Johnson Controls 2015 Annual Report Download - page 10

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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
and/or negatively affect our reputation.
A downgrade in the ratings of our debt could restrict our ability to access the debt capital markets and increase our interest
costs.
Unfavorable changes in the ratings that rating agencies assign to our debt may ultimately negatively impact our access to the debt
capital markets and increase the costs we incur to borrow funds. If ratings for our debt fall below investment grade, our access to
the debt capital markets would become restricted. Future tightening in the credit markets and a reduced level of liquidity in many
financial markets due to turmoil in the financial and banking industries could affect our access to the debt capital markets or the
price we pay to issue debt. Historically, we have relied on our ability to issue commercial paper rather than to draw on our credit
facility to support our daily operations, which means that a downgrade in our ratings or volatility in the financial markets causing
limitations to the debt capital markets could have an adverse effect on our business or our ability to meet our liquidity needs.
Additionally, several of our credit agreements generally include an increase in interest rates if the ratings for our debt are downgraded.
Further, an increase in the level of our indebtedness may increase our vulnerability to adverse general economic and industry
conditions and may affect our ability to obtain additional financing.
The potential insolvency or financial distress of third parties could adversely impact our business and results of operations.
We are exposed to the risk that third parties to various arrangements who owe us money or goods and services, or who purchase
goods and services from us, will not be able to perform their obligations or continue to place orders due to insolvency or financial
distress. If third parties fail to perform their obligations under arrangements with us, we may be forced to replace the underlying
commitment at current or above market prices or on other terms that are less favorable to us. In such events, we may incur losses,
or our results of operations, financial condition or liquidity could otherwise be adversely affected.
We may be unable to complete or integrate acquisitions or joint ventures effectively, which may adversely affect our growth,
profitability and results of operations.
We expect acquisitions of businesses and assets, as well as joint ventures (or other strategic arrangements), to play a role in our
future growth. We cannot be certain that we will be able to identify attractive acquisition or joint venture targets, obtain financing
for acquisitions on satisfactory terms, successfully acquire identified targets or form joint ventures, or manage the timing of
acquisitions with capital obligations across our businesses. Additionally, we may not be successful in integrating acquired businesses
or joint ventures into our existing operations and achieving projected synergies. Competition for acquisition opportunities in the
various industries in which we operate may rise, thereby increasing our costs of making acquisitions or causing us to refrain from
making further acquisitions. If we were to use equity securities to finance a future acquisition, our then-current shareholders would
experience dilution. We are also subject to applicable antitrust laws and must avoid anticompetitive behavior. These and other
factors related to acquisitions and joint ventures may negatively and adversely impact our growth, profitability and results of
operations.
Risks associated with joint venture investments may adversely affect our business and financial results.
We have entered into several joint ventures and we may enter into additional joint ventures in the future. Our joint venture partners
may at any time have economic, business or legal interests or goals that are inconsistent with our goals or with the goals of the
joint venture. In addition, we may compete against our joint venture partners in certain of our other markets. Disagreements with
our business partners may impede our ability to maximize the benefits of our partnerships. Our joint venture arrangements may
require us, among other matters, to pay certain costs or to make certain capital investments or to seek our joint venture partner’s
consent to take certain actions. In addition, our joint venture partners may be unable or unwilling to meet their economic or other
obligations under the operative documents, and we may be required to either fulfill those obligations alone to ensure the ongoing