Johnson Controls 2010 Annual Report Download - page 64

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64
In December 2007, the FASB issued guidance changing the accounting and reporting for minority interests, which
are recharacterized as noncontrolling interests and classified as a component of equity. This new consolidation
method changes the accounting for transactions with minority interest holders. This guidance is included in ASC
810, ―Consolidation,‖ and was adopted by the Company in the first quarter of fiscal 2010 (October 1, 2009). The
adoption of this guidance did not have a material impact on the Company’s consolidated financial condition and
results of operations. Refer to Note 14, ―Equity and Noncontrolling Interests,‖ for further discussion.
In September 2006, the FASB issued guidance that defines fair value, establishes a framework for measuring fair
value and expands disclosures about fair value measurements. This guidance also establishes a fair value hierarchy
that prioritizes information used in developing assumptions when pricing an asset or liability. This guidance is
included in ASC 820, ―Fair Value Measurements and Disclosures.‖ The Company adopted this guidance effective
October 1, 2008. In February 2008, the FASB delayed the effective date of this guidance for nonfinancial assets and
nonfinancial liabilities that are recognized or disclosed in the financial statements on a nonrecurring basis to fiscal
years beginning after November 15, 2008. The provisions of this guidance for nonfinancial assets and nonfinancial
liabilities were effective for the Company in the first quarter of fiscal 2010 (October 1, 2009) and will be applied
prospectively to fair value assessments such as the Company’s long-lived asset impairment analyses. Refer to Note
17, ―Impairment of Long-Lived Assets,‖ for further discussion.
2. ACQUISITIONS
In July 2010, the Company acquired an additional 40% of a power solutions Korean joint venture. The acquisition
increased the Company’s ownership percentage to 90%. The remaining 10% was acquired by the local management
team. The Company paid approximately $86 million (excluding cash acquired of $57 million) for the additional
ownership percentage and incurred approximately $10 million of acquisition costs and related purchase accounting
adjustments. As a result of the 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
subsequently adjusted to reflect final valuation studies.
Also during fiscal 2010, the Company completed three acquisitions for a combined purchase price of $35 million, of
which $32 million was paid as of September 30, 2010. The acquisitions in the aggregate were not material to the
Company’s consolidated financial statements. In connection with the acquisitions, the Company recorded goodwill
of $9 million. The purchase price allocation may be subsequently adjusted to reflect final valuation studies.
During fiscal 2009, the Company completed four acquisitions for a combined purchase price of $43 million, of
which $38 million was paid in the twelve months ended September 30, 2009. None of the acquisitions were material
to the Company’s consolidated financial statements. In connection with these acquisitions, the Company recorded
goodwill of $30 million, of which $26 million was recorded during fiscal 2009.
In July 2008, the Company formed a joint venture to acquire the interior product assets of Plastech Engineered
Products, Inc. (Plastech). Plastech filed for bankruptcy in February 2008. The Company owns 70% of the newly
formed entity and certain Plastech term lenders hold the remaining noncontrolling interest. The Company
contributed cash and injection molding plants to the new entity with a fair value of $262 million. The lenders
contributed their rights to receive Plastech’s interiors business obtained in exchange for certain Plastech debt. The
combined equity in the new entity was approximately $375 million. Goodwill of $199 million was recorded as part
of the transaction. In the third quarter of fiscal 2009, the Company finalized valuations associated with the
acquisition and recorded a $21 million increase to goodwill.
Also in fiscal 2008, the Company completed seven additional acquisitions for a combined purchase price of $108
million, none of which were material to the Company’s consolidated financial statements. In connection with these
acquisitions, the Company recorded goodwill of $66 million.