What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-11-19 compared with 2023-12-14 · 395 added, 356 removed, 1524 unchanged (33% of the section changed)

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Commitments and Contingencies

Subsequent Events

Report of Independent Registered Public Accounting Firm

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In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2024 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because a material weakness in internal control over financial reporting existed as of that date related to

ineffective design and maintenance of information technology controls to prevent or detect, on a timely basis, unauthorized access to certain of the Company's financial reporting systems.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness referred to above is described in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A.

We considered this material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in management’s report referred to above.

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

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We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded FM:Systems from its assessment of internal control over financial reporting as of September 30, 2023 because it was acquired by the Company in a purchase business combination in July 2023.

We have also excluded FM:Systems from our audit of internal

control over financial reporting.

FM:Systems is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent less than 1% of each of the related consolidated financial statement amounts as of and for the year ended September 30, 2023.

Definition and Limitations of Internal Control over Financial Reporting

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Revenue Recognition from Certain Contracts with Customers

As described in Notes 1 and 4 to the consolidated financial statements, the Company recognized $26,793 million of net sales for the year ended September 30, 2023, of which a majority relates to certain over time and point in time contracts with customers.

As described in Notes 1, 3 and 4 to the consolidated financial statements, the Company recognized net sales of $22,952 million from continuing operations and $4,466 million from discontinued operations for the year ended September 30, 2024, of which a majority relates to certain over time and point in time contracts with customers.

Revenue from certain long-term contracts to design, manufacture and install building products and systems as well as unscheduled repair or replacement services is recognized on an over time basis, with progress towards completion measured using a cost-to-cost input method based on the relationship between actual costs incurred and total estimated costs at completion.

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For these arrangements, revenue is recognized over time on a straight-line basis over the respective contract term.

Revenue associated with the sale of equipment and related installations are recognized over time on a cost-to-cost input method, while the revenue for monitoring and maintenance services are recognized over time as services are rendered.

Revenue associated with the sale of equipment and related installations are generally recognized over time on a cost-to-cost input method, while the revenue for monitoring and maintenance services are recognized over time as services are rendered.

In other cases, the Company recognizes revenue at the point in time when control over the goods or services transfers to the customer.

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(iii) testing, on a sample basis for certain over time contracts, the costs incurred to date;

and (iv) performing a comparison of estimated gross margin in the prior year to gross margin at

completion of the arrangement in the current year for certain over time contracts with customers.

and (iv) performing a comparison of estimated gross margin in the prior year to gross margin at completion of the arrangement in the current year for certain over time contracts with customers.

Evaluating the appropriateness of the timing and amount of revenue recognized for certain point in time contracts with customers involved (i) obtaining and inspecting source documents, such as contracts or purchase orders, evidence of goods delivered, and consideration received in exchange for those goods and (ii) evaluating the appropriateness of the point in time revenue recognition method.

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Milwaukee, Wisconsin

December 14, 2023

November 19, 2024

We have served as the Company’s auditor since 1957.

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Net financing charges 342 258 205

Equity income 265 246 261

Equity income (loss) ( 42 ) 3 6

Income from continuing operations before income taxes 1,522 1,113 1,112

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Income from continuing operations attributable to noncontrolling interests 4 19 15

Income from discontinued operations attributable to noncontrolling interests 191 165 176

Net income attributable to Johnson Controls $ 1,705 $ 1,849 $ 1,532

Amounts attributable to Johnson Controls ordinary shareholders:

Amounts attributable to Johnson Controls

Income from continuing operations $ 1,407 $ 1,562 $ 1,279

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Discontinued operations 0.44 0.42 0.36

Net income $ 2.70 $ 2.20 $ 2.28

Total $ 2.53 $ 2.70 $ 2.20

Diluted earnings per share attributable to Johnson Controls

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Discontinued operations 0.44 $ 0.42 0.36

Net income $ 2.69 $ 2.19 $ 2.27

Total $ 2.52 $ 2.69 $ 2.19

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

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Cash and cash equivalents $ 606 $ 828

Accounts receivable, less allowance for

expected credit losses of $ 90 and $ 66 , respectively

Accounts receivable - net 6,051 5,494

Inventories 1,774 1,872

Current assets held for sale 1,595 1,552

Other current assets 1,153 991

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Other intangible assets - net 4,130 4,772

Investments in partially-owned affiliates 1,056 963

Noncurrent assets held for sale 3,210 3,105

Other noncurrent assets 5,048 4,482

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Deferred revenue 2,160 1,923

Current liabilities held for sale 1,431 1,375

Other current liabilities 2,438 2,435

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Pension and postretirement benefit obligations 217 252

Noncurrent liabilities held for sale 405 407

Other noncurrent liabilities 4,753 4,987

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Operating Activities of Continuing Operations

Net income attributable to Johnson Controls $ 1,849 $ 1,532 $ 1,513

Income attributable to noncontrolling interests 184 191 233

Net income 2,033 1,723 1,746

Income from continuing operations attributable to Johnson Controls $ 1,407 $ 1,562 $ 1,279

Income from continuing operations attributable to noncontrolling interests 4 19 15

Income from continuing operations 1,411 1,581 1,294

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

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Acquisition of businesses, net of cash acquired ( 3 ) ( 726 ) ( 269 )

Business divestitures, net of cash divested 345 28 —

Other - net ( 33 ) 21 41

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Payment of cash dividends ( 1,000 ) ( 980 ) ( 916 )

Proceeds from the exercise of stock options 42 17 178

Dividends paid to noncontrolling interests ( 149 ) ( 121 ) ( 142 )

Employee equity-based compensation withholding taxes ( 37 ) ( 51 ) ( 33 )

Other - net ( 107 ) 3 ( 4 )

Cash used by financing activities from continuing operations ( 1,948 ) ( 2,059 ) ( 395 )

Discontinued Operations - Cash used by operating activities

— ( 4 ) ( 64 )

Discontinued Operations

Cash provided by operating activities 530 365 753

Cash used by investing activities ( 37 ) ( 91 ) ( 105 )

Cash used by financing activities ( 132 ) ( 115 ) ( 121 )

Cash provided by discontinued operations 361 159 527

Effect of exchange rate changes on cash, cash equivalents and restricted cash 59 ( 5 ) ( 53 )

Change in cash, cash equivalents and restricted cash held for sale ( 6 ) ( 5 ) ( 3 )

Increase (decrease) in cash, cash equivalents and restricted cash ( 150 ) ( 1,147 ) 725

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Beginning Balance $ 16,545 $ 16,268 $ 17,562

Ordinary Shares

Beginning balance 7 7 8

Repurchases and retirements of ordinary shares — — ( 1 )

Ending balance 7 7 7

Ordinary Shares - Beginning and ending balance

Ordinary Shares Held in Treasury, at Cost

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Beginning balance 17,349 17,224 17,116

Change in noncontrolling interest share — — ( 8 )

Share-based compensation expense 85 85 88

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Repurchases and retirements of ordinary shares ( 1,246 ) ( 625 ) ( 1,441 )

Other — — ( 4 )

Ending balance 848 1,384 1,151

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Loss

Beginning balance ( 955 ) ( 911 ) ( 434 )

Other comprehensive income (loss) ( 44 ) ( 477 ) 342

Other comprehensive loss ( 9 ) ( 44 ) ( 477 )

Ending balance ( 964 ) ( 955 ) ( 911 )

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Dividends attributable to noncontrolling interests ( 108 ) ( 152 ) ( 131 )

Change in noncontrolling interest share ( 1 ) 5 ( 6 )

Other 2 ( 1 ) 5

Ending Balance 1,263 1,149 1,134

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The Company is committed to helping its customers win and creating greater value for all of its stakeholders through its strategic focus on buildings.

The Company is a global leader in engineering, manufacturing, commissioning and retrofitting building products and systems, including residential and commercial heating, ventilating, air-conditioning ("HVAC") equipment, industrial refrigeration systems, controls, security systems, fire-detection systems and fire-suppression solutions.

The Company further serves customers by providing technical services, including maintenance, management and repair of equipment (in the HVAC, industrial refrigeration, controls, security and fire-protection space), energy-management consulting and data-driven “smart building” services and solutions powered by its OpenBlue software platform and capabilities.

The Company is a global leader in engineering, manufacturing, commissioning and retrofitting building products and systems, including residential and commercial HVAC equipment, industrial refrigeration systems, controls, security systems, fire-detection systems and fire-suppression solutions.

The Company further serves customers by providing technical services, including maintenance, management, repair, retrofit and replacement of equipment (in the HVAC, industrial refrigeration, security and fire-protection space), and energy-management consulting.

The Company's OpenBlue digital software platform enables enterprises to better manage their physical spaces by combining the Company's building products and services with cutting-edge technology and digital capabilities to enable data-driven “smart building” services and solutions.

The Company partners with customers by leveraging its broad product portfolio and digital capabilities powered by OpenBlue, together with its direct channel service and solutions capabilities, to deliver outcome-based solutions across the lifecycle of a building that address customers’ needs to improve energy efficiency, enhance security, create healthy environments and reduce greenhouse gas emissions.

