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

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

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

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

The consolidated financial statements include the consolidated accounts of Johnson Controls International plc, a corporation organized under the laws of Ireland, and its subsidiaries (Johnson Controls International plc and all its subsidiaries, hereinafter collectively referred to as the "Company" or "Johnson Controls"). In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (which include normal recurring adjustments) necessary to state fairly the financial position, results of operations and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been omitted pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC"). These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 20172018 filed with the SEC on November 21, 2017.20, 2018. The results of operations for the three and nine month periods ended June 30, 20182019 are not necessarily indicative of results for the Company’s 20182019 fiscal year because of seasonal and other factors.

Nature of Operations

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

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

Principles of Consolidation

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

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

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

At June 30, 2019, the Company held restricted cash of approximately $16 million, all of which was recorded within other current assets in the consolidated statements of financial position. These amounts were related to cash restricted for payment of asbestos liabilities. At September 30, 2018, the Company held restricted cash of approximately $19$15 million, of which $10$6 million was recorded within other current assets in the consolidated statements of financial position and $9 million was recorded within other noncurrent assets in the consolidated statements of financial position. At September 30, 2017, the Company held restricted cash of approximately $31 million, of which $22 million was recorded within other current assets in the consolidated statements of financial position and $9 million was recorded within other noncurrent assets in the consolidated statements of financial position. These amounts were primarily related to cash restricted for payment of asbestos liabilities.

Retrospective Changes

Effective July 1, 2017,During the first quarter of fiscal 2019, the Company reorganized the reportable segments withindetermined that its Building Technologies &Power Solutions business met the criteria to align with its new management reporting structure and business activities. Priorbe classified as a discontinued operation, which required retrospective application to this reorganization, Building Technologies & Solutions was comprised of five reportable segmentsfinancial information for financial reporting purposes: Systems and Service North America, Products North America, Asia, Rest of World and Tyco. As a result of this change, Building Technologies & Solutions is now comprised of four reportable segments for financial reporting purposes: Building Solutions North America, Building Solutions EMEA/LA, Building Solutions Asia Pacific and Global Products.all periods presented. Refer to Note 18, “Segment Information,”4, "Discontinued Operations" of the notes to consolidated financial statements for further information. The net sales and cost of sales split of products and systems versus services ininformation regarding the consolidated statements of income has also been revised for the Building Technologies & Solutions reorganization.Company's discontinued operations.

In MarchNovember 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." During the quarter ended December 31, 2017, the Company adopted ASU No. 2016-09. As a result, employee withholding taxes paid to taxing authorities for equity-based compensation transactions, previously classified as cash flows from operating activities, were reclassified to financing activities in the consolidated statements of cash flows for the nine months ended June 30, 2017. Refer to Note 2, "New Accounting Standards," of the notes to consolidated financial statements for further information.

In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments." ASU No. 2016-15 provides clarification guidance on eight specific cash flow presentation issues in order to reduce the diversity in practice. ASU No. 2016-15 was effective retrospectively for the Company for the quarter ending December 31, 2018, with early2018. The adoption permitted. The amendments in this update should be applied retrospectively to all periods presented. The impact of this guidance had an impact on the presentation of equity swap funding and settlement activities since the activity changed from an operating activity to an investing activity.

On August 17, 2018, the SEC issued the final rule under SEC Release No. 33-10532, "Disclosure Update and Simplification," that amends certain of its disclosure requirements that have become redundant, duplicative, overlapping, outdated or superseded. The final rule extends to interim periods the annual disclosure requirement of presenting changes in each caption of stockholders' equity and the amount of dividends per share. These disclosures are required to be provided for the current and comparative interim periods. As a result, the Company will dependhas included the Consolidated Statements of Shareholders' Equity Attributable to Johnson Controls Ordinary Shareholders for the three and nine month periods ended June 30, 2019 and 2018 in this quarterly report on Form 10-Q.

benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The ASU also allows only the service cost component of net periodic benefit cost to be eligible for capitalization. ASU No. 2017-07 was effective for the quarter ended December 31, 2018. The guidance was effective retrospectively except for the capitalization of the service cost component which was applied prospectively. The adoption of this guidance did not have a significant impact on the levelsCompany's consolidated financial statements as the Company does not present a subtotal of restricted cash balances in the periods presented.income from operations within its consolidated statements of income.

In October 2016, the FASB issued ASU No. 2016-16, "Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory." The ASU requires the tax effects of all intra-entity sales of assets other than inventory to be recognized in the period in which the transaction occurs. The guidance will bewas effective for the Company for the quarter ending December 31, 2018, with early adoption permitted but only in the first interim period of a fiscal year.2018. The changes are required to bewere applied by means of a cumulative-effect adjustment recordedwhich resulted in a reduction to retained earnings asand other noncurrent assets of the beginning of the fiscal year of adoption. The Company is currently assessing the impact adoption of this guidance will have on its consolidated financial statements.$546 million.

