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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended September 30, 2010
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
Milwaukee, Wisconsin
(Address of principal executive offices)
53209
(Zip Code)
Registrant’s telephone number, including area code:
(414) 524-1200
Securities Registered Pursuant to Section 12(b) of the Exchange Act:
Title of Each Class
Name of Each Exchange on Which Registered
Common Stock
Corporate Units
New York Stock Exchange
New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Exchange Act: None
Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Exchange Act. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act 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 No 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12
months (or for such shorter period that the registrant was required to submit and post such files). Yes No
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 is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See
the definitions of ―large accelerated filer,‖ ―accelerated filer‖ and ―smaller reporting company‖ in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No
As of March 31, 2010, the aggregate market value of the registrant’s Common Stock held by non-affiliates of the registrant
was approximately $22.2 billion based on the closing sales price as reported on the New York Stock Exchange. As of October 31,
2010, 674,375,572 shares of the registrant’s Common Stock, par value $0.01 7/18 per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement to be delivered to shareholders in connection with the Annual Meeting of Shareholders to
be held on January 26, 2011 are incorporated by reference into Part III.

Table of contents

  • Page 1
    ...). Yes  No  As of March 31, 2010, the aggregate market value of the registrant's Common Stock held by non-affiliates of the registrant was approximately $22.2 billion based on the closing sales price as reported on the New York Stock Exchange. As of October 31, 2010, 674,375,572 shares of the...

  • Page 2
    JOHNSON CONTROLS, INC. Index to Annual Report on Form 10-K Year Ended September 30, 2010 Page CAUTIONARY STATEMENTS FOR FORWARD-LOOKING INFORMATION ...PART I. ITEM 1. ITEM 1A. ITEM 1B. ITEM 2. ITEM 3. ITEM 4. BUSINESS ...RISK FACTORS...UNRESOLVED STAFF COMMENTS...PROPERTIES ...LEGAL PROCEEDINGS ...(...

  • Page 3
    ... air conditioning (HVAC) systems, building management systems, controls, security and mechanical equipment. In addition, the building efficiency business provides technical services, energy management consulting and operations of entire real estate portfolios for the non-residential buildings market...

  • Page 4
    ... the Company's extensive global network of sales and service offices. Some building controls and mechanical systems are sold to distributors of air-conditioning, refrigeration and commercial heating systems throughout the world. Approximately 45% of building efficiency's sales are derived from HVAC...

  • Page 5
    ... sales to the OEM market. Sales of automotive batteries generated 14% of the Company's fiscal 2010 consolidated net sales. Batteries and plastic battery containers are manufactured at wholly- and majority-owned plants in North America, South America, Asia and Europe. Competition Building efficiency...

  • Page 6
    ..., North America service and rest of world markets, partially offset by a decline in Europe. The backlog does not include amounts associated with contracts in the global workplace solutions business because such contracts are typically multi-year service awards, nor does it include unitary products...

  • Page 7
    ... conditioning equipment generally increases in the summer months. This seasonality is mitigated by the other products and services provided by the building efficiency business that have no material seasonal effect. Sales of automotive seating and interior systems and of batteries to automobile OEMs...

  • Page 8
    .... Because of their purchasing size, our automotive customers can influence market participants to compete on price terms. If we are not able to offset pricing reductions resulting from these pressures by improved operating efficiencies and reduced expenditures, those pricing reductions may have an...

  • Page 9
    ... 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 continued volatility in the financial markets causing...

  • Page 10
    ... that these central locations are disrupted or disabled, key business processes, such as invoicing, payments and general management operations, could be interrupted. We are in the process of implementing new information technology systems. We are in the process of implementing a new global financial...

  • Page 11
    ...equipment supplier base. Lower production levels for key customers, increases in certain raw material, commodity and energy costs and global credit market conditions could result in financial distress among many companies within the automotive supply base. Financial distress within the supplier base...

