10-Q 1 q2fy1810-q.htm 10-Q Document


 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
 
 
 
Form 10-Q
 
 
 
 
 
  
(Mark One)
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2018
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 001-13836 
 
 
 
 
 
 
JOHNSON CONTROLS INTERNATIONAL PLC
(Exact name of registrant as specified in its charter) 
 
 
 
 
 
 
Ireland
 
98-0390500
(Jurisdiction of Incorporation)
 
(I.R.S. Employer Identification No.)
 
 
One Albert Quay
Cork, Ireland
(Address of principal executive offices)
353-21-423-5000

(Registrant’s telephone number)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report) 
 
 
 
 
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
þ
 
 
Accelerated filer
¨

Non-accelerated filer
¨

(Do not check if a smaller
 
Smaller reporting company
¨

 
 
 reporting company)

 
Emerging growth company
¨

 
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
 
Ordinary Shares Outstanding at March 31, 2018
Ordinary Shares, $0.01 par value per share
 
926,204,412
 
 
 
 
 

1


JOHNSON CONTROLS INTERNATIONAL PLC
FORM 10-Q
Report Index

  
Page
Part I. Financial Information
 
 
 
Item 1. Financial Statements (unaudited)
 
 
 
Consolidated Statements of Financial Position at March 31, 2018 and September 30, 2017
 
 
Consolidated Statements of Income for the Three and Six Month Periods Ended March 31, 2018 and 2017
 
 
Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Month Periods Ended March 31, 2018 and 2017
 
 
Consolidated Statements of Cash Flows for the Six Month Periods Ended March 31, 2018 and 2017
 
 
Notes to Consolidated Financial Statements
 
 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
 
Item 3. Quantitative and Qualitative Disclosures About Market Risk
 
 
Item 4. Controls and Procedures
 
 
Part II. Other Information
 
 
 
Item 1. Legal Proceedings
 
 
Item 1A. Risk Factors
 
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 
 
Item 6. Exhibits
 
 
Signatures

2



PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
Johnson Controls International plc
Consolidated Statements of Financial Position
(in millions, except par value; unaudited)
 
 
 
 
 
March 31, 2018
 
September 30, 2017
Assets
 
 
 
 
 
 
 
Cash and cash equivalents
$
268

 
$
321

Accounts receivable - net
6,679

 
6,666

Inventories
3,565

 
3,209

Assets held for sale
22

 
189

Other current assets
1,737

 
1,907

Current assets
12,271

 
12,292

 
 
 
 
Property, plant and equipment - net
6,235

 
6,121

Goodwill
19,806

 
19,688

Other intangible assets - net
6,625

 
6,741

Investments in partially-owned affiliates
1,294

 
1,191

Noncurrent assets held for sale

 
1,920

Other noncurrent assets
3,721

 
3,931

Total assets
$
49,952

 
$
51,884

 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
 
Short-term debt
$
1,111

 
$
1,214

Current portion of long-term debt
25

 
394

Accounts payable
4,250

 
4,271

Accrued compensation and benefits
866

 
1,071

Deferred revenue
1,543

 
1,279

Liabilities held for sale

 
72

Other current liabilities
3,197

 
3,553

Current liabilities
10,992

 
11,854

 
 
 
 
Long-term debt
10,962

 
11,964

Pension and postretirement benefits
864

 
947

Noncurrent liabilities held for sale

 
173

Other noncurrent liabilities
5,019

 
5,368

Long-term liabilities
16,845

 
18,452

 
 
 
 
Commitments and contingencies (Note 21)


 


 
 
 
 
Redeemable noncontrolling interests
235

 
211

 
 
 
 
Ordinary shares, $0.01 par value
9

 
9

Ordinary A shares, €1.00 par value

 

Preferred shares, $0.01 par value

 

Ordinary shares held in treasury, at cost
(946
)
 
(710
)
Capital in excess of par value
16,471

 
16,390

Retained earnings
5,594

 
5,231

Accumulated other comprehensive loss
(254
)
 
(473
)
Shareholders’ equity attributable to Johnson Controls
20,874

 
20,447

Noncontrolling interests
1,006

 
920

Total equity
21,880

 
21,367

Total liabilities and equity
$
49,952

 
$
51,884


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

3



Johnson Controls International plc
Consolidated Statements of Income
(in millions, except per share data; unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended
March 31,
 
Six Months Ended
March 31,
 
2018
 
2017
 
2018
 
2017
Net sales
 
 
 
 
 
 
 
Products and systems*
$
5,996

 
$
5,769

 
$
11,942

 
$
11,354

Services*
1,479

 
1,498

 
2,968

 
2,999

 
7,475

 
7,267

 
14,910

 
14,353

Cost of sales
 
 
 
 
 
 
 
Products and systems*
4,417

 
4,087

 
8,866

 
8,150

Services*
838

 
899

 
1,655

 
1,808

 
5,255

 
4,986

 
10,521

 
9,958

 
 
 
 
 
 
 
 
Gross profit
2,220

 
2,281

 
4,389

 
4,395

 
 
 
 
 
 
 
 
Selling, general and administrative expenses
(1,588
)
 
(1,726
)
 
(3,005
)
 
(3,296
)
Restructuring and impairment costs

 
(99
)
 
(158
)
 
(177
)
Net financing charges
(115
)
 
(116
)
 
(231
)
 
(252
)
Equity income
44

 
53

 
104

 
108

 
 
 
 
 
 
 
 
Income from continuing operations before income taxes
561

 
393

 
1,099

 
778

 
 
 
 
 
 
 
 
Income tax provision
78

 
508

 
345

 
481

 
 
 
 
 
 
 
 
Income (loss) from continuing operations
483

 
(115
)
 
754

 
297

 
 
 
 
 
 
 
 
Loss from discontinued operations, net of tax (Note 4)

 

 

 
(34
)
 
 
 
 
 
 
 
 
Net income (loss)
483

 
(115
)
 
754

 
263

 
 
 
 
 
 
 
 
Income from continuing operations attributable to noncontrolling
   interests
45

 
33

 
86

 
73

 
 
 
 
 
 
 
 
Income from discontinued operations attributable to noncontrolling
   interests

 

 

 
9

 
 
 
 
 
 
 
 
Net income (loss) attributable to Johnson Controls
$
438

 
$
(148
)
 
$
668

 
$
181

 
 
 
 
 
 
 
 
Amounts attributable to Johnson Controls ordinary shareholders:
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
438

 
$
(148
)
 
$
668

 
$
224

        Loss from discontinued operations

 

 

 
(43
)
Net income (loss)
$
438

 
$
(148
)
 
$
668

 
$
181

 
 
 
 
 
 
 
 
Basic earnings (loss) per share attributable to Johnson Controls
 
 
 
 
 
 
 
Continuing operations
$
0.47

 
$
(0.16
)
 
$
0.72

 
$
0.24

Discontinued operations

 

 

 
(0.05
)
Net income (loss)
$
0.47

 
$
(0.16
)
 
$
0.72

 
$
0.19

 
 
 
 
 
 
 
 
Diluted earnings (loss) per share attributable to Johnson Controls
 
 
 
 
 
 
 
Continuing operations
$
0.47

 
$
(0.16
)
 
$
0.72

 
$
0.24

Discontinued operations

 

 

 
(0.05
)
Net income (loss)
$
0.47

 
$
(0.16
)
 
$
0.72

 
$
0.19


*
Products and systems consist of Building Technologies & Solutions and Power Solutions products and systems. Services are Building Technologies & Solutions technical services.

