FY2023 Form 10-K (JCI plc)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

☑

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended September 30, 2023

☐

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, 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 Class

Trading

Symbol

Name of Each Exchange

on Which Registered Title of Each Class

Trading

Symbol

Name of Each Exchange

on Which Registered

Ordinary Shares, Par Value $0.01 JCI New York Stock Exchange 4.250% Senior Notes due 2035 JCI35 New York Stock Exchange

3.625% Senior Notes due 2024 JCI24A New York Stock Exchange 6.000% Notes due 2036 JCI36A New York Stock Exchange

1.375% Notes due 2025 JCI25A New York Stock Exchange 5.70% Senior Notes due 2041 JCI41B New York Stock Exchange

3.900% Notes due 2026 JCI26A New York Stock Exchange 5.250% Senior Notes due 2041 JCI41C New York Stock Exchange

0.375% Senior Notes due 2027 JCI27 New York Stock Exchange 4.625% Senior Notes due 2044 JCI44A New York Stock Exchange

3.000% Senior Notes due 2028 JCI28 New York Stock Exchange 5.125% Notes due 2045 JCI45B New York Stock Exchange

1.750% Senior Notes due 2030 JCI30 New York Stock Exchange 6.950% Debentures due December 1, 2045 JCI45A New York Stock Exchange

2.000% Sustainability-Linked Senior Notes due 2031 JCI31 New York Stock Exchange 4.500% Senior Notes due 2047 JCI47 New York Stock Exchange

1.000% Senior Notes due 2032 JCI32 New York Stock Exchange 4.950% Senior Notes due 2064 JCI64A New York Stock Exchange

4.900% Senior Notes due 2032 JCI32A New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Exchange Act: None

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 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 filer

Accelerated filer

Non-accelerated filer ¨ Smaller 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting

under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of March 31, 2023, the aggregate market value of Johnson Controls International plc Common Stock held by non-affiliates of the registrant was approximately $41.2 billion

based on the closing sales price as reported on the New York Stock Exchange. As of November 30, 2023, 680,673,839 ordinary shares, par value $0.01 per share, were

outstanding.

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction

of an error to previously issued financial statements. þ

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s

executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement to be delivered to shareholders in connection with the annual general meeting of shareholders to be held on March 13, 2024 are

incorporated by reference into Part III.

JOHNSON CONTROLS INTERNATIONAL PLC

Index to Annual Report on Form 10-K

Year Ended September 30, 2023

Page

CAUTIONARY STATEMENTS FOR FORWARD-LOOKING INFORMATION .......................................................

PART I.

ITEM 1. BUSINESS .................................................................................................................................................

ITEM 1A. RISK FACTORS ........................................................................................................................................

ITEM 1B. UNRESOLVED STAFF COMMENTS .....................................................................................................

ITEM 1C. CYBERSECURITY ...................................................................................................................................

ITEM 2. PROPERTIES .............................................................................................................................................

ITEM 3. LEGAL PROCEEDINGS ...........................................................................................................................

ITEM 4. MINE SAFETY DISCLOSURES ..............................................................................................................

EXECUTIVE OFFICERS OF THE REGISTRANT .................................................................................

PART II.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS

AND ISSUER PURCHASES OF EQUITY SECURITIES .......................................................................

ITEM 6. [RESERVED] .............................................................................................................................................

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS ...................................................................................................................

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ..........................

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ...........................................................

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE .....................................................................................................................

106

ITEM 9A. CONTROLS AND PROCEDURES ..........................................................................................................

107

ITEM 9B. OTHER INFORMATION ..........................................................................................................................

108

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS ......... 110

PART III.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE ...................................

110

ITEM 11. EXECUTIVE COMPENSATION .............................................................................................................

110

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND

RELATED STOCKHOLDER MATTERS ................................................................................................

110

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

INDEPENDENCE ......................................................................................................................................

111

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES ............................................................................

111

PART IV.

ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES ...................................................................

112

ITEM 16.

FORM 10-K SUMMARY .......................................................................................................................... 112

INDEX TO EXHIBITS ..............................................................................................................................

113

SIGNATURES ...........................................................................................................................................

118

CAUTIONARY STATEMENTS FOR FORWARD-LOOKING INFORMATION

Unless otherwise indicated, references to "Johnson Controls," the "Company," "we," "our" and "us" in this Annual Report on

Form 10-K refer to Johnson Controls International plc and its consolidated subsidiaries.

The Company has made statements in this document that are forward-looking and therefore are subject to risks and

uncertainties. All statements in this document other than statements of historical fact are, or could be, "forward-

looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In this document, statements

regarding the Company’s future financial position, sales, costs, earnings, cash flows, other measures of results of

operations, synergies and integration opportunities, capital expenditures, debt levels and market outlook are forward-looking

statements. Words such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "should," "forecast," "project"

or "plan" and terms of similar meaning are also generally intended to identify forward-looking statements. However, the

absence of these words does not mean that a statement is not forward-looking. The Company cautions that these statements are

subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond the Company’s

control, that could cause the Company’s actual results to differ materially from those expressed or implied by such forward-

looking statements, including, among others, risks related to: The Company's ability to develop or acquire new products and

technologies that achieve market acceptance and meet applicable quality and regulatory requirements; the ability to manage

general economic, business and capital market conditions, including the impact of recessions, economic downturns and global

price inflation; fluctuations in the cost and availability of public and private financing for our customers; the ability to innovate

and adapt to emerging technologies, ideas and trends in the marketplace, including the incorporation of technologies such as

artificial intelligence; the ability to manage macroeconomic and geopolitical volatility, including shortages impacting the

availability of raw materials and component products and the conflicts between Russia and Ukraine and Israel and Hamas;

managing the risks and impacts of potential and actual security breaches, cyberattacks, privacy breaches or data breaches,

including business, service, or operational disruptions, the unauthorized access to or disclosure of data, financial loss,

reputational damage, increased response and remediation costs, legal, and regulatory proceedings or other unfavorable

outcomes; our ability to remediate our material weakness; maintaining and improving the capacity, reliability and security of

the Company's enterprise information technology infrastructure; the ability to manage the lifecycle cybersecurity risk in the

development, deployment and operation of the Company's digital platforms and services; changes to laws or policies governing

foreign trade, including economic sanctions, tariffs, foreign exchange and capital controls, import/export controls or other trade

restrictions; fluctuations in currency exchange rates; changes or uncertainty in laws, regulations, rates, policies, or

interpretations that impact the Company's business operations or tax status; the ability to adapt to global climate change, climate

change regulation and successfully meet the Company's public sustainability commitments; the outcome of litigation and

governmental proceedings; the risk of infringement or expiration of intellectual property rights; the Company's ability to

manage disruptions caused by catastrophic or geopolitical events, such as natural disasters, armed conflict, political change,

climate change, pandemics and outbreaks of contagious diseases and other adverse public health developments; the ability of

the Company to drive organizational improvement; any delay or inability of the Company to realize the expected benefits and

synergies of recent portfolio transactions; the ability to hire and retain senior management and other key personnel; the tax

treatment of recent portfolio transactions; significant transaction costs and/or unknown liabilities associated with such

transactions; labor shortages, work stoppages, union negotiations, labor disputes and other matters associated with the labor

force; and the cancellation of or changes to commercial arrangements. A detailed discussion of risks related to Johnson

Controls’ business is included in the section entitled "Risk Factors" (refer to Part I, Item 1A, of this Annual Report on Form 10-

K). The forward-looking statements included in this document are made only as of the date of this document, unless otherwise

specified, and, except as required by law, Johnson Controls assumes no obligation, and disclaims any obligation, to update such

statements to reflect events or circumstances occurring after the date of this document.

PART I

ITEM 1 BUSINESS

General

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.

Johnson Controls was originally incorporated in the state of Wisconsin in 1885 as Johnson Electric Service Company to

manufacture, install and service automatic temperature regulation systems for buildings and was renamed Johnson Controls,

Inc. in 1974. In 2005, Johnson Controls acquired York International, a global supplier of heating, ventilating and air-

conditioning ("HVAC") and refrigeration equipment and services. In 2014, Johnson Controls acquired Air Distribution

Technologies, Inc., one of the largest independent providers of air distribution and ventilation products in North America. In

2015, Johnson Controls formed a joint venture with Hitachi to expand its building related product offerings. In 2016, Johnson

Controls, Inc. and Tyco International plc ("Tyco") completed their combination (the "Merger"), combining Johnson Controls'

portfolio of building efficiency solutions with Tyco’s portfolio of fire and security solutions. Following the Merger, Tyco

changed its name to “Johnson Controls International plc.”

In 2016, the Company completed the spin-off of its automotive business into Adient plc, an independent, publicly traded

company. In 2019, the Company closed the sale of its Power Solutions business, completing the Company’s transformation into

a pure-play building technologies and solutions provider.

The Company is a global leader in engineering, manufacturing and commissioning building products and systems, including

residential and commercial HVAC equipment, industrial refrigeration systems, controls, security systems, fire-detection

systems and fire-suppression solutions. The Company further serves customers by providing technical services, including

maintenance, management, repair, retrofit and replacement of equipment (in the HVAC, industrial refrigeration, security and

fire-protection space), and energy-management consulting. The Company's OpenBlue digital software platform enables

enterprises to better manage their physical spaces by combining the Company's building products and services with cutting-

edge technology and digital capabilities to enable data-driven “smart building” services and solutions. The Company partners

with customers by leveraging its broad product portfolio and digital capabilities powered by OpenBlue, together with its direct

channel service and solutions capabilities, to deliver outcome-based solutions across the lifecycle of a building that address

customers’ needs to improve energy efficiency, enhance security, create healthy environments and reduce greenhouse gas

emissions.

Business Segments

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;

• 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.

For more information on the Company’s segments, refer to Note 19, "Segment Information," of the notes to consolidated

financial statements.

Products, Systems, Services and Solutions

The Company sells and installs its commercial HVAC equipment and systems, control systems, security systems, fire-detection

and fire suppression systems, equipment and services primarily through its extensive direct channel, consisting of a global

network of sales and service offices. Significant sales are also generated through global third-party channels, such as

distributors of air-conditioning, controls, security and fire-detection and suppression products. The Company’s large base of

current customers leads to significant repeat business for the maintenance, retrofit and replacement markets. The Company is

also able to leverage its installed base to generate sales for its service business. Trusted building brands, such as YORK®,

Hitachi Air Conditioning, Metasys®, Ansul, Ruskin®, Titus®, Frick®, FM:Systems®, PENN®, Sabroe®, Silent-Aire®,

Simplex® and Grinnell®, together with the breadth and depth of the products, systems and solutions offered by the Company,

give it what it believes to be the most diverse portfolio in the building technology industry.

The Company has developed software platforms, including on-premises platforms and cloud-based software services, and

integrated its products and services with digital capabilities to provide data-driven solutions to create smarter, safer and more

sustainable buildings. The Company's OpenBlue platform enables enterprises to better manage their physical spaces delivering

sustainability, new occupant experiences, safety and security by combining the Company’s building expertise with cutting-edge

technology, including artificial intelligence and machine learning-powered service solutions such as remote diagnostics,

predictive maintenance, workplace management, compliance monitoring and advanced risk assessments. The Company

leverages its digital and data-driven products and services to offer integrated and customizable solutions focused on delivering

outcomes to customers, including OpenBlue Buildings-as-a-Service, OpenBlue Net Zero Buildings-as-a-Service and OpenBlue

Healthy Buildings. These services are generally designed to generate recurring revenue for the Company as it supports its

customers in achieving their desired outcomes.

In fiscal 2023, products and systems accounted for 76% of sales and services accounted for 24% of sales.

Competition

The Company conducts its operations through a significant number of individual contracts that are either negotiated or awarded

on a competitive basis. Key factors in the award of contracts include system and service performance, quality, price, design,

reputation, technology, application engineering capability, availability of financing and construction or project management

expertise. Competitors for HVAC equipment, security, fire-detection, fire suppression and controls in the residential and non-

residential marketplace include many local, regional, national and international providers. Larger competitors include

Honeywell International, Inc.; Siemens Smart Infrastructure, an operating group of Siemens AG; Schneider Electric SA; Carrier

Global Corporation; Trane Technologies plc; Daikin Industries, Ltd.; Lennox International, Inc.; GC Midea Holding Co, Ltd.

and Gree Electric Appliances, Inc. In addition, the Company competes in a highly fragmented building services market. The

Company also faces competition from a diverse range of established companies, start-ups and other emerging entrants to the

buildings industry in the areas of digital services, software as a service and the Internet of Things. The loss of any individual

contract or customer would not have a material adverse effect on the Company.

Business Strategy

The Company’s business strategy is to sustain and expand its position as a leader in smart and sustainable building solutions by

offering a full spectrum of products and solutions for customer buildings across the globe. The Company’s core strategy

remains focused on creating growth platforms, driving operational improvements and creating a high-performance culture. The

Company has strong positions in attractive and growing end-markets across HVAC, controls, fire, security and services,

enhanced by its comprehensive product portfolio and substantial installed base. The Company believes that it is well positioned

to capitalize on the emerging and prevalent trends in the buildings industry, including sustainability, healthy buildings/indoor

environmental quality and smart buildings. To capitalize on these trends, the Company remains focused on maintaining leading

positions in delivering building products, systems and solutions, as well as enabling growth through digital, to develop and

leverage new digital technologies and capabilities into outcomes powered by its OpenBlue software platform. In furtherance of

these goals, the Company has three strategic priorities:

Capitalize on Key Growth Vectors: Sustainability, healthy buildings/indoor environmental quality and smart buildings represent

key growth opportunities for the Company. The Company seeks to leverage its existing portfolio breadth and investments in

product development, combined with the expansion of its digital products and capabilities powered by OpenBlue, to offer

differentiated solutions and innovative deal structures to help customers achieve their objectives. The Company intends to

expand its capabilities by investing in products and technologies, as well as expanding its partnerships, to power innovation that

will allow it to provide differentiated services that are tailored to its customers’ desired outcomes.

Accelerate in High Growth Digital Services, Regions and Verticals: The Company is focused on transforming its large service

business through digital technology, further enabled by the Company’s installed base, domain expertise and global coverage.

The Company is focused on developing and deploying connected equipment, systems and controls that will support the

provision of digital services and solutions. The Company further intends to expand its presence in high growth regions and

invest in high growth verticals within the markets it serves, including healthcare, commercial offices/campus, education and

data centers.

Sustain a High-Performance, Customer-Centric Culture: The Company recognizes that developing talent and creating positive

customer experiences is central to accomplishing its business strategies. The Company is investing in its talent to build a

diverse workforce that is digital capable, solutions oriented and focused on continuous learning and growth. The Company aims

to leverage its talent capabilities and training to create a customer-focused culture to drive customer loyalty and decisions.

To realize these priorities, the Company is leveraging its technology leadership, comprehensive product portfolio, global

presence, substantial installed base and strong channels to monetize the lifecycle opportunities of install, service, retrofit and

replacement which are established and delivered by the Company’s direct field businesses and third-party channels across the

globe. The Company is augmenting its strategic priorities with disciplined execution, productivity enhancements and

sustainable cost management to create a path to realize expanded margins and enhanced profitability.

Backlog

The Company’s backlog is applicable to its sales of systems and services. At September 30, 2023, the backlog was

$13.6 billion, of which $12.1 billion was attributable to the building solutions (field) business. The backlog amount outstanding

at any given time is not necessarily indicative of the amount of revenue to be earned in the upcoming fiscal year.

At September 30, 2023, remaining performance obligations were $19.6 billion, which is $6.0 billion higher than the Company's

backlog of $13.6 billion. Differences between the Company’s remaining performance obligations and backlog are primarily due

to the following:

• Remaining performance obligations include large, multi-purpose contracts including services to be performed over the

initial term of the building contract (typically 25 to 35 years) versus backlog which includes only the lifecycle period

of the contract (approximately five years);

• Remaining performance obligations exclude certain customer contracts with a term of one year or less and contracts

that are cancellable without substantial penalty versus backlog which includes short-term and cancellable contracts;

and

• Remaining performance obligations include the full remaining term of service contracts with substantial termination

penalties versus backlog which includes one year for all outstanding service contracts.

The Company believes backlog is a useful measure of evaluating the Company's operational performance and relationship to

total orders.

Raw Materials

Raw materials used by the Company’s businesses in connection with their operations include steel, aluminum, brass, copper,

polypropylene and certain flurochemicals used in fire suppression agents. The Company also uses semiconductors and other

electronic components in the manufacture of its products. During fiscal 2022 and portions of fiscal 2023, the Company

experienced material cost increases due to global inflation, supply chain disruptions, labor shortages, increased demand and

other regulatory and macroeconomic factors. The collective impact of these trends were favorable to revenue due to increased

demand and price increases to offset inflation, while negatively impacting margins due to supply chain disruptions and cost

pressures. However, throughout fiscal 2023, the Company experienced improved margins as supply chain disruptions eased and

higher priced backlog was converted to sales, as discussed in Item 7. Management's Discussion and Analysis of Financial

Condition and Results of Operations. Although the Company has experienced recent improvement in its supply chain, the

Company could experience further disruptions, shortages and price inflation in the future, the effect of which will depend on the

Company’s ability to successfully mitigate and offset the impact of these events. In fiscal 2024, commodity prices and

availability could fluctuate throughout the year and could significantly affect the Company’s results of operations. For a more

detailed description of the risks related to the availability of raw materials, components and commodities, see Item 1A. Risk

Factors.

Intellectual Property

Generally, the Company seeks statutory protection for strategic or financially important intellectual property developed in

connection with its business. The Company protects its intellectual property investments in a variety of ways. The Company

works actively in the U.S. and internationally to ensure the enforcement of copyright, trademark, trade secret, and other

protections that apply to the Company's products, services, software, solutions, and branding. Certain intellectual property,

where appropriate, is protected by contracts, licenses, confidentiality or other agreements.

The Company owns numerous U.S. and non-U.S. patents (and their respective counterparts), the more important of which cover

those technologies and inventions embodied in current products or which are used in the manufacture of those products.

Internal development allows the Company to maintain competitive advantages that come from product differentiation and

closer technical control over its products and services. While the Company believes patents are important to its business

operations and in the aggregate constitute a valuable asset, no single patent, or group of patents, is critical to the success of the

business. The Company, from time to time, grants licenses under its patents and technology and receives licenses under patents

and technology of others.

The Company’s trademarks, certain of which are material to its business, are registered or otherwise legally protected in the

U.S. and many non-U.S. countries where products and services of the Company are sold. The Company, from time to time,

becomes involved in trademark licensing transactions.

Most works of authorship produced for the Company, such as computer programs, catalogs and sales literature, carry

appropriate notices indicating the Company’s claim to copyright protection under U.S. law and appropriate international

treaties.

Environmental, Health and Safety Matters

Laws addressing the protection of the environment and workers’ safety and health govern the Company’s ongoing global

operations. They generally provide for civil and criminal penalties, as well as injunctive and remedial relief, for noncompliance

or require remediation of sites where Company-related materials have been released into the environment.

A portion of the Company’s products consume energy and use refrigerants. Increased public awareness and concern regarding

global climate change has resulted in more regulations designed to reduce greenhouse gas emissions. These regulations tend to

be implemented under global, national and sub-national climate objectives or policies, and target the global warming potential

(“GWP”) of refrigerants, equipment energy efficiency, and the combustion of fossil fuels as a heating source. The Company

continues to invest in its product portfolio to meet emerging emissions regulations and standards.

The Company has expended substantial resources globally, both financial and managerial, to comply with environmental laws

and worker safety laws and maintains procedures designed to foster and ensure compliance. Certain of the Company’s

businesses are, or have been, engaged in the handling or use of substances that may impact workplace health and safety or the

environment. The Company is committed to protecting its workers and the environment against the risks associated with these

substances.

The Company’s operations and facilities have been, and in the future may become, the subject of formal or informal

enforcement actions or proceedings for noncompliance with environmental laws and worker safety laws or for the remediation

of Company-related substances released into the environment. Such matters typically are resolved with regulatory authorities

through commitments to compliance, abatement or remediation programs and, in some cases, payment of penalties. In addition,

governments in the United States and internationally have increasingly been regulating perfluorooctane sulfonate ("PFOS"),

perfluorooctanoic acid ("PFOA"), and/or other per- and poly-fluoroalkyl substances ("PFAS"), which are contained in certain of

the Company's firefighting foam products. These regulations include declining emission standards and limits set as to the

presence of certain compounds. See Note 21, "Commitments and Contingencies," of the notes to consolidated financial

statements for further discussion of environmental matters.

Government Regulation and Supervision

The Company's operations are subject to numerous federal, state and local laws and regulations, both within and outside the

United States, in areas such as consumer protection, government contracts, international trade, environmental protection, labor

and employment, tax, licensing and others. For example, most U.S. states and non-U.S. jurisdictions in which the Company

operates have licensing laws directed specifically toward the alarm and fire suppression industries. The Company's security

businesses currently rely extensively upon the use of wireline and wireless telephone service to communicate signals. Wireline

and wireless telephone companies in the U.S. are regulated by the federal and state governments. In addition, government

regulation of fire safety codes can impact the Company's fire businesses. The Company’s businesses may also be affected by

changes in governmental regulation of refrigerants, PFAS, energy efficiency standards, noise regulation and product safety

regulations, including changes related to hydro fluorocarbons/emissions reduction efforts, energy conservation standards and

the regulation of fluorinated gases. These and other laws and regulations impact the manner in which the Company conducts its

business, and changes in legislation or government policies can affect the Company's worldwide operations, both favorably and

unfavorably. For a more detailed description of the various laws and regulations that affect the Company's business, see

Item 1A. Risk Factors.

Regulatory Capital Expenditures

The Company’s efforts to comply with numerous federal, state and local laws and regulations applicable to its business and

products often results in capital expenditures. The Company makes capital expenditures to design and upgrade its fire and

security products to comply with or exceed standards applicable to the alarm, fire suppression and security industries. The

Company also makes capital expenditures to meet or exceed energy efficiency standards and comply with applicable

regulations, including the regulation of refrigerants, hydro fluorocarbons/emissions reduction efforts and the regulation of

fluorinated gasses, particularly with respect to the Company’s HVAC products and solutions. The Company’s ongoing

environmental compliance program also results in capital expenditures. Regulatory and environmental considerations are a part

of all significant capital expenditure decisions; however, expenditures in fiscal 2023 related solely to regulatory compliance

were not material. It is management’s expectation that the amount of any future capital expenditures related to compliance with

any individual regulation or grouping of related regulations will not have a material adverse effect on the Company’s financial

results or competitive position in any one year. See Note 21, "Commitments and Contingencies," of the notes to consolidated

financial statements for further discussion of environmental matters.

Human Capital Management

Overview and Governance

The development of a High-Performance Culture enables the Company to achieve its purpose to build smarter, healthier, and

more sustainable tomorrows. The Company’s strategic drivers provide the direction that guides its workforce toward a culture

of continuous improvement and innovation to exceed customers’ expectations and provide solutions for global challenges in the

building systems industry.

The responsibility to develop and maintain a High-Performance Culture is owned, embedded and executed throughout the

Company. The Chief Human Resources Officer ("CHRO") is responsible for establishing the Company’s strategy to drive a

High-Performance Culture and ensuring its execution across the Company. The Compensation and Talent Development

Committee of the Board of Directors is the primary overseer of the Company’s High-Performance Culture strategy and

execution, ensuring that the Company presents an employee value proposition that supports retention and the attraction of

external talent. The Governance and Sustainability Committee is the primary overseer of employee health and safety. The Chief

Executive Officer ("CEO"), the CHRO, the General Counsel, the Vice President of Global Environment Health & Safety, the

Vice President of Diversity, Equity and Inclusion and other senior leaders within the Company are responsible for the execution

of the strategy and engage with the Compensation and Talent Development Committee, the Governance and Sustainability

Committee and the full Board of Directors on the critical components driving the Company’s High-Performance Culture,

including discussions of future of work, human capital trends, processes and practices, diversity, equity and inclusion, health

and safety, talent development, succession planning, and talent and culture best practices. Key components driving the

Company’s High-Performance Culture include:

Health and Safety

Health and Wellness, Safety and Environment are the three pillars of the Company’s Zero Harm vision. The Company’s health

and safety programs are designed around global standards with appropriate variations addressing multiple jurisdictions and

regulations, specific hazards and unique working environments of the Company’s manufacturing, service and install, and

headquarter operations.

The Company requires each of its locations to perform regular safety audits to ensure proper safety policies, program

procedures, analyses and training are in place. In addition, the Company engages an independent third-party conformity

assessment and certification vendor to audit selected operations for adherence to its global health and safety standards. Safety

culture and values-based safety initiatives have been deployed within the Company to sustain and further enhance performance.

The Company utilizes a mixture of leading and lagging indicators to assess the health and safety performance of its operations.

Lagging indicators include the OSHA Total Recordable Incident Rate ("TRIR") and the Lost Time (or Lost Workday) Incident

Rate ("LTIR") based upon the number of incidents per 100 employees (or per 200,000 work hours). In fiscal 2023, the

Company had a TRIR of 0.37 and a LTIR of 0.12.

Diversity, Equity and Inclusion

The Company is dedicated to creating a workplace where diversity is celebrated, where every employee feels included and

valued, and where equitable practices are the norm. By prioritizing diversity, equity, and inclusion, the Company aims to foster

a culture of innovation, collaboration, and respect that drives its success in the global marketplace. Diversity, Equity, and

Inclusion (“DEI”) is a core component of the Company’s strategy to drive a High-Performance Culture, recognized as adding

value to the Company’s creation and delivery of innovative high performing products and enabling solutions to its customers’

toughest problems. The Company has recently elevated its focus on ‘equity’ to further enable all employees to have access to

the opportunities, resources, support and networks they need to develop and succeed. The Company empowers employees to

take an active role in creating a culture that values uniqueness, celebrates creativity and drives innovation. The Company

encourages employees to enable an inclusive culture through active participation in Business Resource Groups ("BRGs") -

employee-led voluntary organizations of people with similar interests, experiences, or demographic characteristics. The

Company continues to increase participation in its BRG chapters worldwide across nine categories: African American, Asia

Pacific, LGBTQ+, Emerging Leaders, Hispanic, Disabilities, Veterans, Women and Sustainability. In 2023, the Company

established BRGs focused on Wellness and Caregiving in response to feedback through its Voice of the Employee events. Each

BRG is open to all employees and sponsored and supported by senior leaders across the enterprise. The Company’s BRG

structure includes monthly learning series, an active recruitment platform, an innovation hub, community engagement and

feedback sessions. The Company also engages BRGs to support the acquisition and development of diverse talent internally and

externally.

As a world leader in building technologies, the Company is committed to enabling employees to bring their authentic selves to

work each day, which in turn adds value, fosters creativity, and inspires change across the organization. The Company

recognizes that it is its people that make the Company exceptional. The Company has developed robust policies and strategies

to support this vision in its operations and its communities, including strategies addressing social impact and employee

experience. The Company is committed to the implementation of its DEI mission, vision and roadmap including a focus on

employee experience, business resource groups, learning and development and external impact.

The Company recognizes that fostering a diverse, equitable, and inclusive environment requires ongoing commitment,

accountability, and continuous improvement. The Company regularly assesses its progress, recognizes employee contributions,

and holds leaders accountable for driving DEI initiatives. The Company also creates mechanisms for open dialogue and

feedback from employees to ensure that everyone’s voices are heard.

The Company has implemented several measures that focus on ensuring accountabilities exist for fostering a diverse, equitable

and inclusive environment:

• Diversity Objectives: The CEO and other senior leaders have diversity and inclusion objectives in their annual

performance goals.

• Attracting Diverse Talent: BRGs are instrumental in positively impacting the attraction of diverse talent to the

Company. BRGs support these efforts through external engagement and support of talent acquisition sourcing

initiatives. The Company’s global flagship Future Leaders Internship Program continues to expand the diversity of its

outreach and focus on the skills needed to advance the Company’s growth initiatives.

• Honoring Employee Contributions: The Company’s Diversity Distinction Awards serve as a recognition and

encouragement for workforce contributions to the Company’s DEI efforts. Awarded to eight employees three times per

year, the nomination driven Diversity Distinction Awards have become a highly regarded recognition of employee’s

contribution to the progress of the Company’s DEI journey.

Talent Development

To maintain a High-Performance Culture, the Company must ensure the continued development and advancement of its

employees. The Company has adopted a continual improvement approach to talent development, working to support

employees’ growth while defining the skills and capabilities the organization will need in future years. To assess current

enterprise capabilities and define future needs, strategic talent reviews and succession planning occur on a planned cadence

annually – globally and across all business areas. The Company continues to provide opportunities for its employees to grow

their careers, with approximately half of open management positions filled internally during fiscal year 2023.

The Company believes that high performance is an outcome of an employee’s ability to change, adapt, and grow their

capabilities throughout their career. This talent development approach includes self and multi-rater assessments, functional and

leadership competency models, providing employees a personalized approach to their development planning and skill

acquisition. The Company emphasizes real-life, real-time learning that enables each employee to meet the demands of

challenging and changing work and focuses on reinforcing key principles that are designed to support an individual’s

effectiveness in his or her current job and in their future development. The Company provides technical and leadership training

to employees, customers and suppliers who work for or with the Company’s products and services.

The Company’s focus on employee development has been structured over the last several years through programs designed to

imbed essential skills with employees and reinforce strategic goals aligning with the Company’s culture, including:

• Digital Transformation: In support of Company’s growth strategy, the Company is investing in developing digital

leadership with personalized and targeted training programs designed to create digitally capable leaders, salespersons,

engineers and technicians.

• Diversity and Inclusion: The Company has developed a structured diversity and inclusion training curriculum across

the levels and stages of individuals' careers to develop and align employees with the Company’s diversity and

inclusion strategy and values. In fiscal year 2023, the Company expanded the diversity curriculum, adding new

training programs to develop careers of under-represented talent and a toolkit for managers to guide their self-led

inclusion efforts.

• Organizational Engagement: The Company periodically measures the engagement of its employees using a quarterly

pulse survey. In fiscal 2023, the survey was launched and conducted three times. The engagement survey provides

managers with their own data dashboard to view their own engagement results and can be utilized by managers at all

levels to understand how to improve the Company’s culture and employee engagement. Managers are provided with

resources to interpret their results and plan their actions following each survey.

In fiscal 2023, the Company offered a robust curriculum of over 197,000 activities that were completed by employees,

consisting of videos, courses, e-learning, documentation, articles and books, including over 4,000 active (in person or virtual)

learning courses. In fiscal 2023, over 1.26 million learning activities were completed by approximately 86,300 employees. The

total learning hours consumed by employees was 1.22 million hours, averaging almost 14 hours per employee including time

invested in formal learning and standard time invested in self-paced reading or video consumption.

