What changed in this filing

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Item 1. Financial Statements

2024-05-01 compared with 2024-01-30 · 314 added, 236 removed, 768 unchanged (42% of the section changed)

4 unchanged sentences

Three Months Ended

March 31, Six Months Ended

2024 2023 2024 2023

Products and systems $ 4,985 $ 5,083 $ 9,474 $ 9,639

Services 1,714 1,603 3,319 3,115

6,699 6,686 12,793 12,754

Cost of sales

1 unchanged sentence

Services 1,059 929 1,999 1,793

4,518 4,445 8,620 8,422

Gross profit 2,181 2,241 4,173 4,332

3 unchanged sentences

Equity income 56 50 118 112

Income before income taxes 403 170

Income (loss) before income taxes ( 361 ) 223 42 393

Income tax (benefit) provision ( 127 ) 49 ( 128 ) 63

Net income 404 156

Net income (loss) ( 234 ) 174 170 330

Income attributable to noncontrolling interests 43 41 73 79

Net income attributable to Johnson Controls $ 374 $ 118

Earnings per share attributable to Johnson Controls

Net income (loss) attributable to Johnson Controls $ ( 277 ) $ 133 $ 97 $ 251

Earnings (loss) per share attributable to Johnson Controls

Basic $ ( 0.41 ) $ 0.19 $ 0.14 $ 0.37

5 unchanged sentences

Three Months Ended

Net income $ 404 $ 156

March 31, Six Months Ended

2024 2023 2024 2023

Net income (loss) $ ( 234 ) $ 174 $ 170 $ 330

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments ( 95 ) 10 ( 33 ) 100

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

Realized and unrealized gains (losses) on derivatives 27 20 ( 15 ) 3

Pension and postretirement plans ( 1 ) — ( 2 ) ( 1 )

Other comprehensive income 19 72

Total comprehensive income 423 228

Other comprehensive income (loss) ( 69 ) 30 ( 50 ) 102

Total comprehensive income (loss) ( 303 ) 204 120 432

Comprehensive income attributable to noncontrolling interests:

5 unchanged sentences

Comprehensive income attributable to noncontrolling interests 44 53 71 116

Comprehensive income attributable to Johnson Controls $ 396 $ 165

Comprehensive income (loss) attributable to Johnson Controls $ ( 347 ) $ 151 $ 49 $ 316

The accompanying notes are an integral part of the consolidated financial statements.

2 unchanged sentences

(in millions, except par value;

December 31, 2023 September 30, 2023

March 31, 2024 September 30, 2023

Cash and cash equivalents $ 843 $ 835

38 unchanged sentences

(in millions;

Three Months Ended December 31,

Six Months Ended March 31,

Operating Activities

2 unchanged sentences

Net income 170 330

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

Adjustments to reconcile net income to cash provided (used) by operating activities:

Depreciation and amortization 467 409

13 unchanged sentences

Accrued income taxes ( 29 ) 60

Cash used by operating activities ( 246 ) ( 296 )

Cash provided (used) by operating activities ( 449 ) 18

Investing Activities

10 unchanged sentences

Employee equity-based compensation withholding taxes ( 24 ) ( 32 )

Dividends paid to noncontrolling interests ( 51 ) ( 72 )

Other - net ( 48 ) 26

11 unchanged sentences

Three Months Ended

March 31, Six Months Ended

2024 2023 2024 2023

Shareholders' Equity Attributable to Johnson Controls

12 unchanged sentences

Beginning balance 1,506 874 1,384 1,151

Net income attributable to Johnson Controls 374 118

Net income (loss) attributable to Johnson Controls ( 277 ) 133 97 251

Cash dividends declared ( 248 ) ( 245 ) ( 500 ) ( 486 )

3 unchanged sentences

Beginning balance ( 933 ) ( 864 ) ( 955 ) ( 911 )

Other comprehensive income 22 47

Other comprehensive income (loss) ( 70 ) 18 ( 48 ) 65

Ending balance ( 1,003 ) ( 846 ) ( 1,003 ) ( 846 )

3 unchanged sentences

Comprehensive income attributable to noncontrolling interests 44 53 71 116

Dividends attributable to noncontrolling interests ( 39 ) ( 62 ) ( 39 ) ( 62 )

Other, including options exercised 2 — 2 —

Ending Balance 1,183 1,188 1,183 1,188

4 unchanged sentences

Notes to Consolidated Financial Statements

December 31, 2023

March 31, 2024

BASIS OF PRESENTATION

4 unchanged sentences

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, 2023 filed with the SEC on December 14, 2023.