As discussed in more detail in Note 3, "Assets and Liabilities Held for Sale and Discontinued Operations", the Company has entered into a definitive agreement to sell its Residential and Light Commercial (“R&LC") HVAC business, including the North America Ducted business and the global Residential joint venture with Hitachi Global Life Solutions, Inc.

(“Hitachi”), of which Johnson Controls owns 60 % and Hitachi owns 40 %.

The R&LC HVAC business, which was previously reported in the Global Products segment, meets the criteria to be classified as a discontinued operation and, as a result, its historical financial results are reflected in the consolidated financial statements as a discontinued operation, and assets and liabilities were reclassified as held for sale for all periods presented.

Unless otherwise noted, all activities and amounts reported in the following footnotes relate to the continuing operations of the Company and exclude activities and amounts related to the R&LC HVAC business.

Principles of Consolidation

The consolidated financial statements include the consolidated accounts of Johnson Controls International plc and its subsidiaries that are consolidated in conformity with accounting principles generally accepted in the United States of America ("U.S.

The consolidated financial statements include the accounts of Johnson Controls International plc and its subsidiaries that are consolidated in conformity with accounting principles generally accepted in the United States of America ("U.S.

All significant intercompany transactions have been eliminated.

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The preparation of consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

GAAP requires management to make estimates and assumptions that affect the reported amounts.

Actual results could differ from those estimates.

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In addition, any contingent consideration is recorded at the estimated fair value as of the date of the acquisition and is recorded as part of the purchase price.

This estimate is updated in future periods and any changes in the estimate, which are not considered an adjustment to the purchase price, are recorded in our consolidated statements of operations.

This estimate is updated in future periods and any changes in the estimate, which are not considered an adjustment to the purchase price, are recorded in the consolidated statements of operations.

Payments for contingent earn-out liabilities that are less than or equal to estimates on the acquisition date are reflected as financing cash outflows.

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Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met.

Conversely, gains are not recognized on the sale of a disposal group until the date of sale.

Gains on the sale of a disposal group are not recognized until the date of sale.

The Company assesses the fair value of a disposal group, less any costs to sell, each reporting period it remains classified as held for sale and reports any subsequent changes as an adjustment to the carrying value of the disposal group, as long as the new carrying value does not exceed the carrying value of the disposal group at the time it was initially classified as held for sale.

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The Company evaluates the reasonableness of the allowance for expected credit losses on a quarterly basis.

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

The Company collects the majority of the factored receivables on behalf of the financial institutions, but maintains no other continuing involvement with the factored receivables.

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

The allowance for expected credit losses was $ 210 million as of September 30, 2024 and $ 88 million as of September 30, 2023.

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

The Company collected the majority of the factored receivables on behalf of the financial institutions, but maintained no other continuing involvement with the factored receivables.

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

The Company discontinued its receivables factoring program in March 2024.

Inventories are stated at the lower of cost or net realizable value using the first-in, first-out ("FIFO") method.

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Goodwill is reviewed for impairment during the fourth fiscal quarter (as of July 31) or more frequently if events or changes in circumstances indicate the asset might be impaired.

The Company performs impairment reviews for its reporting units, which have been determined to be the Company’s reportable segments or one level below the reportable segments in certain instances, using a fair value method based on management’s judgments and assumptions or third party valuations.

The fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date.

In estimating the fair value, the Company uses the multiples of earnings approach based on the average of published multiples of earnings of comparable entities with similar operations and economic characteristics and applies the multiples to the Company's average of historical and future financial results for each reporting unit.

In certain instances, the Company uses discounted cash flow analyses or estimated sales price to further support the fair value estimates.

The Company performs impairment reviews for its reporting units, which have been determined to be the Company’s operating segments or one level below the operating segments, using a qualitative assessment or a quantitative test.

A qualitative assessment is performed when prior quantitative assessments have resulted in significant excess of fair value over the carrying value of a reporting unit, and consideration of qualitative factors allow the Company to conclude it is more likely than not that the fair value of the reporting unit remains greater than its carrying value.

When performing a quantitative goodwill impairment test, the fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date.

To estimate the fair value, the Company uses a discounted cash flow model or estimated sales price for reporting units held for sale.

The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement." The estimated fair value is then compared to the carrying amount of the reporting unit, including recorded goodwill.

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The Company considers the implications of both external (e.g., market growth, competition and local economic conditions) and internal (e.g., product sales and expected product growth) factors and their potential impact on cash flows related to the intangible asset in both the near- and long-term.

The Company also considers the profitability of the business, among other factors, to determine the royalty rate for use in the impairment assessment.

The Company considers the profitability of the business, among other factors, to determine the royalty rate for use in the impairment assessment.

While the Company believes that the estimates and assumptions underlying the valuation methodologies are reasonable, different estimates and assumptions could result in different outcomes.

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To determine the present value of lease payments, the Company uses its incremental borrowing rate based on information available on the lease commencement date or the implicit rate if it is readily determinable.

The Company determines its incremental borrowing rate based on a comparable market yield curve consistent with its credit rating, term of the lease and relative economic environment.

The Company determines its incremental borrowing rate based on a comparable

market yield curve consistent with its credit rating, term of the lease and relative economic environment.

The Company has elected to combine lease and nonlease components for its leases.

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The Company also sells certain HVAC and refrigeration products and services in bundled arrangements with multiple performance obligations, such as equipment, commissioning, service labor and extended warranties.

Approximately four to twelve months separate the timing of the first deliverable until the last piece of equipment is delivered.

Approximately four to twenty-four months separate the timing of the first deliverable until the last piece of equipment is delivered.

There may also be extended warranty arrangements with durations of one to five years commencing upon the end of the standard warranty period.

In addition, the Company sells security monitoring systems that may have multiple performance obligations, including equipment, installation, monitoring services and maintenance agreements.

The transaction price is allocated to each performance obligation based on the relative standalone selling price method.

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Subscriber system assets include installed property, plant and equipment for which the Company retains ownership and deferred costs directly related to the customer acquisition and system installation.

Subscriber system assets represent capitalized equipment (e.g.

security control panels, touch pad, motion detectors, window sensors, and other equipment) and installation costs associated with electronic security monitoring arrangements under which the Company retains ownership of the security system assets in a customer's place of business or residence.

Subscriber system assets represent capitalized equipment (e.g., security control panels, touch pad, motion detectors, window sensors, and other equipment) and installation costs associated with electronic security monitoring arrangements under which the Company retains ownership of the security system assets in a customer's place of business or residence.

Installation costs represent costs incurred to prepare the asset for its intended use.

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Subscriber system assets and any deferred revenue resulting from the customer acquisition are accounted for over the expected life of the subscriber.

the components of subscriber system assets and any related deferred revenue based on the same month and year of acquisition.

In certain geographical areas which have a large number of customers that behave in a similar manner over time, the Company accounts for subscriber system assets and related deferred revenue using pools, with separate pools for the components of subscriber system assets and any related deferred revenue based on the same month and year of acquisition.

Pooled subscriber system assets and related deferred revenue are depreciated using a straight-line method with lives up to 12 years and considering customer attrition.

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The Company records the amount charged back to the dealer as a reduction of the previously recorded intangible asset.

Intangible assets arising from the ADT dealer program described above are amortized in pools determined by the same month and year of contract acquisition on a straight-line basis over the period of the customer relationship.

Intangible assets arising from the ADT dealer program are amortized in pools determined by the same month and year of contract acquisition on a straight-line basis over the period of the customer relationship.

The estimated useful life of dealer intangibles ranges from 12 to 15 years.

Research and Development Costs

Expenditures for research activities relating to product development and improvement are charged against income as incurred and included within selling, general and administrative expenses in the consolidated statements of income.

Expenditures for research activities relating to product development and improvement are charged against income as incurred and primarily included within selling, general and administrative expenses in the consolidated statements of income.

Such expenditures for the years ended September 30, 2024, 2023 and 2022 were $ 267 million, $ 251 million and $ 236 million, respectively.

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Treasury yield curve in effect at the time of grant.

• For grants in fiscal 2023, expected volatility is based on the historical volatility of the Company's stock corresponding to the expected life as of the grant date.

For grants in fiscal 2022 and fiscal 2021, expected volatility is based on the historical volatility of the Company's stock since October 2016 and certain peer companies' stock prior to October 2016 over the most recent period corresponding to the expected life as of the grant date.

• For grants in fiscal 2024 and 2023, expected volatility is based on the historical volatility of the Company's stock corresponding to the expected life as of the grant date.

For grants in fiscal 2022, expected volatility is based on the historical volatility of the Company's stock since October 2016 and certain peer companies' stock prior to October 2016 over the most recent period corresponding to the expected life as of the grant date.

• The expected dividend yield is based on the expected annual dividend as a percentage of the market value of the Company’s ordinary shares as of the grant date.

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Monetary assets and liabilities denominated in non-functional currencies are adjusted to reflect period-end exchange rates.

