What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-01-30 compared with 2023-08-02 · 317 added, 504 removed, 687 unchanged (54% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2023 2022 2023 2022

Products and systems $ 4,489 $ 4,556

Services 1,605 1,512

7,133 6,614 19,887 18,574

Cost of sales

1 unchanged sentence

Services 940 864

4,702 4,414 13,124 12,526

Gross profit 1,992 2,091

16 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2023 2022 2023 2022

Net income $ 404 $ 156

1 unchanged sentence

Foreign currency translation adjustments 62 90

Realized and unrealized gains (losses) on derivatives 4 ( 22 ) 7 ( 5 )

Realized and unrealized losses on derivatives ( 42 ) ( 17 )

Pension and postretirement plans ( 1 ) ( 1 )

Other comprehensive income (loss) ( 69 ) ( 378 ) 33 ( 293 )

Other comprehensive income 19 72

Total comprehensive income 423 228

3 unchanged sentences

Foreign currency translation adjustments 1 31

Realized and unrealized gains (losses) on derivatives 2 ( 3 ) ( 3 ) 1

Other comprehensive loss ( 45 ) ( 61 ) ( 8 ) ( 65 )

Realized and unrealized losses on derivatives ( 4 ) ( 6 )

Other comprehensive income (loss) ( 3 ) 25

Comprehensive income attributable to noncontrolling interests 27 63

4 unchanged sentences

(in millions, except par value;

June 30, 2023 September 30, 2022

December 31, 2023 September 30, 2023

Cash and cash equivalents $ 1,801 $ 835

38 unchanged sentences

(in millions;

Nine Months Ended June 30,

Operating Activities of Continuing Operations

Three Months Ended December 31,

Operating Activities

Net income attributable to Johnson Controls $ 374 $ 118

1 unchanged sentence

Net income 404 156

Adjustments to reconcile net income to cash provided by operating activities:

Adjustments to reconcile net income to cash used by operating activities:

Depreciation and amortization 231 203

Pension and postretirement benefit expense (income) ( 23 ) 8

Pension and postretirement benefit income ( 10 ) ( 6 )

Pension and postretirement contributions ( 6 ) ( 9 )

11 unchanged sentences

Accrued income taxes 5 39

Cash provided by operating activities from continuing operations 831 811

Investing Activities of Continuing Operations

Cash used by operating activities ( 246 ) ( 296 )

Investing Activities

Capital expenditures ( 92 ) ( 134 )

Sale of property, plant and equipment 28 38

Acquisition of businesses, net of cash acquired ( 2 ) ( 79 )

Other - net 20 24

Cash used by investing activities from continuing operations ( 576 ) ( 588 )

Financing Activities of Continuing Operations

Cash used by investing activities ( 74 ) ( 189 )

Financing Activities

Net proceeds from borrowings with maturities less than three months 1,108 467

3 unchanged sentences

Payment of cash dividends ( 252 ) ( 241 )

Dividends paid to noncontrolling interests ( 149 ) ( 121 )

Employee equity-based compensation withholding taxes ( 23 ) ( 30 )

Other - net ( 27 ) 13

Cash provided (used) by financing activities from continuing operations ( 1,111 ) 29

Discontinued Operations - Cash used by operating activities

Cash provided by financing activities 1,228 9

Effect of exchange rate changes on cash, cash equivalents and restricted cash 60 ( 14 )

9 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2023 2022 2023 2022

Shareholders' Equity Attributable to Johnson Controls

24 unchanged sentences

Comprehensive income attributable to noncontrolling interests 27 63

Dividends attributable to noncontrolling interests ( 77 ) — ( 139 ) ( 121 )

Change in noncontrolling interest share — — — 7

Ending Balance 1,176 1,197

4 unchanged sentences

Notes to Consolidated Financial Statements

June 30, 2023

December 31, 2023

BASIS OF PRESENTATION

3 unchanged sentences

GAAP") have been omitted pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC").

These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2022 filed with the SEC on November 15, 2022.

The results of operations for the three and nine month periods ended June 30, 2023 are not necessarily indicative of results for the Company’s 2023 fiscal year because of seasonal and other factors.

Assets and liabilities of the Global Retail business which were classified as held for sale in prior periods have been reclassified to conform with the current period presentation.

Refer to Note 4, "Assets and Liabilities Held for Sale," of the notes to the consolidated financial statements for further details.

The results of operations for the three-month period ended December 31, 2023 are not necessarily indicative of results for the Company’s 2024 fiscal year because of seasonal and other factors.

Nature of Operations

12 unchanged sentences

The Company did not have any material consolidated or nonconsolidated VIE's for the presented reporting periods.

Prior Period Revision – Statement of Cash Flows

The Company revised the amounts previously reported as net proceeds from borrowings with maturities less than three months and proceeds from debt for certain short-term debt transactions that were incorrectly presented on a net basis within the financing activities section of the consolidated statements of cash flows for the three months ended December 30, 2022.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

Restricted Cash

Restricted cash relates to amounts restricted for payment of asbestos liabilities and certain litigation and environmental matters.

Restricted cash is recorded primarily within other current assets in the consolidated statements of financial position and totaled $ 86 million and $ 35 million at June 30, 2023 and September 30, 2022, respectively.

Prior Period Revision – Statement of Cash Flows

Interim and annual amounts for the year ended September 30, 2022 and annual amounts for the years ended September 30, 2021 and 2020 were similarly impacted.

Prior period amounts will be revised with future Quarterly Reports on Form 10-Q and Annual Report on Form 10-K filings.

Cash provided by financing activities and the total increase (decrease) in cash, cash equivalents and restricted cash were unchanged for all affected periods.

The Company does not believe the impact of incorrect presentation is material to any periods.

December 31, 2023

The revision did not change cash provided by financing activities or the total decrease in cash, cash equivalents and restricted cash.

The Company does not believe the impact of the incorrect presentation was material.

NEW ACCOUNTING STANDARDS

Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In September 2022, the FASB issued ASU 2022-04, "Disclosure of Supplier Finance Program Obligations," which is intended to enhance the transparency surrounding the use of supplier finance programs.

2 unchanged sentences

Only the amount outstanding at the end of the period must be disclosed in interim periods.

The Company expects to adopt the new disclosures, other than the rollforward disclosure, as required at the beginning of fiscal 2024.

The rollforward disclosures will be adopted as required at the beginning of fiscal 2025.

The Company adopted the new disclosures, other than the rollforward disclosure, as required at the beginning of fiscal 2024.

The rollforward disclosure will be adopted as required at the beginning of fiscal 2025.

The Company maintains agreements with third-party financial institutions who offer voluntary supply chain financing ("SCF") programs to its suppliers.

The SCF programs enable suppliers to sell their receivables to third-party financial institutions and receive payments earlier than the negotiated commercial terms between the suppliers and the Company, which generally range from 90 to 120 days.

Suppliers sell receivables to third-party financial institutions on terms negotiated between the supplier and the respective third-party financial institution.

The Company remains obligated to make payments under the terms of the original commercial arrangement regardless of whether the supplier receivable is sold, and does not pledge any assets as security or provide other forms of guarantees for the committed payment to the third-party financial institutions.

Amounts outstanding related to SCF programs are included in accounts payable in the consolidated statements of financial position.

Accounts payable included in the SCF programs were approximately $ 559 million and $ 566 million as of December 31, 2023, and September 30, 2023, respectively.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures," which is intended to enhance the transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

The amendments require that on an annual basis, entities disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

In addition, the amendments require that entities disclose additional information about income taxes paid as well as additional disclosures of pretax income and income tax expense, and remove the requirement to disclose certain items that are no longer considered cost beneficial or relevant.

The Company expects to adopt the new annual disclosures as required for fiscal 2026.

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures," which is intended to improve reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses.

In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment and contain other disclosure requirements.

The Company expects to adopt the new annual disclosures as required for fiscal 2025 and the interim disclosures as required beginning with the first quarter of fiscal 2026.

Other recently issued accounting pronouncements are not expected to have a material impact on the Company's consolidated financial statements.

Acquisitions and Divestitures

During the first nine months of fiscal 2023, the Company completed certain acquisitions for a combined purchase price, net of cash acquired, of $ 306 million, of which $ 260 million was paid as of June 30, 2023.

In connection with the acquisitions, the Company recorded goodwill of $ 51 million within the Building Solutions Asia Pacific segment, $ 12 million within the Building Solutions EMEA/LA segment and $ 121 million within the Global Products segment.

These amounts are based on the preliminary purchase price allocations and are subject to change as the purchase price allocations are completed.

The Company completed no divestitures during the first nine months of fiscal 2023.

During the first nine months of fiscal 2022, the Company completed certain acquisitions for a combined purchase price, net of cash acquired, of $ 287 million, of which $ 236 million was paid as of June 30, 2022.

In connection with the acquisitions, the Company recorded goodwill of $ 45 million within the Building Solutions Asia Pacific segment, $ 68 million within the Building Solutions EMEA/LA segment, $ 24 million within the Building Solutions North America segment and $ 45 million with the Global Products segment.

During the first nine months of fiscal 2022, the Company completed a divestiture within the Buildings Solutions EMEA/LA segment.

The selling price, net of cash divested, was $ 18 million, of which $ 16 million was received as of June 30, 2022.

In connection with the divestiture, the Company reduced goodwill by $ 5 million.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

Acquisitions and divestitures were not material individually or in the aggregate during the first nine months of fiscal 2023 or 2022.

Subsequent Event

On July 13, 2023, the Company acquired FM:Systems, a leading digital workplace management and Internet of Things (IoT) solutions provider for facilities and real estate professionals.

The base purchase price for the transaction was $ 455 million, plus up to $ 155 million in payments to be made subject to the achievement of post-closing earn-out milestones over the next two years .

Preliminary purchase accounting is not yet available due to the timing of close of the transaction.

December 31, 2023

ACQUISITIONS AND DIVESTITURES

During the three months ended December 31, 2022, the Company completed certain acquisitions for a combined purchase price, net of cash acquired, of $ 105 million, of which $ 79 million was paid as of December 31, 2022.

In connection with the acquisitions, the Company recorded goodwill of $ 53 million within the Global Products segment and $ 2 million within the Building Solutions EMEA/LA segment.

ASSETS AND LIABILITIES HELD FOR SALE

During fiscal 2022, the Company determined that its Global Retail business within its Building Solutions North America, Building Solutions Asia Pacific and Building Solutions EMEA/LA segments and a business within the Building Solutions Asia Pacific segment both met the criteria to be classified as held for sale.

The assets and liabilities of both businesses were presented as held for sale in the Company's consolidated statements of financial position as of September 30, 2022 and in previously filed quarterly financial statements.

Assets and liabilities held for sale are recorded at the lower of carrying value or fair value, less costs to sell in accordance with ASC 360-10-15, "Impairment or Disposal of Long-Lived Assets." The carrying amount of any assets, including goodwill, that are part of the disposal group, but not in the scope of ASC 360-10, are tested for impairment under the relevant guidance prior to measuring the disposal group at fair value, less cost to sell.

The businesses did not meet the criteria to be classified as discontinued operations as neither planned divestiture represented a strategic shift that would have a major effect on the Company's operations and financial results.

During the third quarter of fiscal 2023, the Company concluded that its Global Retail business no longer met the criteria to be classified as held for sale, as it is no longer probable that it will be sold in the next 12 months.

As a result, the assets and liabilities were reclassified to held and used on the consolidated statements of financial position as of both June 30, 2023 and September 30, 2022.