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.

The results of operations for the three and six month periods ended March 31, 2024 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

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

1 unchanged sentence

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.

Supplier finance programs may also be referred to as reverse factoring, payables finance, or structured payables arrangements.

Supplier finance programs may

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

also be referred to as reverse factoring, payables finance, or structured payables arrangements.

The amendments require a buyer that uses supplier finance programs to make annual disclosures about the program’s key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period, and associated rollforward information.

7 unchanged sentences

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.

Accounts payable included in the SCF programs were approximately $ 561 million and $ 566 million as of March 31, 2024, and September 30, 2023, respectively.

Recently Issued Accounting Pronouncements

9 unchanged sentences

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

Johnson Controls International plc

Notes to Consolidated Financial Statements

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.

During the six months ended March 31, 2023, the Company completed certain acquisitions for a combined purchase price, net of cash acquired, of $ 115 million, of which $ 89 million was paid as of March 31, 2023.

In connection with the acquisitions, the Company recorded goodwill of $ 53 million within the Global Products segment and $ 14 million within the Building Solutions EMEA/LA segment.

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

ASSETS AND LIABILITIES HELD FOR SALE

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.

During the three and six months ended March 31, 2023, the Company recorded impairment charges primarily due to reductions in the estimated fair value of its Global Retail business of $ 210 million and $ 438 million, respectively.

During the six months ended March 31, 2023, the Company also recorded an impairment charge for a business in the Building Solutions Asia Pacific segment of $ 60 million.

Both businesses were classified as held for sale as of March 31, 2023.

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.

No assets and liabilities were classified as held for sale as of March 31, 2024 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 December 31,

Three Months Ended March 31,

Products & Systems Services Total Products & Systems Services Total

4 unchanged sentences

Total $ 4,985 $ 1,714 $ 6,699 $ 5,083 $ 1,603 $ 6,686

Six Months Ended March 31,

Products & Systems Services Total Products & Systems Services Total

Building Solutions North America $ 3,218 $ 2,008 $ 5,226 $ 3,005 $ 1,882 $ 4,887

Building Solutions EMEA/LA 1,144 958 2,102 1,134 872 2,006

Building Solutions Asia Pacific 645 353 998 952 361 1,313

Global Products 4,467 — 4,467 4,548 — 4,548

Total $ 9,474 $ 3,319 $ 12,793 $ 9,639 $ 3,115 $ 12,754

The following table presents further disaggregation of Global Products segment revenues by product type (in millions):

Three Months Ended

March 31, Six Months Ended

2024 2023 2024 2023

HVAC $ 1,683 $ 1,757 $ 3,101 $ 3,197

2 unchanged sentences

Total $ 2,405 $ 2,468 $ 4,467 $ 4,548

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

Contract Balances

2 unchanged sentences

Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period.

Johnson Controls International plc

Notes to Consolidated Financial Statements

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 December 31, 2023 September 30, 2023

Location of contract balances March 31, 2024 September 30, 2023

Contract assets - current Accounts receivable - net $ 2,063 $ 2,370

2 unchanged sentences

Contract liabilities - noncurrent Other noncurrent liabilities 310 297

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.

For the three months ended March 31, 2024 and 2023, the Company recognized revenue of $ 372 million and $ 319 million, respectively, that was included in the contract liability balance at the end of the prior fiscal year.

For the six months ended March 31, 2024 and 2023, the Company recognized revenue of $ 1,261 million and $ 1,165 million, respectively, that was included in the contract liability balance at the end of the prior fiscal year.

Performance Obligations

6 unchanged sentences

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

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 .

As of March 31, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $ 21.2 billion, of which approximately 66 % 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.

5 unchanged sentences

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

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

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):

December 31, 2023 September 30, 2023

March 31, 2024 September 30, 2023

Other current assets $ 204 $ 156

1 unchanged sentence

Total $ 467 $ 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

December 31, 2023

During the three months ended March 31, 2024 and 2023, the C ompany recognized amortization expense of $ 77 million and $ 61 million, respectively, related to costs to obtain or fulfill a contract.