  • Page 12
    .... We negotiate sales prices annually with our automotive seating and interiors customers. Cost-cutting initiatives that our customers have adopted generally result in increased downward pressure on pricing. In some cases our customer supply agreements require reductions in component pricing over the...

  • Page 13
    ... performance in the power solutions business depends, in part, on conditions in the automotive industry. Sales to OEMs accounted for approximately 23% of the total sales of the power solutions business in fiscal 2010. Declines in the North American and European automotive production levels could...

  • Page 14
    Building Efficiency ... York (1), (3) Waynesboro (3) San Antonio Roanoke Milwaukee...France Germany Hong Kong Italy India Japan Mexico Texas Virginia Wisconsin Austria Brazil Belgium Canada China Netherlands Poland Puerto Rico Romania Russia South Africa Spain Taiwan Turkey United Arab Emirates United...

  • Page 15
    Automotive Experience Argentina Australia Austria Belgium Brazil Buenos Aires (1) ...(1),(3) Rocca D'Evandro (1) Japan Ayase (3) Hamakita (3) ... Trencin (1),(4) Zilina (1) East London (1) Pretoria (2),(3)...France Romania Germany Russia Slovak Republic South Africa Spain Sweden Thailand Tunisia United...

  • Page 16
    Automotive Experience (continued) Alabama Georgia Illinois Indiana Kentucky Cottondale ...Ohio Tennessee Texas Wisconsin Louisiana Michigan Power Solutions Arizona Delaware Florida Illinois Indiana ...San Antonio (3) Milwaukee (4) Austria Brazil China Czech Republic France Germany Graz (1),(3) Vienna ...

  • Page 17
    ... administrative offices located in major cities throughout the world. These offices vary in size in proportion to the volume of business in the particular locality. ITEM 3 LEGAL PROCEEDINGS As noted in Item 1, liabilities potentially arise globally under various Environmental Laws and Worker Safety...

  • Page 18
    ... as Vice President and General Manager for North America Systems & the Middle East for the building efficiency business and has held increasing levels of responsibility for controls systems and services sales and operations. Mr. Molinaroli joined the Company in 1983. C. David Myers, 47, was elected...

  • Page 19
    ... 2003. He previously served as Assistant Secretary from 1990 to November 2004 and as Deputy General Counsel from June 2000 to November 2004. Mr. Okarma joined the Company in 1989. Colin Boyd, 51, was elected Vice President, Information Technology and Chief Information Officer in October 2008. Mr...

  • Page 20
    ...end of the second quarter of fiscal 2009. The Company selectively uses equity swaps to reduce market risk associated with its stock-based compensation plans, such as its deferred compensation plans. These equity compensation liabilities increase as the Company's stock price increases and decrease as...

  • Page 21
    The Company's transfer agent's contact information is as follows: Wells Fargo Bank Minnesota, N.A. Shareowner Services Department P.O. Box 64856 St. Paul, MN 55164-0856 (877) 602-7397 21

  • Page 22
    ... Number of employees FINANCIAL POSITION Working capital (5) Total assets Long-term debt Total debt Shareholders' equity attributable to Johnson Controls, Inc. Total debt to total capitalization (6) Net book value per share (1) (7) COMMON SHARE INFORMATION (1) Dividends per share Market prices...

  • Page 23
    .... Building efficiency provides facility systems, services and workplace solutions including comfort, energy and security management for the residential and non-residential buildings markets. Automotive experience designs and manufactures interior systems and products for passenger cars and light...

  • Page 24
    ... higher automotive production in North America, with flat European production, versus fiscal 2010. China automotive production is expected to increase in the coming year, though at a slower pace than in fiscal 2010. The Company expects the global building efficiency market to improve in fiscal 2011...

  • Page 25
    ... and power solutions businesses, favorable operating costs in the automotive experience North America segment, favorable overall margin rates in the building efficiency business, impairment charges recorded in the prior year on an equity investment in the building efficiency North America unitary...

