What changed in this filing

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Item 1. Financial Statements

2024-07-31 compared with 2024-05-01 · 261 added, 212 removed, 870 unchanged (35% of the section changed)

4 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

11 unchanged sentences

Equity income 58 78 176 190

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

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

Net income (loss) ( 234 ) 174 170 330

Income before income taxes 1,279 793 1,321 1,186

Income tax provision (benefit) 227 ( 329 ) 99 ( 266 )

Net income 1,052 1,122 1,222 1,452

Income attributable to noncontrolling interests 77 73 150 152

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

Earnings (loss) per share attributable to Johnson Controls

Net income attributable to Johnson Controls $ 975 $ 1,049 $ 1,072 $ 1,300

Earnings per share attributable to Johnson Controls

Basic $ 1.45 $ 1.54 $ 1.58 $ 1.90

5 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

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

Net income $ 1,052 $ 1,122 $ 1,222 $ 1,452

Other comprehensive income (loss), net of tax:

3 unchanged sentences

Other comprehensive income (loss) ( 64 ) ( 69 ) ( 114 ) 33

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

Total comprehensive income 988 1,053 1,108 1,485

Comprehensive income attributable to noncontrolling interests:

2 unchanged sentences

Foreign currency translation adjustments ( 16 ) ( 47 ) ( 18 ) ( 5 )

Realized and unrealized losses on derivatives 4 1 — ( 5 )

Other comprehensive income (loss) 1 12 ( 2 ) 37

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

Other comprehensive loss ( 16 ) ( 45 ) ( 18 ) ( 8 )

Comprehensive income attributable to noncontrolling interests 61 28 132 144

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

Comprehensive income attributable to Johnson Controls $ 927 $ 1,025 $ 976 $ 1,341

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

2 unchanged sentences

(in millions, except par value;

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Cash and cash equivalents $ 862 $ 835

2 unchanged sentences

Inventories 2,863 2,776

Current assets held for sale 205 —

Other current assets 1,556 1,120

4 unchanged sentences

Investments in partially-owned affiliates 1,054 1,056

Noncurrent assets held for sale 487 —

Other noncurrent assets 4,629 4,489

6 unchanged sentences

Deferred revenue 2,143 1,996

Current liabilities held for sale 149 —

Other current liabilities 2,771 2,832

2 unchanged sentences

Pension and postretirement benefits 225 278

Noncurrent liabilities held for sale 203 —

Other noncurrent liabilities 5,163 5,368

16 unchanged sentences

(in millions;

Six Months Ended March 31,

Nine Months Ended June 30,

Operating Activities

2 unchanged sentences

Net income 1,222 1,452

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

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

Depreciation and amortization 687 621

1 unchanged sentence

Pension and postretirement contributions ( 21 ) ( 38 )

Equity in earnings of partially-owned affiliates, net of dividends received ( 102 ) ( 55 )

Equity in (earnings) losses of partially-owned affiliates, net of dividends received 2 ( 27 )

Deferred income taxes ( 389 ) ( 270 )

9 unchanged sentences

Accrued income taxes 14 ( 215 )

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

Cash provided by operating activities 572 831

Investing Activities

4 unchanged sentences

Financing Activities

Net proceeds from borrowings with maturities less than three months 1,519 1,288

Net proceeds (payments) from borrowings with maturities less than three months 679 ( 248 )

Proceeds from debt 1,281 1,171

5 unchanged sentences

Other - net ( 68 ) 27

Cash provided by financing activities 677 262

Cash used by financing activities ( 322 ) ( 1,111 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash 29 ( 67 )

Increase (decrease) in cash, cash equivalents and restricted cash 36 ( 26 )

Decrease in cash, cash equivalents and restricted cash ( 31 ) ( 923 )

Cash, cash equivalents and restricted cash at beginning of period 924 2,066

7 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

13 unchanged sentences

Beginning balance 507 669 1,384 1,151

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

Net income attributable to Johnson Controls 975 1,049 1,072 1,300

Cash dividends declared ( 249 ) ( 253 ) ( 749 ) ( 739 )

17 unchanged sentences

Notes to Consolidated Financial Statements

March 31, 2024

June 30, 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 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.

