Form 10-Q

~~(Mark One)~~



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

For the quarterly period ended June 30, ~~2019~~



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

~~For the transition period from~~ to 2020

Commission File Number: 001-13836

JOHNSON CONTROLS INTERNATIONAL PLC

(Exact name of registrant as specified in its ~~charter)~~charter)

Ireland

98-0390500

(Jurisdiction of Incorporation)

(I.R.S. Employer Identification No.)

One Albert Quay, Cork, Ireland, T12 X8N6

(Address of principal executive offices and postal code)


(353)			21-423-5000		Not Applicable
~~One Albert Quay,~~					~~Cork,~~	~~Ireland~~
~~(Address of principal executive offices)~~
~~(353)~~	~~21-423-5000~~	~~Not Applicable~~
(Registrant’s telephone number)				(Former name, former address and former fiscal year, if changed since last report)

Securities Registered Pursuant to Section 12(b) of the Exchange Act:



Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Ordinary Shares, Par Value $0.01	JCI	New York Stock Exchange
0.000% Senior Notes due 2020	JCI20B	New York Stock Exchange
4.25% Senior Notes due 2021	JCI21B	New York Stock Exchange
3.750% Senior Notes due 2021	JCI21C	New York Stock Exchange
4.625% Notes due 2023	JCI23	New York Stock Exchange
1.000% Senior Notes due 2023	JCI23A	New York Stock Exchange
3.625% Senior Notes due 2024	JCI24A	New York Stock Exchange
1.375% Notes due 2025	JCI25A	New York Stock Exchange
3.900% Notes due 2026	JCI26A	New York Stock Exchange
6.000% Notes due 2036	JCI36A	New York Stock Exchange
5.70% Senior Notes due 2041	JCI41B	New York Stock Exchange
5.250% Senior Notes due 2041	JCI41C	New York Stock Exchange
4.625% Senior Notes due 2044	JCI44A	New York Stock Exchange
5.125% Notes due 2045	JCI45B	New York Stock Exchange
6.950% Debentures due December 1, 2045	JCI45A	New York Stock Exchange
4.500% Senior Notes due 2047	JCI47	New York Stock Exchange
4.950% Senior Notes due 2064	JCI64A	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Smaller reporting company

☐

Non-accelerated filer

Emerging growth company

☐

~~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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



Class						Ordinary Shares Outstanding at June 30, ~~2019~~2020
Ordinary Shares, $0.01 par value per share						~~795,706,564~~744,047,527

JOHNSON CONTROLS INTERNATIONAL PLC

FORM 10-Q

Report Index



			Page
Part I. Financial Information

Item 1. Financial Statements (unaudited)

Consolidated Statements of Financial Position at June 30, ~~2019~~2020 and September 30, ~~2018~~2019			3

Consolidated Statements of Income for the Three and Nine Month Periods Ended June 30, ~~2019~~2020 and ~~2018~~2019			4

Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Month Periods Ended June 30, ~~2019~~2020 and ~~2018~~2019			5

Consolidated Statements of Cash Flows for the Nine Month Periods Ended June 30, ~~2019~~2020 and ~~2018~~2019			6

Consolidated Statements of Shareholders' Equity Attributable to Johnson Controls Ordinary Shareholders for the Three and Nine Month Periods Ended June 30, ~~2019~~2020 and ~~2018~~2019			7

Notes to Consolidated Financial Statements			8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			4946

Item 3. Quantitative and Qualitative Disclosures About Market Risk			6159

Item 4. Controls and Procedures			6159

Part II. Other Information

Item 1. Legal Proceedings			6260

Item 1A. Risk Factors			6260

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			6362

Item 6. Exhibits			63

Signatures			64

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Johnson Controls International plc
Consolidated Statements of Financial Position
(in millions, except par value; unaudited)

June 30, 2019 September 30, 2018
Assets

Cash and cash equivalents $ 3,685
$ 185
Accounts receivable - net 6,033
5,622
Inventories 2,050
1,819
Assets held for sale 95
3,015
Other current assets 1,179
1,182
Current assets 13,042
11,823

Property, plant and equipment - net 3,282
3,300
Goodwill 18,312
18,381
Other intangible assets - net 5,739
6,187
Investments in partially-owned affiliates 848
848
Noncurrent assets held for sale 59
5,188
Other noncurrent assets 1,787
3,070
Total assets $ 43,069
$ 48,797

Liabilities and Equity

Short-term debt $ 20
$ 1,306
Current portion of long-term debt 501
1
Accounts payable 3,671
3,407
Accrued compensation and benefits 781
1,021
Deferred revenue 1,389
1,326
Liabilities held for sale 46
1,791
Other current liabilities 2,834
2,398
Current liabilities 9,242
11,250

Long-term debt 6,804
9,623
Pension and postretirement benefits 493
616
Noncurrent liabilities held for sale —
207
Other noncurrent liabilities 5,121
4,643
Long-term liabilities 12,418
15,089

Commitments and contingencies (Note 20)

Ordinary shares, $0.01 par value 9
10
Ordinary A shares, €1.00 par value —
—
Preferred shares, $0.01 par value —
—
Ordinary shares held in treasury, at cost (2,168 ) (1,053 )
Capital in excess of par value 16,720
16,549
Retained earnings 6,366
6,604
Accumulated other comprehensive loss (564 ) (946 )
Shareholders’ equity attributable to Johnson Controls 20,363
21,164
Noncontrolling interests 1,046
1,294
Total equity 21,409
22,458
Total liabilities and equity $ 43,069
$ 48,797
Johnson Controls International plc

Consolidated Statements of Financial Position

~~The accompanying notes are an integral part of the consolidated financial statements.~~(in millions, except par value; unaudited)



	June 30, 2020		September 30, 2019
Assets

Cash and cash equivalents	$	2,342	$	2,805
Accounts receivable - net	5,344		5,770
Inventories	1,996		1,814
Assets held for sale	89		98
Other current assets	1,369		1,906
Current assets	11,140		12,393

Property, plant and equipment - net	3,041		3,348
Goodwill	17,759		18,178
Other intangible assets - net	5,364		5,632
Investments in partially-owned affiliates	834		853
Noncurrent assets held for sale	199		60
Other noncurrent assets	2,941		1,823
Total assets	$	41,278	$	42,287

Liabilities and Equity

Short-term debt	$	1,321	$	10
Current portion of long-term debt	1,102		501
Accounts payable	3,057		3,582
Accrued compensation and benefits	685		953
Deferred revenue	1,451		1,407
Liabilities held for sale	38		44
Other current liabilities	2,650		2,573
Current liabilities	10,304		9,070

Long-term debt	5,671		6,708
Pension and postretirement benefits	1,053		1,044
Noncurrent liabilities held for sale	17		—
Other noncurrent liabilities	5,360		4,636
Long-term liabilities	12,101		12,388

Commitments and contingencies (Note 21)



Ordinary shares, $0.01 par value	8		8
Ordinary A shares, €1.00 par value	—		—
Preferred shares, $0.01 par value	—		—
Ordinary shares held in treasury, at cost	(1,119)		(1,086)
Capital in excess of par value	16,904		16,812
Retained earnings	2,955		4,827
Accumulated other comprehensive loss	(943)		(795)
Shareholders’ equity attributable to Johnson Controls	17,805		19,766
Noncontrolling interests	1,068		1,063
Total equity	18,873		20,829
Total liabilities and equity	$	41,278	$	42,287

Johnson Controls International plc
Consolidated Statements of Income
(in millions, except per share data; unaudited)

Three Months Ended
June 30,
Nine Months Ended
June 30,
2019 2018 2019 2018
Net sales
Products and systems $ 4,896
$ 4,727
$ 13,058
$ 12,694
Services 1,555
1,555
4,636
4,523
6,451
6,282
17,694
17,217
Cost of sales
Products and systems 3,380
3,324
9,233
9,082
Services 927
870
2,748
2,525
4,307
4,194
11,981
11,607

Gross profit 2,144
2,088
5,713
5,610

Selling, general and administrative expenses (1,388 ) (1,441 ) (4,284 ) (4,250 )
Restructuring and impairment costs (235 ) —
(235 ) (154 )
Net financing charges (119 ) (95 ) (302 ) (304 )
Equity income 62
55
137
129

Income from continuing operations before income taxes 464
607
1,029
1,031

Income tax provision 239
61
394
314

Income from continuing operations 225
546
635
717

Income from discontinued operations, net of tax (Note 4) 4,051
258
4,598
841

Net income 4,276
804
5,233
1,558

Income from continuing operations attributable to noncontrolling
   interests
84
72
147
134

Income from discontinued operations attributable to noncontrolling
   interests
—
9
24
33

Net income attributable to Johnson Controls $ 4,192
$ 723
$ 5,062
$ 1,391

Amounts attributable to Johnson Controls ordinary shareholders:
Income from continuing operations $ 141
$ 474
$ 488
$ 583
        Income from discontinued operations 4,051
249
4,574
808
Net income $ 4,192
$ 723
$ 5,062
$ 1,391

Basic earnings per share attributable to Johnson Controls
Continuing operations $ 0.16
$ 0.51
$ 0.54
$ 0.63
Discontinued operations 4.65
0.27
5.09
0.87
Net income $ 4.81
$ 0.78
$ 5.63
$ 1.50

Diluted earnings per share attributable to Johnson Controls
Continuing operations $ 0.16
$ 0.51
$ 0.54
$ 0.63
Discontinued operations 4.63
0.27
5.07
0.87
Net income * $ 4.79
$ 0.78
$ 5.61
$ 1.49



*	~~Certain items do not sum due to rounding.~~

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

Johnson Controls International plc
Consolidated Statements of Comprehensive Income (Loss)
(in millions; unaudited)

Three Months Ended
June 30, Nine Months Ended
June 30,
2019 2018 2019 2018

Net income $ 4,276
$ 804
$ 5,233
$ 1,558

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments (94 ) (614 ) (95 ) (331 )
Realized and unrealized gains (losses) on derivatives (9 ) 1
10
(10 )
Realized and unrealized losses on marketable securities —
—
—
(2 )

Other comprehensive loss (103 ) (613 ) (85 ) (343 )

Total comprehensive income 4,173
191
5,148
1,215

Comprehensive income attributable to noncontrolling interests 76
22
179
159

Comprehensive income attributable to Johnson Controls $ 4,097
$ 169
$ 4,969
$ 1,056

Johnson Controls International plc

Consolidated Statements of Income

(in millions, except per share data; unaudited)



	Three Months Ended June 30,						Nine Months Ended June 30,
	2020		2019		2020		2019
Net sales
Products and systems	$	3,919	$	4,896	$	11,877	$	13,058
Services	1,424		1,555		4,486		4,636
	5,343		6,451		16,363		17,694
Cost of sales
Products and systems	2,711		3,380		8,318		9,233
Services	800		927		2,609		2,748
	3,511		4,307		10,927		11,981

Gross profit	1,832		2,144		5,436		5,713

Selling, general and administrative expenses	(1,334)		(1,388)		(4,212)		(4,284)
Restructuring and impairment costs	(610)		(235)		(783)		(235)
Net financing charges	(58)		(119)		(169)		(302)
Equity income	47		62		110		137

Income (loss) from continuing operations before income taxes	(123)		464		382		1,029

Income tax provision (benefit)	(1)		239		77		394

Income (loss) from continuing operations	(122)		225		305		635

Income from discontinued operations, net of tax (Note 4)	—		4,051		—		4,598

Net income (loss)	(122)		4,276		305		5,233

Income from continuing operations attributable to noncontrolling interests	60		84		115		147

Income from discontinued operations attributable to noncontrolling interests	—		—		—		24

Net income (loss) attributable to Johnson Controls	$	(182)	$	4,192	$	190	$	5,062

Amounts attributable to Johnson Controls ordinary shareholders:
Income (loss) from continuing operations	$	(182)	$	141	$	190	$	488
Income from discontinued operations	—		4,051		—		4,574
Net income (loss)	$	(182)	$	4,192	$	190	$	5,062

Basic earnings (loss) per share attributable to Johnson Controls
Continuing operations	$	(0.24)	$	0.16	$	0.25	$	0.54
Discontinued operations	—		4.65		—		5.09
Net income (loss)	$	(0.24)	$	4.81	$	0.25	$	5.63

Diluted earnings (loss) per share attributable to Johnson Controls
Continuing operations	$	(0.24)	$	0.16	$	0.25	$	0.54
Discontinued operations	—		4.63		—		5.07
Net income (loss)	$	(0.24)	$	4.79	$	0.25	$	5.61

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

Johnson Controls International plc

Consolidated Statements of ~~Cash Flows~~Comprehensive Income (Loss)

(in millions; unaudited)

Nine Months Ended June 30,
2019 2018
Operating Activities of Continuing Operations
Net income from continuing operations attributable to Johnson Controls $ 488
$ 583
Income from continuing operations attributable to noncontrolling interests 147
134
Net income from continuing operations 635
717
Adjustments to reconcile net income from continuing operations to cash provided by operating activities:
Depreciation and amortization 625
649
Pension and postretirement benefit income (85 ) (108 )
Pension and postretirement contributions (51 ) (53 )
Equity in earnings of partially-owned affiliates, net of dividends received 6
(84 )
Deferred income taxes 382
(78 )
Non-cash restructuring and impairment charges 235
28
Gain on Scott Safety business divestiture —
(114 )
Equity-based compensation 66
77
Other - net 42
(6 )
Changes in assets and liabilities, excluding acquisitions and divestitures:
Accounts receivable (494 ) (454 )
Inventories (289 ) (211 )
Other assets (62 ) (245 )
Restructuring reserves (84 ) (55 )
Accounts payable and accrued liabilities (36 ) 268
Accrued income taxes (179 ) 366
Cash provided by operating activities from continuing operations 711
697

Investing Activities of Continuing Operations
Capital expenditures (401 ) (481 )
Sale of property, plant and equipment 15
23
Acquisition of businesses, net of cash acquired (16 ) (24 )
Business divestitures, net of cash divested 12
2,101
Proceeds (payments) for equity swap 14
(15 )
Changes in long-term investments 13
(3 )
Cash provided (used) by investing activities from continuing operations (363 ) 1,601

Financing Activities of Continuing Operations
Increase (decrease) in short-term debt - net (1,286 ) 347
Increase in long-term debt —
886
Repayment of long-term debt (2,333 ) (2,743 )
Debt financing costs —
(4 )
Stock repurchases and retirements (5,122 ) (255 )
Payment of cash dividends (712 ) (714 )
Proceeds from the exercise of stock options 111
39
Employee equity-based compensation withholding taxes (26 ) (38 )
Dividends paid to noncontrolling interests (132 ) (43 )
Cash used by financing activities from continuing operations (9,500 ) (2,525 )

Discontinued Operations
Cash provided by operating activities 117
567
Cash provided (used) by investing activities 12,580
(312 )
Cash used by financing activities (35 ) (3 )
Cash provided by discontinued operations 12,662
252
Effect of exchange rate changes on cash, cash equivalents and restricted cash (24 ) (84 )
Change in cash held for sale 15
13
Increase (decrease) in cash, cash equivalents and restricted cash 3,501
(46 )
Cash, cash equivalents and restricted cash at beginning of period 200
332
Cash, cash equivalents and restricted cash at end of period 3,701
286
Less: Restricted cash 16
19
Cash and cash equivalents at end of period $ 3,685
$ 267



	Three Months Ended June 30,						Nine Months Ended June 30,
	2020		2019		2020		2019

Net income (loss)	$	(122)	$	4,276	$	305	$	5,233

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	76		(94)		(157)		(95)
Realized and unrealized gains (losses) on derivatives	6		(9)		3		10
Pension and postretirement plans	—		—		(1)		—

Other comprehensive income (loss)	82		(103)		(155)		(85)

Total comprehensive income (loss)	(40)		4,173		150		5,148

Comprehensive income attributable to noncontrolling interests	64		76		108		179

Comprehensive income (loss) attributable to Johnson Controls	$	(104)	$	4,097	$	42	$	4,969

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

Johnson Controls International plc

Consolidated Statements of Cash Flows

(in millions; unaudited)


	Nine Months Ended June 30,
	2020		2019
Operating Activities of Continuing Operations
Net income from continuing operations attributable to Johnson Controls	$	190	$	488
Income from continuing operations attributable to noncontrolling interests	115		147

Net income from continuing operations	305		635
Adjustments to reconcile net income from continuing operations to cash provided by operating activities:
Depreciation and amortization	616		625
Pension and postretirement benefit expense (income)	42		(85)
Pension and postretirement contributions	(43)		(51)
Equity in earnings of partially-owned affiliates, net of dividends received	9		6
Deferred income taxes	(148)		382
Noncash restructuring and impairment charges	582		235
Equity-based compensation	61		66
Other - net	(38)		42
Changes in assets and liabilities, excluding acquisitions and divestitures:
Accounts receivable	428		(494)
Inventories	(205)		(289)
Other assets	(120)		(62)
Restructuring reserves	58		(84)
Accounts payable and accrued liabilities	(731)		(36)
Accrued income taxes	683		(179)
Cash provided by operating activities from continuing operations	1,499		711

Investing Activities of Continuing Operations
Capital expenditures	(347)		(401)
Sale of property, plant and equipment	98		15
Acquisition of businesses, net of cash acquired	(59)		(16)
Business divestitures, net of cash divested	—		12
Proceeds from equity swap	—		14
Changes in long-term investments	(1)		13

Cash used by investing activities from continuing operations	(309)		(363)

Financing Activities of Continuing Operations
Increase (decrease) in short-term debt - net	1,312		(1,286)

Repayment of long-term debt	(505)		(2,333)
Debt financing costs	(4)		—
Stock repurchases and retirements	(1,467)		(5,122)
Payment of cash dividends	(596)		(712)
Proceeds from the exercise of stock options	42		111
Employee equity-based compensation withholding taxes	(33)		(26)

Dividends paid to noncontrolling interests	(67)		(132)

Other - net	2		—
Cash used by financing activities from continuing operations	(1,316)		(9,500)

Discontinued Operations
Cash provided (used) by operating activities	(255)		117
Cash provided by investing activities	—		12,580
Cash used by financing activities	(113)		(35)
Cash provided (used) by discontinued operations	(368)		12,662
Effect of exchange rate changes on cash, cash equivalents and restricted cash	28		(24)
Change in cash held for sale	—		15
Increase (decrease) in cash, cash equivalents and restricted cash	(466)		3,501
Cash, cash equivalents and restricted cash at beginning of period	2,821		200
Cash, cash equivalents and restricted cash at end of period	2,355		3,701
Less: Restricted cash	13		16
Cash and cash equivalents at end of period	$	2,342	$	3,685

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

Johnson Controls International plc

Consolidated Statements of Shareholders' Equity Attributable to Johnson Controls Ordinary Shareholders

(in millions, except per share data; unaudited)


	Nine Months Ended June 30, 2019
	Total		Ordinary Shares		Capital in Excess of Par Value		Retained Earnings		Treasury Stock, at Cost		Accumulated Other Comprehensive Loss
At September 30, 2018	$	21,164	$	10	$	16,549	$	6,604	$	(1,053)	$	(946)
Comprehensive income (loss)	4,969		—		—		5,062		—		(93)
Cash dividends Ordinary ($0.78 per share)	(683)		—		—		(683)		—		—
Repurchases and retirements of ordinary shares	(5,122)		(1)		—		(4,034)		(1,087)		—
Divestiture of Power Solutions	483		—		—		—		—		483
Adoption of ASC 606	(45)		—		—		(45)		—		—
Adoption of ASU 2016-01	—		—		—		8		—		(8)
Adoption of ASU 2016-16	(546)		—		—		(546)		—		—
Other, including options exercised	143		—		171		—		(28)		—
At June 30, 2019	$	20,363	$	9	$	16,720	$	6,366	$	(2,168)	$	(564)



	Three Months Ended June 30, 2019
	Total		Ordinary Shares		Capital in Excess of Par Value		Retained Earnings		Treasury Stock, at Cost		Accumulated Other Comprehensive Loss
At March 31, 2019	$	20,036	$	10	$	16,640	$	6,416	$	(2,078)	$	(952)
Comprehensive income (loss)	4,097		—		—		4,192		—		(95)
Cash dividends Ordinary ($0.26 per share)	(208)		—		—		(208)		—		—
Repurchases and retirements of ordinary shares	(4,122)		(1)		—		(4,034)		(87)		—
Divestiture of Power Solutions	483		—		—		—		—		483
Other, including options exercised	77		—		80		—		(3)		—
At June 30, 2019	$	20,363	$	9	$	16,720	$	6,366	$	(2,168)	$	(564)


	Nine Months Ended June 30, 2020
	Total		Ordinary Shares		Capital in Excess of Par Value		Retained Earnings		Treasury Stock, at Cost		Accumulated Other Comprehensive Loss
At September 30, 2019	$	19,766	$	8	$	16,812	$	4,827	$	(1,086)	$	(795)
Comprehensive income (loss)	42		—		—		190		—		(148)
Cash dividends Ordinary ($0.78 per share)	(590)		—		—		(590)		—		—
Repurchases and retirements of ordinary shares	(1,467)		—		—		(1,467)		—		—
Adoption of ASC 842	(5)		—		—		(5)		—		—
Other, including options exercised	59		—		92		—		(33)		—
At June 30, 2020	$	17,805	$	8	$	16,904	$	2,955	$	(1,119)	$	(943)



	Three Months Ended June 30, 2020
	Total		Ordinary Shares		Capital in Excess of Par Value		Retained Earnings		Treasury Stock, at Cost		Accumulated Other Comprehensive Loss
At March 31, 2020	$	18,084	$	8	$	16,883	$	3,332	$	(1,118)	$	(1,021)
Comprehensive income (loss)	(104)		—		—		(182)		—		78
Cash dividends Ordinary ($0.26 per share)	(195)		—		—		(195)		—		—

Other, including options exercised	20		—		21		—		(1)		—
At June 30, 2020	$	17,805	$	8	$	16,904	$	2,955	$	(1,119)	$	(943)

Nine Months Ended June 30, 2019
Total
Ordinary
Shares

Capital in Excess
of Par Value

Retained
Earnings

Treasury Stock,
at Cost

Accumulated Other
Comprehensive Loss
At September 30, 2018 $ 21,164
$ 10
$ 16,549
$ 6,604
$ (1,053 ) $ (946 )
Comprehensive income (loss) 4,969
—
—
5,062
—
(93 )
Cash dividends
Ordinary ($0.78 per share) (683 ) —
—
(683 ) —
—
Repurchases and retirements of ordinary shares (5,122 ) (1 ) —
(4,034 ) (1,087 ) —
Divestiture of Power Solutions 483
—
—
—
—
483
Adoption of ASC 606 (45 ) —
—
(45 ) —
—
Adoption of ASU 2016-01 —
—
—
8
—
(8 )
Adoption of ASU 2016-16 (546 ) —
—
(546 ) —
—
Other, including options exercised 143
—
171
—
(28 ) —
At June 30, 2019 $ 20,363
$ 9
$ 16,720
$ 6,366
$ (2,168 ) $ (564 )

Three Months Ended June 30, 2019
Total
Ordinary
Shares

Capital in Excess
of Par Value

Retained
Earnings

Treasury Stock,
at Cost

Accumulated Other
Comprehensive Loss
At March 31, 2019 $ 20,036
$ 10
$ 16,640
$ 6,416
$ (2,078 ) $ (952 )
Comprehensive income (loss) 4,097
—
—
4,192
—
(95 )
Cash dividends
Ordinary ($0.26 per share) (208 ) —
—
(208 ) —
—
Repurchases and retirements of ordinary shares (4,122 ) (1 ) —
(4,034 ) (87 ) —
Divestiture of Power Solutions 483
—
—
—
—
483
Other, including options exercised 77
—
80
—
(3 ) —
At June 30, 2019 $ 20,363
$ 9
$ 16,720
$ 6,366
$ (2,168 ) $ (564 )

Nine Months Ended June 30, 2018
Total
Ordinary
Shares

Capital in Excess
of Par Value

Retained
Earnings

Treasury Stock,
at Cost

Accumulated Other
Comprehensive Loss
At September 30, 2017 $ 20,447
$ 9
$ 16,390
$ 5,231
$ (710 ) $ (473 )
Comprehensive income (loss) 1,056
—
—
1,391
—
(335 )
Cash dividends
Ordinary ($0.78 per share) (722 ) —
—
(722 ) —
—
Repurchases of ordinary shares (255 ) —
—
—
(255 ) —
Adoption of ASU 2016-09 179
—
—
179
—
—
Other, including options exercised 68
—
111
(4 ) (39 ) —
At June 30, 2018 $ 20,773
$ 9
$ 16,501
$ 6,075
$ (1,004 ) $ (808 )

Three Months Ended June 30, 2018
Total
Ordinary
Shares

Capital in Excess
of Par Value

Retained
Earnings

Treasury Stock,
at Cost

Accumulated Other
Comprehensive Loss
At March 31, 2018 $ 20,874
$ 9
$ 16,471
$ 5,594
$ (946 ) $ (254 )
Comprehensive income (loss) 169
—
—
723
—
(554 )
Cash dividends
Ordinary ($0.26 per share) (240 ) —
—
(240 ) —
—
Repurchases of ordinary shares (56 ) —
—
—
(56 ) —
Other, including options exercised 26
—
30
(2 ) (2 ) —
At June 30, 2018 $ 20,773
$ 9
$ 16,501
$ 6,075
$ (1,004 ) $ (808 )

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

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, ~~2019~~2020

(unaudited)

1.Financial Statements


1.	~~Financial Statements~~

The consolidated financial statements include the consolidated accounts of Johnson Controls International plc, a corporation organized under the laws of Ireland, and its subsidiaries (Johnson Controls International plc and all its subsidiaries, hereinafter collectively referred to as the "Company" or "Johnson Controls"). In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (which include normal recurring adjustments) necessary to state fairly the financial position, results of operations and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been omitted pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC"). These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, ~~2018~~2019 filed with the SEC on November ~~20, 2018.~~21, 2019. The results of operations for the three and nine month periods ended June 30, ~~2019~~2020 are not necessarily indicative of results for the Company’s ~~2019~~2020 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 that work seamlessly together to deliver on the promise of smart cities and communities. 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 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 Company further serves customers by providing technical services (in the HVAC, security and fire-protection space), energy-management consulting and data-driven solutions via its data-enabled business. Finally, the Company has a strong presence in the North American 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~~The Company consolidates variable interest entities ("VIE") in ~~Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 810, "Consolidation,"~~which 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 the significant activities of the ~~VIE that most significantly impact the VIE’s economic performance~~entity and the ~~potential~~obligation to absorb losses or receive benefits ~~or losses that could be significant to the VIE is considered the primary beneficiary and consolidates the VIE. If~~from 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.~~

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

~~Johnson Controls International plc~~

~~Notes to Consolidated Financial Statements~~

~~June 30, 2019~~

~~(unaudited)~~

Restricted Cash

At June 30, 2020 and September 30, 2019, the Company held restricted cash of approximately $13 million and $16 million, respectively, 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 $15 million, of which $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.

~~Retrospective Changes~~

During the first quarter of fiscal 2019, the Company determined that its Power Solutions business met the criteria to be classified as a discontinued operation, which required retrospective application to financial information for all periods presented. Refer to Note 4, "Discontinued Operations" of the notes to consolidated financial statements for further information regarding the Company's discontinued operations.

In November 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force)." The ASU requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU No. 2016-18 was effective retrospectively for the quarter ended December 31, 2018. The impact of this guidance did not have a significant impact on the Company's consolidated financial statements for the periods presented.

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. The adoption 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.


2.	~~New Accounting Standards~~

~~Recently Adopted Accounting Pronouncements~~

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 has 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.

In March 2018, the FASB issued ASU No. 2018-05, "Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118," to add various SEC paragraphs pursuant to the issuance of SEC Staff Accounting Bulletin No. 118 ("SAB 118") to ASC 740 "Income Taxes." SAB 118 was issued by the SEC in December 2017 to provide immediate guidance for accounting implications of U.S. Tax Reform under the "Tax Cuts and Jobs Act" in the period of enactment. SAB 118 provides for a provisional one year measurement period for entities to finalize their accounting for certain income tax effects related to the "Tax Cuts and Jobs Act." The Company applied this guidance to its consolidated financial statements and related disclosures beginning in the first quarter of fiscal 2018. In the first quarter of fiscal 2019, the Company completed its analysis of all enactment-date income tax effects of the U.S. tax law change. Refer to Note 9, "Income Taxes," of the notes to consolidated financial statements for further information.

In March 2017, the FASB issued ASU No. 2017-07, "Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." The ASU requires the service cost component of net periodic benefit cost to be presented with other compensation costs. The other components of net periodic

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, ~~2019~~2020

(unaudited)

2. New Accounting Standards

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 Company's consolidated financial statements as the Company does not present a subtotal of 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 was effective for the Company for the quarter ending December 31, 2018. The changes were applied by means of a cumulative-effect adjustment which resulted in a reduction to retained earnings and other noncurrent assets of $546 million.

In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." ASU No. 2016-01 amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including marketable securities. Additionally in February 2018, the FASB issued ASU No. 2018-03, "Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which provides additional clarification on certain topics addressed in ASU No. 2016-01. ASU No. 2016-01 and ASU No. 2018-03 were effective for the Company for the quarter ending December 31, 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 Customers (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 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 mostly 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 the 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.

~~Johnson Controls International plc~~

~~Notes to Consolidated Financial Statements~~

~~June 30, 2019~~

~~(unaudited)~~

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

June 30, 2019
As reported Under previous accounting guidance Impact from adopting the New Revenue Standard
Consolidated Statement of Financial Position

Assets

Accounts receivable - net $ 6,033
$ 6,065
$ (32 )
Inventories 2,050
2,064
(14 )
Other current assets 1,179
1,204
(25 )
Property, plant and equipment - net 3,282
3,242
40
Other noncurrent assets 1,787
1,758
29

Liabilities and Equity

Deferred revenue 1,389
1,380
9
Retained earnings 6,366
6,377
(11 )

Recently ~~Issued~~Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)." ASU No. 2016-02 requires recognition of operating leases as lease assets and liabilities on the balance sheet, and disclosure of key information about leasing arrangements. The ~~original standard was effective retrospectively for~~Company adopted Topic 842 and the ~~Company for~~related amendments using a modified-retrospective approach as of October 1, 2019 and applied the quarter ending December 31, 2019 with early adoption permitted; however in July 2018 the FASB issued ASU No. 2018-11, "Leases (Topic 842): Targeted Improvements," which provides an additional transition method that permits changesnew guidance to ~~be applied by means of~~all leases through a cumulative-effect adjustment ~~recorded in~~to beginning retained ~~earnings as of~~earnings. The comparative periods have not been recast and continue to be reported under the ~~beginning of the fiscal year of adoption.~~previous lease accounting guidance. The Company has elected ~~this transition method at~~to apply the ~~adoption~~package of transitional practical expedients, under which the Company did not reassess prior conclusions about lease identification, lease classification, and initial direct costs of existing leases as of the date of ~~October 1, 2019.~~adoption. The FASB further amended Topic 842 by issuing ASU No. 2018-01, "Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842," which provides an optional transition practical expedient for existing or expired land easements that were not previously recorded as leases, ASU No. 2018-10, "Codification Improvements to Topic 842, Leases," ASU No. 2018-20, "Leases (Topic 842): Narrow-Scope Improvements for Lessors," and ASU No. 2019-01, "Leases (Topic 842): Codification Improvements." The Company is in the processadoption of ~~populating its leases into new lease accounting software and designing and implementing new processes and controls for the accounting for leases under~~ the new ~~guidance. The Company is the lessee under various agreements for facilities and equipment that are currently accounted for as operating leases. The new~~ guidance ~~will require the Company to record operating leases on the balance sheet with~~resulted in recognition of a right-of-use asset and corresponding liability for future payment obligations. The Company is finalizing its assessment of the impact adoption of this guidance will have on its consolidated financial statements. The Company expects the new guidance will have a material impact on its consolidated statements of financial position for the addition of right-of-use assets andrelated lease liabilities ~~but the Company does not expect it~~of $1.1 billion, with an immaterial impact to ~~have a material impact on its consolidated statements of income and its consolidated statements of cash flows.~~retained earnings. Refer to Note 6, “Leases,” for additional lease disclosures.

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


3.	~~Acquisitions and Divestitures~~

3.Acquisitions and Divestitures

During the first nine months of fiscal 2020, the Company completed certain acquisitions for a combined purchase price, net of cash acquired, of $63 million, of which $59 million was paid as of June 30, 2020. In connection with the acquisitions, the Company recorded goodwill of $19 million within the Global Products segment and $23 million within the Building Solutions EMEA/LA segment. The acquisitions were not material to the Company's consolidated financial statements.

On April 30, 2019, the Company completed the sale of its Power Solutions business to BCP Acquisitions LLC for a purchase price of $13.2 billion. The net cash proceeds after tax and transaction-related expenses were $11.6 billion. In connection with the sale, the Company recorded a gain, net of transaction and other costs, of $5.2 billion ($4.0 billion after tax), subject to

~~Johnson Controls International plc~~

~~Notes to Consolidated Financial Statements~~

~~June 30, 2019~~

~~(unaudited)~~

post-closing working capital and net debt adjustments, within income from discontinued operations, net of tax, in the consolidated statements of income. During the first quarter of fiscal 2019, the Company determined 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's consolidated financial statements as a discontinued operation. Refer to Note 4, "Discontinued Operations," of the notes to consolidated financial statements for further disclosure related to the Company's discontinued operations.

During the first nine months of fiscal 2019, the Company completed certain divestitures within the Global Products and Building Solutions EMEA/LA businesses. The combined selling price was $18 million, $12 million of which was received as of June 30, 2019. In connection with the sale, the Company reduced goodwill by $1 million within the Building Solutions EMEA/LA segment. The divestitures were not material to the Company's consolidated financial statements.

During the first nine months of fiscal 2019, the Company completed certain acquisitions for a combined purchase price of $16 million, all of which was paid as of June 30, 2019. ~~The acquisitions were not material to the Company's consolidated financial statements.~~ In connection with the ~~acquisitions,~~acquisition, the Company recorded goodwill of $9 million within the Global Products segment and $1 million within the Building Solutions EMEA/LA segment.

~~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 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. 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 the 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.

4. Discontinued Operations


4.	~~Discontinued Operations~~

On November 13, 2018, the Company entered into a Stock and Asset Purchase Agreement (“Purchase Agreement”) with BCP Acquisitions LLC (“Purchaser”). The Purchaser iswas a newly-formed entity controlled by investment funds managed by Brookfield Capital Partners LLC. Pursuant to the Purchase Agreement, on the terms and subject to the 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.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2020

(unaudited)

During the first quarter of fiscal 2019, the Company determined 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's consolidated financial statements as a discontinued 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.

~~Johnson Controls International plc~~

~~Notes to Consolidated Financial Statements~~

~~June 30, 2019~~

~~(unaudited)~~

The following table summarizes the results of Power Solutions reclassified as discontinued operations for the three and nine month periods ended June 30, 2019 ~~and 2018~~ (in millions). As the Power Solutions sale occurred on April 30, 2019, there is only one month of Power 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, 2019.:


	Three Months Ended June 30,		Nine Months Ended June 30,
	2019		2019

Net sales	$	562	$	5,001

Income from discontinued operations before income taxes	5,315		6,039
Provision for income taxes on discontinued operations	(1,264)		(1,441)
Income from discontinued operations attributable to noncontrolling interests, net of tax	—		(24)
Income from discontinued operations	$	4,051	$	4,574

Three Months Ended
June 30, Nine Months Ended
June 30,
2019 2018 2019 2018

Net sales $ 562
$ 1,838
$ 5,001
$ 5,813

Income from discontinued operations before income taxes 5,315
303
6,039
978
Provision for income taxes on discontinued operations (1,264 ) (45 ) (1,441 ) (137 )
Income from discontinued operations attributable to noncontrolling interests, net of tax —
(9 ) (24 ) (33 )
Income from discontinued operations $ 4,051
$ 249
$ 4,574
$ 808

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statements for Forward-Looking Information

Unless otherwise indicated, references to "Johnson Controls," the "Company," "we," "our" and "us" in this Quarterly Report on Form 10-Q 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 Johnson Controls' future financial position, sales, costs, earnings, cash flows, other measures of results of operations, synergies and integration opportunities, capital expenditures and debt levels 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. Johnson Controls cautions that these statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond Johnson Controls’ control, that could cause Johnson Controls’ actual results to differ materially from those expressed or implied by such forward-looking statements, including, among others, risks related to: Johnson Controls’ ability to manage general economic, business and geopolitical conditions, including the impacts of natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments, such as the COVID-19 pandemic; any delay or inability of Johnson Controls to realize the expected benefits and synergies of recent portfolio transactions such as the merger with Tyco and the ~~spin-off~~disposition of ~~Adient,~~the Power Solutions business, changes in tax laws (including but not limited to the ~~recently enacted~~ Tax Cuts and Jobs ~~Act)~~Act enacted in December 2017), regulations, rates, policies or interpretations, the loss of key senior management, the tax treatment of recent portfolio transactions, significant transaction costs and/or unknown liabilities associated with such transactions, the outcome of actual or potential litigation relating to such transactions, the risk that disruptions from recent transactions will harm Johnson Controls’ business, the strength of the U.S. or other economies, changes to laws or policies governing foreign trade, including increased tariffs or trade restrictions, ~~automotive vehicle production levels, mix and schedules,~~ energy and commodity prices, the availability of raw materials and component products, currency exchange rates, maintaining the capacity, reliability and security of our information technology infrastructure, the risk of infringement or expiration of intellectual property rights, work stoppages, union negotiations, labor disputes and other matters associated with the labor force, the outcome of litigation and governmental proceedings and cancellation of or changes to commercial ~~arrangements, and with respect to the disposition of the Power Solutions business, whether the strategic benefits of the Power Solutions transaction can be achieved.~~arrangements. A detailed discussion of risks related to Johnson Controls' business is included in the section entitled "Risk Factors" in Johnson Controls' Annual Report on Form 10-K for the year ended September 30, ~~2018~~2019 filed with the United States Securities and Exchange Commission ("SEC") on November ~~20, 2018,~~21, 2019, and its Quarterly Report on Form 10-Q for the quarterly period ended March 31, ~~2019~~2020 filed with the SEC on May ~~3, 2019,~~1, 2020, which is available at www.sec.gov and www.johnsoncontrols.com under the "Investors" tab. ~~Shareholders, potential investors and others should consider~~The description of certain of these ~~factors~~risks is supplemented in ~~evaluating the forward-looking statements and should not place undue reliance~~Item 1A of Part II of this Quarterly Report on ~~such statements.~~Form 10-Q. 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.

Overview

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. The Company was renamed to Johnson Controls, Inc. in 1974. In 2005, the Company acquired York International, a global supplier of heating, ventilating, air-conditioning ("HVAC") and refrigeration equipment and services. In 2014, the Company acquired Air Distribution Technologies, Inc. ~~("ADTi")~~, one of the largest independent providers of air distribution and ventilation products in North America. ~~On October 1,~~In 2015, the Company formed a joint venture with Hitachi to expand its building related product offerings.

In ~~the fourth quarter of fiscal~~ 2016, Johnson Controls, Inc. ~~("JCI Inc.")~~ and Tyco completed their combination ~~with JCI Inc. merging with a wholly owned, indirect subsidiary of Tyco~~ (the "Merger"). Following the Merger, Tyco changed its name to ~~“Johnson~~"Johnson Controls International ~~plc”~~plc."

On November 13, 2018, the Company entered into a Stock and ~~JCI Inc. is~~Asset Purchase Agreement (“Purchase Agreement”) with BCP Acquisitions LLC (“Purchaser”). The Purchaser was a ~~wholly-owned subsidiary~~newly-formed entity controlled by investment funds managed by Brookfield Capital Partners LLC. Pursuant to the Purchase Agreement, on the terms and subject to the conditions therein, the Company agreed to sell, and Purchaser agreed to acquire, the Company’s Power Solutions business for a purchase price of ~~Johnson Controls International plc.~~$13.2 billion. The ~~Merger was accounted for~~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 determined that its Power Solutions business met the criteria to be classified as a ~~reverse acquisition using~~discontinued operation and, as a result, Power Solutions' historical financial results are reflected in the ~~acquisition method of accounting in accordance with Accounting Standards Codification ("ASC") 805, "Business Combinations." JCI Inc. was the accounting acquirer for financial reporting purposes.~~

~~Accordingly, the historical~~Company's consolidated financial statements ~~of JCI Inc.~~as a discontinued operation, and its assets and liabilities were retrospectively reclassified as assets and liabilities held for ~~periods prior to this transaction are considered to be the historic financial statements of the Company.~~sale.

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

On November 13, 2018, the Company entered into a Stock and Asset Purchase Agreement (“Purchase Agreement”) with BCP Acquisitions LLC (“Purchaser”). The Purchaser is a newly-formed entity controlled by investment funds managed by Brookfield Capital Partners LLC. Pursuant to the Purchase Agreement, on the terms and subject to the 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.

The following information should be read in conjunction with the September 30, ~~2018~~2019 consolidated financial statements and notes thereto, along with management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended September 30, ~~2018~~2019 filed with the SEC on November ~~20, 2018.~~21, 2019. References in the following discussion and analysis to "Three Months"~~(or~~ (or similar language) refer to the three months ended June 30, ~~2019~~2020 compared to the three months ended June 30, ~~2018,~~2019, while "Year-to-Date" refers to the nine months ended June 30, ~~2019~~2020 compared to the nine months ended June 30, ~~2018.~~2019.

Impact of COVID-19 pandemic

The global outbreak of COVID-19 has severely restricted the level of economic activity around the world. In response to this outbreak, the governments of many countries, states, cities and other geographic regions have taken preventative or protective actions, such as imposing restrictions on travel and business operations. The Company’s affiliates, employees, suppliers, customers and others have been and may continue to be restricted or prevented from conducting normal business activities, including as a result of shutdowns, travel restrictions and other actions that may be requested or mandated by governmental authorities. Such actions have and may in the future prevent the Company from accessing the facilities of its customers to deliver and install products, provide services and complete maintenance. In addition, some of the Company’s customers have chosen to delay or abandon projects on which the Company provides products and/or services as a result of such actions. Although some governments have begun to lift shutdown orders and similar restrictions, a resurgence in the spread of COVID-19 could cause the reinstitution of such preventive or protective measures. While a substantial portion of the Company businesses have been classified as an essential business in jurisdictions in which facility closures have been mandated, some of its facilities have nevertheless been ordered to close in certain jurisdictions.

In response to the challenges presented by COVID-19, the Company has focused its efforts on preserving the health and safety of its employees and customers, as well as maintaining the continuity of its operations. The Company has modified its business practices in response to the COVID-19 outbreak, including restricting non-essential employee travel, implementation of remote work protocols, and cancellation of physical participation in meetings, events and conferences. The Company has also instituted preventive measures at its facilities, including enhanced health and safety protocols, temperature screening, requiring face coverings for all employees and encouraging employees to follow similar protocols when away from work. The Company has adopted a multifaceted framework to guide its decision making when evaluating the readiness of its facilities to safely reopen and operate, and will continue to monitor and audit its facilities to ensure that they are in compliance with the Company’s COVID-19 safety requirements.

In the second quarter of fiscal 2020, the Company experienced a temporary reduction of its manufacturing and operating capacity in China as a result of government-mandated actions to control the spread of COVID-19. In the third quarter of fiscal 2020, the Company experienced similar reductions as a result of government-mandated actions in India and Mexico. Further, the Company has experienced, and may continue to experience, disruptions or delays in its supply chain as a result of such actions, which has resulted in higher supply chain costs to the Company in order to maintain the supply of materials and

components for its products. In order to mitigate disruptions to its supply chain and manufacturing capacity, the Company has taken actions including redistributing its manufacturing capacity to facilities and regions unaffected by shutdown orders, accelerating the purchase and shipment of components from suppliers in identified hot spots, diversifying the Company’s supplier base, conducting government outreach to support the Company’s and its suppliers’ designations as essential businesses, and expanding its existing supplier financing programs to support supplier viability and business continuity.

The Company has also experienced a decline in demand and volumes in its global businesses as a result of the impact of efforts to contain the spread of COVID-19. Specifically, the Company experienced lower demand due to restricted access to customer sites to perform service and installation work as well as reduced discretionary capital spending by the Company's customers. In response, the Company quickly moved to execute cost mitigation actions to offset a portion of the impact of COVID-19 on the demand for its products and services, such as deferring or reducing capital expenditures, implementing cost structure changes, short-term furloughing of salaried employees and limiting discretionary spending including corporate expense. These measures are in addition to the Company's previously disclosed fiscal 2020 restructuring plan. The duration of these cost mitigation actions, as well as the implementation of new cost mitigation actions, will depend on the continued impact of COVID-19, which is highly uncertain.

Although COVID-19 has negatively impacted demand for the Company’s products and services overall, the global pandemic has also provided the Company with the opportunity to help its customers prepare to re-open by delivering solutions and support that enhance the safety and increase the efficiency of their operations.The Company has seen an increase in demand for its products and solutions that promote building health and optimize customers’ infrastructure, including thermal cameras, indoor air quality, location-based services for contact tracing and touchless access control.

During the second quarter of fiscal 2020, the Company determined that it had a triggering event requiring assessment of impairment for certain of its indefinite-lived intangible assets due to declines in revenue directly attributable to the COVID-19 pandemic. As a result, the Company recorded an impairment charge of $62 million related primarily to the Company's retail business indefinite-lived intangible assets within restructuring and impairment costs in the consolidated statements of income in the second quarter of fiscal 2020. During the third quarter of fiscal 2020, the Company determined that it had a triggering event requiring assessment of impairment for certain of its indefinite-lived intangible assets, long-lived assets and goodwill due to declines in revenue and further declines in forecasted cash flows in its North America Retail reporting unit directly attributable to the COVID-19 pandemic. As a result, the Company recorded an impairment charge of $424 million related to the Company's North America Retail reporting unit's goodwill within restructuring and impairment costs in the consolidated statements of income in the third quarter of fiscal 2020. It is possible that future changes in such circumstances, including a more prolonged and/or severe COVID-19 pandemic, would require the Company to record additional non-cash impairment charges.

The Company continues to actively monitor its liquidity position and working capital needs. Given the increasingly uncertain economic environment, the Company took proactive measures in the third quarter of fiscal 2020 to increase near-term financial flexibility, electing to opportunistically raise $675 million via European financing arrangements and $575 million in bank term loans. In addition, the Company took precautionary actions to preserve its liquidity resources in an uncertain environment by suspending its share repurchase program in March 2020.

The Company believes that, following its implementation of its liquidity and cost mitigation actions, it remains in a solid overall capital resources and liquidity position that is adequate to meet its projected needs. As a result, in June 2020, following a review of its liquidity position, the Company announced that it would resume its share repurchase program beginning in the fourth quarter of fiscal 2020. In addition, in July 2020, the Company repaid a $300 million bank term loan.

The Company’s expected cash flow in the fourth quarter and current leverage also provide the Company with the ability to access the debt markets. In order to maintain its solid liquidity position, the Company intends to be opportunistic in exploring opportunities to refinance a portion of its upcoming short term debt maturities.

The extent to which the COVID-19 outbreak continues to impact the Company’s results of operations and financial condition will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity and longevity of COVID-19, the resurgence of COVID-19 in regions that have begun to recover from the initial impact of the pandemic, the impact of COVID-19 on economic activity, and the actions to contain its impact on public health and the global economy. See Part II, Item 1A, Risk Factors, for an additional discussion of risks related to COVD-19.

Net Sales


	Three Months Ended June 30,								Nine Months Ended June 30,
(in millions)	2020		2019		Change		2020		2019		Change

Net sales	$	5,343	$	6,451	-17	%	$	16,363	$	17,694	-8	%

Three Months Ended
June 30,
Nine Months Ended
June 30,

(in millions) 2019 2018 Change 2019 2018
Change

Net sales $ 6,451
$ 6,282
3 % $ 17,694
$ 17,217

3 %

The ~~increase~~decrease in consolidated net sales for the three months ended June 30, ~~2019~~2020 was due to ~~higher~~lower organic sales ($~~349~~1,037 million) and ~~acquisitions ($5 million), partially offset by~~ the unfavorable impact of foreign currency translation ($~~141~~87 million) ~~and lower sales due to business divestitures~~, partially offset by acquisitions ($4416 million). ~~The increase in organic sales related to higher volumes across all segments.~~ Excluding the impact of foreign currency translation and business acquisitions and divestitures, consolidated net sales ~~increased 6%~~decreased 16% as compared to the prior ~~year.~~year primarily due to the unfavorable impact of the COVID-19 pandemic on demand and volumes. Refer to the "Segment Analysis" below within this Item 2 for a discussion of net sales by segment.

The ~~increase~~decrease in consolidated net sales for the nine months ended June 30, ~~2019~~2020 was due to ~~higher~~lower organic sales ($~~1,007~~1,180 million) ~~and acquisitions ($18 million)~~, ~~partially offset by~~ the unfavorable impact of foreign currency translation ($~~406~~177 million) and lower sales due to business divestitures ($~~142~~12 million), partially offset by acquisitions ($38 million). ~~The increase in organic sales related to higher volumes across all segments.~~ Excluding the impact of foreign currency translation and business acquisitions and divestitures, consolidated net sales ~~increased 6%~~decreased 7% as compared to the prior ~~year.~~year due to the unfavorable impact of the COVID-19 pandemic. Refer to the "Segment Analysis" below within this Item 2 for a discussion of net sales by segment.

Cost of Sales / Gross Profit


	Three Months Ended June 30,											Nine Months Ended June 30,
(in millions)	2020			2019			Change		2020			2019			Change

Cost of sales	$	3,511		$	4,307		-18	%	$	10,927		$	11,981		-9	%
Gross profit	1,832			2,144			-15	%	5,436			5,713			-5	%
% of sales	34.3		%	33.2		%			33.2		%	32.3		%

Three Months Ended
June 30, Nine Months Ended
June 30,
(in millions) 2019 2018 Change 2019 2018 Change

Cost of sales $ 4,307
$ 4,194
3 % $ 11,981
$ 11,607
3 %
Gross profit 2,144
2,088
3 % 5,713
5,610
2 %
% of sales 33.2 % 33.2 % 32.3 % 32.6 %

Cost of sales and gross profit decreased for the three month period ended June 30, ~~2019 increased as compared to the three month period ended June 30, 2018,~~2020, and gross profit as a percentage of sales ~~was unchanged.~~increased by 110 basis points. Gross profit decreased due to organic sales declines from the unfavorable impact of the COVID-19 pandemic. Foreign currency translation had a favorable impact on cost of sales of approximately ~~$93~~$60 million. Refer to the "Segment Analysis" below within this Item 2 for a discussion of segment earnings before interest, taxes and amortization ("EBITA") by segment.

Cost of sales decreased and gross profit decreased for the nine month period ended June 30, ~~2019 increased as compared to the nine month period ended June 30, 2018,~~2020, and gross profit as a percentage of sales ~~decreased~~increased by 3090 basis points. ~~Gross profit increased due to higher volumes across all segments, partially offset by business divestitures and higher operating costs.~~ Foreign currency translation had a favorable impact on cost of sales of approximately ~~$270~~$120 million. Refer to the "Segment Analysis" below within this Item 2 for a discussion of segment EBITA by segment.

Selling, General and Administrative Expenses


	Three Months Ended June 30,											Nine Months Ended June 30,
(in millions)	2020			2019			Change		2020			2019			Change

Selling, general and administrative expenses	$	1,334		$	1,388		-4	%	$	4,212		$	4,284		-2	%
% of sales	25.0		%	21.5		%			25.7		%	24.2		%

Three Months Ended
June 30, Nine Months Ended
June 30,
(in millions) 2019 2018 Change 2019 2018 Change

Selling, general and administrative
expenses
$ 1,388
$ 1,441
-4 % $ 4,284
$ 4,250
1 %
% of sales 21.5 % 22.9 % 24.2 % 24.7 %

Selling, general and administrative expenses ("SG&A") for the three month period ended June 30, ~~2019~~2020 decreased 4%$54 million, and SG&A as ~~compared to the three month period ended June 30, 2018.~~a percentage of sales increased by 350 basis points. The decrease in SG&A was primarily due to ~~productivity savings~~a favorable impact of cost mitigation actions and ~~costs synergies, net of incremental investments,~~reduction in discretionary spend in the current quarter, a prior year environmental charge and a ~~current year tax indemnification reserve release,~~favorable impact of foreign currency translation, partially offset by a current year ~~environmental charge. Foreign currency translation had a favorable impact~~mark-to-market loss on ~~SG&A of $27 million. Refer to the "Segment Analysis" below within Item 2 for a discussion of segment EBITA by segment.~~pension plans

SG&A for the nine month period ended June 30, 2019 increased 1% as compared to the nine month period ended June 30, 2018. The increase in SG&A was primarily due to a $114 million gain on sale of the Scott Safety business in the Global Products segment in the prior year, and a ~~current year environmental charge, partially offset by productivity savings and costs synergies, net of incremental investments, and a current~~prior year tax indemnification reserve release. Foreign currency translation had a favorable impact on SG&A of ~~$82~~$16 million. Refer to the "Segment Analysis" below within this Item 2 for a discussion of segment EBITA by segment.

SG&A for the nine month period ended June 30, 2020 decreased $72 million, and SG&A as a percentage of sales increased by 150 basis points. The decrease in SG&A was primarily due to a favorable impact of cost mitigation actions and reduction in discretionary spend in the current year, a prior year environmental charge and a favorable impact of foreign currency translation, partially offset by a current year mark-to-market loss on pension plans and a prior year tax indemnification reserve release. Foreign currency translation had a favorable impact on SG&A of $35 million. Refer to the "Segment Analysis" below within this Item 2 for a discussion of segment EBITA by segment.

Restructuring and Impairment Costs


	Three Months Ended June 30,							Nine Months Ended June 30,
(in millions)	2020		2019		Change	2020		2019		Change

Restructuring and impairment costs	$	610	$	235	*	$	783	$	235	*

Three Months Ended
June 30, Nine Months Ended
June 30,
(in millions) 2019 2018 Change 2019 2018 Change

Restructuring and impairment costs $ 235
$ —
* $ 235
$ 154
53 %

* Measure not meaningful

Refer to Note 8,9, "Significant Restructuring and Impairment Costs," Note 8, "Goodwill and Other Intangible Assets," and Note ~~17,~~18, "Impairment of Long-Lived Assets," of the notes to consolidated financial statements for further disclosure related to the Company's restructuring plans and impairment costs.

Net Financing Charges


	Three Months Ended June 30,								Nine Months Ended June 30,
(in millions)	2020		2019		Change		2020		2019		Change

Net financing charges	$	58	$	119	-51	%	$	169	$	302	-44	%

Three Months Ended
June 30, Nine Months Ended
June 30,

(in millions) 2019 2018 Change 2019 2018 Change

Net financing charges $ 119
$ 95
25 % $ 302
$ 304
-1 %

Refer to Note ~~11,~~12, "Debt and Financing Arrangements," of the notes to consolidated financial statements for further disclosure related to the Company's net financing charges.

Equity Income


	Three Months Ended June 30,								Nine Months Ended June 30,
(in millions)	2020		2019		Change		2020		2019		Change

Equity income	$	47	$	62	-24	%	$	110	$	137	-20	%

~~Equity Income~~

Three Months Ended
June 30, Nine Months Ended
June 30,

(in millions) 2019 2018 Change 2019 2018 Change

Equity income $ 62
$ 55
13 % $ 137
$ 129
6 %

The ~~increase~~decrease in equity income for the three months ended June 30, ~~2019~~2020 was primarily due to ~~higher~~lower income at a certain partially-owned ~~affiliate~~affiliates of the Johnson Controls - Hitachi joint ~~venture.~~ venture primarily due to the unfavorable impact of the COVID-19 pandemic. Foreign currency translation had an unfavorable impact on equity income of $2 million for the three months ended June 30, 2020. Refer to the "Segment Analysis" below within this Item 2 for a discussion of segment EBITA by segment.

The ~~increase~~decrease in equity income for the nine months ended June 30, ~~2019~~2020 was primarily due to ~~higher~~lower income at certain partially-owned affiliates ~~within Building Solutions EMEA/LA segment and~~of the Johnson Controls - Hitachi joint ~~venture.~~venture primarily due to the unfavorable impact of the COVID-19 pandemic. Foreign currency translation had an unfavorable impact on equity income of $4 million for the nine months ended June 30, 2020. Refer to the "Segment Analysis" below within this Item 2 for a discussion of segment EBITA by segment.

Income Tax Provision (Benefit)


	Three Months Ended June 30,										Nine Months Ended June 30,
(in millions)	2020			2019			Change	2020			2019			Change

Income tax provision (benefit)	$	(1)		$	239		*	$	77		$	394		-80	%
Effective tax rate	1		%	52		%		20		%	38		%

Three Months Ended
June 30, Nine Months Ended
June 30,
(in millions) 2019 2018 Change 2019 2018 Change

Income tax provision $ 239
$ 61
* $ 394
$ 314
25 %
Effective tax rate 52 % 10 % 38 % 30 %

* Measure not meaningful

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

The statutory tax rate in Ireland is being used as a comparison since the Company is domiciled in Ireland. For the three months ended June 30, 2020, the Company's effective tax rate for continuing operations was 1% and was lower than the statutory tax rate of 12.5% primarily due to tax audit reserve adjustments, the income tax effects of mark-to-market adjustments and the benefits of continuing global tax planning initiatives, partially offset by the tax impact of an impairment charge and tax rate differentials. For the nine months ended June 30, 2020, the Company's effective tax rate for continuing operations was 20% and was higher than the statutory tax rate of 12.5% primarily due to a discrete tax charge related to the remeasurement of deferred tax assets and liabilities as a result of Swiss tax reform, the tax impact of an impairment charge and tax rate differentials, partially offset by tax audit reserve adjustments, the income tax effects of mark-to-market adjustments and the benefits of continuing global tax planning initiatives. For the three months ended June 30, 2019, the Company's effective tax rate for continuing operations was 52% and was higher than the statutory tax rate of 12.5% primarily due to a discrete tax charge related to newly enacted regulations related to U.S. Tax Reform, non-U.S. tax audit reserve adjustments and tax rate differentials, partially offset by a tax indemnification reserve release, the tax benefits of an asset held for sale impairment charge and continuing global tax planning initiatives. For the nine months ended June 30, 2019, the Company's effective tax rate for continuing operations was 38% and was higher than the statutory tax rate of 12.5% primarily due to valuation allowance adjustments as a result of tax law changes, a discrete tax charge related to newly enacted regulations related to U.S. Tax Reform, non-U.S. tax audit reserve adjustments, and tax rate differentials, partially offset by a tax indemnification reserve release, the tax benefits of an asset held for sale impairment charge and continuing global tax planning initiatives. For the three months ended June 30, 2018, the Company's effective tax rate for continuing operations was 10% and was lower than the statutory tax rate of 12.5% primarily due to the benefits of continuing global tax planning initiatives. For the nine months ended June 30, 2018, the Company's effective tax rate for continuing operations was 30% and was higher than the statutory tax rate of 12.5% primarily due to the discrete net impacts of U.S. Tax Reform, the tax impact of the divestiture of the Scott Safety business and tax rate differentials, partially offset by the benefits of continuing global tax planning initiatives and tax audit closures. The effective tax rate for the nine months ended June 30, ~~2019 increased~~2020 decreased as compared to the nine months ended June 30, ~~2018~~2019 primarily

due to the discrete tax items described below and tax planning initiatives. The global tax planning initiatives related primarily to foreign tax credit planning, global financing structures and alignment of our global business functions in a tax efficient manner.

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

In connection with the Company’s analysis of the impact of the U.S. tax law changes, the Company recorded a provisional net tax charge of $108 million during fiscal 2018 consistent with guidance prescribed by Staff Accounting Bulletin 118. This provisional net tax charge arises from a benefit of $108 million due to the remeasurement of U.S. deferred tax assets and liabilities, offset by the Company’s tax charge relating to the one-time transition tax on deemed repatriated earnings, inclusive of all relevant taxes, of $216 million. The Company’s estimated benefit of the remeasurement of U.S. deferred tax assets and liabilities increased from $101 million as of December 31, 2017 to $108 million as of September 30, 2018 due to calculation refinement of the Company’s estimated impact. The Company remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21% or the blended fiscal 2018 rate of 24.5%. The Company’s tax charge for transition tax decreased from $305 million as of December 31, 2017 to $216 million as of September 30, 2018 due to further analysis of the Company’s post-1986 non-U.S. earnings and profits (“E&P”) previously deferred from U.S. federal taxation and refinement of the estimated impact of tax law changes. In the first quarter of fiscal 2019, the Company completed its analysis of all enactment-date income tax effects of the U.S. tax law change with no further adjustment to the provisional amounts recorded as of September 30, 2018.

In the third quarter of fiscal 2019, the Company recorded a discrete charge of $199 million related to newly enacted regulations related to U.S. Tax Reform which impacted the Company's reserves for uncertain tax positions.

~~In the third quarter of fiscal 2019, the Company recorded a discrete charge of $27 million related to non-U.S. tax examinations.~~

~~In the third quarter of fiscal 2019, the Company recorded a $235 million impairment charge related to assets held for sale.~~items. Refer to Note ~~17, "Impairment of Long-Lived Assets,~~10, "Income Taxes," of the notes to consolidated financial statements for further ~~information regarding the impairment charge. The impairment charge generated a $53 million tax benefit.~~detail.

In the third quarter of fiscal 2019, the Company released a $226 million tax indemnification reserve. Refer to Note 19, "Guarantees," of the notes to consolidated financial statements for further information regarding the reserve release. The reserve release generated no income tax expense.

In the first quarter of fiscal 2019, as a result of changes to U.S. tax law, the Company recorded a discrete tax charge of $76 million related to valuation allowances on certain U.S. deferred tax assets.

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

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

In the first quarter of fiscal 2018, the Company recorded $154 million of significant restructuring and impairment costs. Refer to Note 8, "Significant Restructuring and Impairment Costs," of the notes to consolidated financial statements for additional information. The restructuring costs generated a $23 million tax benefit, which reflects the Company’s current tax position in these jurisdictions.

Income From Discontinued Operations, Net of Tax


	Three Months Ended June 30,							Nine Months Ended June 30,
(in millions)	2020		2019		Change	2020		2019		Change

Income from discontinued operations, net of tax	$	—	$	4,051	*	$	—	$	4,598	*

Three Months Ended
June 30, Nine Months Ended
June 30,

(in millions) 2019 2018 Change 2019 2018
Change

Income from discontinued operations, net of tax $ 4,051
$ 258
* $ 4,598
$ 841
*

* Measure not meaningful

Refer to Note 4, "Discontinued Operations," of the notes to consolidated financial statements for further information regarding the Company's discontinued operations.

Income Attributable to Noncontrolling Interests


	Three Months Ended June 30,								Nine Months Ended June 30,
(in millions)	2020		2019		Change		2020		2019		Change

Income from continuing operations attributable to noncontrolling interests	$	60	$	84	-29	%	$	115	$	147	-22	%
Income from discontinued operations attributable to noncontrolling interests	—		—		*		—		24		*

Three Months Ended
June 30, Nine Months Ended
June 30,

(in millions) 2019 2018 Change 2019 2018
Change

Income from continuing operations
attributable to noncontrolling
interests $ 84
$ 72
17 % $ 147
$ 134
10 %
Income from discontinued
operations attributable to
noncontrolling interests
—
9
*
24
33
-27 %

* Measure not meaningful

The ~~increase~~decrease in income from continuing operations attributable to noncontrolling interests for the three and nine months ended June 30, ~~2019~~2020 was primarily due to ~~higher~~lower net income as a result of the COVID-19 pandemic at certain partially-owned affiliates within the Global Products segment.

Refer to Note 4, "Discontinued Operations," of the notes to consolidated financial statements for further information regarding the Company's discontinued operations.

Net Income (Loss) Attributable to Johnson Controls


	Three Months Ended June 30,							Nine Months Ended June 30,
(in millions)	2020		2019		Change	2020		2019		Change

Net income (loss) attributable to Johnson Controls	$	(182)	$	4,192	*	$	190	$	5,062	-96	%

Three Months Ended
June 30, Nine Months Ended
June 30,
(in millions) 2019 2018 Change 2019 2018 Change

Net income attributable to
Johnson Controls
$ 4,192
$ 723
* $ 5,062
$ 1,391
*

* Measure not meaningful

The increase in net loss attributable to Johnson Controls for the three months ended June 30, 2020 was primarily due to the prior year income from discontinued operations, current year restructuring and impairment charges and the unfavorable impact of the COVID-19 pandemic, partially offset by lower income tax provision and net financing charges. The decrease in net income attributable to Johnson Controls for the ~~three and~~ nine months ended June 30, ~~2019~~2020 was primarily due to the ~~gain on sale~~prior year income from discontinued operations, current year restructuring and impairment charges and the unfavorable impact of the ~~Power Solutions business and higher gross profit,~~COVID-19 pandemic, partially offset by ~~a non-cash impairment charge, and a higher~~lower income tax ~~provision.~~provision and net financing charges.

Diluted earnings (loss) per share attributable to Johnson Controls for the three months ended June 30, ~~2019~~2020 was ~~$4.79~~$(0.24) compared to ~~$0.78~~$4.79 for the three months ended June 30, ~~2018.~~2019. Diluted earnings per share attributable to Johnson Controls for the nine months ended June 30, ~~2019~~2020 was ~~$5.61~~$0.25 compared to ~~$1.49~~$5.61 for the nine months ended June 30, ~~2018.~~2019.

Comprehensive Income (Loss) Attributable to Johnson Controls


	Three Months Ended June 30,							Nine Months Ended June 30,
(in millions)	2020		2019		Change	2020		2019		Change

Comprehensive income (loss) attributable to Johnson Controls	$	(104)	$	4,097	*	$	42	$	4,969	-99	%

Three Months Ended
June 30, Nine Months Ended
June 30,
(in millions) 2019 2018 Change 2019 2018 Change

Comprehensive income
attributable to Johnson Controls
$ 4,097
$ 169
* $ 4,969
$ 1,056
*

* Measure not meaningful

The increase in comprehensive ~~income~~loss attributable to Johnson Controls for the three months ended June 30, ~~2019~~2020 was due to ~~higher~~lower net income attributable to Johnson Controls ($~~3,469~~4,374 million) ~~and~~, partially offset by an increase in other comprehensive income attributable to Johnson Controls ($~~459~~173 million) resulting primarily from favorable currency translation adjustments. The ~~year-over-year~~year-

over-year favorable foreign currency translation adjustments were primarily driven by the ~~weakening~~strengthening of the ~~British pound~~euro, Canadian dollar and ~~euro currencies~~Mexican peso against the U.S. dollar in the ~~prior year.~~current quarter.

The ~~increase~~decrease in comprehensive income attributable to Johnson Controls for the nine months ended June 30, ~~2019~~2020 was due to ~~higher~~lower net income attributable to Johnson Controls ($~~3,671~~4,872 million) and an increase in other comprehensive ~~income~~loss attributable to Johnson Controls ($~~242~~55 million) resulting primarily from ~~favorable~~unfavorable currency translation adjustments. The year-over-year ~~favorable~~unfavorable foreign currency translation adjustments were primarily driven by the weakening of the ~~British pound~~Canadian dollar, Mexican peso and Brazilian real currencies, partially offset by the strengthening of the euro ~~currencies~~ against the U.S. dollar in the ~~prior~~current year.

Segment Analysis

On October 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." 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.

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


	Three Months Ended June 30,								Nine Months Ended June 30,
(in millions)	2020		2019		Change		2020		2019		Change

Building Solutions North America	$	2,020	$	2,327	-13	%	$	6,362	$	6,630	-4	%
Building Solutions EMEA/LA	756		922		-18	%	2,534		2,707		-6	%
Building Solutions Asia Pacific	588		691		-15	%	1,742		1,932		-10	%
Global Products	1,979		2,511		-21	%	5,725		6,425		-11	%
	$	5,343	$	6,451	-17	%	$	16,363	$	17,694	-8	%

Three Months Ended
June 30, Nine Months Ended
June 30,
(in millions) 2019 2018
Change 2019 2018 Change

Building Solutions North America $ 2,327
$ 2,246
4 % $ 6,630
$ 6,355
4 %
Building Solutions EMEA/LA 922
926
- %
2,707
2,748
-1 %
Building Solutions Asia Pacific 691
681
1 % 1,932
1,864
4 %
Global Products 2,511
2,429
3 % 6,425
6,250
3 %
$ 6,451
$ 6,282
3 % $ 17,694
$ 17,217
3 %

Three Months:

•The decrease in Building Solutions North America was due to lower volumes ($299 million) and the unfavorable impact of foreign currency translation ($8 million). The decrease in volumes was primarily attributable to the unfavorable impact of the COVID-19 pandemic.

•The decrease in Building Solutions EMEA/LA was primarily attributable to lower volumes ($134 million) and the unfavorable impact of foreign currency translation ($44 million), partially offset by incremental sales related to business acquisitions ($12 million). The decrease in volumes was primarily attributable to the unfavorable impact of the COVID-19 pandemic.

•The decrease in Building Solutions Asia Pacific was due to lower volumes ($86 million) and the unfavorable impact of foreign currency translation ($19 million), partially offset by incremental sales related to business acquisitions ($2 million). The decrease in volumes was primarily attributable to the unfavorable impact of the COVID-19 pandemic.

•The decrease in Global Products was due to lower volumes ($518 million) and the unfavorable impact of foreign currency translation ($16 million), partially offset by incremental sales related to business acquisitions ($2 million). The decrease in volumes was primarily attributable to the unfavorable impact of the COVID-19 pandemic.

Year-to-Date:

•The decrease in Building Solutions North America was due to lower volumes ($258 million) and the unfavorable impact of foreign currency translation ($10 million). The decrease in volumes was primarily attributable to an increase in installation / services being more than offset by the unfavorable impact of the COVID-19 pandemic.

•The decrease in Building Solutions EMEA/LA was primarily attributable to the unfavorable impact of foreign currency translation ($102 million), lower volumes ($91 million) and lower volumes due to business divestitures ($7 million), partially offset by incremental sales related to business acquisitions ($27 million). The decrease in volumes

was primarily attributable to an increase in installation / services sales being more than offset by the unfavorable impact of the COVID-19 pandemic.

•The decrease in Building Solutions Asia Pacific was due to lower volumes ($157 million) and the unfavorable impact of foreign currency translation ($39 million), partially offset by incremental sales related to business acquisitions ($6 million). The decrease in volumes was primarily attributable to an increase in installation / services sales being more than offset by the unfavorable impact of the COVID-19 pandemic.

•The decrease in Global Products was due to lower volumes ($674 million), the unfavorable impact of foreign currency translation ($26 million) and lower volumes due to business divestitures ($5 million), partially offset by incremental sales related to business acquisitions ($5 million). The decrease in volumes was primarily attributable to an increase in building management and specialty product sales being more than offset by the unfavorable impact of the COVID-19 pandemic.

Segment EBITA


	Three Months Ended June 30,								Nine Months Ended June 30,
(in millions)	2020		2019		Change		2020		2019		Change

Building Solutions North America	$	307	$	300	2	%	$	816	$	807	1	%
Building Solutions EMEA/LA	62		101		-39	%	237		258		-8	%
Building Solutions Asia Pacific	92		98		-6	%	229		240		-5	%
Global Products	378		333		14	%	797		774		3	%
	$	839	$	832	1	%	$	2,079	$	2,079	—	%

Three Months:

•The increase in Building Solutions North America was due to ~~higher~~prior year integration costs ($10 million), and productivity savings and cost mitigation actions, net of unfavorable volumes ($882 million), partially offset by current year integration costs ($4 million) and the unfavorable impact of foreign currency translation ($1 million).

•The decrease in Building Solutions EMEA/LA was due to unfavorable volumes, net of productivity savings and cost mitigation actions ($34 million), the unfavorable impact of foreign currency translation ($7 million) and lower equity income ($2 million), partially offset by higher income due to business acquisitions ($2 million) and prior year integration costs ($2 million).

•The decrease in Building Solutions Asia Pacific was due to unfavorable volumes, net of productivity savings and cost mitigation actions ($5 million) and the unfavorable impact of foreign currency translation ($1 million).

•The increase in Global Products was due to prior year environmental charge ($140 million) and prior year integration costs ($8 million), partially offset by unfavorable volumes, net of favorable price / cost, productivity savings and cost mitigation actions ($79 million), lower equity income driven primarily by the unfavorable impact of COVID-19 ($12 million), current year integration costs ($7 million), the unfavorable impact of foreign currency translation ($4 million) and lower income due to business acquisitions ($1 million).

Year-to-Date:

•The increase in Building Solutions North America was ~~primarily attributable~~due to ~~higher installation / service sales.~~prior year integration costs ($15 million), and productivity savings and cost mitigation actions, net of unfavorable volumes ($2 million), partially offset by current year integration costs ($7 million) and the unfavorable impact of foreign currency translation ($1 million).

•The decrease in Building Solutions EMEA/LA was due to the unfavorable impact of foreign currency translation ($5416 million), unfavorable volumes, net of productivity savings and cost mitigation actions ($12 million), and lower ~~volumes~~income due to business divestitures ($31 million), partially offset by higher ~~volumes~~income due to business acquisitions ($515 million) and prior year integration costs ($3 million).

~~and incremental sales related to a business acquisition ($2 million).~~ •The ~~increase in volumes was primarily attributable to higher installation sales.~~

~~The increase~~decrease in Building Solutions Asia Pacific was due to ~~higher~~unfavorable volumes, ($40 million) and incremental sales related to a business acquisition ($1 million), partially offset by the unfavorable impact of foreign currency translation ($31 million). The increase in volumes was primarily attributable to higher installation sales.

The increase in Global Products was due to higher volumes ($170 million) and incremental sales related to business acquisitions ($2 million), partially offset by the unfavorable impact of foreign currency translation ($49 million) and lower volumes related to business divestitures ($41 million). The increase in volumes was across HVAC and refrigeration equipment, building management and specialty products businesses.

~~Year-to-Date:~~

The increase in Building Solutions North America was due to higher volumes ($300 million), partially offset by the unfavorable impact of foreign currency translation ($25 million). The increase in volumes was primarily attributable to higher installation / service sales.

The decrease in Building Solutions EMEA/LA was due to the unfavorable impact of foreign currency translation ($166 million) and lower volumes due to business divestitures ($3 million), partially offset by higher volumes ($124 million) and incremental sales related to a business acquisition ($4 million). The increase in volumes was primarily attributable to higher installation / service sales.

The increase in Building Solutions Asia Pacific was due to higher volumes ($142 million) and incremental sales related to a business acquisition ($1 million), partially offset by the unfavorable impact of foreign currency translation ($75 million). The increase in volumes was primarily attributable to higher installation / service sales.

The increase in Global Products was due to higher volumes ($441 million) and incremental sales related to business acquisitions ($13 million), partially offset by the unfavorable impact of foreign currency translation ($140 million) and lower volumes related to business divestitures ($139 million). The increase in volumes was primarily attributable to higher building management, HVAC and refrigeration equipment, and specialty products sales.

~~Segment EBITA~~

Three Months Ended
June 30, Nine Months Ended
June 30,
(in millions) 2019 2018 Change 2019 2018 Change

Building Solutions North America $ 300
$ 314
-4 % $ 807
$ 780
3 %
Building Solutions EMEA/LA 101
96
5 % 258
242
7 %
Building Solutions Asia Pacific 98
97
1 % 240
242
-1 %
Global Products 333
435
-23 % 774
949
-18 %
$ 832
$ 942
-12 % $ 2,079
$ 2,213
-6 %

~~Three Months:~~

The decrease in Building Solutions North America was due to higher SG&A, including incremental sales investments, and unfavorable mix ($31 million) and current year integration costs ($10 million), partially offset by favorable volumes ($23 million) and prior year integration costs ($4 million).

The increase in Building Solutions EMEA/LA was due to favorable volumes ($19 million), prior year integration costs ($2 million) and higher equity income ($1 million), partially offset by the unfavorable impact of foreign currency translation ($9 million), higher SG&A, including incremental sales investments ($6 million), and current year integration costs ($2 million).

The increase in Building Solutions Asia Pacific was due to higher volumes ($11 million), partially offset by higher SG&A, including incremental sales investments ($7 million), and the unfavorable impact of foreign currency translation ($3 million).

~~The decrease in Global Products was due to a current year environmental charge ($140 million), higher SG&A and operating expenses, including product investments,~~ net of productivity savings and cost mitigation actions ($10 million), the unfavorable impact of foreign currency translation ($9 million), current year integration costs ($8 million) and lower income due to business divestitures ($4 million). These items were partially offset by favorable volumes / mix ($57 million), prior year integration costs ($6 million) and higher equity income ($6 million).

~~Year-to-Date:~~

The increase in Building Solutions North America was due to favorable volumes ($78 million) and prior year integration costs ($18 million), partially offset by higher SG&A, including incremental sales investments, and unfavorable mix ($52 million), current year integration costs ($15 million) and the unfavorable impact of foreign currency translation ($2 million), partially offset by higher income due to business acquisitions ($1 million).

•The increase in ~~Building Solutions EMEA/LA~~Global Products was due to ~~favorable volumes / mix~~prior year environmental charge ($36140 million), and prior year integration costs ($~~5 million), higher equity income ($4 million) and incremental income related to a business acquisition ($1~~16 million), partially offset by unfavorable volumes, net of favorable price / cost, productivity savings and cost mitigation actions ($91 million), lower equity income driven primarily by the unfavorable impact of ~~foreign currency translation~~COVID-19 ($2624 million), current year integration costs ($38 million) ~~and higher SG&A, including incremental sales investments ($1 million).~~

~~The decrease in Building Solutions Asia Pacific was due to unfavorable mix / margin rates ($20 million)~~, ~~higher SG&A, including incremental investments ($11 million) and~~ the unfavorable impact of foreign currency translation ($7 million), ~~partially offset by higher volumes ($36 million).~~

~~The decrease in Global Products was~~lower income due to ~~a current year environmental charge~~business acquisitions ($~~140~~2 million)~~, a prior year gain on sale of Scott Safety ($114 million), higher SG&A~~ and operating expenses, including product investments and a prior year insignificant gain on a business divestiture, net of productivity savings ($53 million), the unfavorable impact of foreign currency translation ($19 million), lower income due to business divestitures ~~and acquisitions~~ ($~~16 million) and current year integration costs ($16~~1 million). ~~These items were partially offset by favorable volumes / mix ($160 million), prior year integration costs ($21 million) and higher equity income ($2 million).~~

Backlog

The Company’s backlog relating to the Building Technologies & Solutions business is applicable to its sales of systems and services. At June 30, ~~2019,~~2020, the backlog was ~~$9.3~~$9.4 billion, of which ~~$9.0~~$9.1 billion iswas attributable to the 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.

In the first quarter of fiscal 2019, the Company adopted ASC 606, “Revenue from Contracts with Customers,” and as a result is required to disclose remaining performance obligations. At June 30, ~~2019,~~2020, remaining performance obligations were ~~$14.2~~$14.4 billion, which is ~~$4.9~~$5.0 billion higher than the Company's backlog of ~~$9.3~~$9.4 billion. Differences between the Company’s remaining performance obligations and backlog are primarily due to:

•Remaining performance obligations include large, multi-purpose contracts to construct hospitals, schools and other governmental buildings, which are services to be performed over the building's lifetime with initial contract terms of 25 to 35 years for the entire term of the contract versus backlog which includes only the lifecycle period of these contracts which approximates five years;

•The Company has elected to exclude from remaining performance obligations certain contracts with customers with a term of one year or less or contracts that are cancelable without substantial penalty while these contracts are included within backlog; 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 will continue to report backlog as it believes it is a useful measure of evaluating the Company's operational performance and relationship to total orders.

Liquidity and Capital Resources

Working Capital


	June 30,		September 30,
(in millions)	2020		2019		Change

Current assets	$	11,140	$	12,393
Current liabilities	(10,304)		(9,070)
	836		3,323		-75	%

Less: Cash	(2,342)		(2,805)
Add: Short-term debt	1,321		10
Add: Current portion of long-term debt	1,102		501
Less: Assets held for sale	(89)		(98)
Add: Liabilities held for sale	38		44
Working capital (as defined)	$	866	$	975	-11	%

Accounts receivable - net	$	5,344	$	5,770	-7	%
Inventories	1,996		1,814		10	%
Accounts payable	3,057		3,582		-15	%

June 30, September 30,
(in millions) 2019 2018 Change

Current assets $ 13,042
$ 11,823

Current liabilities (9,242 ) (11,250 )
3,800
573
*

Less: Cash (3,685 ) (185 )
Add: Short-term debt 20
1,306

Add: Current portion of long-term debt 501
1

Less: Assets held for sale (95 ) (3,015 )
Add: Liabilities held for sale 46
1,791

Working capital (as defined) $ 587
$ 471
25 %

Accounts receivable - net $ 6,033
$ 5,622
7 %
Inventories 2,050
1,819
13 %
Accounts payable 3,671
3,407
8 %

* Measure not meaningful

•The Company defines working capital as current assets less current liabilities, excluding cash, short-term debt, the current portion of long-term debt, and the current portions of assets and liabilities held for sale. 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 ~~increase~~decrease in working capital at June 30, ~~2019~~2020 as compared to September 30, ~~2018,~~2019, was primarily due to ~~an increase~~lower income tax assets, a decrease in accounts receivable, ~~due to organic sales growth,~~and the establishment of an ~~increase~~operating lease liability on the balance sheet in ~~inventory to meet anticipated customer demand and timing~~the first quarter of ~~employee benefit payments,~~fiscal 2020 as a result of the adoption of ASC 842, partially offset by ~~an increase~~a decrease in accounts payable due to ~~timing~~lower spending, a decrease in accrued compensation and ~~mix of supplier payments,~~benefits liabilities and an increase in ~~other current liabilities.~~inventory.

•The Company’s days sales in accounts receivable at June 30, ~~2019~~2020 and September 30, ~~2018~~2019 were ~~68 days.~~70 days and 67 days, respectively. There has been no significant adverse changes in the level of overdue receivables or significant changes in revenue recognition methods.

•The Company’s inventory turns for the three months ended June 30, ~~2019~~2020 were ~~the same as~~lower than the comparable period ended September 30, ~~2018.~~2019, primarily due to changes in inventory production levels.

•Days in accounts payable at June 30, ~~2019~~2020 were 6973 days, ~~lower~~higher than 72 days at the comparable period ended September 30, ~~2018.~~2019.

Cash Flows From Continuing Operations


	Nine Months Ended June 30,
(in millions)	2020		2019

Cash provided by operating activities	$	1,499	$	711
Cash used by investing activities	(309)		(363)
Cash used by financing activities	(1,316)		(9,500)

Nine Months Ended June 30,
(in millions) 2019 2018

Cash provided by operating activities $ 711
$ 697
Cash provided (used) by investing activities (363 ) 1,601
Cash used by financing activities (9,500 ) (2,525 )
Capital expenditures (401 ) (481 )

•The increase in cash provided by operating activities ~~for the nine months ended June 30, 2019~~ was primarily due to the timing of income tax payments / refunds and favorable changes in ~~other assets and higher partially-owned affiliate dividends,~~accounts receivable, partially offset by unfavorable changes in accounts payable and accrued ~~liabilities, and inventory.~~liabilities.

•The ~~increase~~decrease in cash used by investing activities ~~for the nine months ended June 30, 2019~~ was primarily due to lower capital expenditures and higher net cash ~~proceeds received from the Scott Safety business divestiture in the prior year,~~payments made for acquisitions, partially offset by ~~lower capital expenditures.~~higher proceeds from the sale of property, plant & equipment.

•The ~~increase~~decrease in cash used by financing activities ~~for the nine months ended June 30, 2019~~ was primarily due to ~~higher~~lower stock repurchases, higher short-term debt borrowings and ~~higher~~lower repayments of long-term debt.

~~The decrease in capital expenditures for the nine months ended June 30, 2019 primarily is due to timing of capital investment spend in the current year.~~

Capitalization


	June 30,			September 30,
(in millions)	2020			2019			Change

Short-term debt	$	1,321		$	10
Current portion of long-term debt	1,102			501
Long-term debt	5,671			6,708
Total debt	8,094			7,219			12	%
Less: cash and cash equivalents	2,342			2,805
Total net debt	5,752			4,414			30	%

Shareholders’ equity attributable to Johnson Controls ordinary shareholders	17,805			19,766			-10	%
Total capitalization	$	23,557		$	24,180		-3	%

Total net debt as a % of total capitalization	24.4		%	18.3		%

June 30, September 30,
(in millions) 2019 2018 Change

Short-term debt $ 20
$ 1,306

Current portion of long-term debt 501
1

Long-term debt 6,804
9,623

Total debt 7,325
10,930
-33 %
Less: cash and cash equivalents 3,685
185

Total net debt 3,640
10,745
-66 %

Shareholders’ equity attributable to Johnson Controls
ordinary shareholders
20,363
21,164
-4 %
Total capitalization $ 24,003
$ 31,909
-25 %

Total net debt as a % of total capitalization 15.2 % 33.7 %

•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 review of the extent to which the Company relies on external debt financing for its funding and is a measure of risk to its shareholders.

In the third quarter of fiscal 2019, the Company began deploying the net cash proceeds from the Power Solution sale, which included a reduction in debt of approximately $3.4 billion and share repurchases. The debt reduction included short-term and long-term debt repayments, including a $1.5 billion debt tender as further described below.

•The Company believes its capital resources and liquidity position at June 30, ~~2019~~2020 are adequate to meet projected needs. The Company believes requirements for working capital, capital expenditures, dividends, ~~stock repurchases,~~ minimum pension contributions, debt maturities and any potential acquisitions or stock repurchases in the remainder of fiscal ~~2019~~2020 will continue to be funded from operations, supplemented by short- and long-term borrowings, if required. The Company currently manages its short-term

debt position in the U.S. and euro commercial paper markets and bank loan markets. In the event the Company is unable to issue commercial paper, it would have the ability to draw on its ~~$2.0~~$2.5 billion and $0.5 billion revolving credit ~~facility.~~facilities. The ~~facility matures~~facilities mature in ~~August 2020.~~December 2024 and December 2020, respectively. There were no draws on the revolving credit ~~facility~~facilities as of June 30, ~~2019~~2020 and September 30, 2018. The Company also selectively makes use of short-term credit lines other than its revolving credit facility. The Company, as of June 30, 2019, could borrow up to $2.8 billion based on committed credit lines.2019. In addition, the Company held cash and cash equivalents of ~~$3.6~~$1.0 billion as of June 30, ~~2019.~~2020. Given the increasingly uncertain economic environment caused by the COVID-19 pandemic, the Company took proactive measures in April 2020 to increase near-term financial flexibility, electing to opportunistically raise $675 million via European financing arrangements and $575 million in bank term loans.

This new debt partially replaces a recently matured $500 million bond, which was repaid in March 2020. As such, the Company believes it has sufficient financial resources to fund operations and meet its obligations for the foreseeable future.

~~In June 2019, the Company completed a "modified Dutch auction" tender offer to repurchase approximately $4.0 billion of its ordinary shares at a price of $39.25 per share.~~

In May 2019, the Company completed the debt tender offer to purchase up to $1.5 billion in aggregate principal amount of certain of its outstanding notes for $1.6 billion total consideration. The Company recognized a loss on the extinguishment of debt of $60 million, which was recorded within the net financing charges in the consolidated statements of income.

•The Company’s debt financial covenant in its revolving credit facility requires 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 Accounting Standards Codification ("ASC") 715-60, "Defined Benefit Plans - Other Postretirement," or (ii) the cumulative foreign currency translation adjustment. As of June 30, ~~2019,~~2020, the Company was in compliance with all covenants and other requirements set forth in its credit agreements and the indentures, governing its notes, and expect 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 key financial assumptions used in calculating the Company’s pension liability are determined annually, or whenever plan assets and liabilities are re-measured as required under accounting principles generally accepted in the U.S., including the expected rate of return on its plan assets. In fiscal ~~2019,~~2020, the Company believes the long-term rate of return will approximate ~~7.10%~~6.90%, 5.20% and ~~5.65%~~5.70% for U.S. pension, non-U.S. pension and postretirement plans, respectively. During the first nine months of fiscal ~~2019,~~2020, the Company made approximately ~~$51~~$43 million in total pension and postretirement ~~contributions for continuing operations.~~contributions. In total, the Company expects to contribute approximately ~~$55~~$50 million in cash to its defined benefit pension plans in fiscal ~~2019 for continuing operations.~~2020. The Company expects to contribute ~~$15~~$4 million in cash to its postretirement plans in fiscal ~~2019 for continuing operations.~~2020.

•The Company earns a significant amount of its ~~operating~~ income outside of the parent company. Outside basis differences in ~~consolidated~~these subsidiaries are deemed to be permanently reinvested except in limited circumstances. However, in fiscal 2019, the Company provided income tax expense related to a change in the Company's assertion over the outside basis differences of the Company’s investment in certain subsidiaries as a result of the planned divestiture of the Power Solutions business. Also, in fiscal 2018, due to U.S. Tax Reform, the Company provided income tax related to the change in the Company’s assertion over the outside basis difference of certain non-U.S. subsidiaries owned directly or indirectly by U.S. subsidiaries. Under U.S. Tax Reform, the U.S. has adopted a territorial tax system that provides an exemption for dividends received by U.S. corporations from 10% or more owned non-U.S. corporations. However, certain non-U.S, U.S. state and withholding taxes may still apply when closing an outside basis difference via distribution or other transactions. The Company currently does not intend nor foresee a need to repatriate undistributed earnings ~~or reduce~~included in the outside basis differences other than ~~as noted above or~~ in tax efficient manners. Except as noted, 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 a tax efficient ~~manner,~~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.

•To better align its resources with its growth strategies and reduce the cost structure of its global operations in certain underlying markets, the Company committed to a significant restructuring plan in fiscal 2020 and recorded a cumulative $297 million of restructuring and impairment costs in the consolidated statements of income. The restructuring action related to cost reduction initiatives in the Company’s Building Technologies & Solutions business and at Corporate. The costs consist primarily of workforce reductions, plant closures and asset impairments. The Company currently estimates that upon completion of the restructuring action, the cumulative fiscal 2020 restructuring plan will reduce annual operating costs for continuing operations by approximately $430 million, which is primarily the result of lower cost of sales and SG&A due to reduced employee-related costs, depreciation and amortization expense. The Company expects the annual benefit of these actions will be substantially realized in 2021. For fiscal 2020, the savings, net of execution costs, are expected to be approximately 30% of the expected annual operating cost reduction. The restructuring action is expected to be substantially complete in fiscal 2021. The restructuring plan reserve balance of $139 million at June 30, 2020 is expected to be paid in cash.

reduction initiatives in the Company’s Building Technologies & Solutions business and at Corporate. The costs consist primarily of workforce reductions, plant closures and asset impairments. The Company currently estimates that upon completion of the restructuring action, the fiscal 2018 restructuring plan will reduce annual operating costs for continuing operations by approximately $300 million, which is primarily the result of lower cost of sales and SG&A due to reduced employee-related costs, depreciation and amortization expense. The Company expects the annual benefit of these actions will be substantially realized in 2020. ~~For fiscal 2019, the savings, net of execution costs, are expected to be approximately 70% of the expected annual operating cost reduction.~~ The restructuring action is expected to be substantially complete in 2020. The restructuring plan reserve balance of ~~$106~~$69 million at June 30, ~~2019~~2020 is expected to be paid in cash.

•To better align its resources with its growth strategies and reduce the cost structure of its global operations in certain underlying markets, the Company committed to a significant restructuring plan in fiscal 2017 and recorded $347 million of restructuring and impairment costs in the consolidated statements of income. The restructuring action related to cost reduction initiatives in the Company’s Building Technologies & Solutions business and at Corporate. The costs consist primarily of workforce reductions, plant closures and asset impairments. The Company currently estimates that upon completion of the restructuring action, the fiscal 2017 restructuring plan will reduce annual operating costs for continuing operations by approximately $260 million, which is primarily the result of lower cost of sales and SG&A due to reduced employee-related costs, depreciation and amortization expense. The Company ~~expects~~substantially realized the annual benefit of these actions ~~will be substantially realized~~ in fiscal 2019. The restructuring ~~action is~~actions are expected to be substantially complete in fiscal ~~2019.~~2020. The restructuring plan reserve balance of ~~$69~~$21 million at June 30, ~~2019~~2020 is expected to be paid in cash.

To better align its resources with its growth strategies and reduce the cost structure of its global operations to address the softness in certain underlying markets, the Company committed to a significant restructuring plan in fiscal 2016 and recorded $222 million of restructuring and impairment costs in the consolidated statements of income. The restructuring action related to cost reduction initiatives in the Company’s Building Technologies & Solutions business and at Corporate. The costs consist primarily of workforce reductions, plant closures, asset impairments and change-in-control payments. The Company currently estimates that upon completion of the restructuring action, the fiscal 2016 restructuring plan will reduce annual operating costs for continuing operations by approximately $127 million, which is primarily the result of lower cost of sales and SG&A due to reduced employee-related costs, depreciation and amortization expense. The Company expects the annual benefit of these actions will be substantially realized in fiscal 2019. The restructuring action is expected to be substantially complete in fiscal 2019. The restructuring plan reserve balance of $59 million at June 30, 2019 is expected to be paid in cash.

•Refer to Note ~~11,~~12, "Debt and Financing Arrangements," of the notes to consolidated financial statements for additional information on items impacting capitalization.

New Accounting Standards

Refer to Note 2, "New Accounting Standards," of the notes to consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of June 30, ~~2019~~,2020, the Company had not experienced any adverse changes in market risk exposures that materially affected the quantitative and qualitative disclosures presented in the Company's Annual Report on Form 10-K for the year ended September 30, ~~2018.~~2019.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended ("Exchange Act"). Based upon their evaluation of these disclosure controls and procedures, the principal executive officer and principal financial officer concluded that the disclosure controls and procedures were effective as of June 30, ~~2019~~2020 to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time period

specified in the SEC’s rules and forms, and to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding disclosure.

Changes in Internal Control Over Financial Reporting

There have been no significant changes in the Company’s internal control over financial reporting during the three months ended June 30, ~~2019~~2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. 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. ~~The~~On October 17, 2019, the court ~~had scheduled an~~heard oral ~~argument hearing~~arguments on the motion to dismiss ~~for October 17, 2019.~~and took the matter under advisement. Although the Company believes it has substantial defenses to plaintiffs’ claims, it is not able to predict the outcome of this action.

Refer to Note ~~20,~~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 II, Item 1, "Legal Proceedings."

ITEM 1A. RISK FACTORS

The description of certain risk factors described under “Risk Factors” in Part I, Item 1A, of the Company’s Annual Report on Form 10-K for the year ended September 30, ~~2018~~2019 was supplemented in Item 1A of Part II of ~~Forms~~Form 10-Q for the quarterly period ending March 31, ~~2019~~2020 filed with the SEC on May ~~3, 2019.~~1, 2020. Other than as described in this Item 1A, there have been no other material changes to our risk factors from the risk factors previously disclosed in the ~~2018~~2019 Annual Report and the Quarterly Report on Form 10-Q for the three month period ended March 31, 2020.

The recent COVID-19 pandemic could have an adverse effect on our business, financial condition, results of operations and cash flows

The global outbreak of COVID-19 has severely restricted the level of economic activity around the world and has caused a significant contraction in the global economy. In response to this outbreak, the governments of many countries, states, cities and other geographic regions have taken preventative or protective actions, such as imposing restrictions on travel and business operations. Temporary closures of businesses have been ordered and numerous other businesses have temporarily closed voluntarily. These measures, while intended to protect human life, have and are expected to continue to have significant adverse impacts on domestic and foreign economies of uncertain severity and duration. Currently, the ~~Second Quarter Form 10-Q.~~effectiveness of economic stabilization efforts and other measures being taken to mitigate the effects of these actions and the spread of COVID-19 is uncertain.

As a result of the COVID-19 pandemic, we and our affiliates, employees, suppliers, customers and others have been and may continue to be restricted or prevented from conducting normal business activities, including as a result of shutdowns, travel restrictions and other actions that may be requested or mandated by governmental authorities. Such actions have prevented, and may in the future prevent us from accessing the facilities of our customers to deliver and install products, provide services and

complete maintenance. Although some governments have begun to lift shutdown orders and similar restrictions, a resurgence in the spread of COVID-19 could cause the reinstitution of such preventive or protective measures. While a substantial portion of our businesses have been classified as an essential business in jurisdictions in which facility closures have been mandated, some of our facilities have nevertheless been ordered to close in certain jurisdictions and we can give no assurance that there will not be additional closures in the future or that our businesses will be classified as essential in each of the jurisdictions in which we operate.

The COVID-19 outbreak has impacted, and may continue to impact, our office locations, manufacturing and servicing facilities and distribution centers, as well as those of our third party vendors, including the effects of facility closures, reductions in operating hours and other social distancing efforts. For example, we have experienced temporary reductions of our manufacturing and operating capacity in India, China and Mexico as a result of government-mandated actions to control the spread of COVID-19. In addition, we have modified our business practices (including employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners, and suppliers. These modifications to our business practices, including any future actions we take, may cause us to experience increases in costs, reductions in productivity and disruptions to our business routines. Further, we have experienced, and may continue to experience, disruptions or delays in our supply chain as a result of such actions, which has resulted in higher supply chain costs to us in order to maintain the supply of materials and components for our products.

Our management of the impact of COVID-19 has and will continue to require significant investment of time from our management and employees, as well as resources across our global enterprise. The focus on managing and mitigating the impacts of COVID-19 on our business may cause us to divert or delay the application of our resources toward new initiatives or investments, which may adversely impact our future results of operations. In addition, issues relating to the COVID-19 pandemic may result in legal claims or litigation against us.

We may also experience impacts from market downturns and changes in consumer behavior related to pandemic fears as a result of COVID-19. For example, we have experienced a recent decline in demand in our global businesses as a result of the impact of efforts to contain the spread of COVID-19. In addition, our customers may choose to delay or abandon projects on which we provide products and/or services. We may also experience adverse impacts on demand and sales volumes from industries that are sensitive to economic downturns and volatility in commodity prices, including the industries described in our risk factor titled “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” in our Annual Report on Form 10-K for the year ended September 30, 2019. If these adverse impacts continue, our stock price and the operating performances of our businesses could be adversely affected, which could require us to incur material impairment, restructuring or other charges. For example, we were required to record an impairment charge of indefinite-lived intangible assets primarily related to our retail business and an impairment of the North America Retail reporting unit's goodwill in the nine months ended June 30, 2020.

The impact of COVID-19 has caused significant uncertainty and volatility in the credit markets. We rely on the credit markets to provide us with liquidity to operate and grow our businesses beyond the liquidity that operating cash flows provide. If our access to capital were to become significantly constrained or if costs of capital increased significantly due the impact of COVID-19, including volatility in the capital markets, a reduction in our credit ratings or other factors, then our financial condition, results of operations and cash flows could be adversely affected.

If the COVID-19 pandemic becomes more pronounced in our global markets, experiences a resurgence in markets recovering from the spread of COVID-19, or if another significant natural disaster or pandemic were to occur in the future, our operations in areas impacted by such events could experience further adverse financial impacts due to market changes and other resulting events and circumstances. The extent to which the COVID-19 outbreak impacts our financial condition will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19, the longevity of COVID-19, the impact of COVID-19 on economic activity, the actions to contain its impacts on public health and the global economy and the speed at which economic activity resumes following the lifting of measures designed to mitigate the spread of COVID-19. The impact of COVID-19 may also exacerbate other risks discussed in Item 1A of our Annual Report on Form 10-K for the year ended September 30, 2019, any of which could have a material effect on our financial condition, results of operations and cash flows.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Following the Tyco Merger, the Company adopted, subject to the ongoing existence of sufficient distributable reserves, the existing Tyco International plc $1 billion share repurchase program in September 2016. In December 2017, the Company's Board of Directors approved a $1 billion increase to its share repurchase authorization. In November 2018, the Company's Board of Directors approved an additional $1 billion increase to its share repurchase authorization. In March 2019, the Company's Board of Directors approved an ~~additional~~ $8.5 billion increase to its existing share repurchase authorization, subject to the completion of the previously announced sale of the Company's Power Solutions business, which closed on April 30, 2019. 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. ~~During~~In order to enhance liquidity resources in response to financial market uncertainty related to the ~~three months ended June 30, 2019,~~COVID-19 pandemic, in March 2020 the Company ~~repurchased $4,122 million of~~made the decision to suspend its ~~ordinary shares, of which $4,035 million of its ordinary~~share repurchase program. As a result, no shares were purchased through publicly announced "modified Dutch auction" tender offer and $87 million of its ordinary shares were purchased on an open market. During the nine months ended June 30, 2019, the Company repurchased $5,122 million of its ordinary shares, of which $4,035 million of its ordinary shares were purchased through publicly announced "modified Dutch auction" tender offer and $1,087 million of its ordinary shares were purchased on an open market. Refer to Note 14, "Equity and Noncontrolling Interests," of the notes to consolidated financial statements for additional information regarding the equity tender offer.

~~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 June 30, ~~2019.~~2020. During the nine month ended June 30, 2020, the Company repurchased $1.5 billion of its shares. As of June 30, 2020, approximately $3.1 billion remains available under the share repurchase program. In June 2020, the Company announced the share repurchase program would resume in the fourth quarter of fiscal 2020.

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

4/1/19 - 4/30/19
Purchases by Company —
$ —
—
$ 9,548,524,388

5/1/19 - 5/31/19
Purchases by Company —
—
—
9,548,524,388

6/1/19 - 6/30/19
Purchases by Company 104,628,694
39.40
104,628,694
5,426,212,910

During the three months ended June 30, ~~2019,~~2020, 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.

ITEM 6. EXHIBITS

INDEX TO EXHIBITS

~~Reference is made to the separate exhibit index contained on page 65 filed herewith.~~


Exhibit No.			Description





31.1			Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1			Certification of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101			The following materials from Johnson Controls International plc's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Statements of Financial Position, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Shareholders' Equity Attributable to Johnson Controls Ordinary Shareholders and (vi) Notes to Consolidated Financial Statements.

104			Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

JOHNSON CONTROLS INTERNATIONAL PLC

Date: July 31, 2020

~~JOHNSON CONTROLS INTERNATIONAL PLC~~

By:

~~Date: August 1, 2019~~

~~By:~~

/s/ Brian J. Stief

~~Brian J. Stief~~

~~Executive Vice President and~~

~~Chief Financial Officer~~

~~JOHNSON CONTROLS INTERNATIONAL PLC~~

~~Form 10-Q~~

~~INDEX TO EXHIBITS~~


				Brian J. Stief
		~~Exhibit No.~~	~~Description~~

~~31.1~~	~~Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

~~31.2~~	~~Certification by the~~ Vice Chairman and Chief Financial Officer ~~pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

~~32.1~~	~~Certification of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~101~~	The following materials from Johnson Controls International plc's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Statements of Financial Position, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Shareholders' Equity Attributable to Johnson Controls Ordinary Shareholders and (vi) Notes to Consolidated Financial Statements.

6564


7.	~~Goodwill and~~ Location of lease balances	June 30, 2020
Operating lease right-of-use assets	Other ~~Intangible Assets~~noncurrent assets	$	1,127
Operating lease liabilities - current	Other current liabilities	322
Operating lease liabilities - noncurrent	Other noncurrent liabilities	820

Weighted-average remaining lease term		6 years
Weighted-average discount rate		2.3		%


	June 30, 2020
2020 (3 months)	$	83
2021	338
2022	256
2023	160
2024	115
After 2024	278
Total operating lease payments	1,230
Less interest	(88)
Present value of lease payments	$	1,142


	June 30, 2020										September 30, 2019
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Definite-lived intangible assets
Technology	$	1,318	$	(462)	$	856	$	1,307	$	(370)	$	937
Customer relationships	2,732		(906)		1,826		2,722		(759)		1,963
Miscellaneous	636		(255)		381		584		(224)		360
Total definite-lived intangible assets	4,686		(1,623)		3,063		4,613		(1,353)		3,260
Indefinite-lived intangible assets
Trademarks/trade names	2,221		—		2,221		2,282		—		2,282
Miscellaneous	80		—		80		90		—		90
	2,301		—		2,301		2,372		—		2,372
Total intangible assets	$	6,987	$	(1,623)	$	5,364	$	6,985	$	(1,353)	$	5,632



	June 30, 2019							September 30, 2018
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Amortized intangible assets
Technology	$	1,316	$	(342	)	$	974	$	1,317	$	(251	)	$	1,066
Customer relationships	2,745		(714		)	2,031		2,941		(599		)	2,342
Miscellaneous	566		(228		)	338		458		(185		)	273
Total amortized intangible assets	4,627		(1,284		)	3,343		4,716		(1,035		)	3,681
Unamortized intangible assets
Trademarks/trade names	2,306		—			2,306		2,386		—			2,386
Miscellaneous	90		—			90		120		—			120
	2,396		—			2,396		2,506		—			2,506
Total intangible assets	$	7,023	$	(1,284	)	$	5,739	$	7,222	$	(1,035	)	$	6,187


Tax Jurisdiction		Tax Years Covered

~~Tax Jurisdiction~~Belgium		~~Tax Years Covered~~2015 - 2019
Germany
~~Belgium~~	~~2015 - 2017~~
~~China~~	~~2008 - 2016~~
~~France~~	~~2010 - 2012; 2015 - 2016~~
~~Germany~~	2007 - 2016
~~Japan~~Taiwan		~~2015~~2017 - 2018
United Kingdom		~~2012~~2014 - 2015, 2017



	Nine Months Ended June 30,
	2019			2018
Operating Activities of Continuing Operations
Net income from continuing operations attributable to Johnson Controls	$	488		$	583
Income from continuing operations attributable to noncontrolling interests	147			134
Net income from continuing operations	635			717
Adjustments to reconcile net income from continuing operations to cash provided by operating activities:
Depreciation and amortization	625			649
Pension and postretirement benefit income	(85		)	(108		)
Pension and postretirement contributions	(51		)	(53		)
Equity in earnings of partially-owned affiliates, net of dividends received	6			(84		)
Deferred income taxes	382			(78		)
Non-cash restructuring and impairment charges	235			28
Gain on Scott Safety business divestiture	—			(114		)
Equity-based compensation	66			77
Other - net	42			(6		)
Changes in assets and liabilities, excluding acquisitions and divestitures:
Accounts receivable	(494		)	(454		)
Inventories	(289		)	(211		)
Other assets	(62		)	(245		)
Restructuring reserves	(84		)	(55		)
Accounts payable and accrued liabilities	(36		)	268
Accrued income taxes	(179		)	366
Cash provided by operating activities from continuing operations	711			697

Investing Activities of Continuing Operations
Capital expenditures	(401		)	(481		)
Sale of property, plant and equipment	15			23
Acquisition of businesses, net of cash acquired	(16		)	(24		)
Business divestitures, net of cash divested	12			2,101
Proceeds (payments) for equity swap	14			(15		)
Changes in long-term investments	13			(3		)
Cash provided (used) by investing activities from continuing operations	(363		)	1,601

Financing Activities of Continuing Operations
Increase (decrease) in short-term debt - net	(1,286		)	347
Increase in long-term debt	—			886
Repayment of long-term debt	(2,333		)	(2,743		)
Debt financing costs	—			(4		)
Stock repurchases and retirements	(5,122		)	(255		)
Payment of cash dividends	(712		)	(714		)
Proceeds from the exercise of stock options	111			39
Employee equity-based compensation withholding taxes	(26		)	(38		)
Dividends paid to noncontrolling interests	(132		)	(43		)
Cash used by financing activities from continuing operations	(9,500		)	(2,525		)

Discontinued Operations
Cash provided by operating activities	117			567
Cash provided (used) by investing activities	12,580			(312		)
Cash used by financing activities	(35		)	(3		)
Cash provided by discontinued operations	12,662			252
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(24		)	(84		)
Change in cash held for sale	15			13
Increase (decrease) in cash, cash equivalents and restricted cash	3,501			(46		)
Cash, cash equivalents and restricted cash at beginning of period	200			332
Cash, cash equivalents and restricted cash at end of period	3,701			286
Less: Restricted cash	16			19
Cash and cash equivalents at end of period	$	3,685		$	267



	Nine Months Ended June 30, 2018
	Total			Ordinary Shares		Capital in Excess of Par Value		Retained Earnings			Treasury Stock, at Cost			Accumulated Other Comprehensive Loss
At September 30, 2017	$	20,447		$	9	$	16,390	$	5,231		$	(710	)	$	(473	)
Comprehensive income (loss)	1,056			—		—		1,391			—			(335		)
Cash dividends Ordinary ($0.78 per share)	(722		)	—		—		(722		)	—			—
Repurchases of ordinary shares	(255		)	—		—		—			(255		)	—
Adoption of ASU 2016-09	179			—		—		179			—			—
Other, including options exercised	68			—		111		(4		)	(39		)	—
At June 30, 2018	$	20,773		$	9	$	16,501	$	6,075		$	(1,004	)	$	(808	)



	Three Months Ended June 30, 2018
	Total			Ordinary Shares		Capital in Excess of Par Value		Retained Earnings			Treasury Stock, at Cost			Accumulated Other Comprehensive Loss
At March 31, 2018	$	20,874		$	9	$	16,471	$	5,594		$	(946	)	$	(254	)
Comprehensive income (loss)	169			—		—		723			—			(554		)
Cash dividends Ordinary ($0.26 per share)	(240		)	—		—		(240		)	—			—
Repurchases of ordinary shares	(56		)	—		—		—			(56		)	—
Other, including options exercised	26			—		30		(2		)	(2		)	—
At June 30, 2018	$	20,773		$	9	$	16,501	$	6,075		$	(1,004	)	$	(808	)



	June 30, 2019
	As reported		Under previous accounting guidance		Impact from adopting the New Revenue Standard
Consolidated Statement of Financial Position

Assets

Accounts receivable - net	$	6,033	$	6,065	$	(32	)
Inventories	2,050		2,064		(14		)
Other current assets	1,179		1,204		(25		)
Property, plant and equipment - net	3,282		3,242		40
Other noncurrent assets	1,787		1,758		29

Liabilities and Equity

Deferred revenue	1,389		1,380		9
Retained earnings	6,366		6,377		(11		)



	September 30, 2018

Cash	$	15
Accounts receivable - net	1,443
Inventories	1,405
Other current assets	152
Assets held for sale	$	3,015

Property, plant and equipment - net	$	2,871
Goodwill	1,092
Other intangible assets - net	161
Investments in partially-owned affiliates	453
Other noncurrent assets	611
Noncurrent assets held for sale	$	5,188

Short-term debt	$	9
Current portion of long-term debt	25
Accounts payable	1,237
Accrued compensation and benefits	125
Other current liabilities	395
Liabilities held for sale	$	1,791

Long-term debt	$	31
Pension and postretirement benefits	101
Other noncurrent liabilities	75
Noncurrent liabilities held for sale	$	207


	Three Months Ended June 30, 2020										Three Months Ended June 30, 2019
	Products & Systems		Services		Total		Products & Systems		Services		Total

Building Solutions North America	$	1,250	$	770	$	2,020	$	1,494	$	833	$	2,327
Building Solutions EMEA/LA	346		410		756		464		458		922
Building Solutions Asia Pacific	344		244		588		427		264		691
Global Products	1,979		—		1,979		2,511		—		2,511

Total	$	3,919	$	1,424	$	5,343	$	4,896	$	1,555	$	6,451


	Nine Months Ended June 30, 2020										Nine Months Ended June 30, 2019
	Products & Systems		Services		Total		Products & Systems		Services		Total

Building Solutions North America	$	3,963	$	2,399	$	6,362	$	4,202	$	2,428	$	6,630
Building Solutions EMEA/LA	1,203		1,331		2,534		1,297		1,410		2,707
Building Solutions Asia Pacific	986		756		1,742		1,134		798		1,932
Global Products	5,725		—		5,725		6,425		—		6,425

Total	$	11,877	$	4,486	$	16,363	$	13,058	$	4,636	$	17,694


	Location of contract balances	June 30, 2020		September 30, 2019
Contract assets - current	Accounts receivable - net	$	1,409	$	1,389
Contract assets - noncurrent	Other noncurrent assets	98		90
Contract liabilities - current	Deferred revenue	(1,451)		(1,407)
Contract liabilities - noncurrent	Other noncurrent liabilities	(120)		(117)
Total		$	(64)	$	(45)



	Location of contract balances	June 30, 2019			October 1, 2018
Contract assets - current	Accounts receivable - net	$	1,428		$	1,261
Contract assets - noncurrent	Other noncurrent assets	85			85
Contract liabilities - current	Deferred revenue	(1,389		)	(1,335		)
Contract liabilities - noncurrent	Other noncurrent liabilities	(125		)	(113		)
Total		$	(1	)	$	(102	)



	June 30, 2019		September 30, 2018

Raw materials and supplies	$	685	$	606
Work-in-process	215		155
Finished goods	1,150		1,058
Inventories	$	2,050	$	1,819


	Three Months Ended June 30, 2020		Nine Months Ended June 30, 2020
Cash paid for amounts included in the measurement of lease liability:
Operating cash outflows from operating leases	$	100	$	297
Noncash operating lease activity:
Right-of-use assets obtained in exchange for operating lease liabilities	141		315


			Business Acquisitions		Impairments		Currency Translation and Other
	September 30,										June 30,
	2019										2020

Building Solutions North America	$	9,588	$	—	$	(424)	$	(20)	$	9,144
Building Solutions EMEA/LA	1,849		23		—		3		1,875
Building Solutions Asia Pacific	1,194		—		—		10		1,204
Global Products	5,547		19		—		(30)		5,536
Total	$	18,178	$	42	$	(424)	$	(37)	$	17,759



			Business Acquisitions		Business Divestitures			Currency Translation and Other
	September 30,										June 30,
	2018										2019

Building Solutions North America	$	9,603	$	—	$	—		$	(5	)	$	9,598
Building Solutions EMEA/LA	1,950		1		(1		)	(40		)	1,910
Building Solutions Asia Pacific	1,235		—		—			(9		)	1,226
Global Products	5,593		9		(22		)	(2		)	5,578
Total	$	18,381	$	10	$	(23	)	$	(56	)	$	18,312


	Employee Severance and Termination Benefits		Long-Lived Asset Impairments		Other		Total

Original reserve	$	54	$	54	$	3	$	111
Utilized—cash	(8)		—		—		(8)
Utilized—noncash	—		(54)		—		(54)
Balance at December 31, 2019	$	46	$	—	$	3	$	49

Utilized—cash	(24)		—		(1)		(25)

Balance at March 31, 2020	$	22	$	—	$	2	$	24
Additional reserve	142		42		2		186
Utilized—cash	(28)		—		(1)		(29)
Utilized—noncash	—		(42)		—		(42)
Balance at June 30, 2020	$	136	$	—	$	3	$	139


	U.S. Pension Plans
	Three Months Ended June 30,						Nine Months Ended June 30,
	2020		2019		2020		2019


Interest cost	$	18	$	25	55		75
Expected return on plan assets	(46)		(46)		(136)		(138)
Net actuarial loss	157		—		157		—
Settlement loss	6		—		6		—
Net periodic benefit cost (credit)	$	135	$	(21)	$	82	$	(63)


	U.S. Pension Plans													Non-U.S. Pension Plans
	Three Months Ended June 30,						Nine Months Ended June 30,							Three Months Ended June 30,						Nine Months Ended June 30,
	2019			2018			2019			2018				2020		2019		2020		2019

Service cost	$	—		$	—		$	—		$	1		Service cost	$	6	$	5	$	19	$	16
Interest cost	25			23			75			69			Interest cost	9		14		27		40
Expected return on plan assets	(46		)	(49		)	(138		)	(149		)	Expected return on plan assets	(27)		(26)		(83)		(78)
Amortization of prior service cost													Amortization of prior service cost	—		—		1		—
Settlement loss													Settlement loss	—		—		—		1
Net periodic benefit credit	$	(21	)	$	(26	)	$	(63	)	$	(79	)	Net periodic benefit credit	$	(12)	$	(7)	$	(36)	$	(21)


	Postretirement Benefits
	Three Months Ended June 30,						Nine Months Ended June 30,
	2020		2019		2020		2019

Service cost	$	1	$	—	$	1	$	1
Interest cost	1		2		3		5
Expected return on plan assets	(3)		(2)		(7)		(7)
Amortization of prior service credit	—		—		(1)		—
Net periodic benefit credit	$	(1)	$	—	$	(4)	$	(1)



	Nine Months Ended June 30, 2020										Nine Months Ended June 30, 2019
	Equity Attributable to Johnson Controls International plc		Equity Attributable to Noncontrolling Interests		Total Equity		Equity Attributable to Johnson Controls International plc		Equity Attributable to Noncontrolling Interests		Total Equity

Beginning balance, September 30,	$	19,766	$	1,063	$	20,829	$	21,164	$	1,294	$	22,458
Total comprehensive income:
Net income	190		115		305		5,062		171		5,233
Foreign currency translation adjustments	(148)		(9)		(157)		(103)		8		(95)
Realized and unrealized gains on derivatives	1		2		3		10		—		10

Pension and postretirement plans	(1)		—		(1)		—		—		—
Other comprehensive income (loss)	(148)		(7)		(155)		(93)		8		(85)
Comprehensive income	42		108		150		4,969		179		5,148

Other changes in equity:
Cash dividends—ordinary shares	(590)		—		(590)		(683)		—		(683)
Dividends attributable to noncontrolling interests	—		(103)		(103)		—		(132)		(132)
Repurchases and retirements of ordinary shares	(1,467)		—		(1,467)		(5,122)		—		(5,122)

Divestiture of Power Solutions	—		—		—		483		(295)		188
Adoption of ASC 606	—		—		—		(45)		—		(45)
Adoption of ASU 2016-16	—		—		—		(546)		—		(546)
Adoption of ASC 842	(5)		—		(5)		—		—		—
Other, including options exercised	59		—		59		143		—		143
Ending balance, June 30,	$	17,805	$	1,068	$	18,873	$	20,363	$	1,046	$	21,409



	Three Months Ended June 30, 2018

Beginning balance, March 31, 2018	$	235
Net income	10
Foreign currency translation adjustments	(13		)
Realized and unrealized losses on derivatives	(1		)
Ending balance, June 30, 2018	$	231




	Nine Months Ended June 30, 2018

Beginning balance, September 30, 2017	$	211
Net income	35
Foreign currency translation adjustments	(3		)
Realized and unrealized losses on derivatives	(9		)
Dividends	(3		)
Ending balance, June 30, 2018	$	231


	Volume Outstanding as of
Commodity	June 30, 2020	September 30, 2019

Copper	2,724	3,561
Aluminum	2,622	2,967


	Derivatives and Hedging Activities Designated as Hedging Instruments under ASC 815						Derivatives and Hedging Activities Not Designated as Hedging Instruments under ASC 815
	June 30,		September 30,		June 30,		September 30,
	2020		2019		2020		2019
Other current assets
Foreign currency exchange derivatives	$	5	$	16	$	15	$	19
Commodity derivatives	1		—		—		—




Other noncurrent assets
Equity swap	—		—		49		62
Total assets	$	6	$	16	$	64	$	81

Other current liabilities
Foreign currency exchange derivatives	$	9	$	23	$	16	$	—
Commodity derivatives	—		1		—		—

Long-term debt
Foreign currency denominated debt	2,602		2,544		—		—
Total liabilities	$	2,611	$	2,568	$	16	$	—


	Fair Value of Assets						Fair Value of Liabilities
	June 30,		September 30,		June 30,		September 30,
	2020		2019		2020		2019
Gross amount recognized	$	70	$	97	$	2,627	$	2,568
Gross amount eligible for offsetting	(21)		(11)		(21)		(11)
Net amount	$	49	$	86	$	2,606	$	2,557


Derivatives in ASC 815 Cash Flow Hedging Relationships	Three Months Ended June 30,									Nine Months Ended June 30,
			2020			2019			2020			2019
Foreign currency exchange derivatives	$	—		$	(2)		$	2		$	7
Commodity derivatives	5			(5)			2			(2)
Total	$	5		$	(7)		$	4		$	5


Derivatives in ASC 815 Cash Flow Hedging Relationships	Location of Gain (Loss) Reclassified from AOCI into Income	Three Months Ended June 30,								Nine Months Ended June 30,
						2020			2019			2020	2019
Foreign currency exchange derivatives	Cost of sales	$	(4)	$	2		$	(1)		$	4
Commodity derivatives	Cost of sales	2		—			1			(3)
Commodity derivatives	Income from discontinued operations	—		(1)			—			(10)
Total		$	(2)	$	1		$	—		$	(9)


		Amount of Gain (Loss) Recognized in Income on Derivative
Derivatives Not Designated as Hedging Instruments under ASC 815	Location of Gain (Loss) Recognized in Income on Derivative	Three Months Ended June 30,								Nine Months Ended June 30,
						2020			2019			2020	2019
Foreign currency exchange derivatives	Cost of sales	$	(2)	$	(3)		$	2		$	(9)
Foreign currency exchange derivatives	Net financing charges	19		(18)			68			(42)

Foreign currency exchange derivatives	Income from discontinued operations	—		(2)			—			52
Equity swap	Selling, general and administrative	10		7			(14)			10
Total		$	27	$	(16)		$	56		$	11


	Fair Value Measurements Using:									Fair Value Measurements Using:
	Total as of June 30, 2019		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total as of June 30, 2020		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Other current assets									Other current assets
Foreign currency exchange derivatives	$	10	$	—	$	10	$	—	Foreign currency exchange derivatives	$	20	$	—	$	20	$	—
Exchange traded funds (fixed income)¹	19		19		—		—		Exchange traded funds (fixed income)¹	19		19		—		—
Commodity derivatives									Commodity derivatives	1		—		1		—

Other noncurrent assets									Other noncurrent assets
Investments in marketable common stock	1		1		—		—

Deferred compensation plan assets	69		69		—		—		Deferred compensation plan assets	61		61		—		—
Exchange traded funds (fixed income)¹	138		138		—		—		Exchange traded funds (fixed income)¹	142		142		—		—
Exchange traded funds (equity)¹	115		115		—		—		Exchange traded funds (equity)¹	120		120		—		—
Equity swap	59		—		59		—		Equity swap	49		—		49		—

Total assets	$	411	$	342	$	69	$	—	Total assets	$	412	$	342	$	70	$	—
Other current liabilities									Other current liabilities
Foreign currency exchange derivatives	$	7	$	—	$	7	$	—	Foreign currency exchange derivatives	$	25	$	—	$	25	$	—
Commodity derivatives	1		—		1		—

Total liabilities	$	8	$	—	$	8	$	—	Total liabilities	$	25	$	—	$	25	$	—



	Fair Value Measurements Using:
	Total as of September 30, 2018		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	$	16	$	—	$	16	$	—
Commodity derivatives	1		—		1		—
Exchange traded funds (fixed income)¹	14		14		—		—
Other noncurrent assets
Investments in marketable common stock	1		1		—		—
Deferred compensation plan assets	100		100		—		—
Exchange traded funds (fixed income)¹	148		148		—		—
Exchange traded funds (equity)¹	119		119		—		—
Equity swap	63		—		63		—
Noncurrent assets held for sale
Investments in marketable common stock	3		3		—		—
Total assets	$	465	$	385	$	80	$	—
Other current liabilities
Foreign currency exchange derivatives	$	12	$	—	$	12	$	—
Commodity derivatives	2		—		2		—
Liabilities held for sale
Commodity derivatives	12		—		12		—
Total liabilities	$	26	$	—	$	26	$	—


	Fair Value Measurements Using:
	Total as of September 30, 2019		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	$	35	$	—	$	35	$	—

Exchange traded funds (fixed income)¹	19		19		—		—


Other noncurrent assets

Deferred compensation plan assets	71		71		—		—
Exchange traded funds (fixed income)¹	138		138		—		—
Exchange traded funds (equity)¹	116		116		—		—
Equity swap	62		—		62		—


Total assets	$	441	$	344	$	97	$	—
Other current liabilities
Foreign currency exchange derivatives	$	23	$	—	$	23	$	—
Commodity derivatives	1		—		1		—
Total liabilities	$	24	$	—	$	24	$	—


•	~~County of Dutchess v. The 3M Company et al.,~~ ~~filed October 12, 2018 in the United States District Court, Southern District of New York.~~