  • Page 26
    ... unfavorable margin rates ($24 million), lower volumes in truckbased services ($18 million) and higher selling, general and administrative expenses ($5 million), partially offset by the favorable impact of foreign currency translation ($2 million). The increase in North America unitary products was...

  • Page 27
    ... Company's automotive experience, building efficiency and power solutions businesses and included workforce reductions and plant consolidations. The Company expects to substantially complete the 2009 Plan by the end of 2011. The automotive-related restructuring actions targeted excess manufacturing...

  • Page 28
    ...for automotive experience - North America and workforce reductions in building efficiency - Europe. Also, in the fourth quarter of fiscal 2010, the Company sold one plant in automotive experience - North America it had planned to close as a part of the 2008 Plan. The loss on the sale of the plant of...

  • Page 29
    ...greater than the base effective tax rate due in part to various items during the year as discussed in detail below. Restructuring Charge In the second quarter of fiscal year 2009, the Company recorded a $27 million discrete period tax adjustment related to the second quarter 2009 restructuring costs...

  • Page 30
    ... for tax contingencies are provided for in accordance with the requirements of ASC 740. Based on recently published case law in a non-U.S. jurisdiction and the settlement of a tax audit during the third quarter of fiscal 2010, the Company released net $38 million of reserves for uncertain tax...

  • Page 31
    ... changes to Wisconsin income tax law as part of the Budget Stimulus and Repair Bill, Wisconsin Act 2. These changes are effective in the Company's tax year ended September 30, 2010. The major changes included an adoption of corporate unitary combined reporting and an expansion of the related entity...

  • Page 32
    ... and power solutions businesses, favorable operating costs in the automotive experience North America segment, favorable overall margin rates in the building efficiency business, impairment charges recorded in the prior year on an equity investment in the building efficiency North America unitary...

  • Page 33
    ... service North America unitary products Global workplace solutions Europe Rest of world * Measure not meaningful Change -3% -10% -16% -11% -21% -10% -12% Change -2% -9% * -24% -64% -40% -59% $ $ Net Sales: ï,· The decrease in North America systems was primarily due to lower volumes of control...

  • Page 34
    ...89% * $ $ Net Sales: ï,· The decrease in North America was primarily due to the significantly reduced industry production volumes by all of the Company's major OEM customers ($2.5 billion), partially offset by the acquisition of the interior product assets of Plastech Engineered Products, Inc. in...

  • Page 35
    ... experience, building efficiency and power solutions businesses and includes workforce reductions and plant consolidations. The Company expects to substantially complete the 2008 Plan in 2011. The automotive-related restructuring was in response to the fundamentals of the European and North...

  • Page 36
    ... ater than the base effective tax rate due in part to various items during the year as discussed in detail below. The Company's effective tax rate for fiscal 2008 increased over the base effective tax rate due to the fourth quarter restructuring charge, which was recorded using a blended statutory...

  • Page 37
    ... audit by the Internal Revenue Service and respective non-U.S. tax authorities. Although the outcome of tax audits is always uncertain, management believes that it has appropriate support for the positions taken on its tax returns and that its annual tax provisions included amounts sufficient to pay...

  • Page 38
    ...mainly in the automotive experience business, lead costs not recovered through pricing, first quarter impairment charges recorded on an equity investment in the North American unitary products group in building efficiency and certain fixed assets in the automotive experience North America and Europe...

  • Page 39
    ... experience North America and Europe segments and the building efficiency unitary products group segment due to the rapid declines in the automotive and construction markets. As a result, the Company performed impairment testing for goodwill and determined that fair values of the reporting units...

  • Page 40
    ... to the planned relocation of its headquarters building in Japan in the automotive experience Asia segment. As a result, the Company reviewed its long-lived assets for impairment and recorded an $11 million impairment charge within selling, general and administrative expenses in the third quarter of...