The results of operations for the three and nine month periods ended June 30, 2024 are not necessarily indicative of results for the Company’s 2024 fiscal year because of seasonal and other factors.

Nature of Operations

18 unchanged sentences

Notes to Consolidated Financial Statements

March 31, 2024

June 30, 2024

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

8 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 $ 561 million and $ 566 million as of March 31, 2024, and September 30, 2023, respectively.

Accounts payable included in the SCF programs were approximately $ 669 million and $ 566 million as of June 30, 2024, and September 30, 2023, respectively.

Recently Issued Accounting Pronouncements

10 unchanged sentences

ACQUISITIONS AND DIVESTITURES

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.

During the nine months ended June 30, 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 $ 121 million within the Global Products segment, $ 51 million within the Building Solutions Asia Pacific segment and $ 12 million within the Building Solutions EMEA/LA segment.

ASSETS AND LIABILITIES HELD FOR SALE

During the third quarter of fiscal 2024, the Company entered into a definitive agreement to sell its Air Distribution Technologies ("ADTi") business included within the Global Products segment.

As of June 30, 2024, ADTi met the criteria

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

ASSETS AND LIABILITIES HELD FOR SALE

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 March 31, 2024 or September 30, 2023.

June 30, 2024

to be classified as held for sale and the assets and liabilities of this business are separately presented in the consolidated statements of financial position.

The following table summarizes the asset and liabilities associated with ADTi classified as held for sale (in millions):

June 30, 2024

Assets Held for Sale

Accounts receivable - net $ 91

Inventories 93

Other current assets 21

Current assets held for sale 205

Property, plant and equipment - net 83

Other intangible assets - net 308

Other noncurrent assets 131

Impairment on assets held for sale ( 35 )

Noncurrent assets held for sale 487

Total Assets $ 692

Liabilities Held for Sale

Accounts payable $ 113

Accrued compensation and benefits 13

Other current liabilities 23

Current liabilities held for sale 149

Pension and postretirement benefits 5

Other noncurrent liabilities 198

Noncurrent liabilities held for sale 203

Total Liabilities $ 352

Based on the total consideration expected from the sale, net of costs to sell, the Company recorded non-cash impairment charges on the allocated goodwill of $ 21 million and the held for sale disposal group of $ 35 million within restructuring and impairment costs in the consolidated statements of income during the three months ended June 30, 2024.

The business did not meet the criteria to be classified as a discontinued operation as the divestiture does not represent a strategic shift that will have a major effect on the Company's operations and financial results.

The transaction is expected to close in the fourth quarter of fiscal 2024.

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.

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 was no longer probable that it would be sold in the next 12 months.

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

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

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 March 31,

Three Months Ended June 30,

Products & Systems Services Total Products & Systems Services Total

4 unchanged sentences

Total $ 5,422 $ 1,809 $ 7,231 $ 5,431 $ 1,702 $ 7,133

Six Months Ended March 31,

Nine Months Ended June 30,

Products & Systems Services Total Products & Systems Services Total

6 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

3 unchanged sentences

Total $ 2,676 $ 2,687 $ 7,143 $ 7,235

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

June 30, 2024

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 March 31, 2024 September 30, 2023

Location of contract balances June 30, 2024 September 30, 2023

Contract assets - current Accounts receivable - net $ 1,961 $ 2,370

2 unchanged sentences

Contract liabilities - noncurrent Other noncurrent liabilities 314 297

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.

For the three months ended June 30, 2024 and 2023, the Company recognized revenue of $ 269 million and $ 222 million, respectively, that was included in the contract liability balance at the end of the prior fiscal year.

