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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2023
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
Ireland98-0390500
(Jurisdiction of Incorporation)(I.R.S. Employer Identification No.)
One Albert Quay, Cork, Ireland, T12 X8N6
(353) 21-423-5000
(Address of Principal Executive Offices and Postal Code)(Registrant's Telephone Number)
Securities Registered Pursuant to Section 12(b) of the Exchange Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Ordinary Shares, Par Value $0.01JCINew York Stock Exchange
 3.625% Senior Notes due 2024  JCI24A New York Stock Exchange
 1.375% Notes due 2025  JCI25A New York Stock Exchange
 3.900% Notes due 2026  JCI26A New York Stock Exchange
0.375% Senior Notes due 2027JCI27New York Stock Exchange
3.000% Senior Notes due 2028JCI28New York Stock Exchange
1.750% Senior Notes due 2030JCI30New York Stock Exchange
2.000% Sustainability-Linked Senior Notes due 2031JCI31New York Stock Exchange
1.000% Senior Notes due 2032JCI32New York Stock Exchange
4.900% Senior Notes due 2032JCI32ANew York Stock Exchange
4.250% Senior Notes due 2035JCI35New York Stock Exchange
 6.000% Notes due 2036  JCI36A New York Stock Exchange
 5.70% Senior Notes due 2041  JCI41B New York Stock Exchange
 5.250% Senior Notes due 2041  JCI41C New York Stock Exchange
 4.625% Senior Notes due 2044  JCI44A New York Stock Exchange
 5.125% Notes due 2045  JCI45B New York Stock Exchange
 6.950% Debentures due December 1, 2045  JCI45A New York Stock Exchange
 4.500% Senior Notes due 2047  JCI47 New York Stock Exchange
 4.950% Senior Notes due 2064  JCI64A New York Stock Exchange
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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit 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 filerþAccelerated filerSmaller reporting company
Non-accelerated filer¨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.
ClassOrdinary Shares Outstanding at December 31, 2023
Ordinary Shares, $0.01 par value per share681,477,046



JOHNSON CONTROLS INTERNATIONAL PLC
FORM 10-Q
Report Index
  
Page
Part I. Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Statements of Income for the Three Month Periods Ended December 31, 2023 and 2022
Consolidated Statements of Comprehensive Income for the
       Three Month Periods Ended December 31, 2023 and 2022
Consolidated Statements of Financial Position at December 31, 2023 and September 30, 2023
Consolidated Statements of Cash Flows for the Three Month Periods Ended December 31, 2023 and 2022
Consolidated Statements of Shareholders' Equity for the
       Three Month Periods Ended December 31, 2023 and 2022
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 5. Other Information
Item 6. Exhibits
Signatures



PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Johnson Controls International plc
Consolidated Statements of Income
(in millions, except per share data; unaudited)
Three Months Ended
December 31,
20232022
Net sales
Products and systems$4,489 $4,556 
Services1,605 1,512 
6,094 6,068 
Cost of sales
Products and systems3,162 3,113 
Services940 864 
4,102 3,977 
Gross profit1,992 2,091 
Selling, general and administrative expenses1,513 1,571 
Restructuring and impairment costs39 345 
Net financing charges99 67 
Equity income62 62 
Income before income taxes403 170 
Income tax (benefit) provision(1)14 
Net income 404 156 
Less: Income attributable to noncontrolling interests30 38 
Net income attributable to Johnson Controls$374 $118 
Earnings per share attributable to Johnson Controls
Basic$0.55 $0.17 
Diluted0.55 0.17 


















The accompanying notes are an integral part of the consolidated financial statements.
3


Johnson Controls International plc
Consolidated Statements of Comprehensive Income
(in millions; unaudited)
Three Months Ended
December 31,
 20232022
Net income $404 $156 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments62 90 
Realized and unrealized losses on derivatives(42)(17)
Pension and postretirement plans(1)(1)
Other comprehensive income19 72 
Total comprehensive income423 228 
Comprehensive income attributable to noncontrolling interests:
Net income30 38 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments1 31 
Realized and unrealized losses on derivatives(4)(6)
Other comprehensive income (loss)(3)25 
Comprehensive income attributable to noncontrolling interests27 63 
Comprehensive income attributable to Johnson Controls$396 $165 




























The accompanying notes are an integral part of the consolidated financial statements.
4


Johnson Controls International plc
Consolidated Statements of Financial Position
(in millions, except par value; unaudited)
December 31, 2023September 30, 2023
Assets
Cash and cash equivalents$1,801 $835 
Accounts receivable, less allowance for
      expected credit losses of $102 and $90, respectively
6,045 6,006 
Inventories3,006 2,776 
Other current assets1,202 1,120 
Current assets12,054 10,737 
Property, plant and equipment - net3,131 3,136 
Goodwill18,124 17,936 
Other intangible assets - net4,835 4,888 
Investments in partially-owned affiliates1,144 1,056 
Other noncurrent assets4,693 4,489 
Total assets$43,981 $42,242 
Liabilities and Equity
Short-term debt$1,998 $385 
Current portion of long-term debt652 645 
Accounts payable3,976 4,268 
Accrued compensation and benefits934 958 
Deferred revenue2,122 1,996 
Other current liabilities2,727 2,832 
Current liabilities12,409 11,084 
Long-term debt7,959 7,818 
Pension and postretirement benefits271 278 
Other noncurrent liabilities5,468 5,368 
Long-term liabilities13,698 13,464 
Commitments and contingencies (Note 21)
Ordinary shares, $0.01 par value
7 7 
Ordinary A shares, €1.00 par value
  