  • Page 41
    ... the financial results of the equity investment. The Company reviewed its equity investment in U.S. Air for impairment and as a result, recorded a $152 million impairment charge within equity income (loss) for the building efficiency North America unitary products segment in the first quarter of...

  • Page 42
    ... Capital expenditures ï,· $ Year Ended September 30, 2010 2009 1,514 (968) (895) (777) $ 917 (828) 278 (647) The increase in cash provided by operating activities was primarily due to higher net income attributable to Johnson Controls, Inc. and favorable working capital changes in accounts payable...

  • Page 43
    ... $450 million. The Equity Units consist of (i) a forward purchase contract obligating the holder to purchase from the Company for a price in cash of $50, on the purchase contract settlement date of March 31, 2012, subject to early settlement, a certain number of shares of the Company's common stock...

  • Page 44
    ... position at September 30, 2010 are adequate to meet projected needs. The Company believes requirements for working capital, capital expenditures, dividends, minimum pension contributions, debt maturities and any potential acquisitions in fiscal 2011 will continue to be funded from operations...

  • Page 45
    ... into extended warranties and long-term service and maintenance agreements with certain customers. For these arrangements, revenue is recognized on a straight-line basis over the respective contract term. The Company's building efficiency business also sells certain HVAC products and services in...

  • Page 46
    ...its customers depending upon the specific product and terms of the customer purchase agreement. A typical warranty program requires that the Company replace defective products within a specified time period from the date of sale. The Company records an estimate of future warranty-related costs based...

  • Page 47
    ... in ASC 715, ―Compensation - Retirement Benefits,â€- and is effective for the Company for the fiscal year ending September 30, 2010. The adoption of this guidance did not impact on the Company's consolidated financial condition and results of operations. Refer to Note 15, ―Retirement Plans...

  • Page 48
    .... RISK MANAGEMENT The Company selectively uses derivative instruments to reduce market risk associated with changes in foreign currency, commodities, interest rates and stock-based compensation. All hedging transactions are authorized and executed pursuant to clearly defined policies and procedures...

  • Page 49
    ... 30, 2010 and 2009, respectively. Commodities The Company uses commodity contracts in the financial derivatives market in cases where commodity price risk cannot be naturally offset or hedged through supply base fixed price contracts. Commodity risks are systematically managed pursuant to policy...

  • Page 50
    ... accounting adjustments recorded in the power solutions segment. The preceding amounts are stated on a pre-tax basis. (2) The fiscal 2009 first quarter net loss includes $152 million of impairment charges recorded on an equity investment in the building efficiency North American unitary products...

  • Page 51
    ...restructuring charge. The fiscal 2009 fourth quarter net income includes $105 million of incremental warranty charges recorded in the building efficiency North American unitary products segment and $111 million of debt conversion costs. The preceding amounts are stated on a pre-tax basis. (3) Due to...

  • Page 52
    ... of Cash Flows for the years ended September 30, 2010, 2009 and 2008 Consolidated Statements of Shareholders' Equity Attributable to Johnson Controls, Inc. for the years ended September 30, 2010, 2009 and 2008 Notes to Consolidated Financial Statements Valuation and Qualifying Accounts 53 55 56 57...

  • Page 53
    ... of Johnson Controls, Inc. and its subsidiaries at September 30, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2010 in conformity with accounting principles generally accepted in the United States of America. In...

  • Page 54
    ... of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that...

  • Page 55
    ... 1.63 * Products and systems consist of automotive experience and power solutions products and systems and building efficiency installed systems. Services are building efficiency technical and global workplace solutions. The accompanying notes are an integral part of the financial statements. 55

  • Page 56
    Johnson Controls, Inc. Consolidated Statements of Financial Position September 30, 2010 2009 (in millions, except par value and share data) Assets Cash and cash equivalents Accounts receivable, less allowance for doubtful accounts of $96 and $99, respectively Inventories Other current assets ...