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

4



Johnson Controls International plc
Consolidated Statements of Comprehensive Income (Loss)
(in millions; unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended
March 31,
 
Six Months Ended
March 31,
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
Net income (loss)
$
483

 
$
(115
)
 
$
754

 
$
263

 
 
 
 
 
 
 
 
Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustments
204

 
252

 
283

 
(451
)
Realized and unrealized losses on derivatives
(10
)
 
(8
)
 
(11
)
 
(4
)
Realized and unrealized gains (losses) on marketable securities
(2
)
 
11

 
(2
)
 
9

 
 
 
 
 
 
 
 
Other comprehensive income (loss)
192

 
255

 
270

 
(446
)
 
 
 
 
 
 
 
 
Total comprehensive income (loss)
675

 
140

 
1,024

 
(183
)
 
 
 
 
 
 
 
 
Comprehensive income attributable to noncontrolling interests
77

 
42

 
137

 
51

 
 
 
 
 
 
 
 
Comprehensive income (loss) attributable to Johnson Controls
$
598

 
$
98

 
$
887

 
$
(234
)

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

5



Johnson Controls International plc
Consolidated Statements of Cash Flows
(in millions; unaudited)
 
Six Months Ended March 31,
 
2018
 
2017
Operating Activities
 
 
 
Net income attributable to Johnson Controls
$
668

 
$
181

Income from continuing operations attributable to noncontrolling interests
86

 
73

Income from discontinued operations attributable to noncontrolling interests

 
9

Net income
754

 
263

Adjustments to reconcile net income to cash provided (used) by operating activities:
 
 
 
Depreciation and amortization
552

 
638

Pension and postretirement benefit income
(72
)
 
(202
)
Pension and postretirement contributions
(37
)
 
(258
)
Equity in earnings of partially-owned affiliates, net of dividends received
(79
)
 
(116
)
Deferred income taxes
(77
)
 
1,059

Non-cash restructuring and impairment charges
30

 
39

Gain on Scott Safety business divestiture
(114
)
 

Equity-based compensation
56

 
81

Other
(24
)
 
1

Changes in assets and liabilities, excluding acquisitions and divestitures:
 
 
 
Accounts receivable
108

 
(21
)
Inventories
(300
)
 
(370
)
Other assets
15

 
(150
)
Restructuring reserves
(12
)
 
47

Accounts payable and accrued liabilities
(521
)
 
(599
)
Accrued income taxes
254

 
(1,931
)
Cash provided (used) by operating activities
533

 
(1,519
)
 
 
 
 
Investing Activities
 
 
 
Capital expenditures
(497
)
 
(634
)
Sale of property, plant and equipment
10

 
18

Acquisition of businesses, net of cash acquired
(15
)
 
(6
)
Business divestitures
2,114

 
180

Changes in long-term investments
(14
)
 
(30
)
Cash provided (used) by investing activities
1,598

 
(472
)
 
 
 
 
Financing Activities
 
 
 
Increase (decrease) in short-term debt - net
(100
)
 
55

Increase in long-term debt
886

 
1,552

Repayment of long-term debt
(2,328
)
 
(831
)
Debt financing costs
(4
)
 
(17
)
Stock repurchases
(199
)
 
(119
)
Payment of cash dividends
(473
)
 
(235
)
Proceeds from the exercise of stock options
36

 
88

Employee equity-based compensation withholding taxes
(37
)
 
(33
)
Dividends paid to noncontrolling interests
(46
)
 
(78
)
Dividend from Adient spin-off

 
2,050

Cash transferred to Adient related to spin-off

 
(665
)
Cash paid related to prior acquisitions

 
(37
)
Other
11

 
14

Cash provided (used) by financing activities
(2,254
)
 
1,744

Effect of exchange rate changes on cash and cash equivalents
61

 
(25
)
Change in cash held for sale
9

 
105

Decrease in cash and cash equivalents
(53
)
 
(167
)
Cash and cash equivalents at beginning of period
321

 
579

Cash and cash equivalents at end of period
$
268

 
$
412


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

6


Johnson Controls International plc
Notes to Consolidated Financial Statements
March 31, 2018
(unaudited)



1.
Financial Statements

The consolidated financial statements include the consolidated accounts of Johnson Controls International plc, a corporation organized under the laws of Ireland, and its subsidiaries (Johnson Controls International plc and all its subsidiaries, hereinafter collectively referred to as the "Company" or "Johnson Controls"). In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (which include normal recurring adjustments) necessary to state fairly the financial position, results of operations and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been omitted pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC"). These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2017 filed with the SEC on November 21, 2017. The results of operations for the three and six month periods ended March 31, 2018 are not necessarily indicative of results for the Company’s 2018 fiscal year because of seasonal and other factors.

Nature of Operations

Johnson Controls International plc, headquartered in Cork, Ireland, is a global diversified technology and multi industrial leader serving a wide range of customers in more than 150 countries. The Company creates intelligent buildings, efficient energy solutions, integrated infrastructure and next generation transportation systems that work seamlessly together to deliver on the promise of smart cities and communities. The Company is committed to helping our customers win and creating greater value for all of its stakeholders through strategic focus on our buildings and energy growth platforms.

In the fourth quarter of fiscal 2016, Johnson Controls, Inc. ("JCI Inc.") and Tyco International plc ("Tyco") completed their combination with JCI Inc. merging with a wholly-owned, indirect subsidiary of Tyco (the "Merger"). Following the Merger, Tyco changed its name to “Johnson Controls International plc” and JCI Inc. is a wholly-owned subsidiary of Johnson Controls International plc. The Merger was accounted for as a reverse acquisition using the acquisition method of accounting in accordance with Accounting Standards Codification ("ASC") 805, "Business Combinations." JCI Inc. was the accounting acquirer for financial reporting purposes. Accordingly, the historical consolidated financial statements of JCI Inc. for periods prior to this transaction are considered to be the historic financial statements of the Company. 

The Building Technologies & Solutions ("Buildings") business is a global market leader in engineering, developing, manufacturing and installing building products and systems around the world, including heating, ventilating, air-conditioning ("HVAC") equipment, HVAC controls, energy-management systems, security systems, fire detection systems and fire suppression solutions. The Buildings business further serves customers by providing technical services (in the HVAC, security and fire-protection space), energy-management consulting and data-driven solutions via its recently launch data-enabled business. Finally, the Company is a North American market leader in residential air conditioning and heating systems and a global market leader in industrial refrigeration products.

The Power Solutions business is a leading global supplier of lead-acid automotive batteries for virtually every type of passenger car, light truck and utility vehicle. The Company serves both automotive original equipment manufacturers and the general vehicle battery aftermarket. The Company also supplies advanced battery technologies to power start-stop, hybrid and electric vehicles.

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 U.S. GAAP. All significant intercompany transactions have been eliminated. The results of companies acquired or disposed of during the year are included in the consolidated financial statements from the effective date of acquisition or up to the date of disposal. Investments in partially-owned affiliates are accounted for by the equity method when the Company’s interest exceeds 20% and the Company does not have a controlling interest.


7


Johnson Controls International plc
Notes to Consolidated Financial Statements
March 31, 2018
(unaudited)


Under certain criteria as provided for in Financial Accounting Standards Board ("FASB") ASC 810, "Consolidation," the Company may consolidate a partially-owned affiliate. To determine whether to consolidate a partially-owned affiliate, the Company first determines if the entity is a variable interest entity ("VIE"). An entity is considered to be a VIE if it has one of the following characteristics: 1) the entity is thinly capitalized; 2) residual equity holders do not control the entity; 3) equity holders are shielded from economic losses or do not participate fully in the entity’s residual economics; or 4) the entity was established with non-substantive voting rights. If the entity meets one of these characteristics, the Company then determines if it is the primary beneficiary of the VIE. The party with the power to direct activities of the VIE that most significantly impact the VIE’s economic performance and the potential to absorb benefits or losses that could be significant to the VIE is considered the primary beneficiary and consolidates the VIE. If the entity is not considered a VIE, then the Company applies the voting interest model to determine whether or not the Company shall consolidate the partially-owned affiliate.

Consolidated VIEs    

Based upon the criteria set forth in ASC 810, the Company has determined that it was not the primary beneficiary in any VIEs for the reporting period ended March 31, 2018 and that it was the primary beneficiary in one VIE for the reporting period ended September 30, 2017, as the Company absorbed significant economics of the entity and had the power to direct the activities that are considered most significant to the entity.

In fiscal 2012, a pre-existing VIE accounted for under the equity method was reorganized into three separate investments as a result of the counterparty exercising its option to put its interest to the Company. The Company acquired additional interests in two of the reorganized group entities. The reorganized group entities are considered to be VIEs as the other owner party has been provided decision making rights but does not have equity at risk. The Company was considered the primary beneficiary of one of the entities due to the Company’s power pertaining to decisions over significant activities of the entity. As such, this VIE was consolidated within the Company’s consolidated statements of financial position as of September 30, 2017. During the quarter ended December 31, 2017, certain joint venture agreements were amended, and as a result, the Company can no longer make key operating decisions considered to be most significant to the VIE. As such, the Company is no longer considered the primary beneficiary of this entity, and the Company deconsolidated the entity during the quarter ended December 31, 2017. The impact of the entity on the Company’s consolidated statements of income for the six month periods ended March 31, 2018 and 2017 was not material.

The carrying amounts and classification of assets (none of which are restricted) and liabilities included in the Company’s consolidated statements of financial position for the consolidated VIE is as follows (in millions):
 
 
September 30,
2017
 
 
 
Current assets
 
$
2

Noncurrent assets
 
53

Total assets
 
$
55

 
 
 
Current liabilities
 
$
6

Noncurrent liabilities
 
42

Total liabilities
 
$
48


The Company did not have a significant variable interest in any other consolidated VIEs for the presented reporting periods.