Preferred shares, $0.01 par value
  
Ordinary shares held in treasury, at cost(1,263)(1,240)
Capital in excess of par value17,381 17,349 
Retained earnings1,506 1,384 
Accumulated other comprehensive loss(933)(955)
Shareholders’ equity attributable to Johnson Controls16,698 16,545 
Noncontrolling interests1,176 1,149 
Total equity17,874 17,694 
Total liabilities and equity$43,981 $42,242 








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)
Three Months Ended December 31,
 20232022
Operating Activities
Net income attributable to Johnson Controls$374 $118 
Income attributable to noncontrolling interests30 38 
Net income404 156 
Adjustments to reconcile net income to cash used by operating activities:
Depreciation and amortization231 203 
Pension and postretirement benefit income(10)(6)
Pension and postretirement contributions(6)(9)
Equity in earnings of partially-owned affiliates, net of dividends received(56)(56)
Deferred income taxes(70)(92)
Noncash restructuring and impairment charges9 294 
Equity-based compensation30 30 
Other - net(22)(27)
Changes in assets and liabilities, excluding acquisitions and divestitures:
Accounts receivable61 (88)
Inventories(203)(348)
Other assets(191)(68)
Restructuring reserves(14)14 
Accounts payable and accrued liabilities(414)(338)
Accrued income taxes5 39 
Cash used by operating activities(246)(296)
Investing Activities
Capital expenditures(92)(134)
Acquisition of businesses, net of cash acquired(2)(79)
Other - net20 24 
Cash used by investing activities(74)(189)
Financing Activities
Net proceeds from borrowings with maturities less than three months1,108 467 
Proceeds from debt422 154 
Repayments of debt (200)
Stock repurchases and retirements (154)
Payment of cash dividends(252)(241)
Employee equity-based compensation withholding taxes(23)(30)
Other - net(27)13 
Cash provided by financing activities1,228 9 
Effect of exchange rate changes on cash, cash equivalents and restricted cash60 (14)
Increase (decrease) in cash, cash equivalents and restricted cash968 (490)
Cash, cash equivalents and restricted cash at beginning of period924 2,066 
Cash, cash equivalents and restricted cash at end of period1,892 1,576 
Less: Restricted cash91 67 
Cash and cash equivalents at end of period$1,801 $1,509 



The accompanying notes are an integral part of the consolidated financial statements.
6


Johnson Controls International plc
Consolidated Statements of Shareholders' Equity
(in millions, except per share data; unaudited)
Three Months Ended
December 31,
 20232022
Shareholders' Equity Attributable to Johnson Controls
Beginning Balance$16,545 $16,268 
Ordinary Shares - Beginning and ending balance
7 7 
Ordinary Shares Held in Treasury, at Cost
Beginning balance(1,240)(1,203)
Employee equity-based compensation withholding taxes(23)(30)
Ending balance(1,263)(1,233)
Capital in Excess of Par Value
Beginning balance17,349 17,224 
Share-based compensation expense20 19 
Other, including options exercised12 19 
Ending balance17,381 17,262 
Retained Earnings
Beginning balance1,384 1,151 
Net income attributable to Johnson Controls374 118 
Cash dividends declared(252)(241)
Repurchases and retirements of ordinary shares (154)
Ending balance1,506 874 
Accumulated Other Comprehensive Income (Loss)
Beginning balance(955)(911)
Other comprehensive income22 47 
Ending balance(933)(864)
Ending Balance16,698 16,046 
Shareholders' Equity Attributable to Noncontrolling Interests
Beginning Balance1,149 1,134 
Comprehensive income attributable to noncontrolling interests27 63 
Ending Balance1,176 1,197 
Total Shareholders' Equity$17,874 $17,243 
Cash Dividends Declared per Ordinary Share$0.37 $0.35 















The accompanying notes are an integral part of the consolidated financial statements.
7


Johnson Controls International plc
Notes to Consolidated Financial Statements
December 31, 2023
(unaudited)

1.BASIS OF PRESENTATION

The consolidated financial statements include the consolidated accounts of Johnson Controls International plc, a public limited company 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, 2023 filed with the SEC on December 14, 2023. The results of operations for the three-month period ended December 31, 2023 are not necessarily indicative of results for the Company’s 2024 fiscal year because of seasonal and other factors.

Nature of Operations

Johnson Controls International plc, headquartered in Cork, Ireland, is a global leader in smart, healthy and sustainable buildings, serving a wide range of customers in more than 150 countries. The Company’s products, services, systems and solutions advance the safety, comfort and intelligence of spaces to serve people, places and the planet. 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, repair, retrofit and replacement 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 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.

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 reporting period 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 exercises significant influence, which typically occurs when its ownership interest exceeds 20%, and the Company does not have a controlling interest.

The Company consolidates variable interest entities ("VIE") when it has the power to direct the significant activities of the entity and the obligation to absorb losses or receive benefits from the entity that may be significant. The Company did not have any material consolidated or nonconsolidated VIE's for the presented reporting periods.