  • Page 57
    ... Capital expenditures Sale of property, plant and equipment Acquisition of businesses, net of cash acquired Recoverable customer engineering expenditures Settlement of cross-currency interest rate swaps Changes in long-term investments Cash used by investing activities Financing Activities Increase...

  • Page 58
    ... 2007 Comprehensive income: Net income attributable to Johnson Controls, Inc. Foreign currency translation adjustments Realized and unrealized losses on derivatives Employee retirement plans Other comprehensive loss Comprehensive income Adjustment to initially adopt FIN 48, net of tax Cash dividends...

  • Page 59
    ... ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of Johnson Controls, Inc. and its domestic and non-U.S. subsidiaries that are consolidated in conformity with accounting principles generally accepted in the United States of America...

  • Page 60
    ... goods and work-in-process inventories include material, labor and manufacturing overhead costs. Pre-Production Costs Related to Long-Term Supply Arrangements The Company's policy for engineering, research and development, and other design and development costs related to products that will be sold...

  • Page 61
    ... experience North America and Europe segments and the building efficiency unitary products group segment due to the rapid declines in the automotive and construction markets. As a result, the Company performed impairment testing for goodwill and determined that fair values of the reporting units...

  • Page 62
    ... long-term service and maintenance agreements with certain customers. For these arrangements, revenue is recognized on a straight-line basis over the respective contract term. The Company's building efficiency business also sells cer tain heating, ventilating and air conditioning (HVAC) products and...

  • Page 63
    ... purposes is strictly prohibited. The Company uses financial instruments to manage the market risk from changes in foreign exchange rates, commodity prices, stock-based compensation liabilities and interest rates. The fair values of all derivatives are recorded in the consolidated statements of...

  • Page 64
    ... acquisition, the Company recorded a non-cash gain of $47 million within power solutions equity income to adjust the Company's existing equity investment in the Korean joint venture to fair value. Goodwill of $51 million was recorded as part of the transaction. The purchase price allocation may be...

  • Page 65
    ... the LIFO method of accounting were approximately 22% of total inventories at September 30, 2010 and 2009. 4. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following (in millions): September 30, 2010 2009 Buildings and improvements Machinery and equipment Construction...

  • Page 66
    ... of the Company's reporting segments for the fiscal years ended September 30, 2010 and 2009 ...Building efficiency North America systems North America service North America unitary products Global workplace solutions Europe Rest of world Automotive experience North America Europe Asia Power solutions...

  • Page 67
    ... charges of $105 million recorded in the fourth quarter of fiscal 2009 by the building efficiency North America unitary products segment, of which $76 million was due to a specific product issue and $29 million was a result of the Company's periodic warranty review proces s and analysis of return...

  • Page 68
    ...-term debt outstanding $ 75 $ 658 $ 7 7 6 5 5 15 45 (11) 34 Operating Leases $ 296 241 171 121 84 115 $ 1,028 $ 6.2% 1.8% The Company has a $2.05 billion committed five-year credit facility to support its outstanding commercial paper. The facility expires in December 2011. There were no draws...

  • Page 69
    ... the Company entered into a new one year committed, revolving credit facility in the amount of 50 million euro expiring in May 2011. At September 30, 2010, there were no draws on the revolving credit facilities. In January 2009, the Company retired its 24 billion yen, three year, floating rate loan...

  • Page 70
    .... During the quarter ended March 31, 2010, the Company retired its 18 billion yen, three year, floating rate loan agreement scheduled to mature on January 18, 2011. The Company used cash to repay the note. During the quarter ended March 31, 2010, the Company retired approximately $61 million...

  • Page 71
    ... beginning in the second quarter of fiscal 2009 and is applied prospectively. The Company selectively uses derivative instruments to reduce market risk associated with changes in foreign currency, commodities, stock-based compensation liabilities and interest rates. Under Company policy, the use of...

