Johnson Controls 2012 Annual Report Download - page 35

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35
Based on 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 positions, including interest and
penalties.
As a result of certain events related to prior year tax planning initiatives during the first quarter of fiscal 2010, the
Company increased the reserve for uncertain tax positions by $31 million, including $26 million of interest and
penalties.
In the fourth quarter of fiscal 2010, the Company decreased its reserves for uncertain tax positions by $20 million,
which was substantially offset by an increase in its valuation allowances in a similar amount. These adjustments
were based on a review of tax filing positions taken in jurisdictions with valuation allowances as indicated above.
The Company’s federal income tax returns and certain non-U.S. income tax returns for various fiscal years remain
under various stages of 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 assessments, if any,
which may be proposed by the taxing authorities. At September 30, 2011, the Company had recorded a liability for
its best estimate of the probable loss on certain of its tax positions, the majority of which is included in other
noncurrent liabilities in the consolidated statements of financial position. Nonetheless, the amounts ultimately paid,
if any, upon resolution of the issues raised by the taxing authorities, may differ materially from the amounts accrued
for each year.
Impacts of Tax Legislation and Change in Statutory Tax Rates
During the fiscal year ended September 30, 2011, tax legislation was adopted in various jurisdictions. None of these
changes had a material impact on the Company’s consolidated financial condition, results of operations or cash
flows.
On March 23, 2010, the U.S. President signed into law comprehensive health care reform legislation under the
Patient Protection and Affordable Care Act (HR3590). Included among the major provisions of the law was a
change in the tax treatment of a portion of Medicare Part D medical payments. The Company recorded a noncash
tax charge of approximately $18 million in the second quarter of fiscal year 2010 to reflect the impact of this
change. In the fourth quarter of fiscal 2010, the amount decreased by $2 million resulting in an overall impact of
$16 million.
Income Attributable to Noncontrolling Interests
Year Ended
September 30,
(in millions)
2011
2010
Change
Income attributable to
noncontrolling interests
$
117
$
75
56%
The increase in income attributable to noncontrolling interests was primarily due to higher earnings at certain
Automotive Experience partially-owned affiliates in North America and Asia, and a Power Solutions partially-
owned affiliate.