Employee Population and Demographics

As of September 30, 2023, the Company employed approximately 100,000 people worldwide, of which approximately 37,000

were employed in the United States and approximately 63,000 were outside the United States. Approximately 22,000

employees are covered by collective bargaining agreements or works councils and the Company believes that its relations with

its labor unions are generally positive.

Employee Diversity as of September 30, 2023

Male Female Minority

(1)

Total employees 76% 24% 32%

Managers 79% 21% 22%

(1)

Male and female data represents all employees globally. Minority data represents U.S. employees only.

Seasonal Factors

Certain of the Company's sales are seasonal as the demand for residential air conditioning equipment and services generally

increases in the summer months. This seasonality is mitigated by the other products and services provided by the Company that

have no material seasonal effect.

Research and Development Expenditures

Refer to Note 1, "Summary of Significant Accounting Policies," of the notes to consolidated financial statements for research

and development expenditures. The Company has committed to invest a substantial portion of its new product research and

development in climate-related innovation to develop sustainable products and services. The Company invests in enhancements

to the capabilities of its product lines and services to support its strategy, meet consumer preferences and achieve regulatory

compliance. This includes investments in the development of the Company’s OpenBlue platform and related service offerings,

digital product capabilities, energy efficient products, and low GWP refrigerants and technology.

Available Information

The Company’s filings with the U.S. Securities and Exchange Commission ("SEC"), including annual reports on Form 10-K,

quarterly reports on Form 10-Q, definitive proxy statements on Schedule 14A, current reports on Form 8-K, and any

amendments to those reports filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, are made available

free of charge through the Investor Relations section of the Company’s Internet website at http://www.johnsoncontrols.com as

soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the SEC. Copies of

any materials the Company files with the SEC can also be obtained free of charge through the SEC’s website at http://

www.sec.gov. The Company also makes available, free of charge, its Code of Ethics, Corporate Governance Guidelines, Board

of Directors committee charters and other information related to the Company on the Company’s Internet website or in printed

form upon request. The Company is not including the information contained on the Company’s website as a part of, or

incorporating it by reference into, this Annual Report on Form 10-K.

ITEM 1A RISK FACTORS

Provided below is a cautionary discussion of what we believe to be the most important risk factors applicable to the Company.

Discussion of these factors is incorporated by reference into and considered an integral part of Part II, Item 7, “Management’s

Discussion and Analysis of Financial Conditions and Results of Operations.” The disclosure of a risk should not be interpreted

to imply that such risk has not already materialized. Additional risks not currently known to the Company or that the Company

currently believes are immaterial may also impair the Company’s business, financial condition, results of operations and cash

flows.

Risks Related to Our Business Operations

Our future growth is dependent upon our ability to develop or acquire new products and technologies that achieve

market acceptance with acceptable margins.

Our future success depends on our ability to develop or acquire, manufacture and bring competitive, and increasingly complex,

products and services to market quickly and cost-effectively. Our ability to develop or acquire new products, services and

technologies requires the investment of significant resources. These acquisitions and development efforts divert resources from

other potential investments in our businesses, and they may not lead to the development of new technologies, products or

services on a timely basis. Further, we must continue to effectively adapt our products and services to a changing technological

and regulatory environment to drive growth and defend against disruption caused by competitors, regulators or other external

forces impacting our business and operations. If we are unable to be agile and responsive to disruption in the development of

new products, services and technologies, including technologies such as artificial intelligence and machine learning, our

business, financial condition, results of operations and cash flows could be adversely affected.

Moreover, as we introduce new products, we may be unable to detect and correct defects in the design of a product or in its

application to a specified use, which could result in loss of sales or delays in market acceptance. Even after introduction, new or

enhanced products may not satisfy customer preferences and product failures may cause customers to reject our products.

Further, as we integrate emerging and rapidly evolving technologies such as artificial intelligence and machine learning into our

products and services, we may not be able to anticipate or identify vulnerabilities, design flaws or security threats resulting from

the use of such technology and develop adequate protection measures. As a result, these products may not achieve market

acceptance and our brand image could suffer. We must also attract, develop and retain individuals with the requisite technical

expertise and understanding of customers’ needs to develop new technologies and introduce new products, particularly as we

increase investment in our digital services and solutions business and our OpenBlue software platform. The laws and

regulations applicable to our products, and our customers’ product and service needs, change from time to time, and regulatory

changes may render our products and technologies noncompliant or result in new or enhanced regulatory scrutiny. In addition,

the markets for our products, services and technologies may not develop or grow as we anticipate. The failure of our

technology, products or services to gain market acceptance due to more attractive offerings by our competitors, the introduction

of new competitors to the market with new or innovative product offerings or the failure to address any of the above factors

could significantly reduce our revenues, increase our operating costs or otherwise materially and adversely affect our business,

financial condition, results of operations and cash flows.

Failure to achieve and maintain a high level of product and service quality could damage our reputation with customers

and negatively impact our results.

Product and service quality issues could harm customer confidence in our company and our brands. If certain of our product

and service offerings do not meet applicable safety standards or our customers’ expectations regarding quality, safety or

performance, we could experience lost sales and increased costs and we could be exposed to legal, financial and reputational

risks. In addition, when our products fail to perform as expected, we are exposed to warranty, product liability, personal injury

and other claims. We have experienced such quality issues in the past and may experience such issues in the future.

We cannot be certain that our quality controls and procedures will reveal defects in our products or their raw materials, which

may not become apparent until after the products have been placed in use in the market. Accordingly, there is a risk that

products will have defects, which could require a product recall or field corrective action. Such remedial actions can be

expensive to implement and may damage our reputation, customer relationships and market share. We have conducted product

recalls and field corrective actions in the past and may do so again in the future.

In many jurisdictions, product liability claims are not limited to any specified amount of recovery. If any such claims or

contribution requests or requirements exceed our available insurance or if there is a product recall, there could be an adverse

impact on our results of operations. In addition, a recall or claim could require us to review some or all of our product portfolio

to assess whether similar issues are present in other products, which could result in a significant disruption to our business and

which could have a further adverse impact on our business, financial condition, results of operations and cash flows. There can

be no assurance that we will not experience any material warranty or product liability claims in the future, that we will not incur

significant costs to defend such claims or that we will have adequate reserves to cover any recall, repair and replacement costs.

Failure to increase organizational effectiveness through organizational improvements may reduce our profitability or

adversely impact our business.

Our results of operations, financial condition and cash flows are dependent upon our ability to drive organizational

improvement. We seek to drive improvements through a variety of actions, including restructuring and integration activities,

digital transformation, business portfolio reviews, productivity initiatives, functionalization, executive management changes,

and business and operating model assessments. Risks associated with these actions include delays in execution, additional

unexpected costs, realization of fewer than estimated productivity improvements, increased change fatigue, organizational

strain and adverse effects on employee morale. We may not realize the full operational or financial benefits we expect, the

recognition of these benefits may be delayed, and these actions may potentially disrupt our operations. In addition, our failure to

effectively manage organizational changes may lead to increased attrition and harm our ability to attract and retain key talent.

Cybersecurity incidents impacting our IT systems and digital products could disrupt business operations, result in the

loss of critical and confidential information, and materially and adversely affect our reputation and results of

operations.

We rely upon the capacity, reliability and security of our IT and data security infrastructure and our ability to expand and

continually update this infrastructure in response to the changing needs of our business. As we implement new systems or

integrate existing systems, they may not perform as expected. We also face the challenge of supporting our older systems,

which are vulnerable to increased risks, including the risk of further security breaches, system failures and disruptions, and

implementing necessary upgrades. In addition, certain of our employees work remotely at times, which increases our

vulnerability to cybersecurity and other IT risks. If we experience a problem with the functioning of an important IT system as a

result of increased burdens placed on our IT infrastructure or a security breach of our IT systems, the resulting disruptions could

have a material adverse effect on our business.

Global cybersecurity threats and incidents can range from uncoordinated individual attempts to gain unauthorized access to IT

systems to sophisticated and targeted measures known as advanced persistent threats directed at the Company, its products, its

customers and/or its third-party service providers, including cloud providers. These threats and incidents originate from many

sources globally and include malware that takes the form of computer viruses, ransomware, worms, Trojan horses, spyware,

adware, scareware, rogue software, and programs that act against the computer user. Techniques used to obtain unauthorized

access to, or to sabotage, IT systems or networks are constantly evolving and may not be recognized until launched against a

target. We and third parties we utilize as vendors to support our business and operations have experienced, and expect to

continue to experience, these types of threats and incidents. We and our third-party service providers have experienced and

expect to continue to experience threats from sophisticated nation-state actors and organized criminal groups who engage in

attacks (including advanced persistent threat intrusions) that add to the risks to our IT systems (including our cloud services

providers’ systems), internal networks, our customers’ systems and the information that they store and process. Our customers,

including the U.S. government, are increasingly requiring cybersecurity protections and mandating cybersecurity standards in

our products, and we may incur additional costs to comply with such demands. We deploy countermeasures to deter, prevent,

detect, respond to and mitigate these threats, including identity and access controls, data protection, vulnerability assessments,

product software designs which we believe are less susceptible to cyber-attacks, monitoring of our IT networks and systems,

maintenance of backup and protective systems and the incorporation of cybersecurity design throughout the lifecycle of our

products. Despite these efforts, the Company has experienced, and will likely continue to experience, attacks and resulting

breaches or breakdowns of the Company’s, or its third-party service providers’, databases or systems. Cybersecurity incidents,

depending on their nature and scope, have resulted, and may in the future result, in the misappropriation, destruction, corruption

or unavailability of critical data and confidential or proprietary information (our own or that of third parties) and the disruption

of business operations. Such incidents have remained, and could in the future remain, undetected for an extended period of

time, and the losses arising from such incidents could exceed our available insurance coverage for such matters. In addition,

security breaches impacting our IT systems have in certain cases resulted in, and in the future could result in, a risk of loss or

unauthorized disclosure or theft of information, which could lead to enforcement actions, litigation, regulatory or governmental

audits, investigations and possible liability.

An increasing number of our products, services and technologies, including our OpenBlue software platform, are delivered with

digital capabilities and accompanying interconnected device networks, which include sensors, data, building management

systems and advanced computing and analytics capabilities. If we are unable to manage the lifecycle cybersecurity risk in

development, deployment and operation of our digital platforms and services, they could become susceptible to cybersecurity

incidents and lead to third-party claims that our product failures have caused damages to our customers. This risk is enhanced

by the increasingly connected nature of our products and the role they play in managing building systems.

During the fourth quarter of fiscal 2023, we experienced a cybersecurity incident that disrupted portions of our internal

information technology infrastructure and applications consisting of unauthorized access by a third party, exfiltration of data

and the deployment of ransomware, which in turn caused disruptions and limitation of access to portions of our business

applications that support aspects of our operations and corporate functions. As a result of this incident, we experienced

disruptions to our normal operations which had an adverse impact on our financial performance, as discussed in Item 7,

Management’s Discussion and Analysis of Financial Condition and Results of Operations. We have and may continue to incur

significant costs in connection with the cybersecurity incident and any future cybersecurity incidents, including infrastructure

investments or remediation efforts. Further, we could experience other additional consequences in the future as a result of the

incident, including, reputational damage, exposure to legal claims or enforcement actions and fines levied by governmental

organizations, which in turn could materially and adversely affect our results of operations. In addition, limitations on our

ability to analyze and investigate the incident due to limitations on the availability of historical logs and other forensic data may

impact our ability to identify all of the impacts and root causes of the cybersecurity incident. There can be no assurance that

additional unauthorized access or cyber incidents will not occur or that we will not suffer material losses in the future.

Unauthorized access or cyber incidents could occur more frequently and on a more significant scale to those we have suffered

to date. We could also experience similar consequences as a result of future cybersecurity incidents. Other potential

consequences of future cybersecurity incidents could include the theft of intellectual property and the diminution in the value of

our investment in research, development and engineering, which in turn could materially and adversely affect our

competitiveness and results of operations.

We identified a material weakness in our internal control over financial reporting which, if not remediated

appropriately or timely, could result in the loss of investor confidence and adversely impact our business operations and

our stock price.

As a result of the cybersecurity incident experienced beginning in September 2023, and as disclosed in Part II, Item 9A of this

report, we have identified a material weakness in our internal control over financial reporting related to not maintaining

sufficient information technology (“IT”) controls to prevent or detect, on a timely basis, unauthorized access to certain of the

Company’s financial reporting systems. Accordingly, management concluded that our internal control over financial reporting

was not effective as of September 30, 2023. If we are unable to remediate the material weakness, or if we are otherwise unable

to maintain effective internal control over financial reporting, then our ability to record, process and report financial information

accurately, and to prepare financial statements within required time periods, could be adversely affected. If our financial

statements are not accurate, investors may not have a complete understanding of our operations. Likewise, if our financial

statements are not filed on a timely basis, we could be in violation of covenants contained in the agreements governing our debt

and other borrowings. We could also be subject to sanctions or investigations by the stock exchange on which our shares are

listed, the SEC or other regulatory authorities, which could result in a material adverse effect on our business. These outcomes

could subject us to litigation, civil or criminal investigations or enforcement actions requiring the expenditure of financial

resources and diversion of management time, could negatively affect investor confidence in the accuracy and completeness of

our financial statements and could also adversely impact our stock price and our access to the capital markets. Moreover, while

we are implementing measures designed to help ensure that control deficiencies contributing to the material weakness are

remediated as soon as possible, these measures will result in additional costs, including third-party expenditures engaging

security specialists and implementing certain new IT access, security and recovery measures, and such costs could adversely

affect our results of operations, financial condition and cash flows.

Data privacy, identity protection and information security compliance may require significant resources and presents

certain risks.

We collect, store, have access to and otherwise process certain confidential or sensitive data, including proprietary business

information, customer data, personal data or other information that is subject to privacy and security laws, regulations and/or

customer-imposed controls. Despite our efforts to protect such data, our business and our products may be vulnerable to

security incidents, theft, misplaced or lost data, programming errors, or errors that could potentially lead to compromising such

data, improper use of our products, systems, software solutions or networks, unauthorized access, use, disclosure, modification

or destruction of information, defective products, production downtimes and operational disruptions. During the fourth quarter

of fiscal 2023, we experienced a cybersecurity event consisting of unauthorized access, data exfiltration and deployment of

ransomware by a third party to a portion of our internal IT infrastructure. We are currently in the process of analyzing the data

accessed, exfiltrated or otherwise impacted during the cybersecurity incident. The actual or perceived risk of theft, loss,

fraudulent use or misuse of customer, employee or other data as a result of the cybersecurity incident, as well as non-

compliance with applicable industry standards or our contractual or other legal obligations or privacy and information security

policies regarding such data, could result in costs, fines, litigation or regulatory actions. We could face similar consequences in

the future if we, our suppliers, channel partners, customers or other third parties experience the actual or perceived risk of theft,

loss, fraudulent use or misuse of data, including as a result of employee error or malfeasance, or as a result of the imaging,

software, security and other products we incorporate into our products. Such an event could lead customers to select the

products and services of our competitors. Both the cybersecurity incident and similar future incidents could harm our

reputation, cause unfavorable publicity or otherwise adversely affect certain potential customers’ perception of the security and

reliability of our services as well as our credibility and reputation, which could result in lost sales.

In addition, we operate in an environment in which there are different and potentially conflicting data privacy laws in effect in

the various U.S. states and foreign jurisdictions in which we operate and we must understand and comply with each law and

standard in each of these jurisdictions while ensuring the data is secure. For example, proposed regulations restricting the use of

biometric security technology could impact the products and solutions offered by our security business. Government

enforcement actions can be costly and interrupt the regular operation of our business, and violations of data privacy laws can

result in fines, reputational damage and civil lawsuits, any of which may adversely affect our business, reputation and financial

statements.

Some of our contracts do not contain limitations of liability, and even where they do, there can be no assurance that limitations

of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and

security obligations. While we maintain general liability insurance coverage and coverage for errors or omissions, such

coverage might not be adequate or otherwise protect us from liabilities or damages with respect to claims alleging compromises

of customer data, that such coverage will continue to be available to us on acceptable terms or at all, or that such coverage will

pay future claims. The successful assertion of one or more large claims against us that exceeds our available insurance

coverage, or results in changes to our insurance policies (including premium increases or the imposition of large deductible or

co-insurance requirements), could have an adverse effect on our business.

Infringement or expiration of our intellectual property rights, or allegations that we have infringed upon the intellectual

property rights of third parties, could negatively affect us.

We rely on a combination of trademarks, trade secrets, patents, copyrights, know-how, confidentiality provisions and licensing

arrangements to establish and protect our proprietary rights. We cannot guarantee, however, that the steps we have taken to

protect our intellectual property will be adequate to prevent infringement of our rights or misappropriation or theft of our

technology, trade secrets or know-how. For example, effective patent, trademark, copyright and trade secret protection may be

unavailable or limited in some of the countries in which we operate. In addition, while we generally enter into confidentiality

agreements with our employees and third parties to protect our trade secrets, know-how, business strategy and other proprietary

information, such confidentiality agreements could be breached or otherwise may not provide meaningful protection for our

trade secrets and know-how related to the design, manufacture or operation of our products. From time to time we resort to

litigation to protect our intellectual property rights. Such proceedings can be burdensome and costly, and we may not prevail.

Further, adequate remedies may not be available in the event of an unauthorized use or disclosure of our trade secrets and

manufacturing expertise. Finally, for those products in our portfolio that rely on patent protection, once a patent has expired, the

product is generally open to competition. Products under patent protection usually generate significantly higher revenues than

those not protected by patents. If we fail to successfully enforce our intellectual property rights, our competitive position could

suffer, which could harm our business, financial condition, results of operations and cash flows.

In addition, we are, from time to time, subject to claims of intellectual property infringement by third parties, including

practicing entities and non-practicing entities. Regardless of the merit of such claims, responding to infringement claims can be

expensive and time-consuming. The litigation process is subject to inherent uncertainties, and we may not prevail in litigation

matters regardless of the merits of our position. Intellectual property lawsuits or claims may become extremely disruptive if the

plaintiffs succeed in blocking the trade of our products and services and they may have a material adverse effect on our

business, financial condition, results of operations and cash flows.

We rely on our global direct installation channel for a significant portion of our revenue. Failure to maintain and grow

the installed base resulting from direct channel sales could adversely affect our business.

Unlike many of our competitors, we rely on a direct sales channel for a substantial portion of our revenue. The direct channel

provides for the installation of fire and security solutions, and HVAC equipment manufactured by us. This represents a

significant distribution channel for our products, creates a large installed base of our fire and security solutions and HVAC

equipment, and creates opportunities for longer term service and monitoring revenue. If we are unable to maintain or grow this

installation business, whether due to changes in economic conditions, a failure to anticipate changing customer needs, a failure

to introduce innovative or technologically advanced solutions, or for any other reason, our installation revenue could decline,

which could in turn adversely impact our product pull-through and our ability to grow service and monitoring revenue.

Global climate change and related regulations could negatively affect our business.

The effects of climate change create financial risks to our business. For example, the effects of climate change could disrupt our

operations by impacting the availability and cost of materials needed for manufacturing, exacerbate existing risks to our supply

chain and increase insurance and other operating costs. These factors may impact our decisions to construct new facilities or

maintain existing facilities in areas most prone to physical climate risks. We could also face indirect financial risks passed

through the supply chain and disruptions that could result in increased prices for our products and the resources needed to

produce them.

Increased public awareness and concern regarding global climate change has resulted in more regulations designed to reduce

greenhouse gas emissions. These regulations tend to be implemented under global, national and sub-national climate objectives

or policies, and target the global warming potential (“GWP”) of refrigerants, equipment energy efficiency, and the combustion

of fossil fuels as a heating source. Many of our products consume energy and use refrigerants. Regulations which seek to reduce

greenhouse gas emissions present a risk to our global products business, predominantly our HVAC business, if we do not

adequately prepare our product portfolio. As a result, we have and may be in the future required to make increased research and

development and other capital expenditures to improve our product portfolio in order to meet new regulations and standards.

Further, our customers and the markets we serve may impose emissions or other environmental standards through regulation,

market-based emissions policies or consumer preference that we may not be able to timely meet due to the required level of

capital investment or technological advancement. While we have been committed to continuous improvements to our product

portfolio to meet and exceed anticipated regulations and preferences, there can be no assurance that our commitments will be

successful, that our products will be accepted by the market, that proposed regulation or deregulation will not have a negative

competitive impact or that economic returns will reflect our investments in new product development.

We are subject to emerging and competing climate regulations. There continues to be a lack of consistent climate legislation,

which creates economic and regulatory uncertainty. Such regulatory uncertainty extends to incentives, which if discontinued,

could adversely impact the demand for energy efficient buildings, and could increase costs of compliance. These factors may

impact the demand for our products, obsolescence of our products and our results of operations.

Failure to achieve our public sustainability commitments could negatively affect our reputation and business.

As of the date of this filing, we have made several public commitments regarding our intended reduction of carbon emissions,

including commitments to achieve net zero carbon emissions by 2040 and the establishment of science-based targets to reduce

carbon emissions from our operations and the operations of our customers. Although we intend to meet these commitments, we

may be required to expend significant resources to do so, which could increase our operational costs. Further, there can be no

assurance of the extent to which any of our commitments will be achieved, or that any future investments we make in

furtherance of achieving such targets and goals will meet investor expectations or any binding or non-binding legal standards

regarding sustainability performance. Moreover, we may determine that it is in the best interest of our company and our

shareholders to prioritize other business, social, governance or sustainable investments over the achievement of our current

commitments based on economic, regulatory and social factors, business strategy or pressure from investors, activist groups or

other stakeholders. If we are unable to meet these commitments, then we could incur adverse publicity and reaction from

investors, activist groups and other stakeholders, which could adversely impact the perception of our brand and our products

and services by current and potential customers, as well as investors, which could in turn adversely impact our financial

condition and results of operations.

The ability of suppliers to deliver raw materials, parts and components to our manufacturing facilities, and our ability

to manufacture and deliver services without disruption, could affect our results of operations.

We use a wide range of materials (primarily steel, copper and aluminum) and components (including semiconductors and other

electronic components) in the global production of our products, which come from numerous suppliers around the world.

Because not all of our business arrangements provide for guaranteed supply and some key parts may be available only from a

single supplier or a limited group of suppliers, we are subject to supply and pricing risk. Our operations and those of our

suppliers are subject to disruption for a variety of reasons, including supplier plant shutdowns or slowdowns, transportation

delays, work stoppages, labor relations, labor shortages, global geopolitical instability, price inflation, governmental regulatory

and enforcement actions, intellectual property claims against suppliers, financial issues such as supplier bankruptcy,

information technology failures, and hazards such as fire, earthquakes, flooding, or other natural disasters. For example, during

2022 and 2023 we were impacted by the following supply chain issues, due to economic, political and other factors largely

beyond our control: increased input material costs and component shortages; supply chain disruptions and delays and cost

inflation. In addition, some of our subcontractors have experienced supply chain and labor disruptions, which have and could in

the future impact our ability to timely complete projects and convert our backlog. Such disruptions have and could in the future

interrupt our ability to manufacture or obtain certain products and components, thereby adversely impacting our ability to

provide products to customers, convert our backlog into revenue and realize expected profit margins. We could experience the

reoccurrence of similar or new disruptions in the future, the effect of which will depend on our ability to successfully mitigate

and offset the impact of these disruptions. Any significant disruption could materially and adversely affect our business,

financial condition, results of operations and cash flows.

Material supply shortages and delays in deliveries, along with other factors such as price inflation, can also result in increased

pricing. While many of our customers permit quarterly or other periodic adjustments to pricing based on changes in component

prices and other factors, we may bear the risk of price increases that occur between any such repricing or, if such repricing is

not permitted, during the balance of the term of the particular customer contract. The inability to timely convert our backlog due

to supply chain disruptions subjects us to pricing risk due to cost inflation occurring between the generation of backlog and its

conversion into revenue. If we are unable to effectively manage the impacts of price inflation and timely convert our backlog,

our results of operations, financial condition and cash flows could materially and adversely be affected.

Our business success depends on attracting and retaining qualified personnel.

Our ability to sustain and grow our business requires us to hire, retain and develop a high-performance, customer-centric and

diverse management team and workforce. Continuous efficient and timely customer service, customer support and customer

intimacy are essential to enabling customer loyalty and driving our financial results. Our growth strategies require that we pivot

to new talent capability investments and build the workforce of the future, with an emphasis on developing skills in digital and

consultative, outcome-based selling. Failure to ensure that we have the leadership and talent capacity with the necessary skillset

and experience could impede our ability to deliver our growth objectives, execute our strategic plan and effectively transition

our leadership. Any unplanned turnover or inability to attract and retain key employees could have a negative effect on our

results of operations.

Our ability to convert backlog into revenue requires us to maintain a labor force that is sufficiently large enough to support our

manufacturing operations to meet customer demand, as well as provide on-site services and project support for our customers.

This includes recruiting, hiring and retaining skilled trade workers to support our direct channel field businesses. We have in

the past, and could in the future, experience shortages for skilled or unskilled labor. The impacts of such labor shortages could

limit our ability to convert backlog into revenue and negatively impact our results of operations.

A material disruption of our operations due to catastrophic or geopolitical events, particularly at our monitoring and/or

manufacturing facilities, could materially and adversely affect our business.

If our operations, particularly at our monitoring facilities and/or manufacturing facilities, were to be disrupted as a result of

significant equipment failures, natural disasters, pandemics, climate change, cybersecurity incidents, power outages, fires,

explosions, abrupt political change, armed conflict, terrorism, sabotage, adverse weather conditions, public health crises, labor

disputes, labor shortages or other reasons, we may be unable to effectively respond to alarm signals, fill customer orders,

convert our backlog, collect revenue and otherwise meet obligations to or demand from our customers, which could adversely

affect our financial performance. These events may also cause us to experience increased costs and reduced productivity. For

example, our recent cybersecurity incident caused disruptions to our operations, adversely affecting our financial performance.

For more information on the impact of the cybersecurity incident, see Item 7, Management’s Discussion and Analysis of

Financial Condition and Results of Operations.

The occurrence or reoccurrence of regional epidemics or a global pandemic, such as COVID-19, may adversely affect our

operations, financial condition, and results of operations. The extent to which global pandemics impact our business going

forward will depend on factors such as the duration and scope of the pandemic; governmental, business, and individuals' actions

in response to the pandemic; and the impact on economic activity, including the possibility of recession or financial market

instability. Measures to contain a global pandemic may intensify other risks described in these Risk Factors.

Interruptions to production could increase our costs and reduce our sales. Any interruption in production capability could

require us to make substantial capital expenditures or purchase alternative material at higher costs to fill customer orders, which

could negatively affect our profitability and financial condition. We maintain property damage insurance that we believe to be

adequate to provide for reconstruction of facilities and equipment, cybersecurity insurance to mitigate losses resulting from

cybersecurity incidents, as well as business interruption insurance to mitigate losses resulting from significant production

interruption or shutdown caused by an insured loss. However, any recovery under our insurance policies may not offset the lost

sales or increased costs that may be experienced during the disruption of operations, which could adversely affect our business,

financial condition, results of operations and cash flows.

Our business may be adversely affected by work stoppages, union negotiations, labor disputes and other matters

associated with our labor force.

We employ approximately 100,000 people worldwide. Approximately 22% of these employees are covered by collective

bargaining agreements or works councils. Although we believe that our relations with the labor unions and works councils that

represent our employees are generally good and we have experienced no material strikes or work stoppages recently, no

assurances can be made that we will not experience in the future these and other types of conflicts with labor unions, works

councils, other groups representing employees or our employees generally, or that any future negotiations with our labor unions

will not result in significant increases in our cost of labor. Additionally, a work stoppage at one of our suppliers could

materially and adversely affect our operations if an alternative source of supply were not readily available. Work stoppages by

employees of our customers could also result in reduced demand for our products.

Risks Related to Macroeconomic and Political Conditions

Some of the industries in which we operate are cyclical and, accordingly, demand for our products and services could be

adversely affected by downturns in these industries.

Much of the demand for installation of our products and solutions is driven by commercial, institutional, industrial, data center,

governmental and residential construction, industrial facility expansion, retrofit activity, maintenance projects and other capital

investments in buildings within the sectors that we serve. Construction and other capital investment projects are heavily

dependent on general economic conditions, localized demand for real estate and availability of credit, public funding or other

sources of financing. Some of the real estate markets we serve are prone to significant fluctuations in supply and demand. In

addition, most real estate developers rely heavily on project financing in order to initiate and complete projects. Declines in real

estate values and increases in prevailing interest rates could lead to significant reductions in the demand for and availability of

project financing, even in markets where demand may otherwise be sufficient to support new construction. These factors could

in turn temper demand for new building products and solutions and have a corresponding impact on our financial condition,

results of operations and cash flows.

Levels of industrial capital expenditures for facility expansions and maintenance are dependent on general economic conditions,

economic conditions within specific industries we serve, expectations of future market behavior and available financing. The

businesses of many of our industrial customers are to varying degrees cyclical and have experienced periodic downturns.

During such economic downturns, customers in these industries tend to delay major capital projects, including greenfield

construction, maintenance projects and upgrades. Additionally, demand for our products and services may be affected by

volatility in energy, component and commodity prices, commodity and component availability and fluctuating demand

forecasts, as our customers may be more conservative in their capital planning, which may reduce demand for our products and

services as projects are postponed or cancelled. Increases in prevailing interest rates or disruptions in financial markets and

banking systems could make credit and capital markets difficult for our customers to access and could significantly raise the

cost of new debt for our customers. Any difficulty in accessing these markets and the increased associated costs can have a

negative effect on investment in large capital projects, including necessary maintenance and upgrades, even during periods of

favorable end-market conditions.

Many of our customers inside and outside of the industrial and commercial sectors, including governmental and institutional

customers, have experienced budgetary constraints as sources of revenue have been negatively impacted by adverse or stagnant

economic conditions, including continued increases in interest rates. These budgetary constraints have in the past, and may in

the future, reduce demand for our products and services among governmental and institutional customers.

Reduced demand for our products and services could result in the delay or cancellation of existing orders or lead to excess

capacity, which unfavorably impacts our absorption of fixed costs. This reduced demand may also erode average selling prices

in the industries we serve. Any of these results could materially and adversely affect our business, financial condition, results of

operations and cash flows.

Economic, political, credit and capital market conditions could adversely affect our financial performance, our ability to

grow or sustain our business and our ability to access the capital markets.