Nonconsolidated VIEs

As mentioned previously within the "Consolidated VIEs" section above, in fisca1 2012, a pre-existing VIE was reorganized into three separate investments as a result of the counterparty exercising its option to put its interest to the Company. The reorganized group entities are considered to be VIEs as the other owner party has been provided decision making rights but does not have equity at risk. The VIEs are named as co-obligors under a third party debt agreement in the amount of $159 million, maturing in fiscal 2020, under which a VIE could become subject to paying more than its allocated share of the third

8


Johnson Controls International plc
Notes to Consolidated Financial Statements
March 31, 2018
(unaudited)


party debt in the event of bankruptcy of one or more of the other co-obligors. The other co-obligors, all related parties in which the Company is an equity investor, consist of the remaining group entities involved in the reorganization. As part of the overall reorganization transaction, the Company has also provided financial support to the group entities in the form of loans totaling $37 million, which are subordinate to the third party debt agreement. The Company is a significant customer of certain co-obligors, resulting in a remote possibility of loss. Additionally, the Company is subject to a floor guaranty expiring in fiscal 2022; in the event that the other owner party no longer owns any part of the group entities due to sale or transfer, the Company has guaranteed that the proceeds received from the sale or transfer will not be less than $25 million. The Company has partnered with the group entities to design and manufacture battery components for the Power Solutions business. The Company is not considered to be the primary beneficiary of three of the entities as of March 31, 2018 and two of the entities as of September 30, 2017, as the Company cannot make key operating decisions considered to be most significant to the VIEs. Therefore, the entities are accounted for under the equity method of accounting as the Company’s interest exceeds 20% and the Company does not have a controlling interest. The Company’s maximum exposure to loss includes the partially-owned affiliate investment balances of $41 million and $65 million at March 31, 2018 and September 30, 2017, respectively, as well as the subordinated loan from the Company, third party debt agreement and floor guaranty mentioned above. Current liabilities due to the VIEs are not material and represent normal course of business trade payables for all presented periods.

The Company did not have a significant variable interest in any other unconsolidated VIEs for the presented reporting periods.

Restricted Cash

At March 31, 2018, the Company held restricted cash of approximately $21 million, of which $12 million was recorded within other current assets in the consolidated statements of financial position and $9 million was recorded within other noncurrent assets in the consolidated statements of financial position. At September 30, 2017, the Company held restricted cash of approximately $31 million, of which $22 million was recorded within other current assets in the consolidated statements of financial position and $9 million was recorded within other noncurrent assets in the consolidated statements of financial position. These amounts were primarily related to cash restricted for payment of asbestos liabilities.

Retrospective Changes

Effective July 1, 2017, the Company reorganized the reportable segments within its Building Technologies & Solutions business to align with its new management reporting structure and business activities. Prior to this reorganization, Building Technologies & Solutions was comprised of five reportable segments for financial reporting purposes: Systems and Service North America, Products North America, Asia, Rest of World and Tyco. As a result of this change, Building Technologies & Solutions is now comprised of four reportable segments for financial reporting purposes: Building Solutions North America, Building Solutions EMEA/LA, Building Solutions Asia Pacific and Global Products. Refer to Note 18, “Segment Information,” of the notes to consolidated financial statements for further information. The net sales and cost of sales split of products and systems versus services in the consolidated statements of income has also been revised for the Building Technologies & Solutions reorganization.

In March 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." During the quarter ended December 31, 2017, the Company adopted ASU No. 2016-09. As a result, employee withholding taxes paid to taxing authorities for equity-based compensation transactions, previously classified as cash flows from operating activities, were reclassified to financing activities in the consolidated statements of cash flows for the six months ended March 31, 2017. Refer to Note 2, "New Accounting Standards," of the notes to consolidated financial statements for further information.
    
2. 
New Accounting Standards

Recently Adopted Accounting Pronouncements

In March 2018, the FASB issued ASU No. 2018-05, "Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulleting No. 118" to add various SEC paragraphs pursuant to the issuance of SEC Staff Accounting Bulletin No. 118 ("SAB 118") to ASC 740 "Income Taxes." SAB 118 was issued by the SEC in December 2017 to provide immediate guidance for accounting implications of U.S. tax reform under the "Tax Cuts and Jobs Act" in the period of

9


Johnson Controls International plc
Notes to Consolidated Financial Statements
March 31, 2018
(unaudited)


enactment. SAB 118 provides for a provisional one year measurement period for entities to finalize their accounting for certain income tax effects related to the "Tax Cuts and Jobs Act." The Company applied this guidance to its consolidated financial statements and related disclosures beginning in the quarter ended December 31, 2017. Refer to Note 9, "Income Taxes," of the notes to consolidated financial statements for further information.

In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." The ASU more closely aligns the results of hedge accounting with risk management activities through amendments to the designation and measurement guidance to better reflect a Company's hedging strategy and effectiveness. During the quarter ended December 31, 2017, the Company early adopted ASU 2017-12. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." ASU No. 2016-09 impacts certain aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statements of cash flows. During the quarter ended December 31, 2017, the Company adopted ASU No. 2016-09. As a result, the Company recognized deferred tax assets of $179 million in the consolidated statements of financial position related to certain operating loss carryforwards resulting from the exercise of employee stock options and vested restricted stock on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of October 1, 2017. Additionally, employee withholding taxes paid to taxing authorities for equity-based compensation transactions, previously classified as cash flows from operating activities, were reclassified to financing activities in the consolidated statements of cash flows for the six months ended March 31, 2017 for comparative purposes. The remaining provisions of ASU No. 2016-09 did not have a material impact on the Company's consolidated financial statements.
 
Recently Issued Accounting Pronouncements

In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force)." The ASU requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The guidance will be effective for the Company for the quarter ending December 31, 2018, with early adoption permitted. The amendments in this update should be applied retrospectively to all periods presented. The impact of this guidance for the Company will depend on the levels of restricted cash balances in the periods presented.

In October 2016, the FASB issued ASU No. 2016-16, "Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory." The ASU requires the tax effects of all intra-entity sales of assets other than inventory to be recognized in the period in which the transaction occurs. The guidance will be effective for the Company for the quarter ending December 31, 2018, with early adoption permitted but only in the first interim period of a fiscal year. The changes are required to be applied by means of a cumulative-effect adjustment recorded in retained earnings as of the beginning of the fiscal year of adoption. The Company is currently assessing the impact adoption of this guidance will have on its consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments." ASU No. 2016-15 provides clarification guidance on eight specific cash flow presentation issues in order to reduce the diversity in practice. ASU No. 2016-15 will be effective for the Company for the quarter ending December 31, 2018, with early adoption permitted. The guidance should be applied retrospectively to all periods presented, unless deemed impracticable, in which case prospective application is permitted. The Company is currently assessing the impact adoption of this guidance will have on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)." ASU No. 2016-02 requires recognition of operating leases as lease assets and liabilities on the balance sheet, and disclosure of key information about leasing arrangements. ASU No. 2016-02 will be effective retrospectively for the Company for the quarter ending December 31, 2019, with early adoption permitted. The Company is currently assessing the impact adoption of this guidance will have on its consolidated financial statements. The Company has started the assessment process by evaluating the population of leases under the revised definition of what qualifies as a leased asset. The Company is the lessee under various agreements for

10


Johnson Controls International plc
Notes to Consolidated Financial Statements
March 31, 2018
(unaudited)