During the six months ended March 31, 2024 and 2023, the Company recognized amortization expense of $ 134 million and $ 122 million, respectively, relate d to costs to obtain or fulfill a contract.

There were no impairment losses recognized in the three and six months ended March 31, 2024 and 2023.

ACCOUNTS RECEIVABLE

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.

The Company sold $ 702 million of accounts receivable under factoring agreements during the six months ended March 31, 2024.

No amounts were sold during the three months ended March 31, 2024 as the Company discontinued its receivable factoring program.

The Company sold $ 427 million and $ 836 million of accounts receivable during the three and six months ended March 31, 2023, respectively.

Previously sold receivables still outstanding were $ 82 million and $ 681 million as of March 31, 2024 and September 30, 2023, respectively.

Inventories consisted of the following (in millions):

December 31, 2023 September 30, 2023

March 31, 2024 September 30, 2023

Raw materials and supplies $ 1,218 $ 1,203

3 unchanged sentences

GOODWILL AND OTHER INTANGIBLE ASSETS

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

Three Months Ended December 31, 2023

The following table summarizes changes in the carrying amount of goodwill in each of the Company’s reportable segments (in millions):

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

1 unchanged sentence

Accumulated impairment loss ( 659 ) ( 47 ) — ( 259 ) ( 965 )

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

Balance at September 30, 2023 9,381 1,885 1,179 5,491 17,936

Impairments — ( 230 ) — — ( 230 )

Foreign currency translation and other (1)

Balance at end of period $ 9,396 $ 1,961 $ 1,217 $ 5,550 $ 18,124

11 44 1 ( 5 ) 51

Balance at March 31, 2024 $ 9,392 $ 1,699 $ 1,180 $ 5,486 $ 17,757

(1) Includes measurement period adjustments

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

December 31, 2023 September 30, 2023

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.

During the second quarter of fiscal 2024, the Company determined a

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

triggering event had occurred for one of its reporting units due to year-to-date results and projections for the remainder of fiscal 2024 being lower than the forecast used in the previous annual goodwill impairment test, 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 $ 230 million within restructuring and impairment cost in the consolidated statements of income, which was determined by comparing the carrying amount of the reporting unit to its fair value.

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." The reporting unit whose goodwill was impaired was previously disclosed as being at risk of impairment in the Company’s Annual Report on Form 10-K for the year-ended September 30, 2023.

It is possible that future changes in circumstances, including an increase in the discount rate or a decrease in the revenue growth rates, could result in an additional non-cash impairment charge of the remaining $ 215 million of goodwill for this reporting unit.

There were no other triggering events requiring an impairment assessment be conducted in the six months ended March 31, 2024.

Other intangible assets, primarily from business acquisitions, consisted of (in millions):

March 31, 2024 September 30, 2023

Amount Accumulated

10 unchanged sentences

Total intangible assets $ 7,704 $ ( 2,987 ) $ 4,717 $ 7,625 $ ( 2,737 ) $ 4,888

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

Amortization of other intangible assets for the three months ended March 31, 2024 and 2023 was $ 125 million and $ 104 million, respectively.

Amortization of other intangible assets for the six months ended March 31, 2024 and 2023 was $ 247 million and $ 208 million, respectively.

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

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

Location of lease balances March 31, 2024 September 30, 2023

Operating lease right-of-use assets Other noncurrent assets

3 unchanged sentences

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

Three Months Ended

Six Months Ended

Right-of-use assets obtained in exchange for operating lease liabilities $ 135 $ 215

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

DEBT AND FINANCING ARRANGEMENTS

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

December 31, September 30,

March 31, September 30,

Commercial paper $ 1,784 $ 200

3 unchanged sentences

Weighted average interest rate on short-term debt outstanding 4.7 % 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.

As of March 31, 2024, 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 March 31, 2024.

In April 2024, the Company and its wholly-owned subsidiary, Tyco Fire & Security Finance S.C.A, co-issued $ 700 million unsecured, unsubordinated senior notes with an interest rate of 5.50 % which is due April 2029.

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.

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

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.

During the three months ended March 31, 2024, the Company terminated $ 600 million of forward-starting interest-rate swaps related to an anticipated note issuance that was no longer highly likely to occur.

Accumulated amounts previously recorded in AOCI were not material and were recognized as net financing charges in the consolidated statements of income when the swaps were terminated.

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.