  • Page 72
    The Company uses commodity contracts in the financial derivatives market in cases where commodity price risk cannot be naturally offset or hedged through supply base fixed price contracts. Commodity risks are systematically managed pursuant to policy guidelines. As cash flow hedges, the effective ...

  • Page 73
    ...presents the location and fair values of derivative instruments and hedging activities included in the Company's consolidated statements of financial position (in millions): Derivatives and Hedging Activities Designated as Hedging Instruments under ASC 815 September 30, September 30, 2010 2009 Other...

  • Page 74
    ... Foreign currency exchange derivatives Equity swap Commodity derivatives Total Location of Gain (Loss) Recognized in Income on Derivative Cost of sales Net financing charges Selling, general and administrative expenses Cost of sales $ Year Ended September 30, 2010 Amount of Gain (Loss) Recognized...

  • Page 75
    ...Quoted Prices Other in Active Observable Total as of Markets Inputs September 30, 2010 (Level 1) (Level 2) Other current assets Foreign currency exchange derivatives $ Commodity derivatives Other noncurrent assets Investments in marketable common stock... Commodity derivatives Long-term debt Fixed rate...

  • Page 76
    ...a market approach as the fair value of the swaps is based on the Company's stock price at the reporting period date. Changes in fair value on the equity swaps are reflected in the consolidated statement of income within selling, general and administrative expenses. Cross-currency interest rate swaps...

  • Page 77
    ... for up to approximately 41 million shares of new common stock as of September 30, 2010. Option awards are granted with an exercise price equal to the market price of the Company's stock at the date of grant; those option awards vest between two and three years after the grant date and expire ten...

  • Page 78
    ... of ASC 718. The tax benefit from the exercise of stock options, which is recorded in capital in excess of par value, was $7 million, $1 million and $19 million for the fiscal years ended September 30, 2010, 2009 and 2008. The Company does not settle equity instruments granted under share-based...

  • Page 79
    ... market price during the period. The assumed proceeds under the treasury stock method include the purchase price that the grantee will pay in the future, compensation cost for future service that the Company has not yet recognized and any windfall tax benefits that would be credited to capital...

  • Page 80
    ... interests, and requires that equity presented in the consolidated financial statements include amounts attributable to Johnson Controls, Inc. shareholders and the noncontrolling interests. This guidance is included in ASC 810, ―Consolidation,â€- and was effective for the Company October 1, 2009...

  • Page 81
    ...Equity Attributable to Equity Attributable to Johnson Controls, Noncontrolling Inc. Interests At September 30, 2007 Total comprehensive income: Net income Foreign currency translation adjustments Realized and unrealized losses on derivatives Employee retirement plans Other comprehensive income (loss...

  • Page 82
    ...) 167 $ 15. RETIREMENT PLANS Pension Benefits The Company has non-contributory defined benefit pension plans covering most U.S. and certain non-U.S. employees. The benefits provided are primarily based on years of service and average compensation or a monthly retirement benefit amount. Effective...

  • Page 83
    ... surrounding the types of plan assets and associated risks, as well as disclosure of information about fair value measurements of plan assets. This guidance is included in ASC 715, ―Compensation - Retirement Benefits,â€- is effective for the Company for fiscal 2010 and is applied prospectively...

  • Page 84
    ... is determined by indirect quoted market prices. The value of assets held in separate accounts is not published, but the investment managers report daily the underlying holdings. The underlying holdings are direct quoted market prices on regulated financial exchanges. Commodities: The fair value of...

  • Page 85
    ...September 30, 2010 $ $ 64 7 71 $ $ $ $ 64 7 71 $ $ 174 59 (9) (5) 13 232 $ $ 86 5 91 $ $ 88 59 (9) (5) 8 141 Hedge Funds Real Estate The expected return on plan assets is based on the Company's expectation of the long-term average rate of return of the capital markets in which the plans invest. The...