facilities and equipment that are currently accounted for as operating leases. The new guidance will require the Company to record operating leases on the balance sheet with a right-of-use asset and corresponding liability for future payment obligations. Additionally in January 2018, the FASB issued ASU No. 2018-01, "Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842," which provides an optional transition practical expedient for existing or expired land easements that were not previously recorded as leases. ASU No. 2018-01 follows the same implementation guidelines as ASU No. 2016-02. The Company expects the new guidance will have a material impact on its consolidated statements of financial position for the addition of right-of-use assets and lease liabilities, but the Company does not expect it to have a material impact on its consolidated statements of income and its consolidated statements of cash flows.
In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." ASU No. 2016-01 amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including marketable securities. ASU No. 2016-01 will be effective for the Company for the quarter ending December 31, 2018, and early adoption is not permitted, with certain exceptions. The changes are required to be applied by means of a cumulative-effect adjustment on the balance sheet as of the beginning of the fiscal year of adoption. Additionally in February 2018, the FASB issued ASU No. 2018-03, "Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which provides additional clarification on certain topics addressed in ASU No. 2016-01. ASU No. 2018-01 will be effective for the Company when ASU No. 2016-01 is adopted. The impact of this guidance for the Company will depend on the magnitude of the unrealized gains and losses on the Company's marketable securities investments.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)." ASU No. 2014-09 clarifies the principles for recognizing revenue when an entity either enters into a contract with customers to transfer goods or services or enters into a contract for the transfer of non-financial assets. The original standard was effective retrospectively for the Company for the quarter ending December 31, 2017; however in August 2015, the FASB issued ASU No. 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date," which defers the effective date of ASU No. 2014-09 by one-year for all entities. The new standard will become effective retrospectively for the Company for the quarter ending December 31, 2018, with early adoption permitted, but not before the original effective date. Additionally, in March 2016, the FASB issued ASU No. 2016-08, "Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)," in April 2016, the FASB issued ASU No. 2016-10, "Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing," in May 2016, the FASB issued ASU No. 2016-12, "Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients," and in December 2016, the FASB issued ASU No. 2016-20, "Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers," all of which provide additional clarification on certain topics addressed in ASU No. 2014-09. ASU No. 2016-08, ASU No. 2016-10, ASU No. 2016-12 and ASU No. 2016-20 follow the same implementation guidelines as ASU No. 2014-09 and ASU No. 2015-14. The Company has elected to adopt the new revenue guidance as of October 1, 2018 using the modified retrospective approach.  In preparation for adoption of the new guidance, the Company has reviewed representative samples of contracts and other forms of agreements with customers globally and is in the process of evaluating the impact of the new revenue standard. Based on its procedures to date, the Company is not in a position today to quantify the potential impact the new revenue standard will have to its consolidated financial statements.

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

3.
Acquisitions and Divestitures

During the first six months of fiscal 2018, the Company completed certain acquisitions for a combined purchase price of $15 million, all of which was paid as of March 31, 2018. The acquisitions were not material to the Company’s consolidated financial statements. In connection with the acquisitions, the Company recorded goodwill of $8 million within the Global Products segment.

In the second quarter of fiscal 2018, the Company completed the sale of a certain Global Products business. The selling price was $103 million, all of which was received in the three months ended March 31, 2018. In connection with the sale, the

11


Johnson Controls International plc
Notes to Consolidated Financial Statements
March 31, 2018
(unaudited)


Company reduced goodwill by $20 million and realized an insignificant gain. The divestiture was not material to the Company's consolidated financial statements.

In the first quarter of fiscal 2018, the Company completed the sale of its Scott Safety business to 3M Company. The selling price, net of cash divested, was $2.0 billion, all of which was received as of December 31, 2017. In connection with the sale, the Company recorded a pre-tax gain of $114 million within selling, general and administrative expenses in the consolidated statements of income and reduced goodwill in assets held for sale by $1.2 billion. The gain, net of tax, recorded was $84 million. Net cash proceeds from the transaction of approximately $1.9 billion were used to repay a significant portion of the Tyco International Holding S.a.r.L.'s ("TSarl") $4.0 billion of merger-related debt. The Scott Safety business is included in the Global Products segment and was reported within assets and liabilities held for sale in the consolidated statements of financial position as of September 30, 2017. Refer to Note 4, "Discontinued Operations," of the notes to consolidated financial statements for further disclosure related to the Company's net assets held for sale.

In the first six months of fiscal 2017, the Company completed three acquisitions for a combined purchase price, net of cash acquired, of $9 million$6 million of which was paid in the six months ended March 31, 2017. The acquisitions in the aggregate were not material to the Company’s consolidated financial statements.

In the second quarter of fiscal 2017, the Company completed the sale of its ADT security business in South Africa within the Building Solutions EMEA/LA segment. The selling price, net of cash divested, was $129 million, all of which was received in the six months ended March 31, 2017. In connection with the sale, the Company reduced goodwill in assets held for sale by $92 million. The divestiture was not material to the Company's consolidated financial statements.

In the first six months of fiscal 2017, the Company completed one divestiture for a sales price of $4 million, all of which was received in the six months ended March 31, 2017. The divestiture decreased the Company's ownership from a controlling to noncontrolling interest, and as a result, the Company deconsolidated cash of $5 million. The divestiture was not material to the Company's consolidated financial statements.

In the first six months of fiscal 2017, the Company received $52 million in net cash proceeds related to prior year business divestitures.

4.
Discontinued Operations

On October 31, 2016, the Company completed the spin-off of its Automotive Experience business by way of the transfer of the Automotive Experience business from Johnson Controls to Adient plc and the issuance of ordinary shares of Adient directly to holders of Johnson Controls ordinary shares on a pro rata basis. Prior to the open of business on October 31, 2016, each of the Company's shareholders received one ordinary share of Adient plc for every 10 ordinary shares of Johnson Controls held as of the close of business on October 19, 2016, the record date for the distribution. Company shareholders received cash in lieu of fractional shares of Adient, if any. Following the separation and distribution, Adient plc is now an independent public company trading on the New York Stock Exchange ("NYSE") under the symbol "ADNT." The Company did not retain any equity interest in Adient plc. Adient’s historical financial results are reflected in the Company’s consolidated financial statements as a discontinued operation. The Company did not allocate any general corporate overhead to discontinued operations.


12


Johnson Controls International plc
Notes to Consolidated Financial Statements
March 31, 2018
(unaudited)


The following table summarizes the results of Adient, reclassified as discontinued operations for the six month period ended March 31, 2017 (in millions). As the Adient spin-off occurred on October 31, 2016, there is only one month of Adient results included in the six month period ended March 31, 2017.
 
Six Months Ended March 31,
 
2017
 
 
Net sales
$
1,434

 
 
Income from discontinued operations before income taxes
1

Provision for income taxes on discontinued operations
35

Income from discontinued operations attributable to noncontrolling interests, net of tax
9

Loss from discontinued operations
$
(43
)

For the six months ended March 31, 2017, the income from discontinued operations before income taxes included separation costs of $79 million.

For the six months ended March 31, 2017, the effective tax rate was more than the U.S. federal statutory rate of 35% primarily due to the tax impacts of separation costs and Adient spin-off related tax expense, partially offset by non-U.S. tax rate differentials.

The following table summarizes depreciation and amortization, capital expenditures, and significant operating and investing noncash items related to Adient for the six month period ended March 31, 2017 (in millions):
 
Six Months Ended March 31,
 
2017
 
 
Depreciation and amortization
$
29

Equity in earnings of partially-owned affiliates
(31
)
Deferred income taxes
562

Equity-based compensation
1

Accrued income taxes
(808
)
Capital expenditures
(91
)

Assets and Liabilities Held for Sale

During the second quarter of fiscal 2017, the Company signed a definitive agreement to sell its Scott Safety business of the Global Products segment to 3M Company. The transaction closed on October 4, 2017. The assets and liabilities of this business are presented as held for sale in the consolidated statements of financial position as of September 30, 2017. The business did not meet the criteria to be classified as a discontinued operation as the divestiture of the Scott Safety business did not have a major effect on the Company’s operations and financial results.


13


Johnson Controls International plc
Notes to Consolidated Financial Statements
March 31, 2018
(unaudited)


The following table summarizes the carrying value of the Scott Safety assets and liabilities held for sale at September 30, 2017 (in millions):
 
September 30, 2017
 
 
Cash
$
9

Accounts receivable - net
100

Inventories
75

Other current assets
5

Assets held for sale
$
189

 
 
Property, plant and equipment - net
$
79

Goodwill
1,248

Other intangible assets - net
592

Other noncurrent assets
1

Noncurrent assets held for sale
$
1,920

 
 
Accounts payable
$
37

Accrued compensation and benefits
10

Other current liabilities
25

Liabilities held for sale
$
72

 
 
Other noncurrent liabilities
$
173

Noncurrent liabilities held for sale
$
173


At March 31, 2018, $22 million of certain Corporate assets were classified as held for sale.

5.
Percentage-of-Completion Contracts

The Building Technologies & Solutions business records certain long-term contracts under the percentage-of-completion method of accounting. Under this method, sales and gross profit are recognized as work is performed based on the relationship between actual costs incurred and total estimated costs at completion. The Company records costs and earnings in excess of billings on uncompleted contracts primarily within accounts receivable - net and billings in excess of costs and earnings on uncompleted contracts primarily within deferred revenue in the consolidated statements of financial position. Costs and earnings in excess of billings related to these contracts were $1,065 million and $908 million at March 31, 2018 and September 30, 2017, respectively. Billings in excess of costs and earnings related to these contracts were $565 million and $451 million at March 31, 2018 and September 30, 2017, respectively.