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

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

Volume Outstanding as of

Commodity December 31, 2023 September 30, 2023

Commodity March 31, 2024 September 30, 2023

Copper 3,447 2,812

1 unchanged sentence

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.

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 and six months ended March 31, 2024 and 2023.

Net Investment Hedges

3 unchanged sentences

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

December 31, September 30,

March 31, September 30,

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

7 unchanged sentences

Notes to Consolidated Financial Statements

December 31, 2023

March 31, 2024

Fair Value of Derivative Instruments

1 unchanged sentence

Derivatives and Hedging Activities

Designated as Hedging Instruments Derivatives and Hedging Activities Not

Designated as Hedging Instruments

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

as Hedging Instruments Derivatives and Hedging Activities

Not Designated

as Hedging Instruments

March 31, September 30, March 31, September 30,

2024 2023 2024 2023

8 unchanged sentences

Foreign currency exchange derivatives $ 17 $ 20 $ — $ 5

Interest rate swaps 14 — — —

Commodity derivatives — 2 — —

15 unchanged sentences

Notes to Consolidated Financial Statements

December 31, 2023

March 31, 2024

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

Fair Value of Assets Fair Value of Liabilities

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

March 31, September 30, March 31, September 30,

2024 2023 2024 2023

5 unchanged sentences

Derivatives in Cash Flow

Hedging Relationships Three Months Ended December 31,

Hedging Relationships Three Months Ended March 31, Six Months Ended March 31,

2024 2023 2024 2023

Foreign currency exchange derivatives $ 15 $ 9 $ 2 $ ( 12 )

4 unchanged sentences

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

March 31, Six Months Ended

2024 2023 2024 2023

Foreign currency exchange derivatives Cost of sales $ ( 2 ) $ ( 5 ) $ ( 3 ) $ 4

4 unchanged sentences

Recognized in Income on Derivative Three Months Ended

March 31, Six Months Ended

2024 2023 2024 2023

Foreign currency exchange derivatives Cost of sales $ 2 $ ( 6 ) $ ( 3 ) $ ( 8 )

Foreign currency exchange derivatives SG&A ( 1 ) — ( 1 ) —

Foreign currency exchange derivatives Net financing charges 59 15 16 ( 64 )

Total $ 60 $ 9 $ 12 $ ( 72 )

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

March 31, 2024

The following table presents pre-tax gains (losses) on net investment hedges recorded as foreign currency translation adjustments ("CTA") within other comprehensive income (loss) (in millions):

Three Months Ended

March 31, Six Months Ended

2024 2023 2024 2023

Net investment hedges $ 98 $ ( 60 ) $ ( 47 ) $ ( 329 )

No gains or losses were reclassified from CTA into income during the three and six months ended March 31, 2024 and 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

March 31, 2024

Recurring Fair Value Measurements

1 unchanged sentence

Fair Value Measurements Using:

December 31, 2023 Quoted Prices

March 31, 2024 Quoted Prices

(Level 1) Significant

4 unchanged sentences

Other noncurrent assets

Cross-currency interest rate swap 7 — 7 —

Deferred compensation plan assets 53 53 — —

4 unchanged sentences

Foreign currency exchange derivatives $ 17 $ — $ 17 $ —

Interest rate swaps 14 — 14 —

Contingent earn-out liabilities 63 — — 63

4 unchanged sentences

Notes to Consolidated Financial Statements

December 31, 2023

March 31, 2024

Fair Value Measurements Using:

20 unchanged sentences

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

The following table summarizes the changes in contingent earn-out liabilities, which are valued using significant unobservable inputs (Level 3) (in millions):

The following table summarizes changes in contingent earn-out liabilities, which are valued using significant unobservable inputs (Level 3) (in millions):

Balance at September 30, 2023

1 unchanged sentence

Reduction for change in estimates ( 8 )

Currency translation 1

Balance at December 31, 2023

Balance at March 31, 2024

Valuation Methods

6 unchanged sentences

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

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.

March 31, 2024

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.

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.

7 unchanged sentences

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,

The following table presents the portion of unrealized gains recognized in the consolidated statements of income that relate to equity securities still held at March 31, 2024 and 2023 (in millions):

Three Months Ended March 31, Six Months Ended March 31,

2024 2023 2024 2023

Deferred compensation plan assets $ 3 $ 2 $ 7 $ 5

Investments in exchange traded funds 17 12 39 23

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.