Aggregate transaction gains, net of the impact of foreign currency hedges, for the years ended September 30, 2023, 2022 and 2021 were $ 28 million, $ 49 million and $ 56 million, respectively.

Aggregate transaction gains (losses), net of the impact of foreign currency hedges, included in income from continuing operations for the years ended September 30, 2024, 2023 and 2022 were $( 10 ) million, $ 22 million and $ 33 million, respectively.

Derivative Financial Instruments

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The use of derivatives for speculative purposes is strictly prohibited.

The Company selectively uses derivatives to manage the market risk from changes in foreign exchange rates, commodity prices, stock-based compensation liabilities and interest rates.

The Company selectively uses derivatives to manage the market risk from changes in foreign exchange rates, commodity prices, and interest rates.

The fair values of all derivatives are recorded in the consolidated statements of financial position.

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The Company utilizes a mark-to-market approach for recognizing pension and postretirement benefit expenses, including measuring plan assets at fair value and recognizing actuarial gains and losses in the fourth quarter of each fiscal year or at the date of a remeasurement event.

The Company records an estimate for future warranty-related costs based on actual historical return rates and other known factors.

The Company records an estimate for future warranty-related costs based on actual historical claims and other known factors.

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

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

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

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

Loss Contingencies

Accruals are recorded for various contingencies including legal proceedings, environmental matters, self-insurance and other claims that arise in the normal course of business when it is probable a liability has been incurred and the amount of the liability is reasonably estimable.

The accruals are based on judgment, the probability of losses and, where applicable, the consideration of opinions of internal and/or external legal counsel and actuarial determined estimates.

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Expenses associated with environmental remediation obligations are recognized when such amounts are probable and can be reasonably estimated.

Liabilities and expenses for workers' compensation, product, general and auto liabilities is dependent on claims experience.

Liabilities and expenses for workers' compensation, product, general and auto liabilities are dependent on claims experience.

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

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The Company and certain of its subsidiaries, along with numerous other companies, are named as defendants in personal injury lawsuits based on alleged exposure to asbestos-containing materials.

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

The estimated liability and corresponding insurance recovery for pending and future claims and defense costs are based on the Company's historical claim experience, and estimates of the number and resolution cost of potential future claims that may be filed and is discounted to present values from the time that the costs are expected to be incurred which in some cases is not until 2068 (which is the Company's reasonable best estimate of the actuarial determined time period through which asbestos-related claims will be filed against its affiliates).

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

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At least annually, the Company assesses the sufficiency of its estimated liability for pending and future claims and defense costs by evaluating actual experience regarding claims filed, settled and dismissed, and amounts paid in settlements.

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

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

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

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

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

The Company evaluates all of these factors and determines

whether a change in the estimate of its liability for pending and future claims and defense costs or insurance receivable is warranted.

The Company records asbestos-related insurance recoveries that are probable.

Estimated asbestos-related insurance recoveries represent estimated amounts due to the Company for previously paid and settled claims and the probable reimbursements relating to its estimated liability for pending and future claims discounted to present value.

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A valuation allowance is provided to reduce the carrying or book value of deferred tax assets if, based upon the available evidence, including consideration of tax planning strategies, it is more-likely-than-not that some or all of the deferred tax assets will not be realized.

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 years ended September 30, 2022 and 2021.

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

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

New Accounting Pronouncements

Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

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

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

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

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

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

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

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

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

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

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

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

Accounts payable included in the SCF programs were approximately $ 703 million and $ 520 million as of September 30, 2024, and September 30, 2023, respectively.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses," which is intended to enhance transparency into the nature and function of expenses.

The amendments require that on an annual and interim basis, entities disclose disaggregated operating expense information about specific categories, including purchases of inventory, employee compensation, depreciation, amortization and depletion.

The Company expects to adopt the new annual disclosures as required for fiscal 2028 and the interim disclosures as required beginning with the first quarter of fiscal 2029.

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

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

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

In addition, the amendments require that entities disclose additional information about income taxes paid as well as additional disclosures of pretax income and income tax expense, and remove the requirement to disclose certain

items that are no longer considered cost beneficial or relevant.

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

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

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

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

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

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

ACQUISITIONS AND DIVESTITURES

FM:Systems Acquisition

In July 2023, the Company completed its acquisition of FM:Systems, a leading digital workplace management and Internet of Things ("IoT") solutions provider for facilities and real estate professionals, for $ 540 million, net of cash acquired, which was comprised of an upfront cash payment of $ 465 million, net of cash acquired, and the estimated fair value at the acquisition date of contingent earn-out liabilities of $ 75 million.

The contingent earn-out liabilities are primarily based upon the achievement of certain defined operating results in the two years following the acquisition, with a maximum payout of $ 155 million.

In connection with the acquisition, the Company recorded goodwill of $ 399 million in the Building Solutions North America segment.

During fiscal 2024, the Company completed three divestitures, including the divestiture of its Air Distribution Technologies ("ADTi") business which was included within the Global Products segment.

The combined selling price, net of cash divested, was $ 347 million, of which $ 332 million was received as of September 30, 2024.

In connection with the closing of the ADTi transaction, the Company recorded a pre-tax loss of $ 42 million within selling, general and administrative expenses in the consolidated statements of income.

An impairment of $ 56 million was recorded within restructuring and impairment costs in the consolidated statements of income while the business was classified as held for sale.

Net cash proceeds from the divestitures were used for general corporate purposes.

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

In July 2023, the Company completed its acquisition of FM:Systems, a leading digital workplace management and Internet of Things ("IoT") solutions provider for facilities and real estate professionals, for $ 540 million, net of cash acquired, which was comprised of an upfront cash payment of $ 465 million, and the estimated fair value at the acquisition date of contingent earn-out liabilities which are primarily based upon the achievement of certain defined operating results in the two years following the acquisition.

In connection with the acquisition and subsequent measurement period adjustments, the Company recorded goodwill of $ 407 million in the Building Solutions North America segment.

Goodwill is attributable primarily to expected synergies, expanded market opportunities and other benefits that the Company believes will result from integrating the products and capabilities of FM:Systems into its operations.

The goodwill created in the acquisition is not deductible for tax purposes.

The preliminary fair values of the assets acquired and liabilities assumed related to FM:Systems are as follows (in millions):

Cash and cash equivalents $ 8

Accounts receivable 15

All other current assets 9

Intangible assets 194

All other noncurrent assets 7

Total assets acquired 632

Deferred revenue 24

All other current liabilities 49

Other noncurrent liabilities 11

Total liabilities acquired 84

Net assets acquired $ 548

The purchase price allocation to identifiable intangible assets acquired is as follows:

(in millions) Weighted Average Life (in years)

Customer relationships $ 117 10

Technology 74 10

Trademarks and other definite-lived intangibles 3 4

Total identifiable intangible assets $ 194

Silent-Aire Acquisition

In May 2021, the Company completed its acquisition of Silent-Aire, a global leader in hyperscale data center cooling and modular critical infrastructure solutions, for approximately $ 755 million, net of cash acquired, which was comprised of an upfront net cash payment of approximately $ 661 million, the estimated fair value of contingent earn-out liabilities at the acquisition date of approximately $ 86 million and a working capital adjustment of $ 8 million.

The contingent earn-out liabilities are based upon the achievement of certain defined operating results in each of the three years following the acquisition, with a maximum payout of approximately $ 250 million.

The Company recorded reductions in the fair value of the contingent earn-out liability of $ 30 million and $ 43 million during the years ended September 30, 2023 and 2022, respectively.

No earn-out payments were made for the twelve-month earn-out periods ended April 30, 2023 and 2022, as the performance measures for the periods were not achieved.

Other Acquisitions

During fiscal 2023, the Company acquired several other businesses for a combined purchase price, net of cash acquired, of $ 306 million, of which $ 260 million was paid as of September 30, 2023.

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The Company recorded goodwill associated with these acquisitions of $ 119 million in the Global Products segment, $ 55 million in the Building Solutions Asia Pacific segment and $ 13 million in the Building Solutions EMEA/LA segment.

During fiscal 2022, the Company acquired several businesses for a combined purchase price, net of cash acquired, of $ 323 million, of which $ 269 million was paid as of September 30, 2022.

Intangible assets associated with these acquisitions totaled $ 123 million and primarily relate to customer relationships and technology.

The Company recorded goodwill associated with these acquisitions of $ 194 million, of which $ 68 million was assigned to the Building Solutions EMEA/LA segment, $ 45 million was assigned to the Global Products segment, $ 44 million was assigned to the Building Solutions Asia Pacific segment and $ 36 million was assigned to the Building Solutions North America segment.

Other acquisitions were not material individually or in the aggregate in fiscal 2023 and 2022.

Refer to Note 3, "Assets and Liabilities Held for Sale & Discontinued Operations," of the notes to the consolidated financial statements for disclosure of a business in the Building Solutions Asia Pacific segment that was sold on August 1, 2023.

No divestitures were material individually or in the aggregate in fiscal 2023 and 2022.