In AugustJanuary 2016, the FASB issued ASU No. 2016-15, "Statement2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Cash Flows (Topic 230): Classification of Certain Cash ReceiptsFinancial Assets and Cash Payments.Financial Liabilities." ASU No. 2016-15 provides clarification guidance on eight specific cash flow2016-01 amends certain aspects of recognition, measurement, presentation issuesand disclosure of financial instruments, including marketable securities. Additionally in order to reduceFebruary 2018, the diversity in practice.FASB issued ASU No. 2016-15 will be2018-03, "Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which provides additional clarification on certain topics addressed in ASU No. 2016-01. ASU No. 2016-01 and ASU No. 2018-03 were effective for the Company for the quarter ending December 31, 2018,2018. The changes were applied by means of a cumulative-effect adjustment which resulted in an increase to retained earnings of $8 million. The new standard requires the mark-to-market of marketable securities investments previously recorded within accumulated other comprehensive income on the statement of financial position be recorded in the statement of income on a prospective basis beginning as of the adoption date. As these restricted investments do not relate to the underlying operating performance of its business, the Company’s definition of segment earnings excludes the mark-to-market adjustments beginning in the first quarter of fiscal 2019. Refer to Note 18, "Segment Information," of the notes to consolidated financial statements for further information.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with early adoption permitted. The guidance should be applied retrospectivelyCustomers (Topic 606)." ASU No. 2014-09 and its related amendments (collectively, the “New Revenue Standard”) clarify the principles for recognizing revenue when an entity either enters into a contract with customers to all periods presented, unless deemed impracticable, in which case prospective application is permitted.transfer goods or services or enters into a contract for the transfer of non-financial assets. The Company adopted the New Revenue Standard on October 1, 2018 using a modified retrospective approach. Under the New Revenue Standard, revenue recognition is currently assessingmostly consistent with the previous guidance, with the exception of the Power Solutions business, which is now reported as a discontinued operation beginning in the first quarter of fiscal 2019. Within the Power Solutions business, certain customers return battery cores which are now included in the transaction price as noncash consideration. The New Revenue Standard did not have a material impact on the Company’s consolidated statements of financial position, consolidated statements of income or its consolidated statements of cash flows. As of October 1, 2018, the Company applied the New Revenue Standard to contracts that were not completed as of this date and recognized a cumulative-effect adjustment of a reduction to retained earnings of $45 million, which relates primarily to deferred revenue recorded for certain battery core returns that represent a material right provided to customers. The prior period comparative information has not been restated and continues to be reported under the previous guidance.

The impact of adoption of the New Revenue Standard to the Company's consolidated statement of income for the nine months ended June 30, 2019 for continuing operations was an increase to net sales of approximately $1 million, with the impact to income before taxes of less than $1 million. The impact of adoption of this guidance will have on itsthe New Revenue Standard to the Company's consolidated statement of income for the three and nine months ended June 30, 2019 for discontinued operations was an increase to net sales of $77 million and $667 million, respectively, with the impact to income from discontinued operations, net of tax, of approximately $1 million and $26 million, respectively.

The impact of adoption of the New Revenue Standard to the Company's consolidated statement of financial statements.position as of June 30, 2019 is as follows (in millions):

During the first nine months of fiscal 2018, the Company completed certain acquisitions for a combined purchase price of $24 million, all of which was paid as of June 30, 2018. The acquisitions in the aggregate were not material to the Company’s consolidated financial statements. In connection with the acquisitions, the Company recorded goodwill of $12 million within the Global Products segment.

In the second quarter of fiscal 2018, the Company completed the sale of a certain Global Products business. The selling price was $103 million, all of which was received in the three months ended March 31, 2018. In connection with the sale, the Company reduced goodwill by $20 million and realized an insignificant gain.million. The divestiture was not material to the Company's consolidated financial statements.

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

On October 31, 2016,November 13, 2018, the Company completed the spin-off of its Automotive Experience businessentered into a Stock and Asset Purchase Agreement (“Purchase Agreement”) with BCP Acquisitions LLC (“Purchaser”). The Purchaser is a newly-formed entity controlled by way of the transfer of the Automotive Experience business from Johnson Controls to Adient plc and the issuance of ordinary shares of Adient directly to holders of Johnson Controls ordinary shares on a pro rata basis. Priorinvestment funds managed by Brookfield Capital Partners LLC. Pursuant to the open of business on October 31, 2016, each of the Company's shareholders received one ordinary share of Adient plc for every 10 ordinary shares of Johnson Controls held as of the close of business on October 19, 2016, the record date for the distribution. Company shareholders received cash in lieu of fractional shares of Adient, if any. Following the separation and distribution, Adient plc is now an independent public company tradingPurchase Agreement, on the New York Stock Exchange ("NYSE") underterms and subject to the symbol "ADNT."conditions therein, the Company agreed to sell, and Purchaser agreed to acquire, the Company’s Power Solutions business for a purchase price of $13.2 billion. The transaction closed on April 30, 2019 with net cash proceeds of $11.6 billion after tax and transaction-related expenses.

During the first quarter of fiscal 2019, the Company did not retain any equity interest in Adient plc. Adient’sdetermined that its Power Solutions business met the criteria to be classified as a discontinued operation and, as a result, Power Solutions' historical financial results are reflected in the Company’sCompany's consolidated financial statements as a discontinued operation.operation, and assets and liabilities were retrospectively reclassified as assets and liabilities held for sale. The Company did not allocate any general corporate overhead to discontinued operations.

The following table summarizes the results of Adient,Power Solutions reclassified as discontinued operations for the three and nine month periodperiods ended June 30, 20172019 and 2018 (in millions). As the Adient spin-offPower Solutions sale occurred on October 31, 2016,April 30, 2019, there is only one month of AdientPower Solutions results included in the three month period ended June 30, 2019, and only seven months included in the nine month period ended June 30, 2017.2019.

For the ninethree months ended June 30, 2017, the2019, income from discontinued operations before income taxes included separationa gain on sale of the Power Solutions business, net of transaction and other costs, of $79 million.

For the three and nine months ended June 30, 2019, the effective tax rate was more than the U.S. federalIrish statutory rate of 35%12.5% primarily due to the tax impacts of separation coststhe divestiture of the Power Solutions business and Adient spin-off related tax expense, partially offset by non-U.S.rate differentials. For the three and nine months ended June 30, 2018, the effective tax rate was more than the Irish statutory rate of 12.5% primarily due to tax rate differentials.