Johnson Controls 2014 Annual Report Download - page 9

9
2013, with our initial disclosure relating to conflict minerals occurring in May 2014. There are costs associated with complying
with these disclosure requirements, including for diligence to determine the sources of conflict minerals used in our products and
other potential changes to products, processes or sources of supply as a consequence of such verification activities. Our continued
compliance with these disclosure rules could adversely affect the sourcing, supply and pricing of materials used in our products.
As there may be only a limited number of suppliers offering "conflict free" conflict minerals, we cannot be sure that we will be
able to obtain necessary conflict minerals from such suppliers in sufficient quantities or at competitive prices. Also, we may face
reputational challenges if we determine that certain of our products contain minerals not determined to be conflict free or if we
are unable to sufficiently verify the origins for all conflict minerals used in our products through the procedures we may implement.
We are subject to requirements relating to environmental regulation and environmental remediation matters, which could
adversely affect our business and results of operations.
Because of uncertainties associated with environmental regulation and environmental remediation activities at sites where we may
be liable, future expenses that we may incur to remediate identified sites could be considerably higher than the current accrued
liability on our consolidated statement of financial position, which could have a material adverse effect on our business and results
of operations.
Risks related to our defined benefit retirement plans may adversely impact our results of operations and cash flow.
Significant changes in actual investment return on defined benefit plan assets, discount rates, mortality assumptions and other
factors could adversely affect our results of operations and the amounts of contributions we must make to our defined benefit plans
in future periods. As we mark-to-market our defined benefit plan assets and liabilities on an annual basis, large non-cash gains or
losses could be recorded in the fourth quarter of each fiscal year. Generally accepted accounting principles in the U.S. require that
we calculate income or expense for the plans using actuarial valuations. These valuations reflect assumptions about financial
markets and interest rates, which may change based on economic conditions. Funding requirements for our defined benefit plans
are dependent upon, among other things, interest rates, underlying asset returns and the impact of legislative or regulatory changes
related to defined benefit funding obligations. For a discussion regarding the significant assumptions used to determine net periodic
benefit cost, refer to "Critical Accounting Estimates and Policies" included in Item 7, "Management’s Discussion and Analysis of
Financial Condition and Results of Operations."
We may be unable to realize the expected benefits of our restructuring actions, which could adversely affect our profitability
and operations.
In order to align our resources with our growth strategies, operate more efficiently and control costs, we periodically announce
restructuring plans, which include workforce reductions, global plant closures and consolidations, asset impairments and other
cost reduction initiatives. We may undertake additional restructuring actions and workforce reductions in the future. As these plans
and actions are complex, unforeseen factors could result in expected savings and benefits to be delayed or not realized to the full
extent planned, and our operations and business may be disrupted.
Negative or unexpected tax consequences could adversely affect our results of operations.
Adverse changes in the underlying profitability and financial outlook of our operations in several jurisdictions could lead to
additional changes in our valuation allowances against deferred tax assets and other tax reserves on our statement of financial
position, and the future sale of certain businesses could potentially result in the repatriation of accumulated foreign earnings that
could materially and adversely affect our results of operations. Additionally, changes in tax laws in the U.S. or in other countries
where we have significant operations could materially affect deferred tax assets and liabilities on our consolidated statement of
financial position and income tax provision on our consolidated statement of income.
We are also subject to tax audits by governmental authorities in the U.S. and in non-U.S. jurisdictions. Negative unexpected results
from one or more such tax audits could adversely affect our results of operations.
Legal proceedings in which we are, or may be, a party may adversely affect us.
We are currently and may in the future become subject to legal proceedings and commercial or contractual disputes. These are
typically claims that arise in the normal course of business including, without limitation, commercial or contractual disputes with
our suppliers, intellectual property matters, third party liability, including product liability claims and employment claims. There
exists the possibility that such claims may have an adverse impact on our results of operations that is greater than we anticipate.