6.
Inventories

Inventories consisted of the following (in millions):
 
March 31, 2018
 
September 30, 2017
 
 
 
 
Raw materials and supplies
$
991

 
$
919

Work-in-process
575

 
567

Finished goods
1,999

 
1,723

Inventories
$
3,565

 
$
3,209



14


Johnson Controls International plc
Notes to Consolidated Financial Statements
March 31, 2018
(unaudited)


7.
Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill in each of the Company’s reportable segments for the six month period ended March 31, 2018 were as follows (in millions):
 
 
 
Business Acquisitions
 
Business Divestitures
 
Currency Translation and Other
 
 
 
September 30,
 
 
 
 
March 31,
 
2017
 
 
 
 
2018
 
 
 
 
 
 
 
 
 
 
Building Technologies & Solutions
 
 
 
 
 
 
 
 
 
     Building Solutions North America
$
9,637

 
$

 
$

 
$
(22
)
 
$
9,615

     Building Solutions EMEA/LA
2,012

 

 

 
77

 
2,089

     Building Solutions Asia Pacific
1,255

 

 

 
54

 
1,309

     Global Products
5,687

 
8

 
(20
)
 
2

 
5,677

Power Solutions
1,097

 

 

 
19

 
1,116

Total
$
19,688

 
$
8

 
$
(20
)
 
$
130

 
$
19,806


At September 30, 2017, accumulated goodwill impairment charges included $47 million related to the Building Solutions EMEA/LA - Latin America reporting unit.

The Company’s other intangible assets, primarily from business acquisitions valued based on independent appraisals, consisted of (in millions):
 
March 31, 2018
 
September 30, 2017
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Amortized intangible assets
 
 
 
 
 
 
 
 
 
 
 
Technology
$
1,344

 
$
(205
)
 
$
1,139

 
$
1,328

 
$
(137
)
 
$
1,191

Customer relationships
3,163

 
(561
)
 
2,602

 
3,168

 
(486
)
 
2,682

Miscellaneous
443

 
(176
)
 
267

 
389

 
(147
)
 
242

Total amortized intangible assets
4,950

 
(942
)
 
4,008

 
4,885

 
(770
)
 
4,115

Unamortized intangible assets
 
 
 
 
 
 
 
 
 
 
 
Trademarks/trade names
2,494

 

 
2,494

 
2,483

 

 
2,483

Miscellaneous
123

 

 
123

 
143

 

 
143

 
2,617

 

 
2,617

 
2,626

 

 
2,626

Total intangible assets
$
7,567

 
$
(942
)
 
$
6,625


$
7,511


$
(770
)

$
6,741


Amortization of other intangible assets included within continuing operations for the three month periods ended March 31, 2018 and 2017 was $94 million and $126 million, respectively. Amortization of other intangible assets included within continuing operations for the six month periods ended March 31, 2018 and 2017 was $188 million and $275 million, respectively. Excluding the impact of any future acquisitions, the Company anticipates amortization for fiscal 2019, 2020, 2021, 2022 and 2023 will be approximately $383 million, $379 million, $371 million, $361 million and $348 million per year, respectively.


15


Johnson Controls International plc
Notes to Consolidated Financial Statements
March 31, 2018
(unaudited)


8.
Significant Restructuring and Impairment Costs

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

In fiscal 2018, the Company committed to a significant restructuring plan (2018 Plan) and recorded $158 million of restructuring and impairment costs in the consolidated statements of income. This was the total amount incurred to date and the total amount expected to be incurred for this restructuring plan. The restructuring actions related to cost reduction initiatives in the Company’s Building Technologies & Solutions and Power Solutions businesses and at Corporate. The costs consist primarily of workforce reductions, plant closures and asset impairments. Of the restructuring and impairment costs recorded, $76 million related to the Global Products segment, $32 million related to the Building Solutions EMEA/LA segment, $24 million related to Corporate, $14 million related to the Building Solutions Asia Pacific segment, $8 million related to the Building Solutions North America segment and $4 million related to the Power Solutions segment. The restructuring actions are expected to be substantially complete in 2020.

The following table summarizes the changes in the Company’s 2018 Plan reserve, 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
 
 
 
 
 
 
 
 
Original reserve
$
125

 
$
30

 
$
3

 
$
158

Utilized—noncash

 
(30
)
 

 
(30
)
Balance at December 31, 2017
$
125

 
$

 
$
3

 
$
128

Utilized—cash
(8
)
 

 
(1
)
 
(9
)
Balance at March 31, 2018
$
117

 
$

 
$
2

 
$
119


In fiscal 2017, the Company committed to a significant restructuring plan (2017 Plan) and recorded $367 million of restructuring and impairment costs in the consolidated statements of income. This was the total amount incurred to date and the total amount expected to be incurred for this restructuring plan. The restructuring actions related to cost reduction initiatives in the Company’s Building Technologies & Solutions and Power Solutions businesses and at Corporate. The costs consist primarily of workforce reductions, plant closures and asset impairments. Of the restructuring and impairment costs recorded, $166 million related to Corporate, $74 million related to the Building Solutions EMEA/LA segment, $59 million related to the Building Solutions North America segment, $32 million related to the Global Products segment, $20 million related to the Power Solutions segment and $16 million related to the Building Solutions Asia Pacific segment. The restructuring actions are expected to be substantially complete in 2018.


16


Johnson Controls International plc
Notes to Consolidated Financial Statements
March 31, 2018
(unaudited)


The following table summarizes the changes in the Company’s 2017 Plan reserve, included within other current liabilities in the consolidated statements of financial position (in millions):

 
Employee Severance and Termination Benefits
 
Long-Lived Asset Impairments
 
Other
 
Currency
Translation
 
Total
 
 
 
 
 
 
 
 
 
 
Original reserve
$
276

 
$
77

 
$
14

 
$

 
$
367

Utilized—cash
(75
)
 

 

 

 
(75
)
Utilized—noncash

 
(77
)
 
(1
)
 

 
(78
)
   Adjustment to restructuring reserves
25

 

 

 

 
25

Balance at September 30, 2017
$
226


$


$
13


$


$
239

Utilized—cash
(109
)
 

 
(3
)
 

 
(112
)
Utilized—noncash

 

 

 
1

 
1

Balance at March 31, 2018
$
117

 
$

 
$
10


$
1

 
$
128


In fiscal 2016, the Company committed to a significant restructuring plan (2016 Plan) and recorded $288 million of restructuring and impairment costs in the consolidated statements of income. This was the total amount incurred to date and the total amount expected to be incurred for this restructuring plan. The restructuring actions related to cost reduction initiatives in the Company’s Building Technologies & Solutions and Power Solutions businesses and at Corporate. The costs consist primarily of workforce reductions, plant closures, asset impairments and change-in-control payments. Of the restructuring and impairment costs recorded, $161 million related to Corporate, $66 million related to the Power Solutions segment, $44 million related to the Global Products segment and $17 million related to the Building Solutions EMEA/LA segment. The restructuring actions are expected to be substantially complete in 2018. Included in the reserve is $56 million of committed restructuring actions taken by Tyco for liabilities assumed as part of the Tyco acquisition.

Additionally, the Company recorded $332 million of restructuring and impairment costs within discontinued operations related to Adient in fiscal 2016.


17


Johnson Controls International plc
Notes to Consolidated Financial Statements
March 31, 2018
(unaudited)


The following table summarizes the changes in the Company’s 2016 Plan reserve, included within other current liabilities in the consolidated statements of financial position (in millions):

Employee Severance and Termination Benefits
 
Long-Lived Asset Impairments
 
Other
 
Currency
Translation
 
Total
 
 
 
 
 
 
 
 
 
 
Original reserve
$
368

 
$
190

 
$
62

 
$

 
$
620

Acquired Tyco restructuring
     reserves
78

 

 

 

 
78

Utilized—cash
(32
)
 

 

 

 
(32
)
Utilized—noncash

 
(190
)
 
(32
)
 
1

 
(221
)
Balance at September 30, 2016
$
414

 
$

 
$
30

 
$
1

 
$
445

Adient spin-off impact
(194
)
 

 
(22
)
 

 
(216
)
Utilized—cash
(86
)
 

 
(2
)
 

 
(88
)
Utilized—noncash

 

 

 
1

 
1

 Adjustment to restructuring
    reserves
(25
)
 

 

 

 
(25
)
Transfer to liabilities held for sale
(3
)
 

 

 

 
(3
)
Adjustment to acquired Tyco
     restructuring reserves
(22
)
 

 

 

 
(22
)
Balance at September 30, 2017
$
84

 
$

 
$
6

 
$
2

 
$
92

Utilized—cash
(14
)
 

 
(2
)
 

 
(16
)
Balance at March 31, 2018
$
70

 
$

 
$
4

 
$
2

 
$
76


The Company's fiscal 2018, 2017 and 2016 restructuring plans included workforce reductions of approximately 9,200 employees (7,300 for the Building Technologies & Solutions business, 1,700 for Corporate and 200 for Power Solutions). Restructuring charges associated with employee severance and termination benefits are paid over the severance period granted to each employee or on a lump sum basis in accordance with individual severance agreements. As of March 31, 2018, approximately 2,700 of the employees have been separated from the Company pursuant to the restructuring plans. In addition, the restructuring plans included eleven plant closures in the Building Technologies & Solutions business. As of March 31, 2018, four of the eleven plants have been closed.