For the nine months ended June 30, 2024 and 2023, the Company recognized revenue of $ 1,530 million and $ 1,387 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 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 .

As of June 30, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $ 21.4 billion, of which approximately 67 % 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):

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Other current assets $ 247 $ 156

1 unchanged sentence

Total $ 525 $ 380

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.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

During the three months ended June 30, 2024 and 2023, the C ompany recognized amortizat ion expense of $ 84 million and $ 66 million, respectively, related to costs to obtain or fulfill a contract.

During the nine months ended June 30, 2024 and 2023, the Company recognized amortization expense of $ 218 million and $ 188 million, respectively, re late d to costs to obtain or fulfill a contract.

There were no impairment losses recognized in the three and nine months ended June 30, 2024 and 2023.

ACCOUNTS RECEIVABLE

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.

The Company discontinued its receivable factoring program in March 2024.

Accounts receivable sold totaled $ 702 million during the nine months ended June 30, 2024, $ 425 million during the three months ended June 30, 2023 and $ 1.3 billion during the nine months ended June 30, 2023.

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

Inventories consisted of the following (in millions):

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Raw materials and supplies $ 1,107 $ 1,203

11 unchanged sentences

6 31 ( 2 ) ( 65 ) ( 30 )

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

(1) Includes measurement period adjustments

Balance at June 30, 2024 $ 9,387 $ 1,686 $ 1,177 $ 5,426 $ 17,676

(1) Includes measurement period adjustments and the allocation of $ 21 million of goodwill from Global Products to the ADTi disposal group classified as held for sale.

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

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

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

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.

June 30, 2024

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 $ 212 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.

There were no other triggering events requiring an impairment assessment be conducted in the nine months ended June 30, 2024.

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

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Amount Accumulated

10 unchanged sentences

Total intangible assets $ 7,305 $ ( 2,990 ) $ 4,315 $ 7,625 $ ( 2,737 ) $ 4,888

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.

Amortization of other intangible assets for the three months ended June 30, 2024 and 2023 was $ 119 million and $ 111 million, respectively.

Amortization of other intangible assets for the nine months ended June 30, 2024 and 2023 was $ 366 million and $ 319 million, respectively.

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

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

Location of lease balances June 30, 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):

Six Months Ended

Nine Months Ended

Right-of-use assets obtained in exchange for operating lease liabilities $ 248 $ 347

1 unchanged sentence

Notes to Consolidated Financial Statements

March 31, 2024

June 30, 2024

DEBT AND FINANCING ARRANGEMENTS

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

March 31, September 30,

June 30, September 30,

Commercial paper $ 941 $ 200

3 unchanged sentences

Weighted average interest rate on short-term debt outstanding 4.5 % 5.1 %

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.

As of June 30, 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 June 30, 2024.

In June 2024, the Company completed the debt tender offer to purchase $ 119 million of its 5.125 % Notes due 2045.

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.

12 unchanged sentences

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.

During the second quarter of fiscal 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.

4 unchanged sentences

Notes to Consolidated Financial Statements

March 31, 2024

June 30, 2024

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

Volume Outstanding as of

Commodity March 31, 2024 September 30, 2023

Commodity June 30, 2024 September 30, 2023

Copper 2,790 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 and six months ended March 31, 2024 and 2023.

Net Investment Hedges

3 unchanged sentences

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

March 31, September 30,

June 30, September 30,

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

7 unchanged sentences

Notes to Consolidated Financial Statements

March 31, 2024

June 30, 2024

Fair Value of Derivative Instruments

4 unchanged sentences

as Hedging Instruments

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

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

2024 2023 2024 2023

25 unchanged sentences

Notes to Consolidated Financial Statements

March 31, 2024

June 30, 2024

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

Fair Value of Assets Fair Value of Liabilities

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

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

2024 2023 2024 2023

5 unchanged sentences

Derivatives in Cash Flow

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

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

2024 2023 2024 2023

5 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

June 30, Nine Months Ended

2024 2023 2024 2023

5 unchanged sentences

Recognized in Income on Derivative Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

5 unchanged sentences

Notes to Consolidated Financial Statements

March 31, 2024

June 30, 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

June 30, Nine Months Ended

2024 2023 2024 2023

Net investment hedges $ 44 $ 30 $ ( 3 ) $ ( 299 )

No gains or losses were reclassified from CTA into income during the three and six months ended March 31, 2024 and 2023.

