Johnson Controls International plc (JCI, NYSE)
Industry: Building Products & Equipment
Annual report, fiscal year 2021


## JOHNSON CONTROLS INTERNATIONAL PLC
Index to Annual Report on Form 10-K
Year Ended September 30, 2021

CAUTIONARY STATEMENTS FOR FORWARD-LOOKING INFORMATION Page 3

PART I.

ITEM 1. BUSINESS 3

ITEM 1A. RISK FACTORS 10

ITEM 1B. UNRESOLVED STAFF COMMENTS 25

ITEM 2. PROPERTIES 25

ITEM 3. LEGAL PROCEEDINGS 25

ITEM 4. MINE SAFETY DISCLOSURES 25

EXECUTIVE OFFICERS OF THE REGISTRANT 26

PART II.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 27

ITEM 6. [RESERVED] 29

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 29

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 47

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 48

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 114

ITEM 9A. CONTROLS AND PROCEDURES 114

ITEM 9B. OTHER INFORMATION 115

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 115

PART III.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 115

ITEM 11. EXECUTIVE COMPENSATION 115

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 116

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 116

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 116

PART IV.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 117

ITEM 16. FORM 10-K SUMMARY 117

INDEX TO EXHIBITS 118

SIGNATURES 123



## CAUTIONARY STATEMENTS FOR FORWARD-LOOKING INFORMATION

Unless otherwise indicated, references to "Johnson Controls," the "Company," "we," "our" and "us" in this Annual Report on Form 10-K refer to Johnson Controls International plc and its consolidated subsidiaries.

The Company has made statements in this document that are forward-looking and therefore are subject to risks and uncertainties. All statements in this document other than statements of historical fact are, or could be, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In this document, statements regarding the Company's future financial position, sales, costs, earnings, cash flows, other measures of results of operations, synergies and integration opportunities, capital expenditures 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. The Company cautions that these statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond the Company's control, that could cause the Company's actual results to differ materially from those expressed or implied by such forward-looking statements, including, among others, risks related to: The Company's ability to manage general economic, business, capital market and geopolitical conditions, including global price inflation and shortages impacting the availability of raw materials and component products; the Company's ability to manage the impacts of natural disasters, climate change, pandemics and outbreaks of contagious diseases and other adverse public health developments, such as the COVID-19 pandemic; the strength of the U.S. or other economies; changes or uncertainty in laws, regulations, rates, policies or interpretations that impact the Company's business operations or tax status; the ability to develop or acquire new products and technologies that achieve market acceptance and meet applicable regulatory requirements; changes to laws or policies governing foreign trade, including increased tariffs or trade restrictions; maintaining the capacity, reliability and security of the Company's enterprise information technology infrastructure; the ability to manage the lifecycle cybersecurity risk in the development, deployment and operation of the Company's digital platforms and services; the risk of infringement or expiration of intellectual property rights; any delay or inability of the Company to realize the expected benefits and synergies of recent portfolio transactions; the outcome of litigation and governmental proceedings; the ability to hire and retain senior management and other key personnel; the tax treatment of recent portfolio transactions; significant transaction costs and/or unknown liabilities associated with such transactions; fluctuations in currency exchange rates; labor shortages, work stoppages, union negotiations, labor disputes and other matters associated with the labor force; and the cancellation of or changes to commercial arrangements. A detailed discussion of risks related to Johnson Controls' business is included in the section entitled "Risk Factors" (refer to Part I, Item 1A, of this Annual Report on Form 10-K). The forward-looking statements included in this document are made only as of the date of this document, unless otherwise specified, and, except as required by law, Johnson Controls assumes no obligation, and disclaims any obligation, to update such statements to reflect events or circumstances occurring after the date of this document.

## PART I

## ITEM 1 BUSINESS

## General

Johnson Controls International plc, headquartered in Cork, Ireland, is a global leader in smart, healthy and sustainable buildings, serving a wide range of customers in more than 150 countries. The Company’s products, services, systems and solutions advance the safety, comfort and intelligence of spaces to serve people, places and the planet. The Company is committed to helping its customers win and creating greater value for all of its stakeholders through its strategic focus on buildings.

Johnson Controls was originally incorporated in the state of Wisconsin in 1885 as Johnson Electric Service Company to manufacture, install and service automatic temperature regulation systems for buildings and was renamed to Johnson Controls, Inc. in 1974. In 2005, Johnson Controls acquired York International, a global supplier of heating, ventilating, air-conditioning ("HVAC") and refrigeration equipment and services. In 2014, Johnson Controls acquired Air Distribution Technologies, Inc., one of the largest independent providers of air distribution and ventilation products in North America. In 2015, Johnson Controls formed a joint venture with Hitachi to expand its building related product offerings. In 2016, Johnson Controls, Inc. and Tyco completed their combination (the "Merger"), combining Johnson Controls portfolio of building efficiency solutions with Tyco's portfolio of fire and security solutions. Following the Merger, Tyco changed its name to "Johnson Controls International plc."

In 2016, the Company completed the spin-off of its automotive business into Adient plc, an independent, publicly traded company. In 2019, the Company sold its Power Solutions business to BCP Acquisitions LLC, an entity controlled by



investment funds managed by Brookfield Capital Partners LLC, completing the Company’s transformation into a pure-play building technologies and solutions provider.

The Company is a global leader in engineering, manufacturing and commissioning building products and systems, including residential and commercial HVAC equipment, industrial refrigeration systems, controls, security systems, fire-detection systems and fire-suppression solutions. The Company further serves customers by providing technical services, including maintenance, management, repair, retrofit and replacement of equipment (in the HVAC, industrial refrigeration, security and fire-protection space), energy-management consulting and data-driven “smart building” services and solutions powered by its OpenBlue software platform and capabilities. The Company partners with customers by leveraging its broad product portfolio and digital capabilities powered by OpenBlue, together with its direct channel service and solutions capabilities, to deliver outcome-based solutions across the lifecycle of a building that address customers’ needs to improve energy efficiency and reduce greenhouse gas emissions.

## Business Segments

The Company conducts its business through four business segments: Building Solutions North America, Building Solutions EMEA/LA, Building Solutions Asia Pacific and Global Products.

Building Solutions North America: Building Solutions North America designs, sells, installs and services HVAC, controls, building management, refrigeration, integrated electronic security and integrated fire-detection and suppression systems for commercial, industrial, retail, small business, institutional and governmental customers in the United States and Canada. Building Solutions North America also provides energy efficiency solutions and technical services, including inspection, scheduled maintenance, and repair and replacement of mechanical and controls systems, as well as data-driven “smart building” solutions, to non-residential building and industrial applications in the United States and Canadian marketplace.

Building Solutions EMEA/LA: Building Solutions EMEA/LA designs, sells, installs, and services HVAC, controls, building management, refrigeration, integrated electronic security, integrated fire-detection and suppression systems, and provides technical services, including data-driven “smart building” solutions, to markets in Europe, the Middle East, Africa and Latin America.

Building Solutions Asia Pacific: Building Solutions Asia Pacific designs, sells, installs, and services HVAC, controls, building management, refrigeration, integrated electronic security, integrated fire-detection and suppression systems, and provides technical services, including data-driven “smart building” solutions, to the Asia Pacific marketplace.

Global Products: Global Products designs, manufactures and sells HVAC equipment, controls software and software services for residential and commercial applications to commercial, industrial, retail, residential, small business, institutional and governmental customers worldwide. In addition, Global Products designs, manufactures and sells refrigeration equipment and controls globally. The Global Products business also designs, manufactures and sells fire protection, fire suppression and security products, including intrusion security, anti-theft devices, access control, and video surveillance and management systems, for commercial, industrial, retail, residential, small business, institutional and governmental customers worldwide. Global Products includes the Johnson Controls-Hitachi joint venture.

For more information on the Company’s segments, refer to Note 20, "Segment Information," of the notes to consolidated financial statements.

## Products, Systems, Services and Solutions

The Company sells and installs its commercial HVAC equipment and systems, control systems, security systems, fire-detection and fire suppression systems, equipment and services primarily through its extensive direct channel, consisting of a global network of sales and service offices. Significant sales are also generated through global third-party channels, such as distributors of air-conditioning, controls, security and fire-detection and suppression products. The Company's large base of current customers leads to significant repeat business for the maintenance, retrofit and replacement markets. The Company is also able to leverage its installed base to generate sales for its service business. Trusted building brands, such as YORK \( ^{®} \) , Hitachi Air Conditioning, Metasys \( ^{®} \) , AnSul, Ruskin \( ^{®} \) , Titus \( ^{®} \) , Frick \( ^{®} \) , PENN \( ^{®} \) , Sabroe \( ^{®} \) , Silent-Aire \( ^{®} \) , Simplex \( ^{®} \)  and Grinnell \( ^{®} \) , together with the breadth and depth of the products, systems and solutions offered by the Company, give it what it believes to be the most diverse portfolio in the building technology industry.

The Company has developed software platforms, including on-premises platforms and cloud-based software services, and integrated its products and services with digital capabilities to provide data-driven solutions to create smarter, safer and more



sustainable buildings. In fiscal 2020, the Company launched its software platform, OpenBlue, enabling enterprises to manage all aspects of their physical spaces delivering sustainability, new occupant experiences, safety and security by combining the Company's building expertise with cutting-edge technology, including AI-powered service solutions such as remote diagnostics, predictive maintenance, compliance monitoring and advanced risk assessments. The Company leverages its digital and data-driven products and services to offer integrated and customizable solutions focused on delivering outcomes to customers, including OpenBlue Buildings-as-a-Service, OpenBlue Net Zero Buildings-as-a-Service and OpenBlue Healthy Buildings. These services are generally designed to generate recurring revenue for the Company as it supports its customers in achieving their desired outcomes.

In fiscal 2021, approximately 37% of sales originated from product offerings, 36% of sales originated from installations and 27% of sales originated from service offerings.

## Competition

The Company conducts its operations through thousands of individual contracts that are either negotiated or awarded on a competitive basis. Key factors in the award of contracts include system and service performance, quality, price, design, reputation, technology, application engineering capability and construction or project management expertise. Competitors for HVAC equipment, security, fire-detection, fire suppression and controls in the residential and non-residential marketplace include many local, regional, national and international providers. Larger competitors include Honeywell International, Inc.; Siemens Smart Infrastructure, an operating group of Siemens AG; Schneider Electric SA; Carrier Global Corporation; Trane Technologies plc; Daikin Industries, Ltd.; Lennox International, Inc.; GC Midea Holding Co, Ltd. and Gree Electric Appliances, Inc. In addition, the Company competes in a highly fragmented building services market. The loss of any individual contract or customer would not have a material adverse effect on the Company.

## Business Strategy

The Company’s business strategy is to sustain and expand its position as a leader in smart and sustainable building solutions by offering a full spectrum of products and solutions for customer buildings across the globe. The Company’s core strategy remains focused on creating growth platforms, driving operational improvements and creating a high-performance culture. The Company has strong positions in attractive and growing end-markets across HVAC, controls, fire, security and services, enhanced by its comprehensive product portfolio and substantial installed base. The Company believes that it is well positioned to capitalize on the emerging and prevalent trends in the buildings industry, including decarbonization, healthy buildings/indoor environmental quality and smart buildings. To capitalize on these trends, the Company is building on its fiscal 2021 priorities of maintaining leading positions in commercial HVAC and building management systems, as well as enabling growth through digital, to develop and leverage new digital technologies and capabilities into outcomes powered by its OpenBlue software platform. In furtherance of these goals, the Company has three strategic priorities:

Capitalize on Key Growth Vectors: Decarbonization, healthy buildings/indoor environmental quality and smart buildings represent key growth opportunities for the Company. The Company seeks to leverage its existing portfolio breadth and investments in product development, combined with the expansion of its digital products and capabilities powered by OpenBlue, to offer differentiated solutions and innovative deal structures to help customers achieve their objectives. The Company intends to invest in products and expand its partnerships to power innovation that will allow it to provide differentiated services that are tailored to its customers' desired outcomes.

Accelerate in High Growth Digital Services, Regions and Verticals: The Company is focused on transforming its large service business through its OpenBlue digital technologies and enabled by the Company’s installed base, domain expertise and global coverage. The Company further intends to expand its presence in high growth regions and invest in high growth verticals within the markets it serves, including healthcare, commercial offices/campus, education and data centers.

Sustain a High-Performance, Customer-Centric Culture: The Company recognizes that developing talent and creating positive customer experiences is central to accomplishing its business strategies. The Company is investing in its talent to build a diverse workforce that is digital capable, solutions oriented and focused on continuous learning and growth. The Company aims to leverage its talent capabilities and training to create a customer-focused culture to drive customer loyalty and decisions.

To realize these priorities, the Company is leveraging its technology leadership, comprehensive product portfolio, global presence, substantial installed base and strong channels to monetize the lifecycle opportunities of install, service, retrofit and replacement which are established and delivered by the Company's direct field businesses and third-party channels across the globe. The Company is augmenting its strategic priorities with disciplined execution, productivity enhancements and sustainable cost management to create a path to realize expanded margins and enhanced profitability.



## Backlog

The Company’s backlog is applicable to its sales of systems and services. At September 30, 2021, the backlog was $10.5 billion, of which $10.1 billion was 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.

At September 30, 2021, remaining performance obligations were $16.1 billion, which is $5.6 billion higher than the Company's backlog of $10.5 billion. Differences between the Company's remaining performance obligations and backlog are primarily due to the following:

- Remaining performance obligations include large, multi-purpose contracts to construct hospitals, schools and other governmental buildings, which are services to be performed over the building's lifetime with average 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.

## Raw Materials

Raw materials used by the Company’s businesses in connection with their operations include steel, aluminum, brass, copper, polypropylene and certain fluorochemicals used in fire suppression agents. The Company also uses semiconductors and other electronic components in the manufacture of its products. During portions of fiscal 2021, the Company experienced higher than normal commodity and component prices and, in some instances, shortages due to global inflation, supply chain disruptions, labor shortages, increased demand and other regulatory and macroeconomic factors associated with the COVID-19 pandemic. These trends had a negative impact on the Company’s results of operations in fiscal 2021, although they were largely mitigated by the Company through proactive measures such as making purchases with the anticipation of higher demand, expanding and redistributing its supplier network, supplier financing, price increases and productivity improvements. The Company believes that the macroeconomic trends experienced in fiscal 2021 will continue into fiscal 2022. Therefore, the Company could experience further disruptions, shortages and price inflation in the future, the effect of which will depend on the Company’s ability to successfully mitigate and offset the impact of these events. In fiscal 2022, commodity prices and availability could fluctuate throughout the year and could significantly affect the Company’s results of operations.

## Intellectual Property

Generally, the Company seeks statutory protection for strategic or financially important intellectual property developed in connection with its business. Certain intellectual property, where appropriate, is protected by contracts, licenses, confidentiality or other agreements. From time to time, the Company takes action to protect its businesses by asserting its intellectual property rights against third-party infringers.

The Company owns numerous U.S. and non-U.S. patents (and their respective counterparts), the more important of which cover those technologies and inventions embodied in current products or which are used in the manufacture of those products. While the Company believes patents are important to its business operations and in the aggregate constitute a valuable asset, no single patent, or group of patents, is critical to the success of the business. The Company, from time to time, grants licenses under its patents and technology and receives licenses under patents and technology of others.

The Company’s trademarks, certain of which are material to its business, are registered or otherwise legally protected in the U.S. and many non-U.S. countries where products and services of the Company are sold. The Company, from time to time, becomes involved in trademark licensing transactions.



Most works of authorship produced for the Company, such as computer programs, catalogs and sales literature, carry appropriate notices indicating the Company’s claim to copyright protection under U.S. law and appropriate international treaties.

## Environmental, Health and Safety Matters

Laws addressing the protection of the environment and workers' safety and health govern the Company’s ongoing global operations. They generally provide for civil and criminal penalties, as well as injunctive and remedial relief, for noncompliance or require remediation of sites where Company-related materials have been released into the environment.

The Company has expended substantial resources globally, both financial and managerial, to comply with environmental laws and worker safety laws and maintains procedures designed to foster and ensure compliance. Certain of the Company’s businesses are, or have been, engaged in the handling or use of substances that may impact workplace health and safety or the environment. The Company is committed to protecting its workers and the environment against the risks associated with these substances.

The Company’s operations and facilities have been, and in the future may become, the subject of formal or informal enforcement actions or proceedings for noncompliance with environmental laws and worker safety laws or for the remediation of Company-related substances released into the environment. Such matters typically are resolved with regulatory authorities through commitments to compliance, abatement or remediation programs and, in some cases, payment of penalties. See Note 23, "Commitments and Contingencies," of the notes to consolidated financial statements for further discussion of environmental matters.

## Government Regulation and Supervision

The Company's operations are subject to numerous federal, state and local laws and regulations, both within and outside the United States, in areas such as consumer protection, government contracts, international trade, environmental protection, labor and employment, tax, licensing and others. For example, most U.S. states and non-U.S. jurisdictions in which the Company operates have licensing laws directed specifically toward the alarm and fire suppression industries. The Company's security businesses currently rely extensively upon the use of wireline and wireless telephone service to communicate signals. Wireline and wireless telephone companies in the U.S. are regulated by the federal and state governments. In addition, government regulation of fire safety codes can impact the Company's fire businesses. The Company's businesses may also be affected by changes in governmental regulation of refrigerants and energy efficiency standards, noise regulation and product safety regulations, including changes related to hydro fluorocarbons/emissions reductions efforts, energy conservation standards and the regulation of fluorinated gases. These and other laws and regulations impact the manner in which the Company conducts its business, and changes in legislation or government policies can affect the Company's worldwide operations, both favorably and unfavorably. For a more detailed description of the various laws and regulations that affect the Company's business, see Item 1A. Risk Factors.

## Regulatory Capital Expenditures

The Company’s efforts to comply with numerous federal, state and local laws and regulations applicable to its business and products often results in capital expenditures. The Company makes capital expenditures to design and upgrade its fire and security products to comply with or exceed standards applicable to the alarm, fire suppression and security industries. The Company also makes capital expenditures to meet or exceed energy efficiency standards, including the regulation of refrigerants, hydro fluorocarbons/emissions reductions efforts and the regulation of fluorinated gases, particularly with respect to the Company’s HVAC products and solutions. The Company’s ongoing environmental compliance program also results in capital expenditures. Regulatory and environmental considerations are a part of all significant capital expenditure decisions; however, expenditures in fiscal 2021 related solely to regulatory compliance were not material. It is management’s opinion that the amount of any future capital expenditures related to compliance with any individual regulation or grouping of related regulations will not have a material adverse effect on the Company’s financial results or competitive position in any one year. See Note 23, "Commitments and Contingencies," of the notes to consolidated financial statements for further discussion of environmental matters.



## Human Capital Management

## Overview and Governance

The Company strives to continuously drive and develop its High-Performance Culture. The Company’s High-Performance Culture represents the practices and behaviors, underpinned by the Company’s values, that lead to sustained growth, winning results and satisfied customers.

The responsibility to develop and maintain a High-Performance Culture is owned, embedded and executed throughout the Company. The Chief Human Resources Officer ("CHRO") is responsible for establishing the Company’s strategy to drive a High-Performance Culture and ensuring its execution across the Company. The Compensation and Talent Development Committee of the Board of Directors is the primary overseer of the Company’s High-Performance Culture strategy and execution. The Chief Executive Officer, the CHRO, the Vice President of Diversity and Inclusion and other senior leaders within the Company are responsible for the execution of the strategy and engage with the Compensation and Talent Development Committee, the Governance and Sustainability Committee and the full Board of Directors on the critical components driving the Company’s High-Performance Culture, including discussions of human capital trends, practices and operations, diversity and inclusion, health and safety, leadership development and succession planning. Key components driving the Company’s High-Performance Culture include:

## Health and Safety

Health and Wellness, Safety and Environment are the three pillars of the Company’s Zero Harm vision. The Company’s health and safety programs are designed around global standards with appropriate variations addressing multiple jurisdictions and regulations, specific hazards and unique working environments of the Company’s manufacturing, service and install, and headquarter operations. In response to COVID-19, the Company created new Zero Harm standards and processes to ensure the ongoing health and safety of its workplaces, including extensive communication and education programs to encourage all employees to get vaccinated against COVID-19 when eligible and the organization of on-site vaccination clinics at the Company’s facilities. Throughout fiscal year 2021, as employees in many countries were faced with continued work-from-home instructions, the Company’s focus on employee well-being continued with the utilization of global and regional well-being councils, addressing physical, mental, social and financial aspects of employee wellbeing during the pandemic. See "Impact of COVID-19 pandemic" included in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for more information on human capital management actions taken by the Company in response to the COVID-19 pandemic.

The Company requires each of its locations to perform regular safety audits to ensure proper safety policies, program procedures, analyses and training are in place. In addition, the Company engages an independent third-party conformity assessment and certification vendor to audit selected operations for adherence to its global health and safety standards. Safety culture and behavior-based safety initiatives have been deployed within the Company, including a multi-faceted policy focused on preventing distracted driving and the design and rollout of a new-style of platform ladder built to provide a safe working platform for employees. One safety policy that applies to all employees around the globe, regardless of rank, is every individual worker’s right to apply the “Stop Work” principle when uncertain about the health and safety of a particular task.

The Company utilizes a mixture of leading and lagging indicators to assess the health and safety performance of its operations. Lagging indicators include the OSHA Total Recordable Incident Rate ("TRIR") and the Lost Time (or Lost Workday) Incident Rate ("LTIR") based upon the number of incidents per 100 employees (or per 200,000 work hours). In fiscal year 2021, the Company had a TRIR of 0.37 and a LTIR of 0.12.

## Diversity and Inclusion

Diversity and inclusion are embedded throughout the Company’s strategy to drive a High-Performance Culture. The Company recognizes that an inclusive culture that is diverse adds value to the Company and its customers through: the creation and delivery of innovative and outstanding products, services and outcomes; the cultivation of an engaged and empowered environment where employee productivity drives company growth; and the onboarding of high-performing talent into the organization to propel the Company’s transformation and future. The Company believes that all employees and leaders are responsible for creating a diverse and inclusive workplace. Employees are empowered to take an active role in creating a culture that values uniqueness, celebrates creativity and drives innovation. The Company places a high value on inclusion, engaging employees in Business Resource Groups ("BRGs") — employee-led voluntary organizations of people with similar interests, experiences, or demographic characteristics. The Company maintains its BRG chapters worldwide across nine



categories: African American, Asia Pacific, LGBTQ+, Emerging Leaders, Hispanic, Disabilities, Veterans, Women and Sustainability. The Company uses these groups to serve as a source of inclusion and to support the acquisition and development of diverse talent internally and externally. Each BRG is open to all employees and sponsored and supported by senior leaders across the enterprise. The Company's BRG structure includes monthly learning series, an active recruitment platform, an innovation hub, and community engagement. In fiscal year 2021, the Company realized over 350% growth in BRG membership.

The Company has implemented several measures that focus on ensuring accountabilities exist for making progress in diversity:

• Diversity Performance Goals: The CEO and other senior leaders have diversity and inclusion objectives in their annual performance goals.

- Attracting Diverse Talent: The Company commits to having a diverse talent pipeline by partnering with its business units in their workforce planning forecasts, as well as external organizations, to develop initiatives and goals to recruit diverse talent across all leadership and skill areas. In furtherance of this commitment, the Company launched its Future Leaders Internship Program, an enterprise-wide internship program designed to build a sustainable, diverse pipeline of talent with the critical skills needed to support the Company’s growth initiatives.

- Facilitating Engagement: The Company launched the Perspectives Listening Series to facilitate honest, courageous and authentic conversations between colleagues on topics that are relevant and important to employees, communities and society as a whole. Topics covered include next generation leadership, gender equality, the social justice movement and fatherhood.

## Talent Development

To maintain a High-Performance Culture, the Company must ensure the continued development and advancement of its people. Strategic talent reviews and succession planning occur on a planned cadence annually – globally and across all business areas. The Company continues to provide opportunities for the Company’s employees to grow their careers, with over half of open management positions filled internally during fiscal year 2021.

The Company believes that high performance is an outcome of a person’s ability to change, adapt, and grow their capabilities throughout their career. The Company emphasizes real-life, real-time learning that enables a person to meet the demands of challenging and changing work and focuses on reinforcing key principles that are designed to support an individual’s effectiveness in his or her current job and in their future development. The Company provides technical and leadership training to employees, customers and suppliers who work for or with the Company’s products and services. In particular, the Company’s focus on employee development has been structured over the last several years through programs designed to imbed essential skills and reinforce strategic goals that are aligned to the Company’s culture, including:

- Digital Transformation: In support of Company’s growth strategy, the Company is investing in developing digital leadership with personalized and targeted training programs designed to create digitally capable leaders, salespersons and technicians.

- Diversity and Inclusion: The Company has developed a structured diversity and inclusion training continuum across the levels and stages of individuals' careers to develop and align employees with the Company's diversity and inclusion strategy and values.

- Organizational Health: The Company regularly assesses its progress using an Organizational Health Index survey and develops annual health plans comprised of priority initiatives to drive key behaviors and practices that is informed by the survey’s results. These plans are specifically tailored for each business unit and regularly assessed during the year, with managers accountable for introducing and teaching new skills or toolsets to their teams.

In fiscal year 2021, the Company offered a robust curriculum of over 150,000 learning activities available to employees, consisting of videos, courses, e-learning, documentation, articles and books, including over 5,000 active (in person or virtual) learning courses. In fiscal year 2021, over 1.1 million learning activities were completed by approximately 85,300 employees.



## Employee Population and Demographics

As of September 30, 2021, the Company employed approximately 101,000 people worldwide, of which approximately 37,000 were employed in the United States and approximately 64,000 were outside the United States. Approximately 22,000 employees are covered by collective bargaining agreements or works councils and the Company believes that its relations with its labor unions are generally positive.

Employee Diversity as of September 30, 2021

<table><tr><td>Employees</td><td>Male</td><td>Female</td><td>Minority  \( {}^{(1)} \)</td></tr><tr><td>Total</td><td>77%</td><td>23%</td><td>26%</td></tr><tr><td>Managers</td><td>81%</td><td>19%</td><td>18%</td></tr></table>

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

## Seasonal Factors

Certain of the Company's sales are seasonal as the demand for residential air conditioning equipment and services generally increases in the summer months. This seasonality is mitigated by the other products and services provided by the Company that have no material seasonal effect.

## Research and Development Expenditures

Refer to Note 1, "Summary of Significant Accounting Policies," of the notes to consolidated financial statements for research and development expenditures. In January 2021, the Company committed to invest 75 percent of its new product research and development in climate-related innovation to develop sustainable products and services.

## Available Information

The Company’s filings with the U.S. Securities and Exchange Commission ("SEC"), including annual reports on Form 10-K, quarterly reports on Form 10-Q, definitive proxy statements on Schedule 14A, current reports on Form 8-K, and any amendments to those reports filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, are made available free of charge through the Investor Relations section of the Company’s Internet website at http://www.johnsoncontrols.com as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the SEC. Copies of any materials the Company files with the SEC can also be obtained free of charge through the SEC’s website at http://www.sec.gov. The Company also makes available, free of charge, its Code of Ethics, Corporate Governance Guidelines, Board of Directors committee charters and other information related to the Company on the Company’s Internet website or in printed form upon request. The Company is not including the information contained on the Company’s website as a part of, or incorporating it by reference into, this Annual Report on Form 10-K.