Company management closely monitors its overall cost structure and continually analyzes each of its businesses for opportunities to consolidate current operations, improve operating efficiencies and locate facilities in close proximity to customers. This ongoing analysis includes a review of its manufacturing, engineering and purchasing operations, as well as the overall global footprint for all its businesses.

9.
Income Taxes

In calculating the provision for income taxes, the Company uses an estimate of the annual effective tax rate based upon the facts and circumstances known at each interim period. On a quarterly basis, the actual effective tax rate is adjusted, as appropriate, based upon changed facts and circumstances, if any, as compared to those forecasted at the beginning of the fiscal year and each interim period thereafter.

The statutory tax rate in Ireland is being used as a comparison since the Company is domiciled in Ireland. For the three months ended March 31, 2018, the Company's effective tax rate was 14% and was higher than the statutory tax rate of 12.5% primarily due to tax rate differentials, partially offset by the benefits of continuing global tax planning initiatives. For the six months ended March 31, 2018, the Company's effective tax rate was 31% and was higher than the statutory tax rate of 12.5% primarily due to the discrete net impacts of U.S. Tax Reform, final income tax effects of the completed divestiture of the Scott Safety business and tax rate differentials, partially offset by the benefits of continuing global tax planning initiatives and tax audit

18


Johnson Controls International plc
Notes to Consolidated Financial Statements
March 31, 2018
(unaudited)


closures. For the three months ended March 31, 2017, the Company's effective tax rate was 129% and was higher than the statutory tax rate of 12.5% primarily due to the establishment of a deferred tax liability on the outside basis difference of the Company's investment in certain subsidiaries related to the divestiture of the Scott Safety business and tax rate differentials, partially offset by the benefits of continuing global tax planning initiatives, the jurisdictional mix of significant restructuring and impairment costs, and Tyco Merger transaction and integration costs. For the six months ended March 31, 2017, the Company's effective tax rate was 62% and was higher than the statutory tax rate of 12.5% primarily due to the establishment of a deferred tax liability on the outside basis difference of the Company's investment in certain subsidiaries related to the divestiture of the Scott Safety business, the income tax effects of pension mark-to-market gains, and tax rate differentials, partially offset by the benefits of continuing global tax planning initiatives, the jurisdictional mix of significant restructuring and impairment costs, Tyco Merger transaction and integration costs, purchase accounting impacts and a tax benefit due to changes in entity tax status.

Valuation Allowance

The Company reviews the realizability of its deferred tax assets on a quarterly basis, or whenever events or changes in circumstances indicate that a review is required. In determining the requirement for a valuation allowance, the historical and projected financial results of the legal entity or consolidated group recording the net deferred tax asset are considered, along with any other positive or negative evidence. Since future financial results may differ from previous estimates, periodic adjustments to the Company’s valuation allowances may be necessary.

Uncertain Tax Positions

At September 30, 2017, the Company had gross tax effected unrecognized tax benefits of $2,173 million, of which $2,047 million, if recognized, would impact the effective tax rate. Total net accrued interest at September 30, 2017 was approximately $99 million (net of tax benefit). The interest and penalties accrued during the six months ended March 31, 2018 and 2017 were not material. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense.

In the first quarter of fiscal 2018, tax audit resolutions resulted in a net $25 million benefit to income tax expense.

In the U.S., fiscal years 2015 through 2016 are currently under exam by the Internal Revenue Service ("IRS"). Additionally, the Company is currently under exam in the following major non-U.S. jurisdictions:
Tax Jurisdiction
 
Tax Years Covered
 
 
 
Belgium
 
2015 - 2016
Brazil
 
2011 - 2012
Canada
 
2013 - 2014
China
 
2008 - 2016
France
 
2010 - 2016
Germany
 
2007 - 2015
Spain
 
2010 - 2014
Switzerland
 
2011 - 2014
United Kingdom
 
2011 - 2015

Impacts of Tax Legislation

On December 22, 2017, the “Tax Cuts and Jobs Act” (H.R. 1) was enacted which significantly revises U.S. corporate income tax by, among other things, lower corporate income tax rates, impose a one-time transition tax on deemed repatriated earnings of non-U.S. subsidiaries, and implement a territorial tax system and various base erosion minimum tax provisions.


19


Johnson Controls International plc
Notes to Consolidated Financial Statements
March 31, 2018
(unaudited)


In the first quarter of fiscal 2018, as a result of the enacted legislation, the Company recorded a discrete non-cash tax benefit of $101 million due to the remeasurement of U.S. deferred tax assets and liabilities. The Company remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21% or the blended fiscal 2018 rate of 24.5%. This tax benefit is provisional as the Company is still analyzing certain aspects of the legislation and refining calculations, which could potentially materially affect the measurement of these amounts or give rise to new deferred tax amounts.

In the first quarter of fiscal 2018, the Company also recorded a discrete tax charge of $305 million due to the one-time transition tax on deemed repatriated earnings of certain non-U.S. subsidiaries. This charge is inclusive of relevant non-U.S. withholding taxes and U.S. state income tax on the portion of the earnings expected to be repatriated. This one-time transition tax is based on the Company’s post-1986 earnings and profits (“E&P”) not previously subjected to U.S. taxation. This tax charge is provisional as the Company has not yet finally determined its post-1986 non-U.S. E&P. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. Given the varying tax rates (15.5% on cash and 8% on other property), this amount may change when the Company completes the calculation of post-1986 non-U.S. E&P previously deferred from U.S. federal taxation and concludes on the amounts held in cash versus other specified assets.

Various impacts of the enacted legislation are still being evaluated by the Company and may materially differ from the estimated impacts recognized in the first quarter of fiscal 2018 due to future treasury regulations, tax law technical corrections, and other potential guidance, notices, rulings, refined computations, actions the Company may take as a result of the tax legislation, and other items. The SEC has issued rules that allow for a measurement period of up to one year after the enactment date of the legislation to finalize the recording of the related tax impacts. 

On October 13, 2016, the U.S. Treasury and the IRS released final and temporary Section 385 regulations. These regulations address whether certain instruments between related parties are treated as debt or equity. The Company does not expect that the regulations will have a material impact on its consolidated financial statements.

During the six months ended March 31, 2018 and 2017, other tax legislation was adopted in various jurisdictions. These law changes did not have a material impact on the Company's consolidated financial statements.

Other Tax Matters

In the second quarter of fiscal 2018, the Company recorded $64 million of transaction and integration costs. These costs generated a $9 million tax benefit which reflects the Company’s current tax position in these jurisdictions.

In the first quarter of fiscal 2018, the Company completed the sale of its Scott Safety business to 3M Company. Refer to Note 3, "Acquisitions and Divestitures," of the notes to consolidated financial statements for additional information. In connection with the sale, the Company recorded a pre-tax gain of $114 million and income tax expense of $30 million.

In the first quarter of fiscal 2018, the Company recorded $50 million of transaction and integration costs. These costs generated a $7 million tax benefit which was impacted by the Company’s current tax position in these jurisdictions.

In the first quarter of fiscal 2018, the Company recorded $158 million of significant restructuring and impairment costs. Refer to Note 8, "Significant Restructuring and Impairment Costs," of the notes to consolidated financial statements for additional information. The restructuring costs generated a $24 million tax benefit, which was impacted by the Company’s current tax position in these jurisdictions and the lower enacted U.S. tax rate.

In the second quarter of fiscal 2017, the Company recorded a discrete non-cash tax charge of $457 million related to establishment of a deferred tax liability on the outside basis difference of the Company's investment in certain subsidiaries of the Scott Safety business.

In the second quarter of fiscal 2017, the Company recorded $138 million of transaction and integration costs which generated a $31 million tax benefit.


20


Johnson Controls International plc
Notes to Consolidated Financial Statements
March 31, 2018
(unaudited)


In the second quarter of fiscal 2017, the Company recorded pension mark-to-market gains of $18 million, which resulted in tax expense of $8 million.

In the second quarter of fiscal 2017, the Company recorded $99 million of significant restructuring and impairment costs. Refer to Note 8, "Significant Restructuring and Impairment Costs," of the notes to consolidated financial statements for additional information. The restructuring costs generated a $20 million tax benefit, which was impacted by the Company’s current tax position in these jurisdictions.