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

December 31, September 30,

The fair value of long-term debt at March 31, 2024 and September 30, 2023 was as follows (in billions):

March 31, September 30,

Public debt $ 7.6 $ 7.1

3 unchanged sentences

The fair value of other long-term debt was determined using quoted market prices for similar instruments and are classified as Level 2 inputs within the ASC 820 fair value hierarchy.

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

STOCK-BASED COMPENSATION

2 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:

Three Months Ended December 31,

Six Months Ended March 31,

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

4 unchanged sentences

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

Three Months Ended

Six 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:

Three Months Ended

Six Months Ended

Expected life of option (years) 5.7 5.8

4 unchanged sentences

Notes to Consolidated Financial Statements

December 31, 2023

March 31, 2024

EARNINGS PER SHARE

1 unchanged sentence

Three Months Ended

Net income attributable to Johnson Controls $ 374 $ 118

March 31, Six Months Ended

2024 2023 2024 2023

Net income (loss) attributable to Johnson Controls $ ( 277 ) $ 133 $ 97 $ 251

Weighted Average Shares Outstanding

6 unchanged sentences

Stock options and unvested restricted stock — 0.3 0.5 0.3

For the three months ended March 31, 2024, the total number of potential dilutive shares due to stock options, unvested restricted stock and unvested performance share awards was 1.6 million.

However, these items were not included in the computation of diluted loss per share for the three months ended March 31, 2024 since to do so would decrease the loss per share.

Share repurchase program

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.

During the three and six months ended March 31, 2024, the Company repurchased and immediately retired $ 474 million of its ordinary shares.

During the three and six months ended March 31, 2023, the Company repurchased and immediately retired $ 93 million and $ 247 million, respectively, of its ordinary shares.

As of March 31, 2024, approximately $ 2.5 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.

1 unchanged sentence

Notes to Consolidated Financial Statements

December 31, 2023

March 31, 2024

Accumulated Other Comprehensive Income (Loss)

The following schedules present changes in AOCI attributable to Johnson Controls (in millions, net of tax):

The following schedules present changes in AOCI attributable to Johnson Controls (in millions):

Three Months Ended

March 31, Six Months Ended

2024 2023 2024 2023

Foreign currency translation adjustments

11 unchanged sentences

Reclassification to income ( 2 ) ( 1 ) ( 3 ) ( 2 )

Net tax impact 1 1 1 1

Balance at end of period ( 2 ) — ( 2 ) —

5 unchanged sentences

Three Months Ended

March 31, Six Months Ended

2024 2023 2024 2023

Interest cost $ 19 $ 20 $ 39 $ 41

1 unchanged sentence

Net actuarial loss — 15 — 23

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

Settlement loss — 1 — 1

Net periodic benefit cost (credit) $ ( 11 ) $ 3 $ ( 21 ) $ ( 2 )

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

March 31, 2024

Pension Plans

Three Months Ended

March 31, Six Months Ended

2024 2023 2024 2023

Service cost $ 4 $ 4 $ 8 $ 7

4 unchanged sentences

Three Months Ended

March 31, Six Months Ended

2024 2023 2024 2023

Interest cost $ 1 $ 1 $ 2 $ 2

2 unchanged sentences

Net periodic benefit credit $ ( 3 ) $ ( 2 ) $ ( 5 ) $ ( 4 )

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.

During the three and six months ended March 31, 2023, 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 $ 15 million and $ 23 million, respectively, primarily due to decreases in discount rates, partially offset by favorable plan asset performance.

RESTRUCTURING AND RELATED COSTS

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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 December 31, 2023

Additional restructuring charges related to this plan were recorded in the three and six months ended March 31, 2024 and are expected in subsequent quarters.

The following table summarizes restructuring and related costs (in millions):

Three Months Ended March 31, 2024 Six Months Ended March 31, 2024

Building Solutions North America $ — $ 4

Building Solutions EMEA/LA — 13

Building Solutions Asia Pacific 3 3

Global Products 15 36

Corporate 6 7

Total $ 24 $ 63

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):

March 31, 2024

The following table summarizes changes in the restructuring reserve, which is included within other current liabilities in the consolidated statements of financial position (in millions):

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

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Utilized—noncash — ( 23 ) ( 1 ) ( 24 )

Balance at December 31, 2023

Other 28 — — 28

Balance at March 31, 2024

$ 71 $ — $ 11 $ 82

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

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

The Company reviews the realizability of its deferred tax assets on a quarterly basis, or whenever events or changes in circumstances indicate that a review is required.