Prior Period Revision – Statement of Cash Flows

The Company revised the amounts previously reported as net proceeds from borrowings with maturities less than three months and proceeds from debt for certain short-term debt transactions that were incorrectly presented on a net basis within the financing activities section of the consolidated statements of cash flows for the three months ended December 30, 2022.
8


Johnson Controls International plc
Notes to Consolidated Financial Statements
December 31, 2023
(unaudited)
The revision did not change cash provided by financing activities or the total decrease in cash, cash equivalents and restricted cash. The Company does not believe the impact of the incorrect presentation was material.

2.      NEW ACCOUNTING STANDARDS

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. Supplier finance programs may also be referred to as reverse factoring, payables finance, or structured payables arrangements. The amendments require a buyer that uses supplier finance programs to make annual disclosures about the program’s key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period, and associated rollforward information. Only the amount outstanding at the end of the period must be disclosed in interim periods. The Company adopted the new disclosures, other than the rollforward disclosure, as required at the beginning of fiscal 2024. The rollforward disclosure will be adopted as required at the beginning of fiscal 2025.

The Company maintains agreements with third-party financial institutions who offer voluntary supply chain financing ("SCF") programs to its suppliers. The SCF programs enable suppliers to sell their receivables to third-party financial institutions and receive payments earlier than the negotiated commercial terms between the suppliers and the Company, which generally range from 90 to 120 days. Suppliers sell receivables to third-party financial institutions on terms negotiated between the supplier and the respective third-party financial institution. The Company remains obligated to make payments under the terms of the original commercial arrangement regardless of whether the supplier receivable is sold, and does not pledge any assets as security or provide other forms of guarantees for the committed payment to the third-party financial institutions.

Amounts outstanding related to SCF programs are included in accounts payable in the consolidated statements of financial position. Accounts payable included in the SCF programs were approximately $559 million and $566 million as of December 31, 2023, and September 30, 2023, respectively.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," which is intended to enhance the transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments require that on an annual basis, entities disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In addition, the amendments require that entities disclose additional information about income taxes paid as well as additional disclosures of pretax income and income tax expense, and remove the requirement to disclose certain items that are no longer considered cost beneficial or relevant. The Company expects to adopt the new annual disclosures as required for fiscal 2026.

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures," which is intended to improve reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment and contain other disclosure requirements. The Company expects to adopt the new annual disclosures as required for fiscal 2025 and the interim disclosures as required beginning with the first quarter of fiscal 2026.

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

9


Johnson Controls International plc
Notes to Consolidated Financial Statements
December 31, 2023
(unaudited)
3.ACQUISITIONS AND DIVESTITURES

During the three months ended December 31, 2022, the Company completed certain acquisitions for a combined purchase price, net of cash acquired, of $105 million, of which $79 million was paid as of December 31, 2022. In connection with the acquisitions, the Company recorded goodwill of $53 million within the Global Products segment and $2 million within the Building Solutions EMEA/LA segment.

4.     ASSETS AND LIABILITIES HELD FOR SALE

During the three months ended December 31, 2022, the Company recorded impairment charges primarily due to reductions in the estimated fair values of its Global Retail business of $228 million and a business in the Building Solutions Asia Pacific segment of $60 million. Both businesses were classified as held for sale as of December 31, 2022. All of the impairments were recorded within restructuring and impairment costs in the consolidated statements of income.
No assets and liabilities were classified as held for sale as of December 31, 2023 or September 30, 2023.

5.     REVENUE RECOGNITION

Disaggregated Revenue

The following tables present the Company's revenues disaggregated by segment and by Products & Systems and Services revenue (in millions):
Three Months Ended December 31,
20232022
Products & SystemsServicesTotalProducts & SystemsServicesTotal
Building Solutions North America$1,518 $969 $2,487 $1,451 $916 $2,367 
Building Solutions EMEA/LA572 466 1,038 552 423 975 
Building Solutions Asia Pacific337 170 507 473 173 646 
Global Products2,062  2,062 2,080  2,080 
Total$4,489 $1,605 $6,094 $4,556 $1,512 $6,068 


The following table presents further disaggregation of Global Products segment revenues by product type (in millions):
Three Months Ended
December 31,
20232022
HVAC$1,418 $1,440 
Fire & Security547 570 
Industrial Refrigeration97 70 
Total$2,062 $2,080 

Contract Balances

Contract assets relate to the Company’s right to consideration for performance obligations satisfied but not billed. Contract liabilities relate to customer payments received in advance of satisfaction of performance obligations under the contract. Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period. 

10


Johnson Controls International plc
Notes to Consolidated Financial Statements
December 31, 2023
(unaudited)
The following table presents the location and amount of contract balances in the Company's consolidated statements of financial position (in millions):
Location of contract balancesDecember 31, 2023September 30, 2023
Contract assets - currentAccounts receivable - net$2,170 $2,370 
Contract assets - noncurrentOther noncurrent assets4 12 
Contract liabilities - currentDeferred revenue2,122 1,996 
Contract liabilities - noncurrentOther noncurrent liabilities306 297 

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

Performance Obligations

A performance obligation is a distinct good, service, or a bundle of goods and services promised in a contract. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. When contracts with customers require significant and complex integration, contain goods or services which are highly interdependent or interrelated, or are goods or services which significantly modify or customize other promises in the contracts and, therefore, are not distinct, then the entire contract is accounted for as a single performance obligation. For any contracts with multiple performance obligations, the contract’s transaction price is allocated to each performance obligation based on the estimated relative standalone selling price of each distinct good or service in the contract. For product sales, each product sold to a customer typically represents a distinct performance obligation.

Performance obligations are satisfied at a point in time or over time. The timing of satisfying the performance obligation is typically stipulated by the terms of the contract. As of December 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $19.9 billion, of which approximately 64% is expected to be recognized as revenue over the next two years. The remaining performance obligations expected to be recognized in revenue beyond two years primarily relate to large, multi-purpose contracts to construct hospitals, schools and other governmental buildings, which include services to be performed over the building's lifetime, with initial contract terms of 25 to 35 years. 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 service contracts with an original expected duration of one year or less.

Costs to Obtain or Fulfill a Contract

The Company recognizes the incremental costs incurred to obtain or fulfill a contract with a customer as an asset when these costs are recoverable. These costs consist primarily of sales commissions and design costs that relate to a contract or an anticipated contract that the Company expects to recover. Costs to obtain or fulfill a contract are capitalized and amortized over the period of contract performance.

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

December 31, 2023September 30, 2023
Other current assets$183 $156 
Other noncurrent assets215 224 
Total$398 $380 

During the three months ended December 31, 2023 and 2022, the Company recognized amortization expense of $57 million and $61 million, respectively, related to costs to obtain or fulfill a contract. There were no impairment losses recognized in the three months ended December 31, 2023 and 2022.
11


Johnson Controls International plc
Notes to Consolidated Financial Statements
December 31, 2023
(unaudited)

6.    ACCOUNTS RECEIVABLE

The Company sold $702 million and $409 million of accounts receivable under factoring agreements during the three months ended December 31, 2023 and 2022, respectively. Previously sold receivables still outstanding were $761 million and $681 million as of December 31, 2023 and September 30, 2023, respectively.

7.     INVENTORIES

Inventories consisted of the following (in millions):
December 31, 2023September 30, 2023
Raw materials and supplies$1,252 $1,203 
Work-in-process248 226 
Finished goods1,506 1,347 
Inventories$3,006 $2,776 

8.    GOODWILL AND OTHER INTANGIBLE ASSETS

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

Three Months Ended December 31, 2023
Building Solutions North AmericaBuilding Solutions EMEA/LABuilding Solutions Asia PacificGlobal ProductsTotal
Goodwill$10,040 $1,932 $1,179 $5,750 18,901 
Accumulated impairment loss(659)(47) (259)(965)
Balance at beginning of period9,381 1,885 1,179 5,491 17,936 
Foreign currency translation and other15 76 38 59 188 
Balance at end of period$9,396 $1,961 $1,217 $5,550 $18,124 
(1) Includes measurement period adjustments

The Company’s other intangible assets, primarily from business acquisitions, consisted of (in millions):
 December 31, 2023September 30, 2023
 Gross
Carrying
Amount
Accumulated
Amortization
NetGross
Carrying
Amount
Accumulated
Amortization
Net
Definite-lived intangible assets
Technology$1,587 $(849)$738 $1,575 $(806)$769 
Customer relationships3,076 (1,571)1,505 3,047 (1,496)1,551 
Miscellaneous921 (462)459 889 (435)454 
5,584 (2,882)2,702 5,511 (2,737)2,774 
Indefinite-lived intangible assets
Trademarks/trade names2,133  2,133 2,114  2,114 
Total intangible assets$7,717 $(2,882)$4,835 $7,625 $(2,737)$4,888 

Amortization of other intangible assets for the three months ended December 31, 2023 and 2022 was $122 million and $104 million, respectively.
12


Johnson Controls International plc
Notes to Consolidated Financial Statements
December 31, 2023
(unaudited)

9.    LEASES

The following table presents supplemental consolidated statement of financial position information (in millions):
Location of lease balancesDecember 31, 2023September 30, 2023
Operating lease right-of-use assets
Other noncurrent assets
$1,389 $1,389 
Operating lease liabilities - current
Other current liabilities
327 318 
Operating lease liabilities - noncurrent
Other noncurrent liabilities
1,079 1,086 

The following table presents supplemental noncash operating lease activity (in millions):
Three Months Ended
December 31,
20232022
Right-of-use assets obtained in exchange for operating lease liabilities$77 $110 

10.    DEBT AND FINANCING ARRANGEMENTS

Short-term debt consisted of the following (in millions):
 December 31,September 30,
 20232023
Commercial paper$1,383 $200 
Term loans598 159 
Bank borrowings17 26 
$1,998 $385 
Weighted average interest rate on short-term debt outstanding4.4 %5.1 %

As of December 31, 2023, the Company had syndicated committed revolving credit facilities of $2.5 billion which is scheduled to expire in December 2028 and $500 million which is scheduled to expire in December 2024. There were no draws on the facilities as of December 31, 2023.

11.    DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company selectively uses derivative instruments to reduce market risk associated with changes in foreign currency, commodities and interest rates. Under Company policy, the use of derivatives is restricted to those intended for hedging purposes; the use of any derivative instrument for speculative purposes is strictly prohibited. A description of each type of derivative utilized by the Company to manage risk is included in the following paragraphs. In addition, refer to Note 12, "Fair Value Measurements," of the notes to the consolidated financial statements for information related to the fair value measurements and valuation methods utilized by the Company for each derivative type.

Cash Flow Hedges

The Company has global operations and participates in foreign exchange markets to minimize its risk of loss from fluctuations in foreign currency exchange rates. The Company selectively hedges anticipated transactions that are subject to foreign exchange rate risk primarily using foreign currency exchange forward contracts. The Company hedges 70% to 90% of the notional amount of each of its known foreign exchange transactional exposures.

13


Johnson Controls International plc
Notes to Consolidated Financial Statements
December 31, 2023
(unaudited)
The Company enters into forward-starting interest-rate swaps in conjunction with anticipated note issuances. Forward-starting interest swaps are terminated when the anticipated notes are issued. As of December 31, 2023 and September 30, 2023, $600 million of forward-starting interest swaps were outstanding on an $800 million anticipated note issuance. Accumulated amounts recorded in accumulated other comprehensive income (loss) ("AOCI") as of the date of the note issuance are amortized to interest expense over the life of the related note to reflect the difference between the swap's reference rate and the fixed rate of the note.

The Company selectively hedges anticipated transactions that are subject to commodity price risk, primarily using commodity hedge contracts, to minimize overall price risk associated with the Company’s purchases of copper and aluminum in cases where commodity price risk cannot be naturally offset or hedged through supply base fixed price contracts. Commodity risks are systematically managed pursuant to policy guidelines. The maturities of the commodity hedge contracts coincide with the expected purchase of the commodities.

The Company had the following outstanding contracts to hedge forecasted commodity purchases (in metric tons):
 Volume Outstanding as of
CommodityDecember 31, 2023September 30, 2023
Copper3,062 2,812 
Aluminum 5,973 5,976 

Cash flow hedges under ASC 815, "Derivatives and Hedging," that hedge gains or losses due to changes in fair value are initially recorded as a component of AOCI and are subsequently reclassified into earnings when the hedged transactions occur and affect earnings. These contracts were highly effective in hedging the variability in future cash flows attributable to changes in currency exchange rates and commodity prices during the three months ended December 31, 2023 and 2022.

Net Investment Hedges

The Company enters into cross-currency interest rate swaps and foreign currency denominated debt obligations to selectively hedge portions of its net investment in non-U.S. subsidiaries. The currency effects of the cross-currency interest rate swaps and debt obligations are reflected in the AOCI account within shareholders’equity attributable to Johnson Controls ordinary shareholders where they offset gains and losses recorded on the Company’s net investments globally.

The following table summarizes net investment hedges (in billions):
December 31,September 30,
20232023
Euro-denominated bonds designated as net investment hedges in Europe2.9 2.9 
Yen-denominated debt designated as a net investment hedge in Japan¥30 ¥30 
US dollar vs. Yen cross-currency interest rate swap designated as a net investment hedge in Japan¥14 ¥14 

Derivatives Not Designated as Hedging Instruments

The Company holds certain foreign currency forward contracts not designated as hedging instruments under ASC 815 to hedge foreign currency exposure resulting from monetary assets and liabilities denominated in nonfunctional currencies. The changes in fair value of these foreign currency forward exchange derivatives are recorded in the consolidated statements of income where they offset foreign currency transactional gains and losses on the nonfunctional currency denominated assets and liabilities being hedged.

14


Johnson Controls International plc
Notes to Consolidated Financial Statements
December 31, 2023
(unaudited)
Fair Value of Derivative Instruments

The following table presents the location and fair values of derivative instruments and hedging activities included in the Company’s consolidated statements of financial position (in millions):
 Derivatives and Hedging Activities 
Designated as Hedging Instruments
Derivatives and Hedging Activities Not
Designated as Hedging Instruments
 December 31,September 30,December 31,September 30,
2023202320232023
Other current assets
Foreign currency exchange derivatives$14 $16 $ $13 
Interest rate swaps 22   
Commodity derivatives1    
Other noncurrent assets
Cross-currency interest rate swap 5   
Total assets$15 $43 $ $13 
Other current liabilities
Foreign currency exchange derivatives$31 $20 $30 $5 
Interest rate swaps14    
        Commodity derivatives 2   
Long-term debt
Foreign currency denominated debt3,394 3,253   
Total liabilities$3,439 $3,275 $30 $5 

Counterparty Credit Risk

The use of derivative financial instruments exposes the Company to counterparty credit risk. The Company has established policies and procedures to limit the potential for counterparty credit risk, including establishing limits for credit exposure and continually assessing the creditworthiness of counterparties. As a matter of practice, the Company deals with major banks worldwide having strong investment grade long-term credit ratings. To further reduce the risk of loss, the Company generally enters into International Swaps and Derivatives Association ("ISDA") master netting agreements with substantially all of its counterparties. The Company enters into ISDA master netting agreements with counterparties that permit the net settlement of amounts owed under the derivative contracts. The master netting agreements generally provide for net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event. The Company has not elected to offset the fair value positions of the derivative contracts recorded in the consolidated statements of financial position.

The Company's derivative contracts do not contain any credit risk related contingent features and do not require collateral or other security to be furnished by the Company or the counterparties. The Company's exposure to credit risk associated with its derivative instruments is measured on an individual counterparty basis, as well as by groups of counterparties that share similar attributes. The Company does not anticipate any non-performance by any of its counterparties, and the concentration of risk with financial institutions does not present significant credit risk to the Company.

15


Johnson Controls International plc
Notes to Consolidated Financial Statements
December 31, 2023
(unaudited)
The gross and net amounts of derivative assets and liabilities were as follows (in millions):
 Fair Value of AssetsFair Value of Liabilities
 December 31,September 30,December 31,September 30,
2023202320232023
Gross amount recognized$15 $56 $3,469 $3,280 
Gross amount eligible for offsetting(14)(19)(14)(19)
Net amount$1 $37 $3,455 $3,261 
Derivatives Impact on the Statements of Income and Statements of Comprehensive Income

The following table presents the pre-tax gains (losses) recorded in other comprehensive income (loss) related to cash flow hedges (in millions):    
Derivatives in Cash Flow
 Hedging Relationships
Three Months Ended December 31,
20232022
Foreign currency exchange derivatives$(13)$(21)
Commodity derivatives1 4 
Interest rate swaps(35) 
Total$(47)$(17)

The following table presents the location and amount of the pre-tax gains (losses) on cash flow hedges reclassified from AOCI into the Company’s consolidated statements of income (in millions):
Derivatives in Cash Flow Hedging RelationshipsLocation of Gain (Loss) Reclassified from AOCI into IncomeThree Months Ended
December 31,
20232022
Foreign currency exchange derivativesCost of sales$(1)$9 
Commodity derivativesCost of sales(3)(6)
Total$(4)$3 

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 InstrumentsLocation of Gain (Loss)
Recognized in Income on Derivative
Three Months Ended
December 31,
20232022
Foreign currency exchange derivativesCost of sales$(5)$2 
Foreign currency exchange derivativesNet financing charges(43)79 
Total$(48)$81 

Pre-tax losses on net investment hedges recorded as foreign currency translation adjustments ("CTA") within other comprehensive income (loss) were $145 million and $269 million for the three months ended December 31, 2023 and 2022, respectively. No gains or losses were reclassified from CTA into income during the three months ended December 31, 2023 and 2022.

16


Johnson Controls International plc
Notes to Consolidated Financial Statements
December 31, 2023
(unaudited)
12.    FAIR VALUE MEASUREMENTS

ASC 820, "Fair Value Measurement," defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows:

Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities;

Level 2: Quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs where there is little or no market data, which requires the reporting entity to develop its own assumptions.

ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.

Recurring Fair Value Measurements

The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value (in millions):
 Fair Value Measurements Using:
 Total as of
December 31, 2023
Quoted Prices
in Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Other current assets
Foreign currency exchange derivatives$14 $ $14 $ 
       Commodity derivatives1  1  
Other noncurrent assets
Deferred compensation plan assets47 47   
Exchange traded funds (fixed income)(1)
82 82   
Exchange traded funds (equity)(1)
169 169   
Total assets$313 $298 $15 $ 
Other current liabilities
Foreign currency exchange derivatives$61 $ $61 $ 
Interest rate swaps14  14  
Contingent earn-out liabilities55   55 
Other noncurrent liabilities
Contingent earn-out liabilities50   50 
Total liabilities$180 $ $75 $105 

 



17


Johnson Controls International plc
Notes to Consolidated Financial Statements
December 31, 2023
(unaudited)
 Fair Value Measurements Using:
 Total as of September 30, 2023Quoted Prices
in Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Other current assets
Foreign currency exchange derivatives$29 $ $29 $ 
Interest rate swaps
22  22  
Other noncurrent assets
Cross-currency interest rate swap5  5  
Deferred compensation plan assets45 45   
Exchange traded funds (fixed income)(1)
76 76   
Exchange traded funds (equity)(1)
155 155   
Total assets$332 $276 $56 $ 
Other current liabilities
Foreign currency exchange derivatives$25 $ $25 $ 
Commodity derivatives2  2  
Contingent earn-out liabilities48   48 
Other noncurrent liabilities
Contingent earn-out liabilities76   76 
Total liabilities$151 $ $27 $124 

(1) Classified as restricted investments for payment of asbestos liabilities. See Note 21, "Commitments and Contingencies," of the notes to the consolidated financial statements for further details.

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

Balance at September 30, 2023
$124 
Payments(19)
Reduction for change in estimates(1)
Currency translation1 
Balance at December 31, 2023
$105 

Valuation Methods

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

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

Cross-currency interest rate swaps: The fair value of cross-currency interest rate swaps represents the difference between the swap's reference rate and exchange rate and the interest and exchange rates for a similar instrument as of the reporting period. Cross-currency interest rate swaps are valued under a market approach using publicized prices.

Deferred compensation plan assets: Assets held in the deferred compensation plans will be used to pay benefits under certain of the Company's non-qualified deferred compensation plans. The investments primarily consist of mutual funds
18


Johnson Controls International plc
Notes to Consolidated Financial Statements
December 31, 2023
(unaudited)
which are publicly traded on stock exchanges and are valued using a market approach based on the quoted market prices. Unrealized gains (losses) on the deferred compensation plan assets are recognized in the consolidated statements of income where they offset unrealized gains and losses on the related deferred compensation plan liability.

Exchange traded funds: Investments in exchange traded funds are valued using a market approach based on quoted market prices, where available, or broker/dealer quotes of identical or comparable instruments. Refer to Note 21, "Commitments and Contingencies," of the notes to the consolidated financial statements for further information.

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

Interest rate swaps: The fair value of interest rate swaps represent the difference between the swap's reference rate and the interest rate for a similar instrument as of the reporting period. Interest rate swaps are valued under a market approach using publicized prices.

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

Three Months Ended December 31,
20232022
 Deferred compensation plan assets$4 $3 
 Investments in exchange traded funds22 11 

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

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

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

December 31,September 30,
20232023
Public debt$7.8 $7.1 
Other long-term debt0.4 0.4 
Total fair value of long-term debt$8.2 $7.5 

The fair value of public debt was determined primarily using market quotes which are classified as Level 1 inputs within the ASC 820 fair value hierarchy. The fair value of other long-term debt was determined using quoted market prices for similar instruments and are classified as Level 2 inputs within the ASC 820 fair value hierarchy.

13.    STOCK-BASED COMPENSATION

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

19


Johnson Controls International plc
Notes to Consolidated Financial Statements
December 31, 2023
(unaudited)
A summary of the stock-based awards granted is presented below:
 Three Months Ended December 31,
 20232022
Number GrantedWeighted Average Grant Date Fair ValueNumber GrantedWeighted Average Grant Date Fair Value
Restricted stock/units1,741,102 $53.52 1,614,493 $66.73 
Performance shares370,307 54.13 339,191 79.54 
Stock options652,702 13.74 570,140 18.21 
Performance Share Awards

The following table summarizes the assumptions used in determining the fair value of performance share units granted:
 Three Months Ended
December 31,
20232022
Risk-free interest rate4.21%4.04%
Expected volatility of the Company’s stock27.2%33.5%
Stock Options

The following table summarizes the assumptions used in determining the fair value of stock options granted:
 Three Months Ended
December 31,
 20232022
Expected life of option (years)5.75.8
Risk-free interest rate3.86%3.59%
Expected volatility of the Company’s stock29.8%29.4%
Expected dividend yield on the Company’s stock2.77%2.10%

20


Johnson Controls International plc
Notes to Consolidated Financial Statements
December 31, 2023
(unaudited)
14. EARNINGS PER SHARE

The following table reconciles the numerators and denominators used to calculate basic and diluted earnings per share (in millions):
Three Months Ended
December 31,
 20232022
Net income attributable to Johnson Controls $374 $118 
Weighted Average Shares Outstanding
Basic weighted average shares outstanding680.7 687.0 
Effect of dilutive securities:
Stock options, unvested restricted stock and
     unvested performance share awards
1.7 3.3 
Diluted weighted average shares outstanding682.4 690.3 
Antidilutive Securities
Stock options and unvested restricted stock0.6 0.3 

15.    EQUITY

Share repurchase program

During the three months ended December 31, 2022, the Company repurchased and immediately retired $154 million of its ordinary shares. No shares were repurchased during the three months ended December 31, 2023.

As of December 31, 2023, approximately $3.0 billion remains available under the Company's share repurchase program, which was approved by the Company's Board of Directors in March 2021. The share repurchase program does not have an expiration date and may be amended or terminated by the Board of Directors at any time without prior notice.

21


Johnson Controls International plc
Notes to Consolidated Financial Statements
December 31, 2023
(unaudited)
Accumulated Other Comprehensive Income (Loss)

The following schedules present changes in AOCI attributable to Johnson Controls (in millions, net of tax):
Three Months Ended
December 31,
20232022
Foreign currency translation adjustments
Balance at beginning of period$(970)$(901)
Aggregate adjustment for the period61 59 
Balance at end of period(909)(842)
Realized and unrealized gains (losses) on derivatives
Balance at beginning of period15 (11)
Current period changes in fair value(43)(11)
Reclassification to income (1)
4 (3)
Net tax impact1 3 
Balance at end of period(23)(22)
Pension and postretirement plans
Balance at beginning of period 1 
Reclassification to income(1)(1)
Balance at end of period(1) 
Accumulated other comprehensive loss, end of period$(933)$(864)
(1) Refer to Note 11, "Derivative Instruments and Hedging Activities," of the notes to the consolidated financial statements for disclosure of the line items in the consolidated statements of income affected by reclassifications from AOCI into income related to derivatives.

16.    PENSION AND RETIREMENT PLANS

The components of the Company’s net periodic benefit cost (credit) associated with its defined benefit pension and postretirement plans, which are primarily recorded in selling, general and administrative expenses in the consolidated statements of income, are shown in the tables below in accordance with ASC 715, "Compensation – Retirement Benefits" (in millions):
 U.S. Pension Plans
Three Months Ended
December 31,
 20232022
Interest cost$20 $21 
Expected return on plan assets(30)(34)
Net actuarial loss 8 
Net periodic benefit credit$(10)$(5)

22


Johnson Controls International plc
Notes to Consolidated Financial Statements
December 31, 2023
(unaudited)
 Non-U.S. Pension Plans
Three Months Ended
December 31,
 20232022
Service cost$4 $3 
Interest cost17 16 
Expected return on plan assets(18)(18)
Net periodic benefit cost$3 $1 

 Postretirement Benefits
Three Months Ended
December 31,
 20232022
Interest cost$1 $1 
Expected return on plan assets(2)(2)
Amortization of prior service credit(1)(1)
Net periodic benefit credit$(2)$(2)

During the three months ended December 31, 2022, the amount of cumulative fiscal 2023 lump sum payouts triggered a remeasurement event for certain U.S. pension plans resulting in the recognition of net actuarial losses of $8 million, primarily due to decreases in discount rates, partially offset by favorable plan asset performance.

17.    RESTRUCTURING AND RELATED COSTS

To better align its resources with its growth strategies and reduce the cost structure of its global operations in certain underlying markets, the Company commits to various restructuring activities as necessary. Restructuring activities generally result in charges for workforce reductions, plant closures, asset impairments and other related costs which are reported as restructuring and impairment costs in the Company’s consolidated statements of income. The Company expects the restructuring activities to reduce cost of sales and selling, general and administrative expenses ("SG&A") due to reduced employee-related costs, depreciation and amortization expense.

In the third and fourth quarters of fiscal 2023, the Company developed a restructuring plan which included workforce reductions and other actions focused on continued scaling of SG&A expenses to its planned growth. Additional restructuring charges related to this plan were recorded in the three months ended December 31, 2023 and are expected in subsequent quarters.

The following table summarizes restructuring costs (in millions):
 Three Months Ended December 31, 2023
Building Solutions North America$4 
Building Solutions EMEA/LA13 
Global Products21 
Corporate1 
Total $39 

23


Johnson Controls International plc
Notes to Consolidated Financial Statements
December 31, 2023
(unaudited)
The following table summarizes changes in the restructuring reserve, which is included within other current liabilities in the consolidated statements of financial position, for restructuring actions taken in the year ended September 30, 2023 and three months ended December 31, 2023 (in millions):

Employee Severance and Termination BenefitsLong-Lived Asset ImpairmentsOtherTotal
Restructuring and related costs$204 $38 $34 $276 
Utilized—cash(111) (19)(130)
Utilized—noncash (38)(3)(41)
Balance at September 30, 2023
93  12 105 
Additional restructuring and related costs29 9 1 39 
Utilized—cash(38)  (38)
Utilized—noncash (9) (9)
Balance at December 31, 2023
$84 $ $13 $97 

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

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

Valuation Allowance

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

Uncertain Tax Positions

At September 30, 2023, the Company had gross tax-effected unrecognized tax benefits of $2.2 billion, of which $1.6 billion, if recognized, would impact the effective tax rate. Accrued interest, net at September 30, 2023 was approximately $335 million (net of tax benefit). Interest accrued during the three months ended December 31, 2023 and 2022 was approximately $31 million (net of tax benefit) and approximately $26 million (net of tax benefit), respectively. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense.

24


Johnson Controls International plc
Notes to Consolidated Financial Statements
December 31, 2023
(unaudited)
In the U.S., fiscal years 2017 through 2018 are currently under appeal with the Internal Revenue Service (“IRS”) for certain legal entities. In addition, fiscal years 2016 through 2019 are also under exam by the IRS in relation to a separate consolidated filing group. Additionally, the Company is currently under exam in the following major non-U.S. jurisdictions:
Tax JurisdictionTax Years Covered
Belgium
2015 - 2022
Germany
2007 - 2021
Luxembourg
2017 - 2018
Mexico
2015 - 2019
United Kingdom
2014 - 2015; 2018; 2020 - 2021

It is reasonably possible that tax examinations and/or tax litigation will conclude within the next twelve months, which could have a material impact on tax expense. Based upon the circumstances surrounding these examinations, the impact is not currently quantifiable.

Other Tax Matters

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

Tax expenses and benefits for the above transactions reflect the Company’s current tax positions in the impacted jurisdictions. Refer to Note 17, “Restructuring and Related Costs,” of the notes to the consolidated financial statements for additional information.

Impacts of Tax Legislation

On September 11, 2023, the Schaffhausen parliament approved a partial revision of the cantonal act on direct taxation: Immediate Minimum Taxation Measure (“IMTM”). On November 19, 2023, IMTM was approved in a public referendum in the canton of Schaffhausen, was published in the cantonal official gazette on December 8, 2023, and is effective starting January 1, 2024. The IMTM increased Switzerland's combined statutory income tax rate to approximately 15%. As a result, in the three months ended December 31, 2023, the Company recorded a noncash discrete net tax benefit of $80 million due to the remeasurement of deferred tax assets and liabilities related to Switzerland and the canton of Schaffhausen.

On August 16, 2022, the U.S. enacted the Inflation Reduction Act (“IRA”) which, among other things, creates a new book minimum tax of at least 15% of consolidated GAAP pre-tax income for corporations with average book income in excess of $1 billion. The book minimum tax is first applicable in fiscal year 2024, however, this provision does not have a material impact on the Company's effective tax rate.

During the three months ended December 31, 2023 and 2022, tax legislation was adopted in various other jurisdictions. These law changes did not have a material impact on the Company's consolidated financial statements.

19. SEGMENT INFORMATION

ASC 280, "Segment Reporting," establishes the standards for reporting information about segments in financial statements. In applying the criteria set forth in ASC 280, the Company has determined that it has four reportable segments for financial reporting purposes.

The Company conducts its business through four business segments:

Building Solutions North America which operates in the United States and Canada;
Building Solutions EMEA/LA which operates in Europe, the Middle East, Africa and Latin America;
25


Johnson Controls International plc
Notes to Consolidated Financial Statements
December 31, 2023
(unaudited)
Building Solutions Asia Pacific which operates in Asia Pacific; and
Global Products which operates worldwide and includes the Johnson Controls-Hitachi joint venture.

The Building Solutions segments:

Design, sell, install and service HVAC, controls, building management, refrigeration, integrated electronic security and integrated fire-detection and suppression systems; and
Provide energy-efficiency solutions and technical services, including data-driven "smart building" solutions as well as inspection, scheduled maintenance, and repair and replacement of mechanical and controls systems.

The Global Products segment designs, manufactures and sells:

HVAC equipment, controls software and software services for residential and commercial applications;
Refrigeration equipment and controls;
Fire protection and suppression; and
Security products, including intrusion security, anti-theft devices, access control, and video surveillance and management systems.

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

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

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