ASSETS AND LIABILITIES HELD FOR SALE AND DISCONTINUED OPERATIONS

Assets and Liabilities Held for Sale

During fiscal 2023, the Company concluded that its Global Retail business, which is included in the Building Solutions North America, Building Solutions Asia Pacific and Building Solutions EMEA/LA segments and was previously presented as held for sale in the consolidated statements of financial position as of September 30, 2022, no longer met the criteria to be classified as held for sale.

The Company discontinued sales efforts based on market factors and other considerations and determined that it was no longer probable that the business would be sold within one year.

As a result, the assets and liabilities are now reported as held and used on the consolidated statements of financial position as of both September 30, 2023 and September 30, 2022.

The net assets were reclassified to held and used at the lower of fair value or adjusted carrying value in the current period.

Due to impairment charges recorded in prior periods, there was no impact to the consolidated statements of income as a result of the reclassification.

A business in the Building Solutions Asia Pacific segment, which was previously classified as held for sale, was sold on August 1, 2023.

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

During fiscal 2022, the Company determined that certain assets of the Building Solutions Asia Pacific segment no longer met the criteria to be classified as held for sale because the Company could no longer assert that the sale of the assets was probable within one year due to declines in the Chinese real estate market after the COVID-19 lockdowns.

As a result, the Company reclassified the held for sale assets to held and used as of September 30, 2022.

Upon reclassification, an impairment of $ 45 million was recorded within restructuring and impairment costs in the consolidated statements of income to adjust the asset to the lower of its carrying value adjusted for depreciation and the fair value of the asset as of September 30, 2022.

The following table summarizes impairment charges for the various assets held for sale (in millions):

In July 2024, the Company entered into a definitive agreement to sell its R&LC HVAC business, which includes the North America Ducted businesses and the global Residential joint venture with Hitachi, of which Johnson Controls owns 60 % and Hitachi owns 40 %, to Bosch Group for approximately $ 8.1 billion in cash with the Company’s portion of the aggregate consideration being approximately $ 6.7 billion, inclusive of an upfront royalty payment for the licensing of the York tradename.

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

The R&LC HVAC business, which was previously reported in the Global Products segment, meets the criteria to be classified as discontinued operations as it represents a strategic shift in the Company's operations and results in the exit of substantially all of its residential and light commercial HVAC businesses.

As a result, results of the business are presented in discontinued operations for all periods presented.

The Company determined that the assets and liabilities for the R&LC HVAC business met the held for sale criteria during the fourth quarter of 2024.

Accordingly, the businesses' assets and liabilities were reclassified in the consolidated balance sheets at September 30, 2024 and 2023 to held for sale, and the Company ceased recording depreciation and amortization for the held for sale assets.

The following table summarizes the results of the R&LC HVAC business which are reported as discontinued operations (in millions):

Year Ended September 30,

Global Retail business $ 438 $ 359

Business in the Building Solutions Asia Pacific segment 60 60

Certain assets in the Building Solution Asia Pacific segment — 45

The impairment charges were recorded within restructuring and impairment costs in the consolidated statements of income and include costs to write down the disposal groups to their estimated fair values, less costs to sell;

impairment of goodwill;

and the write-off of internal-use software projects that were no longer probable of being completed.

Refer to Note 8, "Goodwill and Other Intangible Assets," of the notes to the consolidated financial statements for further information regarding the goodwill impairment charges.

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

Discontinued Operations

The Company completed the sale of its Power Solutions business on April 30, 2019.

In fiscal 2021, the favorable resolution of certain post-closing working capital and net debt adjustments resulted in income from discontinued operations of $ 124 million, net of tax of $ 26 million, due to a reversal of a reserve established in connection with the sale .

2024 2023 2022

Net sales $ 4,466 $ 4,462 $ 4,662

Cost of goods sold 3,300 3,295 3,409

Gross profit 1,166 1,167 1,253

Selling, general and administrative expenses 761 794 867

Restructuring and impairment costs 34 15 20

Net financing charges 17 23 8

Equity income 276 262 240

Income from discontinued operations before income taxes 630 597 598

Provision for income taxes on discontinued operations 141 145 169

Income from discontinued operations, net of tax 489 452 429

Income from discontinued operations attributable to noncontrolling interest, net of tax 191 165 176

Income from discontinued operations $ 298 $ 287 $ 253

The following table summarizes the assets and liabilities of the R&LC HVAC business which were classified as held for sale (in millions):

September 30,

Accounts receivable - net 592 512

Inventories 876 904

Other current assets 122 129

Current assets held for sale 1,595 1,552

Property, plant and equipment - net 793 762

Goodwill 1,182 1,164

Other intangible assets - net 96 116

Investments in partially-owned affiliates 949 905

Other noncurrent assets 190 158

Noncurrent assets held for sale 3,210 3,105

Total assets classified as held for sale $ 4,805 $ 4,657

Short-term debt $ — $ 24

Accounts payable 917 770

Accrued compensation and benefits 113 111

Deferred revenue 84 73

Other current liabilities 317 397

Current liabilities held for sale 1,431 1,375

Pension and postretirement benefit obligations 28 27

Other noncurrent liabilities 377 380

Noncurrent liabilities held for sale 405 407

Total liabilities classified as held for sale $ 1,836 $ 1,782

Assets and liabilities classified as held for sale are required to be recorded at the lower of carrying value or fair value less costs to sell.

As of September 30, 2024, the estimated fair value less costs to sell of the held for sale businesses exceeded their carrying value, and therefore, no adjustment was necessary.

During the year ended September 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.

REVENUE RECOGNITION

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Future contract modifications could affect both the timing and the amount of the remaining performance obligations.

The Company excludes the value of remaining performance obligations for contracts with an original expected duration of one year or less.

The Company excludes the value of remaining performance obligations for service contracts with an original expected duration of one year or less and contracts that are cancellable without substantial penalty.

Costs to Obtain or Fulfill a Contract

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Total $ 556 $ 380

Amortization of costs to obtain or fulfill a contract were $ 251 million and $ 191 million during the years ended September 30, 2023 and 2022, respectively.

Amortization of costs to obtain or fulfill a contract was $ 312 million and $ 251 million during the years ended September 30, 2024 and 2023, respectively.

There were no impairment losses recognized in the year ended September 30, 2024 or 2023.

ACCOUNTS RECEIVABLE

The Company discontinued its receivable factoring program in March 2024.

The Company sold $ 641 million and $ 1,717 million of accounts receivable under factoring agreements during the years ended September 30, 2024, and 2023, respectively.

The cost of factoring such receivables was not material.

Previously sold receivables still outstanding were $ 681 million and $ 476 million as of September 30, 2023 and September 30, 2022, respectively.

Previously sold receivables still outstanding were $ 16 million and $ 615 million as of September 30, 2024 and 2023, respectively.

Inventories consisted of the following (in millions):

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Balance at beginning of period 9,381 1,885 1,179 4,327 16,772

Acquisitions (1)

399 13 55 119 586

Impairments — ( 230 ) — — ( 230 )

Foreign currency translation and other (1)

10 107 48 18 183

Balance at end of period $ 9,391 $ 1,762 $ 1,227 $ 4,345 $ 16,725

(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 in June 2024 and subsequently divested in July 2024.

Refer to Note 2, "Acquisitions and Divestitures" of the notes to the consolidated financial statements for further information.

Year Ended September 30, 2023

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Acquisitions 399 13 55 119 586

37 78 44 60 219

Divestitures — ( 5 ) ( 14 ) — ( 19 )

Impairments — — — ( 184 ) ( 184 )

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Balance at end of period $ 9,381 $ 1,885 $ 1,179 $ 4,327 $ 16,772

(1) Includes measurement period adjustments

Management completed its fiscal 2024 annual impairment test as of July 31, which included a qualitative assessment of all but one of its reporting units.

The Company did not identify any qualitative factors that suggest that it is more likely than not that the fair value of its reporting units is less than their carrying amount, including goodwill, and as such, a quantitative impairment test was not necessary.

The Company performed a quantitative goodwill impairment test of one reporting unit with $ 214 million of goodwill, and its fair value was in excess of its carrying value.

However, for this reporting unit, a 200 basis point increase in the discount rate, or a 200 basis point decrease in the revenue growth rates, would cause the fair value to be less than the carrying value.

While no impairment was recorded, it is possible that future changes in circumstances could result in a non-cash impairment charge.

In the second quarter of fiscal 2024, the Company determined a triggering event had occurred for one of its reporting units in the Business Solutions EMEA/LA segment 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 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."

In the second quarter of fiscal 2023, management completed an updated comprehensive review of the Silent-Aire reporting unit, which is included in the Global Products segment.

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

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

Management completed its fiscal 2023 annual impairment test as of July 31.

The fair value of all reporting units substantially exceeded their carrying values, with the exception of one reporting unit with $ 455 million of goodwill whose fair value in excess of its carrying value was approximately 10 %.

For this reporting unit, a 1 % increase in the discount rate, or a 1.5 % decrease in the revenue growth rates, would cause the fair value to be less than the carrying value.