  • Page 86
    ... cash to its defined benefit pension plans in fiscal year 2011. Projected benefit payments from the plans as of September 30, 2010 are estimated as follows (in millions): 2011 2012 2013 2014 2015 2016-2020 $ 240 212 222 231 247 1,334 Savings and Investment Plans The Company sponsors various defined...

  • Page 87
    The Company expects to contribute approximately $23 million in cash to its postretirement health and other benefit plans in fiscal year 2011. Projected benefit payments from the plans as of September 30, 2010 are estimated as follows (in millions): 2011 2012 2013 2014 2015 2016-2020 $ 23 23 23 24 24...

  • Page 88
    ... financial position consist of: Prepaid benefit cost Accrued benefit liability Net amount recognized Weighted Average Assumptions (1) Discount rate Rate of compensation increase (1) Postretirement Health and Other Benefits 2010 2009 $ $ - U.S. Plans 2010 2009 $ 2,655 $ 2,355 $ Non-U.S. Plans 2010...

  • Page 89
    ... Amortization of prior service cost (credit) Special termination benefits Curtailment loss (gain) Settlement loss Divestures gain Currency translation adjustment Net periodic benefit cost Expense Assumptions: Discount rate Expected return on plan assets Rate of compensation increase 6.25% 8.50% 4.20...

  • Page 90
    ... Company's automotive experience, building efficiency and power solutions businesses and included workforce reductions and plant consolidations. The Company expects to substantially complete the 2009 Plan by the end of 2011. The automotive-related restructuring actions targeted excess manufacturing...

  • Page 91
    ...for automotive experience - North America and workforce reductions in building efficiency - Europe. Also, in the fourth quarter of fiscal 2010, the Company sold one plant in automotive experience - North America it had planned to close as a part of the 2008 Plan. The loss on the sale of the plant of...

  • Page 92
    ... to the planned relocation of its headquarters building in Japan in the automotive experience Asia segment. As a result, the Company reviewed its long-lived assets for impairment and recorded an $11 million impairment charge within selling, general and administrative expenses in the third quarter of...

  • Page 93
    ... the financial results of the equity investment. The Company reviewed its equity investment in U.S. Air for impairment and as a result, recorded a $152 million impairment charge within equity income (loss) for the building efficiency North America unitary products segment in the first quarter of...

  • Page 94
    ...Company's base effective income tax rate for continuing operations for fiscal years 2010, 2009 and 2008 was 18.1%, 22.7% and 21.0%, respectively. The rate remained below the U.S. statutory rate due to continuing global tax planning initiatives and income in certain non-U.S. jurisdictions with a rate...

  • Page 95
    ... the consolidated statement of financial position. In the third quarter of fiscal 2009, the Company determined that it was more likely than not that a portion of the deferred tax assets within the Brazil power solutions entity would be utilized. Therefore, the Company released $10 million of...

  • Page 96
    ... under audit by tax authorities, including major jurisdictions noted below: Tax Jurisdiction Austria Belgium Brazil Canada China Czech Republic France Germany Italy Japan Mexico Spain United Kingdom United States - Federal United States - State Statute of Limitations 5 years 3 years 5 years 5 years...

  • Page 97
    ... numerous changes to Wisconsin income tax law as part of the Budget Stimulus and Repair Bill, Wisconsin Act 2. These changes are effective in the Company's tax year ended September 30, 2010. The major changes included an adoption of corporate unitary combined reporting and an expansion of the 97

  • Page 98
    ... a tax rate of 17% on a modified tax base with a credit for corporate income tax paid. On December 28, 2007, Italy enacted reductions in regional taxes from 4.25% to 3.9% effective January 1, 2008. These tax law changes did not have a material impact on the Company's consolidated financial condition...

  • Page 99
    .... North America unitary products designs and produces heating and air conditioning solutions for residential and light commercial applications and markets products to the replacement and new construction markets. Global workplace solutions provides on-site staff for complete real estate services...