No gains or losses were reclassified from CTA into income during the three and nine months ended June 30, 2024 and 2023.

FAIR VALUE MEASUREMENTS

8 unchanged sentences

Notes to Consolidated Financial Statements

March 31, 2024

June 30, 2024

Recurring Fair Value Measurements

1 unchanged sentence

Fair Value Measurements Using:

March 31, 2024 Quoted Prices

June 30, 2024 Quoted Prices

(Level 1) Significant

11 unchanged sentences

Foreign currency exchange derivatives $ 10 $ — $ 10 $ —

Commodity derivatives 1 — 1 —

Contingent earn-out liabilities 15 — — 15

2 unchanged sentences

Total liabilities $ 46 $ — $ 11 $ 35

(1) Classified as restricted investments for payment of asbestos liabilities.

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

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

June 30, 2024

Fair Value Measurements Using:

24 unchanged sentences

Reduction for change in estimates ( 69 )

Balance at March 31, 2024

Balance at June 30, 2024

Valuation Methods

6 unchanged sentences

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

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

Deferred compensation plan assets :

1 unchanged sentence

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.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

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 March 31, 2024 and 2023 (in millions):

Three Months Ended March 31, Six Months Ended March 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 June 30, 2024 and 2023 (in millions):

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

2024 2023 2024 2023

2 unchanged sentences

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 March 31, 2024 and September 30, 2023 was as follows (in billions):

March 31, September 30,

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

June 30, September 30,

Public debt $ 8.1 $ 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

June 30, 2024

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

Six Months Ended March 31,

Nine Months Ended June 30,

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:

Six Months Ended

Nine 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:

Six Months Ended

Nine Months Ended

Expected life of option (years) 5.7 5.8

4 unchanged sentences

Notes to Consolidated Financial Statements

March 31, 2024

June 30, 2024

EARNINGS PER SHARE

1 unchanged sentence

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

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

Net income attributable to Johnson Controls $ 975 $ 1,049 $ 1,072 $ 1,300

Weighted Average Shares Outstanding

6 unchanged sentences

Stock options and unvested restricted stock 0.1 0.2 0.4 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 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.

During the three and nine months ended June 30, 2024, the Company repurchased and immediately retired $ 402 million and $ 876 million of its ordinary shares, respectively, on an open market.

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, on an open market.

As of June 30, 2024, approximately $ 2.1 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

March 31, 2024

June 30, 2024

Accumulated Other Comprehensive Income (Loss)

1 unchanged sentence

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

20 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

1 unchanged sentence

Expected return on plan assets ( 30 ) ( 34 ) ( 90 ) ( 101 )

Net actuarial loss — 15 — 23

Net actuarial loss (gain) — ( 6 ) — 17

Settlement loss — — — 1

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

Net periodic benefit credit $ ( 10 ) $ ( 19 ) $ ( 31 ) $ ( 21 )

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

June 30, 2024

Pension Plans

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

5 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

3 unchanged sentences

Net periodic benefit credit $ ( 3 ) $ ( 3 ) $ ( 8 ) $ ( 7 )

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.

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.

RESTRUCTURING AND RELATED COSTS

3 unchanged sentences

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 and six months ended March 31, 2024 and are expected in subsequent quarters.