While no impairment was recorded, it is possible that future changes in circumstances could result in a non-cash impairment charge.

During its fiscal 2022 annual impairment test, the Company determined that goodwill in the Silent-Are reporting unit was impaired and recorded a non-cash impairment charge of $ 75 million within restructuring and impairment costs in the consolidated statements of income.

The impairment charge was determined by comparing the carrying amount of the reporting unit to its fair value.

During its fiscal 2022 annual impairment test, the Company recorded a non-cash impairment charge of $ 75 million of Silent Aire goodwill within restructuring and impairment costs in the consolidated statements of income.

The Company used a discounted cash flow model to estimate the fair value of the Silent-Aire reporting unit in both fiscal 2023 and 2022.

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The fair value measurement is classified as Level 3 within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement" due to the unobservable inputs used.

In fiscal 2022, the Company concluded it had a triggering event requiring assessment of goodwill impairment for its North America Retail reporting unit in conjunction with classifying its Global Retail business as held for sale.

The Silent-Aire reporting unit had no remaining goodwill balance as of September 30, 2024 and 2023.

During fiscal 2022, the Company concluded it had a triggering event requiring assessment of goodwill impairment for its North America Retail reporting unit in conjunction with classifying its Global Retail business as held for sale.

As a result, the Company recorded a non-cash impairment charge of $ 235 million within restructuring and impairment costs in the consolidated statements of income in fiscal 2022.

The North America Retail reporting unit had no remaining goodwill balance as of September 30, 2023 or 2022.

The North America Retail reporting unit had no remaining goodwill balance as of September 30, 2024 and 2023.

The Company used the market approach to estimate the fair value of the reporting unit based on the relative estimated sales proceeds for the planned disposal of the Global Retail business attributable to the North America Retail reporting unit.

The inputs utilized in the analysis are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement."

Refer to Note 3, "Assets and Liabilities Held for Sale & Discontinued Operations," of the notes to the consolidated financial statements for further disclosure.

There were no other triggering events requiring that an impairment assessment be conducted in fiscal 2024, 2023 or 2022.

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Total intangible assets $ 7,082 $ ( 2,952 ) $ 4,130 $ 7,356 $ ( 2,584 ) $ 4,772

During the fourth quarter of fiscal 2024, the Company impaired $ 32 million and $ 13 million of miscellaneous intangible assets in the Global Products segment and Building Solutions North America segment, respectively.

These non-cash charges were recorded within restructuring and impairment costs in the consolidated statement of income.

During the fourth quarter of fiscal 2023, the Company impaired $ 18 million of miscellaneous intangible assets in the Global Products segment and $ 10 million of a trademark in the Building Solutions Asia Pacific segment.

These non-cash charges were recorded within restructuring and impairment costs in the consolidated statements of income.

There was no impairment of other indefinite-lived intangible assets in any of these years, other than as disclosed above.

For all other remaining indefinite lived intangible assets, the Company estimated fair values were greater than the carrying values, with the exception of three other registered trademarks in which the estimated fair values were consistent with their carrying values which totaled $ 412 million.

There were no impairments of other indefinite-lived intangible assets in any of these years, other than as disclosed above.

For all other remaining indefinite-lived intangible assets, the Company estimated fair values were greater than the carrying values, with the exception of two other registered trademarks in which the estimated fair values were consistent with their carrying values which totaled $ 335 million as of July 31, 2024.

Amortization of other intangible assets included within continuing operations for the years ended September 30, 2024, 2023 and 2022 was $ 476 million, $ 426 million and $ 413 million, respectively.

The following table summarizes the expected amortization of definite-lived intangible assets, excluding the impact of future acquisitions, by year (in millions):

The following table summarizes estimated amortization of existing definite-lived intangible assets as of September 30, 2024 for each of the next five fiscal years (in millions):

The following table presents the Company’s lease costs (in millions):

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Operating lease right-of-use assets Other noncurrent assets $ 1,170 $ 1,301

$ 1,389 $ 1,271

Operating lease liabilities - current Other current liabilities 289 298

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September 30,

Bank borrowings $ 26 $ 10

Commercial paper 200 172

Term loans $ 603 $ 159

Commercial paper 350 200

Bank borrowings — 2

Weighted average interest rate on short-term debt outstanding 4.8 % 4.9 %

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due dates by fiscal year):

Carrying Value

Issuer Interest Rate Due Date Par Value September 30, 2023 September 30, 2022

JCI plc 4.625 % 2023 $ 25 $ — $ 25

4.625 % 2023 $ 7 — 7

JCI plc 1.00 % 2023 € 846 — 830

JCI plc 3.625 % 2024 $ 453 453 453

3.625 % 2024 $ 31 31 31

JCI plc EURIBOR plus 0.70 %

2024 € 150 159 —

September 30,

Issuer Interest Rate Due Date 2024 2023

US dollar debt

JCI plc 3.625 % 2024 $ — $ 453

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3.90 % 2026 51 51

JCI plc TORF plus 0.40 %

2027 ¥ 30,000 202 208

JCI plc and TFSCA 2

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4.90 % 2033 400 400

JCI plc and TFSCA 2

1.00 % 2032 € 500 529 489

JCI plc and TFSCA 2

4.90 % 2032 $ 400 394 394

JCI plc and TFSCA 2

4.25 % 2035 € 800 839 —

JCI plc 6.00 % 2036 342 342

13 unchanged sentences

4.95 % 2064 15 15

JCI plc EURIBOR plus 0.70 %

JCI plc 1.375 % 2025 472 448

1.375 % 2025 60 57

JCI plc and TFSCA 2

0.375 % 2027 559 530

JCI plc and TFSCA 2

3.00 % 2028 670 636

JCI plc and TFSCA 2

1.00 % 2032 559 530

JCI plc and TFSCA 2

4.25 % 2035 894 849

Japanese yen debt

JCI plc TORF plus 0.40 %

Gross long-term debt 8,568 8,462

current portion 645 865

Debt issuance costs 38 35

Net unamortized discount 38 41

Net purchase accounting adjustments ( 48 ) ( 77 )

Current portion 536 645

Long-term debt $ 8,004 $ 7,818

3 unchanged sentences

Total $ 8,568

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

Both credit facilities were renewed on December 11, 2023.

The $ 2.5 billion facility is now scheduled to expire in December 2028 and the $ 500 million facility is now scheduled to expire in December 2024.

As of September 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 September 30, 2024.

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Unless otherwise noted, all activities and amounts reported in this footnote include both continuing operations of the Company and activities and amounts related to the R&LC HVAC business.

See Note 3, "Assets and Liabilities Held for Sale and Discontinued Operations" for additional details regarding divestiture of the R&LC HVAC business.

Cash Flow Hedges

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Aluminum 2,450 5,976

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

The following table summarizes forward-starting interest rate swaps and the related anticipated note issuances (in millions):

Year Ended September 30,

US dollar denominated

Forward-starting interest swaps $ 600 $ 300

Anticipated note issuance 800 400

Euro denominated

Forward-starting interest swap € 400 € 200

Anticipated note issuance 800 600

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

As of September 30, 2023, $ 600 million of forward-starting interest swaps were outstanding.

Accumulated amounts recorded in AOCI as of the date of the note issuance are amortized to interest expense over the life of the related note to reflect the difference between the swap's reference rate and the fixed rate of the note.

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

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

During 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.

During fiscal 2023, the Company terminated forward-starting interest rate swaps with a combined notional amount of € 400 million when the related anticipated debt was issued.

Accumulated amounts recorded in AOCI as of the date of the debt issuance are amortized to interest expense over the life of the respective debt to reflect the difference between the swap's reference rate and the fixed rate of the note.

Net Investment Hedges

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

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

subsidiaries.

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Foreign currency exchange derivatives $ 19 $ 16 $ 1 $ 13

Commodity derivatives 2 — — —

Interest rate swaps — 22 — —

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Hedging Relationships Location of Gain (Loss)

Reclassified from AOCI into Income Year Ended September 30,

Reclassified from

AOCI into Income Year Ended September 30,

2024 2023 2022

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

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

Derivatives Not Designated

as Hedging Instruments Location of Gain (Loss)

Recognized in Income on Derivative Year Ended September 30,

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Foreign currency exchange derivatives Selling, general and administrative ( 1 ) — —

Foreign currency exchange derivatives Income tax provision — — ( 1 )

Interest rate swaps Net financing charges — 1 —

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Total $ 37 $ ( 118 ) $ 90

Pre-tax gains (losses) on net investment hedges recorded as foreign currency translation adjustment ("CTA") within other comprehensive income (loss) were $( 223 ) million, $ 470 million and $ 42 million for the years ended September 30, 2023, 2022 and 2021, respectively.

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):

Year Ended September 30,

2024 2023 2022

Net investment hedges $ ( 173 ) $ ( 223 ) $ 470

No gains or losses were reclassified from CTA into income for the years ended September 30, 2024, 2023 and 2022.