We compete around the world in various geographic regions and product markets. Global economic and political conditions

affect each of our primary businesses and the businesses of our customers and suppliers. Recessions, economic downturns,

price instability, inflation, slowing economic growth and social and political instability in the industries and/or markets where

we compete could negatively affect our revenues and financial performance in future periods, result in future restructuring

charges, and adversely impact our ability to grow or sustain our business. For example, current macroeconomic and political

instability caused by rising interest rates, global supply chain disruptions, inflation, ongoing conflicts between Russia and

Ukraine as well as Israel and Hamas, geopolitical tensions and the strengthening of the U.S. dollar, have and could continue to

adversely impact our results of operations. Other potential consequences arising from the conflicts, the further escalation of

geopolitical tensions globally and their effect on our business and results of operations as well as the global economy, cannot be

predicted. This may include further economic sanctions, embargoes, regional instability, geopolitical shifts, regional or

international expansion of current conflicts, energy instability, potential retaliatory action by governments, supply chain

disruptions, disruption to local markets, increased cybersecurity attacks against us, our third-party service providers and

customers, collateral consequences from cyber conflicts between nation-states or other politically motivated actors targeting

critical technology infrastructure. and increased tensions among countries in which we operate. Our failure to adequately react

to these and other political and economic conditions could materially and adversely affect our results of operations, financial

condition or liquidity.

The capital and credit markets provide us with liquidity to operate and grow our business beyond the liquidity that operating

cash flows provide. A worldwide economic downturn and/or disruption of the credit markets could reduce our access to capital

necessary for our operations and executing our strategic plan. In addition, we have experienced, and expect to continue to

experience, increased capital costs due to increases in global interest rates. If our access to capital were to become significantly

constrained, or if costs of capital increased significantly due to increased interest rates, lowered credit ratings, prevailing

industry conditions, the volatility of the capital markets or other factors; then our financial condition, results of operations and

cash flows could be adversely affected.

Risks associated with our non-U.S. operations could adversely affect our business, financial condition and results of

operations.

We have significant operations in a number of countries outside the U.S., some of which are located in emerging markets.

Long-term economic and geopolitical uncertainty in any of the regions of the world in which we operate, such as Asia, South

America, the Middle East, Europe and emerging markets, could result in the disruption of markets and negatively affect cash

flows from our operations to cover our capital needs and debt service requirements.

In addition, as a result of our global presence, a significant portion of our revenues and expenses is denominated in currencies

other than the U.S. dollar. We are therefore subject to non-U.S. currency risks and non-U.S. exchange exposure. While we

employ financial instruments to hedge some of our transactional foreign exchange exposure, these activities do not insulate us

completely from those exposures. Exchange rates can be volatile and a substantial weakening of foreign currencies against the

U.S. dollar could reduce our profit margin in various locations outside of the U.S. and adversely impact the comparability of

results from period to period. During each of 2022 and 2023, we experienced a reduction in revenue and profits as a result of

the significant strengthening of the U.S. dollar against foreign currencies. The continued strength of the U.S. dollar could

continue to adversely impact our revenue and profit in non-U.S. jurisdictions.

There are other risks that are inherent in our non-U.S. operations, including the potential for changes in socio-economic

conditions, laws and regulations, including anti-trust, labor and environmental laws, and monetary and fiscal policies; the

ability to enforce rights, collect revenues and protect assets in foreign jurisdictions; protectionist measures that may prohibit

acquisitions or joint ventures, or impact trade volumes; unsettled or unstable political conditions; international conflict;

government-imposed plant or other operational shutdowns; backlash from foreign labor organizations related to our

restructuring actions; corruption; natural and man-made disasters, hazards and losses; violence, civil and labor unrest, and

possible terrorist attacks. These and other factors may have a material adverse effect on our business and results of operations.

Changes in U.S. or foreign trade policies and other factors beyond our control may adversely impact our business and

operating results.

Geopolitical tensions and trade disputes can disrupt supply chains and increase the cost of our products. This could cause our

products to be more expensive for customers, which could reduce the demand for or attractiveness of such products. In addition,

a geopolitical conflict in a region where we operate could disrupt our ability to conduct business operations in that region.

Countries also could adopt restrictive trade measures, such as laws and regulations concerning investments and limitations on

foreign ownership of businesses, taxation, foreign exchange controls, capital controls, employment regulations and the

repatriation of earnings and controls on imports or exports of goods, technology, or data, any of which could adversely affect

our operations and supply chain and limit our ability to offer our products and services as intended. Changes in laws or policies

governing the terms of foreign trade, and in particular increased trade restrictions, tariffs or taxes on imports from countries

where we manufacture products or from where we import products or raw materials (either directly or through our suppliers)

could have an impact on our competitive position, business operations and financial results. For example, the U.S., China and

other countries continue to implement restrictive trade actions, including tariffs, export controls, sanctions, legislation favoring

domestic investment and other actions impacting the import and export of goods, foreign investment and foreign operations in

jurisdictions in which we operate. These kinds of restrictions could be adopted with little to no advanced notice, and we may

not be able to effectively mitigate the adverse impacts from such measures. Political uncertainty surrounding trade or other

international disputes also could have a negative impact on customer confidence and willingness to spend money, which could

impair our future growth. Any of these events could increase the cost of our products, create disruptions to our supply chain and

impair our ability to effectively operate and compete in the countries where we do business.

Volatility in commodity prices may adversely affect our results of operations.

Increases in commodity costs can negatively impact the profitability of orders in backlog as prices on such orders are typically

fixed; therefore, in the short-term, our ability to adjust for changes in certain commodity prices is limited. In these cases, if we

are not able to recover commodity cost increases through price increases to our customers on new orders, then such increases

will have an adverse effect on our results of operations. In cases where commodity price risk cannot be naturally offset or

hedged through supply-based fixed-price contracts, we use commodity hedge contracts to minimize overall price risk associated

with our anticipated commodity purchases. Unfavorability in our hedging programs during a period of declining commodity

prices could result in lower margins as we reduce prices to match the market on a fixed commodity cost level. Additionally, to

the extent we do not or are unable to hedge certain commodities and the commodity prices substantially increase, such increases

will have an adverse effect on our results of operations.

During fiscal 2023, we experienced increased commodity costs as a result of global macroeconomic trends, including global

price inflation, supply chain disruption and the Russia/Ukraine conflict. We could experience further cost fluctuations in the

future, which could negatively impact our results of operations to the extent we are unable to successfully mitigate and offset

the impact of increased costs.

Risks Related to Government Regulations

Our businesses operate in regulated industries and are subject to a variety of complex and continually changing laws

and regulations.

Our operations and employees are subject to various U.S. federal, state and local licensing laws, codes and standards and

similar foreign laws, codes, standards and regulations. Changes in laws or regulations could require us to change the way we

operate or to utilize resources to maintain compliance, which could increase costs or otherwise disrupt operations. In addition,

failure to comply with any applicable laws or regulations could result in substantial fines or revocation of our operating permits

and licenses. Competition or other regulatory investigations can continue for several years, be costly to defend and can result in

substantial fines. If laws and regulations were to change or if we or our products failed to comply, our business, financial

condition and results of operations could be adversely affected.

Due to the international scope of our operations, the system of laws and regulations to which we are subject is complex and

includes regulations issued by the U.S. Customs and Border Protection, the U.S. Department of Commerce's Bureau of Industry

and Security, the U.S. Treasury Department's Office of Foreign Assets Control and various non U.S. governmental agencies,

including applicable export controls, anti-trust, customs, currency exchange control and transfer pricing regulations, laws

regulating the foreign ownership of assets, and laws governing certain materials that may be in our products. No assurances can

be made that we will continue to be found to be operating in compliance with, or be able to detect violations of, any such laws

or regulations.

We are also subject to a complex network of tax laws and tax treaties that impact our effective tax rate. For more information

on risks related to tax regulation, see “Risks Related to Tax Matters” below.

We cannot predict the nature, scope or effect of future regulatory requirements to which our operations might be subject or the

manner in which existing laws might be administered or interpreted.

We are subject to requirements relating to environmental and safety regulations and environmental remediation

matters which could adversely affect our business, results of operation and reputation.

We are subject to numerous federal, state and local environmental laws and regulations governing, among other things, solid

and hazardous waste storage, treatment and disposal, and remediation of releases of hazardous materials. There are significant

capital, operating and other costs associated with compliance with these environmental laws and regulations. Environmental

laws and regulations may become more stringent in the future, which could increase costs of compliance, decrease demand for

our products, create reputational harm or require us to manufacture with alternative technologies and materials. For example,

our subsidiary Tyco Fire Protection Products announced it will discontinue the production and sale of fluorinated firefighting

foams by June 2024, including Aqueous Film-Forming Foam ("AFFF") and related products, and will transition to non-

fluorinated foam alternatives.

Federal, state and local authorities also regulate a variety of matters, including, but not limited to, health, safety laws governing

employee injuries, and permitting requirements in addition to the environmental matters discussed above. If we are unable to

adequately comply with applicable health and safety regulations and provide our employees with a safe working environment,

we may be subject to litigation and regulatory action, in addition to negatively impacting our ability to attract and retain talented

employees. New legislation and regulations may require us to make material changes to our operations, resulting in significant

increases to the cost of production. Additionally, violations of environmental, health and safety laws are subject to civil, and, in

some cases, criminal sanctions. As a result of these various uncertainties, we may incur unexpected interruptions to operations,

fines, penalties or other reductions in income which could adversely impact our business, financial condition and results of

operations.

We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and

similar anti-bribery laws around the world.

The U.S. Foreign Corrupt Practices Act (the "FCPA"), the U.K. Bribery Act and similar anti-bribery laws in other jurisdictions

generally prohibit companies and their intermediaries from making improper payments to government officials or other persons

for the purpose of obtaining or retaining business, and require that companies maintain accurate books and records. Our policies

mandate compliance with these laws. We operate in many parts of the world that are recognized as having governmental and

commercial corruption and local customs and practices that can be inconsistent with anti-bribery laws. We cannot provide

assurance that our internal control policies and procedures will preclude reckless or criminal acts committed by our employees

or third-party intermediaries. Where we believe or have reason to believe that our employees or agents have or may have

violated applicable anti-corruption laws, or if we are subject to allegations of any such violations, we have and will investigate

the allegations and from time to time as necessary may engage outside counsel to investigate the relevant facts and

circumstances, which can be expensive and require significant time and attention from senior management. Violations of these

laws may result in criminal or civil sanctions, which could disrupt our business and result in a material adverse effect on our

reputation, business, financial condition, results of operations and cash flows. In addition, we could be subject to commercial

impacts such as lost revenue from customers who decline to do business with us as a result of such compliance matters, which

also could have a material adverse effect on our reputation, business, financial condition, results of operations and cash flows.

We are subject to risks arising from regulations applicable to companies doing business with the U.S. government.

Our customers include many U.S. federal, state and local government authorities. Doing business with the U.S. federal, state

and local governments subjects us to certain particular risks, including dependence on the level of government spending and

compliance with and changes in governmental procurement and security regulations. Agreements relating to the sale of

products to government entities may be subject to termination, reduction or modification, either at the convenience of the

government or for failure to perform under the applicable contract. We are subject to potential government investigations of

business practices and compliance with government procurement and security regulations, which can be expensive and

burdensome. If we were charged with wrongdoing as a result of an investigation, we could be suspended from bidding on or

receiving awards of new government contracts, which could have a material adverse effect on our results of operations. In

addition, various U.S. federal and state legislative proposals have been made in the past that would deny governmental

contracts to U.S. companies that have moved their corporate location abroad. We are unable to predict the likelihood that, or

final form in which, any such proposed legislation might become law, the nature of regulations that may be promulgated under

any future legislative enactments, or the effect such enactments and increased regulatory scrutiny may have on our business.

Risks Related to Litigation

Potential liability for environmental contamination could result in substantial costs.

We have projects underway at multiple current and former manufacturing and testing facilities to investigate and remediate

environmental contamination resulting from past operations by us or by other businesses that previously owned or used the

properties, including our Fire Technology Center and Stanton Street manufacturing facility located in Marinette, Wisconsin.

These projects relate to a variety of activities, including arsenic, solvent, oil, metal, lead, PFOS, PFOA and/or other per- and

polyfluorinated substances ("PFAS") and other hazardous substance contamination cleanup; and structure decontamination and

demolition, including asbestos abatement. Governments in the United States and internationally have increasingly been

regulating PFAS, which is contained in certain of the Company's firefighting foam products. These regulations include

declining emission standards and limits set as to the presence of certain compounds. Because of uncertainties associated with

environmental regulation and environmental remediation activities at sites where we may be liable, future expenses that we may

incur to remediate identified sites and resolve outstanding litigation could be considerably higher than the current accrued

liability on our consolidated statements of financial position, which could have a material adverse effect on our business, results

of operations and cash flows.

In addition, we have been named, along with others, in a number of class action and other lawsuits relating to the use of fire-

fighting foam products by the U.S. Department of Defense, the U.S. military and others for fire suppression purposes and

related training exercises. It is difficult to predict the outcome or ultimate financial exposure, if any, represented by these

matters, and there can be no assurance that any such exposure will not be material. Such claims may also negatively affect our

reputation. See Note 21, “Commitments and Contingencies,” of the notes to consolidated financial statements for additional

information on these matters.

We are party to asbestos-related product litigation that could adversely affect our financial condition, results of

operations and cash flows.

We and certain of our subsidiaries, along with numerous other third parties, are named as defendants in personal injury lawsuits

based on alleged exposure to asbestos containing materials. These cases typically involve product liability claims based

primarily on allegations of manufacture, sale or distribution of industrial products that either contained asbestos or were used

with asbestos containing components. We cannot predict with certainty the extent to which we will be successful in litigating or

otherwise resolving lawsuits on satisfactory terms in the future and we continue to evaluate different strategies related to

asbestos claims filed against us including entity restructuring and judicial relief. Unfavorable rulings, judgments or settlement

terms could have a material adverse impact on our business and financial condition, results of operations and cash flows. See

Note 21, “Commitments and Contingencies,” of the notes to consolidated financial statements for additional information on

these matters.

Legal proceedings in which we are, or may be, a party may adversely affect us.

We are currently, and may in the future, become subject to legal proceedings and commercial or contractual disputes. These are

typically claims that arise in the normal course of business including, without limitation, commercial or contractual disputes

with our suppliers or customers, intellectual property matters, third party liability, including product liability claims, and

employment claims. In addition, we may be exposed to greater risks of liability for employee acts or omissions, or system

failure, in our fire and security businesses than may not be inherent in other businesses. In particular, because many of our fire

and security products and services are intended to protect lives and real and personal property, we may have greater exposure to

litigation risks than other businesses. The nature of the services we provide exposes us to the risks that we may be held liable

for employee acts or omissions or system failures. As a result, such employee acts or omissions or system failures could have a

material adverse effect on our business, financial condition, results of operations and cash flows.

Risks Relating to Strategic Transactions

We may be unable to successfully execute or effectively integrate acquisitions or joint ventures.

We expect acquisitions of businesses and assets, as well as joint ventures (or other strategic arrangements), to play a role in our

future growth and our ability to build capabilities in our products and services. We cannot be certain that we will be able to

identify attractive acquisition or joint venture targets, obtain financing for acquisitions on satisfactory terms, successfully

acquire identified targets or form joint ventures, or manage the timing of acquisitions with capital obligations across our

businesses. Competition for acquisition opportunities may rise, thereby increasing our costs of making acquisitions or causing

us to refrain from making further acquisitions.

Acquisitions and investments may involve significant cash expenditures, debt incurrences, equity issuances, operating losses

and expenses and may be dilutive to earnings. Acquisitions involve numerous other risks, including: the diversion of

management attention to integration matters; difficulties in integrating operations and systems; challenges in conforming

standards, controls, procedures and accounting and other policies, business cultures and compensation structures; difficulties in

assimilating employees and in attracting and retaining key personnel; challenges in successfully integrating and operating

businesses with different characteristics than our current core businesses; challenges in keeping existing customers and

obtaining new customers; difficulties in achieving anticipated cost savings, synergies, business opportunities and growth

prospects; contingent liabilities (including contingent tax liabilities and earn-out obligations) that are larger than expected; and

potential unknown liabilities, adverse consequences and unforeseen increased expenses associated with acquired companies.

The goodwill and intangible assets recorded with past acquisitions were significant and impairment of such assets could result

in a material adverse impact on our financial condition and results of operations.

Many of these factors are outside of our control, and any one of them could result in increased costs, decreased expected

revenues and diversion of management time and energy, which could materially and adversely impact our business, financial

condition and results of operations.

Risks associated with joint venture investments may adversely affect our business and financial results.

We have entered into several joint ventures and we may enter into additional joint ventures in the future. Our joint venture

partners may at any time have economic, business or legal interests or goals that are inconsistent with our goals or with the

goals of the joint venture. In addition, we may compete against our joint venture partners in certain of our markets.

Disagreements with our business partners may impede our ability to maximize the benefits of our partnerships. Our joint

venture arrangements may require us, among other matters, to pay certain costs or to make certain capital investments or to seek

our joint venture partner’s consent to take certain actions. In addition, our joint venture partners may be unable or unwilling to

meet their economic or other obligations under the operative documents, and we may be required to either fulfill those

obligations alone to ensure the ongoing success of a joint venture or to dissolve and liquidate a joint venture. These risks could

result in a material adverse effect on our business and financial results.

Divestitures of some of our businesses or product lines may materially adversely affect our financial condition, results of

operations or cash flows.

We continually evaluate the performance and strategic fit of all of our businesses and may sell businesses or product lines.

Divestitures involve risks, including difficulties in the separation of operations, services, products and personnel, the diversion

of management's attention from other business concerns, the disruption of our business, the potential loss of key employees and

the retention of uncertain environmental or other contingent liabilities related to the divested business. Some divestitures may

be dilutive to earnings. In addition, divestitures may result in significant asset impairment charges, including those related to

goodwill and other intangible assets, which could have a material adverse effect on our financial condition and results of

operations. In the event we are unable to successfully divest a business or product line, we may be forced to wind down such

business or product line, which could materially and adversely affect our results of operations and financial condition. We

cannot assure you that we will be successful in managing these or any other significant risks that we encounter in divesting a

business or product line, and any divestiture we undertake could materially and adversely affect our business, financial

condition, results of operations and cash flows, and may also result in a diversion of management attention, operational

difficulties and losses.

Risks Related to Tax Matters

Future potential changes to the tax laws could adversely affect us and our affiliates.

Legislative and regulatory action may be taken in the U.S. and other jurisdictions in which we operate, which, if ultimately

enacted, could override tax treaties upon which we rely, or broaden the circumstances under which we would be considered a

U.S. resident, each of which could materially and adversely affect our effective tax rate. We cannot predict the outcome of any

specific legislative or regulatory proposals and such changes could have a prospective or retroactive application. However, if

proposals were enacted that had the effect of disregarding our incorporation in Ireland or limiting Johnson Controls

International plc’s ability, as an Irish company, to take advantage of tax treaties with the U.S., we could be subject to increased

taxation, potentially significant expense, and/or other adverse tax consequences.

The U.S. enacted the Inflation Reduction Act of 2022 (“IRA”) in August 2022, which, among other sections, 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 will first apply to us in fiscal 2024. We do not expect the IRA to have a material impact

on our effective tax rate, however, it is possible that the U.S. Congress could advance other tax legislation proposals in the

future that could have a material impact on our tax rate. In addition, in October 2021, the Organization for Economic Co-

operation and Development ("OECD")/G20 inclusive framework on Base Erosion and Profit Shifting (the Inclusive

Framework) published a statement updating and finalizing the key components of a two-pillar plan on global tax reform which

has now been agreed upon by the majority of OECD members. Pillar One allows countries to reallocate a portion of residual

profits earned by multinational enterprises ("MNE"), with an annual global revenue exceeding €20 billion and a profit margin

over 10%, to other market jurisdictions. The adoption of Pillar One and its potential effective date remain uncertain. Pillar Two

requires MNEs with an annual global revenue exceeding €750 million to pay a global minimum tax of 15%. On December 15,

2022, the Council of the EU formally adopted Directive (EU) 2022/2523 (the “Pillar Two Directive”) to achieve a coordinated

implementation of Pillar Two in EU Member States consistent with EU law. On October 19, 2023, the Irish Minster of Finance

published Irish Finance (No.2) Bill 2023, which includes implementation of the 15% Pillar Two global minimum tax. The bill,

subject to amendment during the legislative process, is expected to be signed into law by late December. The Pillar Two

legislation is anticipated to be effective for our fiscal year beginning October 1, 2024. We are continuing to evaluate the

potential impact on future periods of the Pillar Two Framework, pending legislative adoption by individual countries, as such

changes could result in an increase in our effective tax rate.

Future potential changes to the U.S. tax laws could result in us being treated as a U.S. corporation for U.S. federal tax

purposes, and the Internal Revenue Service ("IRS") may not agree that we should be treated as a non-U.S. corporation

for U.S. federal tax purposes.

Because Johnson Controls International plc is organized under the laws of Ireland, it would generally be classified as a foreign

corporation under the general rule that a corporation is considered tax resident in the jurisdiction of its organization or

incorporation for U.S. federal income tax purposes. However, Section 7874 of the Code ("Section 7874") provides an exception

to this general rule under which a non-U.S. incorporated entity may, in certain circumstances, be treated as a U.S. corporation

for U.S. federal tax purposes. The IRS may assert that, as a result of the Merger, Johnson Controls International plc should be

treated as a U.S. corporation (and, therefore, a U.S. tax resident) for U.S. federal income tax purposes pursuant to Section 7874

of the Internal Revenue Code. The IRS may also assert that the ability of our U.S. affiliates to utilize U.S. tax attributes, such as

net operating losses and certain tax credits, to offset U.S. taxable income resulting from certain transactions may be limited

under Section 7874. The application of these rules could result in significant additional U.S. tax liability. In addition, a

retroactive change to U.S. tax laws in this area could change the tax classification of Johnson Controls International plc. If it

were to be treated as a U.S. corporation for federal tax purposes, we could be subject to substantially greater U.S. tax liability

than currently contemplated as a non-U.S. corporation.

Based on the terms of the Merger, we currently expect that Section 7874 does not apply to us or our affiliates as a result of the

Merger. However, determining the applicability of Section 7874 is complex and is subject to factual and legal uncertainties.

Thus, there can be no assurance that the IRS will agree with the position that Johnson Controls International plc should not be

treated as a U.S. corporation for U.S. federal tax purposes or that Section 7874 does not otherwise apply.

Changes to the U.S. model income tax treaty could adversely affect us.

On February 17, 2016, the U.S. Treasury released a revised U.S. model income tax convention (the "new model"), which is the

baseline text used by the U.S. Treasury to negotiate tax treaties. If any or all of the modifications to the model treaty are

adopted in the main jurisdictions in which we do business, they could, among other things, cause double taxation, increase audit

risk and substantially increase our worldwide tax liability. We cannot predict the outcome of any specific modifications to the

model treaty, and we cannot provide assurance that any such modifications will not apply to us.

Negative or unexpected tax consequences could adversely affect our results of operations.

Adverse changes in the underlying profitability and financial outlook of our operations in several jurisdictions could lead to

additional changes in our valuation allowances against deferred tax assets and other tax reserves on our statement of financial

position, and the future sale of certain businesses could potentially result in the reversal of outside basis differences that could

adversely affect our results of operations and cash flows. Additionally, changes in tax laws in the U.S., Ireland or in other

countries where we have significant operations could materially affect deferred tax assets and liabilities on our consolidated

statements of financial position and our income tax provision in our consolidated statements of income.

We are also subject to tax audits by governmental authorities. Negative unexpected results from one or more such tax audits

could adversely affect our results of operations.

Risks Relating to Our Jurisdiction of Incorporation

Irish law differs from the laws in effect in the U.S. and may afford less protection to holders of our securities.

It may not be possible to enforce court judgments obtained in the U.S. against us in Ireland based on the civil liability

provisions of the U.S. federal or state securities laws. In addition, there is some uncertainty as to whether the courts of Ireland

would recognize or enforce judgments of U.S. courts obtained against us or our directors or officers based on the civil liabilities

provisions of the U.S. federal or state securities laws or hear actions against us or those persons based on those laws. We have

been advised that the U.S. currently does not have a treaty with Ireland providing for the reciprocal recognition and

enforcement of judgments in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by

any U.S. federal or state court based on civil liability, whether or not based solely on U.S. federal or state securities laws, would

not automatically be enforceable in Ireland.

As an Irish company, Johnson Controls is governed by the Irish Companies Acts, which differ in some material respects from

laws generally applicable to U.S. corporations and shareholders, including, among others, differences relating to interested

director and officer transactions and shareholder lawsuits. Likewise, the duties of directors and officers of an Irish company

generally are owed to the company only. Shareholders of Irish companies generally do not have a personal right of action

against directors or officers of the company and may exercise such rights of action on behalf of the company only in limited

circumstances. Accordingly, holders of Johnson Controls International plc securities may have more difficulty protecting their

interests than would holders of securities of a corporation incorporated in a jurisdiction of the U.S.

Transfers of Johnson Controls ordinary shares may be subject to Irish stamp duty.

For the majority of transfers of Johnson Controls ordinary shares, there is no Irish stamp duty. However, Irish stamp duty is

payable for certain share transfers. A transfer of Johnson Controls ordinary shares from a seller who holds shares beneficially

(i.e., through the Depository Trust Company ("DTC")) to a buyer who holds the acquired shares beneficially is not subject to

Irish stamp duty (unless the transfer involves a change in the nominee that is the record holder of the transferred shares). A

transfer of Johnson Controls ordinary shares by a seller who holds shares directly (i.e., not through DTC) to any buyer, or by a

seller who holds the shares beneficially to a buyer who holds the acquired shares directly, may be subject to Irish stamp duty

(currently at the rate of 1% of the price paid or the market value of the shares acquired, if higher) payable by the buyer. A

shareholder who directly holds shares may transfer those shares into his or her own broker account to be held through DTC

without giving rise to Irish stamp duty provided that the shareholder has confirmed to Johnson Controls transfer agent that there

is no change in the ultimate beneficial ownership of the shares as a result of the transfer and, at the time of the transfer, there is

no agreement in place for a sale of the shares.

We currently intend to pay, or cause one of our affiliates to pay, stamp duty in connection with share transfers made in the

ordinary course of trading by a seller who holds shares directly to a buyer who holds the acquired shares beneficially. In other

cases, Johnson Controls may, in its absolute discretion, pay or cause one of its affiliates to pay any stamp duty. Johnson

Controls Memorandum and Articles of Association provide that, in the event of any such payment, Johnson Controls (i) may

seek reimbursement from the buyer, (ii) may have a lien against the Johnson Controls ordinary shares acquired by such buyer

and any dividends paid on such shares and (iii) may set-off the amount of the stamp duty against future dividends on such

shares. Parties to a share transfer may assume that any stamp duty arising in respect of a transaction in Johnson Controls

ordinary shares has been paid unless one or both of such parties is otherwise notified by Johnson Controls.

Dividends paid by us may be subject to Irish dividend withholding tax.

In certain circumstances, as an Irish tax resident company, we will be required to deduct Irish dividend withholding tax

(currently at the rate of 25%) from dividends paid to our shareholders. Shareholders that are residents in the U.S., European

Union countries (other than Ireland) or other countries with which Ireland has signed a tax treaty (whether the treaty has been

ratified or not) generally should not be subject to Irish withholding tax so long as the shareholder has provided certain Irish

dividend withholding tax forms. However, some shareholders may be subject to withholding tax, which could adversely affect

the price of our ordinary shares.

Dividends received by investors could be subject to Irish income tax.

Dividends paid in respect of Johnson Controls ordinary shares generally are not subject to Irish income tax where the beneficial

owner of these dividends is exempt from dividend withholding tax, unless the beneficial owner of the dividend has some

connection with Ireland other than his or her shareholding in Johnson Controls.

Johnson Controls shareholders who receive their dividends subject to Irish dividend withholding tax generally will have no

further liability to Irish income tax on the dividend unless the beneficial owner of the dividend has some connection with

Ireland other than his or her shareholding in Johnson Controls.

General Risk Factors

The potential insolvency or financial distress of third parties could adversely impact our business and results of

operations.

We are exposed to the risk that third parties to various arrangements who owe us money or goods and services, or who purchase

goods and services from us, will not be able to perform their obligations or continue to place orders due to insolvency or

financial distress. If third parties fail to perform their obligations under arrangements with us, we may be forced to replace the

underlying commitment at current or above market prices or on other terms that are less favorable to us. In such events, we may

incur losses, or our results of operations, financial condition or liquidity could otherwise be adversely affected.

Risks related to our defined benefit retirement plans may adversely impact our results of operations and cash flow.

Significant changes in actual investment return on defined benefit plan assets, discount rates, mortality assumptions and other

factors could adversely affect our results of operations and the amounts of contributions we must make to our defined benefit

plans in future periods. Because we mark-to-market our defined benefit plan assets and liabilities on an annual basis, large non-

cash gains or losses could be recorded in the fourth quarter of each fiscal year or when a remeasurement event occurs.

Generally accepted accounting principles in the U.S. require that we calculate income or expense for the plans using actuarial

valuations. These valuations reflect assumptions about financial markets and interest rates, which may change based on

economic conditions. Funding requirements for our defined benefit plans are dependent upon, among other factors, interest

rates, underlying asset returns and the impact of legislative or regulatory changes related to defined benefit funding obligations.

A variety of other factors could adversely affect the results of operations of our business.

Any of the following could materially and adversely impact the results of operations of our business: loss of, changes in, or

failure to perform under guaranteed performance contracts with our major customers; cancellation of, or significant delays in,

projects in our backlog; delays or difficulties in new product development; our ability to recognize the expected benefits of our

restructuring actions, downgrades in the ratings of our debt, material increases to our level of indebtedness, products and

services that we are unable to pass on to the market; changes in energy costs or governmental regulations that would decrease

the incentive for customers to update or improve their building control systems; and natural or man-made disasters or losses

that impact our ability to deliver products and services to our customers.

ITEM 1B UNRESOLVED STAFF COMMENTS

The Company has no unresolved written comments regarding its periodic or current reports from the staff of the SEC.

ITEM 1C CYBERSECURITY

Requirement not yet applicable to the Company.

ITEM 2 PROPERTIES

The Company has properties in over 60 countries throughout the world, with its world headquarters located in Cork, Ireland and

its North American operational headquarters located in Milwaukee, Wisconsin USA. The Company’s wholly- and majority-

owned facilities primarily consist of manufacturing, sales and service offices, research and development facilities, monitoring

centers, and assembly and/or warehouse centers. At September 30, 2023, these properties totaled approximately 40 million

square feet of floor space of which 12 million square feet are owned and 28 million square feet are leased. The Company

considers its facilities to be suitable for their current uses and adequate for current needs. The majority of the facilities are

operating at normal levels based on capacity. The Company does not anticipate difficulty in renewing existing leases as they

expire or in finding alternative facilities.