The net assets were reclassified to held and used at the lower of fair value or adjusted carrying value in the current period, and due to prior period impairment charges recorded, there was no impact to the consolidated statements of income as a result of this reclassification.

No impairment charges were recorded during the three months ended June 30, 2023.

During the nine months ended June 30, 2023, the Company recorded impairment charges for the Global Retail business of $ 438 million and the Building Solutions Asia Pacific segment of $ 60 million.

The impairment charges were primarily due to reductions in the estimated fair values of the businesses to be disposed as a result of negotiations with potential buyers and were recorded within restructuring and impairment costs in the consolidated statements of income.

The business in the Building Solutions Asia Pacific segment was sold on August 1, 2023.

The net assets were not significant to the consolidated statements of financial position.

The Company is finalizing its accounting for the transaction and any gain or loss on sale is not expected to be significant.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

During the three months ended December 31, 2022, the Company recorded impairment charges primarily due to reductions in the estimated fair values of its Global Retail business of $ 228 million and a business in the Building Solutions Asia Pacific segment of $ 60 million.

Both businesses were classified as held for sale as of December 31, 2022.

All of the impairments were recorded within restructuring and impairment costs in the consolidated statements of income.

No assets and liabilities were classified as held for sale as of December 31, 2023 or September 30, 2023.

REVENUE RECOGNITION

1 unchanged sentence

The following tables present the Company's revenues disaggregated by segment and by Products & Systems and Services revenue (in millions):

Three Months Ended June 30,

Products & Systems Services Total Products & Systems Services Total

Building Solutions North America $ 1,636 $ 1,029 $ 2,665 $ 1,481 $ 945 $ 2,426

Building Solutions EMEA/LA 571 474 1,045 537 415 952

Building Solutions Asia Pacific 537 199 736 493 172 665

Global Products 2,687 — 2,687 2,571 — 2,571

Total $ 5,431 $ 1,702 $ 7,133 $ 5,082 $ 1,532 $ 6,614

Nine Months Ended June 30,

Three Months Ended December 31,

Products & Systems Services Total Products & Systems Services Total

6 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2023 2022 2023 2022

HVAC $ 1,418 $ 1,440

8 unchanged sentences

Notes to Consolidated Financial Statements

June 30, 2023

December 31, 2023

The following table presents the location and amount of contract balances in the Company's consolidated statements of financial position (in millions):

Location of contract balances June 30, 2023 September 30, 2022

Location of contract balances December 31, 2023 September 30, 2023

Contract assets - current Accounts receivable - net $ 2,170 $ 2,370

2 unchanged sentences

Contract liabilities - noncurrent Other noncurrent liabilities 306 297

For the three months ended June 30, 2023 and 2022, the Company recognized revenue of $ 222 million and $ 193 million, respectively, that was included in the beginning of period contract liability balance.

For the nine months ended June 30, 2023 and 2022, the Company recognized revenue of $ 1,387 million and $ 1,252 million, respectively, that was included in the beginning of period contract liability balance

For the three months ended December 31, 2023 and 2022, the Company recognized revenue of $ 889 million and $ 846 million, respectively, that was included in the beginning of period contract liability balance.

Performance Obligations

6 unchanged sentences

The timing of satisfying the performance obligation is typically stipulated by the terms of the contract.

As of June 30, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $ 19.2 billion, of which approximately 65 % is expected to be recognized as revenue over the next two years .

As of December 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $ 19.9 billion, of which approximately 64 % is expected to be recognized as revenue over the next two years .

The remaining performance obligations expected to be recognized in revenue beyond two years primarily relate to large, multi-purpose contracts to construct hospitals, schools and other governmental buildings, which include services to be performed over the building's lifetime, with initial contract terms of 25 to 35 years.

3 unchanged sentences

The Company recognizes the incremental costs incurred to obtain or fulfill a contract with a customer as an asset when these costs are recoverable.

These costs consist primarily of sales commissions and design costs that relate to a contract or an anticipated contract that we expect to recover.

These costs consist primarily of sales commissions and design costs that relate to a contract or an anticipated contract that the Company expects to recover.

Costs to obtain or fulfill a contract are capitalized and amortized over the period of contract performance.

The following table presents the location and amount of costs to obtain or fulfill a contract recorded in the Company's consolidated statements of financial position (in millions):

June 30, 2023 September 30, 2022

December 31, 2023 September 30, 2023

Other current assets $ 183 $ 156

1 unchanged sentence

Total $ 398 $ 380

During the three months ended December 31, 2023 and 2022, the Company recognized amortization expense of $ 57 million and $ 61 million, respectively, related to costs to obtain or fulfill a contract.

There were no impairment losses recognized in the three months ended December 31, 2023 and 2022.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

During the three months ended June 30, 2023 and 2022, the Company recognized amortization expense of $ 66 million and $ 48 million, respectively, related to costs to obtain or fulfill a contract.

During the nine months ended June 30, 2023 and 2022, the Company recognized amortization expense of $ 188 million and $ 145 million, respectively, related to costs to obtain or fulfill a contract.

There were no impairment losses recognized in the three and nine months ended June 30, 2023 and 2022.

December 31, 2023

ACCOUNTS RECEIVABLE

The Company enters into various factoring agreements to sell certain accounts receivable to third-party financial institutions.

For the majority of these agreements, for ease of administration, the Company collects customer payments related to the factored receivables on behalf of the financial institutions but otherwise maintains no continuing involvement with respect to the factored receivables.

Sales of accounts receivable are reflected as a reduction of accounts receivable in the consolidated statements of financial position and the proceeds are included in cash flows from operating activities in the consolidated statements of cash flows.

The Company sold $ 425 million and $ 1,261 million of accounts receivable under these factoring agreements during the three and nine months ended June 30, 2023, respectively.

The Company sold $ 244 million and $ 612 million of accounts receivable under these factoring agreements during the three and nine months ended June 30, 2022, respectively.

The cost of factoring such receivables was not material.

Previously sold receivables still outstanding were $ 397 million and $ 476 million as of June 30, 2023 and September 30, 2022, respectively.

The Company sold $ 702 million and $ 409 million of accounts receivable under factoring agreements during the three months ended December 31, 2023 and 2022, respectively.

Previously sold receivables still outstanding were $ 761 million and $ 681 million as of December 31, 2023 and September 30, 2023, respectively.

Inventories consisted of the following (in millions):

June 30, 2023 September 30, 2022

December 31, 2023 September 30, 2023

Raw materials and supplies $ 1,252 $ 1,203

4 unchanged sentences

The changes in the carrying amount of goodwill in each of the Company’s reportable segments were as follows (in millions):

Nine Months Ended June 30, 2023

Three Months Ended December 31, 2023

Building Solutions North America Building Solutions EMEA/LA Building Solutions Asia Pacific Global Products Total

2 unchanged sentences

Balance at beginning of period 9,381 1,885 1,179 5,491 17,936

Acquisitions (1)

— 12 51 121 184

Impairments — — — ( 184 ) ( 184 )

Foreign currency translation and other 15 76 38 59 188

1 unchanged sentence

(1) Includes measurement period adjustments

The Company tests goodwill for impairment annually as of July 31 or more frequently if events or changes in circumstances indicate the asset might be impaired.

In the second quarter of fiscal 2023, management completed an updated comprehensive review of the Silent-Aire reporting unit, including its current quarter results and its nearer term

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

Due to actual results being lower than its business plan, and the nearer term forecast being revised to reflect lower margins and earnings, the Company determined a triggering event had occurred and a quantitative test of goodwill for possible impairment was necessary.

As a result of the goodwill impairment test, the Company recorded a non-cash impairment charge of $ 184 million within restructuring and impairment costs in the consolidated statements of income in the second quarter of fiscal 2023, which was determined by comparing the carrying amount of the reporting unit to its fair value.

The Silent-Aire reporting unit has no remaining goodwill balance as of June 30, 2023.

The Company used a discounted cash flow model to estimate the fair value of the reporting unit.

The primary assumptions used in the model were management's internal projections of future cash flows, the weighted-average cost of capital and the long-term growth rate, which are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement." There were no other triggering events requiring that an impairment assessment be conducted in the nine months ended June 30, 2023.

However, it is possible that future changes in circumstances would require the Company to record additional non-cash impairment charges.

The Company’s other intangible assets, primarily from business acquisitions, consisted of (in millions):

June 30, 2023 September 30, 2022

December 31, 2023 September 30, 2023

Amount Accumulated

9 unchanged sentences

Trademarks/trade names 2,133 — 2,133 2,114 — 2,114

2,143 — 2,143 2,207 — 2,207

Total intangible assets $ 7,717 $ ( 2,882 ) $ 4,835 $ 7,625 $ ( 2,737 ) $ 4,888

Amortization of other intangible assets for the three-month periods ended June 30, 2023 and 2022 was $ 111 million and $ 102 million, respectively.

Amortization of other intangible assets for the nine month periods ended June 30, 2023 and 2022 was $ 319 million and $ 326 million, respectively.

The Company tests indefinite-lived intangible assets for impairment annually as of July 31 or more frequently if events or changes in circumstances indicate the asset might be impaired.

There were no triggering events requiring that an impairment assessment be conducted in the nine months ended June 30, 2023.

However, it is possible that future changes in circumstances would require the Company to record additional non-cash impairment charges.

Amortization of other intangible assets for the three months ended December 31, 2023 and 2022 was $ 122 million and $ 104 million, respectively.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

The following table presents supplemental consolidated statement of financial position information (in millions):

Location of lease balances June 30, 2023 September 30, 2022

Location of lease balances December 31, 2023 September 30, 2023

Operating lease right-of-use assets Other noncurrent assets

2 unchanged sentences

Operating lease liabilities - noncurrent Other noncurrent liabilities

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

The following table presents supplemental noncash operating lease activity, excluding leases acquired in business combinations (in millions):

Nine Months Ended

The following table presents supplemental noncash operating lease activity (in millions):

Three Months Ended

Right-of-use assets obtained in exchange for operating lease liabilities $ 77 $ 110

1 unchanged sentence

Short-term debt consisted of the following (in millions):

June 30, September 30,

Bank borrowings $ 23 $ 10

December 31, September 30,

Commercial paper $ 1,383 $ 200

Term loans 598 159

Weighted average interest rate on short-term debt outstanding 3.8 % 0.5 %

As of June 30, 2023, the Company had a syndicated $ 2.5 billion committed revolving credit facility, which is scheduled to expire in December 2024, and a syndicated $ 500 million committed revolving credit facility, which is scheduled to expire in November 2023.

As of June 30, 2023, there were no draws on the facilities.

Financing Activity

The Company entered into the following financing activities during the current fiscal year:

• October 2022

– Repaid a € 200 million ($ 196 million as of September 30, 2022) term loan with an interest rate of EURIBOR plus 0.5 %

– Issued a € 150 million ($ 163 million as of March 31, 2023) term loan with an interest rate of EURIBOR plus 0.7 % which is due in April 2024

• January 2023 - Repaid $ 32 million of outstanding 4.625 % Notes due 2023

– Repaid a € 150 million ($ 147 million as of September 30, 2022) term loan with an interest rate of 0.0 %

– Repaid a € 135 million ($ 133 million as of September 30, 2022) term loan with an interest rate of EURIBOR plus 0.5 %

– Issued a € 150 million ($ 163 million as of March 31, 2023) term loan with an interest rate of EURIBOR plus 0.4 % which is due March 2024

• May 2023 - Together with its wholly owned subsidiary, Tyco Fire & Security Finance S.C.A., co-issued an € 800 million ($ 868 million as of June 30, 2023) bond with an interest rate of 4.25 % which is due May 2035.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

Net Financing Charges

Net financing charges consisted of the following (in millions):

Three Months Ended

June 30, Nine Months Ended

Bank borrowings 17 26

$ 1,998 $ 385

Interest expense, net of capitalized interest costs $ 79 $ 54 $ 219 $ 165

Other financing charges 13 6 34 16

Interest income ( 10 ) ( 2 ) ( 17 ) ( 5 )

Net foreign exchange results for financing activities ( 2 ) ( 9 ) ( 18 ) ( 23 )

Net financing charges $ 80 $ 49 $ 218 $ 153

Weighted average interest rate on short-term debt outstanding 4.4 % 5.1 %

As of December 31, 2023, the Company had syndicated committed revolving credit facilities of $ 2.5 billion which is scheduled to expire in December 2028 and $ 500 million which is scheduled to expire in December 2024.