7 unchanged sentences

Foreign currency exchange derivatives $ 20 $ — $ 20 $ —

Interest rate swaps 22 — 22 —

Commodity derivatives 2 — 2 —

Other noncurrent assets

Cross-currency interest rate swap 5 — 5 —

Deferred compensation plan assets 56 56 — —

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Total liabilities $ 54 $ — $ 26 $ 28

1 Classified as restricted investments for payment of asbestos liabilities.

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

Fair Value Measurements Using:

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

Exchange traded funds (fixed income) 1

Interest rate swaps 22 — 22 —

Other noncurrent assets

Cross-currency interest rate swaps 5 — 5 —

Deferred compensation plan assets 45 45 — —

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Balance at September 30, 2023 $ 124

Acquisitions 112

Payments ( 26 )

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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.

Exchange traded funds :

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

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

Foreign currency exchange derivatives :

3 unchanged sentences

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

Investments in exchange traded funds :

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

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

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

The following table presents the portion of unrealized gains recognized in the consolidated statements of income that relate to equity securities still held at September 30, 2024 and 2023 (in millions):

September 30,

1 unchanged sentence

Investments in exchange traded funds 58 24

All of the gains and losses 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 September 30, 2023 and 2022 was as follows (in billions):

The fair value of long-term debt was as follows (in billions):

September 30,

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STOCK-BASED COMPENSATION

Unless otherwise noted, all activities and amounts reported in this footnote include both continuing operations of the Company and activities and amounts related to the R&LC HVAC business.

See Note 3, "Assets and Liabilities Held for Sale and Discontinued Operations" for additional details regarding divestiture of the R&LC HVAC business.

The Johnson Controls International plc 2021 Equity and Incentive Plan authorizes stock options, stock appreciation rights, restricted (non-vested) stock/units, performance shares, performance units and other stock-based awards.

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Performance Share Awards (PSU's)

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

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

Year Ended September 30,

58 unchanged sentences

Accumulated Other Comprehensive Income

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

The following table includes changes attributable to both continuing and discontinued operations in AOCI attributable to Johnson Controls (in millions, net of tax):

Year Ended September 30,

14 unchanged sentences

Reclassification to income ( 5 ) ( 1 ) ( 3 )

Other changes — — 8

Net tax impact 1 — —

3 unchanged sentences

RETIREMENT PLANS

Unless otherwise noted, all activities and amounts reported in this footnote include both continuing operations of the Company and activities and amounts related to the R&LC HVAC business.

See Note 3, "Assets and Liabilities Held for Sale and Discontinued Operations" for additional details regarding divestiture of the R&LC HVAC business.

Pension Benefits

1 unchanged sentence

The benefits provided are primarily based on years of service and average compensation or a monthly retirement benefit amount.

Certain of the Company’s U.S.

The Company’s U.S.

pension plans no longer allow new participants to enter the plans and no longer accrue benefits.

36 unchanged sentences

Defined contribution plan contributions charged to expense amounted to $ 208 million, $ 209 million and $ 196 million during the years ended September 30, 2024, 2023 and 2022, respectively.

The Company temporarily suspended certain contributions in fiscal 2021 in response to the COVID-19 pandemic.

Multiemployer Benefit Plans

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Corporate/Other 786 784 2 —

Alternative 211 — 211 —

Total Investments in the Fair Value Hierarchy 1,169 $ 1,144 $ 25 $ —

Real Estate Investments Measured at Net Asset Value (1)

Investments Measured at Net Asset Value (1)

Alternative 235

Real Estate 266

Due to Broker ( 79 )

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Total Investments in the Fair Value Hierarchy 1,122 $ 1,061 $ 61 $ —

Real Estate Investments Measured at Net Asset Value (1)

Investments Measured at Net Asset Value (1)

Alternative 211

Real Estate 295

Due to Broker ( 129 )

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Cash and Cash Equivalents $ 52 $ 52 $ — $ —

Equity Securities

Large-Cap 52 9 43 —

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Cash and Cash Equivalents $ 8 $ 8 $ — $ —

Equity Securities

Global 66 — 66 —

Equity Securities - Global

Total Investments in the Fair Value Hierarchy 79 8 71 —

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Total Plan Assets $ 144

(1) The fair value of certain real estate and multi-credit strategy investments do not have a readily determinable fair value and require the fund managers to independently arrive at fair value by calculating net asset value ("NAV") per share.

(1) The fair value of certain real estate, multi-credit strategy, and alternative investments do not have a readily determinable fair value and require the fund managers to independently arrive at fair value by calculating net asset value ("NAV") per share.

In order to calculate NAV per share, the fund managers value the investments using any one, or a combination of, the following methods:

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Assumptions used to revalue the investments are updated every quarter.

Due to the fact that the fund managers calculate NAV per share, the Company utilizes a practical expedient for measuring the fair value of its real estate and multi-credit strategy investments, as provided for under ASC 820, "Fair Value Measurement." In applying the

practical expedient, the Company is not required to further adjust the NAV provided by the fund manager in order to determine the fair value of its investments as the NAV per share is calculated in a manner consistent with the measurement principles of ASC 946, "Financial Services - Investment Companies," and as of the Company's measurement date.

Due to the fact that the fund managers calculate NAV per share, the Company utilizes a practical expedient for measuring the fair value of its real estate, multi-credit strategy, and alternative investments, as provided for under ASC 820, "Fair Value Measurement." In applying the practical expedient, the Company is not required to further adjust the NAV provided by the fund manager in order to determine the fair value of its investments as the NAV per share is calculated in a manner consistent with the measurement principles of ASC 946, "Financial Services - Investment Companies," and as of the Company's measurement date.

The Company believes this is an appropriate methodology to obtain the fair value of these assets.

For the component of the real estate portfolio under development, the investments are carried at cost until they are completed and valued by a third party appraiser.

In accordance with ASU No.

2015-07, "Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)," investments for which fair value is measured using the net asset value per share practical expedient are disclosed separate from the fair value hierarchy.

The fair value amounts presented in these tables are intended to permit reconciliation of total plan assets to the amounts presented in the notes to consolidated financial statements.

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Plan participant contributions — — 3 3 2 3

Actuarial gain ( 37 ) ( 587 ) ( 62 ) ( 651 ) ( 7 ) ( 25 )

Actuarial loss (gain) 104 ( 37 ) 84 ( 62 ) 4 ( 7 )

Benefits and settlements paid ( 144 ) ( 299 ) ( 132 ) ( 126 ) ( 13 ) ( 12 )

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Funded status $ ( 12 ) $ ( 65 ) $ ( 92 ) $ ( 85 ) $ 88 $ 67

Amounts recognized in the statement of financial position consist of:

Prepaid benefit cost $ 1 $ 37 $ 97 $ 151 $ 101 $ 95

Accrued benefit liability ( 66 ) ( 129 ) ( 182 ) ( 189 ) ( 34 ) ( 40 )

Amounts recognized in the consolidated statements of financial position consist of:

Other noncurrent assets $ 2 $ 1 $ 62 $ 62 $ 118 $ 101

Noncurrent assets held for sale — — 52 35 — —

Accrued compensation and benefits ( 2 ) ( 3 ) ( 12 ) ( 12 ) ( 2 ) ( 2 )

Pension and postretirement benefit obligations ( 12 ) ( 63 ) ( 166 ) ( 143 ) ( 28 ) ( 32 )

Noncurrent liabilities held for sale — — ( 28 ) ( 27 ) — —

Net amount recognized $ ( 12 ) $ ( 65 ) $ ( 92 ) $ ( 85 ) $ 88 $ 67

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For the non-U.S.

pension and postretirement plans, the Company consistently uses the relevant country specific benchmark indices for determining the various discount rates.

The Company has elected to utilize a full yield curve approach in the estimation of service and interest components of net periodic benefit cost (credit) for pension and other postretirement for plans that utilize a

yield curve approach.

pension and postretirement plans, the Company consistently uses the relevant country specific benchmark indices for

determining the various discount rates.

The full yield curve approach applies the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows.

The fiscal 2023 and fiscal 2022 net actuarial gains related to changes in the projected benefit obligation were primarily the result of the increase in discount rates globally.

The fiscal 2024 net actuarial losses related to changes in the projected benefit obligation were primarily the result of the decrease in discount rates globally.

The fiscal 2023 net actuarial gains related to changes in the projected benefit obligation were primarily the result of the increase in discount rates globally.

