Johnson Controls 2010 Annual Report Download - page 82

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82
The components of accumulated other comprehensive income were as follows (in millions, net of tax):
September 30,
2010
2009
Foreign currency translation adjustments
$
743
$
858
Realized and unrealized gains on derivatives
20
7
Unrealized gains on marketable common stock
3
-
Employee retirement plans
(843)
(673)
Accumulated other comprehensive income (loss)
$
(77)
$
192
The Company consolidates certain subsidiaries in which the noncontrolling interest party has within their control the
right to require the Company to redeem all or a portion of its interest in the subsidiary. The redeemable
noncontrolling interests are reported at their estimated redemption value. Any adjustment to the redemption value
impacts retained earnings but does not impact net income. Redeemable noncontrolling interests which are
redeemable only upon future events, the occurrence of which is not currently probable, are recorded at carrying
value.
The following schedules present changes in the redeemable noncontrolling interests (in millions):
Year Ended
Year Ended
Year Ended
September 30, 2010
September 30, 2009
September 30, 2008
Beginning balance, September 30
$
155
$
167
$
74
Net income (loss)
32
(28)
(1)
Foreign currency translation adjustments
1
(2)
1
Increase in noncontrolling interest share
17
-
112
Dividends attributable to noncontrolling interests
-
(2)
(3)
Redemption value adjustment
(9)
20
(16)
Ending balance, September 30
$
196
$
155
$
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 January 1, 2006, certain of the Company’s U.S. pension plans were amended to
prohibit new participants from entering the plans. Effective September 30, 2009, active participants will continue to
accrue benefits under the amended plans until December 31, 2014. Funding for U.S. pension plans equals or exceeds
the minimum requirements of the Employee Retirement Income Security Act of 1974. Funding for non-U.S. plans
observes the local legal and regulatory limits. Also, the Company makes contributions to union-trusteed pension
funds for construction and service personnel.
The Company’s investment policies employ an approach whereby a mix of equities and fixed income investments
are used to maximize the long-term return of plan assets for a prudent level of risk. The investment portfolio
primarily contains a diversified blend of equity and fixed income investments. Equity investments are diversified
across domestic and non-domestic stocks, as well as growth, value and small to large capitalizations. Fixed income
investments include corporate and government issues, with short-, mid- and long-term maturities, with a focus on
investment grade when purchased. Investment and market risks are measured and monitored on an ongoing basis
through regular investment portfolio reviews, annual liability measurements and periodic asset/liability studies. The
majority of the real estate component of the portfolio is invested in a diversified portfolio of high-quality, operating
properties with cash yields greater than the targeted appreciation. Investments in other alternative asset classes,
including hedge funds and commodities, are made via mutual funds to diversify the expected investment returns
relative to the equity and fixed income investments. As a result of our diversification strategies, there are no
significant concentrations of risk within the portfolio of investments.
The Company’s actual asset allocations are in line with target allocations. The Company rebalances asset allocations
as appropriate, in order to stay within a range of allocation for each asset category.