In the first quarter of fiscal 2017, the Company recorded a discrete tax benefit of $101 million due to changes in entity tax status.

In the first quarter of fiscal 2017, the Company recorded pension mark-to-market gains of $117 million, which resulted in tax expense of $46 million.

In the first quarter of fiscal 2017, the Company recorded $130 million of transaction and integration costs which generated an $11 million tax benefit.

In the first quarter of fiscal 2017, the Company recorded $78 million of significant restructuring and impairment costs. Refer to Note 8, "Significant Restructuring and Impairment Costs," of the notes to consolidated financial statements for additional information. The restructuring costs generated a $14 million tax benefit, which was impacted by the Company’s current tax position in these jurisdictions.

10.
Pension and Postretirement Plans

The components of the Company’s net periodic benefit costs from continuing operations associated with its defined benefit pension and postretirement plans are shown in the tables below in accordance with ASC 715, "Compensation – Retirement Benefits" (in millions):
 
U.S. Pension Plans
 
Three Months Ended
March 31,
 
Six Months Ended
March 31,
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
Service cost
$
3

 
$
4

 
$
7

 
$
9

Interest cost
27

 
29

 
53

 
57

Expected return on plan assets
(57
)
 
(58
)
 
(114
)
 
(117
)
Net actuarial gain

 
(18
)
 

 
(135
)
Settlement gain

 
(1
)
 

 
(9
)
Net periodic benefit credit
$
(27
)
 
$
(44
)
 
$
(54
)
 
$
(195
)

 
Non-U.S. Pension Plans
 
Three Months Ended
March 31,
 
Six Months Ended
March 31,
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
Service cost
$
6

 
$
8

 
$
12

 
$
16

Interest cost
15

 
11

 
29

 
23

Expected return on plan assets
(29
)
 
(22
)
 
(58
)
 
(45
)
Net periodic benefit credit
$
(8
)
 
$
(3
)
 
$
(17
)
 
$
(6
)


21


Johnson Controls International plc
Notes to Consolidated Financial Statements
March 31, 2018
(unaudited)


 
Postretirement Benefits
 
Three Months Ended
March 31,
 
Six Months Ended
March 31,
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
Service cost
$
1

 
$

 
$
1

 
$
1

Interest cost
1

 
2

 
3

 
3

Expected return on plan assets
(3
)
 
(2
)
 
(5
)
 
(5
)
Net periodic benefit credit
$
(1
)
 
$

 
$
(1
)
 
$
(1
)

During the three and six months ended March 31, 2017, the amount of lump sum payouts triggered a remeasurement event for certain U.S. pension plans resulting in the recognition of net actuarial gains of $18 million and $135 million, respectively.

11.
Debt and Financing Arrangements

In October 2017, the Company completed the previously announced sale of its Scott Safety business to 3M. Net cash proceeds from the transaction of approximately $1.9 billion were used to repay a significant portion of the TSarl $4.0 billion of merger-related debt. In addition, in March 2018, the Company repaid $26 million in principal amount, plus accrued interest, of the TSarl merger-related debt. As of March 31, 2018, the outstanding balance of the TSarl term loan was approximately $1.7 billion.

In March 2018, the Company increased the committed credit limit from $1.0 billion to $1.25 billion on TSarl's committed revolving credit facility scheduled to expire in August 2020. As of March 31, 2018, there were no draws on the facility.

In March 2018, the Company entered into a 364-day $250 million committed revolving credit facility scheduled to expire in March 2019. As of March 31, 2018, there were no draws on the facility.

In March 2018, a 364-day $150 million committed revolving credit facility expired. The Company entered into a new $150 million committed revolving credit facility scheduled to expire in February 2019. As of March 31, 2018, there were no draws on the facility.

In February 2018, a 364-day $150 million committed revolving credit facility expired. The Company entered into a new $150 million committed revolving credit facility scheduled to expire in February 2019. As of March 31, 2018, there were no draws on the facility.

In January 2018, a 364-day $250 million committed revolving credit facility expired. The Company entered into a new $200 million committed revolving credit facility scheduled to expire in January 2019. As of March 31, 2018, there were no draws on the facility.

In January 2018, the Company retired $67 million in principal amount, plus accrued interest, of its 3.75% fixed rate notes that expired in January 2018.

In December 2017, the Company repaid a 364-day 150 million euro floating rate term loan, plus accrued interest, scheduled to mature in September 2018.

In November 2017, the Company issued 750 million euro in principal amount of 0.0% senior unsecured fixed rate notes due in December 2020. Proceeds from the issuance were used to repay existing debt and for other general corporate purposes.

In November 2017, the Company retired $300 million in principal amount, plus accrued interest, of its 1.4% fixed rate notes that expired in November 2017.


22


Johnson Controls International plc
Notes to Consolidated Financial Statements
March 31, 2018
(unaudited)


Net Financing Charges

The Company's net financing charges line item in the consolidated statements of income for the three and six months ended March 31, 2018 and 2017 contained the following components (in millions):
 
Three Months Ended
March 31,
 
Six Months Ended
March 31,
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
Interest expense, net of capitalized interest costs
$
104

 
$
118

 
$
218

 
$
228

Banking fees and bond cost amortization
14

 
11

 
27

 
41

Interest income
(5
)
 
(5
)
 
(14
)
 
(12
)
Net foreign exchange results for financing activities
2

 
(8
)
 

 
(5
)
Net financing charges
$
115

 
$
116

 
$
231

 
$
252


Net financing charges for the six month period ended March 31, 2017, included $17 million of transaction costs related primarily to the prior year debt exchange offer fees.

12.
Stock-Based Compensation

During September 2016, the Board of Directors of the Company approved amendments to the Johnson Controls International plc 2012 Share and Incentive Plan (the "Plan"). The types of awards authorized by the Plan comprise of stock options, stock appreciation rights, performance shares, performance units and other stock-based compensation awards. The Compensation Committee of the Company's Board of Directors determines the types of awards to be granted to individual participants and the terms and conditions of the awards. Awards are typically granted annually in the Company’s fiscal first quarter. A summary of the stock-based awards granted during the six month periods ended March 31, 2018 and 2017 is presented below:
 
Six Months Ended March 31,
 
2018
 
2017
 
Number Granted
 
Weighted Average Grant Date Fair Value
 
Number Granted
 
Weighted Average Grant Date Fair Value
 
 
 
 
 
 
 
 
Stock options
1,355,595

 
$
7.05

 
2,830,826

 
$
7.81

Stock appreciation rights

 

 
15,693

 
8.28

Restricted stock/units
2,095,225

 
37.37

 
1,582,962

 
41.74

Performance shares
496,478

 
36.31

 
846,725

 
48.40


Stock Options

Stock options are granted with an exercise price equal to the market price of the Company’s stock at the date of grant. Stock option awards typically vest between two and three years after the grant date and expire ten years from the grant date.


23


Johnson Controls International plc
Notes to Consolidated Financial Statements
March 31, 2018
(unaudited)


The fair value of each option is estimated on the date of grant using a Black-Scholes option valuation model that uses the assumptions noted in the following table. The expected life of options represents the period of time that options granted are expected to be outstanding, assessed separately for executives and non-executives. The risk-free interest rate for periods during the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. For fiscal 2018, the expected volatility is based on the historical volatility of the Company’s stock after the Adient spin-off blended with the historical volatility of certain peer companies’ stock prior to the Adient spin-off over the most recent period corresponding to the expected life as of the grant date. For fiscal 2017, the expected volatility is based on the historical volatility of certain peer companies 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. The Company uses historical data to estimate option exercises and employee terminations within the valuation model.
 
Six Months Ended
March 31,
 
2018
 
2017
Expected life of option (years)
6.5
 
4.75 & 6.5
Risk-free interest rate
2.28%
 
1.23% - 1.48%
Expected volatility of the Company’s stock
23.7%
 
24.6%
Expected dividend yield on the Company’s stock
2.78%
 
2.21%

Stock Appreciation Rights ("SARs")

SARs vest under the same terms and conditions as stock option awards; however, they are settled in cash for the difference between the market price on the date of exercise and the exercise price. As a result, SARs are recorded in the Company’s consolidated statements of financial position as a liability until the date of exercise. The fair value of each SAR award is estimated using a similar method described for stock options. The fair value of each SAR award is recalculated at the end of each reporting period and the liability and expense are adjusted based on the new fair value.

Restricted (Nonvested) Stock / Units

The Plan provides for the award of restricted stock or restricted stock units to certain employees. These awards are typically share settled unless the employee is a non-U.S. employee or elects to defer settlement until retirement at which point the award would be settled in cash. Restricted awards typically vest over a period of three years from the grant date. The Plan allows for different vesting terms on specific grants with approval by the Board of Directors. The fair value of each share-settled restricted award is based on the closing market value of the Company’s ordinary shares on the date of grant. The fair value of each cash-settled restricted award is recalculated at the end of each reporting period based on the closing market value of the Company's ordinary shares at the end of the reporting period, and the liability and expense are adjusted based on the new fair value.