Additional restructuring charges related to this plan were recorded in the three and nine months ended June 30, 2024 and are expected in subsequent quarters.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

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

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

Three Months Ended June 30, 2024 Nine Months Ended June 30, 2024

Building Solutions North America $ — $ 4

4 unchanged sentences

Total $ 40 $ 103

Johnson Controls International plc

Notes to Consolidated Financial Statements

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):

8 unchanged sentences

Other 32 — 32

Balance at March 31, 2024

Balance at June 30, 2024

$ 54 $ — $ 16 $ 70

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 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.

For the three months ended June 30, 2024, the Company's effective tax rate was 17.7 % and was higher than the statutory tax rate of 12.5 % primarily due to the tax impact of the water systems Aqueous Film Forming Foam ("AFFF") insurance proceeds and tax rate differentials, partially offset by the benefits of continuing global tax planning.

For the nine months ended June 30, 2024, the Company's effective tax rate was 7.5 % and was lower than the statutory tax rate of 12.5 % primarily due to the net tax impact of the water systems AFFF settlement costs and insurance proceeds, 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.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

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.

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.

1 unchanged sentence

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

Johnson Controls International plc

Notes to Consolidated Financial Statements

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.

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

Interest accrued during the nine months ended June 30, 2024 and 2023 was approximately $ 92 million and $ 33 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.

6 unchanged sentences

Germany 2007 - 2021

Luxembourg 2017 - 2018

Mexico 2016 - 2019

7 unchanged sentences

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

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.

As a result, in the nine months ended June 30, 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

5 unchanged sentences

• Building Solutions Asia Pacific which operates in Asia Pacific;

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

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

2 unchanged sentences

• 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:

4 unchanged sentences

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

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.

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 and insurance recoveries, 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

June 30, Nine Months Ended

2024 2023 2024 2023

4 unchanged sentences

Total net sales $ 7,231 $ 7,133 $ 20,024 $ 19,887

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

Segment EBITA

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

8 unchanged sentences

Water systems AFFF settlement (1)

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

Water systems AFFF insurance recoveries (1)

( 351 ) — ( 351 ) —

Net mark-to-market gains ( 5 ) ( 17 ) ( 42 ) ( 16 )

Net financing charges 71 80 263 218

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

Johnson Controls International plc

Notes to Consolidated Financial Statements

March 31, 2024

Income before income taxes $ 1,279 $ 793 $ 1,321 $ 1,186

(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.

12 unchanged sentences

Changes in estimates to pre-existing warranties 26

Balance at March 31, 2024 $ 238

Currency translation ( 2 )

Balance at June 30, 2024 $ 233

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

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):

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Other current liabilities $ 37 $ 31

4 unchanged sentences

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 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

March 31, 2024

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”).

5 unchanged sentences

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").

4 unchanged sentences

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.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

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 condition or cash flows.

1 unchanged sentence

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 March 31, 2024 and September 30, 2023, respectively.

Conditional asset retirement obligations were $ 8 million and $ 13 million at June 30, 2024 and September 30, 2023, respectively.

FTC-Related Matters

2 unchanged sentences

("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.

During the three months ended June 30, 2024, Tyco Fire Products completed its previously announced plan to discontinue the production and sale of fluorinated firefighting foams, including AFFF products, and has transitioned 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

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.

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 EPA to address the presence of arsenic at the site.

9 unchanged sentences

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.

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”).

The WDNR initiated a rulemaking proceeding that would establish groundwater quality standards for PFOA, PFOS,

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

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.

17 unchanged sentences

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

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 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 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 expert discovery and the court has set a trial date of December 3, 2024.

The parties are engaged in summary judgment and pretrial motions 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.

13 unchanged sentences

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.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

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.

Department of Defense (the "DOD") and others for fire suppression purposes and related training exercises.

7 unchanged sentences

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.

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.

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.

3 unchanged sentences

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.

In connection with the settlement, a charge for $ 750 million was recorded in selling, general and administrative expenses in the consolidated statements of income in the three months ended March 31, 2024.