There were no draws on the facilities as of December 31, 2023.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

8 unchanged sentences

The Company hedges 70 % to 90 % of the notional amount of each of its known foreign exchange transactional exposures.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

The Company enters into forward-starting interest-rate swaps in conjunction with anticipated note issuances.

Forward-starting interest swaps are terminated when the anticipated notes are issued.

As of December 31, 2023 and September 30, 2023, $ 600 million of forward-starting interest swaps were outstanding on an $ 800 million anticipated note issuance.

Accumulated amounts recorded in accumulated other comprehensive income (loss) ("AOCI") as of the date of the note issuance are amortized to interest expense over the life of the related note to reflect the difference between the swap's reference rate and the fixed rate of the note.

The Company selectively hedges anticipated transactions that are subject to commodity price risk, primarily using commodity hedge contracts, to minimize overall price risk associated with the Company’s purchases of copper and aluminum in cases where commodity price risk cannot be naturally offset or hedged through supply base fixed price contracts.

1 unchanged sentence

The maturities of the commodity hedge contracts coincide with the expected purchase of the commodities.

As cash flow hedges under ASC 815, "Derivatives and Hedging," hedge gains or losses due to changes in fair value are initially recorded as a component of accumulated other comprehensive income (loss) ("AOCI") and are subsequently reclassified into earnings when the hedged transactions occur and affect earnings.

These contracts were highly effective in hedging the variability in future cash flows attributable to changes in currency exchange rates during the three and nine months ended June 30, 2023 and 2022.

The Company had the following outstanding contracts to hedge forecasted commodity purchases (in metric tons):

Volume Outstanding as of

Commodity June 30, 2023 September 30, 2022

Commodity December 31, 2023 September 30, 2023

Copper 3,062 2,812

Aluminum 5,973 5,976

In March, April and May 2023, the Company entered into forward-starting interest rate swaps with a combined notional amount of € 400 million to reduce the market risk associated with changes in interest rates on future potential debt

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

The swaps were terminated in May 2023 when the anticipated debt was issued.

Accumulated amounts recorded in AOCI as of the date of the debt issuance are amortized to interest expense over the life of the respective debt.

Cash flow hedges under ASC 815, "Derivatives and Hedging," that hedge gains or losses due to changes in fair value are initially recorded as a component of AOCI and are subsequently reclassified into earnings when the hedged transactions occur and affect earnings.

These contracts were highly effective in hedging the variability in future cash flows attributable to changes in currency exchange rates and commodity prices during the three months ended December 31, 2023 and 2022.

Net Investment Hedges

The Company enters into foreign currency denominated debt obligations to selectively hedge portions of its net investment in non-U.S.

The Company enters into cross-currency interest rate swaps and foreign currency denominated debt obligations to selectively hedge portions of its net investment in non-U.S.

subsidiaries.

The currency effects of the debt obligations are reflected in AOCI attributable to Johnson Controls ordinary shareholders where they offset currency gains and losses recorded on the Company's net investments globally.

The currency effects of the cross-currency interest rate swaps and debt obligations are reflected in the AOCI account within shareholders’equity attributable to Johnson Controls ordinary shareholders where they offset gains and losses recorded on the Company’s net investments globally.

The following table summarizes net investment hedges (in billions):

June 30, September 30,

December 31, September 30,

Euro-denominated bonds designated as net investment hedges in Europe € 2.9 € 2.9

Yen-denominated debt designated as a net investment hedge in Japan ¥ 30 ¥ 30

US dollar vs.

Yen cross-currency interest rate swap designated as a net investment hedge in Japan ¥ 14 ¥ 14

Derivatives Not Designated as Hedging Instruments

1 unchanged sentence

The changes in fair value of these foreign currency forward exchange derivatives are recorded in the consolidated statements of income where they offset foreign currency transactional gains and losses on the nonfunctional currency denominated assets and liabilities being hedged.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

Fair Value of Derivative Instruments

1 unchanged sentence

Derivatives and Hedging Activities

Designated as Hedging Instruments under ASC 815 Derivatives and Hedging Activities Not

Designated as Hedging Instruments under ASC 815

June 30, September 30, June 30, September 30,

Designated as Hedging Instruments Derivatives and Hedging Activities Not

Designated as Hedging Instruments

December 31, September 30, December 31, September 30,

2023 2023 2023 2023

1 unchanged sentence

Foreign currency exchange derivatives $ 14 $ 16 $ — $ 13

Interest rate swaps — 22 — —

Commodity derivatives 1 — — —

Other noncurrent assets

Cross-currency interest rate swap — 5 — —

Total assets $ 15 $ 43 $ — $ 13

1 unchanged sentence

Foreign currency exchange derivatives $ 31 $ 20 $ 30 $ 5

Interest rate swaps 14 — — —

Commodity derivatives — 2 — —

6 unchanged sentences

As a matter of practice, the Company deals with major banks worldwide having strong investment grade long-term credit ratings.

To further reduce the risk of loss, the Company generally enters into International Swaps and Derivatives Association ("ISDA") master netting agreements with

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

substantially all of its counterparties.

To further reduce the risk of loss, the Company generally enters into International Swaps and Derivatives Association ("ISDA") master netting agreements with substantially all of its counterparties.

The Company enters into ISDA master netting agreements with counterparties that permit the net settlement of amounts owed under the derivative contracts.

4 unchanged sentences

The Company does not anticipate any non-performance by any of its counterparties, and the concentration of risk with financial institutions does not present significant credit risk to the Company.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

The gross and net amounts of derivative assets and liabilities were as follows (in millions):

Fair Value of Assets Fair Value of Liabilities

June 30, September 30, June 30, September 30,

December 31, September 30, December 31, September 30,

2023 2023 2023 2023

4 unchanged sentences

The following table presents the pre-tax gains (losses) recorded in other comprehensive income (loss) related to cash flow hedges (in millions):

Derivatives in ASC 815 Cash Flow

Hedging Relationships Three Months Ended June 30, Nine Months Ended June 30,

2023 2022 2023 2022

Derivatives in Cash Flow

Hedging Relationships Three Months Ended December 31,

Foreign currency exchange derivatives $ ( 13 ) $ ( 21 )

3 unchanged sentences

The following table presents the location and amount of the pre-tax gains (losses) on cash flow hedges reclassified from AOCI into the Company’s consolidated statements of income (in millions):

Derivatives in ASC 815 Cash Flow Hedging Relationships Location of Gain (Loss) Reclassified from AOCI into Income Three Months Ended

June 30, Nine Months Ended

2023 2022 2023 2022

Derivatives in Cash Flow Hedging Relationships Location of Gain (Loss) Reclassified from AOCI into Income Three Months Ended

Foreign currency exchange derivatives Cost of sales $ ( 1 ) $ 9

Commodity derivatives Cost of sales ( 3 ) ( 6 )

Interest rate swaps Net financing charges — ( 1 ) — ( 2 )

Total $ ( 4 ) $ 3

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

The following table presents the location and amount of pre-tax gains (losses) on derivatives not designated as hedging instruments recognized in the Company’s consolidated statements of income (in millions):

Derivatives Not Designated as Hedging Instruments under ASC 815 Location of Gain

Derivatives Not Designated as Hedging Instruments Location of Gain (Loss)

Recognized in Income on Derivative Three Months Ended

June 30, Nine Months Ended

2023 2022 2023 2022

Foreign currency exchange derivatives Cost of sales $ ( 5 ) $ 2

Foreign currency exchange derivatives Net financing charges ( 43 ) 79

Equity swap Selling, general and administrative — ( 4 ) — ( 5 )

Total $ ( 48 ) $ 81

Pre-tax gains (losses) on net investment hedges recorded as foreign currency translation adjustments ("CTA") within other comprehensive income (loss) were $ 30 million and $ 192 million for the three months ended June 30, 2023 and 2022, respectively.

Pre-tax gains (losses) on net investment hedges recorded as CTA within other comprehensive income (loss) were $( 299 ) million and $ 315 million for the nine months ended June 30, 2023 and 2022, respectively.

No gains or losses were reclassified from CTA into income during the three and nine months ended June 30, 2023 and 2022.

Pre-tax losses on net investment hedges recorded as foreign currency translation adjustments ("CTA") within other comprehensive income (loss) were $ 145 million and $ 269 million for the three months ended December 31, 2023 and 2022, respectively.

No gains or losses were reclassified from CTA into income during the three months ended December 31, 2023 and 2022.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

FAIR VALUE MEASUREMENTS

6 unchanged sentences

When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

Recurring Fair Value Measurements

1 unchanged sentence

Fair Value Measurements Using:

June 30, 2023 Quoted Prices

December 31, 2023 Quoted Prices

(Level 1) Significant

2 unchanged sentences

Foreign currency exchange derivatives $ 14 $ — $ 14 $ —

Commodity derivatives 1 — 1 —

Other noncurrent assets

5 unchanged sentences

Foreign currency exchange derivatives $ 61 $ — $ 61 $ —

Commodity derivatives 4 — 4 —

Interest rate swaps 14 — 14 —

Contingent earn-out liabilities 55 — — 55

4 unchanged sentences

Notes to Consolidated Financial Statements

June 30, 2023

December 31, 2023

Fair Value Measurements Using:

4 unchanged sentences

Foreign currency exchange derivatives $ 29 $ — $ 29 $ —

Exchange traded funds (fixed income) (1)

Interest rate swaps

Other noncurrent assets

Cross-currency interest rate swap 5 — 5 —

Deferred compensation plan assets 45 45 — —

13 unchanged sentences

Balance at September 30, 2023

Acquisitions 36

Payments ( 19 )

1 unchanged sentence

Currency translation 1

Balance at June 30, 2023

Balance at December 31, 2023

Valuation Methods

Foreign currency exchange derivatives :

The foreign currency exchange derivatives are valued under a market approach using publicized spot and forward prices.

Commodity derivatives :

The commodity derivatives are valued under a market approach using publicized prices, where available, or dealer quotes.

Interest rate swaps:

The fair value of interest rate swaps represent the difference between the swap's reference rate and the interest rate for a similar instrument as of the reporting period.

Interest rate swaps are valued under a market approach using publicized prices.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

Contingent earn-out liabilities :

The contingent earn-out liabilities were established using a Monte Carlo simulation based on the forecasted operating results and the earn-out formula specified in the purchase agreements.

Cross-currency interest rate swaps:

The fair value of cross-currency interest rate swaps represents the difference between the swap's reference rate and exchange rate and the interest and exchange rates for a similar instrument as of the reporting period.

Cross-currency interest rate swaps are valued under a market approach using publicized prices.