In determining the requirement for a valuation allowance, the historical and projected financial results of the legal entity or consolidated group recording the net deferred tax asset are considered, along with any other positive or negative evidence.

Since future financial results may differ from previous estimates, periodic adjustments to the Company’s valuation allowances may be necessary.

For the three months ended March 31, 2024, the Company's effective tax rate was 35.2 % and was higher than the statutory tax rate of 12.5 % primarily due to the tax impact of an impairment charge and tax rate differentials, partially offset by the tax impact of the water systems Aqueous Film Forming Foam ("AFFF") settlement costs and the benefits of continuing global tax planning.

For the six months ended March 31, 2024, the Company's effective tax rate was ( 305 %) and was lower than the statutory tax rate of 12.5 % primarily due to the tax impact of the water systems AFFF settlement costs, Swiss tax reform, and the benefits of continuing global tax planning, partially offset by the tax impact of an impairment charge, 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 March 31, 2023, the Company's effective tax rate was 22.0 % and was higher than the statutory tax rate of 12.5 % primarily due to the tax impact of an impairment charge and tax rate differentials, partially offset by the benefits of continuing global tax planning initiatives.

For the six months ended March 31, 2023, the Company's effective tax rate was 16.0 % and was higher than the statutory tax rate of 12.5 % primarily due to the tax impact of an impairment charge and tax rate differentials, partially offset by the benefits of continuing global tax planning initiatives.

Refer to Note 21, "Commitments and Contingencies," of the notes to the consolidated financial statements for further disclosure related to the water systems AFFF settlement.

Uncertain Tax Positions

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 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.

Accrued interest, net at September 30, 2023 was approximately

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.

March 31, 2024

$ 335 million (net of tax benefit).

Interest accrued during the six months ended March 31, 2024 and 2023 was approximately $ 60 million and $ 56 million (both net of tax benefit), respectively.

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

In the U.S., fiscal years 2019 through 2020 are currently under audit and 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.

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Based upon the circumstances surrounding these examinations, the impact is not currently quantifiable.

Other Tax Matters

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.

Impacts of Tax Legislation

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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.

As a result, in the six months ended March 31, 2024, 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.

SEGMENT INFORMATION

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

The Company conducts its business through four business segments:

The Company conducts its business through four operating segments, all of which are reportable 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;

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• 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.

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

The Global Products segment designs, manufactures and sells:

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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.

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

Financial information relating to the Company’s reportable segments is as follows (in millions):

Three Months Ended

March 31, Six Months Ended

2024 2023 2024 2023

Building Solutions North America $ 2,739 $ 2,520 $ 5,226 $ 4,887

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Total net sales $ 6,699 $ 6,686 $ 12,793 $ 12,754

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

Segment EBITA

Three Months Ended

March 31, Six Months Ended

2024 2023 2024 2023

Building Solutions North America $ 373 $ 315 $ 658 $ 582

6 unchanged sentences

Restructuring and impairment costs 254 418 293 763

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

Water systems AFFF settlement (1)

Net mark-to-market losses (gains) ( 15 ) 4 ( 37 ) 1

Net financing charges 93 71 192 138

Income before income taxes $ 403 $ 170

Income (loss) before income taxes $ ( 361 ) $ 223 $ 42 $ 393

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

(1) Refer to Note 21, "Commitments and Contingencies," of the notes to the consolidated financial statements for further disclosure related to the water systems AFFF settlement.

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.

6 unchanged sentences

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):

Three Months Ended December 31, 2023

Balance at beginning of period $ 203

The following table summarizes changes in the total product warranty liability (in millions):

Balance at September 30, 2023 $ 203

Accruals for warranties issued during the period 71

Settlements made (in cash or in kind) during the period ( 64 )

Currency translation 3

Balance at end of period $ 209

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

Changes in estimates to pre-existing warranties 28

Balance at March 31, 2024 $ 238

COMMITMENTS AND CONTINGENCIES

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

December 31, 2023 September 30, 2023

March 31, 2024 September 30, 2023

Other current liabilities $ 28 $ 31

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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 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 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.

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.

