Johnson Controls 2010 Annual Report Download - page 104

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104
20. COMMITMENTS AND CONTINGENCIES
The Company accrues for potential environmental losses in a manner consistent with accounting principles
generally accepted in the United States; that is, when it is probable a loss has been incurred and the amount of the
loss is reasonably estimable. Reserves for environmental costs totaled $47 million and $32 million at September 30,
2010 and 2009, respectively. The Company reviews the status of its environmental sites on a quarterly basis and
adjusts its reserves accordingly. Such potential liabilities accrued by the Company do not take into consideration
possible recoveries of future insurance proceeds. They do, however, take into account the likely share other parties
will bear at remediation sites. It is difficult to estimate the Company's ultimate level of liability at many remediation
sites due to the large number of other parties that may be involved, the complexity of determining the relative
liability among those parties, the uncertainty as to the nature and scope of the investigations and remediation to be
conducted, the uncertainty in the application of law and risk assessment, the various choices and costs associated
with diverse technologies that may be used in corrective actions at the sites, and the often quite lengthy periods over
which eventual remediation may occur. Nevertheless, the Company has no reason to believe at the present time that
any claims, penalties or costs in connection with known environmental matters will have a material adverse effect
on the Company's financial position, results of operations or cash flows. In addition, the Company has identified
asset retirement obligations for environmental matters that are expected to be addressed at the retirement, disposal,
removal or abandonment of existing owned facilities, 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
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 material adverse effect on the Company's
financial position, results of operations or cash flows. Costs related to such matters were not material to the periods
presented.