Tyco Fire Products contributed an initial payment of $ 250 million in June 2024, with the remaining $ 500 million due by the first quarter of fiscal 2025.

Prior to the date of the final contribution, Tyco Fire Products has agreed to contribute any applicable insurance recoveries in excess of the initial $ 250 million payment, up to the remaining $ 500 million due, within a specified period following the receipt of such recovery.

During the three months ended June 30, 2024, the Company recorded expected insurance recoveries of $ 351 million in selling, general and administrative expenses in the consolidated statements of income, substantially all of the proceeds of which are expected to be received in the fourth quarter of fiscal 2024.

In accordance with its agreement and recent insurance recovery, Tyco Fire Products will make an additional payment during the fourth quarter of fiscal 2024 of approximately $ 90 million, reducing its final payment to approximately $ 410 million.

The amounts and timing of any additional insurance recoveries are uncertain.

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

The settlement is subject to final 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.

1 unchanged sentence

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;

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

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

small transient water systems;

9 unchanged sentences

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

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

All 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

Tyco Fire Products was also recently named in class actions in British Columbia and Quebec, Canada.

AFFF Individual or Mass Actions

18 unchanged sentences

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 further additional locations across New York.

Ct., Albany County)), against a number of manufacturers, including

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

affiliates of the Company, with respect to alleged PFOS and PFOA contamination purportedly resulting from firefighting foams used at further additional locations across New York.

This suit has been removed to the United States District Court for the Northern District of New York and transferred to the MDL.

11 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, 33 other states and territories have filed 35 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, Oklahoma, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Washington, Wisconsin, Guam, the Northern Mariana Islands, and Puerto Rico.

Arkansas, Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Hawaii, Illinois, Indiana, 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.

6 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 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.

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.

The insurance litigation

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

involves numerous factual and legal issues.

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

3 unchanged sentences

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):

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Other current liabilities $ 58 $ 58

6 unchanged sentences

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

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Cash $ 10 $ 20

9 unchanged sentences

As a result, actual liabilities or insurance recoveries could be significantly higher or lower than those recorded if assumptions used in the Company's calculations vary significantly from actual results.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

Self-Insured Liabilities

3 unchanged sentences

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):

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Other current liabilities $ 98 $ 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):

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Other current assets $ 6 $ 6

5 unchanged sentences

Costs related to such matters were not material to the periods presented.

SUBSEQUENT EVENT

On July 23, 2024, the Company entered into a Stock and Asset Purchase Agreement (“Purchase Agreement”) with Bosch GmbH, a Gesellschaft mit beschränkter Haftung (“Purchaser”).

Pursuant to the Purchase Agreement, on the terms and subject to the conditions therein, the Company has agreed to sell, and Purchaser has agreed to acquire, the Company’s Residential and Light Commercial HVAC business (the “R&LC Business”), including the Company’s North America Ducted business and Johnson Controls-Hitachi Air Conditioning Holding (UK) Ltd., the Company’s global Residential joint venture with Hitachi Global Life Solutions, Inc.

(“Hitachi”), of which the Company owns 60 % and Hitachi owns 40 %.

The total consideration payable by Purchaser to the Company and Hitachi is approximately $ 8.1 billion in cash, and the Company’s portion of the aggregate consideration is approximately $ 6.7 billion in cash, in each case, subject to adjustment, plus the assumption by Purchaser or its affiliates of certain liabilities of the R&LC Business specified in the Purchase Agreement.

Net cash proceeds to the Company are expected to be approximately $ 5.0 billion after tax and transaction-related expenses.

The transaction is expected to close in the fourth quarter of fiscal 2025, subject to required regulatory approvals and other customary closing conditions.

The Company expects to report the operating results of the R&LC HVAC business, which is currently reported in the Global Products segment, in discontinued operations beginning in the fourth quarter of fiscal 2024.

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