ITEM 3 LEGAL PROCEEDINGS

Gumm v. Molinaroli, et al.

On August 16, 2016, a putative class action lawsuit, Gumm v. Molinaroli, et al., Case No. 16-cv-1093, was filed in the United

States District Court for the Eastern District of Wisconsin, naming Johnson Controls, Inc., the individual members of its board

of directors at the time of the merger with the Company’s merger subsidiary and certain of its officers, the Company and the

Company’s merger subsidiary as defendants. The complaint asserted various causes of action under the federal securities laws,

state law and the Taxpayer Bill of Rights, including that the individual defendants allegedly breached their fiduciary duties and

unjustly enriched themselves by structuring the merger among the Company, Tyco and the merger subsidiary in a manner that

would result in a United States federal income tax realization event for the putative class of certain Johnson Controls, Inc.

shareholders and allegedly result in certain benefits to the defendants, as well as related claims regarding alleged misstatements

in the proxy statement/prospectus distributed to the Johnson Controls, Inc. shareholders, conversion and breach of contract. The

complaint also asserted that Johnson Controls, Inc., the Company and the Company’s merger subsidiary aided and abetted the

individual defendants in their breach of fiduciary duties and unjust enrichment. The complaint seeks, among other things,

disgorgement of profits and damages. On September 30, 2016, approximately one month after the closing of the merger,

plaintiffs filed a preliminary injunction motion seeking, among other items, to compel Johnson Controls, Inc. to make certain

intercompany payments that plaintiffs contend will impact the United States federal income tax consequences of the merger to

the putative class of certain Johnson Controls, Inc. shareholders and to enjoin Johnson Controls, Inc. from reporting to the

Internal Revenue Service the capital gains taxes payable by this putative class as a result of the closing of the merger. The court

held a hearing on the preliminary injunction motion on January 4, 2017, and on January 25, 2017, the judge denied the

plaintiffs' motion. Plaintiffs filed an amended complaint on February 15, 2017, and the Company filed a motion to dismiss on

April 3, 2017. On October 17, 2019, the court heard oral arguments on the motion to dismiss and took the matter under

advisement. On November 3, 2021, the court granted the Company’s motion to dismiss the amended complaint. Plaintiffs

appealed to the United States Court of Appeals for the Seventh Circuit. On November 6, 2023, the Seventh Circuit affirmed the

decision of the district court.

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

environmental, asbestos, insurable liabilities and other litigation matters, which is incorporated by reference herein and is

considered an integral part of Part I, Item 3, "Legal Proceedings."

ITEM 4 MINE SAFETY DISCLOSURES

Not applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

Pursuant to General Instruction G(3) of Form 10-K, the following list of executive officers of the Company as of December 14,

2023 is included as an unnumbered Item in Part I of this report in lieu of being included in the Company’s Proxy Statement

relating to the annual general meeting of shareholders to be held on March 13, 2024.

Julie Brandt, 49, has served as Vice President and President, Building Solutions, North America since April 2023. Prior

to joining Johnson Controls, Ms. Brandt served as Executive Vice President and General Manager, North America Western

Region at Otis Worldwide Corp, an elevator and escalator manufacturing, installation and service company, from

September 2020 until April 2023. While at Otis, Ms. Brandt also served in roles of increasing responsibility from 2000

until 2020, including Executive Vice President and Chief Transformation Officer, from January 2019 until August 2020

and as Managing Director, Hong Kong, Macau and Taiwan, from January 2016 until December 2018.

John Donofrio, 62, has served as Executive Vice President and General Counsel of the Company since November 2017.

He previously served as Vice President, General Counsel and Secretary of Mars, Incorporated, a global food manufacturer

from October 2013 to November 2017. Before joining Mars in October 2013, Mr. Donofrio was Executive Vice President,

General Counsel and Secretary for The Shaw Group Inc., a global engineering and construction company, from October

2009 until February 2013. Prior to joining Shaw, Mr. Donofrio was Senior Vice President, General Counsel and Chief

Compliance Officer at Visteon Corporation, a global automotive supplier, a position he held from 2005 until October 2009.

Mr. Donofrio has been a Director of FARO Technologies, Inc., a designer, developer, manufacturer and marketer of

software driven, 3D measurement, imaging and realization systems, since 2008.

Olivier Leonetti, 59, has served as Chief Financial Officer since November 2020. Prior to joining Johnson Controls, Mr.

Leonetti served as the Senior Vice President and Chief Financial Officer of Zebra Technologies, a provider of enterprise-

level data capture and automatic identification solutions, a position he had held since November 2016. Prior to joining

Zebra, Mr. Leonetti was the Executive Vice President and Chief Financial Officer of Western Digital, a provider of data

infrastructure solutions from 2014 to 2016. Prior to joining Western Digital, Mr. Leonetti served as Vice President of

Finance – Global Commercial Organization at Amgen, Inc. from 2011 to 2014. From 1997 to 2011, Mr. Leonetti served in

various senior finance positions with increasing responsibility at Dell Inc., including most recently as Vice President of

Finance. Prior to joining Dell Inc., Mr. Leonetti served in various worldwide finance capacities with Lex Rac Service plc

and the Gillette Company. Mr. Leonetti also serves as a director on the board of Eaton Corporation plc, a provider of power

management technologies and services.

Nathan Manning, 47, has served as Vice President and Chief Operations Officer, Global Field Operations, since

December 2022. He previously served as Vice President and President, Building Solutions, North America from October

2020 until March 2023. He also served as Vice President and General Manager, Field Operations, from March 2020 to

October 2020 and Vice President and General Manager, HVAC and Controls Building Solutions North America, from

January 2019 to March 2020. Prior to joining Johnson Controls, he served in various roles at General Electric, a diversified

industrial and technology company, where he held the position of General Manager, Operational Excellence for General

Electric’s GE Power segment from August 2017 until December 2018 and the position of General Manager, Services of

GE Energy Connections, a division of GE Power, from November 2015 until August 2017. Prior to joining General

Electric, Mr. Manning served as Vice President, General Manager of Eaton Aerospace, a segment of Eaton Corporation

plc, a provider of power management technologies and services, from February 2014 until November 2015. Prior to joining

Eaton, Mr. Manning served in a number of roles with increasing responsibility in General Electric from his hire in January

2000, including as President and Chief Executive Officer of Aviage Systems, a joint venture between General Electric and

Aviation Industry Corporation of China, from July 2012 until February 2014.

Daniel C. “Skip” McConeghy, 57, has served as Vice President, Chief Accounting and Tax Officer since June 2022.

Mr. McConeghy previously served as Vice President, Global Tax since October 2020 and as interim Controller since

February 2022. He also served as Vice President, Corporate Tax Planning, from July 2012 through October 2020. Prior to

joining Johnson Controls, Mr. McConeghy was a Tax Partner at PricewaterhouseCoopers, from July 1999 through June

2012.

George R. Oliver, 63, has served as Chief Executive Officer and Chairman of the Board since September 2017. He

previously served as our President and Chief Operating Officer following the completion of the merger of Johnson

Controls and Tyco in September 2016. Prior to that, Mr. Oliver was Tyco's Chief Executive Officer, a position he held

since September 2012. He joined Tyco in July 2006, and served as President of a number of operating segments from 2007

through 2011. Before joining Tyco, he served in operational leadership roles of increasing responsibility at several General

Electric divisions. Mr. Oliver also serves as a director on the board of Raytheon Technologies, an aerospace and defense

company.

Anu Rathninde, 53, has served as Vice President and President, Building Solutions, Asia Pacific since May 2022. Prior

to joining Johnson Controls, Mr. Rathninde served as President, Electrical Distribution Systems and Advanced Safety &

User Experience, Asia Pacific at Aptiv plc, and mobility architecture company primarily serving the automotive sector,

from November 2021 until May 2022 and as President, Electrical Distribution Systems from May 2016 until November

2021. Prior to joining Aptiv, Mr. Rathninde served as Vice President of the Automotive Products Group at Johnson

Electric, manufacturer of electric motors, actuators, motion subsystems and related electro-mechanical components. Earlier

in his career, Mr. Rathninde held progressive leadership positions at Aptiv in general management, engineering, business

development, strategy and business planning.

Lei Zhang Schlitz, 57, has served as Vice President and President, Global Products, since November 2022. Prior to

joining Johnson Controls, Ms. Schlitz served as Executive Vice President, Automotive OEM of Illinois Tool Works Inc.

(“ITW”), a global manufacturer of a diversified range of industrial products and equipment, from 2019 until October 2022.

Prior to serving as Vice President, Automotive OEM, Ms. Schlitz served in various leadership roles at ITW, including

Executive Vice President, ITW Food Equipment Segment, from September 2015 until January 2020, Group President,

Global Ware-Wash and Refrigeration Businesses and Food Equipment Asia Pacific, from January 2014 until August 2015,

Group President, Worldwide Refrigeration & Weigh Wrap Business, from May 2011 until December 2013 and as Vice

President, ITW Technology Center from October 2008 until April 2011. Prior to joining ITW, Ms. Schlitz served in roles

of increasing responsibility at Siemens Energy & Automation from September 2001 until September 2008 and General

Electric from 1998 until September 2001. Ms. Schlitz serves on the Board of Directors for Archer Daniels Midland

Company, a leader in human and animal nutrition and agricultural origination and processing.

Marlon Sullivan, 50, has served as Executive Vice President and Chief Human Resources Officer since September 2021.

Prior to joining Johnson Controls, he served as the Senior Vice President of Human Resources at Delta Airlines from

January 2021 to September 2021. Prior to joining Delta, Mr. Sullivan served in various human resources and talent

development leadership roles at Abbott Laboratories from December 2007 through December 2020. Earlier in his career,

Mr. Sullivan held a variety of human resources roles at The Home Depot.

Marc Vandiepenbeeck, 45, has served as Vice President and President, Building Solutions, Europe, Middle East, Africa

and Latin America since August 2023. From 2005 until 2023, Mr. Vandiepenbeeck served in roles of increasing

responsibility at Johnson Controls, including Vice President, Finance in 2023, Vice President of Finance, Building

Solutions North America, from 2021 through 2023, Vice President and Treasurer, from 2019 until 2021 and Treasurer,

Asia Pacific, Middle East, Hong Kong/Shanghai and China, from 2012 until 2015.

There are no family relationships, as defined by the instructions to this item, among the Company’s executive officers.

PART II

ITEM 5 MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS

AND ISSUER PURCHASES OF EQUITY SECURITIES

The shares of the Company’s ordinary shares are traded on the New York Stock Exchange under the symbol "JCI."

Number of Record Holders

Title of Class as of November 30, 2023

Ordinary Shares, $0.01 par value

28,519

As of September 30, 2023, approximately $3.0 billion remains available under the share repurchase program which was

authorized by the Company's Board of Directors in March 2021. The share repurchase authorization does not have an expiration

date and may be amended or terminated by the Board of Directors at any time without prior notice. During fiscal 2023, the

Company repurchased $625 million of its ordinary shares on the open market.

The following table presents information regarding the repurchase of the Company’s ordinary shares by the Company as part of

the publicly announced program during the three months ended September 30, 2023.

Period

Total Number of

Shares Purchased

Average Price

Paid per Share

Total Number of

Shares Purchased

as Part of the

Publicly

Announced

Program

Approximate

Dollar Value of

Shares that May

Yet be Purchased

under the

Programs

7/1/23 - 7/31/23

178,302 $ 67.86 178,302 $ 2,989,400,398

8/1/23 - 8/31/23

— — — —

9/1/23 - 9/30/23

— — — —

During the three months ended September 30, 2023, acquisitions of shares by the Company from certain employees in order to

satisfy employee tax withholding requirements in connection with the vesting of restricted shares were not material.

Equity compensation plan information is incorporated by reference from Part III, Item 12, "Security Ownership of Certain

Beneficial Owners and Management and Related Stockholder Matters," of this document and should be considered an integral

part of this Item 5.

The following information in Item 5 is not deemed to be "soliciting material" or to be "filed" with the SEC or subject to

Regulation 14A or 14C under the Securities Exchange Act of 1934 ("Exchange Act") or to the liabilities of Section 18 of the

Exchange Act, and will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the

Exchange Act, except to the extent the Company specifically incorporates it by reference into such a filing.

The line graph below compares the cumulative total shareholder return on the Company's ordinary shares with the cumulative

total return of companies on the Standard & Poor’s ("S&P’s") 500 Stock Index and the companies on the S&P 500 Industrials

Index. This graph assumes the investment of $100 on September 30, 2018 and the reinvestment of all dividends since that date.

ITEM 6 [RESERVED]

ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

General

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 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.

The Company's fiscal year ends on September 30. Unless otherwise stated, references to years in this report relate to fiscal years

rather than calendar years. This discussion summarizes the significant factors affecting the consolidated operating results,

financial condition and liquidity of the Company for the year ended September 30, 2023. This discussion should be read in

conjunction with Item 8, the consolidated financial statements and the notes to consolidated financial statements. A detailed

discussion of the 2022 to 2021 year-over-year changes are not included herein and can be found in the Management's

Discussion and Analysis of Financial Condition and Results of Operations in the Company's 2022 Annual Report on Form 10-

K filed November 15, 2022 under the heading "Fiscal year 2022 compared to fiscal year 2021" which is incorporated herein by

reference.

Macroeconomic Trends

Much of the demand for the Company’s products and solutions is driven by construction, facility expansion, retrofit and

maintenance projects within the commercial, institutional, industrial, data center, governmental and residential sectors.

Construction projects are heavily dependent on general economic conditions, localized demand for real estate and the

availability of credit, public funding or other financing sources. Positive or negative fluctuations in construction, industrial

facility expansion, retrofit activity, maintenance projects and other capital investments in buildings within the sectors that the

Company serves, as well as availability of credit, financing or funding for such projects, could have a corresponding impact on

the Company’s financial condition, results of operations and cash flows. The economic conditions in China, specifically

challenges in real estate, began negatively impacting the Building Solutions Asia Pacific segment in the fourth quarter of fiscal

2023. The Company expects continued softening in China in fiscal 2024.

As a result of the Company’s global presence, a significant portion of its revenues and expenses is denominated in currencies

other than the U.S. dollar. The Company is therefore subject to non-U.S. currency risks and non-U.S. exchange exposure. While

the Company employs financial instruments to hedge some of its transactional foreign exchange exposure, these activities do

not insulate it completely from those exposures. In addition, the currency exposure from the translation of non-U.S. dollar

functional currency subsidiaries are not able to be hedged. Exchange rates can be volatile and a substantial weakening or

strengthening of foreign currencies against the U.S. dollar could increase or reduce the Company’s profit margin, respectively,

and impact the comparability of results from period to period. During fiscal 2023, revenue and profits were adversely impacted

due to the strengthening of the U.S. dollar against foreign currencies.

The Company continues to observe trends demonstrating increased interest and demand for its products and services that enable

smart, safe, efficient and sustainable buildings. This demand is driven in part by government tax incentives, building

performance standards and other regulations designed to limit emissions and combat climate change. In particular, legislative

and regulatory initiatives such as the U.S. Climate Smart Buildings Initiative, U.S. Inflation Reduction Act and EU Energy

Performance of Buildings Directive include provisions designed to fund and encourage investment in decarbonization and

digital technologies for buildings. This demand is supplemented by an increase in commitments in both the public and private

sectors to reduce emissions and/or achieve net zero emissions. The Company seeks to capitalize on these trends to drive growth

by developing and delivering technologies and solutions to create smart, sustainable and healthy buildings. The Company is

investing in new digital and product capabilities, including its OpenBlue platform, to enable it to deliver sustainable, high-

efficiency products and tailored services to enable customers to achieve their sustainability goals. The Company is leveraging

its install base, together with data-driven products and services to offer outcome-based solutions to customers with a focus on

generating accelerated growth in services and recurring revenue.

The Company has experienced, and could continue to experience, increased material cost inflation and component shortages, as

well as disruptions and delays in its supply chain, as a result of global macroeconomic trends, including increased global

demand, geopolitical and economic tensions, including the conflicts between Russia and Ukraine and Israel and Hamas, and

labor shortages. Actions taken by the Company to mitigate supply chain disruptions and inflation, including expanding and

redistributing its supplier network, supplier financing, price increases and productivity improvements, have generally been

successful in offsetting some, but not all, of the impact of these trends. The collective impact of these trends has been favorable

to revenue due to increased demand and price increases to offset inflation, while negatively impacting margins due to supply

chain disruptions and cost pressures. However, during fiscal 2023, the Company observed improved margins as supply chain

disruptions eased and higher priced backlog was converted to sales. Although the Company has experienced recent

improvement in its supply chain, it could experience further disruptions, shortages and cost increases in the future, the effect of

which will depend on the Company’s ability to successfully mitigate and offset the impact of these events.

The extent to which the Company’s results of operations and financial condition are impacted by these and other factors in the

future will depend on developments that are highly uncertain and cannot be predicted. See Part I, Item 1A, of this Annual

Report on Form 10-K for an additional discussion of risks.

Cybersecurity Incident

During the weekend of September 23, 2023, the Company experienced a cybersecurity incident impacting its internal

information technology ("IT") infrastructure and applications. The incident was detected shortly after receiving reports of

outages to certain of the Company’s systems. Promptly after detecting the issue, the Company implemented its incident

management and response plan and business continuity plans, including implementing remediation measures to mitigate the

impact of the incident and restore affected systems and functions. The Company also engaged leading cybersecurity experts and

other specialized consultants to assist in its investigation and remediation of the incident, as well as the restoration of impacted

applications and systems. The Company’s investigation and remediation efforts remain ongoing, including the analysis of data

accessed, exfiltrated or otherwise impacted during the cybersecurity incident. Based on the information reviewed to date, the

Company believes the unauthorized activity has been contained and has not observed evidence of any impact to its digital

products, services and solutions, including OpenBlue and Metasys.

The cybersecurity incident consisted of unauthorized access, data exfiltration and deployment of ransomware by a third party to

a portion of the Company’s internal IT infrastructure. The incident caused disruptions and limitation of access to portions of the

Company’s business applications supporting aspects of the Company’s operations and corporate functions, which disruptions

and limitations continued into the early portion of the first quarter of fiscal 2024. To date, the Company has largely restored the

impacted applications and systems.

Lost and deferred revenues and expenses related to the cybersecurity incident adversely impacted fiscal 2023 net income by

approximately $30 million, or approximately $0.04 per diluted share. This was primarily attributable to order processing and

logistics disruptions and delays, and expenses associated with the response to, and remediation of, the incident.

The Company has incurred and expects to incur additional expenses associated with the response to, and remediation of, the

incident in fiscal 2024, most of which the Company expects to incur in the first half of the year. These expenses include third-

party expenditures, including IT recovery and forensic experts and others performing professional services to investigate and

remediate the incident, as well as incremental operating expenses incurred from the resulting disruption to the Company’s

business operations. Further, the cybersecurity incident caused disruptions to certain of the Company’s billing systems, which is

expected to negatively impact cash provided from continuing operations during the first quarter of fiscal 2024. The overall

impact of the cybersecurity incident in fiscal 2024 is not expected to be material to net income, net of insurance recoveries, or

cash flows from continuing operations; however, the timing of recognizing the insurance recoveries may differ from the timing

of recognizing the associated expenses.

The Company maintains insurance covering certain losses associated with cybersecurity incidents. The Company did not

recognize any insurance recoveries related to the cybersecurity incident in the three months ended September 30, 2023. The

Company currently expects that a substantial portion of its direct costs incurred related to containing, investigating and

remediating the incident, as well as business interruption losses, will be reimbursed through insurance recoveries.

Restructuring and Cost Optimization Initiatives

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 the third quarter of fiscal 2023, the Company began

developing a restructuring plan with certain actions focused on continued scaling of Selling, general and administrative

expenses ("SG&A") to its planned growth. The scope of the plan was substantially finalized in the fourth quarter of fiscal 2023

and certain actions related to this plan were committed and executed during the fourth quarter, primarily related to workforce

reductions, and were recorded to restructuring and impairment costs in the consolidated statements of income. Additional

restructuring charges are expected in subsequent quarters. The Company expects savings from the restructuring initiatives to be

substantially offset by incremental ongoing operating costs and investments to grow the business. Restructuring charges

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

plans.

FISCAL YEAR 2023 COMPARED TO FISCAL YEAR 2022

Net Sales

Year Ended September 30,

(in millions) 2023 2022 Change

Net sales

$ 26,793 $ 25,299

6 %

The increase in net sales was due to higher organic sales ($1,997 million) and the favorable net impact of acquisitions and

divestitures ($113 million), partially offset by the unfavorable impact of foreign currency translation ($616 million). Excluding

the impact of foreign currency translation and business acquisitions and divestitures, consolidated net sales increased 8% over

the prior year, attributable to increased pricing in response to inflation pressures. Refer to the "Segment Analysis" below within

Item 7 for a discussion of net sales by segment.

Cost of Sales / Gross Profit

Year Ended September 30,

(in millions) 2023 2022 Change

Cost of sales $ 17,822 $ 16,956 5 %

Gross profit 8,971 8,343 8 %

% of sales 33.5% 33.0%

Cost of sales and gross profit both increased and gross profit as a percentage of sales increased by 50 basis points. Gross profit

increased due to organic sales growth and favorable price/cost, partially offset by the unfavorable impact of foreign currency

translation ($192 million) and the unfavorable year-over-year impact of net pension mark-to-market adjustments ($42 million).

Gross profit as a percentage of sales increased primarily due to favorable price/cost. Refer to the "Segment Analysis" below

within Item 7 for a discussion of segment earnings before interest, taxes and amortization ("EBITA").

Selling, General and Administrative Expenses

Year Ended September 30,

(in millions) 2023 2022 Change

Selling, general and administrative expenses $ 6,181 $ 5,945 4 %

% of sales 23.1% 23.5%

Selling, general and administrative expenses ("SG&A") increased by $236 million, and SG&A as a percentage of sales

improved by 40 basis points. The increase in SG&A was primarily due to certain investments to support growth, one-time

transaction and separation costs, the unfavorable year-over-year impact of net mark-to-market adjustments ($84 million) and a

loss associated with a fire at a leased warehouse facility ($40 million), partially offset by non-recurring environmental

remediation charges in the prior year ($255 million) and favorable foreign currency translation ($118 million). Refer to the

"Segment Analysis" below within Item 7 for a discussion of segment EBITA.

Restructuring and Impairment Costs

Year Ended September 30,

(in millions) 2023 2022 Change

Restructuring and impairment costs $ 1,064 $ 721 48 %

Restructuring and impairment costs in fiscal 2023 includes $498 million of impairment charges related to businesses classified

or previously classified as held for sale, $276 million in severance and other charges resulting from restructuring initiatives,

$184 million of goodwill impairment charges related to the Silent-Aire reporting unit, and $106 million of impairment charges

for various long-lived assets.

Restructuring and impairment costs in fiscal 2022 includes $359 million of impairment charges related to the North America

and Global Retail business which was previously held for sale, $182 million in severance and other charges resulting from

restructure initiatives, $105 million of impairments for a business and assets previously held for sale, and $75 million of

goodwill impairment charges related to the Silent-Aire reporting unit.

Refer to "Note 3, "Assets and Liabilities Held for Sale & Discontinued Operations," Note 7, "Property, Plant and Equipment,"

Note 8, "Goodwill and Other Intangible Assets," and Note 17, "Restructuring and Related Costs," of the notes to consolidated

financial statements for further disclosure related to the Company's restructuring plans and impairment costs.

Net Financing Charges

Year Ended September 30,

2023 2022 Change

Interest expense, net of capitalized interest costs $ 307 $ 225 36 %

Other financing charges 52 27 93 %

Gain on debt extinguishment (25) — *

Interest income (18) (6) *

Net foreign exchange results for financing activities (35) (33) 6 %

Net financing charges $ 281 $ 213 32 %

* Measure not meaningful

Refer to Note 10, "Debt and Financing Arrangements," of the notes to consolidated financial statements for further disclosure

related to the Company's debt.

Equity Income

Year Ended September 30,

(in millions) 2023 2022 Change

Equity income $ 265 $ 246 8 %

The increase in equity income was primarily due to higher income at certain partially-owned affiliates of the Johnson Controls -

Hitachi joint venture. Refer to the "Segment Analysis" below within Item 7 for a discussion of segment EBITA.

Income Tax Provision

Year Ended September 30,

(in millions) 2023 2022 Change

Income tax (benefit) $ (323) $ (13) *

Effective tax rate (19) % (1) %

* Measure not meaningful

The statutory tax rate in Ireland of 12.5% is being used as a comparison since the Company is domiciled in Ireland.

For fiscal 2023, the effective tax rate for continuing operations was (19)% and was lower than the statutory tax rate primarily

due to the favorable tax impacts of intellectual property tax adjustments, tax reserve adjustments as the result of tax audit

resolutions and remeasurements, valuation allowance adjustments and the benefits of continuing global tax planning initiatives,

partially offset by the unfavorable impact of impairment and restructuring charges.

For fiscal 2022, the effective tax rate for continuing operations was (1)% and was lower than the statutory tax rate primarily due

to favorable impact of tax reserve adjustments as the result of expired statute of limitations for certain tax years and the benefits

of continuing global tax planning initiatives, partially offset by the unfavorable impact of impairment and restructuring charges,

valuation allowance adjustments, and the establishment of a deferred tax liability on the outside basis difference of the

Company's investment in certain subsidiaries as a result of the planned divestitures and tax rate differentials.

The fiscal 2023 effective tax rate was lower than fiscal 2022 primarily due to tax reserve adjustments as the result of tax audit

resolutions, valuation allowance adjustments and the benefits of continuing global tax planning initiatives, partially offset by

the impact of impairment and restructuring charges. Refer to Note 18, "Income Taxes," of the notes to consolidated financial

statements for further details.

The U.S. enacted the Inflation Reduction Act of 2022 (“IRA”) in August 2022, which, among other sections, 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 will first apply to the Company in fiscal 2024. The Company does not expect the IRA to

have a material impact on its effective tax rate, however, it is possible that the U.S. Congress could advance other tax legislation

proposals in the future that could have a material impact on the Company's tax rate. In addition, in October 2021, the

Organization for Economic Co-operation and Development ("OECD")/G20 inclusive framework on Base Erosion and Profit

Shifting (the Inclusive Framework) published a statement updating and finalizing the key components of a two-pillar plan on

global tax reform which has now been agreed upon by the majority of OECD members. Pillar One allows countries to

reallocate a portion of residual profits earned by multinational enterprises ("MNE"), with an annual global revenue exceeding

€20 billion and a profit margin over 10%, to other market jurisdictions. The adoption of Pillar One and its potential effective

date remain uncertain. Pillar Two requires MNEs with an annual global revenue exceeding €750 million to pay a global

minimum tax of 15%. On December 15, 2022, the Council of the EU formally adopted Directive (EU) 2022/2523 (the “Pillar

Two Directive”) to achieve a coordinated implementation of Pillar Two in EU Member States consistent with EU law. On

October 19, 2023, the Irish Minster of Finance published Irish Finance (No.2) Bill 2023, which includes implementation of the

15% Pillar Two global minimum tax. The bill, subject to amendment during the legislative process, is expected to be signed

into law by late December. The Pillar Two legislation is anticipated to be effective for the Company with the fiscal year

beginning October 1, 2024. The Company is continuing to evaluate the potential impact on future periods of the Pillar Two

Framework, pending legislative adoption by individual countries, as such changes could result in an increase in its effective tax

rate.

Income Attributable to Noncontrolling Interests

Year Ended September 30,

(in millions) 2023 2022 Change

Income attributable to noncontrolling interests $ 184 $ 191 -4 %

The decrease in income attributable to noncontrolling interests was primarily due to lower net income at certain partially-owned

affiliates within the Global Products segment.

Net Income Attributable to Johnson Controls

Year Ended September 30,

(in millions) 2023 2022 Change

Net income attributable to Johnson Controls $ 1,849 $ 1,532 21 %

The increase in net income attributable to Johnson Controls was primarily due to higher gross profit and higher income tax

benefits, partially offset by higher restructuring and impairment costs and higher SG&A. Diluted earnings per share attributable

to Johnson Controls was $2.69 for the year ended September 30, 2023 compared to $2.19 for the year ended September 30,

2022.

Comprehensive Income Attributable to Johnson Controls

Year Ended September 30,

(in millions) 2023 2022 Change

Comprehensive income attributable to

Johnson Controls $ 1,805 $ 1,055 71 %

The increase in comprehensive income attributable to Johnson Controls was due to an increase in other comprehensive income

attributable to Johnson Controls ($433 million) resulting primarily from reductions in foreign currency translation expense and

an increase in net income attributable to Johnson Controls ($317 million).

SEGMENT ANALYSIS

Management evaluates the performance of its business units based primarily on segment EBITA, which represents income from

continuing operations before income taxes and noncontrolling interests, excluding general corporate expenses, intangible asset

amortization, net financing charges, restructuring and impairment costs, and net mark-to-market adjustments related to pension

and postretirement plans and restricted asbestos investments.

Net Sales

for the Year Ended

September 30,

Segment EBITA

for the Year Ended

September 30,

(in millions) 2023 2022 Change 2023 2022 Change

Building Solutions North America $ 10,330 $ 9,367 10 % $ 1,394 $ 1,122 24 %

Building Solutions EMEA/LA 4,096 3,845 7 % 316 358 -12 %

Building Solutions Asia Pacific 2,746 2,714 1 % 343 332 3 %

Global Products 9,621 9,373 3 % 1,965 1,594 23 %

$ 26,793 $ 25,299 6 % $ 4,018 $ 3,406 18 %

Net Sales

• The increase in Building Solutions North America was due to organic growth, including higher prices ($979 million)

and incremental sales related to business acquisitions ($29 million), partially offset by the unfavorable impact of

foreign currency translation ($45 million). Excluding the impacts of business acquisitions and foreign currency

translation, sales growth was led by growth in HVAC & Controls and Fire & Security.

• The increase in Building Solutions EMEA/LA was due to organic growth, including higher prices ($324 million) and

the net impact of business acquisitions and divestitures ($29 million), partially offset by the unfavorable impact of

foreign currency translation ($102 million). Excluding the impacts of foreign currency translation and business

acquisitions and divestitures, sales growth was led by growth in Fire & Security and HVAC & Controls.

• The increase in Building Solutions Asia Pacific was due to organic growth, including higher prices ($182 million) and

the net impact of business acquisitions and divestitures ($19 million), partially offset by the unfavorable impact of

foreign currency translation ($169 million). The economic conditions in China, specifically challenges in real estate,

began negatively impacting the Building Solutions Asia Pacific segment in the fourth quarter of fiscal 2023, but had an

insignificant impact on results for the full year. Excluding the impacts of foreign currency translation and business

acquisitions and divestitures, sales growth was led by continued demand for HVAC & Controls.