Deferred compensation plan assets :

Assets held in the deferred compensation plans will be used to pay benefits under certain of the Company's non-qualified deferred compensation plans.

The investments primarily consist of mutual funds which are publicly traded on stock exchanges and are valued using a market approach based on the quoted market prices.

The investments primarily consist of mutual funds

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

which are publicly traded on stock exchanges and are valued using a market approach based on the quoted market prices.

Unrealized gains (losses) on the deferred compensation plan assets are recognized in the consolidated statements of income where they offset unrealized gains and losses on the related deferred compensation plan liability.

Investments in exchange traded funds :

Exchange traded funds :

Investments in exchange traded funds are valued using a market approach based on quoted market prices, where available, or broker/dealer quotes of identical or comparable instruments.

Refer to Note 21, "Commitments and Contingencies," of the notes to the consolidated financial statements for further information.

Contingent earn-out liabilities :

The contingent earn-out liabilities were established using a Monte Carlo simulation based on the forecasted operating results and the earn-out formula specified in the purchase agreements.

The following table presents the portion of unrealized gains (losses) recognized in the consolidated statements of income that relate to equity securities still held at June 30, 2023 and 2022 (in millions):

Three Months Ended June 30, Nine Months Ended June 30,

2023 2022 2023 2022

Foreign currency exchange derivatives :

The foreign currency exchange derivatives are valued under a market approach using publicized spot and forward prices.

Interest rate swaps:

The fair value of interest rate swaps represent the difference between the swap's reference rate and the interest rate for a similar instrument as of the reporting period.

Interest rate swaps are valued under a market approach using publicized prices.

The following table presents the portion of unrealized gains recognized in the consolidated statements of income that relate to equity securities still held at December 31, 2023 and 2022 (in millions):

Three Months Ended December 31,

Deferred compensation plan assets $ 4 $ 3

Investments in exchange traded funds 22 11

All of the gains (losses) on investments in exchange traded funds related to restricted investments.

All of the gains on investments in exchange traded funds related to restricted investments.

The fair values of cash and cash equivalents, accounts receivable, short-term debt and accounts payable approximate their carrying values.

At June 30, 2023, the fair value of long-term debt was $ 8.7 billion, including public debt of $ 8.5 billion and other long-term debt of $ 0.2 billion.

At September 30, 2022, the fair value of long-term debt was $ 7.3 billion, including public debt of $ 7.1 billion and other long-term debt of $ 0.2 billion.

The fair value of long-term debt at December 31, 2023 and September 30, 2023 was as follows (in billions):

December 31, September 30,

Public debt $ 7.8 $ 7.1

Other long-term debt 0.4 0.4

Total fair value of long-term debt $ 8.2 $ 7.5

The fair value of public debt was determined primarily using market quotes which are classified as Level 1 inputs within the ASC 820 fair value hierarchy.

4 unchanged sentences

Awards are typically granted annually in the Company’s fiscal first quarter.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

A summary of the stock-based awards granted is presented below:

Nine Months Ended June 30,

Three Months Ended December 31,

Number Granted Weighted Average Grant Date Fair Value Number Granted Weighted Average Grant Date Fair Value

2 unchanged sentences

Stock options 652,702 13.74 570,140 18.21

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

Performance Share Awards

The following table summarizes the assumptions used in determining the fair value of performance share units granted:

Nine Months Ended

Three Months Ended

Risk-free interest rate 4.21 % 4.04 %

2 unchanged sentences

The following table summarizes the assumptions used in determining the fair value of stock options granted:

Nine Months Ended

Three Months Ended

Expected life of option (years) 5.7 5.8

2 unchanged sentences

Expected dividend yield on the Company’s stock 2.77 % 2.10 %

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

EARNINGS PER SHARE

1 unchanged sentence

Three Months Ended

June 30, Nine Months Ended

2023 2022 2023 2022

Net income attributable to Johnson Controls $ 374 $ 118

7 unchanged sentences

Stock options and unvested restricted stock 0.6 0.3

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

Share repurchase program

During the three and nine months ended June 30, 2023, the Company repurchased and immediately retired $ 366 million and $ 613 million of its ordinary shares, respectively.

For the three and nine months ended June 30, 2022, the Company repurchased and immediately retired $ 392 million and $ 1,427 million of its ordinary shares, respectively.

As of June 30, 2023, approximately $ 3.0 billion re mains available under the Company's share repurchase program, which was approved by the Company's Board of Directors in March 2021.

During the three months ended December 31, 2022, the Company repurchased and immediately retired $ 154 million of its ordinary shares.

No shares were repurchased during the three months ended December 31, 2023.

As of December 31, 2023, approximately $ 3.0 billion re mains available under the Company's share repurchase program, which was approved by the Company's Board of Directors in March 2021.

The share repurchase program does not have an expiration date and may be amended or terminated by the Board of Directors at any time without prior notice.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

Accumulated Other Comprehensive Income (Loss)

3 unchanged sentences

Balance at beginning of period $ ( 970 ) $ ( 901 )

Aggregate adjustment for the period (net of tax effect of $ 0 and $ 0 )

( 25 ) ( 298 )

Balance at end of period ( 868 ) ( 641 )

Realized and unrealized gains (losses) on derivatives

Balance at beginning of period ( 3 ) ( 4 )

Current period changes in fair value (net of tax effect of $ 0 and $( 4 ))

Reclassification to income (net of tax effect of $ 1 and $( 3 )) (1)

Balance at end of period ( 1 ) ( 23 )

Pension and postretirement plans

Balance at beginning of period — 2

Reclassification to income (net of tax effect of $ 0 and $ 0 )

Balance at end of period ( 1 ) 2

Accumulated other comprehensive loss, end of period $ ( 870 ) $ ( 662 )

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

Nine Months Ended

Foreign currency translation adjustments

Balance at beginning of period $ ( 901 ) $ ( 421 )

Aggregate adjustment for the period (net of tax effect of $ 0 and $ 0 )

Aggregate adjustment for the period 61 59

Balance at end of period ( 909 ) ( 842 )

1 unchanged sentence

Balance at beginning of period 15 ( 11 )

Current period changes in fair value (net of tax effect of $ 1 and $ 2 )

Reclassification to income (net of tax effect of $ 1 and $( 5 )) (1)

Current period changes in fair value ( 43 ) ( 11 )

Reclassification to income (1)

Net tax impact 1 3

Balance at end of period ( 23 ) ( 22 )

1 unchanged sentence

Balance at beginning of period — 1

Reclassification to income (net of tax effect of $( 1 ) and $( 1 ))

Reclassification to income ( 1 ) ( 1 )

Balance at end of period ( 1 ) —

1 unchanged sentence

(1) Refer to Note 11, "Derivative Instruments and Hedging Activities," of the notes to the consolidated financial statements for disclosure of the line items in the consolidated statements of income affected by reclassifications from AOCI into income related to derivatives.

Pension and Postretirement Plans

PENSION AND RETIREMENT PLANS

The components of the Company’s net periodic benefit cost (credit) associated with its defined benefit pension and postretirement plans, which are primarily recorded in selling, general and administrative expenses in the consolidated statements of income, are shown in the tables below in accordance with ASC 715, "Compensation – Retirement Benefits" (in millions):

1 unchanged sentence

Three Months Ended

June 30, Nine Months Ended

2023 2022 2023 2022

Interest cost $ 20 $ 21

Expected return on plan assets ( 30 ) ( 34 )

Net actuarial loss (gain) ( 6 ) 106 17 124

Settlement loss — 2 1 3

Net periodic benefit cost (credit) $ ( 19 ) $ 88 $ ( 21 ) $ 46

Net actuarial loss — 8

Net periodic benefit credit $ ( 10 ) $ ( 5 )

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

December 31, 2023

Pension Plans

Three Months Ended

June 30, Nine Months Ended

2023 2022 2023 2022

Service cost $ 4 $ 3

1 unchanged sentence

Expected return on plan assets ( 18 ) ( 18 )

Net actuarial gain — ( 19 ) — ( 20 )

Settlement loss (gain) — ( 1 ) — 7

Net periodic benefit cost (credit) $ 2 $ ( 25 ) $ 5 $ ( 29 )

Net periodic benefit cost $ 3 $ 1

Postretirement Benefits

Three Months Ended

June 30, Nine Months Ended

2023 2022 2023 2022

Interest cost $ 1 $ 1

2 unchanged sentences

Net periodic benefit credit $ ( 2 ) $ ( 2 )

Cumulative fiscal 2023 lump sum payouts triggered remeasurement events for certain pension plans in each quarter of fiscal 2023.

During the three months ended June 30, 2023, the Company recognized net actuarial gains of $ 6 million, primarily due to increases in discount rates, partially offset by unfavorable asset performance.

During the nine months ended June 30, 2023, the Company recognized net actuarial losses of $ 17 million, primarily due to net decreases in discount rates, partially offset by net favorable plan asset performance.

Cumulative fiscal 2022 lump sum payouts triggered remeasurement events for certain pension plans in each quarter of fiscal 2022.

During the three and nine months ended June 30, 2022, the Company recognized net actuarial losses of $ 87 million and $ 104 million, respectively, primarily due to unfavorable plan asset performance, partially offset by increases in discount rates.

Restructuring Costs

During the three months ended December 31, 2022, the amount of cumulative fiscal 2023 lump sum payouts triggered a remeasurement event for certain U.S.

pension plans resulting in the recognition of net actuarial losses of $ 8 million, primarily due to decreases in discount rates, partially offset by favorable plan asset performance.

RESTRUCTURING AND RELATED COSTS

To better align its resources with its growth strategies and reduce the cost structure of its global operations in certain underlying markets, the Company commits to various restructuring activities as necessary.

1 unchanged sentence

The Company expects the restructuring activities to reduce cost of sales and selling, general and administrative expenses ("SG&A") due to reduced employee-related costs, depreciation and amortization expense.

In the third quarter of fiscal 2023, the Company began developing a restructuring plan with certain actions focused on continued scaling of SG&A expenses to its planned growth.

Early actions of this plan were committed to during the third quarter and charges, primarily related to workforce reductions, were recorded to restructuring and impairment costs in the consolidated statements of income, and additional restructuring charges are expected in subsequent quarters.

The scope of the plan is expected to be finalized during the fourth quarter of fiscal 2023.

Restructuring charges incurred during the first and second quarters of fiscal 2023 were the result of other segment and Corporate-level restructuring plans.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

Refer to Note 4, "Assets and Liabilities Held for Sale," and Note 8, "Goodwill and Other Intangible Assets," of the notes to the consolidated financial statements for disclosure of other impairment costs.

In the third and fourth quarters of fiscal 2023, the Company developed a restructuring plan which included workforce reductions and other actions focused on continued scaling of SG&A expenses to its planned growth.

Additional restructuring charges related to this plan were recorded in the three months ended December 31, 2023 and are expected in subsequent quarters.

