Johnson Controls 2013 Annual Report Download - page 98

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The Company's restructuring plans included workforce reductions of approximately 16,700 employees (9,500 for the Automotive
Experience business, 6,200 for the Building Efficiency business and 1,000 for the Power Solutions business). Restructuring charges
associated with employee severance and termination benefits are paid over the severance period granted to each employee or on
a lump sum basis in accordance with individual severance agreements. As of September 30, 2013, approximately 6,300 of the
employees have been separated from the Company pursuant to the restructuring plans. In addition, the restructuring plans included
twenty-one plant closures (seventeen for Automotive Experience, two for Building Efficiency and two for Power Solutions). As
of September 30, 2013, five of the twenty-one plants have been closed.
Refer to Note 17, “Impairment of Long-Lived Assets,” of the notes to consolidated financial statements for further information
regarding the long-lived asset impairment charges recorded as part of the restructuring actions.
Refer to Note 6, “Goodwill and other Intangible Assets," of the notes to consolidated financial statements for further information
regarding the goodwill impairment charge recorded in the fourth quarter of fiscal 2013.
Company management closely monitors its overall cost structure and continually analyzes each of its businesses for opportunities
to consolidate current operations, improve operating efficiencies and locate facilities in low cost countries in close proximity to
customers. This ongoing analysis includes a review of its manufacturing, engineering and purchasing operations, as well as the
overall global footprint for all its businesses. Because of the importance of new vehicle sales by major automotive manufacturers
to operations, the Company is affected by the general business conditions in this industry. Future adverse developments in the
automotive industry could impact the Company’s liquidity position, lead to impairment charges and/or require additional
restructuring of its operations.
17. IMPAIRMENT OF LONG-LIVED ASSETS
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the asset’s
carrying amount may not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with ASC
360-10-15, “Impairment or Disposal of Long-Lived Assets.” ASC 360-10-15 requires the Company to group assets and liabilities
at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and
evaluate the asset group against the sum of the undiscounted future cash flows. If the undiscounted cash flows do not indicate the
carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the
asset group exceeds its fair value based on discounted cash flow analysis or appraisals.
In the second, third and fourth quarters of fiscal 2013, the Company concluded it had a triggering event requiring assessment of
impairment for certain of its long-lived assets in conjunction with its restructuring actions announced in fiscal 2013. In addition,
in the fourth quarter of fiscal 2013, the Company concluded that it had a triggering event requiring assessment of impairment for
the long-lived assets held by the Automotive Experience Interiors segment due to the impairment of goodwill in the quarter. As a
result, the Company reviewed the long-lived assets for impairment and recorded a $156 million impairment charge within
restructuring and impairment costs on the consolidated statement of income, of which $13 million was recorded in the second
quarter, $36 million in the third quarter and $107 million in the fourth quarter of fiscal 2013. Of the total impairment charge, $57
million related to the Automotive Experience Interiors segment, $40 million related to the Building Efficiency Other segment, $22
million related to the Automotive Experience Seating segment, $18 million related to the Power Solutions segment, $12 million
related to corporate assets and $7 million related to various segments within the Building Efficiency business. Refer to Note 16,
“Significant Restructuring and Impairment Costs,” of the notes to consolidated financial statements for additional information.
The impairment was measured, depending on the asset, either under an income approach utilizing forecasted discounted cash flows
or a market approach utilizing an appraisal to determine fair values of the impairment assets. These methods are consistent with
the methods the Company employed in prior periods to value other long-lived assets. The inputs utilized in the analyses are
classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement."
In the third and fourth quarters of fiscal 2012, the Company concluded it had a triggering event requiring assessment of impairment
for certain of its long-lived assets in conjunction with its restructuring actions announced in fiscal 2012. In addition, in the fourth
quarter of fiscal 2012, the Company concluded it had a triggering event requiring assessment of impairment for certain of its long-
lived assets due to volume declines in the European automotive markets. As a result, the Company reviewed the long-lived assets
for impairment and recorded a $39 million impairment charge within restructuring and impairment costs on the consolidated
statement of income, of which $3 million was recorded in the third quarter and $36 million in the fourth quarter of fiscal 2012. Of
the total impairment charge, $14 million related to the Power Solutions segment, $11 million related to the Automotive Experience
Interiors segment, $4 million related to the Building Efficiency Other segment and $10 million related to corporate assets. Refer
to Note 16, “Significant Restructuring and Impairment Costs,” of the notes to consolidated financial statements for additional
information. The impairment was measured, depending on the asset, either under an income approach utilizing forecasted discounted
cash flows or a market approach utilizing an appraisal to determine fair values of the impairment assets. These methods are