Its corporate predecessor, Ansul Incorporated (“Ansul”), manufactured arsenic-based agricultural herbicides at the Stanton Street Facility, which resulted in significant arsenic contamination of soil and groundwater on the site and in parts of the adjoining Menominee River.

In 2009, Ansul entered into an Administrative Consent Order (the "Consent Order") with the U.S.

Environmental Protection Agency (“EPA”) to address the presence of arsenic at the site.

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 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

A substantial portion of the Company's environmental reserves relates to ongoing long-term remediation efforts to address contamination relating to Aqueous Film Forming Foam ("AFFF") containing perfluorooctane sulfonate ("PFOS"), perfluorooctanoic acid ("PFOA"), and/or other per- and poly-fluoroalkyl substances ("PFAS") at or near the Tyco Fire

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.

March 31, 2024

Products L.P.

PFOA, PFOS, and other PFAS compounds are being studied by the U.S.

Environmental Protection Agency ("EPA") and other environmental and health agencies and researchers.

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.

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.

On April 10, 2024, EPA announced the final National Primary Drinking Water Regulation (“NPDWR”) for six PFAS compounds including PFOA and PFOS.

The NPDWR established legally enforceable levels, called Maximum Contaminant Levels, of 4.0 parts per trillion ("ppt") for each of PFOA and PFOS, 10 ppt for each of PFHxS, PFNA, and HFPO-DA (commonly known as GenX Chemicals), and a Hazard Index of one for mixtures containing two or more of PFHxS, PFNA, HFPO-DA, and PFBA.

In February 2024, EPA released two proposed rules relating to PFAS under the Resource Conservation and Recovery Act (“RCRA”):

one rule proposes to list nine PFAS (including PFOA and PFOS) as “hazardous constituents,” and a second rule proposes to clarify that hazardous waste regulated under the rule includes not only substances listed or identified as hazardous waste in the regulations, but also any substances that meets the statutory definition of hazardous waste.

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").

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or (3) entire categories of PFAS.

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

On April 17, 2024, the EPA Administrator signed the final rule designating PFOA and PFOS, along with their salts and structural isomers, as “hazardous substances.”

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.

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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 $ 10 million and $ 13 million at December 31, 2023 and September 30, 2023, respectively.

Conditional asset retirement obligations were $ 10 million and $ 13 million at March 31, 2024 and September 30, 2023, respectively.

FTC-Related Matters

FTC Remediation

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.

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

Its corporate predecessor, Ansul Incorporated (“Ansul”), manufactured arsenic-based agricultural herbicides at the Stanton Street

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

Facility, which resulted in significant arsenic contamination of soil and groundwater on the site and in parts of the adjoining Menominee River.

In 2009, Ansul entered into an Administrative Consent Order (the "Consent Order") with EPA to address the presence of arsenic at the site.

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 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.

FTC-Related Litigation

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.

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

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

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.

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22-CX-1 (filed March 14, 2022 in Circuit Court in Marinette County, Wisconsin)).

The WDOJ alleges that the Company failed to timely report the presence of PFAS chemicals at the FTC, and that the Company has not sufficiently investigated or remediated PFAS at or near the FTC.

The WDOJ alleges that the Company failed to timely report the presence of PFAS chemicals at the

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

FTC, and that the Company has not sufficiently investigated or remediated PFAS at or near the FTC.

The WDOJ seeks monetary penalties and an injunction ordering these two subsidiaries to complete a site investigation and cleanup of PFAS contamination in accordance with the WDNR's requests.

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

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

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.

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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.

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.

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, and other unaffiliated defendants related to environmental matters at the FTC.

Plaintiffs allege that use of AFFF products at the FTC and activities by third parties unrelated to the Company contaminated nearby drinking water sources, surface waters, and other natural resources and properties, including their personal properties.

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

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.

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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

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.

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.

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.

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Additional cases have been identified for transfer to or are being directly filed in the MDL.

AFFF Municipal and Water Provider Cases

Chemguard and Tyco Fire Products have been named as defendants in more than 815 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

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

bases, or Navy or Air Force bases released PFOS and PFOA into public water supply wells and/or other public property, allegedly requiring remediation.

Tyco Fire Products 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.

Water Systems AFFF Settlement Agreement

On April 12, 2024, Tyco Fire Products agreed to a settlement with a nationwide class of public water systems that detected PFAS in their drinking water systems that they allege to be associated with the use of AFFF.