The following table summarizes restructuring costs (in millions):

Three Months Ended June 30, 2023 Nine Months Ended June 30, 2023

Three Months Ended December 31, 2023

Building Solutions North America $ 4

Building Solutions EMEA/LA 13

Building Solutions Asia Pacific 6 12

Global Products 21

Corporate 10 31

Total $ 81 $ 162

The following table summarizes changes in the restructuring reserve, which is included within other current liabilities in the consolidated statements of financial position, for new restructuring actions taken in the nine months ended June 30, 2023 (in millions):

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

The following table summarizes changes in the restructuring reserve, which is included within other current liabilities in the consolidated statements of financial position, for restructuring actions taken in the year ended September 30, 2023 and three months ended December 31, 2023 (in millions):

Employee Severance and Termination Benefits Long-Lived Asset Impairments Other Total

Restructuring costs $ 114 $ 20 $ 28 $ 162

Restructuring and related costs $ 204 $ 38 $ 34 $ 276

Utilized—cash ( 111 ) — ( 19 ) ( 130 )

Utilized—noncash — ( 38 ) ( 3 ) ( 41 )

Balance at June 30, 2023

Balance at September 30, 2023

Additional restructuring and related costs 29 9 1 39

Utilized—cash ( 38 ) — — ( 38 )

Utilized—noncash — ( 9 ) — ( 9 )

Balance at December 31, 2023

$ 84 $ — $ 13 $ 97

2 unchanged sentences

The statutory tax rate in Ireland is being used as a comparison since the Company is domiciled in Ireland.

For the three months ended June 30, 2023, the Company's effective tax rate was ( 41.5 %) and was lower than the statutory tax rate of 12.5 % primarily due to reserve adjustments resulting from tax audit developments and the benefits of continuing global tax planning, partially offset by tax rate differentials.

For the nine months ended June 30, 2023, the Company's effective tax rate was ( 22.4 %) and was lower than the statutory tax rate of 12.5 % primarily due to reserve adjustments resulting from tax audit developments and the benefits of continuing global tax planning, partially offset by the tax impact of an impairment charge and tax rate differentials.

For the three months ended June 30, 2022, the Company's effective tax rate was 12.1 % and was lower than the statutory tax rate of 12.5 % primarily due to the income tax effects of mark-to-market adjustments and the benefits of continuing global tax planning initiatives, partially offset by the establishment of a deferred tax liability on the outside basis difference of the Company's investment in certain subsidiaries as a result of the planned divestitures and tax rate differentials.

For the nine months ended June 30, 2022, the Company's effective tax rate was 17.2 % and was higher than the statutory tax rate of 12.5 % primarily due to the tax impact of an impairment charge, the establishment of a deferred tax liability on the

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

outside basis difference of the Company's investment in certain subsidiaries as a result of the planned divestitures and tax rate differentials, partially offset by the income tax effects of mark-to-market adjustments and the benefits of continuing global tax planning initiatives.

For the three months ended December 31, 2023, the Company's effective tax rate was ( 0.2 %) and was lower than the statutory tax rate of 12.5 % primarily due to Swiss tax reform and the benefits of continuing global tax planning, partially offset by the establishment of a deferred tax liability on the outside basis difference of the Company's investment in certain consolidated subsidiaries and tax rate differentials.

For the three months ended December 31, 2022, the Company's effective tax rate was 8.2 % and was lower than the statutory tax rate of 12.5 % primarily due to impairment and restructuring charges and the benefits of continuing global tax planning initiatives, partially offset by tax rate differentials.

Valuation Allowance

3 unchanged sentences

Uncertain Tax Positions

At September 30, 2022, the Company had gross tax-effected unrecognized tax benefits of $ 2,537 million, of which $ 1,973 million, if recognized, would impact the effective tax rate.

At September 30, 2023, the Company had gross tax-effected unrecognized tax benefits of $ 2.2 billion, of which $ 1.6 billion, if recognized, would impact the effective tax rate.

Accrued interest, net at September 30, 2023 was approximately $ 335 million (net of tax benefit).

Interest accrued during the nine months ended June 30, 2023 and 2022 was approximately $ 33 million (net of tax benefit) and approximately $ 40 million (net of tax benefit), respectively.

Interest accrued during the three months ended December 31, 2023 and 2022 was approximately $ 31 million (net of tax benefit) and approximately $ 26 million (net of tax benefit), respectively.

The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense.

During the three months ended June 30, 2023, as the result of tax audit resolutions, statute expirations, and remeasurements of ongoing controversy matters in various jurisdictions, the Company adjusted its reserve for uncertain tax positions which resulted in a $ 438 million net benefit to income tax expense.

In the U.S., fiscal years 2017 through 2018 are currently under exam by the Internal Revenue Service (“IRS”) for certain legal entities and the Company intends to take any unagreed issues that may result through the administrative appeals process.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

In the U.S., fiscal years 2017 through 2018 are currently under appeal with the Internal Revenue Service (“IRS”) for certain legal entities.

In addition, fiscal years 2016 through 2019 are also under exam by the IRS in relation to a separate consolidated filing group.

Additionally, the Company is currently under exam in the following major non-U.S.

9 unchanged sentences

Other Tax Matters

The Company recorded restructuring and impairment costs of $ 81 million, which generated an $ 11 million tax benefit, during the three months ended June 30, 2023 and $ 121 million, which generated a $ 15 million tax benefit, during the three months ended June 30, 2022.

The Company recorded restructuring and impairment costs of $ 844 million, which generated a $ 98 million tax benefit, during the nine months ended June 30, 2023 and $ 554 million, which generated a $ 29 million tax benefit, during the nine months ended June 30, 2022.

The Company recorded restructuring and impairment costs of $ 39 million, which generated a $ 7 million tax benefit, during the three months ended December 31, 2023 and $ 345 million, which generated a $ 52 million tax benefit, during the three months ended December 31, 2022.

Tax expenses and benefits for the above transactions reflect the Company’s current tax positions in the impacted jurisdictions.

Refer to Note 17, “Restructuring and Related Costs,” of the notes to the consolidated financial statements for additional information.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

Impacts of Tax Legislation

During the nine months ended June 30, 2023 and 2022, tax legislation was adopted in various jurisdictions.

On September 11, 2023, the Schaffhausen parliament approved a partial revision of the cantonal act on direct taxation:

Immediate Minimum Taxation Measure (“IMTM”).

On November 19, 2023, IMTM was approved in a public referendum in the canton of Schaffhausen, was published in the cantonal official gazette on December 8, 2023, and is effective starting January 1, 2024.

The IMTM increased Switzerland's combined statutory income tax rate to approximately 15 %.

As a result, in the three months ended December 31, 2023, the Company recorded a noncash discrete net tax benefit of $ 80 million due to the remeasurement of deferred tax assets and liabilities related to Switzerland and the canton of Schaffhausen.

On August 16, 2022, the U.S.

enacted the Inflation Reduction Act (“IRA”) which, among other things, creates a new book minimum tax of at least 15% of consolidated GAAP pre-tax income for corporations with average book income in excess of $1 billion.

The book minimum tax is first applicable in fiscal year 2024, however, this provision does not have a material impact on the Company's effective tax rate.

During the three months ended December 31, 2023 and 2022, tax legislation was adopted in various other jurisdictions.

These law changes did not have a material impact on the Company's consolidated financial statements.

2 unchanged sentences

In applying the criteria set forth in ASC 280, the Company has determined that it has four reportable segments for financial reporting purposes.

• Building Solutions North America:

Building Solutions North America designs, sells, installs, and services HVAC, controls, building management, refrigeration, integrated electronic security, and integrated fire detection and suppression systems for commercial, industrial, retail, small business, institutional and governmental customers in the United States and Canada.

Building Solutions North America also provides energy efficiency solutions and technical services, including inspection, scheduled maintenance, and repair and replacement of mechanical and control systems, as well as data-driven "smart building" solutions, to non-residential building and industrial applications in the United States and Canadian marketplace.

• Building Solutions EMEA/LA:

Building Solutions EMEA/LA designs, sells, installs and services HVAC, controls, building management, refrigeration, integrated electronic security, integrated fire detection and suppression systems, and provides technical services, including data-driven "smart building" solutions, to markets in Europe, the Middle East, Africa and Latin America.

• Building Solutions Asia Pacific:

Building Solutions Asia Pacific designs, sells, installs and services HVAC, controls, building management, refrigeration, integrated electronic security, integrated fire-detection and suppression systems, and provides technical services, including data-driven "smart building" solutions, in the Asia Pacific marketplace.

• Global Products:

Global Products designs, manufactures and sells HVAC equipment, controls software and software services for residential and commercial applications to commercial, industrial, retail, residential, small business, institutional and governmental customers worldwide.

In addition, Global Products designs, manufactures and sells refrigeration equipment and controls globally.

The Global Products business also designs, manufactures and sells fire protection, fire suppression and security products, including intrusion security, anti-theft devices, access control, and video surveillance and management systems, for commercial, industrial, retail, residential, small business, institutional and governmental customers worldwide.

Global Products also includes the Johnson Controls-Hitachi joint venture.

The Company conducts its business through four business segments:

• Building Solutions North America which operates in the United States and Canada;

• Building Solutions EMEA/LA which operates in Europe, the Middle East, Africa and Latin America;

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

• Building Solutions Asia Pacific which operates in Asia Pacific;

• Global Products which operates worldwide and includes the Johnson Controls-Hitachi joint venture.

The Building Solutions segments:

• Design, sell, install and service HVAC, controls, building management, refrigeration, integrated electronic security and integrated fire-detection and suppression systems;

• Provide energy-efficiency solutions and technical services, including data-driven "smart building" solutions as well as inspection, scheduled maintenance, and repair and replacement of mechanical and controls systems.

The Global Products segment designs, manufactures and sells:

• HVAC equipment, controls software and software services for residential and commercial applications;

• Refrigeration equipment and controls;

• Fire protection and suppression;

• Security products, including intrusion security, anti-theft devices, access control, and video surveillance and management systems.

The Company’s segments provide products and services to commercial, institutional, industrial, data center, governmental and residential customers.

Management evaluates the performance of its business segments primarily on segment earnings before interest, taxes and amortization ("EBITA"), which represents income before income taxes and noncontrolling interests, excluding general corporate expenses, intangible asset amortization, net financing charges, restructuring and impairment costs, and the net mark-to-market adjustments related to pension and postretirement plans and restricted asbestos investments.

1 unchanged sentence

Three Months Ended

June 30, Nine Months Ended

2023 2022 2023 2022

Building Solutions North America $ 2,487 $ 2,367

5 unchanged sentences

Notes to Consolidated Financial Statements

June 30, 2023

December 31, 2023

Segment EBITA

Three Months Ended

June 30, Nine Months Ended

2023 2022 2023 2022

Building Solutions North America $ 285 $ 267

6 unchanged sentences

Restructuring and impairment costs 39 345

Net mark-to-market adjustments 17 ( 126 ) 16 ( 158 )

Net mark-to-market gains ( 22 ) ( 3 )

Net financing charges 99 67

Income before income taxes $ 403 $ 170

Certain of the Company's subsidiaries at the business segment level have guaranteed the performance of third parties and provided financial guarantees for uncompleted work and financial commitments.

Certain of the Company's subsidiaries at the business segment level guarantee the performance of third parties and provide financial guarantees for uncompleted work and financial commitments.

The terms of these guarantees vary with end dates ranging from the current fiscal year through the completion of such transactions and would typically be triggered in the event of nonperformance.

1 unchanged sentence

The Company offers warranties to 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 for future warranty-related costs based on actual historical return rates and other known factors.

Based on analysis of return rates and other factors, the Company’s warranty provisions are adjusted as necessary.

A typical warranty program requires that the Company repair or replace defective products within a specified time period from the date of sale.

The Company records an estimate for future warranty-related costs based on actual historical costs to repair or replace products and other known factors.

The Company monitors its warranty activity and adjusts its reserve estimates when it is probable that future warranty costs will be different than those estimates.

The Company’s product warranty liability is recorded in the consolidated statements of financial position in other current liabilities if the warranty is less than one year and in other non-current liabilities if the warranty extends longer than one year.

The Company’s product warranty liability is recorded in the consolidated statements of financial position in other current liabilities for estimated costs to be incurred within 12 months and in other non-current liabilities for estimated costs to be incurred in more than one year.