• The increase in Global Products was due to the net impact of higher prices and lower volumes ($512 million) and

incremental sales related to business acquisitions ($36 million), partially offset by the unfavorable impact of foreign

currency translation ($300 million). Excluding the impacts of foreign currency translation and business acquisitions,

sales growth was driven by strong price realization and growth in Commercial HVAC and Industrial Refrigeration

products.

Segment EBITA

• The increase in Building Solutions North America was primarily due to favorable price/cost, volume leverage and

productivity savings, partially offset by unfavorable project mix.

• The decrease in Building Solutions EMEA/LA reflects the unfavorable impact of foreign currency translation ($13

million) and higher expenses, partially offset by favorable price/cost.

• The increase in Building Solutions Asia Pacific was primarily due to favorable price/cost and productivity savings,

partially offset by the unfavorable impact of foreign currency translation ($25 million).

• The increase in Global Products was primarily due to favorable price/cost and productivity savings, partially offset by

unfavorable mix, lower gross margin due to lower manufacturing absorption, an uninsured loss associated with a fire

at a leased warehouse facility and the unfavorable impact of foreign currency translation ($42 million).

LIQUIDITY AND CAPITAL RESOURCES

Working Capital

September 30,

(in millions) 2023 2022 Change

Current assets $ 10,737 $ 11,685

Current liabilities (11,084) (11,239)

(347) 446 *

Less: Cash and cash equivalents (835) (2,031)

Add: Short-term debt 385 669

Add: Current portion of long-term debt 645 865

Working capital (as defined) $ (152) $ (51) *

Accounts receivable - net $ 6,006 $ 5,727 5 %

Inventories 2,776 2,665 4 %

Accounts payable 4,268 4,368 -2 %

* Measure not meaningful

• The Company defines working capital as current assets less current liabilities, excluding cash and cash equivalents,

short-term debt, the current portion of long-term debt, and current assets and liabilities held for sale (when applicable).

Management believes that this measure of working capital, which excludes financing-related items and businesses to

be divested, provides a more useful measurement of the Company’s operating performance.

• The decrease in working capital at September 30, 2023 as compared to September 30, 2022, was primarily due to an

increase in deferred revenue and lower income tax assets, partially offset by an increase in accounts receivable due to

increased sales and timing of collections.

• Days sales in accounts receivable were 50 at September 30, 2023, comparable to 51 at September 30, 2022. There has

been no significant adverse change in the level of overdue receivables or significant changes in revenue recognition

methods.

• The Company’s inventory turns for the year ended September 30, 2023 were slightly lower than the comparable period

ended September 30, 2022.

• Days in accounts payable were 84 days at September 30, 2023, down slightly from 88 days at September 30, 2022.

The decrease was primarily due to timing of payments.

Cash Flows From Continuing Operations

Year Ended September 30,

(in millions) 2023 2022

Cash provided by operating activities $ 2,221 $ 1,990

Cash used by investing activities (1,184) (693)

Cash used by financing activities (2,174) (516)

• The increase in cash provided by operating activities reflects higher net income and the favorable impact of inventory,

income tax and accounts receivable activity, which was partially offset by the timing of accounts payable and accrued

liabilities payments.

• The increase in cash used by investing activities was primarily due to the FM:Systems acquisition. Refer to Note 2,

"Acquisitions and Divestitures," of the notes to the consolidated financial statements for further disclosure related to

the FM:Systems and other acquisitions.

• The decrease in cash provided by financing activities was primarily due to changes in short- and long-term borrowing

activity. The net impact of debt proceeds and repayments used cash of $433 million in fiscal 2023 and generated cash

of $2.0 billion in fiscal 2022. This increase in cash used was partially offset by lower stock repurchases.

Capitalization

September 30,

(in millions) 2023 2022 Change

Short-term debt $ 385 $ 669

Current portion of long-term debt 645 865

Long-term debt 7,818 7,426

Total debt 8,848 8,960 -1 %

Less: Cash and cash equivalents 835 2,031

Total net debt 8,013 6,929 16 %

Shareholders’ equity attributable to Johnson Controls 16,545 16,268 2 %

Total capitalization $ 24,558 $ 23,197 6 %

Total net debt as a % of total capitalization 32.6% 29.9%

• Net debt and net debt as a percentage of total capitalization are non-GAAP financial measures. The Company believes

the percentage of total net debt to total capitalization is useful to understanding the Company’s financial condition as it

provides a view of the extent to which the Company relies on external debt financing for its funding and is a measure

of risk to its shareholders.

• The Company's material cash requirements primarily consist of working capital requirements, repayments of long-term

debt and related interest, operating leases, dividends, capital expenditures, potential acquisitions and share repurchases.

• Refer to Note 10, "Debt and Financing Arrangements," of the notes to consolidated financial statements for additional

information on debt obligations and maturities. Interest payable on long-term debt is $283 million in the twelve

months following September 30, 2023 and $3.6 billion thereafter.

• Refer to Note 9, "Leases," of the notes to consolidated financial statements for additional information on lease

obligations and maturities.

• As of September 30, 2023, purchase obligations are $1.8 billion payable in the next twelve months and $240 million

payable thereafter. These purchase obligations represent commitments under enforceable and legally binding

agreements, and do not represent all future expected purchases.

• As of September 30, 2023, the Company expects to contribute $26 million and $203 million to the global pension and

postretirement plans in the next twelve months and thereafter, respectively.

• As of September 30, 2023, approximately $3.0 billion remains available under the Company's share repurchase

authorization, which does not have an expiration date and may be amended or terminated by the Board of Directors at

any time without prior notice. The Company expects to repurchase outstanding shares from time to time depending on

market conditions, alternate uses of capital, liquidity and economic environment.

• The Company declared dividends of $1.45 per share in fiscal 2023 and intends to continue paying quarterly dividends

in fiscal 2024.

• The Company believes its capital resources and liquidity position, including cash and cash equivalents of $835 million

at September 30, 2023, are adequate to fund operations and meet its obligations for the foreseeable future. The

Company expects requirements for working capital, capital expenditures, dividends, minimum pension contributions,

debt maturities and any potential acquisitions or stock repurchases in fiscal 2024 will be funded from operations,

supplemented by short- and long-term borrowings, if required.

– The Company manages its short-term debt position in the U.S. and euro commercial paper markets and bank loan

markets. Commercial paper outstanding was $200 million as of September 30, 2023 and $172 million as of

September 30, 2022.

– The Company maintains a shelf registration statement with the SEC under which it may issue additional debt

securities, ordinary shares, preferred shares, depository shares, warrants purchase contracts and units that may be

offered in one or more offerings on terms to be determined at the time of the offering. The Company anticipates

that the proceeds of any offering would be used for general corporate purposes, including repayment of

indebtedness, acquisitions, additions to working capital, repurchases of ordinary shares, dividends, capital

expenditures and investments in the Company's subsidiaries.

– The Company has the ability to draw on its syndicated $2.5 billion committed revolving credit facility, which was

scheduled to expire in December 2024, and a syndicated $500 million committed revolving credit facility, which

expired in November 2023. Both credit facilities were renewed on December 11, 2023. The $2.5 billion facility is

now scheduled to expire in December 2028 and the $500 million facility is now scheduled to expire in December

2024. There were no draws on the facilities as of September 30, 2023.

• The Company's ability to access the global capital markets and the related cost of financing is dependent upon, among

other factors, the Company's credit ratings. As of September 30, 2023, the Company's credit ratings and outlook were

as follows:

Rating Agency Short-Term Rating Long-Term Rating Outlook

S&P A-2 BBB+ Stable

Moody's P-2 Baa2 Positive

The security ratings set forth above are issued by unaffiliated third party rating agencies and are not a recommendation

to buy, sell or hold securities. The ratings may be subject to revision or withdrawal by the assigning rating organization

at any time.

• The Company entered into the following debt transactions in fiscal 2023:

– Repaid $1.6 billion of debt including the following:

▪ €200 million term loan with an interest rate of EURIBOR plus 0.5%

▪ $32 million Senior Notes due 2023 with an interest rate of 4.625%

▪ €150 million term loan with an interest rate of 0.0%

▪ €135 million term loan with an interest rate of EURIBOR plus 0.5%

▪ €846 million Senior Notes due 2023 with an interest rate of 1.0%

▪ Tendered $105 million of its Notes due 2045 with an interest rate of 5.125%

– Issued $1.2 billion of debt including the following:

▪ €150 million term loan with an interest rate of EURIBOR plus 0.7% which is due in April 2024

▪ €150 million term loan with an interest rate of EURIBOR plus 0.4% which is due March 2024

▪ Together with its wholly owned subsidiary, Tyco Fire & Security Finance S.C.A., co-issued €800 million in

4.25% Senior Notes due May 2035

• Financial covenants in the Company's revolving credit facilities require a minimum consolidated shareholders’ equity

attributable to Johnson Controls of at least $3.5 billion at all times. The revolving credit facility also limits the amount

of debt secured by liens that may be incurred to a maximum aggregated amount of 10% of consolidated shareholders’

equity attributable to Johnson Controls for liens and pledges. For purposes of calculating these covenants, consolidated

shareholders’ equity attributable to Johnson Controls is calculated without giving effect to (i) the application of ASC

715-60, "Defined Benefit Plans - Other Postretirement," or (ii) the cumulative foreign currency translation adjustment.

As of September 30, 2023, the Company was in compliance with all financial covenants set forth in its credit

agreements and the indentures governing its outstanding notes, and expects to remain in compliance for the foreseeable

future. None of the Company’s debt agreements limit access to stated borrowing levels or require accelerated

repayment in the event of a decrease in the Company's credit rating.

• The Company earns a significant amount of its income outside of the parent company. Outside basis differences in

these subsidiaries are deemed to be permanently reinvested except in limited circumstances. The Company currently

does not intend nor foresee a need to repatriate undistributed earnings included in the outside basis differences other

than in tax efficient manners. The Company's intent is to reduce basis differences only when it would be tax efficient.

The Company expects existing U.S. cash and liquidity to continue to be sufficient to fund the Company’s U.S.

operating activities and cash commitments for investing and financing activities for at least the next twelve months and

thereafter for the foreseeable future. In the U.S., should the Company require more capital than is generated by its

operations, the Company could elect to raise capital in the U.S. through debt or equity issuances. The Company has

borrowed funds in the U.S. and continues to have the ability to borrow funds in the U.S. at reasonable interest rates. In

addition, the Company expects existing non-U.S. cash, cash equivalents, short-term investments and cash flows from

operations to continue to be sufficient to fund the Company’s non-U.S. operating activities and cash commitments for

investing activities, such as material capital expenditures, for at least the next twelve months and thereafter for the

foreseeable future. Should the Company require more capital at the Luxembourg and Ireland holding and financing

entities, other than amounts that can be provided in tax efficient methods, the Company could also elect to raise capital

through debt or equity issuances. These alternatives could result in increased interest expense or other dilution of the

Company’s earnings.

• The Company may from time to time purchase its outstanding debt through open market purchases, privately

negotiated transactions or otherwise. Purchases or retirement of debt, if any, will depend on prevailing market

conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Co-Issued Securities: Summarized Financial Information

The following information is provided in compliance with Rule 13-01 of Regulation S-X under the Securities Exchange Act of

1934 with respect to the following unsecured, unsubordinated senior notes (collectively, ("the Notes) which were issued by

Johnson Controls International plc ("Parent Company") and Tyco Fire & Security Finance S.C.A. (“TFSCA”):

• €500 million aggregate principal amount of 0.375% Senior Notes due 2027

• €600 million aggregate principal amount of 3.000% Senior Notes due 2028

• $625 million aggregate principal amount of 1.750% Senior Notes due 2030

• $500 million aggregate principal amount of 2.000% Sustainability-Linked Senior Notes due 2031

• €500 million aggregate principal amount of 1.000% Senior Notes due 2032

• $400 million aggregate principal amount of 4.900% Senior Notes due 2032

• €800 million aggregate principal amount of 4.25% Senior Notes due 2035

TFSCA is a corporate partnership limited by shares (société en commandite par actions) incorporated and organized under the

laws of the Grand Duchy of Luxembourg (“Luxembourg”) and is a wholly-owned consolidated subsidiary of the Company that

is 99.924% owned directly by the Parent Company and 0.076% owned by TFSCA’s sole general partner and manager, Tyco

Fire & Security S.à r.l., which is itself wholly-owned by the Company. The Parent Company is incorporated and organized

under the laws of Ireland. TFSCA is incorporated and organized under the laws of Luxembourg. The bankruptcy, insolvency,

administrative, debtor relief and other laws of Luxembourg or Ireland, as applicable, may be materially different from, or in

conflict with, those of the United States, including in the areas of rights of creditors, priority of governmental and other

creditors, ability to obtain post-petition interest and duration of the proceeding. The application of these laws, or any conflict

among them, could adversely affect noteholders’ ability to enforce their rights under the Notes in those jurisdictions or limit any

amounts that they may receive.

The tables below set forth summarized financial information of the Parent Company and TFSCA (collectively, the “Obligor

Group”) on a combined basis after intercompany transactions have been eliminated, including adjustments to remove the

receivable and payable balances, investment in, and equity in earnings from, those subsidiaries of the Parent Company other

than TFSCA (collectively, the "Non-Obligor Subsidiaries").

The following table presents summarized income statement information for the year ended September 30, 2023 (in millions):

Obligor

Group

Non-Obligor

Subsidiaries

Net sales $ — $ —

Gross profit —

—

Loss from continuing operations (458)

(139)

Net loss (458) (139)

Income attributable to noncontrolling interests —

—

Net loss attributable to the entity (458) (139)

The following table presents summarized balance sheet information as of September 30, 2023 (in millions):

Obligor

Group

Non-Obligor

Subsidiaries

Current assets $ 26 $ 5,608

Noncurrent assets 270 1,882

Current liabilities 3,652 9,289

Noncurrent liabilities 7,585 3,462

Noncontrolling interests — —

The same accounting policies as described in Note 1, "Summary of Significant Accounting Policies," of the notes to

consolidated financial statements are used by the Parent Company and each of its subsidiaries in connection with the

summarized financial information presented above.

CRITICAL ACCOUNTING ESTIMATES

The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the

United States of America ("U.S. GAAP"). This requires management to make estimates and assumptions that affect reported

amounts and related disclosures. Actual results could differ from those estimates. The following estimates are considered by

management to be the most critical to the understanding of the Company's consolidated financial statements as they require

significant judgments that could materially impact the Company’s results of operations, financial position and cash flows.

Revenue Recognition

The Company recognizes revenue from certain long-term contracts on an over time basis, with progress towards completion

measured using a cost-to-cost input method based on the relationship between actual costs incurred and total estimated costs at

completion. Total estimated costs at completion are based primarily on estimated purchase contract terms, historical

performance trends and other economic projections. Factors that may result in a change to these estimates include unforeseen

engineering problems, construction delays, cost inflation, the performance of subcontractors and major material suppliers, and

weather conditions. As a result, changes to the original estimates may be required during the life of the contract. Such estimates

are reviewed monthly and any adjustments to the measure of completion are recognized as adjustments to sales and gross profit

using the cumulative catch-up method. Estimated losses are recorded when identified.

For agreements with multiple performance obligations, the Company allocates the transaction price of the contract to each

performance obligation using the best estimate of the relative standalone selling price of each distinct good or service in the

contract. In order to estimate relative standalone selling price, market data and transfer price studies are utilized. If the

standalone selling price is not directly observable, the Company estimates the standalone selling price using an adjusted market

assessment approach or expected cost plus margin approach.

The Company assesses variable consideration that may affect the total transaction price, including discounts, rebates, refunds,

credits or other similar sources of variable consideration, when determining the transaction price of each contract. The

Company includes variable consideration in the estimated transaction price when it is probable that significant reversal of

revenue recognized would not occur when the uncertainty associated with variable consideration is subsequently resolved.

These estimates are based on the amount of consideration that the Company expects to be entitled to.

Goodwill and Indefinite-Lived Intangible Assets

The Company performs impairment reviews for its reporting units, which have been determined to be the Company’s reportable

segments or one level below the reportable segments in certain instances, using a fair value method based on management’s

judgments and assumptions or third party valuations. The fair value of a reporting unit refers to the price that would be received

to sell the unit as a whole in an orderly transaction between market participants at the measurement date. In estimating the fair

value, the Company uses the multiples of earnings approach based on the average of published multiples of earnings of

comparable entities with similar operations and economic characteristics and applies the multiples to the Company's average of

historical and future financial results for each reporting unit. In certain instances, the Company uses discounted cash flow

analyses or estimated sales price to further support the fair value estimates. The assumptions included in the impairment tests

require judgment, and changes to these inputs could impact the results of the calculations. The key assumptions used in the

impairment tests were management's projections of future cash flows, weighted-average cost of capital and long-term growth

rates. Although the Company's cash flow forecasts are based on assumptions that are considered reasonable by management and

consistent with the plans and estimates management is using to operate the underlying businesses, there are significant

judgments in determining the expected future cash flows attributable to a reporting unit.

Management completed its fiscal 2023 annual impairment test as of July 31. The fair value of all reporting units substantially

exceeded their carrying values, with the exception of one reporting unit with $455 million of goodwill whose fair value in

excess of its carrying value was approximately 10%. For this reporting unit, a 1% increase in the discount rate, or a 1.5%

decrease in the revenue growth rates, would cause the fair value to be less than the carrying value. While no impairment was

recorded, it is possible that future changes in circumstances could result in a non-cash impairment charge.

Indefinite-lived intangible assets are also subject to at least annual impairment testing in the fourth fiscal quarter or as events

occur or circumstances change that indicate the assets may be impaired. Indefinite-lived intangible assets primarily consist of

trademarks and trade names and are tested for impairment using a relief-from-royalty method. A considerable amount of

management judgment and assumptions are required in performing the impairment tests. The key assumptions used in the

impairment tests were long-term revenue growth projections, weighted-average cost of capital, the royalty rate and general

industry, market and macro-economic conditions. The assumptions included in the impairment tests require judgment, and

changes to these inputs could impact the results of the calculations. The key assumptions used in the impairment tests were

management's projections of future cash flows, weighted-average cost of capital and long-term growth rates. Although the

Company's cash flow forecasts are based on assumptions that are considered reasonable by management and consistent with the

plans and estimates management is using to operate the underlying businesses, there are significant judgments in determining

the expected future cash flows attributable to a reporting unit.

During fiscal 2023, the Company impaired $184 million of goodwill in its Silent-Aire reporting unit.

The Company continuously monitors for events and circumstances that could negatively impact the key assumptions in

determining fair value. While the Company believes the judgments and assumptions used in the goodwill and indefinite-lived

intangible impairment tests are reasonable, different assumptions or changes in general industry, market and macro-economic

conditions could change the estimated fair values and, therefore, future impairment charges could be required, which could be

material to the consolidated financial statements.

Refer to Note 8, "Goodwill and Other Intangible Assets," of the notes to consolidated financial statements for information

regarding the results of goodwill and indefinite-lived intangible assets impairment testing performed in fiscal 2023 and 2022.

Pension Plans

The Company provides a range of benefits to its employees and retired employees, including pensions. Plan assets and

obligations are measured annually, or more frequently if there is a significant remeasurement event, based on the Company’s

measurement date utilizing various actuarial assumptions such as discount rates, assumed rates of return and compensation

increases as of that date. The Company reviews its actuarial assumptions on an annual basis and makes modifications to the

assumptions based on current rates and trends when appropriate.

The Company utilizes a mark-to-market approach for recognizing pension expenses, including measuring the market related

value of plan assets at fair value and recognizing actuarial gains and losses in the fourth quarter of each fiscal year or at the date

of a remeasurement event. Refer to Note 16, "Retirement Plans," of the notes to consolidated financial statements for disclosure

of the Company's pension plans.

U.S. GAAP requires that companies recognize in the statement of financial position a liability for plans that are underfunded or

unfunded, or an asset for plans that are over funded. U.S. GAAP also requires that companies measure the benefit obligations

and fair value of plan assets that determine a benefit plan’s funded status as of the date of the employer’s fiscal year end.

The Company considers the expected benefit payments on a plan-by-plan basis when setting assumed discount rates. As a

result, the Company uses different discount rates for each plan depending on the plan jurisdiction, the demographics of

participants and the expected timing of benefit payments. For the U.S. pension plans, the Company uses a discount rate

provided by an independent third party calculated based on an appropriate mix of high quality bonds. For the non-U.S. pension

plans, the Company consistently uses the relevant country specific benchmark indices for determining the various discount

rates. The Company’s weighted average discount rate on U.S. pension plans was 5.48% and 5.08% at September 30, 2023 and

2022, respectively. The Company’s weighted average discount rate on non-U.S. pension plans was 4.72% and 4.36% at

September 30, 2023 and 2022, respectively.

In estimating the expected return on plan assets, the Company considers the historical returns on plan assets, adjusted for

forward-looking considerations, inflation assumptions and the impact of the active management of the plans’ invested assets.

Reflecting the relatively long-term nature of the plans’ obligations, approximately 14% of the plans’ assets are invested in

equity securities and 63% in fixed income securities, with the remainder primarily invested in alternative investments. The

expected long-term return on U.S. pension plan assets used to determine net periodic benefit cost was 8.25% and 7.00% for the

years ended September 30, 2023 and 2022, respectively. The weighted average expected long-term return on non-U.S. pension

plan assets was 5.02% and 3.70% for the years ended September 30, 2023 and 2022, respectively. The actual rate of return on

both U.S and non-U.S pension plans was below expected rates in both fiscal 2023 and fiscal 2022.

For fiscal 2024, the Company believes the long-term rate of return will approximate 8.50% for U.S. pension plans and 5.26%

for non-U.S. pension plans. Any differences between actual investment results and the expected long-term asset returns will be

reflected in net periodic benefit costs in the fourth quarter of each fiscal year or at the date of a significant remeasurement event.

If actual returns on plan assets are less than the Company’s expectations, additional contributions may be required.

In fiscal 2023, total employer contributions to the defined benefit pension plans were $55 million, none of which were

voluntary contributions made by the Company. The Company expects to contribute approximately $24 million in cash to its

defined benefit pension plans in fiscal 2024.

Based on information provided by its independent actuaries and other relevant sources, the Company believes that the

assumptions used are reasonable, however, changes in these assumptions could impact the Company’s financial position, results

of operations or cash flows.

Mark-to-market adjustments represent actuarial gains (losses) arising from changes in actuarial assumptions and actuarial

experiences different from those assumed that are used to value the plan assets and the benefit obligations. The primary factors

contributing to actuarial gains (losses) are changes in the discount rate used to value benefit obligations and the difference

between expected and actual returns on plan assets. Mark-to-market adjustments are highly volatile and are difficult to forecast.

Refer to Note 16, "Retirement Plans," of the notes to consolidated financial statements for further details.

The following chart illustrates the estimated increases (decreases) in projected benefit obligation and future ongoing pension

expense, which excludes any potential mark-to-market adjustments, assuming an increase of 25 basis points in the key

assumptions for the Company's pension plans (in millions):

Pension Benefits

U.S. Plans Non-U.S. Plans

Change in Projected

Benefit Obligation

Change in Ongoing

Pension Expense

Change in Projected

Benefit Obligation

Change in Ongoing

Pension Expense

Discount rate $ (26) $ 2 $ (33) $ 1

Expected return on plan assets — (4) — (3)

Loss Contingencies

Accruals are recorded for various contingencies including legal proceedings, environmental matters, self-insurance and other

claims that arise in the normal course of business. The accruals are based on judgment, the probability of losses and, where

applicable, the consideration of opinions of internal and/or external legal counsel and actuarial determined estimates.

Additionally, the Company records receivables from third party insurers when recovery has been determined to be probable.

The Company is subject to laws and regulations relating to protecting the environment. It is difficult to estimate the Company’s

ultimate level of liability at many remediation sites due to the large number of other parties that may be involved, the

complexity of determining the relative liability among those parties, the uncertainty as to the nature and scope of the

investigations and remediation to be conducted, the uncertainty in the application of law and risk assessment, the various

choices and costs associated with diverse technologies that may be used in corrective actions at the sites, and the often quite

lengthy periods over which eventual remediation may occur. It is possible that technological, regulatory or enforcement

developments, the results of additional environmental studies or other factors could change the Company's expectations with

respect to future charges and cash outlays, and such changes could be material to the Company's future results of operations,

financial condition or cash flows. Nevertheless, the Company does not currently believe that any claims, penalties or costs in

addition to the amounts accrued will have a material adverse effect on the Company’s financial position, results of operations or

cash flows. The Company provides for expenses associated with environmental remediation obligations when such amounts are

probable and can be reasonably estimated. Refer to Note 21, "Commitments and Contingencies," of the notes to consolidated

financial statements.

The Company records liabilities for its workers' compensation, product, general and auto liabilities. The determination of these

liabilities and related expenses is dependent on claims experience. For most of these liabilities, claims incurred but not yet

reported are estimated by utilizing actuarial valuations based upon historical claims experience. The Company records

receivables from third party insurers when recovery has been determined to be probable. The Company maintains captive

insurance companies to manage its insurable liabilities.

Asbestos-Related Contingencies and Insurance Receivables

The Company and certain of its subsidiaries along with numerous other companies are named as defendants in personal injury

lawsuits based on alleged exposure to asbestos-containing materials. The Company's estimate of the liability and corresponding

insurance recovery for pending and future claims and defense costs is based on the Company's historical claim experience, and

estimates of the number and resolution cost of potential future claims that may be filed and is discounted to present value from

2068 (which is the Company's reasonable best estimate of the actuarial determined time period through which asbestos-related

claims will be filed against Company affiliates). Estimated asbestos-related defense costs are included in the asbestos liability.

The Company's legal strategy for resolving claims also impacts these estimates. The Company considers various trends and

developments in evaluating the period of time (the look-back period) over which historical claim and settlement experience is

used to estimate and value claims reasonably projected to be made through 2068. At least annually, the Company assesses the

sufficiency of its estimated liability for pending and future claims and defense costs by evaluating actual experience regarding

claims filed, settled and dismissed, and amounts paid in settlements. In addition to claims and settlement experience, the

Company considers additional quantitative and qualitative factors such as changes in legislation, the legal environment, and the

Company's defense strategy. The Company also evaluates the recoverability of its insurance receivable on an annual basis. The

Company evaluates all of these factors and determines whether a change in the estimate of its liability for pending and future

claims and defense costs or insurance receivable is warranted.

In connection with the recognition of liabilities for asbestos-related matters, the Company records asbestos-related insurance

recoveries that are probable. The Company's estimate of asbestos-related insurance recoveries represents estimated amounts due

to the Company for previously paid and settled claims and the probable reimbursements relating to its estimated liability for

pending and future claims discounted to present value. In determining the amount of insurance recoverable, the Company

considers available insurance, allocation methodologies, solvency and creditworthiness of the insurers. Refer to Note 21,

"Commitments and Contingencies," of the notes to consolidated financial statements for a discussion on management's

judgments applied in the recognition and measurement of asbestos-related assets and liabilities.

Income Taxes

Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to differences between

financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and other

loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income

in the years in which those temporary differences are expected to be recovered or settled. The Company records a valuation

allowance that primarily represents non-U.S. operating and other loss carryforwards for which realization is uncertain.

Management judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities,

and the valuation allowance recorded against the Company’s net deferred tax assets.

The Company reviews the realizability of its deferred tax assets and related valuation allowances 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. At September 30, 2023, the

Company had a valuation allowance of $6.4 billion for continuing operations, of which $5.6 billion relates to net operating loss

carryforwards primarily in Brazil, France, Germany, Ireland, Luxembourg, Mexico, the United Kingdom, and the U.S. for

which sustainable taxable income has not been demonstrated; and $0.8 billion for other deferred tax assets.

The Company’s federal income tax returns and certain non-U.S. income tax returns for various fiscal years remain under

various stages of audit by the IRS and respective non-U.S. tax authorities. Although the outcome of tax audits is always

uncertain, management believes that it has appropriate support for the positions taken on its tax returns and that its annual tax

provisions included amounts sufficient to pay assessments, if any, which may be proposed by the taxing authorities. At

September 30, 2023, the Company had recorded a liability of $2.2 billion for its best estimate of the probable loss on certain of

its tax positions, the majority of which is included in other noncurrent liabilities in the consolidated statements of financial

position. Nonetheless, the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may

differ materially from the amounts accrued for each year.

The Company does not generally provide additional U.S. or non-U.S. income taxes on outside basis differences of consolidated

subsidiaries included in shareholders’ equity attributable to Johnson Controls International plc, except in limited circumstances

including anticipated taxation on planned divestitures. The reduction of the outside basis differences via the sale or liquidation

of these subsidiaries and/or distributions could create taxable income. The Company’s intent is to reduce the outside basis

differences only when it would be tax efficient. Refer to "Capitalization" within the "Liquidity and Capital Resources" section

for discussion of U.S. and non-U.S. cash projections.

Refer to Note 18, "Income Taxes," of the notes to consolidated financial statements for the Company's income tax disclosures.

NEW ACCOUNTING PRONOUNCEMENTS

Refer to the "New Accounting Pronouncements" section within Note 1, "Summary of Significant Accounting Policies," of the

notes to consolidated financial statements.

RISK MANAGEMENT

The Company selectively uses derivative instruments to reduce market risk associated with changes in foreign currency,

commodities, and interest rates. All hedging transactions are authorized and executed pursuant to clearly defined policies and

procedures, which strictly prohibit the use of financial instruments for speculative purposes. At the inception of the hedge, the

Company assesses the effectiveness of the hedge instrument and designates the hedge instrument as a hedge of one of the

following:

• Forecasted transaction or of the variability of cash flows to be received or paid related to an unrecognized asset or

liability (a cash flow hedge)

• Net investment in a non-U.S. operation (a net investment hedge)

The Company performs hedge effectiveness testing on an ongoing basis depending on the type of hedging instrument used. All

derivatives not designated as hedging instruments under ASC 815, "Derivatives and Hedging," are revalued in the consolidated

statements of income.

For all foreign currency derivative instruments designated as cash flow hedges, retrospective effectiveness is tested on a

monthly basis using a cumulative dollar offset test. The fair value of the hedged exposures and the fair value of the hedge

instruments are revalued, and the ratio of the cumulative sum of the periodic changes in the value of the hedge instruments to

the cumulative sum of the periodic changes in the value of the hedge is calculated. The hedge is deemed as highly effective if

the ratio is between 80% and 125%. For commodity derivative contracts designated as cash flow hedges, effectiveness is tested

using a regression calculation. Ineffectiveness is minimal as the Company aligns most of the critical terms of its derivatives

with the supply contracts.