Under the terms of the agreement, Tyco Fire Products agreed to contribute $ 750 million to resolve these PFAS claims.

The settlement releases these claims against Tyco Fire Products, Chemguard, and other related corporate entities.

In connection with the settlement, a charge for $ 750 million was recorded by the Company in the three months ended March 31, 2024.

Tyco Fire Products expects to contribute an initial $ 250 million on or about May 25, 2024, with the remaining $ 500 million to be contributed six months after preliminary court approval of the settlement, which is expected to be addressed by the MDL court in or around mid-May, 2024.

Tyco Fire Products has a significant amount of insurance through a number of insurers and expects to apply the proceeds recovered under its policies to cover a substantial portion of the total payment, although the specific amount and timing of any insurance recoveries are uncertain.

There are still several procedural and legal steps that must occur before the settlement is final and payments are made.

The settlement is subject to approval by the MDL court and other contingencies, and that process is expected to take several months.

The class of public water systems included in this settlement broadly includes any public water system (as defined in the settlement agreement) that has detected PFAS in its drinking water sources as of May 15, 2024.

The following systems are excluded from the settlement class:

water systems owned and operated by a State or the United States government;

systems that have not detected the presence of PFAS as of May 15, 2024;

small transient water systems;

privately-owned drinking water wells;

and the water system in the city of Marinette, Wisconsin (which is included only if it so requests).

The settlement does not resolve claims of public water systems that request exclusion from the class (“opt out”) pursuant to the process to be established by the MDL Court.

It also does not resolve potential future claims of public water systems that detect PFAS in their water systems for the first time after May 15, 2024, or certain claims not related to drinking water, such as separate alleged claims relating to real property damage or stormwater or wastewater treatment.

Finally, this settlement does not affect the other categories of cases that remain at issue in the MDL, such as personal injury cases, property damage cases, other types of class actions, claims brought by state or territory attorneys general, or other types of damages alleged to be related to the historic use of AFFF manufactured and sold by Tyco Fire Products and Chemguard.

While it is reasonably possible that the excluded systems or claims could result in additional future lawsuits, claims, assessments or proceedings, it is not possible to predict the outcome of any such matters, and as such, the Company is unable to develop an estimate of a possible loss or range of losses, if any, at this time.

The settlement does not constitute an admission of liability or wrongdoing by Tyco Fire Products or Chemguard.

If the MDL court does not approve the agreement or certain terms are not fulfilled, Tyco Fire Products and Chemguard will continue to defend themselves in the litigation.

AFFF Putative Class Actions

Chemguard and Tyco Fire Products are named in 46 pending putative class actions in federal courts originating from 18 states and territories.

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

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

It is anticipated that the remaining state-court action will be similarly tagged and transferred.

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

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

AFFF Individual or Mass Actions

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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 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.

The MDL court set the first case for trial on June 5, 2023 ( City of Stuart (Florida) v.

On April 26, 2023, the parties entered a stipulation dismissing Chemguard with prejudice from the City of Stuart case, and on May 4, 2023 the parties entered into a stipulation dismissing Tyco with prejudice from the City of Stuart case.

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 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.

AFFF State or U.S.

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904029-18 (N.Y.

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.

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.

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

20 unchanged sentences

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

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

In addition, 32 other states and territories have filed 34 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.

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, Oklahoma, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Washington, Wisconsin, Guam, the Northern Mariana Islands, and Puerto Rico.

All of these complaints, if not filed directly in the MDL, have been 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.

5 unchanged sentences

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.

The insurance litigation involves numerous factual and legal issues.

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.

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

Asbestos Matters

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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.

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

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):

December 31, 2023 September 30, 2023

March 31, 2024 September 30, 2023

Other current liabilities $ 58 $ 58

5 unchanged sentences

Net asbestos-related liabilities $ 86 $ 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):

December 31, 2023 September 30, 2023

March 31, 2024 September 30, 2023

Cash $ 14 $ 20

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

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

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

December 31, 2023 September 30, 2023

March 31, 2024 September 30, 2023

Other current liabilities $ 90 $ 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):

December 31, 2023 September 30, 2023

March 31, 2024 September 30, 2023

Other current assets $ 6 $ 6

1 unchanged sentence

Total insurance receivables $ 20 $ 20

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2023

Other Matters

3 unchanged sentences

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