The changes in the carrying amount of the Company’s total product warranty liability were as follows (in millions):

Nine Months Ended

Three Months Ended December 31, 2023

Balance at beginning of period $ 203

1 unchanged sentence

Settlements made (in cash or in kind) during the period ( 27 )

Changes in estimates to pre-existing warranties 12 ( 9 )

Currency translation 3

2 unchanged sentences

Notes to Consolidated Financial Statements

June 30, 2023

December 31, 2023

COMMITMENTS AND CONTINGENCIES

2 unchanged sentences

The following table presents the location and amount of reserves for environmental liabilities in the Company's consolidated statements of financial position (in millions):

June 30, 2023 September 30, 2022

December 31, 2023 September 30, 2023

Other current liabilities $ 31 $ 31

2 unchanged sentences

The Company periodically examines whether the contingent liabilities related to the environmental matters described below are probable and reasonably estimable based on experience and ongoing developments in those matters, including continued study and analysis of ongoing remediation obligations.

During the three months ended September 30, 2022, with the assistance of independent environmental consultants and taking into consideration investigation and remediation actions previously completed, new information available to the Company during the fourth quarter of fiscal 2022 and ongoing discussions with the Wisconsin Department of Natural Resources ("WDNR"), the Company completed a comprehensive long-term analysis and cost assessment related to the Company’s ongoing environmental remediation obligations.

As a result of this analysis, the Company increased its accrual for environmental liabilities by $ 228 million in the fourth quarter of fiscal 2022, which are recorded on an undiscounted basis.

The Company expects that it will pay the amounts recorded over an estimated period of up to 20 years.

The Company is not able to estimate a possible loss or range of loss, if any, in excess of the established accruals for environmental liabilities at this time.

A substantial portion of the increase to the Company's environmental reserves relates to ongoing long-term remediation efforts to address contamination relating to fire-fighting foams containing perfluorooctane sulfonate ("PFOS"), perfluorooctanoic acid ("PFOA"), and/or other per- and poly-fluoroalkyl substances ("PFAS") at or near the Tyco Fire Products L.P.

A substantial portion of the Company's environmental reserves relates to ongoing long-term remediation efforts to address contamination relating to fire-fighting foams containing perfluorooctane sulfonate ("PFOS"), perfluorooctanoic acid ("PFOA"), and/or other per- and poly-fluoroalkyl substances ("PFAS") at or near the Tyco Fire Products L.P.

(“Tyco Fire Products”) Fire Technology Center ("FTC") located in Marinette, Wisconsin and surrounding areas in the City of Marinette and Town of Peshtigo, Wisconsin, as well as the continued remediation of PFAS, arsenic and other contaminants at the Tyco Fire Products Stanton Street manufacturing facility also located in Marinette, Wisconsin (the “Stanton Street Facility”).

The increase in reserves was recorded as a result of several events that occurred in the three months ended September 30, 2022, including the completion and testing of the Groundwater Extraction and Treatment System (“GETS”) at the FTC (as further discussed below), the completion of resident surveys in Peshtigo regarding long-term drinking water solutions, correspondence with regulators on planned remediation activities, finalization of cost estimates for system upgrades and related long-term run rate costs in response to new permit requirements at the Stanton Street Facility, and the development of additional information through ongoing investigation and analysis.

These events allowed the Company to develop estimates of costs associated with the long-term remediation actions expected to be performed over an estimated period of up to 20 years, including the continued operation of the GETS, the implementation of long-term drinking water solutions, continued monitoring and testing of the wells, the operation and wind-down of other legacy remediation and treatment systems and the completion of ongoing investigation obligations.

The use of fire-fighting foams at the FTC was primarily for training and testing purposes to ensure that such products sold by the Company’s affiliates, Chemguard, Inc.

("Chemguard") and Tyco Fire Products, were effective at suppressing high intensity fires that may occur at military installations, airports or elsewhere.

In May 2021, as part of Tyco Fire Products’ ongoing investigation and remediation program, the WDNR approved Tyco Fire Products’ proposed GETS, a permanent groundwater remediation system that extracts groundwater containing PFAS, treats it using advanced filtration systems, and returns the treated water to the environment.

Tyco Fire Products has completed construction of the GETS, which is now in operation.

Tyco Fire Products has also completed the removal and disposal of PFAS-affected soil from the FTC.

Tyco Fire Products is also in the process of implementing a long-term drinking water solution in the form of deep aquifer private drinking wells for certain Peshtigo residents.

On July 18, 2023, Tyco Fire Products announced that it plans to

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

discontinue the production and sale of fluorinated firefighting foams by June 2024, including AFFF products, and will transition to non-fluorinated foam alternatives.

On July 18, 2023, Tyco Fire Products announced that it plans to discontinue the production and sale of fluorinated firefighting foams by June 2024, including AFFF products, and will transition to non-fluorinated foam alternatives.

Tyco Fire Products has been engaged in remediation activities at the Stanton Street Facility since 1990.

3 unchanged sentences

Under this agreement, Tyco Fire Products’ principal obligations are to contain the arsenic contamination on the site, pump and treat on-site groundwater, dredge, treat and properly dispose of contaminated sediments in the adjoining river areas, and monitor contamination levels on an ongoing basis.

Activities completed under the Consent Order since 2009 include the installation of a subsurface barrier wall around the facility to contain contaminated groundwater, the installation of a groundwater extraction and treatment system and the dredging and offsite disposal of treated river sediment.

In addition to ongoing remediation activities, the Company is also working with the WDNR to investigate and remediate the presence of PFAS at or near the Stanton Street Facility as part of the evaluation and remediation of PFAS in the Marinette region.

Activities completed under the Consent Order since 2009 include the installation of a subsurface barrier wall around the facility to contain contaminated groundwater, the installation and ongoing operation and monitoring of a groundwater extraction and treatment system and the dredging and offsite disposal of treated river sediment.

In addition to ongoing remediation activities, the Company is also working with the Wisconsin Department of Natural Resources ("WDNR") to investigate and remediate the presence of PFAS at or near the Stanton Street Facility as part of the evaluation and remediation of PFAS in the Marinette region.

Tyco Fire Products is operating and monitoring at the FTC a Groundwater Extraction and Treatment System ("GETS"), a permanent groundwater remediation system that extracts groundwater containing PFAS, treats it using advanced filtration systems, and returns the treated water to the environment.

Tyco Fire Products has also completed the removal and disposal of PFAS-affected soil from the FTC.

The Company's reserves for continued remediation of the FTC, the Stanton Street Facility and surrounding areas in Marinette and Peshtigo are based on estimates of costs associated with the long-term

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

remediation actions, including the continued operation of the GETS, the implementation of long-term drinking water solutions for the area impacted by groundwater migrating from the FTC, continued monitoring and testing of groundwater monitoring wells, the operation and wind-down of other legacy remediation and treatment systems and the completion of ongoing investigation obligations.

PFOA, PFOS, and other PFAS compounds are being studied by EPA and other environmental and health agencies and researchers.

EPA initially stated that it would propose regulatory standards for PFOS and PFOA in drinking water by the end of 2019, in accordance with its PFAS Action Plan released in February 2019, and issued interim recommendations for addressing PFOA and PFOS in groundwater in December 2019.

In March 2021, EPA published its final determination to regulate PFOS and PFOA in drinking water and in June 2022 an updated set of interim health advisory levels for PFOA and PFOS in drinking water, as well as final health advisory levels for two other types of PFAS (PFBS and GenX chemicals).

In November 2022, EPA added a class definition of PFAS to the final version of EPA's fifth Contaminant Candidate List ("CCL 5"), which is a list of substances not currently subject to national drinking water regulation, but which EPA believes may require future regulation.

In March 2021, EPA published its final determination to regulate PFOS and PFOA in drinking water.

In March 2023, EPA announced a proposed National Primary Drinking Water Regulation (“NPDWR”) for six PFAS compounds including PFOA and PFOS.

The NPDWR proposes establishing legally enforceable levels, called Maximum Contaminant Levels, of 4.0 parts per trillion for each of PFOA and PFOS.

EPA indicated that it anticipates finalizing the regulation by the end of 2023.

In October 2021, EPA released its "PFAS Strategic Roadmap:

EPA's Commitments to Action 2021-2024." The 2021-2024 Roadmap sets timelines by which EPA plans to take specific actions, including, among other items, publishing a national PFAS testing strategy, proposing to designate PFOA and PFOS as Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) hazardous substances, restricting PFAS discharges from industrial sources through Effluent Limitations Guidelines, publishing the final toxicity assessment for five additional PFAS, requiring water systems to test for 29 PFAS under the Safe Drinking Water Act, and publishing improved analytical methods in eight different environmental matrices to monitor 40 PFAS present in wastewater and stormwater discharges.

Both PFOA and PFOS are types of synthetic chemical compounds that have been present in firefighting foam.

However, both are also present in many existing consumer products.

According to EPA, PFOA and PFOS have been used to make carpets, clothing, fabrics for furniture, paper packaging for food and other materials (e.g., cookware) that are resistant to water, grease or stains.

In August 2022, EPA published a proposed rule that would designate PFOA and PFOS as “hazardous substances” under CERCLA.

The EPA has stated that it intends to propose two rules relating to PFAS under the Resource Conservation and Recovery Act (“RCRA”):

one rule would list four PFAS (PFOA, PFOS, PFBS, and GenX) as “hazardous constituents,” and a second rule would clarify that hazardous constituents are subject to RCRA's corrective action program.

In August 2022, EPA published a proposed rule that would designate PFOA and PFOS as “hazardous substances” under Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA").

In April 2023, EPA issued an Advanced Notice of Proposed Rulemaking ("ANPR") seeking input on whether it should expand the proposed rule to designate as "hazardous substances" under CERCLA:

2 unchanged sentences

or (3) entire categories of PFAS.

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 financial viability of other potentially responsible parties and third-party indemnitors, the uncertainty as to the nature and scope of the investigations and remediation to be conducted, changes in environmental regulations, changes in permissible levels of specific compounds in drinking water sources, or changes in enforcement theories and policies, including efforts to recover natural resource damages, 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.

It is possible that technological, regulatory or enforcement developments, the results of additional environmental studies or other factors could change the Company's expectations with respect to future charges and cash outlays, and such changes could be material to the Company's future results of operations, financial

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

condition or cash flows.

The EPA indicated that it anticipates finalizing the regulation by March 2024.

It is not possible 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 financial viability of other potentially responsible parties and third-party indemnitors, the uncertainty as to the nature and scope of the investigations and remediation to be conducted, changes in environmental regulations, changes in permissible levels of specific compounds in soil, groundwater and drinking water sources, or changes in enforcement theories and policies, including efforts to recover natural resource damages, 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 does not currently believe that any claims, penalties or costs in addition to the amounts accrued 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.

Conditional asset retirement obligations were $ 13 million and $ 17 million at June 30, 2023 and September 30, 2022, respectively.

FTC-Related Remediation and Litigation

Conditional asset retirement obligations were $ 10 million and $ 13 million at December 31, 2023 and September 30, 2023, respectively.

FTC-Related Matters

On June 21, 2019, the WDNR announced that it had received from the Wisconsin Department of Health Services (“WDHS”) a recommendation for groundwater quality standards as to, among other compounds, PFOA and PFOS.

1 unchanged sentence

Although Wisconsin approved final regulatory standards for PFOA and PFOS in drinking water and surface water in February 2022, the Wisconsin Natural Resources Board did not approve WDNR's proposed standards for PFOA and PFOS in groundwater.