  • Page 100
    ... (in millions): Year Ended September 30, 2009 2008 2010 Net Sales Building efficiency North America systems North America service North America unitary products Global workplace solutions Europe Rest of world Automotive experience North America Europe Asia Power solutions Total net sales $ 2,142...

  • Page 101
    ...Income (Loss) Building efficiency North America systems North America service North America unitary products (1) Global workplace solutions (2) Europe (3) Rest of world (4) Automotive experience North America (5) Europe (6) Asia (7) Power solutions (8) Total segment income Net financing charges Debt...

  • Page 102
    ... 32 502 168 783 $ $ $ 2010 Capital Expenditures Building efficiency North America systems North America service North America unitary products Global workplace solutions Europe Rest of world Automotive experience North America Europe Asia Power solutions Total Year Ended September 30, 2009 2008...

  • Page 103
    ...Segments Financial information relating to the Company's operations by geographic area is as follows (in million s): Year Ended September 30, 2009 2008 $ 11,099 2,877 952 7,330 6,239 28,497 $ 13,724 4,009 1,514 11,118 7,697 38,062 2010 Net Sales United States Germany Mexico Other European countries...

  • Page 104
    ..., primarily in the power solutions business. At September 30, 2010 and 2009, the Company recorded conditional asset retirement obligations of $84 million and $85 million, respectively. The Company is involved in a number of product liability and various other casualty lawsuits incident to the...

  • Page 105
    ...communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management's Report on Internal Control Over Financial Reporting The Company's management is responsible for...

  • Page 106
    ..., 2010, as follows: ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Incorporated by reference to the sections entitled ―Proposal One: Election of Directors,â€- ―Q: Where can I find Corporate Governance materials for Johnson Controls?,â€- ―Board Information,â€- ―Audit Committee...

  • Page 107
    ..., AND DIRECTOR INDEPENDENCE Incorporated by reference to sections entitled ―Board Information - Related Person Transactionsâ€- and ―Board Information - Board Independenceâ€- of the fiscal 2010 Proxy Statement. ITEM 14 PRINCIPAL ACCOUNTING FEES AND SERVICES Incorporated by reference to the Audit...

  • Page 108
    ... Attributable to Johnson Controls, Inc. for the years ended September 30, 2010, 2009 and 2008 Notes to Consolidated Financial Statements (2) Financial Statement Schedule For the years ended September 30, 2010, 2009 and 2008: Schedule II - Valuation and Qualifying Accounts (3) Exhibits Reference is...

  • Page 109
    ... duly authorized. JOHNSON CONTROLS, INC. By /s/ R. Bruce McDonald R. Bruce McDonald Executive Vice President and Chief Financial Officer Date: November 23, 2010 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below as of November 23, 2010, by the...

  • Page 110
    ..., 2008, and effective December 31, 2008 (incorporated by reference to Exhibit 3.ii to Johnson Controls, Inc. Annual Report on Form 10-K for the year ended September 30, 2008) (Commission File No. 1-5097). Miscellaneous long-term debt agreements and financing leases with banks and other creditors and...

  • Page 111
    ... 1, 2008 (incorporated by reference to Exhibit 10.K to Johnson Controls, Inc. Annual Report on Form 10-K for the year ended September 30, 2007) (Commission File No. 1-5097).** Form of employment agreement between Johnson Controls, Inc. and all elected officers and named executives hired between...

  • Page 112
    ... Johnson Controls, Inc. Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2010) (Commission File No. 15097) .** Johnson Controls, Inc. 2003 Stock Plan for Outside Directors, as amended September 1, 2009 (incorporated by reference to Exhibit 10.N to Johnson Controls, Inc. Annual...

  • Page 113
    ... all elected officers and named executives hired after July 28, 2010, as amended and restated July 28, 2010 (incorporated by reference to Exhibit 10.Y to Johnson Controls, Inc. Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010) (Commission File No. 1-5097).** Subsidiaries of...

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