For net investment hedges, the Company assesses its net investment positions in the non-U.S. operations and compares it with

the outstanding net investment hedges on a quarterly basis. The hedge is deemed effective if the aggregate outstanding principal

of the hedge instruments designated as the net investment hedge in a non-U.S. operation does not exceed the Company’s net

investment positions in the respective non-U.S. operation.

Derivative instruments not designated as hedging instruments under ASC 815 require no assessment of effectiveness.

A discussion of the Company’s accounting policies for derivative financial instruments is included in Note 1, "Summary of

Significant Accounting Policies," of the notes to consolidated financial statements, and further disclosure relating to derivatives

and hedging activities is included in Note 11, "Derivative Instruments and Hedging Activities," and Note 12, "Fair Value

Measurements," of the notes to consolidated financial statements.

Foreign Exchange

The Company has manufacturing, sales and distribution facilities around the world and thus makes investments and enters into

transactions denominated in various foreign currencies. In order to maintain strict control and achieve the benefits of the

Company’s global diversification, foreign exchange exposures for each currency are netted internally so that only its net foreign

exchange exposures are, as appropriate, hedged with financial instruments.

The Company hedges 70% to 90% of the nominal amount of each of its known foreign exchange transactional exposures. The

Company primarily enters into foreign currency exchange contracts to reduce the earnings and cash flow impact of the variation

of non-functional currency denominated receivables and payables. Gains and losses resulting from hedging instruments offset

the foreign exchange gains or losses on the underlying assets and liabilities being hedged. The maturities of the forward

exchange contracts generally coincide with the settlement dates of the related transactions. Realized and unrealized gains and

losses on these contracts are recognized in the same period as gains and losses on the hedged items. The Company also

selectively hedges anticipated transactions that are subject to foreign exchange exposure, primarily with foreign currency

exchange contracts, which are designated as cash flow hedges in accordance with ASC 815.

The Company has entered into foreign currency denominated debt obligations to selectively hedge portions of its net

investment in non-U.S. subsidiaries. The currency effects of debt obligations are reflected in the accumulated other

comprehensive income ("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.

At September 30, 2023 and 2022, the Company estimates that an unfavorable 10% change in the exchange rates would have

decreased net unrealized gains by approximately $63 million and $133 million, respectively.

Interest Rates

Substantially all of the Company's outstanding debt has fixed interest rates, and, therefore, any fluctuation in market interest

rates is not expected to have a material effect on the Company's results of operations. A 100 basis point increase/decrease in the

average interest rate on the Company's variable rate debt would have an immaterial impact on interest expense.

Commodities

The Company uses commodity hedge contracts in the financial derivatives market 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. As a cash flow hedge, gains and losses resulting from the hedging instruments offset the gains or losses on

purchases of the underlying commodities that will be used in the business. The maturities of the commodity hedge contracts

coincide with the expected purchase of the commodities.

ENVIRONMENTAL, HEALTH AND SAFETY AND OTHER MATTERS

The Company’s global operations are governed by environmental laws and worker safety laws. Under various circumstances,

these laws impose civil and criminal penalties and fines, as well as injunctive and remedial relief, for noncompliance and

require remediation at sites where Company-related substances have been released into the environment.

The Company has expended substantial resources globally, both financial and managerial, to comply with applicable

environmental laws and worker safety laws and to protect the environment and workers. The Company believes it is in

substantial compliance with such laws and maintains procedures designed to foster and ensure compliance. However, the

Company has been, and in the future may become, the subject of formal or informal enforcement actions or proceedings

regarding noncompliance with such laws or the remediation of Company-related substances released into the environment.

Such matters typically are resolved with regulatory authorities through commitments to compliance, abatement or remediation

programs and in some cases payment of penalties. Historically, neither such commitments nor penalties imposed on the

Company have been material.

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

information.

ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See "Risk Management" included in Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of

Operations.

ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements

Page

Report of Independent Registered Public Accounting Firm (PCAOB ID 238) .......................................................... 48

Consolidated Statements of Income for the years ended September 30, 2023, 2022 and 2021 .................................. 51

Consolidated Statements of Comprehensive Income for the years ended September 30, 2023, 2022 and 2021 ........

Consolidated Statements of Financial Position as of September 30, 2023 and 2022 .................................................. 53

Consolidated Statements of Cash Flows for the years ended September 30, 2023, 2022 and 2021 ........................... 54

Consolidated Statements of Shareholders' Equity for the years ended September 30, 2023, 2022 and 2021 ............ 55

Notes to Consolidated Financial Statements ............................................................................................................... 56

1. Summary of Significant Accounting Policies .................................................................................................... 56

2. Acquisitions and Divestitures ............................................................................................................................. 65

3. Assets and Liabilities Held for Sale and Discontinued Operations .................................................................... 67

4. Revenue Recognition ..........................................................................................................................................

5. Accounts Receivable .......................................................................................................................................... 69

6. Inventories .......................................................................................................................................................... 69

7. Property, Plant and Equipment ........................................................................................................................... 70

8. Goodwill and Other Intangible Assets ................................................................................................................ 70

9. Leases ................................................................................................................................................................. 72

10. Debt and Financing Arrangements ................................................................................................................... 73

11. Derivative Instruments and Hedging Activities ............................................................................................... 75

12. Fair Value Measurements ................................................................................................................................. 79

13. Stock-Based Compensation .............................................................................................................................. 81

14. Earnings Per Share ............................................................................................................................................ 83

15. Equity ................................................................................................................................................................ 83

16. Retirement Plans ...............................................................................................................................................

17. Restructuring and Related Costs ....................................................................................................................... 91

18. Income Taxes .................................................................................................................................................... 92

19. Segment Information ........................................................................................................................................ 96

20. Guarantees ........................................................................................................................................................ 99

21. Commitments and Contingencies ..................................................................................................................... 100

22. Subsequent Events ............................................................................................................................................ 106

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Johnson Controls International plc

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated statements of financial position of Johnson Controls International plc and its

subsidiaries (the “Company”) as of September 30, 2023 and 2022, and the related consolidated statements of income, of

comprehensive income, of shareholders' equity and of cash flows for each of the three years in the period ended September 30,

2023, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the

Company's internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control -

Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial

position of the Company as of September 30, 2023 and 2022, and the results of its operations and its cash flows for each of the

three years in the period ended September 30, 2023 in conformity with accounting principles generally accepted in the United

States of America. Also in our opinion, the Company did not maintain, in all material respects, effective internal control over

financial reporting as of September 30, 2023, based on criteria established in Internal Control - Integrated Framework (2013)

issued by the COSO because a material weakness in internal control over financial reporting existed as of that date related to

ineffective design and maintenance of information technology controls to prevent or detect, on a timely basis, unauthorized

access to certain of the Company's financial reporting systems.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that

there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented

or detected on a timely basis. The material weakness referred to above is described in Management’s Report on Internal Control

Over Financial Reporting appearing under Item 9A. We considered this material weakness in determining the nature, timing,

and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and our opinion regarding the

effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated

financial statements.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal

control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included

in management’s report referred to above. Our responsibility is to express opinions on the Company’s consolidated financial

statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm

registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent

with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the

Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the

audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,

whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material

respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement

of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated

financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal

control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the

risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based

on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the

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

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded FM:Systems

from its assessment of internal control over financial reporting as of September 30, 2023 because it was acquired by the

Company in a purchase business combination in July 2023. We have also excluded FM:Systems from our audit of internal

control over financial reporting. FM:Systems is a wholly-owned subsidiary whose total assets and total revenues excluded from

management’s assessment and our audit of internal control over financial reporting represent less than 1% of each of the related

consolidated financial statement amounts as of and for the year ended September 30, 2023.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the

reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally

accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures

that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and

dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit

preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and

expenditures of the company are being made only in accordance with authorizations of management and directors of the

company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or

disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,

projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate

because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial

statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or

disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or

complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated

financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate

opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition from Certain Contracts with Customers

As described in Notes 1 and 4 to the consolidated financial statements, the Company recognized $26,793 million of net sales for

the year ended September 30, 2023, of which a majority relates to certain over time and point in time contracts with customers.

Revenue from certain long-term contracts to design, manufacture and install building products and systems as well as

unscheduled repair or replacement services is recognized on an over time basis, with progress towards completion measured

using a cost-to-cost input method based on the relationship between actual costs incurred and total estimated costs at

completion. The cost-to-cost input method is used as it best depicts the transfer of control to the customer that occurs as the

Company incurs costs. Changes to the original estimates may be required during the life of the contract and estimated losses are

recorded when identified. The Company enters into extended warranties and long-term service and maintenance agreements

with certain customers. For these arrangements, revenue is recognized over time on a straight-line basis over the respective

contract term. Revenue associated with the sale of equipment and related installations are recognized over time on a cost-to-cost

input method, while the revenue for monitoring and maintenance services are recognized over time as services are rendered. In

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

customer.

The principal considerations for our determination that performing procedures relating to revenue recognition from certain

contracts with customers is a critical audit matter are a high degree of auditor effort in performing procedures and evaluating

audit evidence related to the revenue recognized on certain of the Company's over time and point in time contracts with

customers.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall

opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the

revenue recognition process for the Company’s over time and point in time contracts with customers. These procedures also

included, among others, evaluating the appropriateness of the timing and amount of revenue recognized for a sample of over

time and point in time contracts with customers. Evaluating the appropriateness of the timing and amount of revenue recognized

for certain over time contracts with customers involved (i) obtaining and inspecting source documents, such as contracts or

service tickets, change orders, and evidence of progress towards completion or services delivered; (ii) evaluating the

appropriateness of the over time revenue recognition methods; (iii) testing, on a sample basis for certain over time contracts, the

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

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

of the timing and amount of revenue recognized for certain point in time contracts with customers involved (i) obtaining and

inspecting source documents, such as contracts or purchase orders, evidence of goods delivered, and consideration received in

exchange for those goods and (ii) evaluating the appropriateness of the point in time revenue recognition method.

/s/ PricewaterhouseCoopers LLP

Milwaukee, Wisconsin

December 14, 2023

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

Johnson Controls International plc

Consolidated Statements of Income

Year Ended September 30,

(in millions, except per share data) 2023 2022 2021

Net sales

Products and systems $ 20,251 $ 19,274 $ 17,202

Services 6,542 6,025 6,466

26,793 25,299 23,668

Cost of sales

Products and systems 14,031 13,533 11,848

Services 3,791 3,423 3,761

17,822 16,956 15,609

Gross profit 8,971 8,343 8,059

Selling, general and administrative expenses (6,181) (5,945) (5,258)

Restructuring and impairment costs (1,064) (721) (242)

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

Equity income 265 246 261

Income from continuing operations before income taxes 1,710 1,710 2,614

Income tax provision (benefit) (323) (13) 868

Income from continuing operations 2,033 1,723 1,746

Income from discontinued operations, net of tax (Note 3) — — 124

Net income 2,033 1,723 1,870

Income from continuing operations attributable to noncontrolling interests 184 191 233

Net income attributable to Johnson Controls $ 1,849 $ 1,532 $ 1,637

Amounts attributable to Johnson Controls ordinary shareholders:

Income from continuing operations $ 1,849 $ 1,532 $ 1,513

Income from discontinued operations — — 124

Net income $ 1,849 $ 1,532 $ 1,637

Basic earnings per share attributable to Johnson Controls

Continuing operations $ 2.70 $ 2.20 $ 2.11

Discontinued operations — — 0.17

Net income $ 2.70 $ 2.20 $ 2.28

Diluted earnings per share attributable to Johnson Controls

Continuing operations $ 2.69 $ 2.19 $ 2.10

Discontinued operations — — 0.17

Net income $ 2.69 $ 2.19 $ 2.27

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

Johnson Controls International plc

Consolidated Statements of Comprehensive Income

Year Ended September 30,

(in millions) 2023 2022 2021

Net income $ 2,033 $ 1,723 $ 1,870

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments (84) (603) 376

Realized and unrealized gains (losses) on derivatives 25 7 (18)

Pension and postretirement plans (1) (3) 4

Other comprehensive income (loss) (60) (599) 362

Total comprehensive income 1,973 1,124 2,232

Comprehensive income attributable to noncontrolling interests:

Net income 184 191 233

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments (15) (123) 19

Realized and unrealized gains on derivatives (1) 1 1

Other comprehensive income (loss) (16) (122) 20

Comprehensive income attributable to noncontrolling interests 168 69 253

Comprehensive income attributable to Johnson Controls $ 1,805 $ 1,055 $ 1,979

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

Johnson Controls International plc

Consolidated Statements of Financial Position

September 30,

(in millions, except par value and share data) 2023 2022

Assets

Cash and cash equivalents

$ 835 $ 2,031

Accounts receivable, less allowance for

expected credit losses of $90 and $66, respectively

6,006 5,727

Inventories

2,776 2,665

Other current assets

1,120 1,262

Current assets

10,737 11,685

Property, plant and equipment - net

3,136 3,131

Goodwill

17,936 17,350

Other intangible assets - net

4,888 5,155

Investments in partially-owned affiliates

1,056 963

Other noncurrent assets

4,489 3,874

Total assets

$ 42,242 $ 42,158

Liabilities and Equity

Short-term debt

$ 385 $ 669

Current portion of long-term debt

645 865

Accounts payable

4,268 4,368

Accrued compensation and benefits

958 1,003

Deferred revenue

1,996 1,804

Other current liabilities

2,832 2,530

Current liabilities

11,084 11,239

Long-term debt

7,818 7,426

Pension and postretirement benefit obligations

278 358

Other noncurrent liabilities

5,368 5,733

Noncurrent liabilities

13,464 13,517

Commitments and contingencies (Note 21)

Ordinary shares (par value $0.01; 2.0 billion shares authorized;

shares issued: 2023 - 709,968,796; 2022 - 717,726,243)

7 7

Ordinary A shares (par value €1.00; 40,000 shares authorized, none outstanding as of

September 30, 2023 and 2022)

— —

Preferred shares (par value $0.01; 200,000,000 shares authorized, none outstanding as of

September 30, 2023 and 2022)

— —

Ordinary shares held in treasury, at cost (shares held: 2023 - 29,596,724;

2022 - 29,029,475)

(1,240) (1,203)

Capital in excess of par value

17,349 17,224

Retained earnings

1,384 1,151

Accumulated other comprehensive loss

(955) (911)

Shareholders’ equity attributable to Johnson Controls

16,545 16,268

Noncontrolling interests

1,149 1,134

Total equity

17,694 17,402

Total liabilities and equity

$ 42,242 $ 42,158

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

Johnson Controls International plc

Consolidated Statements of Cash Flows

Year Ended September 30,

(in millions) 2023 2022 2021

Operating Activities of Continuing Operations

Net income attributable to Johnson Controls

$ 1,849 $ 1,532 $ 1,513

Income attributable to noncontrolling interests

184 191 233

Net income

2,033 1,723 1,746

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

Depreciation and amortization

848 830 845

Pension and postretirement benefit expense (income)

61 (216) (551)

Pension and postretirement contributions

(57) (96) (68)

Equity in earnings of partially-owned affiliates, net of dividends received

(98) 30 (117)

Deferred income taxes

(676) (141) 36

Non-cash restructuring and impairment charges

827 555 98

Equity-based compensation expense

111 102 76

Other - net

(123) (58) (85)

Changes in assets and liabilities, excluding acquisitions and divestitures:

Accounts receivable

(168) (427) (143)

Inventories

(81) (773) (219)

Other assets

(216) (362) (164)

Restructuring reserves

59 (7) (44)

Accounts payable and accrued liabilities

(222) 1,270 813

Accrued income taxes

(77) (440) 328

Cash provided by operating activities from continuing operations

2,221 1,990 2,551

Investing Activities of Continuing Operations

Capital expenditures

(539) (592) (552)

Sale of property, plant and equipment

32 127 124

Acquisition of businesses, net of cash acquired

(726) (269) (725)

Other - net

49 41 63

Cash used by investing activities from continuing operations

(1,184) (693) (1,090)

Financing Activities of Continuing Operations

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

(51) 379 (18)

Proceeds from debt

1,173 1,771 734

Repayments of debt

(1,555) (184) (744)

Stock repurchases and retirements

(625) (1,441) (1,307)

Payment of cash dividends

(980) (916) (762)

Proceeds from the exercise of stock options

42 17 178

Dividends paid to noncontrolling interests

(149) (121) (142)

Employee equity-based compensation withholding taxes

(37) (51) (33)

Other - net

8 30 (37)

Cash used by financing activities from continuing operations

(2,174) (516) (2,131)

Discontinued Operations - Cash used by operating activities

— (4) (64)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(5) (53) 116

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

(1,142) 724 (618)

Cash, cash equivalents and restricted cash at beginning of period

2,066 1,342 1,960

Cash, cash equivalents and restricted cash at end of period

924 2,066 1,342

Less: Restricted cash

89 35 6

Cash and cash equivalents at end of period

$ 835 $ 2,031 $ 1,336

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

Johnson Controls International plc

Consolidated Statements of Shareholders' Equity

Year Ended September 30,

(in millions) 2023 2022 2021

Shareholders' Equity Attributable to Johnson Controls

Beginning Balance $ 16,268 $ 17,562 $ 17,447

Ordinary Shares

Beginning balance 7 7 8

Repurchases and retirements of ordinary shares — — (1)

Ending balance 7 7 7

Ordinary Shares Held in Treasury, at Cost

Beginning balance (1,203) (1,152) (1,119)

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

Ending balance (1,240) (1,203) (1,152)

Capital in Excess of Par Value

Beginning balance 17,224 17,116 16,865

Change in noncontrolling interest share — — (8)

Share-based compensation expense 85 88 76

Other, including options exercised 40 20 183

Ending balance 17,349 17,224 17,116

Retained Earnings

Beginning balance 1,151 2,025 2,469

Net income attributable to Johnson Controls 1,849 1,532 1,637

Cash dividends declared (991) (965) (771)

Repurchases and retirements of ordinary shares (625) (1,441) (1,306)

Other — — (4)

Ending balance 1,384 1,151 2,025

Accumulated Other Comprehensive Income (Loss)

Beginning balance (911) (434) (776)

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

Ending balance (955) (911) (434)

Ending Balance 16,545 16,268 17,562

Shareholders' Equity Attributable to Noncontrolling Interests

Beginning Balance 1,134 1,191 1,086

Comprehensive income attributable to noncontrolling interests 168 69 253

Dividends attributable to noncontrolling interests (152) (131) (142)

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

Ending Balance 1,149 1,134 1,191

Total Shareholders' Equity $ 17,694 $ 17,402 $ 18,753

Cash Dividends Declared per Ordinary Share $ 1.45 $ 1.39 $ 1.07

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

Johnson Controls International plc

Notes to Consolidated Financial Statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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," "Johnson Controls" or "JCI plc").

The Company's fiscal year ends on September 30. Unless otherwise stated, references to years in this report relate to fiscal years

rather than calendar years.

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 and repair of equipment (in the HVAC,

industrial refrigeration, controls, security and fire-protection space), energy-management consulting and data-driven “smart

building” services and solutions powered by its OpenBlue software platform and capabilities. The Company 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 accounting principles generally accepted in the United States of America

("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 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 VIEs in its continuing operations for the presented reporting periods.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates

and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the

date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results

could differ from those estimates.

Fair Value of Financial Instruments

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.

Acquisitions

The purchase price of acquired businesses is allocated to the related identifiable assets and liabilities based on estimated fair

values. The excess of the purchase price over the amount allocated to the assets and liabilities, if any, is recorded as goodwill.

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

as part of the purchase price. This estimate is updated in future periods and any changes in the estimate, which are not

considered an adjustment to the purchase price, are recorded in our consolidated statements of operations. Payments for

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

outflows. Amounts paid in excess of the estimated contingent earn-out liabilities on the acquisition date are reflected as

operating cash outflows.

All available information is used to estimate fair values. External valuation specialists are typically engaged to assist in the fair

value determination of identifiable intangible assets and any other significant assets or liabilities. The preliminary purchase

price allocation is adjusted, as necessary, up to one year after the acquisition closing date as more information is obtained

regarding assets acquired and liabilities assumed based on facts and circumstances that existed as of the acquisition date.

The purchase price allocation methodology contains uncertainties because it requires the Company to make assumptions and to

apply judgment to estimate the fair value of acquired assets and assumed liabilities. The fair value of assets and liabilities is

estimated based upon the carrying value of the acquired assets and assumed liabilities and widely accepted valuation

techniques, including discounted cash flows. Unanticipated events or circumstances may occur which could affect the accuracy

of fair value estimates, including assumptions regarding industry economic factors and business strategies.

Other estimates used in determining fair value include, but are not limited to, future cash flows or income related to intangibles,

market rate assumptions and discount rates. Fair value estimates are based upon assumptions believed to be reasonable, but that

are inherently uncertain, and therefore, may not be realized. Accordingly, there can be no assurance that the estimates,

assumptions, and values reflected in the valuations will be realized, and actual results could differ materially.

Assets and Liabilities Held for Sale

Assets and liabilities (disposal groups) to be sold are classified as held for sale in the period in which all of the following

criteria are met:

• Management, having the authority to approve the action, commits to a plan to sell the disposal group;

• The disposal group is available for immediate sale in its present condition subject only to terms that are usual and

customary for sales of such disposal groups;

• An active program to locate a buyer and other actions required to complete the plan to sell the disposal group have

been initiated;

• Sale of the disposal group is probable and transfer of the disposal group is expected to qualify for recognition as a

completed sale within one year, except if events or circumstances beyond the Company's control extend the period of

time required to sell the disposal group beyond one year;

• The disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value;

and

• Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or

that the plan will be withdrawn.

The Company initially measures a disposal group that is classified as held for sale at the lower of its carrying value or fair value

less any costs to sell in accordance with ASC 360-10-15, "Impairment or Disposal of Long-Lived Assets." The carrying amount

of any assets, including goodwill, that are part of the disposal group, but not in the scope of ASC 360-10, are tested for

impairment under the relevant guidance prior to measuring the disposal group at fair value, less cost to sell.

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

gains are not recognized on the sale of a disposal group until the date of sale. The Company assesses the fair value of a disposal

group, less any costs to sell, each reporting period it remains classified as held for sale and reports any subsequent changes as

an adjustment to the carrying value of the disposal group, as long as the new carrying value does not exceed the carrying value

of the disposal group at the time it was initially classified as held for sale.

Upon determining that a disposal group meets the criteria to be classified as held for sale, the Company reports the assets and

liabilities of the disposal group, if material, in the line items assets held for sale and liabilities held for sale in the consolidated

statements of financial position.

Cash and Cash Equivalents

Cash equivalents include all highly liquid investments with an original maturity of three months or less when purchased.

Restricted Cash

Restricted cash relates to amounts restricted for payment of asbestos liabilities and certain litigation and environmental matters

and is recorded within other current assets in the consolidated statements of financial position.

Receivables

Receivables consist of billed receivables which are currently due from customers and unbilled receivables where the Company

has satisfied its performance obligations, but has not yet issued the invoice to the customer. Incentives are periodically offered

to customers, including early payment discounts and extended payment terms of certain receivables. The Company extends

credit to customers in the normal course of business and maintains an allowance for expected credit losses resulting from the

inability or unwillingness of customers to make required payments. The allowance for expected credit losses is based on

historical experience, existing economic conditions, reasonable and supportable forecasts, and any specific customer collection

issues the Company has identified. The Company evaluates the reasonableness of the allowance for expected credit losses on a

quarterly basis.

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

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

continuing involvement with the factored receivables. Sales of accounts receivable are reflected as a reduction of accounts

receivable in the consolidated statements of financial position and the proceeds are included in cash flows from operating

activities in the consolidated statements of cash flows.

Inventories

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

and work-in-process inventories include material, labor and manufacturing overhead costs.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Depreciation is provided over the estimated useful lives of the respective

assets using the straight-line method for financial reporting purposes and accelerated methods for income tax purposes.

Estimated useful lives generally range from 3 to 40 years for buildings and improvements, up to 15 years for subscriber

systems, and from 3 to 15 years for machinery and equipment. Interest on borrowings is capitalized during the active

construction period of major capital projects, added to the cost of the underlying assets and amortized over the useful lives of

the assets.

Goodwill and Indefinite-Lived Intangible Assets

Goodwill reflects the cost of an acquisition in excess of the fair values assigned to identifiable net assets acquired. Goodwill is

reviewed for impairment during the fourth fiscal quarter (as of July 31) or more frequently if events or changes in

circumstances indicate the asset might be impaired. The Company performs impairment reviews for its reporting units, which

have been determined to be the Company’s reportable segments or one level below the reportable segments in certain instances,

using a fair value method based on management’s judgments and assumptions or third party valuations. The fair value of a

reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market

participants at the measurement date. In estimating the fair value, the Company uses the multiples of earnings approach based

on the average of published multiples of earnings of comparable entities with similar operations and economic characteristics

and applies the multiples to the Company's average of historical and future financial results for each reporting unit. In certain

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

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

Value Measurement." The estimated fair value is then compared to the carrying amount of the reporting unit, including

recorded goodwill. The Company is subject to financial statement risk to the extent that the carrying amount exceeds the

estimated fair value.

Indefinite-lived intangible assets are also subject to at least annual impairment testing in the fourth fiscal quarter or as events

occur or circumstances change that indicate the assets may be impaired. Indefinite-lived intangible assets primarily consist of

trademarks and trade names and are tested for impairment using a relief-from-royalty method. The Company considers the

implications of both external (e.g., market growth, competition and local economic conditions) and internal (e.g., product sales

and expected product growth) factors and their potential impact on cash flows related to the intangible asset in both the near-

and long-term. The Company also considers the profitability of the business, among other factors, to determine the royalty rate

for use in the impairment assessment.

While the Company believes that the estimates and assumptions underlying the valuation methodologies are reasonable,

different estimates and assumptions could result in different outcomes.

Leases

Lessee arrangements

The Company leases certain administrative, production and other facilities, fleet vehicles, information technology equipment

and other equipment under arrangements that are accounted for as operating leases. The Company determines whether an

arrangement contains a lease at contract inception based on whether the arrangement involves the use of a physically distinct

identified asset and whether the Company has the right to obtain substantially all of the economic benefits from the use of the

asset throughout the period as well as the right to direct the use of the asset.

Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its

obligation to make lease payments arising from the lease. Right-of-use assets and the corresponding lease liabilities are

recognized at commencement date based on the present value of lease payments for all leases with terms longer than twelve

months. The majority of the Company's leases do not provide an implicit interest rate. To determine the present value of lease

payments, the Company uses its incremental borrowing rate based on information available on the lease commencement date or

the implicit rate if it is readily determinable. The Company determines its incremental borrowing rate based on a comparable

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

elected to combine lease and nonlease components for its leases.

Most leases contain options to renew or terminate the lease. Right-of-use assets and lease liabilities reflect only the options

which the Company is reasonably certain to exercise.

The Company has certain real estate leases that contain variable lease payments which are based on changes in the Consumer

Price Index (CPI). Additionally, the Company's leases generally require it to pay for fuel, maintenance, repair, insurance and

taxes. These payments are not included in the right-of-use asset or lease liability and are expensed as incurred.

Lease expense is recognized on a straight-line basis over the lease term.

Lessor arrangements

The Company has monitoring services and maintenance agreements within its security business that include subscriber system

assets for which the Company retains ownership. These agreements contain both lease and nonlease components. The Company

has elected to combine lease and nonlease components for these arrangements where the timing and pattern of transfer of the

lease and nonlease components are the same and the lease component would be classified as an operating lease if accounted for

separately. The Company has concluded that in these arrangements the nonlease components are the predominant characteristic,

and as a result, the combined component is accounted for under the revenue guidance.

Impairment of Long-Lived Assets

Long-lived assets, including right-of-use assets under operating leases, other tangible assets and intangible assets with definite

lives, are reviewed for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may

not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with ASC 360-10-15,

"Impairment or Disposal of Long-Lived Assets," ASC 350-30, "General Intangibles Other than Goodwill" and ASC 985-20,

"Costs of Software to be Sold, Leased, or Marketed."

Assets and liabilities are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows

of other assets and liabilities and evaluates the asset group against the sum of the undiscounted future cash flows. If the

undiscounted cash flows do not indicate the carrying amount of the asset group is recoverable, an impairment charge is

measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flow

analysis or appraisals.

Intangible assets acquired in a business combination that are used in research and development activities are considered

indefinite-lived until the completion or abandonment of the associated research and development efforts. During the period that

those assets are considered indefinite lived, they are not amortized but are tested for impairment annually and more frequently if

events or changes in circumstances indicate that it is more likely than not that the asset is impaired. If the carrying amount of an

intangible asset exceeds its fair value, the Company recognizes an impairment loss in an amount equal to that excess.

Unamortized capitalized costs of a computer software product are compared to the net realizable value of the product. The

amount by which the unamortized capitalized costs of a computer software product exceed the net realizable value of that asset

is written off.

Revenue Recognition

Revenue from certain long-term contracts to design, manufacture and install building products and systems as well as

unscheduled repair or replacement services is recognized on an over time basis, with progress towards completion measured

using a cost-to-cost input method based on the relationship between actual costs incurred and total estimated costs at

completion. The cost-to-cost input method is used as it best depicts the transfer of control to the customer that occurs as the

Company incurs costs. Changes to the original estimates may be required during the life of the contract and such estimates are

reviewed monthly. If contract modifications result in additional goods or services that are distinct from those transferred before

the modification, they are accounted for prospectively as if the Company entered into a new contract. If the goods or services in

the modification are not distinct from those in the original contract, sales and gross profit are adjusted using the cumulative

catch-up method for revisions in estimated total contract costs and contract values. Estimated losses are recorded when

identified. The Company does not adjust the promised amount of consideration for the effects of a significant financing

component because at contract inception it expects to receive the payment within twelve months of transfer of goods or

services.

The Company enters into extended warranties and long-term service and maintenance agreements with certain customers. For

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

The Company also sells certain HVAC and refrigeration products and services in bundled arrangements with multiple

performance obligations, such as equipment, commissioning, service labor and extended warranties. Approximately four to

twelve months separate the timing of the first deliverable until the last piece of equipment is delivered. There may also be

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

In addition, the Company sells security monitoring systems that may have multiple performance obligations, including

equipment, installation, monitoring services and maintenance agreements. Revenue associated with the sale of equipment and

related installations are recognized over time on a cost-to-cost input method, while the revenue for monitoring and maintenance

services are recognized over time as services are rendered. The transaction price is allocated to each performance obligation

based on the relative standalone selling price method. In order to estimate relative standalone selling price, market data and

transfer price studies are utilized. If the standalone selling price is not directly observable, the Company estimates the

standalone selling price using an adjusted market assessment approach or expected cost plus margin approach. If the Company

retains ownership of the subscriber system asset, fees for monitoring and maintenance services are recognized over the contract

term on a straight-line basis. Non-refundable fees received in connection with the initiation of a monitoring contract, along with

associated direct and incremental selling costs, are deferred and amortized over the estimated life of the contract.