In December 2022, the Governor of Wisconsin and WDNR approved a scope statement setting out parameters for the WDNR to draft a final rule regarding groundwater quality standards for PFOA and PFOS.

The WDNR is now in the process of drafting the rule.

In July 2019, the Company received a letter from the WDNR directing the expansion of the evaluation of PFAS in the Marinette region to include (1) biosolids sludge produced by the City of Marinette Waste Water Treatment Plant and spread on certain fields in the area and (2) the Menominee and Peshtigo Rivers.

Tyco Fire Products responded to the WDNR’s letter by requesting additional necessary information.

The WDNR initiated a rulemaking proceeding that would establish groundwater quality standards for PFOA, PFOS, perfluorobutane sulfonic acid and its potassium salt (“PFBS”) and hexafluoropropylene oxide dimer acid and its ammonium salt (“HFPO-DA”).

Pursuant to state law, the WDNR has stopped work on the proposed rule and notified the state legislature that, following economic analysis, the proposed costs would exceed statutory thresholds.

As a result, the state legislature is required to authorize the WDNR to allow the rulemaking to continue.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

spread on certain fields in the area and (2) the Menominee and Peshtigo Rivers.

On October 16, 2019, the WDNR issued a “Notice of Noncompliance” to Tyco Fire Products and Johnson Controls, Inc.

5 unchanged sentences

concerning land-applied biosolids, which reviewed and responded to the Company’s biosolids investigation conducted to that date.

Tyco Fire Products responded to the WDNR’s September 2021 notice by the December 27, 2021 deadline set by WDNR and submitted additional updates to WDNR on October 25, 2022 and February 16, 2023.

On April 10, 2023, the WDNR issued a third “Notice of Noncompliance” to Tyco Fire Products and Johnson Controls, Inc.

2 unchanged sentences

believe that they have complied with all applicable environmental laws and regulations.

The Company cannot predict what regulatory or enforcement actions, if any, might result from the WDNR’s actions, or the consequences of any such actions.

The Company cannot predict what regulatory or enforcement actions, if any, might result from the WDNR’s actions, or the consequences of any such actions, including the potential assessment of penalties.

In March 2022, the Wisconsin Department of Justice (“WDOJ”) filed a civil enforcement action against Johnson Controls Inc.

5 unchanged sentences

The parties are proceeding with fact discovery and the court has set a trial date of December 3, 2024.

The Company is vigorously defending this civil enforcement action and believes that it has meritorious defenses, but the Company is presently unable to predict the duration, scope, or outcome of this action.

In October 2022, the Town of Peshtigo filed a tort action in Wisconsin state court against Tyco Fire Products, Johnson Controls Inc., Chemguard, Inc., and ChemDesign, Inc.

5 unchanged sentences

The case has been removed to federal court and transferred to a multi-district litigation ("MDL") before the United States District Court for the District of South Carolina.

The Company plans to vigorously defend against this case and believes that it has meritorious defenses, but the Company is presently unable to predict the duration, scope, or outcome of this action.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

In November 2022, individuals filed six actions in Dane County, Wisconsin alleging personal injury and/or property damage against Tyco Fire Products, Johnson Controls Inc., Chemguard, Inc., and other unaffiliated defendants related to environmental matters at the FTC.

3 unchanged sentences

Subsequently, several additional plaintiffs have direct-filed in the MDL complaints with similar allegations.

These lawsuits are presently at the beginning stages of litigation.

The Company is vigorously defending these cases and believes that it has meritorious defenses, but the Company is presently unable to predict the duration, scope, or outcome of this action.

Aqueous Film-Forming Foam ("AFFF") Litigation

These FTC-related lawsuits are presently at the beginning stages of litigation.

The Company is vigorously defending each of these cases and believes that it has meritorious defenses, but it is presently unable to predict the duration, scope, or outcome of these actions.

Aqueous Film-Forming Foam ("AFFF") Matters

AFFF Litigation

Two of the Company's subsidiaries, Chemguard and Tyco Fire Products, have been named, along with other defendant manufacturers, suppliers and distributors, and, in some cases, certain subsidiaries of the Company affiliated with Chemguard and Tyco Fire Products, in a number of class action and other lawsuits relating to the use of fire-fighting foam products by the U.S.

1 unchanged sentence

Plaintiffs generally allege that the firefighting foam products contain or break down into the chemicals PFOS and PFOA and/or other PFAS compounds and that the use of these products by others at various airbases, airports and other sites resulted in the release of these chemicals into the environment and ultimately into communities’ drinking water supplies neighboring those airports, airbases and other sites.

Plaintiffs generally seek compensatory damages, including damages for alleged personal injuries, medical monitoring, diminution in property values, investigation and remediation costs, and natural resources damages, and also seek punitive damages and injunctive relief to address remediation of the alleged contamination.

Plaintiffs generally seek compensatory damages, including

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

damages for alleged personal injuries, medical monitoring, diminution in property values, investigation and remediation costs, and natural resources damages, and also seek punitive damages and injunctive relief to address remediation of the alleged contamination.

In September 2018, Tyco Fire Products and Chemguard filed a Petition for Multidistrict Litigation with the United States Judicial Panel on Multidistrict Litigation (“JPML”) seeking to consolidate all existing and future federal cases into one jurisdiction.

3 unchanged sentences

Chemguard and Tyco Fire Products are named in 44 pending putative class actions in federal courts originating from 16 states and territories.

All but one of these cases have been direct-filed in or transferred to the MDL and it is anticipated that the remaining case will be transferred to the MDL.

All of these cases have been direct-filed in or transferred to the MDL.

Tyco Fire Products was also recently named in a class action in British Columbia, Canada.

AFFF Individual or Mass Actions

2 unchanged sentences

The vast majority of these matters have been tagged for transfer to, transferred to, or directly-filed in the MDL, and it is anticipated that several newly-filed state court actions will be similarly tagged and transferred.

There are several matters that are proceeding in state courts, including actions in Arizona and Illinois.

There are several matters that are proceeding in state courts, including actions in Arizona, Illinois and Virginia.

Tyco and Chemguard are also periodically notified by other individuals that they may assert claims regarding PFOS and/or PFOA contamination allegedly resulting from the use of AFFF.

AFFF Municipal and Water Provider Cases

Chemguard and Tyco Fire Products have been named as defendants in more than 600 cases involving municipal or water provider plaintiffs that were filed in state or federal courts originating from 33 states.

The vast majority of these cases have been transferred to or were directly filed in the MDL, and it is anticipated that the remaining cases will be transferred to the

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

Chemguard and Tyco Fire Products have been named as defendants in more than 770 cases in federal and state courts involving municipal or water provider plaintiffs that were filed in state or federal courts originating from 35 states and territories.

The vast majority of these cases have been transferred to or were directly filed in the MDL, and it is anticipated that the remaining cases will be transferred to the MDL.

These municipal and water provider plaintiffs generally allege that the use of the defendants’ fire-fighting foam products at fire training academies, municipal airports, Air National Guard bases, or Navy or Air Force bases released PFOS and PFOA into public water supply wells and/or other public property, allegedly requiring remediation.

2 unchanged sentences

On June 5, 2023, the MDL court continued the trial date for the City of Stuart case, and the parties remaining in that case later reached settlement.

The parties in the MDL are working to identify potential water provider and personal injury cases for additional bellwether phases.

The parties in the MDL designated four additional plaintiffs as water provider bellwether cases and conducted initial discovery into those cases.

On December 19, 2023, the MDL court selected two of those cases to proceed into additional discovery.

The parties have also identified 25 personal injury bellwether cases, which have entered into the first phase of bellwether discovery.

Tyco and Chemguard are also periodically notified by other municipal entities that those entities may assert claims regarding PFOS and/or PFOA contamination allegedly resulting from the use of AFFF.

State or U.S.

Territory Attorneys General Litigation related to AFFF

AFFF State or U.S.

Territory Attorneys General Litigation

In June 2018, the State of New York filed a lawsuit in New York state court ( State of New York v.

The 3M Company et al.

The 3M Company et al No.

904029-18 (N.Y.

Ct., Albany County)) against a number of manufacturers, including affiliates of the Company, with respect to alleged PFOS and PFOA contamination purportedly resulting from firefighting foams used at locations across New York, including Stewart Air National Guard Base in Newburgh and Gabreski Air National Guard Base in Southampton, Plattsburgh Air Force Base in Plattsburgh, Griffiss Air Force Base in Rome, and unspecified “other” sites throughout the State.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

Southampton, Plattsburgh Air Force Base in Plattsburgh, Griffiss Air Force Base in Rome, and unspecified “other” sites throughout the State.

The lawsuit seeks to recover costs and natural resource damages associated with contamination at these sites.

1 unchanged sentence

In February 2019, the State of New York filed a second lawsuit in New York state court ( State of New York v.

The 3M Company et al.

The 3M Company et al (N.Y.

Ct., Albany County)), against a number of manufacturers, including affiliates of the Company, with respect to alleged PFOS and PFOA contamination purportedly resulting from firefighting foams used at additional locations across New York.

1 unchanged sentence

In July 2019, the State of New York filed a third lawsuit in New York state court ( State of New York v.

The 3M Company et al.

The 3M Company et al (N.Y.

1 unchanged sentence

In November 2019, the State of New York filed a fourth lawsuit in New York state court ( State of New York v.

The 3M Company et al.

The 3M Company et al (N.Y.

This suit has been removed to federal court and transferred to the MDL.

In January 2019, the State of Ohio filed a lawsuit in Ohio state court ( State of Ohio v.

The 3M Company et al.

G-4801-CI-021804752-000 (Court of Common Pleas of Lucas County, Ohio)) against a number of manufacturers, including affiliates of the Company, with respect to PFOS and PFOA contamination allegedly resulting from the use of firefighting foams at various specified and unspecified locations across Ohio.

The lawsuit seeks to recover costs and natural resource damages associated with the contamination.

This lawsuit has been removed to the United States District Court for the Northern District of Ohio and transferred to the MDL.

In addition, in May and June 2019, three other states filed lawsuits in their respective state courts against a number of manufacturers, including affiliates of the Company, with respect to PFOS and PFOA contamination allegedly resulting from the use of firefighting foams at various specified and unspecified locations across their jurisdictions ( State of New Hampshire v.

The 3M Company et al.

State of Vermont v.

The 3M Company et al .;

State of New Jersey v.

The 3M Company et al .).

All three of these suits have been removed to federal court and transferred to the MDL.

In September 2019, the government of Guam filed a lawsuit in the superior court of Guam against a number of manufacturers, including affiliates of the Company, with respect to PFOS and PFOA contamination allegedly resulting

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

from the use of firefighting foams at various locations within its jurisdiction.

This complaint has been removed to federal court and transferred to the MDL.

In November 2019, the government of the Commonwealth of the Northern Mariana Islands filed a lawsuit in the superior court of the Northern Mariana Islands against a number of manufacturers, including affiliates of the Company, with respect to PFOS and PFOA contamination allegedly resulting from the use of firefighting foams at various locations within its jurisdiction.

This complaint has been removed to federal court and transferred to the MDL.

In August 2020, Attorney General of the State of Michigan filed two substantially similar lawsuits—one in federal court and one in state court—against a number of manufacturers, including affiliates of the Company, with respect to PFOS and PFOA contamination allegedly resulting from the use of firefighting foams at various locations within the State.

The federal action has been transferred to the MDL, and the state court action has been removed to federal court and transferred to the MDL.