Performance Share Awards

The Plan permits the grant of performance-based share unit ("PSU") awards. The PSUs are generally contingent on the achievement of pre-determined performance goals over a three-year performance period as well as on the award holder's continuous employment until the vesting date. The PSUs are also indexed to the achievement of specified levels of total shareholder return versus a peer group over the performance period. Each PSU that is earned will be settled with shares of the Company's ordinary shares following the completion of the performance period, unless the award holder elected to defer a portion or all of the award until retirement which would then be settled in cash.

The fair value of each PSU is estimated on the date of grant using a Monte Carlo simulation that uses the assumptions noted in the following table. The risk-free interest rate for periods during the contractual life of the PSU is based on the U.S. Treasury yield curve in effect at the time of grant. For fiscal 2018, the expected volatility is based on the historical volatility of the Company’s stock after the Adient spin-off blended with the historical volatility of certain peer companies’ stock prior to the Adient spin-off over the most recent three-year period as of the grant date. For fiscal 2017, the expected volatility is based on historical volatility of certain peer companies over the most recent three-year period as of the grant date.

24


Johnson Controls International plc
Notes to Consolidated Financial Statements
March 31, 2018
(unaudited)


 
Six Months Ended
March 31,
 
2018
 
2017
Risk-free interest rate
1.92%
 
1.40%
Expected volatility of the Company’s stock
21.7%
 
21.0%

13.
Earnings Per Share

The Company presents both basic and diluted earnings per share ("EPS") amounts. Basic EPS is calculated by dividing net income attributable to Johnson Controls by the weighted average number of ordinary shares outstanding during the reporting period. Diluted EPS is calculated by dividing net income attributable to Johnson Controls by the weighted average number of ordinary shares and ordinary equivalent shares outstanding during the reporting period that are calculated using the treasury stock method for stock options, unvested restricted stock and unvested performance share awards. The treasury stock method assumes that the Company uses the proceeds from the exercise of stock option awards to repurchase ordinary shares at the average market price during the period. The assumed proceeds under the treasury stock method include the purchase price that the grantee will pay in the future and compensation cost for future service that the Company has not yet recognized. For unvested restricted stock and unvested performance share awards, assumed proceeds under the treasury stock method would include unamortized compensation cost.

The following table reconciles the numerators and denominators used to calculate basic and diluted earnings per share (in millions):
 
Three Months Ended
March 31,
 
Six Months Ended
March 31,
 
2018
 
2017
 
2018
 
2017
Income (loss) Available to Ordinary
   Shareholders
     
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
438

 
$
(148
)
 
$
668

 
$
224

Loss from discontinued operations

 

 

 
(43
)
Basic and diluted income (loss) available to
   shareholders
$
438

 
$
(148
)
 
$
668

 
$
181

 
 
 
 
 
 
 
 
Weighted Average Shares Outstanding
 
 
 
 
 
 
 
Basic weighted average shares outstanding
926.2

 
939.2

 
926.2

 
938.2

Effect of dilutive securities:
 
 
 
 
 
 
 
Stock options, unvested restricted stock and
     unvested performance share awards
6.3

 

 
6.7

 
9.8

Diluted weighted average shares outstanding
932.5

 
939.2

 
932.9

 
948.0

 
 
 
 
 
 
 
 
Antidilutive Securities
 
 
 
 
 
 
 
Options to purchase shares
1.4

 

 
1.2

 
0.1


For the three months ended March 31, 2017, the total number of potential dilutive shares due to stock options, unvested restricted stock and unvested performance share awards was 9.4 million. However, these items were not included in the computation of diluted loss per share for the three months ended March 31, 2017 since to do so would decrease the loss per share.

During the three months ended March 31, 2018 and 2017, the Company declared a dividend of $0.26 and $0.25, respectively, per share. During the six months ended March 31, 2018 and 2017, the Company declared a dividend of $0.52 and $0.50, respectively, per share.The Company paid all dividends in the month subsequent to the end of each fiscal quarter.

25


Johnson Controls International plc
Notes to Consolidated Financial Statements
March 31, 2018
(unaudited)


14.
Equity and Noncontrolling Interests

Other comprehensive income includes activity relating to discontinued operations. The following schedules present changes in consolidated equity attributable to Johnson Controls and noncontrolling interests (in millions, net of tax):
    
 
Three Months Ended March 31, 2018
 
Three Months Ended March 31, 2017
 
Equity
Attributable to
Johnson Controls International plc
 
Equity
Attributable to
Noncontrolling
Interests
 
Total
Equity
 
Equity
Attributable to
Johnson Controls International plc
 
Equity
Attributable to
Noncontrolling
Interests
 
Total
Equity
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance, December 31,
$
20,535

 
$
965

 
$
21,500

 
$
19,577

 
$
819

 
$
20,396

Total comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
438

 
33

 
471

 
(148
)
 
25

 
(123
)
Foreign currency translation adjustments
168

 
31

 
199

 
241

 
10

 
251

Realized and unrealized gains (losses) on derivatives
(6
)
 
1

 
(5
)
 
(6
)
 
(2
)
 
(8
)
Realized and unrealized gains (losses) on marketable securities
(2
)
 

 
(2
)
 
11

 

 
11

    Other comprehensive income
160

 
32

 
192

 
246

 
8

 
254

Comprehensive income
598

 
65

 
663

 
98

 
33

 
131

 
 
 
 
 
 
 
 
 
 
 
 
Other changes in equity:
 
 
 
 
 
 
 
 
 
 
 
Cash dividends—ordinary shares
(240
)
 

 
(240
)
 
(235
)
 

 
(235
)
Dividends attributable to noncontrolling
     interests

 
(43
)
 
(43
)
 

 
(47
)
 
(47
)
Repurchases of ordinary shares
(49
)
 

 
(49
)
 
(119
)
 

 
(119
)
Change in noncontrolling interest share

 
19

 
19

 

 
8

 
8

Spin-off of Adient

 

 

 
(18
)
 

 
(18
)
Other, including options exercised
30

 

 
30

 
85

 

 
85

Ending balance, March 31
$
20,874

 
$
1,006

 
$
21,880

 
$
19,388

 
$
813

 
$
20,201


26


Johnson Controls International plc
Notes to Consolidated Financial Statements
March 31, 2018
(unaudited)


 
Six Months Ended March 31, 2018
 
Six Months Ended March 31, 2017
 
Equity
Attributable to
Johnson Controls International plc
 
Equity
Attributable to
Noncontrolling
Interests
 
Total
Equity
 
Equity
Attributable to
Johnson Controls International plc
 
Equity
Attributable to
Noncontrolling
Interests
 
Total
Equity
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance, September 30,
$
20,447

 
$
920

 
$
21,367

 
$
24,118

 
$
972

 
$
25,090

Total comprehensive income (loss):
 
 
 
 
 
 
 
 
 
 
 
Net income
668

 
61

 
729

 
181

 
61

 
242

Foreign currency translation adjustments
226

 
47

 
273

 
(418
)
 
(25
)
 
(443
)
Realized and unrealized gains (losses) on derivatives
(5
)
 
2

 
(3
)
 
(6
)
 
2

 
(4
)
Realized and unrealized gains (losses) on marketable securities
(2
)
 

 
(2
)
 
9

 

 
9

    Other comprehensive income (loss)
219

 
49

 
268

 
(415
)
 
(23
)
 
(438
)
Comprehensive income (loss)
887

 
110

 
997

 
(234
)
 
38

 
(196
)
 
 
 
 
 
 
 
 
 
 
 
 
Other changes in equity:
 
 
 
 
 
 
 
 
 
 
 
Cash dividends—ordinary shares
(482
)
 

 
(482
)
 
(471
)
 

 
(471
)
Dividends attributable to noncontrolling
     interests

 
(43
)
 
(43
)
 

 
(47
)
 
(47
)
Repurchases of ordinary shares
(199
)
 

 
(199
)
 
(119
)
 

 
(119
)
Change in noncontrolling interest share

 
19

 
19

 

 
(12
)
 
(12
)
Adoption of ASU 2016-09
179

 

 
179

 

 

 

Spin-off of Adient

 

 

 
(4,038
)
 
(138
)
 
(4,176
)
Other, including options exercised
42

 

 
42

 
132

 

 
132

Ending balance, March 31
$
20,874

 
$
1,006

 
$
21,880

 
$
19,388

 
$
813

 
$
20,201