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

customer.

The Company assesses variable consideration that may affect the total transaction price, including discounts, rebates, refunds,

credits or other similar sources of variable consideration, when determining the transaction price of each contract. The

Company includes variable consideration in the estimated transaction price when it is probable that significant reversal of

revenue recognized would not occur when the uncertainty associated with variable consideration is subsequently resolved.

These estimates are based on the amount of consideration that the Company expects to be entitled to.

Shipping and handling costs billed to customers are included in sales and the related costs are included in cost of sales when

control transfers to the customer. The Company presents amounts collected from customers for sales and other taxes net of the

related amounts remitted.

Subscriber System Assets, Dealer Intangibles and Related Deferred Revenue Accounts

The Company considers assets related to the acquisition of new customers in its electronic security business in three asset

categories:

• Internally generated residential subscriber systems outside of North America;

• Internally generated commercial subscriber systems; and

• Customer accounts acquired through the ADT dealer program, primarily outside of North America (referred to as

dealer intangibles).

Subscriber system assets include installed property, plant and equipment for which the Company retains ownership and

deferred costs directly related to the customer acquisition and system installation. Subscriber system assets represent capitalized

equipment (e.g. security control panels, touch pad, motion detectors, window sensors, and other equipment) and installation

costs associated with electronic security monitoring arrangements under which the Company retains ownership of the security

system assets in a customer's place of business or residence. Installation costs represent costs incurred to prepare the asset for its

intended use. The Company pays property taxes on the subscriber system assets and may retrieve such assets when the

agreement is terminated. These assets embody a probable future economic benefit as they generate future monitoring revenue

for the Company.

Costs related to the subscriber system equipment and installation are categorized as property, plant and equipment rather than

deferred costs. Deferred costs associated with subscriber system assets represent direct and incremental selling expenses (such

as commissions) related to acquiring the customer. Commissions related to up-front consideration paid by customers in

connection with the establishment of the monitoring arrangement are determined based on a percentage of the up-front fees and

do not exceed deferred revenue. Such deferred costs are recorded as other current and noncurrent assets within the consolidated

statements of financial position.

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

life of the subscriber. In certain geographical areas which have a large number of customers that behave in a similar manner

over time, the Company accounts for subscriber system assets and related deferred revenue using pools, with separate pools for

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

Pooled subscriber system assets and related deferred revenue are depreciated using a straight-line method with lives up

to 12 years and considering customer attrition. Non-pooled subscriber systems (primarily in Europe, Latin America and Asia)

and related deferred revenue are depreciated using a straight-line method with a 15-year life, with remaining balances written

off upon customer termination.

Certain contracts and related customer relationships result from purchasing residential security monitoring contracts from an

external network of independent dealers who operate under the ADT dealer program, primarily outside of North America.

Acquired contracts and related customer relationships are recorded at their contractually determined purchase price.

During the first 6 months (12 months in certain circumstances) after the purchase of the customer contract, any cancellation of

monitoring service, including those that result from customer payment delinquencies, results in a chargeback by the Company

to the dealer for the full amount of the contract purchase price. The Company records the amount charged back to the dealer as

a reduction of the previously recorded intangible asset.

Intangible assets arising from the ADT dealer program described above are amortized in pools determined by the same month

and year of contract acquisition on a straight-line basis over the period of the customer relationship. The estimated useful life of

dealer intangibles ranges from 12 to 15 years.

Research and Development Costs

Expenditures for research activities relating to product development and improvement are charged against income as incurred

and included within selling, general and administrative expenses in the consolidated statements of income. Such expenditures

for the years ended September 30, 2023, 2022 and 2021 were $320 million, $295 million and $275 million, respectively.

Stock-Based Compensation

Restricted (Non-vested) Stock /Units

Restricted stock and restricted stock units are typically settled in shares for employees in the U.S. and in cash for employees not

in the U.S. Restricted awards typically vest over a period of three years from the grant date. The Company's Compensation and

Talent Development Committee may approve different vesting terms on specific grants. 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

Performance-based share unit ("PSU") awards are generally contingent on the achievement of predetermined performance goals

over a performance period of one to three years and on the award holder's continuous employment until the vesting date. The

majority of PSUs are also indexed to the achievement of specified levels of total shareholder return versus a peer group over the

performance period.

Upon completion of the performance period, earned PSUs are typically settled with shares of the Company's ordinary shares for

employees in the U.S. and in cash for employees not in the U.S.

The fair value of the portion of the PSU which is linked to the achievement of performance goals is based on the closing market

value of the Company's ordinary shares on the date of grant. Share-based compensation expense for these PSUs is recognized

over the performance period based on the probability of achieving the performance targets.

The fair value of the portion of the PSU that is indexed to total shareholder return is estimated on the date of grant using a

Monte Carlo simulation that uses the following assumptions:

• 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.

• The expected volatility is based on the historical volatility of the Company's stock over the most recent three-year

period as of the grant date.

Share-based compensation expense for PSUs which are indexed to total shareholder return is not adjusted for changes in

performance subsequent to the grant date because the likelihood of achieving the market condition is incorporated in the grant

date fair value of the award.

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.

The fair value of each option is estimated on the date of grant using a Black-Scholes option valuation model that uses the

following assumptions:

• The expected life of options represents the period of time that options granted are expected to be outstanding.

• 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 grants in fiscal 2023, expected volatility is based on the historical volatility of the Company's stock corresponding

to the expected life as of the grant date. For grants in fiscal 2022 and fiscal 2021, expected volatility is based on the

historical volatility of the Company's stock since October 2016 and certain peer companies' stock prior to October

2016 over the most recent period corresponding to the expected life as of the grant date.

• 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.

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 include

unamortized compensation cost.

Foreign Currency Translation

Substantially all of the Company’s international operations use the respective local currency as the functional currency. Assets

and liabilities of international entities have been translated at period-end exchange rates, and income and expenses have been

translated using average exchange rates for the period. Monetary assets and liabilities denominated in non-functional currencies

are adjusted to reflect period-end exchange rates. Aggregate transaction gains, net of the impact of foreign currency hedges, for

the years ended September 30, 2023, 2022 and 2021 were $28 million, $49 million and $56 million, respectively.

Derivative Financial Instruments

The Company has written policies and procedures that place all derivative financial instruments under the direction of

Corporate treasury and restrict all derivative transactions to those intended for hedging purposes. The use of derivatives for

speculative purposes is strictly prohibited. The Company selectively uses derivatives to manage the market risk from changes in

foreign exchange rates, commodity prices, stock-based compensation liabilities and interest rates.

The fair values of all derivatives are recorded in the consolidated statements of financial position. The change in a derivative’s

fair value is recorded each period in current earnings or accumulated other comprehensive income ("AOCI"), depending on

whether the derivative is designated as part of a hedge transaction and if so, the type of hedge transaction.

Investments

Investments in debt and equity securities and deferred compensation plan assets are marked to market at the end of each

accounting period. Unrealized gains and losses are recognized in the consolidated statements of income.

Pension and Postretirement Benefits

The Company utilizes a mark-to-market approach for recognizing pension and postretirement benefit expenses, including

measuring plan assets at fair value and recognizing actuarial gains and losses in the fourth quarter of each fiscal year or at the

date of a remeasurement event.

Guarantees

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

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

Company monitors its warranty activity and adjusts its reserve estimates when it is probable that future warranty costs will be

different than those estimates.

The Company’s product warranty liability is recorded in the consolidated statements of financial position in other current

liabilities if the warranty is less than one year and in other noncurrent liabilities if the warranty extends longer than one year.

Loss Contingencies

Accruals are recorded for various contingencies including legal proceedings, environmental matters, self-insurance and other

claims that arise in the normal course of business when it is probable a liability has been incurred and the amount of the liability

is reasonably estimable. The accruals are based on judgment, the probability of losses and, where applicable, the consideration

of opinions of internal and/or external legal counsel and actuarial determined estimates. Additionally, the Company records

receivables from third party insurers when recovery has been determined to be probable.

The Company is subject to laws and regulations relating to protecting the environment. Expenses associated with environmental

remediation obligations are recognized when such amounts are probable and can be reasonably estimated.

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

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

claims experience. Receivables from third party insurers are recorded when recovery has been determined to be probable. The

Company maintains captive insurance companies to manage its insurable liabilities.

Asbestos-Related Contingencies and Insurance Receivables

The Company and certain of its subsidiaries, along with numerous other companies, are named as defendants in personal injury

lawsuits based on alleged exposure to asbestos-containing materials. The estimated liability and corresponding insurance

recovery for pending and future claims and defense costs is based on the Company's historical claim experience, and estimates

of the number and resolution cost of potential future claims that may be filed and is discounted to present value from 2068

(which is the Company's reasonable best estimate of the actuarial determined time period through which asbestos-related claims

will be filed against its affiliates). Estimated asbestos-related defense costs are included in the asbestos liability. The Company's

legal strategy for resolving claims also impacts these estimates. The Company considers various trends and developments in

evaluating the period of time (the look-back period) over which historical claim and settlement experience is used to estimate

and value claims reasonably projected to be made through 2068. At least annually, the Company assesses the sufficiency of its

estimated liability for pending and future claims and defense costs by evaluating actual experience regarding claims filed,

settled and dismissed, and amounts paid in settlements. In addition to claims and settlement experience, the Company considers

additional quantitative and qualitative factors such as changes in legislation, the legal environment, and the Company's defense

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

all of these factors and determines whether a change in the estimate of its liability for pending and future claims and defense

costs or insurance receivable is warranted.

In connection with the recognition of liabilities for asbestos-related matters, the Company records asbestos-related insurance

recoveries that are probable. Estimated asbestos-related insurance recoveries represent estimated amounts due to the Company

for previously paid and settled claims and the probable reimbursements relating to its estimated liability for pending and future

claims discounted to present value. In determining the amount of insurance recoverable, the Company considers available

insurance, allocation methodologies, solvency and creditworthiness of the insurers.

Income Taxes

Deferred tax liabilities and assets are recognized for the expected future tax consequences of events that have been reflected in

the consolidated financial statements. Deferred tax asset and liabilities are determined based on the differences between the

book and tax basis of particular assets and liabilities and operating loss carryforwards, using tax rates in effect for the years in

which the differences are expected to reverse. A valuation allowance is provided to reduce the carrying or book value of

deferred tax assets if, based upon the available evidence, including consideration of tax planning strategies, it is more-likely-

than-not that some or all of the deferred tax assets will not be realized.

Prior Period Revision – Statement of Cash Flows

The Company revised the amounts previously reported as net proceeds from borrowings with maturities less than three months

and proceeds from debt for certain short-term debt transactions that were incorrectly presented on a net basis within the

financing activities section of the consolidated statements of cash flows for the years ended September 30, 2022 and 2021. Cash

provided by financing activities and the total increase (decrease) in cash, cash equivalents and restricted cash were unchanged

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

New Accounting Pronouncements

Recently Issued Accounting Pronouncements

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 expects to adopt the new disclosures,

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

required at the beginning of fiscal 2025.

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

financial statements.

2. ACQUISITIONS AND DIVESTITURES

FM:Systems Acquisition

In July 2023, the Company completed its acquisition of FM:Systems, a leading digital workplace management and Internet of

Things ("IoT") solutions provider for facilities and real estate professionals, for $540 million, net of cash acquired, which was

comprised of an upfront cash payment of $465 million, net of cash acquired, and the estimated fair value at the acquisition date

of contingent earn-out liabilities of $75 million. The contingent earn-out liabilities are primarily based upon the achievement of

certain defined operating results in the two years following the acquisition, with a maximum payout of $155 million.

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

segment. Goodwill is attributable primarily to expected synergies, expanded market opportunities and other benefits that the

Company believes will result from integrating the products and capabilities of FM:Systems into its operations. The goodwill

created in the acquisition is not deductible for tax purposes.

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

Cash and cash equivalents $ 8

Accounts receivable 15

All other current assets 9

Goodwill 399

Intangible assets 194

All other noncurrent assets 7

Total assets acquired 632

Deferred revenue 24

All other current liabilities 49

Other noncurrent liabilities 11

Total liabilities acquired 84

Net assets acquired $ 548

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

Fair Value

(in millions)

Weighted Average

Life (in years)

Customer relationships $ 117 10

Technology 74 10

Trademarks and other definite-lived intangibles 3 4

Total identifiable intangible assets $ 194

Silent-Aire Acquisition

In May 2021, the Company completed its acquisition of Silent-Aire, a global leader in hyperscale data center cooling and

modular critical infrastructure solutions, for approximately $755 million, net of cash acquired, which was comprised of an

upfront net cash payment of approximately $661 million, the estimated fair value of contingent earn-out liabilities at the

acquisition date of approximately $86 million and a working capital adjustment of $8 million. The contingent earn-out

liabilities are based upon the achievement of certain defined operating results in each of the three years following the

acquisition, with a maximum payout of approximately $250 million. The Company recorded reductions in the fair value of the

contingent earn-out liability of $30 million and $43 million during the years ended September 30, 2023 and 2022, respectively.

No earn-out payments were made for the twelve-month earn-out periods ended April 30, 2023 and 2022, as the performance

measures for the periods were not achieved.

Other Acquisitions

During fiscal 2023, the Company acquired several other businesses for a combined purchase price, net of cash acquired, of

$306 million, of which $260 million was paid as of September 30, 2023. Intangible assets associated with these acquisitions

totaled $116 million and primarily relate to customer relationships and technology. The Company recorded goodwill associated

with these acquisitions of $119 million in the Global Products segment, $55 million in the Building Solutions Asia Pacific

segment and $13 million in the Building Solutions EMEA/LA segment.

During fiscal 2022, the Company acquired several businesses for a combined purchase price, net of cash acquired, of

$323 million, of which $269 million was paid as of September 30, 2022. Intangible assets associated with these acquisitions

totaled $123 million and primarily relate to customer relationships and technology. The Company recorded goodwill associated

with these acquisitions of $194 million, of which $68 million was assigned to the Building Solutions EMEA/LA segment,

$45 million was assigned to the Global Products segment, $44 million was assigned to the Building Solutions Asia Pacific

segment and $36 million was assigned to the Building Solutions North America segment.

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

Divestitures

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

statements for disclosure of a business in the Building Solutions Asia Pacific segment that was sold on August 1, 2023. No

divestitures were material individually or in the aggregate in fiscal 2023 and 2022.

3. ASSETS AND LIABILITIES HELD FOR SALE AND DISCONTINUED OPERATIONS

Assets and Liabilities Held for Sale

During fiscal 2023, the Company concluded that its Global Retail business, which is included in the Building Solutions North

America, Building Solutions Asia Pacific and Building Solutions EMEA/LA segments and was previously presented as held for

sale in the consolidated statements of financial position as of September 30, 2022, no longer met the criteria to be classified as

held for sale. The Company discontinued sales efforts based on market factors and other considerations and determined that it

was no longer probable that the business would be sold within one year. As a result, the assets and liabilities are now reported

as held and used on the consolidated statements of financial position as of both September 30, 2023 and September 30, 2022.

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

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

reclassification.

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

1, 2023. The net assets were not significant to the consolidated statements of financial position.

During fiscal 2022, the Company determined that certain assets of the Building Solutions Asia Pacific segment no longer met

the criteria to be classified as held for sale because the Company could no longer assert that the sale of the assets was probable

within one year due to declines in the Chinese real estate market after the COVID-19 lockdowns. As a result, the Company

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

sale assets to held and used as of September 30, 2022. Upon reclassification, an impairment of $45 million was recorded within

restructuring and impairment costs in the consolidated statements of income to adjust the asset to the lower of its carrying value

adjusted for depreciation and the fair value of the asset as of September 30, 2022.

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

Year Ended September 30,

2023 2022

Global Retail business $ 438 $ 359

Business in the Building Solutions Asia Pacific segment 60 60

Certain assets in the Building Solution Asia Pacific segment — 45

The impairment charges were recorded within restructuring and impairment costs in the consolidated statements of income and

include costs to write down the disposal groups to their estimated fair values, less costs to sell; impairment of goodwill; and the

write-off of internal-use software projects that were no longer probable of being completed. Refer to Note 8, "Goodwill and

Other Intangible Assets," of the notes to the consolidated financial statements for further information regarding the goodwill

impairment charges.

The businesses did not meet the criteria to be classified as discontinued operations as neither planned divestiture represented a

strategic shift that would have a major effect on the Company's operations and financial results.

Discontinued Operations

The Company completed the sale of its Power Solutions business on April 30, 2019. In fiscal 2021, the favorable resolution of

certain post-closing working capital and net debt adjustments resulted in income from discontinued operations of $124 million,

net of tax of $26 million, due to a reversal of a reserve established in connection with the sale.

4. REVENUE RECOGNITION

Disaggregated Revenue

The following table presents the Company's revenues disaggregated by segment and by products and systems versus services

revenue (in millions):

Year Ended September 30,

2023 2022

Products &

Systems Services Total

Products &

Systems Services Total

Building Solutions North America $ 6,368 $ 3,962 $ 10,330 $ 5,708 $ 3,659 $ 9,367

Building Solutions EMEA/LA 2,275 1,821 4,096 2,188 1,657 3,845

Building Solutions Asia Pacific 1,987 759 2,746 2,005 709 2,714

Global Products 9,621 — 9,621 9,373 — 9,373

Total $ 20,251 $ 6,542 $ 26,793 $ 19,274 $ 6,025 $ 25,299

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

Year Ended September 30,

2023 2022

HVAC $ 6,820 $ 6,756

Fire & Security 2,446 2,367

Industrial Refrigeration 355 250

Total $ 9,621 $ 9,373

Contract Balances

Contract assets represent the Company’s right to consideration for performance obligations that have been satisfied but not

billed and consist of unbilled receivables and costs in excess of billings. Contract liabilities are customer payments received

before performance obligations are satisfied. Contract balances are classified as assets or liabilities on a contract-by-contract

basis at the end of each reporting period.

The following table presents the location and amount of contract balances in the Company's consolidated statements of

financial position (in millions):

September 30,

Location of contract balances 2023 2022

Contract assets - current Accounts receivable - net $ 2,370 $ 2,067

Contract assets - noncurrent Other noncurrent assets 12 79

Contract liabilities - current Deferred revenue 1,996 1,804

Contract liabilities - noncurrent Other noncurrent liabilities 297 282

The Company recognized revenue that was included in the beginning of period contract liability balance of approximately

$1.6 billion and $1.5 billion for the years ended September 30, 2023 and 2022, respectively.

Performance Obligations

A performance obligation is a distinct good, service, or 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 as of a point in time or over time. The timing of satisfying the performance obligation is

typically indicated by the terms of the contract. As of September 30, 2023, the aggregate amount of the transaction price

allocated to remaining performance obligations was approximately $19.6 billion, of which approximately 65% 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 average 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 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 the costs

are recoverable. These costs consist primarily of sales commissions and bid/proposal costs. Costs to obtain or fulfill a contract

are capitalized when incurred and amortized to expense 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):

September 30,

2023 2022

Other current assets $ 156 $ 139

Other noncurrent assets 224 174

Total $ 380 $ 313

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

2023 and 2022, respectively. There were no impairment losses recognized in the year ended September 30, 2023 or 2022.

5. ACCOUNTS RECEIVABLE

The Company sold $1,962 million and $1,115 million of accounts receivable under factoring agreements during the years ended

September 30, 2023, and 2022, respectively. The cost of factoring such receivables was not material. Previously sold

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

respectively.

6. INVENTORIES

Inventories consisted of the following (in millions):

September 30,

2023 2022

Raw materials and supplies

$ 1,203 $ 1,040

Work-in-process

226 203

Finished goods

1,347 1,422

Inventories

$ 2,776 $ 2,665

7. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following (in millions):

September 30,

2023 2022

Buildings and improvements

$ 1,337 $ 1,320

Subscriber systems

823 762

Machinery and equipment

4,227 3,745

Construction in progress

540 514

Land

194 197

Total property, plant and equipment

7,121 6,538

Less: Accumulated depreciation

(3,985) (3,407)

Property, plant and equipment - net

$ 3,136 $ 3,131

During the fourth quarter of fiscal 2023, the Company determined that a triggering event had occurred in the asset group

comprising the security subscriber business of Argentina, primarily as a result of the significant devaluation of the Argentine

peso that occurred during the quarter and the resulting impact on operating results and cash flows. The Company conducted the

two-step impairment test required in accordance with ASC 360, "Property, Plant & Equipment" and determined that the

carrying amount of the asset group exceeded its fair value. A non-cash impairment charge to the subscriber system assets of

$78 million was recorded and is included in restructuring and impairment costs in the consolidated statements of income. The

Company used a discounted cash flow model to estimate the fair value of the asset group. The primary assumptions and inputs

used in the model included management's internal projections of future cash flows, the weighted-average cost of capital and the

long-term growth rate. The fair value measurement is classified as Level 3 within the fair value hierarchy as defined in ASC

820, "Fair Value Measurement" due to the unobservable inputs used.

8. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

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

Year Ended September 30, 2023

Building

Solutions

North America

Building

Solutions

EMEA/LA

Building

Solutions

Asia Pacific

Global

Products Total

Goodwill $ 9,630 $ 1,794 $ 1,116 $ 5,591 18,131

Accumulated impairment loss (659) (47) — (75) (781)

Balance at beginning of period 8,971 1,747 1,116 5,516 17,350

Acquisitions

(1)

399 13 55 119 586

Impairments — — — (184) (184)

Foreign currency translation and other 11 125 8 40 184

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

Year Ended September 30, 2022

Building

Solutions

North America

Building

Solutions

EMEA/LA

Building

Solutions

Asia Pacific

Global

Products Total

Goodwill $ 9,639 $ 2,088 $ 1,237 $ 5,842 18,806

Accumulated impairment loss (424) (47) — — (471)

Balance at beginning of period 9,215 2,041 1,237 5,842 18,335

Acquisitions

(1)

37 78 44 60 219

Divestitures — (5) (14) — (19)

Impairments (235) — — (75) (310)

Foreign currency translation and other (46) (367) (151) (311) (875)

Balance at end of period $ 8,971 $ 1,747 $ 1,116 $ 5,516 $ 17,350

(1)

Includes measurement period adjustments

In the second quarter of fiscal 2023, management completed an updated comprehensive review of the Silent-Aire reporting unit,

which is included in the Global Products segment. Because actual results were lower than planned and the nearer term forecast

was revised to reflect lower margins and earnings, the Company determined a triggering event had occurred and a quantitative

test of goodwill for possible impairment was necessary. As a result of the goodwill impairment test, the Company recorded a

non-cash impairment charge of $184 million within restructuring and impairment costs in the consolidated statements of

income in fiscal 2023, which was determined by comparing the carrying amount of the reporting unit to its fair value. The

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

Management completed its fiscal 2023 annual impairment test as of July 31. The fair value of all reporting units substantially

exceeded their carrying values, with the exception of one reporting unit with $455 million of goodwill whose fair value in

excess of its carrying value was approximately 10%. For this reporting unit, a 1% increase in the discount rate, or a 1.5%

decrease in the revenue growth rates, would cause the fair value to be less than the carrying value. While no impairment was

recorded, it is possible that future changes in circumstances could result in a non-cash impairment charge.

During its fiscal 2022 annual impairment test, the Company determined that goodwill in the Silent-Are reporting unit was

impaired and recorded a non-cash impairment charge of $75 million within restructuring and impairment costs in the

consolidated statements of income. The impairment charge was determined by comparing the carrying amount of the reporting

unit to its fair value.

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

and 2022. The primary assumptions and inputs used in the model included management's internal projections of future cash

flows, the weighted-average cost of capital and the long-term growth rate. The fair value measurement is classified as Level 3

within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement" due to the unobservable inputs used.

In fiscal 2022, the Company concluded it had a triggering event requiring assessment of goodwill impairment for its North

America Retail reporting unit in conjunction with classifying its Global Retail business as held for sale. As a result, the

Company recorded a non-cash impairment charge of $235 million within restructuring and impairment costs in the consolidated

statements of income in fiscal 2022. The North America Retail reporting unit had no remaining goodwill balance as of

September 30, 2023 or 2022. The Company used the market approach to estimate the fair value of the reporting unit based on

the relative estimated sales proceeds for the planned disposal of the Global Retail business attributable to the North America

Retail reporting unit. The inputs utilized in the analysis are classified as Level 3 inputs within the fair value hierarchy as defined

in ASC 820, "Fair Value Measurement."

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

statements for further disclosure.

There were no other triggering events requiring that an impairment assessment be conducted in fiscal 2023, 2022 or 2021.

However, it is possible that future changes in circumstances would require the Company to record additional non-cash

impairment charges.

Other Intangible Assets

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

September 30,

2023 2022

Gross

Carrying

Amount

Accumulated

Amortization Net

Gross

Carrying

Amount

Accumulated

Amortization Net

Definite-lived intangible assets

Technology

$ 1,575 $ (806) $ 769 $ 1,481 $ (728) $ 753

Customer relationships

3,047 (1,496) 1,551 3,011 (1,340) 1,671

Miscellaneous

889 (435) 454 949 (425) 524

5,511 (2,737) 2,774 5,441 (2,493) 2,948

Indefinite-lived intangible assets

Trademarks/tradenames

2,114 — 2,114 2,207 — 2,207

Total intangible assets

$ 7,625 $ (2,737) $ 4,888 $ 7,648 $ (2,493) $ 5,155

During the fourth quarter of fiscal 2023, the Company impaired $18 million of Miscellaneous intangible assets in the Global

Products segment and $10 million of a trademark in the Building Solutions Asia Pacific segment. These non-cash charges were

recorded within restructuring and impairment costs in the consolidated statements of income.

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

other remaining indefinite lived intangible assets, the Company estimated fair values were greater than the carrying values, with

the exception of three other registered trademarks in which the estimated fair values were consistent with their carrying values

which totaled $412 million.

Amortization of other intangible assets included within continuing operations for the years ended September 30, 2023, 2022

and 2021 was $439 million, $427 million and $435 million, respectively.

The following table summarizes the expected amortization of definite-lived intangible assets, excluding the impact of future

acquisitions, by year (in millions):

2024 $ 508

2025 479

2026 410

2027 365

2028 252

9. LEASES

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

Year Ended September 30,

2023 2022 2021

Operating lease cost $ 384 $ 352 $ 384

Variable lease cost 165 165 130

Total lease costs $ 549 $ 517 $ 514

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

September 30,

Location of lease balances

2023 2022

Operating lease right-of-use assets Other noncurrent assets $ 1,389 $ 1,271

Operating lease liabilities - current Other current liabilities 318 280

Operating lease liabilities - noncurrent Other noncurrent liabilities 1,086 987

Weighted-average remaining lease term 7 years 7 years

Weighted-average discount rate 3.5 % 2.1 %

The following table presents supplemental cash flow information related to operating leases (in millions):

Year Ended September 30,

2023 2022 2021

Cash paid for amounts included in the measurement of lease liability:

Operating cash outflows from operating leases $ 373 $ 367 $ 398

Noncash operating lease activity:

Right-of-use assets obtained in exchange for operating lease liabilities 427 369 515

The following table presents future minimum rental payments for operating lease liabilities as of September 30, 2023 (in

millions):

2024 $ 358

2025 300

2026 227

2027 171

2028 123

After 2028 404

Total operating lease payments 1,583

Less: Interest (179)

Present value of lease payments $ 1,404

10. DEBT AND FINANCING ARRANGEMENTS

Short-Term Debt

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

September 30,

2023 2022

Bank borrowings

$ 26 $ 10

Commercial paper

200 172

Term loans

159 487

$ 385 $ 669

Weighted average interest rate on short-term debt outstanding

5.1 % 0.5 %

Long-Term Debt

Long-term debt consisted of the following (in millions; due dates by fiscal year):

Carrying Value

Issuer Interest Rate Due Date

Par

Value

September 30,

2023

September 30,

2022

JCI plc

4.625% 2023 $ 25 $ — $ 25

TIFSA

4.625% 2023 $ 7

—

JCI plc

1.00% 2023 € 846

—

830

JCI plc

3.625% 2024 $ 453

453

JCI Inc.

3.625% 2024 $ 31

JCI plc

EURIBOR plus 0.70%

2024 € 150 159 —

JCI plc

1.375% 2025 € 423

450

419

TIFSA

1.375% 2025 € 54

JCI plc

3.90% 2026 $ 487

499

505

TIFSA

3.90% 2026 $ 51

JCI plc TORF plus 0.40% 2027 ¥ 30,000 202 208

JCI plc and TFSCA

0.375% 2027 € 500

528

488

JCI plc and TFSCA

3.00% 2028 € 600

634

586

JCI plc and TFSCA

1.75% 2030 $ 625

624

623

JCI plc and TFSCA

2.00% 2031 $ 500

497

496

JCI plc and TFSCA

1.00% 2032 € 500

529

489

JCI plc and TFSCA

4.90% 2032 $ 400

394

JCI plc and TFSCA

4.25% 2035 € 800

839

—

JCI plc

6.00% 2036 $ 342

339

JCI Inc.

6.00% 2036 $ 8

JCI plc

5.70% 2041 $ 190

189

JCI Inc.

5.70% 2041 $ 30

JCI plc

5.25% 2042 $ 155

155

JCI Inc.

5.25% 2042 $ 6

JCI plc

4.625%

2044 $ 444

442

441

JCI Inc. 4.625% 2044 $ 6 6 6

JCI plc

5.125% 2045 $ 477

431

557

TIFSA

5.125% 2045 $ 23

JCI plc

6.95% 2046 $ 32

JCI Inc.

6.95% 2046 $ 4

JCI plc

4.50% 2047 $ 500

496

JCI plc

4.95% 2064 $ 341

340

JCI Inc.

4.95% 2064 $ 15

Other

36 25

Gross long-term debt

8,498 8,324

Less: current portion

645 865

Less: debt issuance costs

35 33

Long-term debt

$ 7,818 $ 7,426

TIFSA = Tyco International Finance S.A.

TFSCA = Tyco Fire & Security Finance S.C.A.

The following table presents maturities of long-term debt as of September 30, 2023 (in millions):

2024 $ 646

2025 508

2026 550

2027 731

2028 634

After 2028 5,429

Total $ 8,498

Other

As of September 30, 2023, the Company had a syndicated $2.5 billion committed revolving credit facility, which was scheduled

to expire in December 2024, and a syndicated $500 million committed revolving credit facility, which expired in November

2023. Both credit facilities were renewed on December 11, 2023. The $2.5 billion facility is now scheduled to expire in

December 2028 and the $500 million facility is now scheduled to expire in December 2024. There were no draws on the

facilities as of September 30, 2023.

As of September 30, 2023, the Company was in compliance with all financial covenants set forth in its credit agreements and

the indentures governing its outstanding notes, and expects to remain in compliance for the foreseeable future.

Total interest paid on both short and long-term debt for the years ended September 30, 2023, 2022 and 2021 was $298 million,

$226 million and $242 million, respectively.

11. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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.

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 its 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.

As cash flow hedges under ASC 815, "Derivatives and Hedging," the 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 during the years ended September 30, 2023 and 2022.

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

Volume Outstanding as of September 30,

Commodity 2023 2022

Copper

2,812 3,629

Aluminum

5,976 6,758

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

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

Year Ended September 30,

2023 2022

US dollar denominated

Forward-starting interest swaps

$ 600 $ 300

Anticipated note issuance

800 400

Euro denominated

Forward-starting interest swap

€ 400 € 200

Anticipated note issuance

800 600

Forward-starting interest swaps are terminated when the anticipated notes are issued. As of September 30, 2023, $600 million

of forward-starting interest swaps were outstanding. Accumulated amounts recorded in AOCI as of the date of the note issuance

are amortized to interest expense over the life of the related note to reflect the difference between the swap's reference rate and

the fixed rate of the note.

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):

September 30,

2023 2022

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

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 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.

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):

Designated

as Hedging Instruments

Not Designated

as Hedging Instruments

September 30,

2023

September 30,

2022

September 30,

2023

September 30,

2022

Other current assets

Foreign currency exchange derivatives

$ 16 $ 30 $ 13 $ 24

Interest rate swaps

22 — —

—

Other noncurrent assets

Cross-currency interest rate swap

5 — — —

Total assets

$ 43 $ 30 $ 13 $ 24

Other current liabilities

Foreign currency exchange derivatives

$ 20 $ 24 $ 5 $ 27

Commodity derivatives

2 10 — —

Long-term debt

Foreign currency denominated debt

3,253 3,077 — —

Total liabilities

$ 3,275 $ 3,111 $ 5 $ 27

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.

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

Fair Value of Assets Fair Value of Liabilities

September 30,

2023

September 30,

2022

September 30,

2023

September 30,

2022

Gross amount recognized $ 56 $ 54 $ 3,280 $ 3,138

Gross amount eligible for offsetting (19) (42) (19) (42)

Net amount $ 37 $ 12 $ 3,261 $ 3,096

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

Year Ended September 30,

2023 2022 2021

Foreign currency exchange derivatives

$ (13) $ 26 $ 15

Commodity derivatives

1 (21) 4

Interest rate swaps

27 16 (21)

Total

$ 15 $ 21 $ (2)

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 Relationships

Location of Gain (Loss)

Reclassified from AOCI

into Income

Year Ended September 30,

2023 2022 2021

Foreign currency exchange derivatives Cost of sales $ (4) $ 25 $ 11

Commodity derivatives Cost of sales (8) (7) 3

Interest rate swaps Net financing charges — (2) —

Total $ (12) $ 16 $ 14

The following table presents the location and amount of pre-tax gains (losses) on derivatives not designated as hedging

instruments recognized in the Company’s consolidated statements of income (in millions):

Derivatives Not Designated as Hedging

Instruments

Location of Gain (Loss)

Recognized in Income on

Derivative

Year Ended September 30,

2023 2022 2021

Foreign currency exchange derivatives Cost of sales $ (16) $ 10 $ (6)

Foreign currency exchange derivatives Net financing charges (103) 85 174

Foreign currency exchange derivatives Selling, general and administrative — — (2)

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

Interest rate swaps Net financing charges 1 — —

Equity swap Selling, general and administrative — (5) 28

Total $ (118) $ 90 $ 193

Pre-tax gains (losses) on net investment hedges recorded as foreign currency translation adjustment ("CTA") within other

comprehensive income (loss) were $(223) million, $470 million and $42 million for the years ended September 30, 2023, 2022

and 2021, respectively. No gains or losses were reclassified from CTA into income for the years ended September 30, 2023,

2022 and 2021.

12. 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

September 30, 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 $ 29 $ — $ 29 $ —

Interest rate swaps 22 — 22 —

Other noncurrent assets

Cross-currency interest rate swap 5 — 5 —

Deferred compensation plan assets 45 45 — —

Exchange traded funds (fixed income)

76 76 — —

Exchange traded funds (equity)

155 155 — —

Total assets $ 332 $ 276 $ 56 $ —

Other current liabilities

Foreign currency exchange derivatives $ 25 $ — $ 25 $ —

Commodity derivatives 2 — 2 —

Contingent earn-out liabilities 48 — — 48

Other noncurrent liabilities

Contingent earn-out liabilities

76 — — 76

Total liabilities $ 151 $ — $ 27 $ 124

Fair Value Measurements Using:

Total as of

September 30, 2022

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 $ 54 $ — $ 54 $ —

Exchange traded funds (fixed income)

22 22 — —

Other noncurrent assets

Deferred compensation plan assets 46 46 — —

Exchange traded funds (fixed income)

86 86 — —

Exchange traded funds (equity)

131 131 — —

Total assets $ 339 $ 285 $ 54 $ —

Other current liabilities

Foreign currency exchange derivatives $ 51 $ — $ 51 $ —

Commodity derivatives 10 — 10 —

Contingent earn-out liabilities 30 — — 30

Other noncurrent liabilities

Contingent earn-out liabilities

30 — — 30

Total liabilities $ 121 $ — $ 61 $ 60

Classified as restricted investments for payment of asbestos liabilities. Refer to Note 21, "Commitments and Contingencies" of the notes to

consolidated financial statements for further details.

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, 2022 $ 60

Acquisitions 112

Payments (10)

Reduction for change in estimates (39)

Currency translation 1

Balance at September 30, 2023 $ 124

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 are generally established using a Monte Carlo simulation

based on the forecasted operating results and the earn-out formulas 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 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.

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 represents 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.

Investments in exchange traded funds: Investments in exchange traded funds are valued using a market approach based on

quoted market prices, where available, or broker/dealer quotes of identical or comparable instruments. Refer to Note 21,

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

The following table presents the portion of unrealized gains (losses) recognized in the consolidated statements of income that

relate to equity securities still held at September 30, 2023 and 2022 (in millions):

Year Ended

September 30,

2023 2022

Deferred compensation plan assets $ 5 $ (10)

Investments in exchange traded funds 24 (55)

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

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

carrying values.

The fair value of long-term debt at September 30, 2023 and 2022 was as follows (in billions):

Year Ended

September 30,

2023 2022

Public debt $ 7.1 $ 7.1

Other long-term debt 0.4 0.2

Total fair value of long-term debt $ 7.5 $ 7.3

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 shares, performance 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. Annual awards are typically granted in the first quarter of

the fiscal year. As of September 30, 2023, there were 55 million shares of the Company's common stock reserved and 41

million shares available for issuance under the 2021 Equity and Incentive Plan.

The following table summarizes stock-based compensation related charges and benefits (in millions):

Year Ended September 30,

2023 2022 2021

Compensation expense

$ 101

$ 104 $ 97

Income tax benefit resulting from share-based compensation arrangements

26 24

Tax impact from exercise and vesting of equity settled awards

Compensation expense is recorded in selling, general and administrative expenses. The Company does not settle stock options

granted under share-based payment arrangements in cash.

Restricted (Non-vested) Stock / Units

A summary of non-vested restricted stock awards at September 30, 2023, and changes for the year then ended, is presented

below:

Weighted

Average

Price

Shares/Units

Subject to

Restriction

Non-vested, September 30, 2022 $ 58.78 2,949,194

Granted 65.72 2,010,495

Vested 53.55 (1,487,685)

Forfeited 64.14 (664,891)

Non-vested, September 30, 2023 $ 64.90 2,807,113

At September 30, 2023, the Company had approximately $113 million of total unrecognized compensation cost related to non-

vested restricted stock arrangements granted which is expected to be recognized over a weighted-average period of 1.9 years.

Performance Share Awards (PSU's)

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

Year Ended September 30,

2023 2022 2021

Risk-free interest rate 4.04% 0.99% 0.20%

Expected volatility of the Company’s stock 33.50% 30.00% 30.90%

A summary of the status of the Company’s non-vested PSU's at September 30, 2023, and changes for the year then ended, is

presented below:

Weighted

Average

Price

Shares/Units

Subject to

PSU

Non-vested, September 30, 2022 $ 60.30 1,143,071

Granted 79.45 344,029

Vested 43.19 (361,117)

Forfeited 71.18 (258,459)

Non-vested, September 30, 2023 $ 71.77 867,524

At September 30, 2023, the Company had approximately $32 million of total unrecognized compensation cost related to non-

vested performance-based share unit awards which is expected to be recognized over a weighted-average period of 1.9 years.

Stock Options

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

Year Ended September 30,

2023 2022 2021

Expected life of option (years) 5.8 6.0 6.5

Risk-free interest rate 3.59% 1.35% 0.60%

Expected volatility of the Company’s stock 29.40% 27.80% 27.60%

Expected dividend yield on the Company’s stock 2.10% 1.71% 2.28%

A summary of stock option activity at September 30, 2023, and changes for the year then ended, is presented below:

Weighted

Average

Option Price

Subject to

Option

Weighted

Average

Remaining

Contractual

Life (years)

Aggregate

Intrinsic

Value

(in millions)

Outstanding, September 30, 2022 $ 42.46 5,683,847

Granted 66.77 570,140

Exercised 38.17 (1,068,612)

Forfeited or expired 59.31 (265,459)

Outstanding, September 30, 2023 $ 45.44 4,919,916 5.75 $ 56

Exercisable, September 30, 2023 $ 39.11 3,762,092 3.83 $ 53

The following table summarizes additional stock option information:

Year Ended September 30,

2023 2022 2021

Weighted-average grant-date fair value of options granted $ 18.21 $ 18.59 $ 9.36

Intrinsic value of options exercised (in millions) 27 19 94

At September 30, 2023, the Company had approximately $10 million of total unrecognized compensation cost related to non-

vested stock options which is expected to be recognized over a weighted-average period of 1.6 years.

14. EARNINGS PER SHARE

The following table reconciles the numerators and denominators used to calculate basic and diluted earnings per share (in

millions):

Year Ended September 30,

2023 2022 2021

Income Available to Ordinary Shareholders

Income from continuing operations

$ 1,849 $ 1,532 $ 1,513

Income from discontinued operations

— — 124

Basic and diluted income available to shareholders

$ 1,849 $ 1,532 $ 1,637

Weighted Average Shares Outstanding

Basic weighted average shares outstanding 684.3 696.1 716.6

Effect of dilutive securities:

Stock options, unvested restricted stock and unvested

performance share awards 3.1 3.5 4.5

Diluted weighted average shares outstanding 687.4 699.6 721.1

Antidilutive Securities

Stock options and unvested restricted stock 0.2 0.4 —

15. EQUITY

Dividends

The authority to declare and pay dividends is vested in the Board of Directors. The timing, declaration and payment of future

dividends to holders of the Company's ordinary shares is determined by the Company's Board of Directors and depends upon

many factors, including the Company's financial condition and results of operations, the capital requirements of the Company's

businesses, industry practice and any other relevant factors.

Under Irish law, dividends may only be paid (and share repurchases and redemptions must generally be funded) out of

"distributable reserves." The creation of distributable reserves was accomplished by way of a capital reduction, which the Irish

High Court approved on December 18, 2014 and as acquired in conjunction with the Merger.

Share Repurchase Program

As of September 30, 2023, approximately $3.0 billion remained available under the 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.

Accumulated Other Comprehensive Income

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

Year Ended September 30,

2023 2022 2021

Foreign currency translation adjustments

Balance at beginning of period $ (901) $ (421) $ (778)

Aggregate adjustment for the period (69) (480) 357

Balance at end of period (970) (901) (421)

Realized and unrealized gains (losses) on derivatives

Balance at beginning of period (11) (17) 2

Current period changes in fair value 19 20 (3)

Reclassification to income

(1)

11 (16) (14)

Net tax impact (4) 2 (2)

Balance at end of period 15 (11) (17)

Pension and postretirement plans

Balance at beginning of period 1 4 —

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

Other changes — — 8

Net tax impact — — (1)

Balance at end of period — 1 4

Accumulated other comprehensive loss, end of period $ (955) $ (911) $ (434)

(1)

Refer to Note 11, "Derivative Instruments and Hedging Activities," of the notes to 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. RETIREMENT PLANS

Pension Benefits

The Company has non-contributory defined benefit pension plans covering certain U.S. and non-U.S. employees. The benefits

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

the Company’s U.S. pension plans no longer allow new participants to enter the plans and no longer accrue benefits. Funding

for U.S. pension plans equals or exceeds the minimum requirements of the Employee Retirement Income Security Act of 1974.

Funding for non-U.S. plans observes the local legal and regulatory limits. Also, the Company makes contributions to union-

trusteed pension funds for construction and service personnel.

The following table includes information for pension plans with accumulated benefit obligations ("ABO") in excess of plan

assets (in millions):

September 30,

2023 2022

Accumulated benefit obligation $ 1,834 $ 2,004

Fair value of plan assets 1,618 1,720

The following table includes information for pension plans with projected benefit obligations ("PBO") in excess of plan assets

(in millions):

September 30,

2023 2022

Projected benefit obligation $ 1,846 $ 2,013

Fair value of plan assets 1,633 1,729

The Company contributed $55 million to the defined benefit plans in fiscal 2023 and expects to contribute approximately $24

million in cash in fiscal 2024. None of contributions made by the Company were voluntary.

Projected benefit payments from the plans as of September 30, 2023 are estimated as follows (in millions):

2024

$ 277

2025

235

2026

235

2027

233

2028

172

2029 - 2033

1,160

Postretirement Benefits

The Company provides certain health care and life insurance benefits for eligible retirees and their dependents primarily in the

U.S. and Canada. Most non-U.S. employees are covered by government sponsored programs. The cost to the Company is not

significant.

Eligibility for coverage is based on meeting certain years of service and retirement age qualifications. These benefits may be

subject to deductibles, co-payment provisions and other limitations. The Company has reserved the right to modify these

benefits.

The health care cost trend assumption does not have a significant effect on the amounts reported.

The following table includes information for postretirement plans with accumulated postretirement benefit obligations

("APBO") in excess of plan assets (in millions):

September 30,

2023 2022

Accumulated postretirement benefit obligation $ 58 $ 68

Fair value of plan assets 24 28

The Company contributed $2 million to the postretirement benefit plans in fiscal 2023 and expects to contribute approximately

$2 million in cash in fiscal 2024.

Projected benefit payments from the plans as of September 30, 2023 are estimated as follows (in millions):

2024

$ 10

2025

2026

2027

2028

2029 - 2033

Defined Contribution Plans

The Company sponsors various defined contribution savings plans that allow employees to contribute a portion of their pre-tax

and/or after-tax income in accordance with plan specified guidelines. Under specified conditions, the Company will contribute

to certain savings plans based on predetermined percentages of compensation earned by the employee and/or will match a

percentage of the employee contributions up to certain limits. Defined contribution plan contributions charged to expense

amounted to $209 million, $196 million and $118 million during the years ended September 30, 2023, 2022 and 2021,

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

Multiemployer Benefit Plans

The Company contributes to multiemployer benefit plans based on obligations arising from collective bargaining agreements

related to certain of its hourly employees in the U.S. These plans provide retirement benefits to participants based on their

service to contributing employers. The benefits are paid from assets held in trust for that purpose. The trustees typically are

responsible for determining the level of benefits to be provided to participants as well as for such matters as the investment of

the assets and the administration of the plans.

The risks of participating in these multiemployer benefit plans are different from single-employer benefit plans in the following

aspects:

• Assets contributed to the multiemployer benefit plan by one employer may be used to provide benefits to employees of

other participating employers.

• If a participating employer stops contributing to the multiemployer benefit plan, the unfunded obligations of the plan

may be borne by the remaining participating employers.

• If the Company stops participating in some of its multiemployer benefit plans, it may be required to pay those plans an

amount based on its allocable share of the underfunded status of the plan, referred to as a withdrawal liability.

The Company participates in approximately 260 multiemployer benefit plans, none of which are individually significant to the

Company. The number of employees covered by the Company’s multiemployer benefit plans has remained consistent over the

past three years, and there have been no significant changes that affect the comparability of fiscal 2023, 2022 and 2021

contributions. The Company recognizes expense for the contractually-required contribution for each period. The Company

contributed $67 million, $71 million and $67 million to multiemployer benefit plans during the years ended September 30,

2023, 2022 and 2021, respectively.

Based on the most recent information available, the Company believes that the present value of actuarial accrued liabilities in

certain of these multiemployer benefit plans may exceed the value of the assets held in trust to pay benefits. Currently, the

Company is not aware of any significant multiemployer benefit plans for which it is probable or reasonably possible that the

Company will be obligated to make up any shortfall in funds. Moreover, if the Company were to exit certain markets or

otherwise cease making contributions to these funds, the Company could trigger a withdrawal liability. Currently, the Company

is not aware of any multiemployer benefit plans for which it is probable or reasonably possible that the Company will have a

significant withdrawal liability. Any accrual for a shortfall or withdrawal liability will be recorded when it is probable that a

liability exists and it can be reasonably estimated.

Plan Assets

The Company’s investment policies employ an approach whereby a mix of equities, fixed income and alternative investments

are used to maximize the long-term return of plan assets for a prudent level of risk. The investment portfolio primarily contains

a diversified blend of equity and fixed income investments. Equity investments are diversified across U.S. and non-U.S. stocks,

as well as growth, value and small to large capitalization. Fixed income investments include corporate and government issues,

with short-, mid- and long-term maturities, with a focus on investment grade when purchased and a target duration close to that

of the plan liability. Investment and market risks are measured and monitored on an ongoing basis through regular investment

portfolio reviews, annual liability measurements and periodic asset/liability studies. The majority of the real estate component

of the portfolio is invested in a diversified portfolio of high-quality, operating properties with cash yields greater than the

targeted appreciation. Investments in other alternative asset classes, including hedge funds, diversify the expected investment

returns relative to the equity and fixed income investments. As a result of the Company's diversification strategies, there are no

significant concentrations of risk within the portfolio of investments.

The Company’s actual asset allocations are in line with target allocations. The Company rebalances asset allocations as

appropriate, in order to stay within a range of allocation for each asset category.

The expected return on plan assets is based on the Company’s expectation of the long-term average rate of return of the capital

markets in which the plans invest. The average market returns are adjusted, where appropriate, for active asset management

returns. The expected return reflects the investment policy target asset mix and considers the historical returns earned for each

asset category.

The Company’s plan assets at September 30, 2023 and 2022, by asset category, are as follows (in millions):

Fair Value Measurements Using:

Asset Category

Total as of

September 30,

2023

Quoted Prices

in Active

Markets

(Level 1)

Significant

Other

Observable

Inputs

(Level 2)

Significant

Unobservable

Inputs

(Level 3)

U.S. Pension

Cash and Cash Equivalents $ 61 $ — $ 61 $ —

Equity Securities

Large-Cap 60 60 — —

Small-Cap 65 65 — —

International - Developed 108 108 — —

International - Emerging 20 20 — —

Fixed Income Securities

Government 225 225 — —

Corporate/Other 583 583 — —

Alternative

211 — 211 —

Total Investments in the Fair Value Hierarchy 1,333 $ 1,061 $ 272 $ —

Real Estate Investments Measured at Net Asset Value

(1)

295

Due to Broker (129)

Total Plan Assets $ 1,499

Non-U.S. Pension

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

Equity Securities

Large-Cap 52 9 43 —

International - Developed 52 12 40 —

International - Emerging 2 — 2 —

Fixed Income Securities

Government 701 40 661 —

Corporate/Other 415 271 144 —

Hedge Fund 15 — 15 —

Real Estate 9 9 — —

Total Investments in the Fair Value Hierarchy 1,298 $ 393 $ 905 $ —

Real Estate Investments Measured at Net Asset Value

(1)

Total Plan Assets $ 1,388

Postretirement

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

Equity Securities - Global 71 — 71 —

Total Investments in the Fair Value Hierarchy 79 $ 8 $ 71 $ —

Multi-Credit Strategy Investments Measured at Net

Asset Value

(1)

Total Plan Assets $ 144

Fair Value Measurements Using:

Asset Category

Total as of

September 30,

2022

Quoted Prices

in Active

Markets

(Level 1)

Significant

Other

Observable

Inputs

(Level 2)

Significant

Unobservable

Inputs

(Level 3)

U.S. Pension

Cash and Cash Equivalents $ 40 $ — $ 40 $ —

Equity Securities

Large-Cap 160 160 — —

Small-Cap 175 175 — —

International - Developed 139 139 — —

International - Emerging 39 39 — —

Fixed Income Securities

Government 217 216 1 —

Corporate/Other 804 804 — —

Total Investments in the Fair Value Hierarchy 1,574 $ 1,533 $ 41 $ —

Real Estate Investments Measured at Net Asset Value

(1)

322

Due to Broker (166)

Total Plan Assets $ 1,730

Non-U.S. Pension

Cash and Cash Equivalents $ 150 $ 150 $ — $ —

Large-Cap 45 8 37 —

International - Developed 43 12 31 —

International - Emerging 3 — 3 —

Fixed Income Securities

Government 650 50 600 —

Corporate/Other 418 277 141 —

Hedge Fund 18 — 18 —

Real Estate 9 9 — —

Total Investments in the Fair Value Hierarchy 1,336 $ 506 $ 830 $ —

Real Estate Investments Measured at Net Asset Value

(1)

Total Plan Assets $ 1,433

Postretirement

Cash and Cash Equivalents $ 13 $ 13 $ — $ —

Equity Securities

Global 66 — 66 —

Total Investments in the Fair Value Hierarchy 79 13 66 —

Multi-Credit Strategy Investments Measured at Net

Asset Value

(1)

Total Plan Assets $ 144

(1)

The fair value of certain real estate and multi-credit strategy investments do not have a readily determinable fair value and

require the fund managers to independently arrive at fair value by calculating net asset value ("NAV") per share. In order to

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

independent third party appraisals, discounted cash flow analysis of net cash flows projected to be generated by the investment

and recent sales of comparable investments. Assumptions used to revalue the investments are updated every quarter. Due to the

fact that the fund managers calculate NAV per share, the Company utilizes a practical expedient for measuring the fair value of

its real estate and multi-credit strategy investments, as provided for under ASC 820, "Fair Value Measurement." In applying the

practical expedient, the Company is not required to further adjust the NAV provided by the fund manager in order to determine

the fair value of its investments as the NAV per share is calculated in a manner consistent with the measurement principles of

ASC 946, "Financial Services - Investment Companies," and as of the Company's measurement date. The Company believes

this is an appropriate methodology to obtain the fair value of these assets. For the component of the real estate portfolio under

development, the investments are carried at cost until they are completed and valued by a third party appraiser. In accordance

with ASU No. 2015-07, "Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its

Equivalent)," investments for which fair value is measured using the net asset value per share practical expedient are disclosed

separate from the fair value hierarchy. The fair value amounts presented in these tables are intended to permit reconciliation of

total plan assets to the amounts presented in the notes to consolidated financial statements.

The following is a description of the valuation methodologies used for assets measured at fair value. Certain assets are held

within commingled funds which are valued at the unitized NAV or percentage of the net asset value as determined by the

manager of the fund. These values are based on the fair value of the underlying net assets owned by the fund.

Cash and Cash Equivalents: The fair value of cash and cash equivalents is valued at cost.

Equity Securities: The fair value of equity securities is determined by direct quoted market prices. The underlying holdings are

direct quoted market prices on regulated financial exchanges.

Fixed Income Securities: The fair value of fixed income securities is determined by direct or indirect quoted market prices. If

indirect quoted market prices are utilized, the value of assets held in separate accounts is not published, but the investment

managers report daily the underlying holdings. The underlying holdings are direct quoted market prices on regulated financial

exchanges.

Hedge Funds: The fair value of hedge funds is accounted for by the custodian. The custodian obtains valuations from

underlying managers based on market quotes for the most liquid assets and alternative methods for assets that do not have

sufficient trading activity to derive prices. The Company and custodian review the methods used by the underlying managers to

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

Real Estate: The fair value of real estate is determined by quoted market prices of the underlying Real Estate Investment Trusts

("REITs"), which are securities traded on an open exchange.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or

reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent

with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial

instruments could result in a different fair value measurement at the reporting date.

Funded Status

The following table contains the ABO and reconciliations of the changes in the PBO, the changes in plan assets and the funded

status (in millions):

Pension Benefits

Postretirement

Benefits U.S. Plans Non-U.S. Plans

September 30, 2023 2022 2023 2022 2023 2022

Accumulated Benefit Obligation $ 1,564 $ 1,822 $ 1,424 $ 1,417 $ 76 $ 89

Change in Projected Benefit Obligation

Projected benefit obligation at beginning of year $ 1,822 $ 2,629 $ 1,471 $ 2,625 $ 89 $ 123

Service cost — — 16 20 — 1

Interest cost 78 56 68 39 4 2

Plan participant contributions — — 3 2 3 3

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

Benefits and settlements paid (299) (276) (126) (166) (12) (14)

Other — — (3) (3) — —

Currency translation adjustment — — 106 (395) — (1)

Projected benefit obligation at end of year $ 1,564 $ 1,822 $ 1,473 $ 1,471 $ 77 $ 89

Change in Plan Assets

Fair value of plan assets at beginning of year $ 1,730 $ 2,459 $ 1,433 $ 2,344 $ 144 $ 172

Actual return on plan assets 66 (454) (77) (459) 7 (20)

Employer and employee contributions 3 1 55 94 5 6

Benefits paid (85) (85) (61) (74) (12) (14)

Settlement payments (215) (191) (65) (92) — —

Other — — (2) (2) — —

Currency translation adjustment — — 105 (378) — —

Fair value of plan assets at end of year $ 1,499 $ 1,730 $ 1,388 $ 1,433 $ 144 $ 144

Funded status $ (65) $ (92) $ (85) $ (38) $ 67 $ 55

Amounts recognized in the statement of financial position consist of:

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

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

Net amount recognized $ (65) $ (92) $ (85) $ (38) $ 67 $ 55

Weighted Average Assumptions

(1)

Discount rate

(2)

5.48 % 5.08 % 4.72 % 4.36 % 5.42 % 4.92 %

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

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

(1)

Plan assets and obligations are determined based on a September 30 measurement date at September 30, 2023 and 2022.

(2)

The Company considers the expected benefit payments on a plan-by-plan basis when setting assumed discount rates. As a

result, the Company uses different discount rates for each plan depending on the plan jurisdiction, the demographics of

participants and the expected timing of benefit payments. For the U.S. pension and postretirement plans, the Company uses a

discount rate provided by an independent third party calculated based on an appropriate mix of high quality bonds. For the non-

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

determining the various discount rates. The Company has elected to utilize a full yield curve approach in the estimation of

service and interest components of net periodic benefit cost (credit) for pension and other postretirement for plans that utilize a

yield curve approach. The full yield curve approach applies the specific spot rates along the yield curve used in the

determination of the benefit obligation to the relevant projected cash flows.

The fiscal 2023 and fiscal 2022 net actuarial gains related to changes in the projected benefit obligation were primarily the

result of the increase in discount rates globally.

Net Periodic Benefit Cost

The following table contains the components of net periodic benefit costs, which are recorded in selling, general and

administrative expenses or cost of sales consistent with the related employees' salaries in the consolidated statements of income

(in millions):

Pension Benefits

Postretirement Benefits U.S. Plans Non-U.S. Plans

Year ended September 30, 2023 2022 2021 2023 2022 2021 2023 2022 2021

Components of Net Periodic

Benefit Cost (Credit):

Service cost $ — $ — $ — $ 16 $ 20 $ 27 $ — $ 1 $ 1

Interest cost 78 56 47 68 39 32 4 2 2

Expected return on plan assets (131) (150) (171) (77) (81) (112) (9) (9) (8)

Net actuarial (gain) loss 28 16 (214) 86 (116) (115) (5) 4 (35)

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

Amortization of prior service

cost (credit) — — — — — 1 (4) (4) (4)

Other — — — — — (1) — — —

Net periodic benefit cost

(credit) included in

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

Expense Assumptions:

Discount rate 5.08 % 2.52 % 2.25 % 4.36 % 1.79 % 1.35 % 4.92 % 2.30 % 1.90 %

Expected return on plan assets 8.25 % 7.00 % 6.90 % 5.02 % 3.70 % 4.90 % 6.64 % 5.29 % 5.30 %

Rate of compensation increase N/A N/A N/A 3.00 % 2.85 % 2.75 % N/A N/A N/A

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

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 restructuring plans 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 actions to

reduce cost of sales and SG&A due to reduced employee-related costs, depreciation and amortization expense.

In the third quarter of fiscal 2023, the Company began developing a restructuring plan with certain actions focused on

continued scaling of SG&A expenses to its planned growth. The scope of the plan was substantially finalized in the fourth

quarter of fiscal 2023 and certain actions related to this plan were committed and executed during the fourth quarter, primarily

related to workforce reductions, and were recorded to restructuring and impairment costs in the consolidated statements of

income. Additional restructuring charges are expected in subsequent quarters. Restructuring charges incurred during the first

and second quarters of fiscal 2023 were the result of other segment and Corporate-level restructuring plans.

Refer to Note 3, "Assets and Liabilities Held for Sale & Discontinued Operations," Note 7, "Property, Plant and Equipment,"

and Note 8, "Goodwill and Other Intangible Assets," of the notes to the consolidated financial statements for disclosure of other

impairment costs.

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

Year Ended

September 30, 2023

Building Solutions North America

$ 43

Building Solutions EMEA/LA

Building Solutions Asia Pacific

Global Products

Corporate

Total

$ 276

The following table summarizes changes in the restructuring reserve, which is included within other current liabilities in the

consolidated statements of financial position, for new restructuring actions taken in the year ended September 30, 2023 (in

millions):

Employee

Severance and

Termination

Benefits

Long-Lived

Asset

Impairments Other Total

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

18. INCOME TAXES

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

millions):

2023 2022 2021

Tax expense at Ireland statutory rate of 12.5% $ 214 $ 214 $ 327

U.S. state income tax, net of federal benefit 39 (23) 34

Income subject to the U.S. federal tax rate 56 (95) 3

Income subject to rates different than the statutory rate 92 125 30

Reserve and valuation allowance adjustments (559) (274) 66

Intellectual property transactions and adjustments (176) — 417

Restructuring and impairment costs 11 40 (9)

Income tax provision (benefit) $ (323) $ (13) $ 868

Effective tax rate (19) % (1)% 33%