In December 2020, the State of Mississippi filed a lawsuit against a number of manufacturers and other defendants, including affiliates of the Company, with respect to PFOS and PFOA damage of the State’s land and natural resources allegedly resulting from the use of firefighting foams at various locations throughout the State.

This complaint was direct-filed in the MDL in South Carolina.

In April 2021, the State of Alaska filed a lawsuit in the superior court of the State of Alaska against a number of manufacturers and other defendants, including affiliates of the Company, with respect to PFOS and PFOA damage of the State’s land and natural resources allegedly resulting from the use of firefighting foams at various locations throughout the State.

5 unchanged sentences

In October 2022, the Attorney General filed two similar lawsuits in the superior courts of the State of North Carolina regarding alleged PFAS damages at two additional locations.

It is anticipated that these two cases will be removed to federal court and transferred to the MDL.

In February 2022, the Attorney General of the State of Colorado filed a lawsuit in Colorado state court against a number of manufacturers and other defendants, including affiliates of the Company, with respect to PFOS and PFOA damage of the State’s land and natural resources, public health, and State property allegedly resulting from the use of firefighting foams at various locations throughout the State.

This complaint has been removed to federal court and transferred to the MDL.

In April 2022, the Attorney General of the State of Florida filed a lawsuit in Florida state court against a number of manufacturers and other defendants, including affiliates of the Company, with respect to PFOS and PFOA damage to the State’s natural resources and public health allegedly resulting from the use of firefighting foams at various locations throughout the State.

This complaint has been removed to federal court and transferred to the MDL.

In May 2022, the Attorney General of the Commonwealth of Massachusetts filed a lawsuit against a number of manufacturers and other defendants, including affiliates of the Company, with respect to PFOS and PFOA damage of the State’s natural resources, property, residents, and consumers allegedly resulting from the use of firefighting foams at various locations throughout the State.

This complaint was direct-filed in the MDL in South Carolina.

In July 2022, the Attorney General of the State of Wisconsin filed a lawsuit in Wisconsin state court against a number of manufacturers and other defendants, including affiliates of the Company, with respect to PFAS damage to the State’s natural resources and public health allegedly resulting, in part, from the use of firefighting foams at various locations throughout the State.

This complaint has been removed to federal court and transferred to the MDL.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

In November 2022, the Attorney General of the State of California filed a lawsuit in California state court against a number of manufacturers and other defendants, including affiliates of the Company, with respect to PFOS and PFOA damage of the State’s land and natural resources allegedly resulting from the manufacture, use, marketing, or sale of PFAS-containing products, including firefighting foams, at various locations throughout the State.

This complaint has been removed to federal court and transferred to the MDL.

In March 2023, the Attorney General of the State of Maine filed a lawsuit in Maine state court against a number of manufacturers and other defendants, including affiliates of the Company, with respect to PFAS damage of the State’s natural resources allegedly resulting from the manufacture, distribution, release, promotion, sale, and use of PFAS-containing AFFF within the state.

This complaint has been removed to federal court and transferred to the MDL.

In March 2023, the Attorney General of the State of Illinois filed a lawsuit in Illinois state court against a number of manufacturers and other defendants, including affiliates of the Company, with respect to PFAS damage of the State’s environmental and natural resources allegedly resulting from the manufacture, storage, sale, distribution, marketing, and use of PFAS-containing AFFF within the State.

This complaint has been removed to federal court, and the JPML is considering Illinois's opposition to transfer to the MDL.

In May and June 2023, eleven other states and territories filed lawsuits, ten in their respective state courts, and one direct-filed in the MDL, against a number of manufacturers, including affiliates of the Company, with respect to PFOS and PFOA contamination allegedly resulting from the use of firefighting foams at various specified and unspecified locations across their jurisdictions ( State of Arizona v.

The 3M Company et al.;

State of Arkansas v.

The 3M Company et al.;

Commonwealth of Kentucky v.

The 3M Company et al.;

State of Maryland v.

The 3M Company et al.;

State of New Mexico v.

The 3M Company et al.;

State of Oregon v.

The 3M Company et al.;

Commonwealth of Puerto Rico v.

The 3M Company et al.;

State of Rhode Island v.

The 3M Company et al.;

State of Tennessee v.

The 3M Company et al.;

State of Texas v.

The 3M Company et al.;

State of Washington v.

The 3M Company et al .).

It is anticipated the ten state court-filed complaints will be removed to federal court and transferred to the MDL.

In July 2023, the Attorney General of the District of Columbia filed a lawsuit in superior court in the District, against a number of manufacturers, including affiliates of the Company, with respect to PFAS damage of the District’s natural resources and public health allegedly resulting from the manufacture, distribution, release, and use of PFAS-containing AFFF within and adjacent to it ( District of Columbia v.

The 3M Company et al.

It is anticipated that this complaint will be removed to federal court and transferred to the MDL.

These two cases have also been removed to federal court and transferred to the MDL.

In addition, 31 other states and territories have filed 33 lawsuits against a number of manufacturers and other defendants, including affiliates of the Company, with respect to PFAS damage of each of those State's environmental and natural resources allegedly resulting from the manufacture, storage, sale, distribution, marketing, and use of PFAS-containing AFFF within each respective State.

The states and territories are:

Arkansas, Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Hawaii, Illinois, Kentucky, Massachusetts, Maryland, Maine, Michigan, Mississippi, New Hampshire, New Jersey, New Mexico, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Washington, Wisconsin, Guam, the Northern Mariana Islands, and Puerto Rico.

All of these complaints, other than Hawaii and Connecticut, have been removed to federal court and transferred to the MDL.

The Hawaii complaint has been removed to federal court and it is anticipated that it will be transferred to the MDL.

It is anticipated that the Connecticut complaint will be removed to federal court and transferred to the MDL.

Other AFFF Related Matters

1 unchanged sentence

This case has been transferred to the MDL.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

In October 2022, the Red Cliff Band of Lake Superior Chippewa Indians (a federally recognized tribe) filed a lawsuit in the United States District Court for the Western District of Wisconsin against a number of manufacturers, including affiliates of the Company, with respect to PFAS contamination allegedly resulting from the use and disposal of AFFF at Duluth Air National Guard Base in Duluth, Minnesota.

2 unchanged sentences

The Company is vigorously defending all of the above AFFF matters and believes that it has meritorious defenses to class certification and the claims asserted, including statutes of limitations, the government contractor defense, various medical and scientific defenses, and other factual and legal defenses.

The government contractor defense is a form of immunity

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

available to government contractors that produced products for the United States government pursuant to the government’s specifications.

The government contractor defense is a form of immunity available to government contractors that produced products for the United States government pursuant to the government’s specifications.

In September 2022, the AFFF MDL Court declined to grant summary judgment on the government contractor defense, ruling that various factual issues relevant to the defense must be decided by a jury rather than the Court.

Tyco and Chemguard have insurance that has been in place for many years and the Company is pursuing this coverage for these matters in the event the Company is required to pay claims.

However, there are numerous factual and legal issues to be resolved in connection with these claims, and it is extremely difficult to predict the outcome or ultimate financial exposure, if any, represented by these matters, and there can be no assurance that any such exposure will not be material.

The Company has a historical general liability insurance program and is pursuing coverage under the program from various insurers through insurance claims discussions and litigation pending in a state court in Wisconsin and a federal district court in South Carolina.

The insurance litigation involves numerous factual and legal issues and remains at a relatively early stage.

There are numerous factual and legal issues to be resolved in connection with these claims.

The Company is presently unable to predict the outcome or ultimate financial exposure, if any, represented by these matters, and there can be no assurance that any such exposure will not be material.

Asbestos Matters

1 unchanged sentence

These cases have typically involved product liability claims based primarily on allegations of manufacture, sale or distribution of industrial products that either contained asbestos or were used with asbestos containing components.

The Company estimates the asbestos-related liability for pending and future claims and related defense costs on a discounted basis.

In connection with the recognition of liabilities for asbestos-related matters, the Company records asbestos-related insurance recoveries that are probable.

The following table presents the location and amount of asbestos-related assets and liabilities in the Company's consolidated statements of financial position (in millions):

June 30, 2023 September 30, 2022

December 31, 2023 September 30, 2023

Other current liabilities $ 58 $ 58

5 unchanged sentences

Net asbestos-related liabilities $ 96 $ 121

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

The following table presents the components of asbestos-related assets (in millions):

June 30, 2023 September 30, 2022

December 31, 2023 September 30, 2023

Cash $ 19 $ 20

3 unchanged sentences

Total asbestos-related assets $ 321 $ 301

The Company's estimate of the liability and corresponding insurance recovery for pending and future claims and defense costs is based on the Company's historical claim experience, and estimates of the number and resolution cost of potential future claims that may be filed and is discounted to present value from 2068 (which is the Company's reasonable best estimate of the actuarially determined time period through which asbestos-related claims will be paid by Company affiliates).

Estimated asbestos-related defense costs are included in the asbestos liability.

The Company's legal strategy for resolving claims also impacts these estimates.

The Company considers various trends and developments in evaluating the period of time (the look-back period) over which historical claim and settlement experience is used to estimate and value claims reasonably projected to be paid through 2068.

Annually, the Company assesses the sufficiency of its estimated liability for pending and future claims and defense costs by evaluating actual experience regarding claims filed, settled and

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2023

dismissed, and amounts paid in settlements.

In addition to claims and settlement experience, the Company considers additional quantitative and qualitative factors such as changes in legislation, the legal environment, and the Company's defense strategy.

The Company also evaluates the recoverability of its insurance receivable on an annual basis.

The Company evaluates all of these factors and determines whether a change in the estimate of its liability for pending and future claims and defense costs or insurance receivable is warranted.

The amounts recorded by the Company for asbestos-related liabilities and insurance-related assets are based on the Company's strategies for resolving its asbestos claims, currently available information, and a number of estimates and assumptions.

The amounts recorded for asbestos-related liabilities and insurance-related assets are based on the Company's strategies for resolving its asbestos claims, currently available information, and a number of estimates and assumptions.

Key variables and assumptions include the number and type of new claims that are filed each year, the average cost of resolution of claims, the identity of defendants, the resolution of coverage issues with insurance carriers, amount of insurance, and the solvency risk with respect to the Company's insurance carriers.

7 unchanged sentences

For most of these liabilities, claims incurred but not yet reported are estimated by utilizing actuarial valuations based upon historical claims experience.

The Company maintains captive insurance companies to manage its self-insured liabilities.

The Company maintains captive insurance companies to manage a portion of its insurable liabilities.

The following table presents the location and amount of self-insured liabilities in the Company's consolidated statements of financial position (in millions):

June 30, 2023 September 30, 2022

December 31, 2023 September 30, 2023

Other current liabilities $ 87 $ 86

3 unchanged sentences

The following table presents the location and amount of insurance receivables in the Company's consolidated statements of financial position (in millions):

June 30, 2023 September 30, 2022

December 31, 2023 September 30, 2023

Other current assets $ 6 $ 6

3 unchanged sentences

Notes to Consolidated Financial Statements

June 30, 2023

December 31, 2023

Other Matters

The Company is involved in various lawsuits, claims and proceedings incident to the operation of its businesses, including those pertaining to product liability, environmental, safety and health, intellectual property, employment, commercial and contractual matters, and various other casualty matters.

Although the outcome of litigation cannot be predicted with certainty and some lawsuits, claims or proceedings may be disposed of unfavorably to us, 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.

Although the outcome of litigation cannot be predicted with certainty and some lawsuits, claims or proceedings may be disposed of unfavorably to the Company, 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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements