -----
Fully diluted earnings per share $1.15 $1.02
===== =====
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EXHIBIT 12
JOHNSON CONTROLS, INC.
COMPUTATION OF RATIO OF EARNINGS TO
FIXED CHARGES
(Dollars in millions)
For the Three Months
Ended December 31, 1996
------------------------
Income from continuing operations $54.9
Provision for income taxes 44.6
Undistributed earnings of partially-owned affiliates (6.3)
Minority interests in net earnings of subsidiaries 5.5
Amortization of previously capitalized interest 1.1
------
99.8
------
Fixed charges:
Interest incurred and amortization of debt expense 35.9
Estimated portion of rent expense 9.4
------
Fixed charges 45.3
Less: Interest capitalized during period (1.8)
------
43.5
------
Earnings $143.3
======
Ratio of earnings to fixed charges 3.2
======
For the purpose of computing this ratio, "earnings" consist of (a)
income from continuing operations before income taxes (adjusted for
undistributed earnings or recognized losses of partially-owned
affiliates which are less than 50% owned, minority interests in net
earnings of subsidiaries, and amortization of previously capitalized
interest), plus (b) fixed charges, minus (c) interest capitalized
during the period. "Fixed charges" consist of (a) interest incurred
and amortization of debt expense plus (b) the portion of rent expense
representative of the interest factor.
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Securities & Exchange Commission
450 Fifth Street, N.W.
Attention Filing Desk, Stop 1-4
Washington, D.C. 20549-1004
February 14, 1997
Re: Johnson Controls, Inc.
SEC Form 10-Q Report
Commission File No. 1-5097
Gentlemen:
Attached for filing with the Commission is the Quarterly Report on
Form 10-Q for the quarter ended December 31, 1996 of Johnson Controls, Inc.
The report is being transmitted via EDGAR as mandated.
Very truly yours,
JOHNSON CONTROLS, INC.
John P. Kennedy
Vice President, Secretary and
General Counsel