Net Periodic Benefit Cost

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Net actuarial (gain) loss ( 9 ) 28 16 22 86 ( 116 ) ( 14 ) ( 5 ) 4

Settlement (gain) loss 1 1 — 6 5 ( 1 ) — — —

Amortization of prior service cost (credit)

— — — — — 1 ( 4 ) ( 4 ) ( 4 )

Settlement loss — 1 1 — 6 5 — — —

Amortization of prior service credit — — — — — — ( 5 ) ( 4 ) ( 4 )

Other — — — 1 — — — —

Net periodic benefit cost (credit) included in continuing operations

$ ( 24 ) $ ( 77 ) $ ( 338 ) $ 99 $ ( 133 ) $ ( 169 ) $ ( 14 ) $ ( 6 ) $ ( 44 )

Net periodic benefit cost (credit) $ ( 50 ) $ ( 24 ) $ ( 77 ) $ 37 $ 99 $ ( 133 ) $ ( 24 ) $ ( 14 ) $ ( 6 )

Expense Assumptions:

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Rate of compensation increase N/A N/A N/A 2.90 % 3.00 % 2.85 % N/A N/A N/A

Interest crediting rate N/A N/A N/A 1.69 % 1.44 % 1.50 % N/A N/A N/A

Interest crediting rate 6.00 % N/A N/A 1.63 % 1.69 % 1.44 % N/A N/A N/A

RESTRUCTURING AND RELATED COSTS

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The Company expects the restructuring actions to reduce cost of sales and SG&A due to reduced employee-related costs, depreciation and amortization expense.

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

The scope of the plan was substantially finalized in the fourth quarter of fiscal 2023 and certain actions related to this plan were committed and executed during the fourth quarter, primarily related to workforce reductions, and were recorded to restructuring and impairment costs in the consolidated statements of income.

Additional restructuring charges are expected in subsequent quarters.

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

Refer to Note 3, "Assets and Liabilities Held for Sale & Discontinued Operations," Note 7, "Property, Plant and Equipment," and Note 8, "Goodwill and Other Intangible Assets," of the notes to the consolidated financial statements for disclosure of other impairment costs.

During the fourth quarter of fiscal 2024, the Company completed its previous restructuring plan and committed to a new multi-year restructuring plan to address stranded costs and further right-size its global operations as a result of previously announced portfolio simplification actions.

It is expected that one-time restructuring costs, including severance and other employee termination benefits, contract termination costs, and certain other related cash and non-cash charges, of approximately $ 400 million will be incurred over the course of fiscal 2025, 2026 and 2027.

Restructuring costs will be incurred across all segments and Corporate functions.

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

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Global Products 38

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

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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Balance at September 30, 2023 93 — 12 105

$ 93 $ — $ 12 $ 105

The more significant components of the Company’s income tax provision from continuing operations are as follows (in millions):

Additional restructuring and related costs 71 41 31 143

Utilized—cash ( 138 ) — ( 25 ) ( 163 )

Utilized—noncash — ( 41 ) ( 1 ) ( 42 )

Other 32 — — 32

Balance at September 30, 2024 $ 58 $ — $ 17 $ 75

The components of the Company’s income tax provision from continuing operations are as follows (in millions):

2024 2023 2022

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federal tax rate

63 42 ( 101 )

Income subject to rates different than the statutory rate ( 204 ) 44 67

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Intellectual property transactions and adjustments — ( 176 ) —

Impact of acquisitions and divestitures 121 — —

Restructuring and impairment costs 38 12 40

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Effective tax rate 7 % ( 42 ) % ( 16 ) %

For fiscal 2023, the effective tax rate for continuing operations was ( 19 )% and was lower than the statutory tax rate primarily due to the favorable tax impacts of intellectual property tax adjustments, tax reserve adjustments as the result of tax audit resolutions and remeasurements, valuation allowance adjustments and the benefits of continuing global tax planning initiatives, partially offset by the unfavorable impact of impairment and restructuring charges.

For fiscal 2022, the effective tax rate for continuing operations was ( 1 )% and was lower than the statutory tax rate primarily due to favorable impact of tax reserve adjustments as the result of expired statute of limitations for certain tax years and the benefits of continuing global tax planning initiatives, partially offset by the unfavorable impact of impairment and restructuring charges, valuation allowance adjustments, and the establishment of a deferred tax liability on the outside basis difference of the Company's investment in certain subsidiaries as a result of the planned divestitures and tax rate differentials.

For fiscal 2021, the effective tax rate for continuing operations was 33 % and was higher than the statutory tax rate primarily due to the unfavorable impact of tax impacts of an intercompany transfer of certain of the Company’s intellectual property rights, valuation allowance adjustments, the income tax effects of mark-to-market adjustments and tax rate differentials, partially offset by the benefits of continuing global tax planning initiatives.

For fiscal 2024, the effective tax rate for continuing operations was 7 % and was lower than the statutory tax rate primarily due to tax reserve adjustments as the result of tax audit resolutions and expired statute of limitations for certain tax years, valuation allowance adjustments and the benefits of continuing global tax planning initiatives, partially offset by the establishment of a deferred tax liability on the outside basis difference of the Company’s investment in certain subsidiaries as a result of the planned divestiture of its R&LC HVAC business and the unfavorable impact of impairment and restructuring charges.

For fiscal 2023, the effective tax rate for continuing operations was ( 42 )% and was lower than the statutory tax rate primarily due to the favorable tax impacts of intellectual property tax adjustments, tax reserve adjustments as the result of tax audit

resolutions and remeasurements, valuation allowance adjustments and the benefits of continuing global tax planning initiatives, partially offset by the unfavorable impact of impairment and restructuring charges.

For fiscal 2022, the effective tax rate for continuing operations was ( 16 )% and was lower than the statutory tax rate primarily due to favorable impact of tax reserve adjustments as the result of expired statute of limitations for certain tax years and the benefits of continuing global tax planning initiatives, partially offset by the unfavorable impact of impairment and restructuring charges and the establishment of a deferred tax liability on the outside basis difference of the Company's investment in certain subsidiaries as a result of the planned divestitures.

Valuation Allowances

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

In fiscal 2024, due to changes in forecasted taxable income, the Company determined that it was more likely than not that certain deferred tax assets of Mexico and Germany would be realized.

The valuation allowance adjustment resulted in a tax benefit of $ 48 million .

In fiscal 2023, due to changes in forecasted taxable income, the Company determined that it was more likely than not that certain deferred tax assets of Canada, Mexico, and Spain would be realized.

The valuation allowance adjustment resulted in a tax benefit of $ 121 million.

In fiscal 2022, due to changes in forecasted taxable income, the Company determined that it was more likely than not that certain deferred tax assets of Japan would not be realized.

The valuation allowance adjustment resulted in a tax charge of $ 27 million.

In fiscal 2021, as a result of an intercompany transfer of certain of the Company’s intellectual property rights, the Company determined that it was more likely than not that certain deferred tax assets of Switzerland would be realized and certain deferred tax assets of Canada would not be realized.

The valuation allowance adjustments resulted in a $ 39 million net benefit to income tax expense.

Due to changes in forecasted taxable income, the Company also recorded a discrete tax charge of $ 105 million related to valuation allowances on certain Mexico deferred tax assets which were considered unrealizable.

The following table summarizes changes in the valuation allowance (in millions):

Year Ended September 30,

2024 2023 2022

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Allowance provision for new operating and other loss carryforwards 215 544 306

Allowance benefits ( 168 ) ( 205 ) ( 170 )

Allowance reductions ( 236 ) ( 171 ) ( 212 )

Balance at end of period $ 6,258 $ 6,279 $ 5,906

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jurisdictions.

Judgment is required in determining its worldwide provision for income taxes and recording the related assets and liabilities.

Judgment is required in determining the worldwide provision for income taxes and recording the related assets and liabilities.

In the ordinary course of the Company’s business, there are many transactions and calculations where the ultimate tax determination is uncertain.

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Net accrued interest 398 329 281

In fiscal 2024, as the result of tax audit resolutions and statute expirations in various jurisdictions, the Company adjusted its reserve for uncertain tax positions which resulted in a $ 91 million net benefit to income tax expense.

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

In fiscal 2022, the statute of limitations for certain tax years expired, which resulted in a $ 301 million benefit to income tax expense.

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

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.

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

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Germany 2007 - 2021

Luxembourg 2017 - 2018

Mexico 2016 - 2019

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During fiscal 2024, 2023 and 2022, the Company incurred charges for restructuring and impairment costs of $ 510 million, $ 1,049 million and $ 701 million, which generated tax benefits of $ 26 million, $ 120 million and $ 47 million, respectively.

In fiscal 2021, the Company completed an intercompany transfer of certain of the Company’s intellectual property rights which resulted in a net tax charge of $ 417 million.

Impacts of Tax Legislation and Change in Statutory Tax Rates

On December 18, 2023, the president of Ireland signed into law the Finance (No.

2) Bill 2023, which included legislation regarding the implementation of the Pillar Two global minimum tax.

The Pillar Two legislation is effective for the Company’s fiscal year beginning October 1, 2024.

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

Immediate Minimum Taxation Measure (“IMTM”).

The IMTM increases Switzerland’s combined statutory income tax rate to approximately 15 %.

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

The Company is still evaluating the impact on its deferred tax assets in the canton of Schaffhausen, however the revaluation of these assets could have a noncash impact of less than $ 100 million to its consolidated financial statements.

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

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

As a result, in fiscal 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.

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.

The Company does not expect this provision to have a material impact on its effective tax rate.

During the fiscal years ended 2023, 2022 and 2021, other tax legislation was adopted in various jurisdictions.

enacted the Inflation Reduction Act (“IRA”) which, among other things, created 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 was first applicable in fiscal 2024 and did not have a material impact on the Company's effective tax rate.

During fiscal 2024, 2023 and 2022, other tax legislation was adopted in various jurisdictions.

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

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At September 30, 2024 and 2023, the Company recorded within the consolidated statements of financial position in other current liabilities approximately $ 211 million and $ 249 million, respectively, of accrued income tax liabilities.

The Company has not provided U.S.

At September 30, 2024, the Company has not provided U.S.

income taxes on approximately $ 24.5 billion of outside basis differences of consolidated subsidiaries of Johnson Controls International plc.

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Research and development 219 171

Intangible assets 306 —

Operating lease liabilities 294 341

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Operating lease right-of-use assets 294 341

Other liabilities 675 252

Net deferred tax asset $ 1,668 $ 1,164

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• Building Solutions Asia Pacific which operates in Asia Pacific;

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

• Global Products which operates worldwide.

The Building Solutions segments:

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The Global Products segment designs, manufactures and sells:

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

• HVAC equipment, controls software and software services;

• Refrigeration equipment and controls;

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

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

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

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

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

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

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Corporate expenses 490 429 369

Net financing charges ( 281 ) ( 213 ) ( 206 )

Restructuring and impairment costs 510 1,049 701

Net mark-to-market adjustments

( 92 ) 34 402

Water systems AFFF settlement (2)

AFFF insurance recoveries (2)

Net financing charges 342 258 205

Loss on divestiture 42 — —

Net mark-to-market (gain) loss ( 47 ) 95 ( 18 )

Income from continuing operations before income taxes $ 1,522 $ 1,113 $ 1,112

(1) EBITA for the Building Solutions EMEA/LA segment includes equity income (loss) of $( 39 ) million, $ 1 million and $ 6 million for the years ended September 30, 2024, 2023 and 2022, respectively.

(2) 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 and insurance recoveries.

September 30,

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Building Solutions EMEA/LA (1)

5,072 5,202 4,991

Building Solutions Asia Pacific 2,571 2,645 2,474

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Total $ 42,695 $ 42,242 $ 42,158

(1) Assets for the Building Solutions EMEA/LA segment includes investments in partially-owned affiliates of $ 57 million, $ 130 million and $ 115 million, as of September 30, 2024, 2023 and 2022, respectively.

Year Ended September 30,

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Total $ 494 $ 446 $ 487

(1) For the years ended September 30, 2023, 2022 and 2021, segment EBITA includes $ 262 million, $ 240 million and $ 250 million, respectively, of equity income for the Global Products segment.

Equity income for other segments is immaterial.

(2) Building Solutions EMEA/LA assets as of September 30, 2023, 2022 and 2021 include $ 130 million, $ 115 million and $ 111 million, respectively, of investments in partially-owned affiliates.

Global Products assets as of September 30, 2023, 2022 and 2021 include $ 905 million, $ 834 million and $ 945 million, respectively, of investments in partially-owned affiliates.

Investments in partially-owned affiliates for other segments are immaterial.

In fiscal 2024, 2023 and 2022, no customer exceeded 10% of consolidated net sales.

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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.

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 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 the recently constructed 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 remediation actions, including the continued operation of the GETS, the implementation of long-term drinking water solutions, continued monitoring and testing of the wells, the operation and wind-down of other legacy remediation and treatment systems and the completion of ongoing investigation obligations.

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

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.

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

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

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

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 meet 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.

It is difficult to estimate the Company’s ultimate level of liability at many remediation sites due to the large number of other parties that may be involved, the complexity of determining the relative liability among those parties, the financial viability of other potentially responsible parties and third-party indemnitors, the uncertainty as to the nature and scope of the investigations and remediation to be conducted, changes in environmental regulations, changes in permissible levels of specific compounds in drinking water sources, or changes in enforcement theories and policies, including efforts to recover natural resource damages, the uncertainty in the application of law and risk assessment, the various choices and costs associated with diverse technologies that may be used in corrective actions at the sites, and the often quite lengthy periods over which eventual remediation may occur.

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

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.

Nevertheless, the Company does not currently believe that any claims, penalties or costs in addition to the amounts accrued will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

1 unchanged sentence

Conditional asset retirement obligations were $ 7 million and $ 8 million at September 30, 2024 and 2023, respectively.

FTC-Related Remediation and Litigation

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.

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.

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

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 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.

1 unchanged sentence

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

The WDNR has initiated a rulemaking proceeding for a rule 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”).

WDNR indicates that the rule could be finalized by the winter of 2023-2024.

In August 2024, WDNR issued a new proposed rule to adopt the EPA Maximum Contaminant Levels for PFAS in drinking water.

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

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

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

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

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The WDNR issued a further letter regarding the issue on November 4, 2019.

In February 2020, the WDNR sent a letter to Tyco Fire Products and Johnson Controls, Inc.

In February 2020, the WDNR sent a letter to Tyco Fire Products and

Johnson Controls, Inc.

further directing the expansion of the evaluation of PFAS in the Marinette region to include investigation activities south and west of the previously defined FTC study area.

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

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

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

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

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

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

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 engaged in summary judgment and pretrial motions and the court has set a trial date of March 3, 2025.

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.

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

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 lawsuits are presently at the beginning stages of litigation.

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

Aqueous Film-Forming Foam ("AFFF") Litigation

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

Aqueous Film-Forming Foam ("AFFF") Matters

AFFF Litigation

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

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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 970 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.

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 in selling, general and administrative expenses in the consolidated statements of income.

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 fiscal 2024, the Company recorded expected insurance recoveries of $ 371 million in selling, general and administrative expenses in the consolidated statements of income and collected insurance recoveries of $ 349 million.

In accordance with its agreement and recent insurance recovery, Tyco Fire Products made an additional payment during the fourth quarter of fiscal 2024 of approximately $ 85 million, reducing its final payment to approximately $ 415 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 be completed in the first half of fiscal 2025.

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 historical 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

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

In addition, six proposed class actions were filed in Canada (British Columbia, Manitoba, Quebec and Ontario) in the past year against Tyco Fire Products and other

manufacturers on behalf of various classes of members who consumed or were exposed to products or supplies that were allegedly contaminated by AFFF.

AFFF Individual or Mass Actions

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

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

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

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 720 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.

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 have designated four additional plaintiffs as water provider bellwether cases and are conducting initial discovery into those cases.

The parties are also working to identify potential personal injury cases for an additional bellwether phase.

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

State or U.S.

Territory Attorneys General Litigation related to AFFF

AFFF State or U.S.

Territory Attorneys General Litigation

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

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

In addition, 29 other states and territories have filed 31 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.

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, Delaware, the District of Columbia, Florida, 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 Delaware and South Carolina, have been removed to federal court and transferred to the MDL.

It is anticipated that the Delaware and South Carolina complaints will be removed to federal court and transferred to the MDL.

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.

Other AFFF Related Matters

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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 and remains at a relatively early stage.

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

The 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 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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Total asbestos-related assets $ 334 $ 301

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

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

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

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

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

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

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

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

September 30,

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Total self-insured liabilities $ 351 $ 333

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

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

September 30,

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

Although the outcome of litigation cannot be predicted with certainty and some lawsuits, claims or proceedings may be disposed of unfavorably to us, it is management’s opinion that none of these will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Although the outcome of litigation cannot be predicted with certainty and some lawsuits, claims or proceedings may be disposed of unfavorably to the Company, it is management’s opinion that

none of these will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

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

SUBSEQUENT EVENTS

During the weekend of September 23, 2023, the Company experienced a cybersecurity incident impacting its internal information technology ("IT") infrastructure and applications.

The incident was detected shortly after receiving reports of outages to certain of the Company’s systems.

Promptly after detecting the issue, the Company implemented its incident management and response plan and business continuity plans, including implementing remediation measures to mitigate the impact of the incident and restore affected systems and functions.

The Company also engaged leading cybersecurity experts and other specialized consultants to assist in its investigation and remediation of the incident, as well as the restoration of impacted applications and systems.

The cybersecurity incident consisted of unauthorized access, data exfiltration and deployment of ransomware by a third party to a portion of the Company’s internal IT infrastructure.

The incident caused disruptions and limitation of access to portions of the Company’s business applications supporting aspects of the Company’s operations and corporate functions.

Lost and deferred revenues and expenses related to the cybersecurity incident had an immaterial impact on fiscal 2023 net income .

During the first quarter of fiscal 2024, expenses have been and will continue to be incurred, primarily related to third-party expenditures, including IT recovery and forensic experts and others performing professional services to investigate and remediate the incident, as well as incremental operating expenses incurred from the resulting disruption to the Company’s business operations.

The overall impact in fiscal 2024 is not expected to be material to net income, net of insurance recoveries, or cash flows from continuing operations;

however, the timing of recognizing the insurance recoveries may differ from the timing of recognizing the associated expenses.

ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 8. Financial Statements and Supplementary Data