## ITEM 1A RISK FACTORS

Provided below is a cautionary discussion of what we believe to be the most important risk factors applicable to the Company. Discussion of these factors is incorporated by reference into and considered an integral part of Part II, Item 7, "Management's Discussion and Analysis of Financial Conditions and Results of Operations." The disclosure of a risk should not be interpreted imply that such risk has not already materialized. Additional risks not currently known to the Company or that the Company currently believes are immaterial also may impair the Company's business, financial condition, results of operations and cash flows.

## Risks Related to Economic and Political Conditions

Impacts related to the 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 disrupted economic activity around the world. As a result, 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. While a substantial portion of our businesses and facilities have been classified as essential in



jurisdictions in which facility closures have been mandated, we can give no assurance that there will not be additional closures in the future or that our businesses and facilities 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. In response to the challenges presented by COVID-19, we modified our business practices, including restricting non-essential employee travel, implementing remote work protocols, and limiting 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.

In September 2021, the Biden Administration issued an executive order requiring U.S.-based employees, contractors, and subcontractors, that work on or in support of U.S. Government contracts, to be fully vaccinated by January 4, 2022. The executive order includes on-site and remote U.S.-based employees, contractors and subcontractors and it only permits limited exceptions for medical and religious reasons. The Occupational Safety and Health Administration ("OSHA") has also issued rules requiring that all large employers in the U.S. have employee populations that are fully vaccinated against or regularly tested for COVID-19 at least once per week by January 4, 2022, however, the implementation of the OSHA rules has been blocked by a federal appeals court, subject to the resolution of ongoing litigation challenging the constitutionality of the rules. These actions are or are expected to be applicable to our U.S. operations and our federal contracting business, and we have announced an internal vaccine mandate with respect to our U.S.-based employees who fall within the scope of the federal contractor and subcontractor executive order. It is also possible that additional vaccine mandates may be announced in other jurisdictions in which our businesses operate. In addition, certain customers have issued vaccine requirements with respect to our employees who provide on-site service at customer facilities. Our efforts to comply with these mandates, including requiring that some or all of our employees be fully vaccinated against COVID-19, could result in increased labor attrition and disruption, as well as difficulty securing future labor needs, and could adversely impact our ability to deliver services to our U.S. federal government customers and potentially other customers, which could in turn adversely impact our results of operations.

We may also experience impacts from market forces and changes in consumer behavior related to pandemic fears as a result of COVID-19. Although we experienced increases in both demand and volumes during fiscal 2021 as governments distributed vaccines and lifted COVID-19-related restrictions, challenges in achieving sufficient vaccination levels and the introduction of new variants of COVID-19 have and could continue to negatively impact our results of operations due to the extension or reinstitation of lockdowns and similar restrictive measures, limited access to customer sites to perform installation and service work, the delay or abandonment of projects on which we provide products and/or services, and the general adverse impacts on demand and sales volumes from industries that are sensitive to economic downturns and volatility in commodity prices. In addition, the Company has experienced and could continue to experience labor shortages at its facilities as the Company expands its production capacity to meet increased customer demand. Further, the COVID-19 pandemic could result in permanent changes in the behaviors of our customers, including the increased prevalence of remote work and a corresponding decline in demand for the construction and maintenance of commercial buildings. Any of these impacts could cause our stock price and the operating performances of our businesses to be adversely affected, which could require us to incur material impairment, restructuring or other charges.

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. This 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.

The extent to which the COVID-19 pandemic continues to impact our results of operations and financial condition will depend on future developments that are highly uncertain and cannot be predicted, including the resurgence of COVID-19 and its variants in regions recovering from the impacts of the pandemic, the effectiveness of COVID-19 vaccines and the speed at which populations are vaccinated around the globe, the impact of COVID-19 on economic activity and regulatory actions taken to contain the impact of COVID-19 on public health and the global economy. The impact of COVID-19 may also exacerbate other risks discussed in Item 1A of this Annual Report on Form 10-K, any of which could have a material effect on our financial condition, results of operations and cash flows.



The ability of suppliers to deliver raw materials, parts and components to our manufacturing facilities, and our ability to manufacture without disruption, could affect our results of operations.

We use a wide range of materials (primarily steel, copper and aluminum) and components (including semiconductors and other electronic components) in the global production of our products, which come from numerous suppliers around the world. Because not all of our business arrangements provide for guaranteed supply and some key parts may be available only from a single supplier or a limited group of suppliers, we are subject to supply and pricing risk. Our operations and those of our suppliers are subject to disruption for a variety of reasons, including COVID-19-related supplier plant shutdowns or slowdowns, transportation delays, work stoppages, labor relations, labor shortages, price inflation, governmental regulatory and enforcement actions, intellectual property claims against suppliers, financial issues such as supplier bankruptcy, information technology failures, and hazards such as fire, earthquakes, flooding, or other natural disasters. For example, we expect to continue to be impacted by the following supply chain issues, due to economic, political and other factors largely beyond our control: increased input material costs and component shortages; supply chain disruptions and delays and cost inflation, all of which could continue or escalate in the future. The effects of climate change, including extreme weather events, long-term changes in temperature levels, water availability, increased cost for decarbonizing process heating, supply costs impacted by increasing energy costs, or energy costs impacted by carbon prices or offsets may exacerbate these risks. Such disruptions could interrupt our ability to manufacture certain products. Any significant disruption could materially and adversely affect our business, financial condition, results of operations and cash flows.

Material supply shortages and delays in deliveries, along with other factors such as price inflation, can also result in increased pricing. While many of our customers permit quarterly or other periodic adjustments to pricing based on changes in component prices and other factors, we may bear the risk of price increases that occur between any such repricing or, if such repricing is not permitted, during the balance of the term of the particular customer contract.

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

Increases in commodity costs can negatively impact the profitability of orders in backlog as prices on such orders are typically fixed; therefore, in the short-term, our ability to adjust for changes in certain commodity prices is limited. In these cases, if we are not able to recover commodity cost increases through price increases to our customers on new orders, then such increases will have an adverse effect on our results of operations. In cases where commodity price risk cannot be naturally offset or hedged through supply based fixed-price contracts, we use commodity hedge contracts to minimize overall price risk associated with our anticipated commodity purchases. Unfavorability in our hedging programs during a period of declining commodity prices could result in lower margins as we reduce prices to match the market on a fixed commodity cost level. Additionally, to the extent we do not or are unable to hedge certain commodities and the commodity prices substantially increase, such increases will have an adverse effect on our results of operations.

We have experienced, and expect to continue to experience, increased commodity costs as a result of global macroeconomic trends. While we have taken action to offset increasing commodity costs as described above, we have nonetheless experienced negative impacts on profitability as a result of such increased costs. Continued increased commodity costs could continue to negatively impact our results of operations to the extent we are unable to successfully mitigate and offset the impact of these costs.

Some of the industries in which we operate are cyclical and, accordingly, demand for our products and services could be adversely affected by downturns in these industries.

Much of the demand for installation of HVAC, security products, and fire detection and suppression solutions is driven by commercial and residential construction and industrial facility expansion and maintenance projects. Commercial and residential construction projects are heavily dependent on general economic conditions, localized demand for commercial and residential real estate and availability of credit. Commercial and residential real estate markets are prone to significant fluctuations in supply and demand. In addition, most commercial and residential real estate developers rely heavily on project financing in order to initiate and complete projects. Declines in real estate values could lead to significant reductions in the availability of project financing, even in markets where demand may otherwise be sufficient to support new construction. These factors could in turn temper demand for new HVAC, fire detection and suppression, and security installations.

Levels of industrial capital expenditures for facility expansions and maintenance are dependent on general economic conditions, economic conditions within specific industries we serve, expectations of future market behavior and available financing. Additionally, volatility in commodity and component prices, as well as commodity and component shortages, can negatively



affect the level of these activities and can result in postponement of capital spending decisions or the delay or cancellation of existing orders.

The businesses of many of our industrial customers are to varying degrees cyclical and have experienced periodic downturns. During such economic downturns, customers in these industries tend to delay major capital projects, including greenfield construction, maintenance projects and upgrades. Additionally, demand for our products and services may be affected by volatility in energy, component and commodity prices and fluctuating demand forecasts, as our customers may be more conservative in their capital planning, which may reduce demand for our products and services. Although our industrial customers tend to be less dependent on project financing than real estate developers, disruptions in financial markets and banking systems could make credit and capital markets difficult for our customers to access, and could significantly raise the cost of new debt for our customers. Any difficulty in accessing these markets and the increased associated costs can have a negative effect on investment in large capital projects, including necessary maintenance and upgrades, even during periods of favorable end-market conditions.

Many of our customers inside and outside of the industrial and commercial sectors, including governmental and institutional customers, have experienced budgetary constraints as sources of revenue have been negatively impacted by adverse or stagnant economic conditions. These budgetary constraints have in the past and may in the future reduce demand for our products and services among governmental and institutional customers.

Reduced demand for our products and services could result in the delay or cancellation of existing orders or lead to excess capacity, which unfavorably impacts our absorption of fixed costs. This reduced demand may also erode average selling prices in the industries we serve. Any of these results could materially and adversely affect our business, financial condition, results of operations and cash flows.

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

We have significant operations in a number of countries outside the U.S., some of which are located in emerging markets. Long-term economic uncertainty in some of the regions of the world in which we operate, such as Asia, South America, the Middle East, Europe and emerging markets, could result in the disruption of markets and negatively affect cash flows from our operations to cover our capital needs and debt service requirements.

In addition, as a result of our global presence, a significant portion of our revenues and expenses is denominated in currencies other than the U.S. dollar. We are therefore subject to non-U.S. currency risks and non-U.S. exchange exposure. While we employ financial instruments to hedge some of our transactional foreign exchange exposure, these activities do not insulate us completely from those exposures. Exchange rates can be volatile and a substantial weakening of foreign currencies against the U.S. dollar could reduce our profit margin in various locations outside of the U.S. and adversely impact the comparability of results from period to period.

There are other risks that are inherent in our non-U.S. operations, including the potential for changes in socio-economic conditions, laws and regulations, including anti-trust, import, export, labor and environmental laws, and monetary and fiscal policies; protectionist measures that may prohibit acquisitions or joint ventures, or impact trade volumes; unsettled or unstable political conditions; government-imposed plant or other operational shutdowns; backlash from foreign labor organizations related to our restructuring actions; corruption; natural and man-made disasters, hazards and losses; violence, civil and labor unrest, and possible terrorist attacks.

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

## Risks Related to Government Regulations

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

Our operations and employees are subject to various U.S. federal, state and local licensing laws, codes and standards and similar foreign laws, codes, standards and regulations. Changes in laws or regulations could require us to change the way we operate or to utilize resources to maintain compliance, which could increase costs or otherwise disrupt operations. In addition, failure to comply with any applicable laws or regulations could result in substantial fines or revocation of our operating permits and licenses. Competition or other regulatory investigations can continue for several years, be costly to defend and can result in



substantial fines. If laws and regulations were to change or if we or our products failed to comply, our business, financial condition and results of operations could be adversely affected.

Due to the international scope of our operations, the system of laws and regulations to which we are subject is complex and includes regulations issued by the U.S. Customs and Border Protection, the U.S. Department of Commerce's Bureau of Industry and Security, the U.S. Treasury Department's Office of Foreign Assets Control and various non U.S. governmental agencies, including applicable export controls, anti-trust, customs, currency exchange control and transfer pricing regulations, laws regulating the foreign ownership of assets, and laws governing certain materials that may be in our products. No assurances can be made that we will continue to be found to be operating in compliance with, or be able to detect violations of, any such laws or regulations. For example, existing free trade laws and regulations, such as the United States-Mexico-Canada Agreement, or any successor agreement, provide certain beneficial duties and tariffs for qualifying imports and exports, subject to compliance with the applicable classification and other requirements. Changes in laws or policies governing the terms of foreign trade, and in particular increased trade restrictions, tariffs or taxes on imports from countries where we manufacture products or from where we import products or raw materials (either directly or through our suppliers) could have an impact on our competitive position, business and financial results. For example, certain of our businesses have a significant presence in the United Kingdom (the "U.K."), where the success of the Brexit referendum in 2016 has continued to cause political and economic uncertainty. In December 2020, the U.K. and the European Union announced they had entered into a post-Brexit deal on certain aspects of trade and other strategic and political issues. Depending on the application of the terms of the trade and cooperation agreement between the U.K. and the European Union, we could face increased regulatory costs and challenges. The implications of these uncertainties could affect our business, financial position and results of operations.

We are also subject to a complex network of tax laws and tax treaties that impact our effective tax rate. For more information on risks related to tax regulation, see “Risks Related to Tax Matters” below.

We cannot predict the nature, scope or effect of future regulatory requirements to which our operations might be subject or the manner in which existing laws might be administered or interpreted.

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

The effects of climate change, such as extreme weather conditions and water scarcity, create financial risks to our business. For example, the demand for our products and services, such as commercial and residential air conditioning equipment, may be affected by unseasonable weather conditions. The effects of climate change could also disrupt our operations by impacting the availability and cost of materials needed for manufacturing and could increase insurance and other operating costs. These factors may impact our decisions to construct new facilities or maintain existing facilities in areas most prone to physical climate risks. We could also face indirect financial risks passed through the supply chain and disruptions that could result in increased prices for our products and the resources needed to produce them.

There is a general consensus that greenhouse gas emissions are linked to global climate change, and that these emissions must be reduced dramatically to avert the worst effects of climate change. Increased public awareness and concern regarding global climate change will result in more regulations designed to reduce greenhouse gas emissions. These regulations tend to be implemented under global, national and sub-national climate objectives or policies, and target the global warming potential (“GWP”) of refrigerants, equipment energy efficiency, and the combustion of fossil fuels as a heating source. Many of our products consume energy and use refrigerants. Regulations which seek to reduce greenhouse gas emissions present a risk to our global products business, predominantly our HVAC business, if we do not adequately prepare our product portfolio. As a result, we may be required to make increased capital expenditures to improve our product portfolio to meet new regulations and standards. Further, our customers and the markets we serve may impose emissions or other environmental standards through regulation, market-based emissions policies or consumer preference that we may not be able to timely meet due to the required level of capital investment or technological advancement. While we have been committed to continuous improvements to our product portfolio to meet and exceed anticipated regulations and preferences, there can be no assurance that our commitments will be successful, that our products will be accepted by the market, that proposed regulation or deregulation will not have a negative competitive impact or that economic returns will reflect our investments in new product development.

There continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty. Such regulatory uncertainty extends to incentives, which if discontinued, could adversely impact the demand for energy efficient buildings, and could increase costs of compliance. These factors may impact the demand for our products, obsolescence of our products and our results of operations.

As of the date of this filing, we have made several public commitments regarding our intended reduction of carbon emissions, including commitments to achieve net zero carbon emissions by 2040 and the establishment of science-based targets to reduce carbon emissions from our operations and the operations of our customers. Although we intend to meet these commitments, we



may be required to expend significant resources to do so, which could increase our operational costs. Further, there can be no assurance of the extent to which any of our commitments will be achieved, or that any future investments we make in furtherance of achieving such targets and goals will meet investor expectations or any binding or non-binding legal standards regarding sustainability performance. Moreover, we may determine that it is in the best interest of our company and our stockholders to prioritize other business, social, governance or sustainable investments over the achievement of our current commitments based on economic, regulatory and social factors, business strategy or pressure from investors, activist groups or other stakeholders. If we are unable to meet these commitments, then we could incur adverse publicity and reaction from investors, activist groups our other stakeholders, which could adversely impact the perception of us and our products and services by current and potential customers, as well as investors, which could in turn adversely impact our results of operations.

We are subject to requirements relating to environmental and safety regulations and environmental remediation matters which could adversely affect our business, results of operation and reputation.

We are subject to numerous federal, state and local environmental laws and regulations governing, among other things, solid and hazardous waste storage, treatment and disposal, and remediation of releases of hazardous materials. There are significant capital, operating and other costs associated with compliance with these environmental laws and regulations. Environmental laws and regulations may become more stringent in the future, which could increase costs of compliance or require us to manufacture with alternative technologies and materials. For example, proposed federal, state and European Union legislative action concerning the use and clean-up of fire-fighting foam products could negatively impact our fire-fighting business and our results of operations, thereby enhancing the risks to our business described under “Potential liability for environmental contamination could result in substantial costs” below.

Federal, state and local authorities also regulate a variety of matters, including, but not limited to, health, safety laws governing employee injuries, and permitting requirements in addition to the environmental matters discussed above. If we are unable to adequately comply with applicable health and safety regulations and provide our employees with a safe working environment, we may be subject to litigation and regulatory action, in addition to negatively impacting our ability to attract and retain talented employees. New legislation and regulations may require the Company to make material changes to its operations, resulting in significant increases to the cost of production.

We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and similar anti-bribery laws around the world.

The U.S. Foreign Corrupt Practices Act (the "FCPA"), the U.K. Bribery Act and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to government officials or other persons for the purpose of obtaining or retaining business. Recent years have seen a substantial increase in anti-bribery law enforcement activity, with more frequent and aggressive investigations and enforcement proceedings by both U.S. and non-U.S. regulators, and increases in criminal and civil proceedings brought against companies and individuals. Our policies mandate compliance with these anti-bribery laws. We operate in many parts of the world that are recognized as having governmental and commercial corruption and local customs and practices that can be inconsistent with anti-bribery laws. We cannot assure you that our internal control policies and procedures will always protect us from reckless or criminal acts committed by our employees or third-party intermediaries. In the event that we believe or have reason to believe that our employees or agents have or may have violated applicable anti-corruption laws, or if we are subject to allegations of any such violations, we may be required to investigate or have outside counsel investigate the relevant facts and circumstances, which can be expensive and require significant time and attention from senior management. Violations of these laws may result in criminal or civil sanctions, which could disrupt our business and result in a material adverse effect on our reputation, business, financial condition, results of operations and cash flows. In addition, we could be subject to commercial impacts such as lost revenue from customers who decline to do business with us as a result of such compliance matters, or we could be subject to lawsuits brought by private litigants, each of which could have a material adverse effect on our reputation, business, financial condition, results of operations and cash flows.

We are subject to risks arising from regulations applicable to companies doing business with the U.S. government.

Our customers include many U.S. federal, state and local government authorities. Doing business with the U.S. government and state and local authorities subjects us to unusual risks, including dependence on the level of government spending and compliance with and changes in governmental procurement and security regulations. Agreements relating to the sale of products to government entities may be subject to termination, reduction or modification, either at the convenience of the government or for failure to perform under the applicable contract. We are subject to potential government investigations of business practices and compliance with government procurement and security regulations, which can be expensive and burdensome. If we were charged with wrongdoing as a result of an investigation, we could be suspended from bidding on or



receiving awards of new government contracts, which could have a material adverse effect on the Company's results of operations. In addition, various U.S. federal and state legislative proposals have been made in the past that would deny governmental contracts to U.S. companies that have moved their corporate location abroad. We are unable to predict the likelihood that, or final form in which, any such proposed legislation might become law, the nature of regulations that may be promulgated under any future legislative enactments, or the effect such enactments and increased regulatory scrutiny may have on our business.

## Risks Related to Our Business Operations

Our future growth is dependent upon our ability to develop or acquire new products and technologies that achieve market acceptance with acceptable margins.

Our future success depends on our ability to develop or acquire, manufacture and bring competitive, and increasingly complex, products and services to market quickly and cost-effectively. Our ability to develop or acquire new products, services and technologies requires the investment of significant resources. These acquisitions and development efforts divert resources from other potential investments in our businesses, and they may not lead to the development of new technologies, products or services on a timely basis. Moreover, as we introduce new products, we may be unable to detect and correct defects in the design of a product or in its application to a specified use, which could result in loss of sales or delays in market acceptance. Even after introduction, new or enhanced products may not satisfy customer preferences and product failures may cause customers to reject our products. As a result, these products may not achieve market acceptance and our brand image could suffer. We must also attract, develop and retain individuals with the requisite technical expertise and understanding of customers' needs to develop new technologies and introduce new products, particularly as we increase investment in our digital services and solutions businesses and our OpenBlue platform. The laws and regulations applicable to our products, and our customers' product and service needs, change from time to time, and regulatory changes may render our products and technologies noncompliant. We must also monitor disruptive technologies and business models. In addition, the markets for our products, services and technologies may not develop or grow as we anticipate. The failure of our technology, products or services to gain market acceptance due to more attractive offerings by our competitors, the introduction of new competitors to the market with new or innovative product offerings or the failure to address any of the above factors could significantly reduce our revenues, increase our operating costs or otherwise materially and adversely affect our business, financial condition, results of operations and cash flows.

## The development of technology products and services presents security and safety risks.

An increasing number of our products, services and technologies, including our OpenBlue platform, are delivered with digital capabilities and the accompanying interconnected device networks, which include sensors, data, building management systems and advanced computing capabilities. If we are unable to manage the lifecycle cybersecurity risk in development, deployment and operation of our digital platforms and services, the possible consequences include financial loss, reputational damage, adverse health, safety, and environmental consequences, exposure to legal claims or enforcement actions, theft of intellectual property, fines levied by the Federal Trade Commission or other governmental organizations, the diminution in the value of our investment in research, development and engineering, and increased cybersecurity protection and remediation costs, which in turn could adversely affect our business, financial condition, results of operations and cash flows.

Cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information, and adversely impact our reputation and results of operations.

We rely upon the capacity, reliability and security of our IT and data security infrastructure and our ability to expand and continually update this infrastructure in response to the changing needs of our business. As we implement new systems or integrate existing systems, they may not perform as expected. We also face the challenge of supporting our older systems and implementing necessary upgrades. In addition, we are relying on our IT infrastructure to support our operations as we manage the impact of COVID-19, including through initiating remote-work protocols for a substantial number of our employees in regions impacted by the spread of the virus. If we experience a problem with the functioning of an important IT system as a result of the increased burden placed on our IT infrastructure or a security breach of our IT systems, including during system upgrades and/or new system implementations, the resulting disruptions could have an adverse effect on our business.

Global cybersecurity threats and incidents can range from uncoordinated individual attempts to gain unauthorized access to IT systems to sophisticated and targeted measures known as advanced persistent threats, directed at the Company, its products, its customers and/or its third-party service providers, including cloud providers. These threats and incidents originate from many sources globally and include malwares that take the form of computer viruses, ransomware, worms, Trojan horses, spyware, adware, scareware, rogue software, and programs that act against the computer user. While we have experienced, and expect to



continue to experience, these types of threats and incidents, none of them to date has been material to the Company. Our customers, including the U.S. government, are increasingly requiring cybersecurity protections and mandating cybersecurity standards in our products, and we may incur additional costs to comply with such demands. We seek to deploy comprehensive measures to deter, prevent, detect, respond to and mitigate these threats, including identity and access controls, data protection, vulnerability assessments, product software designs which we believe are less susceptible to cyber-attacks, continuous monitoring of our IT networks and systems, maintenance of backup and protective systems and the incorporation of cybersecurity design throughout the lifecycle of our products. Despite these efforts, cybersecurity incidents, depending on their nature and scope, could potentially result in the misappropriation, destruction, corruption or unavailability of critical data and confidential or proprietary information (our own or that of third parties) and the disruption of business operations. Such incidents could remain undetected for an extended period of time, and the losses arising from such incidents could exceed our available insurance coverage for such matters. Cybersecurity incidents aimed at the software imbedded in our products could lead to third-party claims that our product failures have caused a similar range of damages to our customers, and this risk is enhanced by the increasingly connected nature of our products and the role they play in managing building systems. The potential consequences of a material cybersecurity incident include financial loss, reputational damage, adverse health, safety, and environmental consequences, exposure to legal claims or enforcement actions, theft of intellectual property, fines levied by the Federal Trade Commission or other governmental organizations, diminution in the value of our investment in research, development and engineering, and increased cybersecurity protection and remediation costs, which in turn could adversely affect our competitiveness and results of operations.

## Data privacy, identity protection and information security compliance may require significant resources and presents certain risks.

We collect, store, have access to and otherwise process certain confidential or sensitive data, including proprietary business information, personal data or other information that is subject to privacy and security laws, regulations and/or customer-imposed controls. Despite our efforts to protect such data, our business and our products may be vulnerable to material security breaches, theft, misplaced or lost data, programming errors, or errors that could potentially lead to compromising such data, improper use of our products, systems, software solutions or networks, unauthorized access, use, disclosure, modification or destruction of information, defective products, production downtimes and operational disruptions. A significant actual or perceived risk of theft, loss, fraudulent use or misuse of customer, employee or other data, whether by us, our suppliers, channel partners, customers or other third parties, as a result of employee error or malfeasance, or as a result of the imaging, software, security and other products we incorporate into our products, as well as non-compliance with applicable industry standards or our contractual or other legal obligations or privacy and information-security policies regarding such data, could result in costs, fines, litigation or regulatory actions, or could lead customers to select products and services of our competitors. In addition, any such event could harm our reputation, cause unfavorable publicity or otherwise adversely affect certain potential customers' perception of the security and reliability of our services as well as our credibility and reputation, which could result in lost sales. In addition, we operate in an environment in which there are different and potentially conflicting data privacy laws in effect in the various U.S. states and foreign jurisdictions in which we operate and we must understand and comply with each law and standard in each of these jurisdictions while ensuring the data is secure. For example, proposed regulations restricting the use of biometric security technology could impact the products and solutions offered by our security business. Government enforcement actions can be costly and interrupt the regular operation of our business, and violations of data privacy laws can result in fines, reputational damage and civil lawsuits, any of which may adversely affect our business, reputation and financial statements.

Infringement or expiration of our intellectual property rights, or allegations that we have infringed upon the intellectual property rights of third parties, could negatively affect us.

We rely on a combination of trademarks, trade secrets, patents, copyrights, know-how, confidentiality provisions and licensing arrangements to establish and protect our proprietary rights. We cannot guarantee, however, that the steps we have taken to protect our intellectual property will be adequate to prevent infringement of our rights or misappropriation or theft of our technology, trade secrets or know-how. For example, effective patent, trademark, copyright and trade secret protection may be unavailable or limited in some of the countries in which we operate. In addition, while we generally enter into confidentiality agreements with our employees and third parties to protect our trade secrets, know-how, business strategy and other proprietary information, such confidentiality agreements could be breached or otherwise may not provide meaningful protection for our trade secrets and know-how related to the design, manufacture or operation of our products. We, from time to time, resort to litigation to protect our intellectual property rights. Such proceedings can be burdensome and costly, and we may not prevail. Further, adequate remedies may not be available in the event of an unauthorized use or disclosure of our trade secrets and manufacturing expertise. Finally, for those products in our portfolio that rely on patent protection, once a patent has expired, the product is generally open to competition. Products under patent protection usually generate significantly higher revenues than



those not protected by patents. If we fail to successfully enforce our intellectual property rights, our competitive position could suffer, which could harm our business, financial condition, results of operations and cash flows.

In addition, we are, from time to time, subject to claims of intellectual property infringement by third parties, including practicing entities and non-practicing entities. Regardless of the merit of such claims, responding to infringement claims can be expensive and time-consuming. The litigation process is subject to inherent uncertainties, and we may not prevail in litigation matters regardless of the merits of our position. Intellectual property lawsuits or claims may become extremely disruptive if the plaintiffs succeed in blocking the trade of our products and services and they may have a material adverse effect on our business, financial condition, results of operations and cash flows.

We rely on our global direct installation channel for a significant portion of our revenue. Failure to maintain and grow the installed base resulting from direct channel sales could adversely affect our business.

Unlike many of our competitors, we rely on a direct sales channel for a substantial portion of our revenue. The direct channel provides for the installation of fire and security solutions, and HVAC equipment manufactured by us. This represents a significant distribution channel for our products, creates a large installed base of our fire and security solutions, and HVAC equipment, and creates opportunities for longer term service and monitoring revenue. If we are unable to maintain or grow this installation business, whether due to changes in economic conditions, a failure to anticipate changing customer needs, a failure to introduce innovative or technologically advanced solutions, or for any other reason, our installation revenue could decline, which could in turn adversely impact our product pull-through and our ability to grow service and monitoring revenue.

## Our business succeeds depends on attracting and retaining qualified personnel.

Our ability to sustain and grow our business requires us to hire, retain and develop a high-performance, customer-centric and diverse management team and workforce. Continuous efficient and timely customer service, customer support and customer intimacy are essential to enabling customer loyalty and driving our financial results. Our growth strategies require that we pivot to new talent capability investments and build the workforce of the future, with an emphasis on developing skills in digital and consultative, outcome-based selling. Failure to ensure that we have the leadership and talent capacity with the necessary skillset and experience could impede our ability to deliver our growth objectives, execute our strategic plan and effectively transition our leadership. Organizational and reporting changes resulting from any future leadership transition or corporate initiatives could result in increased turnover. Additionally, any unplanned turnover or inability to attract and retain key employees could have a negative effect on our results of operations.

Our ability to convert backlog into revenue requires us to maintain a labor force that is sufficiently large enough to support our manufacturing operations to meet customer demand, as well as provide on-site services and project support for our customers. This includes recruiting, hiring and retaining skilled trade workers to support our direct channel field businesses. Recently, we have experienced the impacts of widespread shortages for both skilled and unskilled labor. While we have taken measures to mitigate the impact of these shortages and enhanced our ability to recruit and retain skilled and unskilled labor, we can provide no assurance that such efforts will be successful. If the impacts of labor shortages continue and our mitigation efforts are unsuccessful, this could limit our ability to convert backlog into revenue and negatively impact our results of operations.

## A material disruption of our operations, particularly at our monitoring and/or manufacturing facilities, could adversely affect our business.

If our operations, particularly at our monitoring facilities and/or manufacturing facilities, were to be disrupted as a result of significant equipment failures, natural disasters, climate change, power outages, fires, explosions, terrorism, sabotage, adverse weather conditions, public health crises (including COVID-19 related shutdowns), labor disputes, labor shortages or other reasons, we may be unable to effectively respond to alarm signals, fill customer orders and otherwise meet obligations to or demand from our customers, which could adversely affect our financial performance. For example, during the COVID-19 pandemic, we experienced disruptions in certain of our manufacturing facilities resulting from government-mandated shutdowns during the onset of the pandemic and have more recently experienced labor shortages as we have sought to expand production capacity in response to increased demand. The continuation or recurrence of either of these trends could adversely affect our financial performance.

Interruptions in production could increase our costs and reduce our sales. Any interruption in production capability could require us to make substantial capital expenditures or purchase alternative material at higher costs to fill customer orders, which could negatively affect our profitability and financial condition. We maintain property damage insurance that we believe to be adequate to provide for reconstruction of facilities and equipment, as well as business interruption insurance to mitigate losses resulting from significant production interruption or shutdown caused by an insured loss. However, any recovery under our



insurance policies may not offset the lost sales or increased costs that may be experienced during the disruption of operations, which could adversely affect our business, financial condition, results of operations and cash flows.

Our business may be adversely affected by work stoppages, union negotiations, labor disputes and other matters associated with our labor force.

We employ approximately 101,000 people worldwide. Approximately 22% of these employees are covered by collective bargaining agreements or works councils. Although we believe that our relations with the labor unions and works councils that represent our employees are generally good and we have experienced no material strikes or work stoppages recently, no assurances can be made that we will not experience in the future these and other types of conflicts with labor unions, works councils, other groups representing employees or our employees generally, or that any future negotiations with our labor unions will not result in significant increases in our cost of labor. Additionally, a work stoppage at one of our suppliers could materially and adversely affect our operations if an alternative source of supply were not readily available. Stoppages by employees of our customers could also result in reduced demand for our products.

We are exposed to greater risks of liability for employee acts or omissions, or system failure, in our fire and security businesses than may be inherent in other businesses.

If a customer or third party believes that he or she has suffered harm to person or property due to an actual or alleged act or omission of one of our employees or a security or fire system failure, he or she may pursue legal action against us, and the cost of defending the legal action and of any judgment could be substantial. In particular, because many of our products and services are intended to protect lives and real and personal property, we may have greater exposure to litigation risks than businesses that provide other products and services. We could face liability for failure to respond adequately to alarm activations or failure of our fire protection to operate as expected. The nature of the services we provide exposes us to the risks that we may be held liable for employee acts or omissions or system failures. As a result, such employee acts or omissions or system failures could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We do not own the right to use the ADT \( ^{®} \)  brand name in the U.S. and Canada.

We own the ADT \( ^{\circledR} \)  brand name in jurisdictions outside of the U.S. and Canada, and The ADT Corporation ("ADT") owns the brand name in the U.S. and Canada. Although we have entered into agreements with ADT designed to protect the value of the ADT \( ^{\circledR} \)  brand, we cannot assure you that actions taken by ADT will not negatively impact the value of the brand outside of the U.S. and Canada. These factors expose us to the risk that the ADT \( ^{\circledR} \)  brand name could suffer reputational damage or devaluation for reasons outside of our control, including ADT's business conduct in the U.S. and Canada. Any of these factors may adversely affect our business, financial condition, results of operations and cash flows.

## Risks Related to Litigation

Potential liability for environmental contamination could result in substantial costs.

We have projects underway at multiple current and former manufacturing and testing facilities to investigate and remediate environmental contamination resulting from past operations by us or by other businesses that previously owned or used the properties, including our Fire Technology Center and Stanton Street manufacturing facility located in Marinette, Wisconsin. These projects relate to a variety of activities, including arsenic, solvent, oil, metal, lead, perfluorooctane sulfonate ("PFOS"), perfluorooctanoic acid ("PFOA") and/or other per- and polyfluorinated substances ("PFAS") and other hazardous substance contamination cleanup; and structure decontamination and demolition, including asbestos abatement. Because of uncertainties associated with environmental regulation and environmental remediation activities at sites where we may be liable, future expenses that we may incur to remediate identified sites and resolve outstanding litigation could be considerably higher than the current accrued liability on our consolidated statements of financial position, which could have a material adverse effect on our business, results of operations and cash flows.

In addition, we have been named, along with others, in a number of class action and other lawsuits relating to the use of fire-fighting foam products by the U.S. Department of Defense, the U.S. military and others for fire suppression purposes and related training exercises. It is difficult to predict the outcome or ultimate financial exposure, if any, represented by these matters, and there can be no assurance that any such exposure will not be material. Such claims may also negatively affect our reputation. See Note 23, "Commitments and Contingencies," of the notes to consolidated financial statements for additional information on these matters.



## We are party to asbestos-related product litigation that could adversely affect our financial condition, results of operations and cash flows.

We and certain of our subsidiaries, along with numerous other third parties, are named as defendants in personal injury lawsuits based on alleged exposure to asbestos containing materials. These cases typically involve product liability claims based primarily on allegations of manufacture, sale or distribution of industrial products that either contained asbestos or were used with asbestos containing components. We cannot predict with certainty the extent to which we will be successful in litigating or otherwise resolving lawsuits in the future and we continue to evaluate different strategies related to asbestos claims filed against us including entity restructuring and judicial relief. Unfavorable rulings, judgments or settlement terms could have a material adverse impact on our business and financial condition, results of operations and cash flows. See Note 23, “Commitments and Contingencies,” of the notes to consolidated financial statements for additional information on these matters.

## Risks Relating to Strategic Transactions

## We may be unable to successfully execute or effectively integrate acquisitions or joint ventures.

We expect acquisitions of businesses and assets, as well as joint ventures (or other strategic arrangements), to play a role in our future growth. We cannot be certain that we will be able to identify attractive acquisition or joint venture targets, obtain financing for acquisitions on satisfactory terms, successfully acquire identified targets or form joint ventures, or manage the timing of acquisitions with capital obligations across our businesses.

Acquisitions and investments may involve significant cash expenditures, debt incurrences, equity issuances, operating losses and expenses. Acquisitions involve numerous other risks, including: the diversion of management attention to integration matters; difficulties in integrating operations and systems; challenges in conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures; difficulties in assimilating employees and in attracting and retaining key personnel; challenges in keeping existing customers and obtaining new customers; difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects; contingent liabilities (including contingent tax liabilities and earn-out obligations) that are larger than expected; and potential unknown liabilities, adverse consequences and unforeseen increased expenses associated with acquired companies.

The goodwill and intangible assets recorded with past acquisitions were significant and impairment of such assets could result in a material adverse impact on our financial condition and results of operations. Competition for acquisition opportunities in the various industries in which we operate may rise, thereby increasing our costs of making acquisitions or causing us to refrain from making further acquisitions.

Many of these factors are outside of our control, and any one of them could result in increased costs, decreased expected revenues and diversion of management time and energy, which could materially impact our business, financial condition and results of operations.

## Risks associated with joint venture investments may adversely affect our business and financial results.

We have entered into several joint ventures and we may enter into additional joint ventures in the future. Our joint venture partners may at any time have economic, business or legal interests or goals that are inconsistent with our goals or with the goals of the joint venture. In addition, we may compete against our joint venture partners in certain of our other markets. Disagreements with our business partners may impede our ability to maximize the benefits of our partnerships. Our joint venture arrangements may require us, among other matters, to pay certain costs or to make certain capital investments or to seek our joint venture partner's consent to take certain actions. In addition, our joint venture partners may be unable or unwilling to meet their economic or other obligations under the operative documents, and we may be required to either fulfill those obligations alone to ensure the ongoing success of a joint venture or to dissolve and liquidate a joint venture. These risks could result in a material adverse effect on our business and financial results.

## Divestitures of some of our businesses or product lines may materially adversely affect our financial condition, results of operations or cash flows.

We continually evaluate the performance and strategic fit of all of our businesses and may sell businesses or product lines. Divestitures involve risks, including difficulties in the separation of operations, services, products and personnel, the diversion of management's attention from other business concerns, the disruption of our business, the potential loss of key employees and the retention of uncertain environmental or other contingent liabilities related to the divested business. Some divestitures may be dilutive to earnings. In addition, divestitures may result in significant asset impairment charges, including those related to



goodwill and other intangible assets, which could have a material adverse effect on our financial condition and results of operations. We cannot assure you that we will be successful in managing these or any other significant risks that we encounter in divesting a business or product line, and any divestiture we undertake could materially and adversely affect our business, financial condition, results of operations and cash flows, and may also result in a diversion of management attention, operational difficulties and losses.

## Risks Related to Tax Matters

Future potential changes to the tax laws could adversely affect us and our affiliates.

Legislative and regulatory action may be taken in the U.S. and other jurisdictions in which we operate, which, if ultimately enacted, could override tax treaties upon which we rely, or broaden the circumstances under which we would be considered a U.S. resident, each of which could materially and adversely affect our effective tax rate. We cannot predict the outcome of any specific legislative or regulatory proposals and such changes could have a prospective or retroactive application. However, if proposals were enacted that had the effect of disregarding the incorporation in Ireland or limiting Johnson Controls International plc's ability, as an Irish company, to take advantage of tax treaties with the U.S., we could be subject to increased taxation, potentially significant expense, and/or other adverse tax consequences.

Recently, the U.S. Congress has advanced a variety of tax legislation proposals that are under consideration for potential legislative action. While the final form of any legislative action is still unknown, various proposals, if enacted, could have a material impact on the Company's effective tax rate. In October 2021, 136 out of 140 countries in the Organization for Economic Co-operation and Development ("OECD") Inclusive Framework on Base Erosion and Profit Shifting ("IF"), including Ireland, politically committed to potentially fundamental changes to the international corporate tax system, including the potential implementation of a global minimum corporate tax rate. While the details of these pronouncements presently remain unclear and timing of implementation uncertain, the impact of local country IF adoption could have a material impact on our effective tax rate. It is also possible that jurisdictions in which we do business could react to such IF developments unilaterally by enacting tax legislation that could adversely affect us or our affiliates. There is also general uncertainty regarding the tax policies of the jurisdictions where we operate, and if changes are enacted, there could be a resulting increase in our effective tax rate.

The Internal Revenue Service ("IRS") may not agree that we should be treated as a non-U.S. corporation for U.S. federal tax purposes.

Under current U.S. federal tax law, a corporation is generally considered to be a tax resident in the jurisdiction of its organization or incorporation. Because Johnson Controls International plc is an Irish incorporated entity, it would generally be classified as a non-U.S. corporation (and, therefore, a non-U.S. tax resident) under these rules. However, Section 7874 of the Code ("Section 7874") provides an exception to this general rule under which a non-U.S. incorporated entity may, in certain circumstances, be treated as a U.S. corporation for U.S. federal tax purposes.

Under Section 7874, if (1) former Johnson Controls, Inc. shareholders owned (within the meaning of Section 7874) 80% or more (by vote or value) of our ordinary shares after the Merger by reason of holding Johnson Controls, Inc. common stock (such ownership percentage the "Section 7874 ownership percentage"), and (2) our "expanded affiliated group" did not have "substantial business activities" in Ireland ("the substantial business activities test"), we will be treated as a U.S. corporation for U.S. federal tax purposes. If the Section 7874 ownership percentage of the former Johnson Controls, Inc. shareholders after the Merger was less than 80% but at least 60%, and the substantial business activities test was not met, we and our U.S. affiliates (including the U.S. affiliates historically owned by Tyco) may, in some circumstances, be subject to certain adverse U.S. federal income tax rules (which, among other things, could limit their ability to utilize certain U.S. tax attributes to offset U.S. taxable income or gain resulting from certain transactions). The application of these rules could result in significant additional U.S. tax liability and limit our ability to restructure or access cash earned by certain of our non-U.S. subsidiaries, in each case, without incurring substantial U.S. tax liabilities.

Based on the terms of the Merger, the rules for determining share ownership under Section 7874 and certain factual assumptions, we believe that former Johnson Controls, Inc. shareholders owned (within the meaning of Section 7874) less than 60% (by both vote and value) of our ordinary shares after the Merger by reason of holding shares of Johnson Controls, Inc. common stock. Therefore, under current law, we believe that we should not be treated as a U.S. corporation for U.S. federal tax purposes and that Section 7874 should otherwise not apply to us or our affiliates as a result of the Merger.



However, the determination of the Section 7874 ownership percentage is complex and is subject to factual and legal uncertainties. Thus, there can be no assurance that the IRS will agree with the position that we should not be treated as a U.S. corporation for U.S. federal tax purposes or that Section 7874 does not otherwise apply as a result of the Merger.

Regardless of any application of Section 7874, we are treated as an Irish tax resident for Irish tax purposes. Consequently, if we were to be treated as a U.S. corporation for U.S. federal tax purposes under Section 7874, we could be liable for both U.S. and Irish taxes, which could have a material adverse effect on our financial condition and results of operations.

## Changes to the U.S. model income tax treaty could adversely affect us.

On February 17, 2016, the U.S. Treasury released a revised U.S. model income tax convention (the "new model"), which is the baseline text used by the U.S. Treasury to negotiate tax treaties. If any or all of the modifications to the model treaty are adopted in the main jurisdictions in which we do business, they could, among other things, cause double taxation, increase audit risk and substantially increase our worldwide tax liability. We cannot predict the outcome of any specific modifications to the model treaty, and we cannot provide assurance that any such modifications will not apply to us.

## Negative or unexpected tax consequences could adversely affect our results of operations.

Adverse changes in the underlying profitability and financial outlook of our operations in several jurisdictions could lead to additional changes in our valuation allowances against deferred tax assets and other tax reserves on our statement of financial position, and the future sale of certain businesses could potentially result in the reversal of outside basis differences that could adversely affect our results of operations and cash flows. Additionally, changes in tax laws in the U.S., Ireland or in other countries where we have significant operations could materially affect deferred tax assets and liabilities on our consolidated statements of financial position and our income tax provision in our consolidated statements of income.

We are also subject to tax audits by governmental authorities. Negative unexpected results from one or more such tax audits could adversely affect our results of operations.

## Risks Relating to Our Jurisdiction of Incorporation

## Irish law differs from the laws in effect in the U.S. and may afford less protection to holders of our securities.

It may not be possible to enforce court judgments obtained in the U.S. against us in Ireland based on the civil liability provisions of the U.S. federal or state securities laws. In addition, there is some uncertainty as to whether the courts of Ireland would recognize or enforce judgments of U.S. courts obtained against us or our directors or officers based on the civil liabilities provisions of the U.S. federal or state securities laws or hear actions against us or those persons based on those laws. We have been advised that the U.S. currently does not have a treaty with Ireland providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by any U.S. federal or state court based on civil liability, whether or not based solely on U.S. federal or state securities laws, would not automatically be enforceable in Ireland.

A judgment obtained against us will be enforced by the courts of Ireland if the following general requirements are met: U.S. courts must have had jurisdiction in relation to the particular defendant according to Irish conflict of law rules (the submission to jurisdiction by the defendant would satisfy this rule); and the judgment must be final and conclusive and the decree must be final and unalterable in the court which pronounces it.

A judgment can be final and conclusive even if it is subject to appeal or even if an appeal is pending. But where the effect of lodging an appeal under the applicable law is to stay execution of the judgment, it is possible that in the meantime the judgment may not be actionable in Ireland. It remains to be determined whether final judgment given in default of appearance is final and conclusive. Irish courts may also refuse to enforce a judgment of the U.S. courts which meets the above requirements for one of the following reasons: the judgment is not for a definite sum of money; the judgment was obtained by fraud; the enforcement of the judgment in Ireland would be contrary to natural or constitutional justice; the judgment is contrary to Irish public policy or involves certain U.S. laws which will not be enforced in Ireland; or jurisdiction cannot be obtained by the Irish courts over the judgment debtors in the enforcement proceedings by personal service Ireland or outside Ireland under Order 11 of the Irish Superior Courts Rules.

As an Irish company, Johnson Controls is governed by the Irish Companies Acts, which differ in some material respects from laws generally applicable to U.S. corporations and shareholders, including, among others, differences relating to interested director and officer transactions and shareholder lawsuits. Likewise, the duties of directors and officers of an Irish company



generally are owed to the company only. Shareholders of Irish companies generally do not have a personal right of action against directors or officers of the company and may exercise such rights of action on behalf of the company only in limited circumstances. Accordingly, holders of Johnson Controls International plc securities may have more difficulty protecting their interests than would holders of securities of a corporation incorporated in a jurisdiction of the U.S.

## Transfers of Johnson Controls ordinary shares may be subject to Irish stamp duty.

For the majority of transfers of Johnson Controls ordinary shares, there is no Irish stamp duty. However, Irish stamp duty is payable for certain share transfers. A transfer of Johnson Controls ordinary shares from a seller who holds shares beneficially (i.e., through the Depository Trust Company ("DTC")) to a buyer who holds the acquired shares beneficially is not subject to Irish stamp duty (unless the transfer involves a change in the nominee that is the record holder of the transferred shares). A transfer of Johnson Controls ordinary shares by a seller who holds shares directly (i.e., not through DTC) to any buyer, or by a seller who holds the shares beneficially to a buyer who holds the acquired shares directly, may be subject to Irish stamp duty (currently at the rate of 1% of the price paid or the market value of the shares acquired, if higher) payable by the buyer. A shareholder who directly holds shares may transfer those shares into his or her own broker account to be held through DTC without giving rise to Irish stamp duty provided that the shareholder has confirmed to Johnson Controls transfer agent that there is no change in the ultimate beneficial ownership of the shares as a result of the transfer and, at the time of the transfer, there is no agreement in place for a sale of the shares.

We currently intend to pay, or cause one of our affiliates to pay, stamp duty in connection with share transfers made in the ordinary course of trading by a seller who holds shares directly to a buyer who holds the acquired shares beneficially. In other cases, Johnson Controls may, in its absolute discretion, pay or cause one of its affiliates to pay any stamp duty. Johnson Controls Memorandum and Articles of Association provide that, in the event of any such payment, Johnson Controls (i) may seek reimbursement from the buyer, (ii) may have a lien against the Johnson Controls ordinary shares acquired by such buyer and any dividends paid on such shares and (iii) may set-off the amount of the stamp duty against future dividends on such shares. Parties to a share transfer may assume that any stamp duty arising in respect of a transaction in Johnson Controls ordinary shares has been paid unless one or both of such parties is otherwise notified by Johnson Controls.

## Dividends paid by us may be subject to Irish dividend withholding tax.

In certain circumstances, as an Irish tax resident company, we will be required to deduct Irish dividend withholding tax (currently at the rate of 20%) from dividends paid to our shareholders. Shareholders that are residents in the U.S., European Union countries (other than Ireland) or other countries with which Ireland has signed a tax treaty (whether the treaty has been ratified or not) generally should not be subject to Irish withholding tax so long as the shareholder has provided its broker, for onward transmission to our qualifying intermediary or other designated agent (in the case of shares held beneficially), or us or our transfer agent (in the case of shares held directly), with all the necessary documentation by the appropriate due date prior to payment of the dividend. However, some shareholders may be subject to withholding tax, which could adversely affect the price of our ordinary shares.

## Dividends received by you could be subject to Irish income tax.

Dividends paid in respect of Johnson Controls ordinary shares generally are not subject to Irish income tax where the beneficial owner of these dividends is exempt from dividend withholding tax, unless the beneficial owner of the dividend has some connection with Ireland other than his or her shareholding in Johnson Controls.

Johnson Controls shareholders who receive their dividends subject to Irish dividend withholding tax generally will have no further liability to Irish income tax on the dividend unless the beneficial owner of the dividend has some connection with Ireland other than his or her shareholding in Johnson Controls.

## General Risk Factors

General economic, political, credit and capital market conditions could adversely affect our financial performance, our ability to grow or sustain our businesses and our ability to access the capital markets.

We compete around the world in various geographic regions and product markets. Global economic and political conditions affect each of our primary businesses and the businesses of our customers and suppliers. Any future financial distress or disruption in the industries and/or markets where we compete could negatively affect our revenues and financial performance in future periods, result in future restructuring charges, and adversely impact our ability to grow or sustain our businesses. Further,



negative economic conditions as a result of the COVID-19 pandemic in one or more countries or regions in which we operate could require changes to funding certain of our strategic growth investments.

The capital and credit markets provide us with liquidity to operate and grow our businesses beyond the liquidity that operating cash flows provide. A worldwide economic downturn and/or disruption of the credit markets could reduce our access to capital necessary for our operations and executing our strategic plan. If our access to capital were to become significantly constrained, or if costs of capital increased significantly due to lowered credit ratings, prevailing industry conditions, the volatility of the capital markets or other factors; then our financial condition, results of operations and cash flows could be adversely affected.

If we are unable to adequately react to negative economic impacts that decrease demand for our products and services and/or negative movements in capital markets our results of operations, financial condition or liquidity could be adversely affected.

The potential insolvency or financial distress of third parties could adversely impact our business and results of operations.

We are exposed to the risk that third parties to various arrangements who owe us money or goods and services, or who purchase goods and services from us, will not be able to perform their obligations or continue to place orders due to insolvency or financial distress. Notably, the global COVID-19 pandemic created heightened risk that third parties may be unable to perform their obligations or suffer financial distress due to the global economic impact of the pandemic and the regulatory measures that have been enacted by governments, however, we are unable to predict the impact that COVID-19 will have on any of our customers, suppliers, vendors, and other business partners, and each of their financial conditions or their ability to perform their obligations. If third parties fail to perform their obligations under arrangements with us, we may be forced to replace the underlying commitment at current or above market prices or on other terms that are less favorable to us. In such events, we may incur losses, or our results of operations, financial condition or liquidity could otherwise be adversely affected.

Legal proceedings in which we are, or may be, a party may adversely affect us.

We are currently, and may in the future, become subject to legal proceedings and commercial or contractual disputes. These are typically claims that arise in the normal course of business including, without limitation, commercial or contractual disputes with our suppliers or customers, intellectual property matters, third party liability, including product liability claims, and employment claims.

Risks related to our defined benefit retirement plans may adversely impact our results of operations and cash flow.

Significant changes in actual investment return on defined benefit plan assets, discount rates, mortality assumptions and other factors could adversely affect our results of operations and the amounts of contributions we must make to our defined benefit plans in future periods. Because we mark-to-market our defined benefit plan assets and liabilities on an annual basis, large non-cash gains or losses could be recorded in the fourth quarter of each fiscal year or when a remeasurement event occurs. Generally accepted accounting principles in the U.S. require that we calculate income or expense for the plans using actuarial valuations. These valuations reflect assumptions about financial markets and interest rates, which may change based on economic conditions. Funding requirements for our defined benefit plans are dependent upon, among other factors, interest rates, underlying asset returns and the impact of legislative or regulatory changes related to defined benefit funding obligations. For a discussion regarding the significant assumptions used to determine net periodic benefit cost, refer to "Critical Accounting Estimates" included in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations."

A downgrade in the ratings of our debt could restrict our ability to access the debt capital markets and increase our interest costs.

Unfavorable changes in the ratings that rating agencies assign to our debt may ultimately negatively impact our access to the debt capital markets and increase the costs we incur to borrow funds. If ratings for our debt fall below investment grade, our access to the debt capital markets would become restricted and the price we pay to issue debt could increase. Historically, we have relied on our ability to issue commercial paper rather than to draw on our credit facility to support our daily operations, which means that a downgrade in our ratings or volatility in the financial markets causing limitations to the debt capital markets could have an adverse effect on our business or our ability to meet our liquidity needs.

Additionally, several of our credit agreements generally include an increase in interest rates if the ratings for our debt are downgraded. Further, an increase in the level of our indebtedness may increase our vulnerability to adverse general economic and industry conditions and may affect our ability to obtain additional financing.



## A variety of other factors could adversely affect the results of operations of our business.

Any of the following could materially and adversely impact the results of operations of our business: loss of, changes in, or failure to perform under guaranteed performance contracts with our major customers; cancellation of, or significant delays in, projects in our backlog; delays or difficulties in new product development; our ability to recognize the expected benefits of our restructuring actions, financial instability or market declines of our major component suppliers; price increases of limited-source components, products and services that we are unable to pass on to the market; unreasonable weather conditions in various parts of the world; changes in energy costs or governmental regulations that would decrease the incentive for customers to update or improve their building control systems; and natural or man-made disasters or losses that impact our ability to deliver products and services to our customers.

## ITEM 1B UNRESOLVED STAFF COMMENTS

The Company has no unresolved written comments regarding its periodic or current reports from the staff of the SEC.

## ITEM 2 PROPERTIES

The Company has properties in over 60 countries throughout the world, with its world headquarters located in Cork, Ireland and its North American operational headquarters located in Milwaukee, Wisconsin USA. The Company’s wholly- and majority-owned facilities primarily consist of manufacturing, sales and service offices, research and development facilities, monitoring centers, and assembly and/or warehouse centers. At September 30, 2021, these properties totaled approximately 40 million square feet of floor space of which 14 million square feet are owned and 26 million square feet are leased. The Company considers its facilities to be suitable for their current uses and adequate for current needs. The majority of the facilities are operating at normal levels based on capacity. The Company does not anticipate difficulty in renewing existing leases as they expire or in finding alternative facilities.

## ITEM 3 LEGAL PROCEEDINGS

## Gumm v. Molinaroli, et al.

On August 16, 2016, a putative class action lawsuit, Gumm v. Molinaroli, et al., Case No. 16-cv-1093, was filed in the United States District Court for the Eastern District of Wisconsin, naming Johnson Controls, Inc., the individual members of its board of directors at the time of the merger with the Company's merger subsidiary and certain of its officers, the Company and the Company's merger subsidiary as defendants. The complaint asserted various causes of action under the federal securities laws, state law and the Taxpayer Bill of Rights, including that the individual defendants allegedly breached their fiduciary duties and unjustly enriched themselves by structuring the merger among the Company, Tyco and the merger subsidiary in a manner that would result in a United States federal income tax realization event for the putative class of certain Johnson Controls, Inc. shareholders and allegedly result in certain benefits to the defendants, as well as related claims regarding alleged misstatements in the proxy statement/prospectus distributed to the Johnson Controls, Inc. shareholders, conversion and breach of contract. The complaint also asserted that Johnson Controls, Inc., the Company and the Company's merger subsidiary aided and abetted the individual defendants in their breach of fiduciary duties and unjust enrichment. The complaint seeks, among other things, disgorgement of profits and damages. On September 30, 2016, approximately one month after the closing of the merger, plaintiffs filed a preliminary injunction motion seeking, among other items, to compel Johnson Controls, Inc. to make certain intercompany payments that plaintiffs contend will impact the United States federal income tax consequences of the merger to the putative class of certain Johnson Controls, Inc. shareholders and to enjoin Johnson Controls, Inc. from reporting to the Internal Revenue Service the capital gains taxes payable by this putative class as a result of the closing of the merger. The court held a hearing on the preliminary injunction motion on January 4, 2017, and on January 25, 2017, the judge denied the plaintiffs' motion. Plaintiffs filed an amended complaint on February 15, 2017, and the Company filed a motion to dismiss on April 3, 2017. On October 17, 2019, the court heard oral arguments on the motion to dismiss and took the matter under advisement. On November 3, 2021, the court granted the Company's motion to dismiss the amended complaint.

Refer to Note 23, "Commitments and Contingencies," of the notes to consolidated financial statements for discussion of environmental, asbestos, insurable liabilities and other litigation matters, which is incorporated by reference herein and is considered an integral part of Part I, Item 3, "Legal Proceedings."

## ITEM 4 MINE SAFETY DISCLOSURES

Not applicable.



## EXECUTIVE OFFICERS OF THE REGISTRANT

Pursuant to General Instruction G(3) of Form 10-K, the following list of executive officers of the Company as of November 15, 2021 is included as an unnumbered Item in Part I of this report in lieu of being included in the Company’s Proxy Statement relating to the annual general meeting of shareholders to be held on March 9, 2022.

Tomas Brannemo, 50, has served as Vice President and President, Building Solutions, Europe, Middle East, Africa and Latin America since September 2019. He previously served as Senior Vice President and President, Water Infrastructure and Europe Commercial Team of Xylem Inc., a leading global water technology company. At Xylem, he also served as Senior Vice President and President, Transport and Treatment, from 2017 to 2019 and other roles from 2010 to 2017. Between 2006 and 2010, he held various marketing, sales and engineering positions at Volvo Construction Company.

John Donofrio, 59, has served as Executive Vice President and General Counsel of the Company since November 15, 2017. He previously served as Vice President, General Counsel and Secretary of Mars, Incorporated, a global food manufacturer from October 2013 to November 2017. Before joining Mars in October 2013, Mr. Donofrio was Executive Vice President, General Counsel and Secretary for The Shaw Group Inc., a global engineering and construction company, from October 2009 until February 2013. Prior to joining Shaw, Mr. Donofrio was Senior Vice President, General Counsel and Chief Compliance Officer at Visteon Corporation, a global automotive supplier, a position he held from 2005 until October 2009. Mr. Donofrio has been a Director of FARO Technologies, Inc., a designer, developer, manufacturer and marketer of software driven, 3D measurement, imaging and realization systems, since 2008.

Michael J. Ellis, 65, has served as Executive Vice President and Chief Customer & Digital Officer since October 2019. From May 2018 to October 2019, he served as a Managing Director at Accenture, a global provider of professional services in strategy, consulting, digital, technology and operations. He previously served as Chairman and CEO of ForgeRock, a global digital security software company, from 2012 to 2018. Prior to joining ForgeRock, from 2008 to 2012, he held various senior executive roles at SAP SE, a global provider of enterprise software solutions. Previously, he also served as Chief Executive Officer of Univa, a leading innovator in enterprise-grade workload management and optimization solutions, and as Senior Vice President Business Development at i2 Technologies, a provider of supply chain solutions. Mr. Ellis also serves as a director on the board of CBRE Acquisition Holdings Inc.

Visal Leng, 51, has served as Vice President and President, Building Solutions, Asia Pacific since September 2018. He previously served as President Asia Pacific of Baker Hughes, the world's first and only full stream provider of integrated oilfield products, services and digital solutions, from July 2017 to September 2018. Prior to the merger of Baker Hughes with General Electric in 2017, he held a number of roles with increasing responsibility in General Electric from his hire in November 1996, including President of its Asia Pacific oil and gas operations from January 2014 to July 2017; and Asia Pacific Regional General Manager from October 2011 to December 2013.

Olivier Leonetti, 56, has served as Chief Financial Officer since November 2020. Prior to joining Johnson Controls, Mr. Leonetti served as the Senior Vice President and Chief Financial Officer of Zebra Technologies, a provider of enterprise-level data capture and automatic identification solutions, a position he had held since November 2016. Prior to joining Zebra, Mr. Leonetti was the Executive Vice President and Chief Financial Officer of Western Digital, a provider of data infrastructure solutions from 2014 to 2016. Prior to joining Western Digital, Mr. Leonetti served as Vice President of Finance – Global Commercial Organization at Amgen, Inc. from 2011 to 2014. From 1997 to 2011, Mr. Leonetti served in various senior finance positions with increasing responsibility at Dell Inc., including most recently as Vice President of Finance. Prior to joining Dell Inc., Mr. Leonetti served in various worldwide finance capacities with Lex Rac Service plc and the Gillette Company. Mr. Leonetti also serves as a director on the board of Eaton Corporation plc, a provider of power management technologies and services.

Nathan Manning, 45, has served as Vice President and President, Building Solutions, North America since October 2020. He previously served as Vice President and General Manager, Field Operations, from March 2020 to October 2020 and Vice President and General Manager, HVAC and Controls Building Solutions North America, from January 2019 to March 2020. Prior to joining Johnson Controls, he served in various roles at General Electric, a diversified industrial and technology company, where he held the position of General Manager, Operational Excellence for General Electric's GE Power segment from August 2017 until December 2018 and the position of General Manager, Services of GE Energy Connections, a division of GE Power, from November 2015 until August 2017. Prior to joining General Electric, Mr. Manning served as Vice President, General Manager of Eaton Aerospace, a segment of Eaton Corporation plc, a provider of power management technologies and services, from February 2014 until November 2015. Prior to joining Eaton, Mr.



Manning served in a number of roles with increasing responsibility in General Electric from his hire in January 2000, including as President and Chief Executive Officer of Aviage Systems, a joint venture between General Electric and Aviation Industry Corporation of China, from July 2012 until February 2014.

George R. Oliver; 62, has served as Chief Executive Officer and Chairman of the Board since September 2017. He previously served as our President and Chief Operating Officer following the completion of the merger of Johnson Controls and Tyco in September 2016. Prior to that, Mr. Oliver was Tyco's Chief Executive Officer, a position he held since September 2012. He joined Tyco in July 2006, and served as President of a number of operating segments from 2007 through 2011. Before joining Tyco, he served in operational leadership roles of increasing responsibility at several General Electric divisions. Mr. Oliver also serves as a Director on the board of Raytheon Technologies, an aerospace and defense company.

Ganesh Ramaswamy, 53, has served as Vice President and President, Global Services for Johnson Controls since December 2019. From 2015 to 2019, Mr. Ramaswamy served in various executive leadership roles at Danaher Corporation, a diversified manufacturer of life sciences, diagnostics, and industrial products and services, including Senior Vice President, High Growth markets—Beckman Coulter, President, Videojet Technologies, and, most recently, as Danaher Vice President & Group Executive, Marking & Coding. From 2011 to 2015, Mr. Ramaswamy served in various executive roles at Pentax Medical, a provider of endoscopic imaging devices and solutions, including as President of Pentax Medical from 2013 to 2015. Earlier in his career, Mr. Ramaswamy served in various roles of increasing responsibility with the General Electric Company across product development, service operations, and general management. Mr. Ramaswamy also serves as a director on the board of PACCAR, a global manufacturer of heavy-duty and medium-duty trucks.

Marlon Sullivan, 47, became Executive Vice President and Chief Human Resources Officer in September 2021. Prior to joining Johnson Controls, he served as the Senior Vice President of Human Resources at Delta Airlines from January 2021 to September 2021. Prior to joining Delta, Mr. Sullivan served in various human resources and talent development leadership roles at Abbott Laboratories from December 2007 through December 2020. Earlier in his career, Mr. Sullivan held a variety of human resources roles at The Home Depot.

Robert VanHimbergen, 45, has served as Vice President and Corporate Controller since December 2017. Mr. VanHimbergen joined Johnson Controls in 2007 as the Corporate Director of Global Accounting and has held various Corporate and Power Solutions positions of increasing responsibility. His most recent position was serving as the Chief Financial Officer of Yanfeng Automotive Interiors, an Adient joint venture, formed in 2015. Mr. VanHimbergen began his career at PricewaterhouseCoopers in 1998.

Jeff M. Williams, 60, has served as Vice President and President, Global Products, Building Technologies and Solutions since July 2019. He previously served as Vice President and President, Building Solutions, Europe, Middle East, Africa and Latin America from March 2017 to July 2019. Prior thereto, he served as Vice President - Enterprise Operations - Engineering and Supply Chain from January 2015 through the Merger to March 2017. With respect to roles at Johnson Controls, Inc., he served as Vice President, Program Management Office from 2015 to 2016, as Group Vice President and General Manager Global Seating & Supply Chain from 2013 to 2014, and as Group Vice President and General Manager Customer Group Americas from 2010 to 2012. Mr. Williams joined Johnson Controls, Inc. in 1984.

There are no family relationships, as defined by the instructions to this item, among the Company’s executive officers.

## PART II

## ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The shares of the Company’s ordinary shares are traded on the New York Stock Exchange under the symbol "JCI."

Title of Class
Ordinary Shares, $0.01 par value

Number of Record Holders
as of October 31, 2021
31,522

In March 2021, the Company's Board of Directors approved a $4.0 billion increase to the Company's share repurchase authorization, adding to the $2.0 billion remaining as of December 31, 2020 under the prior share repurchase authorization



approved in 2019. The share repurchase authorization does not have an expiration date and may be amended or terminated by the Board of Directors at any time without prior notice. During fiscal year 2021, the Company repurchased approximately $1.3 billion of its ordinary shares on an open market. As of September 30, 2021, approximately $5.1 billion remains available under the share repurchase authorization.

The following table presents information regarding the repurchase of the Company’s ordinary shares by the Company as part of the publicly announced program during the three months ended September 30, 2021.

<table><tr><td>Period</td><td>Total Number of Shares Purchased</td><td>Average Price Paid per Share</td><td>Total Number of Shares Purchased as Part of the Publicly Announced Program</td><td>Approximate Dollar Value of Shares that May Yet be Purchased under the Programs</td></tr><tr><td>7/1/21 - 7/31/21</td><td></td><td></td><td></td><td></td></tr><tr><td>Purchases by Company</td><td>32,364</td><td>68.47</td><td>32,364</td><td>5,359,251,102</td></tr><tr><td>8/1/21 - 8/31/21</td><td></td><td></td><td></td><td></td></tr><tr><td>Purchases by Company</td><td>1,228,776</td><td>73.20</td><td>1,228,776</td><td>5,269,300,749</td></tr><tr><td>9/1/21 - 9/30/21</td><td></td><td></td><td></td><td></td></tr><tr><td>Purchases by Company</td><td>2,921,433</td><td>73.34</td><td>2,921,433</td><td>5,055,053,808</td></tr></table>

During the three months ended September 30, 2021, acquisitions of shares by the Company from certain employees in order to satisfy employee tax withholding requirements in connection with the vesting of restricted shares were not material.

Equity compensation plan information is incorporated by reference from Part III, Item 12, "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters," of this document and should be considered an integral part of this Item 5.



The following information in Item 5 is not deemed to be "soliciting material" or to be "filed" with the SEC or subject to Regulation 14A or 14C under the Securities Exchange Act of 1934 ("Exchange Act") or to the liabilities of Section 18 of the Exchange Act, and will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent the Company specifically incorporates it by reference into such a filing.

The line graph below compares the cumulative total shareholder return on the Company's ordinary shares with the cumulative total return of companies on the Standard & Poor's ("S&P's") 500 Stock Index and the companies on the S&P 500 Industrials Index. This graph assumes the investment of $100 on September 30, 2016 and the reinvestment of all dividends since that date.

<table><tr><td>COMPANY/INDEX</td><td>Sep16</td><td>Sep17</td><td>Sep18</td><td>Sep19</td><td>Sep20</td><td>Sep21</td></tr><tr><td>Johnson Controls International plc</td><td>100.00</td><td>99.08</td><td>88.58</td><td>114.19</td><td>109.33</td><td>185.50</td></tr><tr><td>S&amp;P 500 Industrials Index</td><td>100.00</td><td>122.34</td><td>135.99</td><td>137.84</td><td>139.61</td><td>180.03</td></tr><tr><td>S&amp;P 500 Index</td><td>100.00</td><td>118.61</td><td>139.85</td><td>145.80</td><td>167.89</td><td>218.26</td></tr></table>



## ITEM 6 [RESERVED]

## ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

## General

Johnson Controls International plc, headquartered in Cork, Ireland, is a global leader in smart, healthy and sustainable buildings, serving a wide range of customers in more than 150 countries. The Company’s products, services, systems and solutions advance the safety, comfort and intelligence of spaces to serve people, places and the planet. The Company is committed to helping its customers win and creating greater value for all of its stakeholders through its strategic focus on buildings.

The Company is a global leader in engineering, manufacturing and commissioning building products and systems, including residential and commercial HVAC equipment, industrial refrigeration systems, controls, security systems, fire-detection systems and fire-suppression solutions. The Company further serves customers by providing technical services, including maintenance, management, repair, retrofit and replacement of equipment (in the HVAC, industrial refrigeration, security and fire-protection space), energy-management consulting and data-driven “smart building” services and solutions powered by its OpenBlue software platform and capabilities. The Company partners with customers by leveraging its broad product portfolio and digital capabilities powered by OpenBlue, together with its direct channel service and solutions capabilities, to deliver outcome-based solutions across the lifecycle of a building that address customers’ needs to improve energy efficiency and reduce greenhouse gas emissions.

This discussion summarizes the significant factors affecting the consolidated operating results, financial condition and liquidity of the Company for the fiscal year ended September 30, 2021. This discussion should be read in conjunction with Item 8, the consolidated financial statements and the notes to consolidated financial statements. A detailed discussion of the 2020 to 2019



year-over-year changes are not included herein and can be found in the Management's Discussion and Analysis section in the Company's 2020 Annual Report on Form 10-K filed November 16, 2020 under the heading "Fiscal year 2020 compared to fiscal year 2019," which is incorporated herein by reference.

## Macroeconomic Trends

Much of the demand for installation of the Company’s products and solutions is driven by commercial and residential construction and industrial facility expansion and maintenance projects. Commercial and residential construction projects are heavily dependent on general economic conditions, localized demand for commercial and residential real estate and availability of credit. Positive or negative fluctuations in commercial and residential construction, industrial facility expansion and maintenance projects and other capital investments in buildings could have a corresponding impact on the Company’s financial condition, results of operations and cash flows.

As a result of the Company’s global presence, a significant portion of its revenues and expenses is denominated in currencies other than the U.S. dollar. The Company is therefore subject to non-U.S. currency risks and non-U.S. exchange exposure. While the Company employs financial instruments to hedge some of its transactional foreign exchange exposure, these activities do not insulate it completely from those exposures. Exchange rates can be volatile and a substantial weakening or strengthening of foreign currencies against the U.S. dollar could increase or reduce the Company’s profit margin in various locations outside of the U.S. and impact the comparability of results from period to period.

The Company continues to observe trends demonstrating increased interest and demand for safe, efficient and sustainable buildings, and seeks to capitalize on these trends to drive growth by developing and delivering technologies and solutions to create smart and healthy buildings. In 2020, the Company launched its software platform, OpenBlue, enabling enterprises to manage all aspects of their physical spaces delivering sustainability, new occupant experiences, and safety and security by combining the Company’s building expertise with cutting-edge technology, including AI-powered service solutions such as remote diagnostics, predictive maintenance, compliance monitoring and advanced risk assessments. The Company continues to leverage its install base, together with data-driven products and services to offer outcome-based solutions to customers with a focus on generating accelerated growth in services and recurring revenue for the Company. In January 2021, the Company committed to invest 75 percent of its new product research and development in climate-related innovation to develop sustainable products and services.

The Company has experienced, and expects to continue to experience, increased input material cost inflation and component shortages, as well as disruptions and delays in its supply chain, as a result of global macroeconomic trends (including increased global demand), government-mandated actions in response to COVID-19 and labor shortages. Actions taken by the Company to mitigate supply chain disruptions and inflation, including expanding and redistributing its supplier network, supplier financing, price increases and productivity improvements, have generally been successful in offsetting some, but not all, of the impact of these trends. As a result, these trends have negatively impacted the Company’s revenue and margins. The Company expects that these trends will continue in fiscal year 2022. Therefore, the Company could experience further disruptions, shortages and price increases in the future, the effect of which will depend on the Company’s ability to successfully mitigate and offset the impact of these events.

## Impact of COVID-19 pandemic

The global outbreak of COVID-19 severely restricted the level of economic activity around the world and caused a significant contraction in the global economy.

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. Although shutdown orders and similar restrictions have been lifted in many jurisdictions in conjunction with the global distribution of vaccines, challenges in achieving sufficient vaccination levels and the spread of new variants of COVID-19 have caused some governments to extend or reinstitute restrictions in impacted areas. During fiscal 2021, the Company’s facilities generally operated at normal levels.

The Company continues to focus its efforts on preserving the health and safety of its employees and customers, as well as maintaining the continuity of its operations. The Company modified its business practices in response to the COVID-19 outbreak, including restricting non-essential employee travel, implementing remote work protocols, and limiting physical participation in meetings, events and conferences. The Company also instituted preventive measures at its facilities, including enhanced health and safety protocols, temperature screening, requiring face coverings for all unvaccinated employees and encouraging employees to follow similar protocols when away from work. The Company has adopted and implemented a



multifaceted framework to guide its decision making as it reopens its offices and facilities to employees, and will continue to monitor and audit its facilities to ensure that they are in compliance with the Company’s COVID-19 safety requirements.

The Company initially 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, during portions of fiscal 2020, 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 fiscal 2021, the Company has experienced increases in both demand and volumes as governments have distributed vaccines and lifted COVID-19-related restrictions, leading to increases in retrofit activity and, to a lesser extent, commercial building construction. The global pandemic has also provided the Company with the opportunity to help its customers prepare to reopen by delivering solutions and support that enhance the safety and increase the efficiency of their operations. As a result of the pandemic, 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.

However, the Company continues to be influenced by COVID-19-related trends impacting site access and the labor force, which have and may continue to negatively impact the Company’s revenues and margins. Challenges in reaching sufficient vaccination levels and the introduction of new variants of COVID-19 have caused some governments to extend or reinstitute lockdowns and similar restrictive measures, which, in some cases, have limited the Company’s ability to access customer sites to install and maintain its products and deliver services. In addition, the Company has experienced and continues to experience labor shortages at certain facilities as the Company expands its production capacity to meet increased customer demand. Although the Company is mitigating these shortages through focused recruitment efforts and competitive compensation packages, the Company could continue to experience such shortages in the future. Recently, the U.S. Government has promulgated orders mandating vaccinations or regular COVID-19 testing for large employers and federal contractors. The Company’s efforts to comply with these mandates, including requiring that some or all of its employees be fully vaccinated against COVID-19, could result in increased labor attrition or disruption, and could adversely impact the Company’s ability to deliver services to our U.S. federal government customers and potentially other customers.

The extent to which the COVID-19 pandemic 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 the resurgence of COVID-19 and its variants in regions recovering from the impacts of the pandemic, the effectiveness of COVID-19 vaccines and the speed at which populations are vaccinated around the globe, the impact of COVID-19 on economic activity, and regulatory actions taken to contain its impact on public health and the global economy. See Part I, Item 1A, of this Annual Report on Form 10-K for an additional discussion of risks related to COVID-19.

## Restructuring and Cost Optimization Initiatives

To better align its resources with its growth strategies and reduce the cost structure of its global operations in certain underlying markets, the Company has committed to various restructuring plans. In fiscal 2021, the Company announced its plans to optimize its cost structure through broad-based SG&A actions focused on simplification, standardization and centralization, with the intent to deliver annualized savings of $300 million by fiscal 2023. Additionally, the Company announced cost of sales actions to drive $250 million in annual run rate savings by fiscal 2023. For more information on the Company’s restructuring plans, see “Liquidity and Capital Resources—Restructuring.”

## FISCAL YEAR 2021 COMPARED TO FISCAL YEAR 2020

## Net Sales

<table><tr><td rowspan="2"></td><td colspan="3">Year Ended September 30,</td></tr><tr><td>2021</td><td>2020</td><td>Change</td></tr><tr><td>(in millions)</td><td>$ 23,668</td><td>$ 22,317</td><td>6 %</td></tr><tr><td>Net sales</td><td></td><td></td><td></td></tr></table>

The increase in net sales was due to higher organic sales ($932 million), the favorable impact of foreign currency translation ($447 million) and incremental sales from acquisitions ($253 million), partially offset by lower sales due to business divestitures ($275 million) and the impact of nonrecurring purchase accounting adjustments ($6 million). Excluding the impact of foreign currency translation, business acquisitions and divestitures and nonrecurring adjustments, consolidated net sales increased 4% as compared to the prior year, primarily attributable to the increased demand generated by the COVID-19 pandemic recovery. Refer to the "Segment Analysis" below within Item 7 for a discussion of net sales by segment.



## Cost of Sales / Gross Profit

<table><tr><td rowspan="2"></td><td colspan="3">Year Ended September 30,</td><td rowspan="2">Change</td></tr><tr><td>2021</td><td>2020</td><td></td></tr><tr><td>(in millions)</td><td></td><td></td><td></td><td></td></tr><tr><td>Cost of sales</td><td>$ 15,609</td><td>$ 14,906</td><td></td><td>5%</td></tr><tr><td>Gross profit</td><td>8,059</td><td>7,411</td><td></td><td>9%</td></tr><tr><td>% of sales</td><td>34.1%</td><td>33.2%</td><td></td><td></td></tr></table>

Cost of sales and gross profit both increased and gross profit as a percentage of sales increased by 90 basis points. Gross profit increased due to organic sales growth, favorable year-over-year impact of net pension mark-to-market adjustments ($207 million) and business acquisitions, partially offset by the unfavorable impact of foreign currency translation ($307 million) and business divestitures. Refer to the "Segment Analysis" below within Item 7 for a discussion of segment earnings before interest, taxes and amortization ("EBITA").

## Selling, General and Administrative Expenses

<table><tr><td rowspan="2"></td><td colspan="3">Year Ended September 30,</td><td rowspan="2">Change</td></tr><tr><td>2021</td><td>2020</td><td></td></tr><tr><td>(in millions)</td><td></td><td></td><td></td><td></td></tr><tr><td>Selling, general and administrative expenses</td><td>$ 5,258</td><td>$ 5,665</td><td></td><td>-7%</td></tr><tr><td>% of sales</td><td>22.2%</td><td>25.4%</td><td></td><td></td></tr></table>

Selling, general and administrative expenses ("SG&A") decreased by $407 million, and SG&A as a percentage of sales decreased by 320 basis points. The decrease in SG&A was primarily due to favorable year-over-year impact of net mark-to-market adjustments on pension plans ($453 million) and favorable impacts of cost mitigation actions and reductions in discretionary spend in the current year, partially offset by the unfavorable impact of foreign currency translation ($97 million). Refer to the "Segment Analysis" below within Item 7 for a discussion of segment EBITA.

## Restructuring and Impairment Costs

<table><tr><td rowspan="2"></td><td colspan="3">Year Ended September 30,</td><td rowspan="2">Change</td></tr><tr><td>2021</td><td>2020</td><td></td></tr><tr><td>(in millions)</td><td></td><td></td><td></td><td></td></tr><tr><td>Restructuring and impairment costs</td><td>$ 242</td><td>$ 783</td><td></td><td>-69%</td></tr></table>

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

## Net Financing Charges

<table><tr><td rowspan="2"></td><td colspan="3">Year Ended September 30,</td><td rowspan="2">Change</td></tr><tr><td>2021</td><td>2020</td><td></td></tr><tr><td>(in millions)</td><td></td><td></td><td></td><td></td></tr><tr><td>Net financing charges</td><td>$ 206</td><td>$ 231</td><td></td><td>-11%</td></tr></table>

Refer to Note 10, "Debt and Financing Arrangements," of the notes to consolidated financial statements for further disclosure related to the Company's net financing charges.



## Equity Income

<table><tr><td rowspan="2"></td><td colspan="3">Year Ended</td></tr><tr><td colspan="3">September 30,</td></tr><tr><td>(in millions)</td><td>2021</td><td>2020</td><td>Change</td></tr><tr><td>Equity income</td><td>$ 261</td><td>$ 171</td><td>53 %</td></tr></table>

The increase in equity income was primarily due to higher income at certain partially-owned affiliates of the Johnson Controls - Hitachi joint venture. Foreign currency translation had a favorable impact on equity income of $12 million. Refer to the "Segment Analysis" below within Item 7 for a discussion of segment EBITA.

## Income Tax Provision

<table><tr><td rowspan="2"></td><td colspan="3">Year Ended</td></tr><tr><td colspan="3">September 30,</td></tr><tr><td>(in millions)</td><td>2021</td><td>2020</td><td>Change</td></tr><tr><td>Income tax provision</td><td>$ 868</td><td>$ 108</td><td>*</td></tr><tr><td>Effective tax rate</td><td>33%</td><td>12%</td><td></td></tr></table>

* Measure not meaningful

The statutory tax rate in Ireland of 12.5% is being used as a comparison since the Company is domiciled in Ireland.

For fiscal 2021, the effective tax rate for continuing operations was 33% and was higher than the statutory tax rate primarily due to the tax impacts of an intercompany transfer of certain of the Company’s intellectual property rights, valuation allowance adjustments, the income tax effects of mark-to-market adjustments and tax rate differentials, partially offset by the benefits of continuing global tax planning initiatives.

For fiscal 2020, the effective rate for continuing operations was 12% and was lower than the statutory tax rate primarily due to tax audit reserve adjustments, the income tax effects of mark-to-market adjustments, valuation allowance adjustments and the benefits of continuing global tax planning initiatives, partially offset by 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.

The fiscal 2021 effective tax rate increased as compared to fiscal 2020 primarily due to the discrete tax items. The fiscal year 2021 and 2020 global tax planning initiatives related primarily to changes in entity tax status, global financing structures and alignment of the Company's global business functions in a tax efficient manner. Refer to Note 19, "Income Taxes," of the notes to consolidated financial statements for further details.

In October 2021, 136 out of 140 countries in the Organization for Economic Co-operation and Development ("OECD") Inclusive Framework on Base Erosion and Profit Shifting ("IF"), including Ireland, politically committed to potentially fundamental changes to the international corporate tax system, including the potential implementation of a global minimum corporate tax rate. While the details of these pronouncements presently remain unclear and timing of implementation uncertain, the impact of local country IF adoption could have a material impact on our effective tax rate in future periods. It is also possible that jurisdictions in which we do business could react to such IF developments unilaterally by enacting tax legislation that could adversely affect us or our affiliates.

## Income From Discontinued Operations, Net of Tax

<table><tr><td rowspan="2"></td><td colspan="3">Year Ended</td></tr><tr><td colspan="3">September 30,</td></tr><tr><td>(in millions)</td><td>2021</td><td>2020</td><td>Change</td></tr><tr><td>Income from discontinued operations, net of tax</td><td>$ 124</td><td>$ —</td><td>*</td></tr></table>

 \( ^{*} \)  Measure not meaningful

Refer to Note 3, "Discontinued Operations," of the notes to consolidated financial statements for further information.



## Income Attributable to Noncontrolling Interests

<table><tr><td rowspan="2"></td><td colspan="3">Year Ended</td></tr><tr><td colspan="3">September 30,</td></tr><tr><td>(in millions)</td><td>2021</td><td>2020</td><td>Change</td></tr><tr><td>Income from continuing operations attributable to noncontrolling interests</td><td>$ 233</td><td>$ 164</td><td>42 %</td></tr></table>

The increase in income from continuing operations attributable to noncontrolling interests was primarily due to higher net income at certain partially-owned affiliates within the Global Products segment.

## Net Income Attributable to Johnson Controls

<table><tr><td rowspan="2"></td><td colspan="3">Year Ended</td></tr><tr><td colspan="3">September 30,</td></tr><tr><td>(in millions)</td><td>2021</td><td>2020</td><td>Change</td></tr><tr><td>Net income attributable to Johnson Controls</td><td>$ 1,637</td><td>$ 631</td><td>*</td></tr></table>

* Measure not meaningful

The increase in net income attributable to Johnson Controls was primarily due to higher gross profit, lower restructuring and impairment costs and lower SG&A, partially offset by higher income tax provision. Fiscal 2021 diluted earnings per share attributable to Johnson Controls was $2.27 compared to $0.84 in fiscal 2020.

## Comprehensive Income Attributable to Johnson Controls

<table><tr><td rowspan="2"></td><td colspan="3">Year Ended</td></tr><tr><td colspan="3">September 30,</td></tr><tr><td>(in millions)</td><td>2021</td><td>2020</td><td>Change</td></tr><tr><td>Comprehensive income attributable to Johnson Controls</td><td>$ 1,979</td><td>$ 650</td><td>*</td></tr></table>

* Measure not meaningful

The increase in comprehensive income attributable to Johnson Controls was due to higher net income attributable to Johnson Controls ($1,006 million) and an increase in other comprehensive income attributable to Johnson Controls ($323 million) resulting primarily from foreign currency translation adjustments. The favorable foreign currency translation adjustments were primarily driven by the strengthening of the Brazilian real, Canadian dollar and Mexican peso against the U.S. dollar in the current year.

## SEGMENT ANALYSIS

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



<table><tr><td rowspan="2"></td><td colspan="2">Net Sales</td><td colspan="4">Segment EBITA</td></tr><tr><td colspan="2">for the Year Ended</td><td colspan="2">for the Year Ended</td><td></td><td></td></tr><tr><td></td><td colspan="2">September 30,</td><td colspan="2">September 30,</td><td></td><td></td></tr><tr><td>(in millions)</td><td>2021</td><td>2020</td><td>Change</td><td>2021</td><td>2020</td><td>Change</td></tr><tr><td>Building Solutions North America</td><td>$ 8,685</td><td>$ 8,605</td><td>1%</td><td>$ 1,204</td><td>$ 1,157</td><td>4%</td></tr><tr><td>Building Solutions EMEA/LA</td><td>3,727</td><td>3,440</td><td>8%</td><td>391</td><td>338</td><td>16%</td></tr><tr><td>Building Solutions Asia Pacific</td><td>2,654</td><td>2,403</td><td>10%</td><td>349</td><td>319</td><td>9%</td></tr><tr><td>Global Products</td><td>8,602</td><td>7,869</td><td>9%</td><td>1,441</td><td>1,134</td><td>27%</td></tr><tr><td></td><td>$ 23,668</td><td>$ 22,317</td><td>6%</td><td>$ 3,385</td><td>$ 2,948</td><td>15%</td></tr></table>

## Net Sales:

The increase in Building Solutions North America was due to the favorable impact of foreign currency translation ($49 million), higher volumes ($27 million) and incremental sales related to business acquisitions ($4 million). The increase in volumes was primarily attributable to a strong recovery in service sales across all domains, partially offset by a modest decline in installation sales driven by a decline in the new construction market.

The increase in Building Solutions EMEA/LA was primarily attributable to the favorable impact of foreign currency translation ($135 million), higher volumes ($115 million) and incremental sales related to business acquisitions ($37 million). The increase in volumes was primarily attributable to higher service and, to a lesser extent, installation sales. By region, growth in Europe was partially offset by a decline in the Middle East.

The increase in Building Solutions Asia Pacific was due to favorable volumes ($143 million) and the favorable impact of foreign currency translation ($117 million), partially offset by business divestitures ($9 million). The increase in volumes was primarily attributable to higher installation and service sales. Growth was led by a strong recovery in China.

The increase in Global Products was due to favorable volumes ($647 million), incremental sales related to business acquisitions ($212 million) and the favorable impact of foreign currency translation ($146 million), partially offset by business divestitures ($266 million) and the impact of nonrecurring purchase accounting adjustments ($6 million). The increase in volumes was primarily attributable to growth across Commercial and Residential HVAC as well as Fire & Security products. This growth was partially offset by a decline in Industrial Refrigeration.

## Segment EBITA:

The increase in Building Solutions North America was due to favorable volumes and productivity savings, net of prior year temporary cost mitigation actions ($31 million), prior year integration costs ($11 million) and the favorable impact of foreign currency translation ($5 million).

The increase in Building Solutions EMEA/LA was due to favorable volumes and productivity savings, net of prior year temporary cost mitigation actions ($41 million), the favorable impact of foreign currency translation ($7 million), higher income due to business acquisitions ($5 million) and prior year integration costs ($2 million), partially offset by lower equity income ($2 million).

The increase in Building Solutions Asia Pacific was due to the favorable impact of foreign currency translation ($13 million), favorable volumes, net of prior year temporary cost mitigation actions ($12 million) and prior year integration costs ($7 million), partially offset by lower income due to business divestitures ($2 million).

The increase in Global Products was due to favorable volumes and productivity savings, net of prior year temporary cost mitigation actions ($176 million), higher equity income ($72 million) driven primarily by certain partially-owned affiliates of the Johnson Controls - Hitachi joint venture, a prior year compensation charge related to a noncontrolling interest acquisition ($39 million), the favorable impact of foreign currency translation ($30 million), prior year integration costs ($13 million) and incremental income related to business acquisitions ($13 million), partially offset by lower income due to business divestitures ($23 million) and Silent-Aire transaction costs and nonrecurring purchase accounting adjustments ($13 million).



## LIQUIDITY AND CAPITAL RESOURCES

## Working Capital

<table><tr><td>(in millions)</td><td>September 30, 2021</td><td>September 30, 2020</td><td>Change</td></tr><tr><td>Current assets</td><td>$ 9,998</td><td>$ 10,053</td><td></td></tr><tr><td>Current liabilities</td><td>(9,098)</td><td>(8,248)</td><td></td></tr><tr><td></td><td>900</td><td>1,805</td><td>-50 %</td></tr><tr><td>Less: Cash and cash equivalents</td><td>(1,336)</td><td>(1,951)</td><td></td></tr><tr><td>Add: Short-term debt</td><td>8</td><td>31</td><td></td></tr><tr><td>Add: Current portion of long-term debt</td><td>226</td><td>262</td><td></td></tr><tr><td>Working capital (as defined)</td><td>$ (202)</td><td>$ 147</td><td>*</td></tr><tr><td>Accounts receivable - net</td><td>$ 5,613</td><td>$ 5,294</td><td>6 %</td></tr><tr><td>Inventories</td><td>2,057</td><td>1,773</td><td>16 %</td></tr><tr><td>Accounts payable</td><td>3,746</td><td>3,120</td><td>20 %</td></tr></table>

* Measure not meaningful

The Company defines working capital as current assets less current liabilities, excluding cash and cash equivalents, short-term debt, the current portion of long-term debt, and 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 decrease in working capital at September 30, 2021 as compared to September 30, 2020, was primarily due to an increase in accounts payable, accrued compensation and benefits liabilities, deferred revenue and lower income tax assets, partially offset by an increase in accounts receivable, an increase in inventory, and the favorable resolution of certain post-closing working capital and net debt adjustments related to the Power Solutions sale.

The Company’s days sales in accounts receivable at September 30, 2021 were 58, a decrease from 63 at September 30, 2020. There has been no significant adverse change in the level of overdue receivables or significant changes in revenue recognition methods.

The Company’s inventory turns for the year ended September 30, 2021 were lower than the comparable period ended September 30, 2020 primarily due to changes in inventory production levels.

Days in accounts payable at September 30, 2021 were 76 days, higher from 69 days for the comparable period ended September 30, 2020, primarily due to timing.

## Cash Flows From Continuing Operations

<table><tr><td rowspan="2">(in millions)</td><td colspan="2">Year Ended September 30,</td></tr><tr><td>2021</td><td>2020</td></tr><tr><td>Cash provided by operating activities</td><td>$ 2,551</td><td>$ 2,479</td></tr><tr><td>Cash used by investing activities</td><td>(1,090)</td><td>(258)</td></tr><tr><td>Cash used by financing activities</td><td>(2,131)</td><td>(2,824)</td></tr></table>

The increase in cash provided by operating activities was primarily due to favorable changes in accounts payable and accrued liabilities and higher pretax income, net of non-cash adjustments, partially offset by prior year income tax refunds and increases in accounts receivable and inventory.



• The increase in cash used by investing activities was primarily due to higher cash payments made for Silent-Aire and other acquisitions.

- The decrease in cash used by financing activities was primarily due to lower levels of share repurchases in fiscal year 2021, partially offset by lower long-term debt borrowings, net of repayments.

## Capitalization

<table><tr><td>(in millions)</td><td colspan="2">September 30, 2021</td><td colspan="2">September 30, 2020</td><td>Change</td></tr><tr><td>Short-term debt</td><td>$     8</td><td>$     31</td><td></td><td></td><td></td></tr><tr><td>Current portion of long-term debt</td><td>226</td><td>262</td><td></td><td></td><td></td></tr><tr><td>Long-term debt</td><td>7,506</td><td>7,526</td><td></td><td></td><td></td></tr><tr><td>Total debt</td><td>7,740</td><td>7,819</td><td></td><td>-1 %</td><td></td></tr><tr><td>Less: Cash and cash equivalents</td><td>1,336</td><td>1,951</td><td></td><td></td><td></td></tr><tr><td>Total net debt</td><td>6,404</td><td>5,868</td><td></td><td>9 %</td><td></td></tr><tr><td>Shareholders&#x27; equity attributable to Johnson Controls ordinary shareholders</td><td>17,562</td><td>17,447</td><td></td><td>1 %</td><td></td></tr><tr><td>Total capitalization</td><td>$     23,966</td><td>$     23,315</td><td></td><td>3 %</td><td></td></tr><tr><td>Total net debt as a % of total capitalization</td><td>26.7 %</td><td>25.2 %</td><td></td><td></td><td></td></tr></table>

- 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.

- The Company's material cash requirements primarily consist of working capital requirements, repayments of long-term debt and related interest, operating leases, dividends, capital expenditures and potential acquisitions and stock repurchases.

- Refer to Note 10, "Debt and Financing Arrangements," of the notes to consolidated financial statements for additional information on debt obligations and maturities. Interest payable on long-term debt was $218 million due in the twelve months following September 30, 2021 and $3,468 million due thereafter.

• Refer to Note 9, "Leases," of the notes to consolidated financial statements for additional information on lease obligations and maturities.

- As of September 30, 2021, purchase obligations were $1,276 million payable in the next twelve months and $168 million payable thereafter. These purchase obligations represent commitments under enforceable and legally binding agreements, and do not represent the entire anticipated purchases in the future.

- As of September 30, 2021, the Company expects to contribute $45 million and $495 million to the global pension and postretirement plans in the next twelve months and thereafter, respectively.

- As of September 30, 2021, approximately $5.1 billion remains available under the Company's share repurchase authorization, which does not have an expiration date and may be amended or terminated by the Board of Directors at any time without prior notice. The Company expects to repurchase outstanding shares from time to time depending on market conditions, alternate uses of capital, liquidity and economic environment.

- In the second quarter of fiscal 2021, the Company raised its annual dividend to $1.08 per share. The Company intends to continue paying quarterly dividends in fiscal 2022.

- The Company believes its capital resources and liquidity position at September 30, 2021 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 in fiscal 2022 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 $2.5 billion revolving credit facility which expires in December 2024 or its $0.5 billion 364-day revolving credit facility which expires in December 2021. There were no draws on the revolving credit facilities as of September 30, 2021 and 2020. The Company also selectively makes use of short-term credit lines other than its revolving credit facility. The Company, as of September 30, 2020, could borrow up to $3.0 billion based on committed credit lines. In addition, the Company held cash and cash equivalents of $1.3 billion as of September 30, 2021. As such, the Company believes it has sufficient financial resources to fund operations and meet its obligations for the foreseeable future.

The Company's ability to access the global capital markets and the related cost of financing is dependent upon, among other factors, the Company's credit ratings. As of September 30, 2021, the Company's credit ratings and outlook were as follows:

<table><tr><td>Rating Agency</td><td>Short-Term Rating</td><td>Long-Term Rating</td><td>Outlook</td></tr><tr><td>S&amp;P</td><td>A-2</td><td>BBB+</td><td>Stable</td></tr><tr><td>Moody&#x27;s</td><td>P-2</td><td>Baa2</td><td>Stable</td></tr></table>

The security ratings set forth above are issued by unaffiliated third party rating agencies and are not a recommendation to buy, sell or hold securities. The ratings may be subject to revision or withdrawal by the assigning rating organization at any time.

In September 2021, the Company and its wholly-owned subsidiary, Tyco Fire & Security Finance S.C.A. (“TFSCA”), issued $500 million of sustainability-linked senior notes with an initial interest rate of 2.0%, which are due in 2031. Beginning in March 2026, the interest rate payable on the note will be increased by an additional 12.5 basis points per annum if the Scope 1 and Scope 2 emissions sustainability performance target is not met and an additional 12.5 basis points per annum if the Scope 3 emissions sustainability performance target is not met. The proceeds were used for general corporate purposes, including the repayment of near-term indebtedness. In September 2021, the Company repaid $193 million of notes which were due in December 2021 and a €200 million bank term loan which was issued in March 2021 and due in March 2022. The Company repaid $257 million in principal amount, plus accrued interest, of 4.25% fixed rate notes when they expired in March 2021. Additionally, during the fiscal year 2021 the Company repaid €43 million in principal amount, plus accrued interest, of 1.0% fixed rate notes which were due in September 2023.

Financial covenants in the Company's revolving credit facilities 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 ASC 715-60, "Defined Benefit Plans - Other Postretirement," or (ii) the cumulative foreign currency translation adjustment. As of September 30, 2021, the Company was in compliance with all covenants and other requirements set forth in its credit agreements and the indentures, governing its outstanding 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 Company earns a significant amount of its income outside of the parent company. Outside basis differences in these subsidiaries are deemed to be permanently reinvested except in limited circumstances. 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. 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 tax efficient methods, the Company could also elect to raise capital.



through debt or equity issuances. These alternatives could result in increased interest expense or other dilution of the Company’s earnings.

The Company may from time to time purchase our outstanding debt through open market purchases, privately negotiated transactions or otherwise. Purchases or retirement of debt, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

- Refer to Note 10, "Debt and Financing Arrangements," of the notes to consolidated financial statements for additional information on items impacting capitalization.

## Restructuring

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

- In fiscal 2021, the Company announced its plans to optimize its cost structure through broad-based SG&A actions focused on simplification, standardization and centralization, with the intent to deliver annualized savings of $300 million by fiscal 2023. Additionally, the Company announced cost of sales actions to drive $250 million in annual run rate savings by fiscal 2023. The one-time pre-tax costs associated with these actions are estimated to be approximately $385 million across all segments and at Corporate. During the year ended September 30, 2021, the Company recorded $242 million of costs resulting from the 2021 restructuring plan. The restructuring action is expected to be substantially complete in fiscal 2023. The Company has outstanding restructuring reserves of $65 million at September 30, 2021, all of which is expected to be paid in cash.

- In fiscal 2020, the Company recorded $297 million of costs resulting from the 2020 restructuring plan. The Company currently estimates that upon completion of the restructuring action, the fiscal 2020 restructuring plans will reduce annual operating costs for continuing operations by approximately $430 million. The annual restructuring activities are substantially completed, and final payments are expected to be made in fiscal 2022. The Company has outstanding restructuring reserves of $37 million at September 30, 2021, all of which is expected to be paid in cash.



## Co-Issued Securities: Summarized Financial Information

The following information is provided in compliance with Rule 13-01 of Regulation S-X under the Securities Exchange Act of 1934 with respect to the (i) $625 million aggregate principal amount of 1.750% Senior Notes due 2030 (the "2030 Notes"), (ii) $500 million aggregate principal amount of 0.375% Senior Notes due 2027 (the "2027 Notes"), (iii) $500 million aggregate principal amount of 1.000% Senior Notes due 2032 (the "2032 Notes") and (iv) $500 million aggregate principal amount of 2.000% Sustainability-Linked Senior Notes due 2031 (the "2031 Notes" and together with the 2032 Notes, the 2030 Notes and the 2027 Notes, the "Notes"), each issued by Johnson Controls International plc ("Parent Company") and TFSCA, a corporate partnership limited by shares (société en commandite par actions) incorporated and organized under the laws of the Grand Duchy of Luxembourg ("Luxembourg"). Refer to Note 10, "Debt and Financing Arrangements," of the notes to consolidated financial statements for additional information.

TFSCA is a wholly-owned consolidated subsidiary of the Company that is 99.996% owned directly by the Parent Company and 0.004% owned by TFSCA's sole general partner and manager, Tyco Fire & Security S.à r.l., which is itself wholly-owned by the Company. The Notes are the Parent Company's and TFSCA's unsecured, unsubordinated obligations. The Parent Company is incorporated and organized under the laws of Ireland and TFSCA is incorporated and organized under the laws of Luxembourg. The bankruptcy, insolvency, administrative, debtor relief and other laws of Luxembourg or Ireland, as applicable, may be materially different from, or in conflict with, those of the United States, including in the areas of rights of creditors, priority of governmental and other creditors, ability to obtain post-petition interest and duration of the proceeding. The application of these laws, or any conflict among them, could adversely affect noteholders' ability to enforce their rights under the Notes in those jurisdictions or limit any amounts that they may receive.

The following tables set forth summarized financial information of the Parent Company and TFSCA (collectively, the “Obligor Group”) on a combined basis after intercompany transactions have been eliminated, including adjustments to remove the receivable and payable balances, investment in, and equity in earnings from, those subsidiaries of the Parent Company other than TFSCA (collectively, the “Non-Obligor Subsidiaries”).

The following table presents summarized income statement information for the year ended September 30, 2021 (in millions):

<table><tr><td rowspan="2"></td><td colspan="2">Year Ended</td></tr><tr><td>September 30, 2021</td><td></td></tr><tr><td>Net sales</td><td>$</td><td>—</td></tr><tr><td>Gross profit</td><td></td><td>—</td></tr><tr><td>Loss from continuing operations</td><td></td><td>(212)</td></tr><tr><td>Net loss</td><td></td><td>(212)</td></tr><tr><td>Income attributable to noncontrolling interests</td><td></td><td>—</td></tr><tr><td>Net loss attributable to the entity</td><td></td><td>(212)</td></tr></table>



Excluded from the table above are the intercompany transactions between the Obligor Group and Non-Obligor Subsidiaries as follows (in millions):

<table><tr><td rowspan="2"></td><td colspan="2">Year Ended</td></tr><tr><td colspan="2">September 30, 2021</td></tr><tr><td>Net sales</td><td>$</td><td>—</td></tr><tr><td>Gross profit</td><td></td><td>—</td></tr><tr><td>Income from continuing operations</td><td></td><td>223</td></tr><tr><td>Net income</td><td></td><td>223</td></tr><tr><td>Income attributable to noncontrolling interests</td><td></td><td>—</td></tr><tr><td>Net income attributable to the entity</td><td></td><td>223</td></tr></table>

The following table presents summarized balance sheet information as of September 30, 2021 (in millions):

<table><tr><td></td><td>September 30, 2021</td></tr><tr><td>Current assets</td><td>$ 1,036</td></tr><tr><td>Noncurrent assets</td><td>280</td></tr><tr><td>Current liabilities</td><td>1,825</td></tr><tr><td>Noncurrent liabilities</td><td>7,260</td></tr><tr><td>Noncontrolling interests</td><td>—</td></tr></table>

Excluded from the table above are the intercompany balances between the Obligor Group and Non-Obligor Subsidiaries as follows (in millions):

<table><tr><td></td><td>September 30, 2021</td></tr><tr><td>Current assets</td><td>$ 465</td></tr><tr><td>Noncurrent assets</td><td>2,992</td></tr><tr><td>Current liabilities</td><td>1,660</td></tr><tr><td>Noncurrent liabilities</td><td>7,199</td></tr><tr><td>Noncontrolling interests</td><td>—</td></tr></table>

The same accounting policies as described in Note 1, "Summary of Significant Accounting Policies," of the notes to consolidated financial statements are used by the Parent Company and each of its subsidiaries in connection with the summarized financial information presented above.

## CRITICAL ACCOUNTING ESTIMATES

The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). This requires management to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates. The following estimates are considered by management to be the most critical to the understanding of the Company's consolidated financial statements as they require significant judgments that could materially impact the Company's results of operations, financial position and cash flows.

## Revenue Recognition

The Company recognizes revenue from certain long-term contracts on an over time basis, with progress towards completion measured using a cost-to-cost input method based on the relationship between actual costs incurred and total estimated costs at completion. Total estimated costs at completion are based primarily on estimated purchase contract terms, historical performance trends and other economic projections. Factors that may result in a change to these estimates include unforeseen engineering problems, construction delays, the performance of subcontractors and major material suppliers, and weather conditions. As a result, changes to the original estimates may be required during the life of the contract. Such estimates are reviewed monthly and any adjustments to the measure of completion are recognized as adjustments to sales and gross profit using the cumulative catch-up method. Estimated losses are recorded when identified.



For agreements with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in the contract. In order to estimate relative selling price, market data and transfer price studies are utilized. If the standalone selling price is not directly observable, the Company estimates the standalone selling price using an adjusted market assessment approach or expected cost plus margin approach.

The Company considers the contractual consideration payable by the customer and assesses variable consideration that may affect the total transaction price, including discounts, rebates, refunds, credits or other similar sources of variable consideration, when determining the transaction price of each contract. The Company includes variable consideration in the estimated transaction price when it is probable that significant reversal of revenue recognized would not occur when the uncertainty associated with variable consideration is subsequently resolved. These estimates are based on the amount of consideration that the Company expects to be entitled to.

## Goodwill and Indefinite-Lived Intangible Assets

The Company reviews goodwill for impairment during the fourth fiscal quarter or more frequently if events or changes in circumstances indicate the asset might be impaired. The Company performs impairment reviews for its reporting units, which have been determined to be the Company's reportable segments or one level below the reportable segments in certain instances, using a fair value method based on management's judgments and assumptions or third party valuations. The fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date. In estimating the fair value, the Company uses the multiples of earnings approach based on the average of published multiples of earnings of comparable entities with similar operations and economic characteristics that are applied to the Company's average of historical and future financial results. In certain instances, the Company uses discounted cash flow analyses or estimated sales price to further support the fair value estimates. The assumptions included in the impairment tests require judgment, and changes to these inputs could impact the results of the calculations. The key assumptions used in the impairment tests were management's projections of future cash flows, weighted-average cost of capital and long-term growth rates. Although the Company's cash flow forecasts are based on assumptions that are considered reasonable by management and consistent with the plans and estimates management is using to operate the underlying businesses, there are significant judgments in determining the expected future cash flows attributable to a reporting unit.

Based on the fiscal 2021 annual impairment test, there were no goodwill impairments and no reporting unit was determined to be at risk of failing the goodwill impairment test.

Indefinite-lived intangible assets are also subject to at least annual impairment testing. Indefinite-lived intangible assets primarily consist of trademarks and trade names and are tested for impairment using a relief-from-royalty method. A considerable amount of management judgment and assumptions are required in performing the impairment tests. The key assumptions used in the impairment tests were long-term revenue growth projections, weighted-average cost of capital and general industry, market and macro-economic conditions.

There were no indefinite-lived intangible asset impairments resulting from the fiscal 2021 annual impairment test. The estimated fair values of all indefinite-lived intangibles substantially exceeded their carrying values, with the exception of the indefinite-lived trademark related to the Company's Asia Pacific subscriber businesses. The estimated fair value of the Asia Pacific indefinite-lived trademark was consistent with its carrying value of $38 million as of September 30, 2021.

The Company continuously monitors for events and circumstances that could negatively impact the key assumptions in determining fair value. While the Company believes the judgments and assumptions used in the goodwill and indefinite-lived intangible impairment tests are reasonable, different assumptions or changes in general industry, market and macro-economic conditions, including a more prolonged and/or severe COVID-19 pandemic, could change the estimated fair values and, therefore, future impairment charges could be required, which could be material to the consolidated financial statements.

## Employee Benefit Plans

The Company provides a range of benefits to its employees and retired employees, including pensions and postretirement benefits. Plan assets and obligations are measured annually, or more frequently if there is a significant remeasurement event, based on the Company’s measurement date utilizing various actuarial assumptions such as discount rates, assumed rates of return, compensation increases and health care cost trend rates as of that date. The Company reviews its actuarial assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends when appropriate.



The Company utilizes a mark-to-market approach for recognizing pension and postretirement benefit expenses, including measuring the market related value of plan assets at fair value and recognizing actuarial gains and losses in the fourth quarter of each fiscal year or at the date of a remeasurement event. Refer to Note 16, "Retirement Plans," of the notes to consolidated financial statements for disclosure of the Company's pension and postretirement benefit plans.

U.S. GAAP requires that companies recognize in the statement of financial position a liability for defined benefit pension and postretirement plans that are underfunded or unfunded, or an asset for defined benefit pension and postretirement plans that are over funded. U.S. GAAP also requires that companies measure the benefit obligations and fair value of plan assets that determine a benefit plan's funded status as of the date of the employer's fiscal year end.

The Company considers the expected benefit payments on a plan-by-plan basis when setting assumed discount rates. As a result, the Company uses different discount rates for each plan depending on the plan jurisdiction, the demographics of participants and the expected timing of benefit payments. For the U.S. pension and postretirement plans, the Company uses a discount rate provided by an independent third party calculated based on an appropriate mix of high quality bonds. For the non-U.S. pension and postretirement plans, the Company consistently uses the relevant country specific benchmark indices for determining the various discount rates. The Company's weighted average discount rate on U.S. pension plans was 2.50% and 2.25% at September 30, 2021 and 2020, respectively. The Company's weighted average discount rate on postretirement plans was 2.30% and 1.90% at September 30, 2021 and 2020, respectively. The Company's weighted average discount rate on non-U.S. pension plans was 1.80% and 1.35% at September 30, 2021 and 2020, respectively.

In estimating the expected return on plan assets, the Company considers the historical returns on plan assets, adjusted for forward-looking considerations, inflation assumptions and the impact of the active management of the plans' invested assets. Reflecting the relatively long-term nature of the plans' obligations, approximately 20% of the plans' assets are invested in equity securities and 68% in fixed income securities, with the remainder primarily invested in alternative investments. For the years ending September 30, 2021 and 2020, the Company's expected long-term return on U.S. pension plan assets used to determine net periodic benefit cost was 6.50% and 6.90%, respectively. The actual rate of return on U.S. pension plans was above 6.50% in fiscal year 2021 and above 6.90% in fiscal year 2020. For the years ending September 30, 2021 and 2020, the Company's weighted average expected long-term return on non-U.S. pension plan assets was 4.90% and 5.20%, respectively. The actual rate of return on non-U.S. pension plans was above 4.90% in fiscal year 2021 and below 5.20% in fiscal year 2020. For the years ending September 30, 2021 and 2020, the Company's weighted average expected long-term return on postretirement plan assets was 5.30% and 5.70%, respectively. The actual rate of return on postretirement plan assets was above 5.30% in fiscal year 2021 and below 5.70% in fiscal year 2020.

Beginning in fiscal 2022, the Company believes the long-term rate of return will approximate 7.00%, 3.70% and 5.30% for U.S. pension, non-U.S. pension and postretirement plans, respectively. Any differences between actual investment results and the expected long-term asset returns will be reflected in net periodic benefit costs in the fourth quarter of each fiscal year or at the date of a significant remeasurement event. If the Company's actual returns on plan assets are less than the Company's expectations, additional contributions may be required.

In fiscal 2021, total employer contributions for continuing operations to the defined benefit pension plans were $65 million, none of which were voluntary contributions made by the Company. The Company expects to contribute approximately $42 million in cash to its defined benefit pension plans in fiscal 2022. In fiscal 2021, total employer contributions for continuing operations to the postretirement plans were $3 million. The Company expects to contribute approximately $3 million in cash to its postretirement plans in fiscal 2022.

Based on information provided by its independent actuaries and other relevant sources, the Company believes that the assumptions used are reasonable; however, changes in these assumptions could impact the Company’s financial position, results of operations or cash flows.

The mark-to-market adjustments represent actuarial gains (losses) arising from changes in actuarial assumptions and actuarial experiences different from those assumed that are used to value the plan assets and the benefit obligations. The primary factors contributing to actuarial gains (losses) are changes in the discount rate used to value benefit obligations and the difference between expected and actual returns on plan assets. As such, the mark-to-market adjustments are highly volatile and are difficult to forecast. Mark-to-market adjustments were $365 million, ($295) million and $(630) million for the fiscal years ended September 30, 2021, 2020 and 2019, respectively.



The following chart illustrates the estimated increases (decreases) in projected benefit obligation and future ongoing pension expense, which excludes any potential mark-to-market adjustments, assuming an increase of 25 basis points in the key assumptions for our pension plans (in millions):

<table><tr><td rowspan="3"></td><td colspan="6">Pension Benefits</td></tr><tr><td colspan="3">U.S. Plans</td><td colspan="3">Non-U.S. Plans</td></tr><tr><td colspan="2">Change in Projected Benefit Obligation</td><td>Change in Ongoing Pension Expense</td><td colspan="2">Change in Projected Benefit Obligation</td><td>Change in Ongoing Pension Expense</td></tr><tr><td>Discount rate</td><td>$ (51)</td><td>$ 5</td><td>$ (84)</td><td>$ 4</td><td></td><td></td></tr><tr><td>Expected return on plan assets</td><td>—</td><td>(6)</td><td>—</td><td></td><td></td><td>(5)</td></tr></table>

A 25 basis point change in the discount rate would not have a material impact on our post-retirement benefit plan obligations.

## Loss Contingencies

Accruals are recorded for various contingencies including legal proceedings, environmental matters, self-insurance and other claims that arise in the normal course of business. The accruals are based on judgment, the probability of losses and, where applicable, the consideration of opinions of internal and/or external legal counsel and actuarially determined estimates. Additionally, the Company records receivables from third party insurers when recovery has been determined to be probable.

The Company is subject to laws and regulations relating to protecting the environment. It is difficult to estimate the Company’s ultimate level of liability at many remediation sites due to the large number of other parties that may be involved, the complexity of determining the relative liability among those parties, the uncertainty as to the nature and scope of the investigations and remediation to be conducted, the uncertainty in the application of law and risk assessment, the various choices and costs associated with diverse technologies that may be used in corrective actions at the sites, and the often quite lengthy periods over which eventual remediation may occur. It is possible that technological, regulatory or enforcement developments, the results of additional environmental studies or other factors could change the Company’s expectations with respect to future charges and cash outlays, and such changes could be material to the Company’s future results of operations, financial condition or cash flows. Nevertheless, the Company does not currently believe that any claims, penalties or costs in addition to the amounts accrued will have a material adverse effect on the Company’s financial position, results of operations or cash flows. The Company provides for expenses associated with environmental remediation obligations when such amounts are probable and can be reasonably estimated. The Company provides for expenses associated with environmental remediation obligations when such amounts are probable and can be reasonably estimated. Refer to Note 23, "Commitments and Contingencies," of the notes to consolidated financial statements.

The Company records liabilities for its workers' compensation, product, general and auto liabilities. The determination of these liabilities and related expenses is dependent on claims experience. For most of these liabilities, claims incurred but not yet reported are estimated by utilizing actuarial valuations based upon historical claims experience. The Company records receivables from third party insurers when recovery has been determined to be probable. The Company maintains captive insurance companies to manage its insurable liabilities.

## Asbestos-Related Contingencies and Insurance Receivables

The Company and certain of its subsidiaries along with numerous other companies are named as defendants in personal injury lawsuits based on alleged exposure to asbestos-containing materials. The Company's estimate of the liability and corresponding insurance recovery for pending and future claims and defense costs is based on the Company's historical claim experience, and estimates of the number and resolution cost of potential future claims that may be filed and is discounted to present value from 2068 (which is the Company's reasonable best estimate of the actuarially determined time period through which asbestos-related claims will be filed against Company affiliates). Asbestos-related defense costs are included in the asbestos liability. The Company's legal strategy for resolving claims also impacts these estimates. The Company considers various trends and developments in evaluating the period of time (the lookback period) over which historical claim and settlement experience is used to estimate and value claims reasonably projected to be made through 2068. Annually, the Company assesses the sufficiency of its estimated liability for pending and future claims and defense costs by evaluating actual experience regarding claims filed, settled and dismissed, and amounts paid in settlements. In addition to claims and settlement experience, the Company considers additional quantitative and qualitative factors such as changes in legislation, the legal environment, and the Company's defense strategy. The Company also evaluates the recoverability of its insurance receivable on an annual basis. The



Company evaluates all of these factors and determines whether a change in the estimate of its liability for pending and future claims and defense costs or insurance receivable is warranted.

In connection with the recognition of liabilities for asbestos-related matters, the Company records asbestos-related insurance recoveries that are probable. The Company's estimate of asbestos-related insurance recoveries represents estimated amounts due to the Company for previously paid and settled claims and the probable reimbursements relating to its estimated liability for pending and future claims discounted to present value. In determining the amount of insurance recoverable, the Company considers available insurance, allocation methodologies, solvency and creditworthiness of the insurers. Refer to Note 23, "Commitments and Contingencies," of the notes to consolidated financial statements for a discussion on management's judgments applied in the recognition and measurement of asbestos-related assets and liabilities.

## Income Taxes

The Company accounts for income taxes in accordance with ASC 740, "Income Taxes." Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and other loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company records a valuation allowance that primarily represents non-U.S. operating and other loss carryforwards for which realization is uncertain. Management judgment is required in determining the Company's provision for income taxes, deferred tax assets and liabilities, and the valuation allowance recorded against the Company's net deferred tax assets.

The Company reviews the realizability of its deferred tax asset valuation allowances on a quarterly basis, or whenever events or changes in circumstances indicate that a review is required. In determining the requirement for a valuation allowance, the historical and projected financial results of the legal entity or consolidated group recording the net deferred tax asset are considered, along with any other positive or negative evidence. Since future financial results may differ from previous estimates, periodic adjustments to the Company's valuation allowances may be necessary. At September 30, 2021, the Company had a valuation allowance of $5.9 billion for continuing operations, of which $5.2 billion relates to net operating loss carryforwards primarily in France, Germany, Ireland, Luxembourg, Mexico, Spain, United Kingdom and the U.S. for which sustainable taxable income has not been demonstrated; and $0.7 billion for other deferred tax assets.

The Company’s federal income tax returns and certain non-U.S. income tax returns for various fiscal years remain under various stages of audit by the IRS and respective non-U.S. tax authorities. Although the outcome of tax audits is always uncertain, management believes that it has appropriate support for the positions taken on its tax returns and that its annual tax provisions included amounts sufficient to pay assessments, if any, which may be proposed by the taxing authorities. At September 30, 2021, the Company had recorded a liability of $2.7 billion for its best estimate of the probable loss on certain of its tax positions, the majority of which is included in other noncurrent liabilities in the consolidated statements of financial position. Nonetheless, the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year.

The Company does not generally provide additional U.S. or non-U.S. income taxes on outside basis differences of consolidated subsidiaries included in shareholders' equity attributable to Johnson Controls International plc, except in limited circumstances including anticipated taxation on planned divestitures. The reduction of the outside basis differences via the sale or liquidation of these subsidiaries and/or distributions could create taxable income. The Company's intent is to reduce the outside basis differences only when it would be tax efficient. Refer to "Capitalization" within the "Liquidity and Capital Resources" section for discussion of U.S. and non-U.S. cash projections.

Refer to Note 19, "Income Taxes," of the notes to consolidated financial statements for the Company's income tax disclosures.

## NEW ACCOUNTING PRONOUNCEMENTS

Refer to the "New Accounting Pronouncements" section within Note 1, "Summary of Significant Accounting Policies," of the notes to consolidated financial statements.

## RISK MANAGEMENT

The Company selectively uses derivative instruments to reduce market risk associated with changes in foreign currency, commodities and stock-based compensation. All hedging transactions are authorized and executed pursuant to clearly defined policies and procedures, which strictly prohibit the use of financial instruments for speculative purposes. At the inception of the



hedge, the Company assesses the effectiveness of the hedge instrument and designates the hedge instrument as either (1) a hedge of a recognized asset or liability or of a recognized firm commitment (a fair value hedge), (2) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to an unrecognized asset or liability (a cash flow hedge) or (3) a hedge of a net investment in a non-U.S. operation (a net investment hedge). The Company performs hedge effectiveness testing on an ongoing basis depending on the type of hedging instrument used. All other derivatives not designated as hedging instruments under ASC 815, "Derivatives and Hedging," are revalued in the consolidated statements of income.

For all foreign currency derivative instruments designated as cash flow hedges, retrospective effectiveness is tested on a monthly basis using a cumulative dollar offset test. The fair value of the hedged exposures and the fair value of the hedge instruments are revalued, and the ratio of the cumulative sum of the periodic changes in the value of the hedge instruments to the cumulative sum of the periodic changes in the value of the hedge is calculated. The hedge is deemed as highly effective if the ratio is between 80% and 125%. For commodity derivative contracts designated as cash flow hedges, effectiveness is tested using a regression calculation. Ineffectiveness is minimal as the Company aligns most of the critical terms of its derivatives with the supply contracts.

For net investment hedges, the Company assesses its net investment positions in the non-U.S. operations and compares it with the outstanding net investment hedges on a quarterly basis. The hedge is deemed effective if the aggregate outstanding principal of the hedge instruments designated as the net investment hedge in a non-U.S. operation does not exceed the Company’s net investment positions in the respective non-U.S. operation.

Equity swaps and any other derivative instruments not designated as hedging instruments under ASC 815 require no assessment of effectiveness.

A discussion of the Company’s accounting policies for derivative financial instruments is included in Note 1, "Summary of Significant Accounting Policies," of the notes to consolidated financial statements, and further disclosure relating to derivatives and hedging activities is included in Note 11, "Derivative Instruments and Hedging Activities," and Note 12, "Fair Value Measurements," of the notes to consolidated financial statements.

## Foreign Exchange

The Company has manufacturing, sales and distribution facilities around the world and thus makes investments and enters into transactions denominated in various foreign currencies. In order to maintain strict control and achieve the benefits of the Company’s global diversification, foreign exchange exposures for each currency are netted internally so that only its net foreign exchange exposures are, as appropriate, hedged with financial instruments.

The Company hedges 70% to 90% of the nominal amount of each of its known foreign exchange transactional exposures. The Company primarily enters into foreign currency exchange contracts to reduce the earnings and cash flow impact of the variation of non-functional currency denominated receivables and payables. Gains and losses resulting from hedging instruments offset the foreign exchange gains or losses on the underlying assets and liabilities being hedged. The maturities of the forward exchange contracts generally coincide with the settlement dates of the related transactions. Realized and unrealized gains and losses on these contracts are recognized in the same period as gains and losses on the hedged items. The Company also selectively hedges anticipated transactions that are subject to foreign exchange exposure, primarily with foreign currency exchange contracts, which are designated as cash flow hedges in accordance with ASC 815.

The Company has entered into foreign currency denominated debt obligations to selectively hedge portions of its net investment in non-U.S. subsidiaries. The currency effects of debt obligations are reflected in the accumulated other comprehensive income ("AOCI") account within shareholders' equity attributable to Johnson Controls ordinary shareholders where they offset gains and losses recorded on the Company's net investments globally.

At September 30, 2021 and 2020, the Company estimates that an unfavorable 10% change in the exchange rates would have decreased net unrealized gains by approximately $213 million and $363 million, respectively.

## Interest Rates

Substantially all of the Company's outstanding debt has fixed interest rates. A 10% increase in the average cost of the Company's variable rate debt would have had an immaterial impact on pre-tax interest expense for the years ended September 30, 2021 and 2020.



## Commodities

The Company uses commodity hedge contracts in the financial derivatives market in cases where commodity price risk cannot be naturally offset or hedged through supply base fixed price contracts. Commodity risks are systematically managed pursuant to policy guidelines. As a cash flow hedge, gains and losses resulting from the hedging instruments offset the gains or losses on purchases of the underlying commodities that will be used in the business. The maturities of the commodity hedge contracts coincide with the expected purchase of the commodities.

## ENVIRONMENTAL, HEALTH AND SAFETY AND OTHER MATTERS

The Company’s global operations are governed by environmental laws and worker safety laws. Under various circumstances, these laws impose civil and criminal penalties and fines, as well as injunctive and remedial relief, for noncompliance and require remediation at sites where Company-related substances have been released into the environment.

The Company has expended substantial resources globally, both financial and managerial, to comply with applicable environmental laws and worker safety laws and to protect the environment and workers. The Company believes it is in substantial compliance with such laws and maintains procedures designed to foster and ensure compliance. However, the Company has been, and in the future may become, the subject of formal or informal enforcement actions or proceedings regarding noncompliance with such laws or the remediation of Company-related substances released into the environment. Such matters typically are resolved with regulatory authorities through commitments to compliance, abatement or remediation programs and in some cases payment of penalties. Historically, neither such commitments nor penalties imposed on the Company have been material.

Refer to Note 23, "Commitments and Contingencies," of the notes to consolidated financial statements for additional information.

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

See "Risk Management" included in Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations.



## ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

## Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm 49
Consolidated Statements of Income for the years ended September 30, 2021, 2020 and 2019 52
Consolidated Statements of Comprehensive Income (Loss) for the years ended September 30, 2021, 2020 and 2019 53
Consolidated Statements of Financial Position as of September 30, 2021 and 2020 54
Consolidated Statements of Cash Flows for the years ended September 30, 2021, 2020 and 2019 55
Consolidated Statements of Shareholders' Equity Attributable to Johnson Controls Ordinary Shareholders for the years ended September 30, 2021, 2020 and 2019 56
Notes to Consolidated Financial Statements 57
Schedule II - Valuation and Qualifying Accounts for the years ended September 30, 2021, 2020 and 2019 114



## Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Johnson Controls International plc

## Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated statements of financial position of Johnson Controls International plc and its subsidiaries (the "Company") as of September 30, 2021 and 2020, and the related consolidated statements of income, of comprehensive income (loss), of shareholders' equity attributable to Johnson Controls ordinary shareholders, and of cash flows for each of the three years in the period ended September 30, 2021, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of September 30, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2021 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

## Change in Accounting Principle

As discussed in Note 9 to the consolidated financial statements, the Company changed the manner in which it accounts for leases as of October 1, 2019.

## Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company's consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based



on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Silent-Aire from its assessment of internal control over financial reporting as of September 30, 2021 because it was acquired by the Company in a purchase business combination during 2021. We have also excluded Silent-Aire from our audit of internal control over financial reporting. Silent-Aire is a wholly-owned subsidiary of the Company whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent less than 1% of each of the related consolidated financial statement amounts as of and for the year ended September 30, 2021.

## Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

## Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

## Uncertain Tax Positions

As described in Note 19 to the consolidated financial statements, the Company has recorded liabilities for uncertain tax positions totaling $2,726 million, primarily as a non-current liability, as of September 30, 2021. The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions. Judgment is required by management in determining the Company's worldwide provision for income taxes and recording the related income tax assets and liabilities. In the ordinary course of the Company's business, there are many transactions and calculations where the ultimate tax determination is uncertain. As disclosed by management, a liability for the best estimate of the probable loss on certain of the tax positions has been recorded by management. The Company's income tax filings are regularly under audit by tax authorities. The amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year.

The principal considerations for our determination that performing procedures relating to uncertain tax positions is a critical audit matter are (i) the significant judgment by management in identifying and recording the estimated probable loss for each uncertain tax position; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate the identification and accurate measurement of uncertain tax positions, (iii) the evaluation of audit evidence available to support the tax liabilities for uncertain tax positions is complex and resulted in significant auditor judgment as the nature of the evidence is often highly subjective; and (iv) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s assessment of uncertain tax positions, including controls over the identification and estimate of probable loss for uncertain tax positions. These procedures also included, among others (i) for a sample of uncertain tax positions by jurisdiction, testing the information used in the calculation of the estimate of probable loss and testing the calculation of the estimate of



probable loss; (ii) testing the completeness of management’s assessment of the identification of uncertain tax positions; and (iii) evaluating the status and results of income tax audits with the relevant tax authorities, as applicable. Professionals with specialized skill and knowledge were used to assist in the evaluation of the completeness and measurement of the Company’s uncertain tax positions, including evaluating the reasonableness of management’s assessment of whether tax positions are more-likely-than-not of being sustained and the amount of potential benefit to be realized, and the application of relevant tax laws.

/s/ PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
November 15, 2021

We have served as the Company’s auditor since 1957.



Johnson Controls International plc
Consolidated Statements of Income

<table><tr><td rowspan="2">(in millions, except per share data)</td><td colspan="4">Year Ended September 30,</td></tr><tr><td>2021</td><td>2020</td><td>2019</td><td></td></tr><tr><td>Net sales</td><td></td><td></td><td></td><td></td></tr><tr><td>Products and systems</td><td>$ 17,202</td><td>$ 16,253</td><td>$ 17,711</td><td></td></tr><tr><td>Services</td><td>6,466</td><td>6,064</td><td>6,257</td><td></td></tr><tr><td></td><td>23,668</td><td>22,317</td><td>23,968</td><td></td></tr><tr><td>Cost of sales</td><td></td><td></td><td></td><td></td></tr><tr><td>Products and systems</td><td>11,848</td><td>11,401</td><td>12,577</td><td></td></tr><tr><td>Services</td><td>3,761</td><td>3,505</td><td>3,698</td><td></td></tr><tr><td></td><td>15,609</td><td>14,906</td><td>16,275</td><td></td></tr><tr><td>Gross profit</td><td>8,059</td><td>7,411</td><td>7,693</td><td></td></tr><tr><td>Selling, general and administrative expenses</td><td>(5,258)</td><td>(5,665)</td><td>(6,244)</td><td></td></tr><tr><td>Restructuring and impairment costs</td><td>(242)</td><td>(783)</td><td>(235)</td><td></td></tr><tr><td>Net financing charges</td><td>(206)</td><td>(231)</td><td>(350)</td><td></td></tr><tr><td>Equity income</td><td>261</td><td>171</td><td>192</td><td></td></tr><tr><td>Income from continuing operations before income taxes</td><td>2,614</td><td>903</td><td>1,056</td><td></td></tr><tr><td>Income tax provision (benefit)</td><td>868</td><td>108</td><td>(233)</td><td></td></tr><tr><td>Income from continuing operations</td><td>1,746</td><td>795</td><td>1,289</td><td></td></tr><tr><td>Income from discontinued operations, net of tax (Note 3)</td><td>124</td><td>—</td><td>4,598</td><td></td></tr><tr><td>Net income</td><td>1,870</td><td>795</td><td>5,887</td><td></td></tr><tr><td>Income from continuing operations attributable to noncontrolling interests</td><td>233</td><td>164</td><td>189</td><td></td></tr><tr><td>Income from discontinued operations attributable to noncontrolling interests</td><td>—</td><td>—</td><td>24</td><td></td></tr><tr><td>Net income attributable to Johnson Controls</td><td>$ 1,637</td><td>$ 631</td><td>$ 5,674</td><td></td></tr><tr><td>Amounts attributable to Johnson Controls ordinary shareholders:</td><td></td><td></td><td></td><td></td></tr><tr><td>Income from continuing operations</td><td>$ 1,513</td><td>$ 631</td><td>$ 1,100</td><td></td></tr><tr><td>Income from discontinued operations</td><td>124</td><td>—</td><td>4,574</td><td></td></tr><tr><td>Net income</td><td>$ 1,637</td><td>$ 631</td><td>$ 5,674</td><td></td></tr><tr><td>Basic earnings per share attributable to Johnson Controls</td><td></td><td></td><td></td><td></td></tr><tr><td>Continuing operations</td><td>$ 2.11</td><td>$ 0.84</td><td>$ 1.26</td><td></td></tr><tr><td>Discontinued operations</td><td>0.17</td><td>—</td><td>5.26</td><td></td></tr><tr><td>Net income</td><td>$ 2.28</td><td>$ 0.84</td><td>$ 6.52</td><td></td></tr><tr><td>Diluted earnings per share attributable to Johnson Controls</td><td></td><td></td><td></td><td></td></tr><tr><td>Continuing operations</td><td>$ 2.10</td><td>$ 0.84</td><td>$ 1.26</td><td></td></tr><tr><td>Discontinued operations</td><td>0.17</td><td>—</td><td>5.23</td><td></td></tr><tr><td>Net income</td><td>$ 2.27</td><td>$ 0.84</td><td>$ 6.49</td><td></td></tr></table>

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



Johnson Controls International plc
Consolidated Statements of Comprehensive Income (Loss)

<table><tr><td rowspan="2">(in millions)</td><td colspan="4">Year Ended September 30,</td></tr><tr><td>2021</td><td>2020</td><td>2019</td><td></td></tr><tr><td>Net income</td><td>$ 1,870</td><td>$ 795</td><td>$ 5,887</td><td></td></tr><tr><td>Other comprehensive income (loss), net of tax:</td><td></td><td></td><td></td><td></td></tr><tr><td>Foreign currency translation adjustments</td><td>376</td><td>25</td><td>(342)</td><td></td></tr><tr><td>Realized and unrealized gains (losses) on derivatives</td><td>(18)</td><td>8</td><td>6</td><td></td></tr><tr><td>Pension and postretirement plans</td><td>4</td><td>8</td><td>(6)</td><td></td></tr><tr><td>Other comprehensive income (loss)</td><td>362</td><td>41</td><td>(342)</td><td></td></tr><tr><td>Total comprehensive income</td><td>2,232</td><td>836</td><td>5,545</td><td></td></tr><tr><td>Comprehensive income attributable to noncontrolling interests</td><td>253</td><td>186</td><td>195</td><td></td></tr><tr><td>Comprehensive income attributable to Johnson Controls</td><td>$ 1,979</td><td>$ 650</td><td>$ 5,350</td><td></td></tr></table>

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



## Johnson Controls International plc
Consolidated Statements of Financial Position

<table><tr><td rowspan="2">(in millions, except par value and share data)</td><td colspan="2">September 30,</td></tr><tr><td>2021</td><td>2020</td></tr><tr><td>Assets</td><td></td><td></td></tr><tr><td>Cash and cash equivalents</td><td>$ 1,336</td><td>$ 1,951</td></tr><tr><td>Accounts receivable - net</td><td>5,613</td><td>5,294</td></tr><tr><td>Inventories</td><td>2,057</td><td>1,773</td></tr><tr><td>Other current assets</td><td>992</td><td>1,035</td></tr><tr><td>Current assets</td><td>9,998</td><td>10,053</td></tr><tr><td>Property, plant and equipment - net</td><td>3,228</td><td>3,059</td></tr><tr><td>Goodwill</td><td>18,335</td><td>17,932</td></tr><tr><td>Other intangible assets - net</td><td>5,549</td><td>5,356</td></tr><tr><td>Investments in partially-owned affiliates</td><td>1,066</td><td>914</td></tr><tr><td>Noncurrent assets held for sale</td><td>156</td><td>147</td></tr><tr><td>Other noncurrent assets</td><td>3,558</td><td>3,354</td></tr><tr><td>Total assets</td><td>$ 41,890</td><td>$ 40,815</td></tr><tr><td>Liabilities and Equity</td><td></td><td></td></tr><tr><td>Short-term debt</td><td>$ 8</td><td>$ 31</td></tr><tr><td>Current portion of long-term debt</td><td>226</td><td>262</td></tr><tr><td>Accounts payable</td><td>3,746</td><td>3,120</td></tr><tr><td>Accrued compensation and benefits</td><td>1,008</td><td>838</td></tr><tr><td>Deferred revenue</td><td>1,637</td><td>1,435</td></tr><tr><td>Other current liabilities</td><td>2,473</td><td>2,562</td></tr><tr><td>Current liabilities</td><td>9,098</td><td>8,248</td></tr><tr><td>Long-term debt</td><td>7,506</td><td>7,526</td></tr><tr><td>Pension and postretirement benefits</td><td>628</td><td>1,140</td></tr><tr><td>Other noncurrent liabilities</td><td>5,905</td><td>5,368</td></tr><tr><td>Long-term liabilities</td><td>14,039</td><td>14,034</td></tr><tr><td>Commitments and contingencies (Note 23)</td><td></td><td></td></tr><tr><td>Ordinary shares (par value $0.01; 2.0 billion shares authorized; shares issued: 2021 - 737,090,363; 2020 - 753,907,315)</td><td>7</td><td>8</td></tr><tr><td>Ordinary A shares (par value €1.00; 40,000 shares authorized, none outstanding as of September 30, 2021 and 2020)</td><td>—</td><td>—</td></tr><tr><td>Preferred shares (par value $0.01; 200,000,000 shares authorized, none outstanding as of September 30, 2021 and 2020)</td><td>—</td><td>—</td></tr><tr><td>Ordinary shares held in treasury, at cost (shares held: 2021 - 28,356,889; 2020 - 27,684,632)</td><td>(1,152)</td><td>(1,119)</td></tr><tr><td>Capital in excess of par value</td><td>17,116</td><td>16,865</td></tr><tr><td>Retained earnings</td><td>2,025</td><td>2,469</td></tr><tr><td>Accumulated other comprehensive loss</td><td>(434)</td><td>(776)</td></tr><tr><td>Shareholders&#x27; equity attributable to Johnson Controls</td><td>17,562</td><td>17,447</td></tr><tr><td>Noncontrolling interests</td><td>1,191</td><td>1,086</td></tr><tr><td>Total equity</td><td>18,753</td><td>18,533</td></tr><tr><td>Total liabilities and equity</td><td>$ 41,890</td><td>$ 40,815</td></tr></table>

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



## Johnson Controls International plc
Consolidated Statements of Cash Flows

<table><tr><td colspan="5">(in millions)</td></tr><tr><td colspan="5">Operating Activities of Continuing Operations</td></tr><tr><td colspan="5">Net income from continuing operations attributable to Johnson Controls</td></tr><tr><td colspan="5">Income from continuing operations attributable to noncontrolling interests</td></tr><tr><td colspan="5">Net income from continuing operations</td></tr><tr><td colspan="5">Adjustments to reconcile net income from continuing operations to cash provided by operating activities:</td></tr><tr><td colspan="5">Depreciation and amortization</td></tr><tr><td colspan="5">Pension and postretirement benefit expense (income)</td></tr><tr><td colspan="5">Pension and postretirement contributions</td></tr><tr><td colspan="5">Equity in earnings of partially-owned affiliates, net of dividends received</td></tr><tr><td colspan="5">Deferred income taxes</td></tr><tr><td colspan="5">Non-cash restructuring and impairment charges</td></tr><tr><td colspan="5">Equity-based compensation</td></tr><tr><td colspan="5">Other - net</td></tr><tr><td colspan="5">Changes in assets and liabilities, excluding acquisitions and divestitures:</td></tr><tr><td colspan="5">Accounts receivable</td></tr><tr><td colspan="5">Inventories</td></tr><tr><td colspan="5">Other assets</td></tr><tr><td colspan="5">Restructuring reserves</td></tr><tr><td colspan="5">Accounts payable and accrued liabilities</td></tr><tr><td colspan="5">Accrued income taxes</td></tr><tr><td colspan="5">Cash provided by operating activities from continuing operations</td></tr><tr><td colspan="5">Investing Activities of Continuing Operations</td></tr><tr><td colspan="5">Capital expenditures</td></tr><tr><td colspan="5">Sale of property, plant and equipment</td></tr><tr><td colspan="5">Acquisition of businesses, net of cash acquired</td></tr><tr><td colspan="5">Business divestitures, net of cash divested</td></tr><tr><td colspan="5">Changes in long-term investments</td></tr><tr><td colspan="5">Proceeds from equity swap</td></tr><tr><td colspan="5">Other - net</td></tr><tr><td colspan="5">Cash used by investing activities from continuing operations</td></tr><tr><td colspan="5">Financing Activities of Continuing Operations</td></tr><tr><td colspan="5">Decrease in short-term debt - net</td></tr><tr><td colspan="5">Increase in long-term debt</td></tr><tr><td colspan="5">Repayment of long-term debt</td></tr><tr><td colspan="5">Debt financing costs</td></tr><tr><td colspan="5">Stock repurchases and retirements</td></tr><tr><td colspan="5">Payment of cash dividends</td></tr><tr><td colspan="5">Proceeds from the exercise of stock options</td></tr><tr><td colspan="5">Dividends paid to noncontrolling interests</td></tr><tr><td colspan="5">Cash received related to prior acquisitions and divestitures, net</td></tr><tr><td colspan="5">Employee equity-based compensation withholding taxes</td></tr><tr><td colspan="5">Cash paid to acquire a noncontrolling interest</td></tr><tr><td colspan="5">Other - net</td></tr><tr><td colspan="5">Cash used by financing activities from continuing operations</td></tr><tr><td colspan="5">Discontinued Operations</td></tr><tr><td colspan="5">Cash used by operating activities</td></tr><tr><td colspan="5">Cash provided by investing activities</td></tr><tr><td colspan="5">Cash used by financing activities</td></tr><tr><td colspan="5">Cash provided (used) by discontinued operations</td></tr><tr><td colspan="5">Effect of exchange rate changes on cash, cash equivalents and restricted cash</td></tr><tr><td colspan="5">Change in cash, cash equivalents and restricted cash held for sale</td></tr><tr><td colspan="5">Increase (decrease) in cash, cash equivalents and restricted cash</td></tr><tr><td colspan="5">Cash, cash equivalents and restricted cash at beginning of period</td></tr><tr><td colspan="5">Cash, cash equivalents and restricted cash at end of period</td></tr><tr><td colspan="5">Less: Restricted cash</td></tr><tr><td colspan="5">Cash and cash equivalents at end of period</td></tr><tr><td colspan="5">The accompanying notes are an integral part of the consolidated financial statements.</td></tr></table>

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

<table><tr><td>(in millions, except per share data)</td><td>Total</td><td>Ordinary Shares</td><td>Capital in Excess of Par Value</td><td>Retained Earnings</td><td>Treasury Stock, at Cost</td><td>Accumulated Other Comprehensive Income (Loss)</td></tr><tr><td>At September 30, 2018</td><td>$ 21,164</td><td>$ 10</td><td>$ 16,549</td><td>$ 6,604</td><td>$ (1,053)</td><td>$ (946)</td></tr><tr><td>Comprehensive income (loss)</td><td>5,350</td><td>—</td><td>—</td><td>5,674</td><td>—</td><td>(324)</td></tr><tr><td>Cash dividends</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Ordinary ($1.04 per share)</td><td>(887)</td><td>—</td><td>—</td><td>(887)</td><td>—</td><td>—</td></tr><tr><td>Repurchases and retirements of ordinary shares</td><td>(5,983)</td><td>(2)</td><td>—</td><td>(5,981)</td><td>—</td><td>—</td></tr><tr><td>Divestiture of Power Solutions</td><td>483</td><td>—</td><td>—</td><td>—</td><td>—</td><td>483</td></tr><tr><td>Adoption of ASC 606</td><td>(45)</td><td>—</td><td>—</td><td>(45)</td><td>—</td><td>—</td></tr><tr><td>Adoption of ASU 2016-01</td><td>—</td><td>—</td><td>—</td><td>8</td><td>—</td><td>(8)</td></tr><tr><td>Adoption of ASU 2016-16</td><td>(546)</td><td>—</td><td>—</td><td>(546)</td><td>—</td><td>—</td></tr><tr><td>Other, including options exercised</td><td>230</td><td>—</td><td>263</td><td>—</td><td>(33)</td><td>—</td></tr><tr><td>At September 30, 2019</td><td>19,766</td><td>8</td><td>16,812</td><td>4,827</td><td>(1,086)</td><td>(795)</td></tr><tr><td>Comprehensive income</td><td>650</td><td>—</td><td>—</td><td>631</td><td>—</td><td>19</td></tr><tr><td>Cash dividends</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Ordinary ($1.04 per share)</td><td>(780)</td><td>—</td><td>—</td><td>(780)</td><td>—</td><td>—</td></tr><tr><td>Repurchases and retirements of ordinary shares</td><td>(2,204)</td><td>—</td><td>—</td><td>(2,204)</td><td>—</td><td>—</td></tr><tr><td>Adoption of ASC 842</td><td>(5)</td><td>—</td><td>—</td><td>(5)</td><td>—</td><td>—</td></tr><tr><td>Change in noncontrolling interest share</td><td>(83)</td><td>—</td><td>(83)</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Other, including options exercised</td><td>103</td><td>—</td><td>136</td><td>—</td><td>(33)</td><td>—</td></tr><tr><td>At September 30, 2020</td><td>17,447</td><td>8</td><td>16,865</td><td>2,469</td><td>(1,119)</td><td>(776)</td></tr><tr><td>Comprehensive income</td><td>1,979</td><td>—</td><td>—</td><td>1,637</td><td>—</td><td>342</td></tr><tr><td>Cash dividends</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Ordinary ($1.07 per share)</td><td>(771)</td><td>—</td><td>—</td><td>(771)</td><td>—</td><td>—</td></tr><tr><td>Repurchases and retirements of ordinary shares</td><td>(1,307)</td><td>(1)</td><td>—</td><td>(1,306)</td><td>—</td><td>—</td></tr><tr><td>Adoption of ASU 2016-13</td><td>(4)</td><td>—</td><td>—</td><td>(4)</td><td>—</td><td>—</td></tr><tr><td>Change in noncontrolling interest share</td><td>(8)</td><td>—</td><td>(8)</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Other, including options exercised</td><td>226</td><td>—</td><td>259</td><td>—</td><td>(33)</td><td>—</td></tr><tr><td>At September 30, 2021</td><td>$ 17,562</td><td>$ 7</td><td>$ 17,116</td><td>$ 2,025</td><td>$ (1,152)</td><td>$ (434)</td></tr></table>

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



# Johnson Controls International plc
Notes to Consolidated Financial Statements

## 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements include the consolidated accounts of Johnson Controls International plc, a 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," "Johnson Controls" or "JCI plc").

## 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's products and solutions enable smart, energy efficient, sustainable buildings that work seamlessly together to advance the safety, comfort and intelligence of spaces to power its customers' mission. The Company is committed to helping its customers win and creating greater value for all of its stakeholders through its strategic focus on buildings.

In 2019, the Company sold its Power Solutions business to BCP Acquisitions LLC ("Purchaser"), an entity controlled by investment funds managed by Brookfield Capital Partners LLC, completing the Company's transformation into a pure-play building technologies and solutions provider. The transaction closed on April 30, 2019 with net cash proceeds of $11.6 billion after tax and transaction-related expenses. Refer to Note 3, "Discontinued Operations," of the notes to consolidated financial statements for further information.

The Company is a global leader in engineering, manufacturing and commissioning building products and systems, including residential and commercial heating, ventilating, air-conditioning ("HVAC") equipment, industrial refrigeration systems, controls, security systems, fire-detection systems and fire-suppression solutions. The Company further serves customers by providing technical services, including maintenance, repair, retrofit and replacement of equipment (in the HVAC, security and fire-protection space), energy-management consulting and data-driven "smart building" services and solutions powered by its digital platforms and capabilities.

## Principles of Consolidation

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

The Company consolidates variable interest entities ("VIE") in which the Company has the power to direct the significant activities of the entity and the obligation to absorb losses or receive benefits from the entity that may be significant. The Company did not have a significant variable interest in any consolidated or nonconsolidated VIEs in its continuing operations for the presented reporting periods.

## Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

## Fair Value of Financial Instruments

The fair values of cash and cash equivalents, accounts receivable, short-term debt and accounts payable approximate their carrying values. See Note 11, "Derivative Instruments and Hedging Activities," and Note 12, "Fair Value Measurements," of the notes to consolidated financial statements for fair value of financial instruments, including derivative instruments, hedging activities and long-term debt.



## Assets and Liabilities Held for Sale

The Company classifies assets and liabilities (disposal groups) to be sold as held for sale in the period in which all of the following criteria are met: management, having the authority to approve the action, commits to a plan to sell the disposal group; the disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such disposal groups; an active program to locate a buyer and other actions required to complete the plan to sell the disposal group have been initiated; the sale of the disposal group is probable, and transfer of the disposal group is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond the Company's control extend the period of time required to sell the disposal group beyond one year; the disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

The Company initially measures a disposal group that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a disposal group until the date of sale. The Company assesses the fair value of a disposal group, less any costs to sell, each reporting period it remains classified as held for sale and reports any subsequent changes as an adjustment to the carrying value of the disposal group, as long as the new carrying value does not exceed the carrying value of the disposal group at the time it was initially classified as held for sale.

Upon determining that a disposal group meets the criteria to be classified as held for sale, the Company reports the assets and liabilities of the disposal group, if material, in the line items assets held for sale and liabilities held for sale in the consolidated statements of financial position. Refer to Note 3, "Discontinued Operations," of the notes to consolidated financial statements for further information.

## Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

## Restricted Cash

At September 30, 2021 and September 30, 2020, the Company held restricted cash of approximately $6 million and $9 million, respectively all of which was recorded within other current assets in the consolidated statements of financial position. These amounts related to cash restricted for payment of asbestos liabilities.

## Receivables

Receivables consist of amounts billed and currently due from customers and unbilled costs and accrued profits related to revenues on long-term contracts that have been recognized for accounting purposes but not yet billed to customers. The Company extends credit to customers in the normal course of business and maintains an allowance for expected credit losses resulting from the inability or unwillingness of customers to make required payments. The allowance for expected credit losses is based on historical experience, existing economic conditions, reasonable and supportable forecasts, and any specific customer collection issues the Company has identified. The Company enters into various factoring agreements to sell certain accounts receivable to third-party financial institutions. For ease of administration, the Company collects customer payments related to certain factored receivables on behalf of the financial institutions but otherwise maintains no other continuing involvement with respect to the factored receivables. Sales of accounts receivable are reflected as a reduction of accounts receivable in the consolidated statements of financial position and the proceeds are included in cash flows from operating activities in the consolidated statements of cash flows.

## Inventories

Inventories are stated at the lower of cost or net realizable value using the first-in, first-out ("FIFO") method. Finished goods and work-in-process inventories include material, labor and manufacturing overhead costs.

## Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Depreciation is provided over the estimated useful lives of the respective assets using the straight-line method for financial reporting purposes and accelerated methods for income tax purposes. The estimated useful lives generally range from 3 to 40 years for buildings and improvements, subscriber systems up to 15 years,



and from 3 to 15 years for machinery and equipment. The Company capitalizes interest on borrowings during the active construction period of major capital projects. Capitalized interest is added to the cost of the underlying assets and is amortized over the useful lives of the assets.

## Goodwill and Indefinite-Lived Intangible Assets

Goodwill reflects the cost of an acquisition in excess of the fair values assigned to identifiable net assets acquired. The Company reviews goodwill for impairment during the fourth fiscal quarter or more frequently if events or changes in circumstances indicate the asset might be impaired. The Company performs impairment reviews for its reporting units, which have been determined to be the Company's reportable segments or one level below the reportable segments in certain instances, using a fair value method based on management's judgments and assumptions or third party valuations. The fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date. In estimating the fair value, the Company uses the multiples of earnings approach based on the average of published multiples of earnings of comparable entities with similar operations and economic characteristics and applies the multiples to the Company's average of historical and future financial results for each reporting unit. In certain instances, the Company uses discounted cash flow analyses or estimated sales price to further support the fair value estimates. The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement." The estimated fair value is then compared with the carrying amount of the reporting unit, including recorded goodwill. The Company is subject to financial statement risk to the extent that the carrying amount exceeds the estimated fair value. Refer to Note 8, "Goodwill and Other Intangible Assets," of the notes to consolidated financial statements for information regarding the goodwill impairment testing performed in fiscal years 2021, 2020 and 2019.

Indefinite-lived intangible assets are also subject to at least annual impairment testing. Indefinite-lived intangible assets primarily consist of trademarks and trade names and are tested for impairment using a relief-from-royalty method. A considerable amount of management judgment and assumptions are required in performing the impairment tests.

## Leases

## Lessee arrangements

The Company leases certain administrative, production and other facilities, fleet vehicles, information technology equipment and other equipment under arrangements that are accounted for as operating leases. The Company determines whether an arrangement contains a lease at contract inception based on whether the arrangement involves the use of a physically distinct identified asset and whether the Company has the right to obtain substantially all of the economic benefits from the use of the asset throughout the period as well as the right to direct the use of the asset.

Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Right-of-use assets and the corresponding lease liabilities are recognized at commencement date based on the present value of lease payments for all leases with terms longer than twelve months. As the majority of the Company’s leases do not provide an implicit interest rate, to determine the present value of lease payments, the Company uses its incremental borrowing rate based on information available on the lease commencement date and uses the implicit rate when readily determinable. The Company determines its incremental borrowing rate based on a comparable market yield curve consistent with its credit rating, term of the lease and relative economic environment. The Company has elected to combine lease and nonlease components for its leases.

## Lessor arrangements

The Company's monitoring services and maintenance agreements within its security business that include subscriber system assets for which the Company retains ownership contain both lease and nonlease components. The Company has elected to combine lease and nonlease components for these arrangements where the timing and pattern of transfer of the lease and nonlease components are the same and the lease component would be classified as an operating lease if accounted for separately. The Company has concluded that in these arrangements the nonlease components are the predominant characteristic, and as a result, the combined component is accounted for under the revenue guidance.

## Impairment of Long-Lived Assets

The Company reviews long-lived assets, including right-of-use assets under operating leases, other tangible assets and intangible assets with definitive lives, for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with



ASC 360-10-15, "Impairment or Disposal of Long-Lived Assets," ASC 350-30, "General Intangibles Other than Goodwill" and ASC 985-20, "Costs of Software to be Sold, Leased, or Marketed."

The Company groups assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluates the asset group against the sum of the undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount of the asset group is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flow analysis or appraisals. Intangible assets acquired in a business combination that are used in research and development activities are considered indefinite-lived until the completion or abandonment of the associated research and development efforts. During the period that those assets are considered indefinite lived, they are not amortized but are tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. If the carrying amount of an intangible asset exceeds its fair value, the Company recognizes an impairment loss in an amount equal to that excess. Unamortized capitalized costs of a computer software product are compared to the net realizable value of the product. The amount by which the unamortized capitalized costs of a computer software product exceed the net realizable value of that asset is written off. Refer to Note 18, "Impairment of Long-Lived Assets," of the notes to consolidated financial statements for information regarding the impairment testing performed in fiscal years 2021, 2020 and 2019.

## Revenue Recognition

The Company recognizes revenue from certain long-term contracts to design, manufacture and install building products and systems as well as unscheduled repair or replacement services on an over time basis, with progress towards completion measured using a cost-to-cost input method based on the relationship between actual costs incurred and total estimated costs at completion. The cost-to-cost input method is used as it best depicts the transfer of control to the customer that occurs as the Company incurs costs. Changes to the original estimates may be required during the life of the contract and such estimates are reviewed monthly. If contract modifications result in additional goods or services that are distinct from those transferred before the modification, they are accounted for prospectively as if the Company entered into a new contract. If the goods or services in the modification are not distinct from those in the original contract, sales and gross profit are adjusted using the cumulative catch-up method for revisions in estimated total contract costs and contract values. Estimated losses are recorded when identified. The Company does not adjust the promised amount of consideration for the effects of a significant financing component as at contract inception the Company expects to receive the payment within twelve months of transfer of goods or services.

The Company enters into extended warranties and long-term service and maintenance agreements with certain customers. For these arrangements, revenue is recognized over time on a straight-line basis over the respective contract term.

The Company also sells certain HVAC and refrigeration products and services in bundled arrangements with multiple performance obligations, such as equipment, commissioning, service labor and extended warranties. Approximately four to twelve months separate the timing of the first deliverable until the last piece of equipment is delivered, and there may be extended warranty arrangements with duration of one to five years commencing upon the end of the standard warranty period. In addition, the Company sells security monitoring systems that may have multiple performance obligations, including equipment, installation, monitoring services and maintenance agreements. Revenues associated with the sale of equipment and related installations are recognized over time on a cost-to-cost input method, while the revenue for monitoring and maintenance services are recognized over time as services are rendered. The transaction price is allocated to each performance obligation based on the relative selling price method. In order to estimate relative selling price, market data and transfer price studies are utilized. If the standalone selling price is not directly observable, the Company estimates the standalone selling price using an adjusted market assessment approach or expected cost plus margin approach. For transactions in which the Company retains ownership of the subscriber system asset, fees for monitoring and maintenance services are recognized over time on a straight-line basis over the contract term. Non-refundable fees received in connection with the initiation of a monitoring contract, along with associated direct and incremental selling costs, are deferred and amortized over the estimated life of the contract.

In all other cases, the Company recognizes revenue at the point in time when control over the goods or services transfers to the customer.

The Company considers the contractual consideration payable by the customer and assesses variable consideration that may affect the total transaction price, including discounts, rebates, refunds, credits or other similar sources of variable consideration, when determining the transaction price of each contract. The Company includes variable consideration in the estimated transaction price when it is probable that significant reversal of revenue recognized would not occur when the uncertainty associated with variable consideration is subsequently resolved. These estimates are based on the amount of consideration that the Company expects to be entitled to.



Shipping and handling costs billed to customers are included in sales and the related costs are included in cost of sales when control transfers to the customer. The Company presents amounts collected from customers for sales and other taxes net of the related amounts remitted.

## Subscriber System Assets, Dealer Intangibles and Related Deferred Revenue Accounts

The Company considers assets related to the acquisition of new customers in its electronic security business in three asset categories: internally generated residential subscriber systems outside of North America, internally generated commercial subscriber systems (collectively referred to as subscriber system assets) and customer accounts acquired through the ADT dealer program, primarily outside of North America (referred to as dealer intangibles). Subscriber system assets include installed property, plant and equipment for which the Company retains ownership and deferred costs directly related to the customer acquisition and system installation. Subscriber system assets represent capitalized equipment (e.g. security control panels, touch pad, motion detectors, window sensors, and other equipment) and installation costs associated with electronic security monitoring arrangements under which the Company retains ownership of the security system assets in a customer's place of business, or outside of North America, residence. Installation costs represent costs incurred to prepare the asset for its intended use. The Company pays property taxes on the subscriber system assets and upon customer termination, may retrieve such assets. These assets embody a probable future economic benefit as they generate future monitoring revenue for the Company.

Costs related to the subscriber system equipment and installation are categorized as property, plant and equipment rather than deferred costs. Deferred costs associated with subscriber system assets represent direct and incremental selling expenses (such as commissions) related to acquiring the customer. Commissions related to up-front consideration paid by customers in connection with the establishment of the monitoring arrangement are determined based on a percentage of the up-front fees and do not exceed deferred revenue. Such deferred costs are recorded as other current and noncurrent assets within the consolidated statements of financial position.

Subscriber system assets and any deferred revenue resulting from the customer acquisition are accounted for over the expected life of the subscriber. In certain geographical areas where the Company has a large number of customers that behave in a similar manner over time, the Company accounts for subscriber system assets and related deferred revenue using pools, with separate pools for the components of subscriber system assets and any related deferred revenue based on the same month and year of acquisition. The Company depreciates its pooled subscriber system assets and related deferred revenue using a straight-line method with lives up to 12 years and considering customer attrition. The Company uses a straight-line method with a 15-year life for non-pooled subscriber system assets (primarily in Europe, Latin America and Asia) and related deferred revenue, with remaining balances written off upon customer termination.

Certain contracts and related customer relationships result from purchasing residential security monitoring contracts from an external network of independent dealers who operate under the ADT dealer program, primarily outside of North America. Acquired contracts and related customer relationships are recorded at their contractually determined purchase price.

During the first 6 months (12 months in certain circumstances) after the purchase of the customer contract, any cancellation of monitoring service, including those that result from customer payment delinquencies, results in a chargeback by the Company to the dealer for the full amount of the contract purchase price. The Company records the amount charged back to the dealer as a reduction of the previously recorded intangible asset.

Intangible assets arising from the ADT dealer program described above are amortized in pools determined by the same month and year of contract acquisition on a straight-line basis over the period of the customer relationship. The estimated useful life of dealer intangibles ranges from 12 to 15 years.

## Research and Development Costs

Expenditures for research activities relating to product development and improvement are charged against income as incurred and included within selling, general and administrative expenses for continuing operations in the consolidated statements of income. Such expenditures for the years ended September 30, 2021, 2020 and 2019 were $275 million, $274 million and $319 million, respectively.



## Earnings Per Share

The Company presents both basic and diluted EPS amounts. Basic EPS is calculated by dividing net income attributable to Johnson Controls by the weighted average number of ordinary shares outstanding during the reporting period. Diluted EPS is calculated by dividing net income attributable to Johnson Controls by the weighted average number of ordinary shares and ordinary equivalent shares outstanding during the reporting period that are calculated using the treasury stock method for stock options, unvested restricted stock and unvested performance share awards. The treasury stock method assumes that the Company uses the proceeds from the exercise of stock option awards to repurchase ordinary shares at the average market price during the period. The assumed proceeds under the treasury stock method include the purchase price that the grantee will pay in the future and compensation cost for future service that the Company has not yet recognized. For unvested restricted stock and unvested performance share awards, assumed proceeds under the treasury stock method include unamortized compensation cost. See Note 14, "Earnings per Share," of the notes to consolidated financial statements for the calculation of earnings per share.

## Foreign Currency Translation

Substantially all of the Company’s international operations use the respective local currency as the functional currency. Assets and liabilities of international entities have been translated at period-end exchange rates, and income and expenses have been translated using average exchange rates for the period. Monetary assets and liabilities denominated in non-functional currencies are adjusted to reflect period-end exchange rates. The aggregate transaction gains (losses), net of the impact of foreign currency hedges, included in income from continuing operations for the years ended September 30, 2021, 2020 and 2019 were $56 million, $(32) million and $(10) million, respectively.

## Derivative Financial Instruments

The Company has written policies and procedures that place all financial instruments under the direction of Corporate treasury and restrict all derivative transactions to those intended for hedging purposes. The use of financial instruments for speculative purposes is strictly prohibited. The Company selectively uses financial instruments to manage the market risk from changes in foreign exchange rates, commodity prices, stock-based compensation liabilities and interest rates.

The fair values of all derivatives are recorded in the consolidated statements of financial position. The change in a derivative’s fair value is recorded each period in current earnings or accumulated other comprehensive income ("AOCI"), depending on whether the derivative is designated as part of a hedge transaction and if so, the type of hedge transaction. See Note 11, "Derivative Instruments and Hedging Activities," and Note 12, "Fair Value Measurements," of the notes to consolidated financial statements for disclosure of the Company’s derivative instruments and hedging activities.

## Investments

The Company invests in debt and equity securities which are marked to market at the end of each accounting period. Unrealized gains and losses on these securities are recognized in the Company's consolidated statements of income. The deferred compensation plan assets are marked to market at the end of each accounting period and all unrealized gains and losses are recorded in the consolidated statements of income.

## Pension and Postretirement Benefits

The Company utilizes a mark-to-market approach for recognizing pension and postretirement benefit expenses, including measuring the market related value of plan assets at fair value and recognizing actuarial gains and losses in the fourth quarter of each fiscal year or at the date of a remeasurement event. Refer to Note 16, "Retirement Plans," of the notes to consolidated financial statements for disclosure of the Company's pension and postretirement benefit plans.

## Loss Contingencies

Accruals are recorded for various contingencies including legal proceedings, environmental matters, self-insurance and other claims that arise in the normal course of business. The accruals are based on judgment, the probability of losses and, where applicable, the consideration of opinions of internal and/or external legal counsel and actuarially determined estimates. Additionally, the Company records receivables from third party insurers when recovery has been determined to be probable.



The Company is subject to laws and regulations relating to protecting the environment. The Company provides for expenses associated with environmental remediation obligations when such amounts are probable and can be reasonably estimated. Refer to Note 23, "Commitments and Contingencies," of the notes to consolidated financial statements.

The Company records liabilities for its workers' compensation, product, general and auto liabilities. The determination of these liabilities and related expenses is dependent on claims experience. For most of these liabilities, claims incurred but not yet reported are estimated by utilizing actuarial valuations based upon historical claims experience. The Company records receivables from third party insurers when recovery has been determined to be probable. The Company maintains captive insurance companies to manage its insurable liabilities.

## Asbestos-Related Contingencies and Insurance Receivables

The Company and certain of its subsidiaries along with numerous other companies are named as defendants in personal injury lawsuits based on alleged exposure to asbestos-containing materials. The Company's estimate of the liability and corresponding insurance recovery for pending and future claims and defense costs is based on the Company's historical claim experience, and estimates of the number and resolution cost of potential future claims that may be filed and is discounted to present value from 2068 (which is the Company's reasonable best estimate of the actuarially determined time period through which asbestos-related claims will be filed against Company affiliates). Asbestos-related defense costs are included in the asbestos liability. The Company's legal strategy for resolving claims also impacts these estimates. The Company considers various trends and developments in evaluating the period of time (the lookback period) over which historical claim and settlement experience is used to estimate and value claims reasonably projected to be made through 2068. Annually, the Company assesses the sufficiency of its estimated liability for pending and future claims and defense costs by evaluating actual experience regarding claims filed, settled and dismissed, and amounts paid in settlements. In addition to claims and settlement experience, the Company considers additional quantitative and qualitative factors such as changes in legislation, the legal environment, and the Company's defense strategy. The Company also evaluates the recoverability of its insurance receivable on an annual basis. The Company evaluates all of these factors and determines whether a change in the estimate of its liability for pending and future claims and defense costs or insurance receivable is warranted.

In connection with the recognition of liabilities for asbestos-related matters, the Company records asbestos-related insurance recoveries that are probable. The Company's estimate of asbestos-related insurance recoveries represents estimated amounts due to the Company for previously paid and settled claims and the probable reimbursements relating to its estimated liability for pending and future claims discounted to present value. In determining the amount of insurance recoverable, the Company considers available insurance, allocation methodologies, solvency and creditworthiness of the insurers. Refer to Note 23, "Commitments and Contingencies," of the notes to consolidated financial statements for a discussion on management's judgments applied in the recognition and measurement of asbestos-related assets and liabilities.

## Income Taxes

Deferred tax liabilities and assets are recognized for the expected future tax consequences of events that have been reflected in the consolidated financial statements. Deferred tax liabilities and assets are determined based on the differences between the book and tax basis of particular assets and liabilities and operating loss carryforwards, using tax rates in effect for the years in which the differences are expected to reverse. A valuation allowance is provided to reduce the carrying or book value of deferred tax assets if, based upon the available evidence, including consideration of tax planning strategies, it is more-likely-than-not that some or all of the deferred tax assets will not be realized. Refer to Note 19, "Income Taxes," of the notes to consolidated financial statements.

## Retrospective Changes

Certain amounts as of September 30, 2020 and 2019 have been revised to conform to the current year's presentation.

## New Accounting Pronouncements

## Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." ASU No. 2016-13 and its related amendments replace the previous expected credit loss methodology with a new incurred loss methodology. The new standard applies to financial instruments, including, but not limited to, trade receivables. Under the new standard, companies must consider historical information, current conditions and a reasonable forecast period when estimating credit losses. The Company adopted ASU No. 2016-13 and the related amendments.



effective October 1, 2020. The adoption did not have a material impact on the Company's consolidated financial statements. Refer to Note 5, "Accounts Receivable, Net," of the notes to the consolidated financial statements for further information.

## Recently Issued Accounting Pronouncements

In October 2021, the FASB issued ASU No. 2021-08, "Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers," which requires contract assets and contract liabilities (e.g. deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, "Revenue from Contracts with Customers." Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree. Historically, such amounts were recognized by the acquirer at fair value in acquisition accounting. The guidance should be applied prospectively to acquisitions occurring on or after the effective date. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years (October 1, 2023 for the Company). Early adoption is permitted, including in interim periods, for any financial statements that have not yet been issued. The impact of the new standard will depend on the magnitude of future acquisitions.

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

## 2. ACQUISITIONS AND DIVESTITURES

## Fiscal Year 2021

## Silent-Aire Acquisition

In May 2021, the Company completed its acquisition of Silent-Aire, a global leader in hyperscale data center cooling and modular critical infrastructure solutions, for approximately $755 million, net of cash acquired, which is comprised of an upfront net cash payment of approximately $661 million, the estimated fair value of contingent earn-out liabilities of approximately $86 million and a working capital adjustment of $8 million. The contingent earn-out liabilities are based upon the achievement of certain defined operating results in each of the three years following the acquisition, with a maximum payout of approximately $250 million. The fair value of contingent earn-out liabilities is reassessed on a quarterly basis and could differ materially from the initial estimates. Subsequent changes in the estimated fair value of contingent earn-out liabilities will be recorded in the consolidated statements of income when incurred. The earn-out payments that are less than or equal to the contingent earn-out liabilities on the acquisition date are reflected as financing cash outflows and amounts paid in excess of the contingent earn-out liabilities on the acquisition date are reflected as operating cash outflows. The Silent-Aire business is reported within the Global Products segment.

In connection with the acquisition, the Company recorded goodwill of $244 million in the Global Products segment. Goodwill is attributable primarily to expected synergies, expanded market opportunities and other benefits that the Company believes will result from combining its operations with the operations of Silent-Aire. The goodwill created in the acquisition is not deductible for tax purposes.



The fair values of the assets acquired and liabilities assumed related to Silent-Aire are as follows (in millions):

<table><tr><td>Cash and cash equivalents</td><td>$ 5</td></tr><tr><td>Accounts receivable</td><td>141</td></tr><tr><td>Inventories</td><td>60</td></tr><tr><td>Other current assets</td><td>4</td></tr><tr><td>Property, plant, and equipment - net</td><td>33</td></tr><tr><td>Goodwill</td><td>244</td></tr><tr><td>Intangible assets - net</td><td>497</td></tr><tr><td>Other noncurrent assets</td><td>84</td></tr><tr><td>Total assets acquired</td><td>$ 1,068</td></tr><tr><td>Accounts payable</td><td>62</td></tr><tr><td>Accrued compensation and benefits</td><td>6</td></tr><tr><td>Deferred revenue</td><td>32</td></tr><tr><td>Other current liabilities</td><td>12</td></tr><tr><td>Other noncurrent liabilities</td><td>196</td></tr><tr><td>Total liabilities acquired</td><td>$ 308</td></tr><tr><td>Net assets acquired</td><td>$ 760</td></tr></table>

The purchase price allocation to identifiable intangible assets acquired related to Silent-Aire are as follows:

<table><tr><td></td><td>Fair Value (in millions)</td><td>Weighted Average Life (in years)</td></tr><tr><td>Customer relationships</td><td>$ 291</td><td>19</td></tr><tr><td>Technology</td><td>116</td><td>13</td></tr><tr><td>Other definite-lived intangibles</td><td>23</td><td>1</td></tr><tr><td>Indefinite-lived trademarks</td><td>67</td><td></td></tr><tr><td>Total identifiable intangible assets</td><td>$ 497</td><td></td></tr></table>

## Other acquisitions and divestitures

During fiscal 2021, the Company completed certain additional acquisitions for a combined purchase price, net of cash acquired, of $81 million, of which $64 million was paid as of September 30, 2021. In connection with these acquisitions and final purchase price allocation adjustments from fiscal 2020 acquisitions, the Company recorded goodwill of $35 million within the Building Solutions EMEA/LA segment and $21 million within the Building Solutions North America segment. The acquisitions were not material to the Company's consolidated financial statements.

During fiscal 2021, the Company completed certain divestitures within the Buildings Solutions Asia Pacific segment. The combined selling price was $27 million, of which $19 million was received as of September 30, 2021. In connection with the divestitures, the Company reduced goodwill by $7 million.

## Fiscal Year 2020

During fiscal 2020, the Company completed certain acquisitions for a combined purchase price, net of cash acquired, of $82 million, of which $77 million was paid as of September 30, 2020. In connection with the acquisitions, the Company recorded goodwill of $35 million within the Building Solutions EMEA/LA segment and $21 million within the Global Products segment. The acquisitions were not material to the Company's consolidated financial statements.

Additionally, in the fourth quarter of fiscal 2020, the Company acquired additional ownership interest in one of its consolidated subsidiaries within the Global Products segment for a purchase price of $132 million, all of which was paid as of September 30, 2020. In connection with this transaction, the Company recorded a compensation charge of $39 million related to the cash settlement of equity awards.



In the fourth quarter of fiscal 2020, the Company completed certain divestitures within the Global Products and Building Solutions Asia Pacific segments. The combined selling price, net of cash divested, was $152 million, of which $135 million was received as of September 30, 2021. In connection with the divestitures, the Company reduced goodwill by $11 million within the Building Solutions Asia Pacific segment. The divestitures were not material to the Company's consolidated financial statements.

## Fiscal Year 2019

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 post-closing working capital and net debt adjustments, within income from discontinued operations, net of tax, in the consolidated statements of income. Refer to Note 3, "Discontinued Operations," of the notes to consolidated financial statements for further disclosure related to the Company's discontinued operations.

During fiscal 2019, the Company completed certain divestitures within the Global Products and Building Solutions EMEA/LA segments. The combined selling price was $18 million, $16 million of which was received as of September 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 fiscal 2019, the Company completed certain acquisitions for a combined purchase price of $32 million, $25 million of which was paid as of September 30, 2019. In connection with the acquisitions, the Company recorded goodwill of $11 million within the Global Products segment, $8 million within the Building Solutions Asia Pacific segment, and $6 million within the Building Solutions EMEA/LA segment. The acquisitions were not material to the Company's consolidated financial statements.

## 3. DISCONTINUED OPERATIONS

## Power Solutions

On April 30, 2019, the Company completed the sale of its Power Solutions business, which met the criteria to be classified as a discontinued operation, 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 post-closing working capital and net debt adjustments, within income from discontinued operations, net of tax, in the consolidated statements of income. In December 2020, the favorable resolution of certain post-closing working capital and net debt adjustments resulted in income from discontinued operations, net of tax, of $124 million due to a reversal of a reserve established in connection with the sale of Power Solutions.

The following table summarizes the results of Power Solutions which are classified as discontinued operations for the fiscal years ended September 30, 2021, 2020 and 2019 (in millions).

<table><tr><td rowspan="2"></td><td colspan="4">Year Ended September 30,</td></tr><tr><td>2021</td><td>2020</td><td>2019</td><td></td></tr><tr><td>Net sales</td><td>$ —</td><td>$ —</td><td>$ 5,001</td><td></td></tr><tr><td>Income from discontinued operations before income taxes</td><td>150</td><td>—</td><td>6,039</td><td></td></tr><tr><td>Provision for income taxes on discontinued operations</td><td>(26)</td><td>—</td><td>(1,441)</td><td></td></tr><tr><td>Income from discontinued operations attributable to noncontrolling interests, net of tax</td><td>—</td><td>—</td><td>(24)</td><td></td></tr><tr><td>Income from discontinued operations</td><td>$ 124</td><td>$ —</td><td>$ 4,574</td><td></td></tr></table>

For the fiscal year ended September 30, 2019, income from discontinued operations before income taxes included a gain on sale of the Power Solutions business, net of transaction and other costs, of $5.2 billion and a favorable impact of $117 million for ceasing depreciation and amortization expense as the business was held for sale.

For the fiscal year ended September 30, 2019, the effective tax rate was more than the Irish statutory rate of 12.5% primarily due to the tax impacts of the divestiture of the Power Solutions business and tax rate differentials.



## Assets and Liabilities Held for Sale

During the third quarter of fiscal 2020, the Company determined that certain assets of the Building Solutions Asia Pacific segment met the criteria to be classified as held for sale. The estimated fair value, less costs to sell, of these assets was $156 million at September 30, 2021 and $147 million at September 30, 2020.

## 4. REVENUE RECOGNITION

## Disaggregated Revenue

The following table presents the Company's revenues disaggregated by segment and by products and systems versus services revenue for the years ended September 30, 2021 and 2020 (in millions):

<table><tr><td rowspan="3"></td><td colspan="8">Year Ended September 30,</td></tr><tr><td colspan="4">2021</td><td colspan="4">2020</td></tr><tr><td>Products &amp; Systems</td><td>Services</td><td>Total</td><td>Products &amp; Systems</td><td>Services</td><td>Total</td><td></td><td></td></tr><tr><td>Building Solutions North America</td><td>$ 5,312</td><td>$ 3,373</td><td>$ 8,685</td><td>$ 5,371</td><td>$ 3,234</td><td>$ 8,605</td><td></td><td></td></tr><tr><td>Building Solutions EMEA/LA</td><td>1,772</td><td>1,955</td><td>3,727</td><td>1,644</td><td>1,796</td><td>3,440</td><td></td><td></td></tr><tr><td>Building Solutions Asia Pacific</td><td>1,516</td><td>1,138</td><td>2,654</td><td>1,369</td><td>1,034</td><td>2,403</td><td></td><td></td></tr><tr><td>Global Products</td><td>8,602</td><td>—</td><td>8,602</td><td>7,869</td><td>—</td><td>7,869</td><td></td><td></td></tr><tr><td>Total</td><td>$ 17,202</td><td>$ 6,466</td><td>$ 23,668</td><td>$ 16,253</td><td>$ 6,064</td><td>$ 22,317</td><td></td><td></td></tr></table>

The following table presents further disaggregation of Global Products segment revenues by product type for the years ended September 30, 2021 and 2020 (in millions):

<table><tr><td rowspan="2"></td><td colspan="2">Year Ended September 30,</td></tr><tr><td>2021</td><td>2020</td></tr><tr><td>HVAC</td><td>$ 6,173</td><td>$ 5,685</td></tr><tr><td>Fire &amp; Security</td><td>2,192</td><td>1,957</td></tr><tr><td>Industrial Refrigeration</td><td>237</td><td>227</td></tr><tr><td>Total</td><td>$ 8,602</td><td>$ 7,869</td></tr></table>

## Contract Balances

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

The following table presents the location and amount of contract balances in the Company's consolidated statements of financial position (in millions):

<table><tr><td rowspan="2"></td><td colspan="3">September 30,</td></tr><tr><td>Location of contract balances</td><td>2021</td><td>2020</td></tr><tr><td>Contract assets - current</td><td>Accounts receivable - net</td><td>$ 1,718</td><td>$ 1,395</td></tr><tr><td>Contract assets - noncurrent</td><td>Other noncurrent assets</td><td>99</td><td>104</td></tr><tr><td>Contract liabilities - current</td><td>Deferred revenue</td><td>(1,637)</td><td>(1,435)</td></tr><tr><td>Contract liabilities - noncurrent</td><td>Other noncurrent liabilities</td><td>(269)</td><td>(245)</td></tr><tr><td>Total</td><td></td><td>$ (89)</td><td>$ (181)</td></tr></table>

For the year ended September 30, 2021, the Company recognized revenue of approximately $1.2 billion that was included in the beginning of period contract liability balance. For the year ended September 30, 2020, the Company recognized revenue of approximately $1.3 billion that was included in the beginning of period contract liability balance.



## Performance Obligations

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

Performance obligations are satisfied as of a point in time or over time. The timing of satisfying the performance obligation is typically indicated by the terms of the contract. As of September 30, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $16.1 billion, of which approximately 60% is expected to be recognized as revenue over the next two years. The remaining performance obligations expected to be recognized in revenue beyond two years primarily relate to large, multi-purpose contracts to construct hospitals, schools and other governmental buildings, which include services to be performed over the building's lifetime, with average initial contract terms of 25 to 35 years. Future contract modifications could affect both the timing and the amount of the remaining performance obligations. The Company excludes the value of remaining performance obligations for contracts with an original expected duration of one year or less.

## Costs to Obtain or Fulfill a Contract

The Company recognizes the incremental costs incurred to obtain or fulfill a contract with a customer as an asset when these costs are recoverable. These costs consist primarily of sales commissions and bid/proposal costs. Costs to obtain or fulfill a contract are capitalized and amortized to revenue over the period of contract performance.

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

<table><tr><td rowspan="2"></td><td colspan="2">September 30,</td></tr><tr><td>2021</td><td>2020</td></tr><tr><td>Other current assets</td><td>$ 149</td><td>$ 119</td></tr><tr><td>Other noncurrent assets</td><td>117</td><td>104</td></tr><tr><td>Total</td><td>$ 266</td><td>$ 223</td></tr></table>

During the year ended September 30, 2021, the Company recognized amortization of $173 million related to costs to obtain or fulfill a contract. There were no impairment losses recognized in the year ended September 30, 2021. During the year ended September 30, 2020, the Company recognized amortization of $162 million related to costs to obtain or fulfill a contract. There were no impairment losses recognized in the year ended September 30, 2020.

## 5. ACCOUNTS RECEIVABLE

Receivables consist of amounts billed and currently due from customers and unbilled costs and accrued profits related to revenues on long-term contracts that have been recognized for accounting purposes but not yet billed to customers. The Company extends credit to customers in the normal course of business and maintains an allowance for expected credit losses resulting from the inability or unwillingness of customers to make required payments. The allowance for expected credit losses is based on historical experience, existing economic conditions, reasonable and supportable forecasts, and any specific customer collection issues the Company has identified. The Company evaluates the reasonableness of the allowance for credit losses on a quarterly basis. The Company enters into various factoring agreements to sell certain accounts receivable to third-party financial institutions. For ease of administration, the Company collects customer payments related to certain factored receivables on behalf of the financial institutions but otherwise maintains no other continuing involvement with respect to the factored receivables. During the year ended September 30, 2021, the Company sold $129 million of accounts receivable under such factoring agreements, and the costs of factoring such receivables were not material. As of September 30, 2021, the outstanding amount of accounts receivable sold under the factoring agreements was $127 million. No receivables were factored under such agreements in fiscal 2020. Sales of accounts receivable are reflected as a reduction of accounts receivable in the



consolidated statements of financial position and the proceeds are included in cash flows from operating activities in the consolidated statements of cash flows.

Accounts receivable, net consisted of the following (in millions):

<table><tr><td rowspan="2"></td><td colspan="3">September 30,</td></tr><tr><td>2021</td><td>2020</td><td></td></tr><tr><td>Accounts receivable</td><td>$     5,723</td><td>$     5,467</td><td></td></tr><tr><td>Less: Allowance for expected credit losses \( ^{(1)} \)</td><td>(110)</td><td></td><td>(173)</td></tr><tr><td>Accounts receivable, net</td><td>$     5,613</td><td>$     5,294</td><td></td></tr></table>

(1) Allowance for doubtful accounts as of September 30, 2020, prior to the adoption of ASU 2016-13.

The changes in the allowance for expected credit losses related to accounts receivable for the year ended September 30, 2021 were as follows (in millions):

<table><tr><td rowspan="2"></td><td colspan="2">Year Ended September 30,</td></tr><tr><td>2021</td><td></td></tr><tr><td>Balance as of September 30, 2020</td><td>$</td><td>173</td></tr><tr><td>Provision for expected credit losses</td><td></td><td>(3)</td></tr><tr><td>Write-offs charged against the allowance for expected credit losses</td><td></td><td>(65)</td></tr><tr><td>Currency translation</td><td></td><td>1</td></tr><tr><td>Other (including impact of adoption of ASU 2016-13)</td><td></td><td>4</td></tr><tr><td>Balance as of September 30, 2021</td><td></td><td>$</td></tr></table>

## 6. INVENTORIES

Inventories consisted of the following (in millions):

<table><tr><td rowspan="2"></td><td colspan="2">September 30,</td></tr><tr><td>2021</td><td>2020</td></tr><tr><td>Raw materials and supplies</td><td>$     769</td><td>$     629</td></tr><tr><td>Work-in-process</td><td>166</td><td>142</td></tr><tr><td>Finished goods</td><td>1,122</td><td>1,002</td></tr><tr><td>Inventories</td><td>$     2,057</td><td>$     1,773</td></tr></table>

## 7. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following (in millions):

<table><tr><td rowspan="2"></td><td colspan="2">September 30,</td></tr><tr><td>2021</td><td>2020</td></tr><tr><td>Buildings and improvements</td><td>$     1,313</td><td>$     1,351</td></tr><tr><td>Subscriber systems</td><td>802</td><td>679</td></tr><tr><td>Machinery and equipment</td><td>3,669</td><td>3,332</td></tr><tr><td>Construction in progress</td><td>500</td><td>327</td></tr><tr><td>Land</td><td>231</td><td>241</td></tr><tr><td>Total property, plant and equipment</td><td>6,515</td><td>5,930</td></tr><tr><td>Less: Accumulated depreciation</td><td>(3,287)</td><td>(2,871)</td></tr><tr><td>Property, plant and equipment - net</td><td>$     3,228</td><td>$     3,059</td></tr></table>



## 8. GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill in each of the Company’s reportable segments for the fiscal years ended September 30, 2021 and 2020 were as follows (in millions):

<table><tr><td></td><td>September 30, 2019</td><td>Business Acquisitions</td><td>Business Divestitures</td><td>Impairments</td><td>Currency Translation and Other</td><td>September 30, 2020</td></tr><tr><td>Building Solutions North America</td><td>$ 9,588</td><td>$ —</td><td>$ —</td><td>(424)</td><td>$ (4)</td><td>$ 9,160</td></tr><tr><td>Building Solutions EMEA/LA</td><td>1,849</td><td>35</td><td>—</td><td>—</td><td>83</td><td>1,967</td></tr><tr><td>Building Solutions Asia Pacific</td><td>1,194</td><td>—</td><td>(11)</td><td>—</td><td>43</td><td>1,226</td></tr><tr><td>Global Products</td><td>5,547</td><td>21</td><td>—</td><td>—</td><td>11</td><td>5,579</td></tr><tr><td>Total</td><td>$ 18,178</td><td>$ 56</td><td>(11)</td><td>(424)</td><td>$ 133</td><td>$ 17,932</td></tr></table>

<table><tr><td></td><td>September 30, 2020</td><td>Business Acquisitions</td><td>Business Divestitures</td><td>Impairments</td><td>Currency Translation and Other</td><td>September 30, 2021</td></tr><tr><td>Building Solutions North America</td><td>$ 9,160</td><td>$ 21</td><td>$ —</td><td>$ —</td><td>$ 34</td><td>$ 9,215</td></tr><tr><td>Building Solutions EMEA/LA</td><td>1,967</td><td>35</td><td>—</td><td>—</td><td>19</td><td>2,021</td></tr><tr><td>Building Solutions Asia Pacific</td><td>1,226</td><td>—</td><td>(7)</td><td>—</td><td>21</td><td>1,240</td></tr><tr><td>Global Products</td><td>5,579</td><td>244</td><td>—</td><td>—</td><td>36</td><td>5,859</td></tr><tr><td>Total</td><td>$ 17,932</td><td>$ 300</td><td>$ (7)</td><td>$ —</td><td>$ 110</td><td>$ 18,335</td></tr></table>

At September 30, 2019, accumulated goodwill impairment charges included $47 million related to the Building Solutions EMEA/LA - Latin America reporting unit.

The Company reviews goodwill for impairment during the fourth fiscal quarter or more frequently if events or changes in circumstances indicate the asset might be impaired. There were no goodwill impairments resulting from the fiscal 2021 and 2020 annual impairment tests. No reporting unit was determined to be at risk of failing the goodwill impairment test as of September 30, 2021.

During fiscal 2020, the Company considered the deterioration in general economic and market conditions due to the COVID-19 pandemic and its impact on each of the Company’s reporting units’ performance. Due to declines in cash flow projections of the North America Retail reporting unit in the third quarter of fiscal 2020 as a result of the COVID-19 pandemic, the Company concluded a triggering event occurred requiring assessment of impairment for its North America Retail reporting unit. As a result, the Company recorded a non-cash impairment charge of $424 million within restructuring and impairment costs in the consolidated statements of income in the third quarter of fiscal 2020, which was determined by comparing the carrying amount of a reporting unit to its fair value in accordance with ASU No. 2017-04, "Intangible - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," which the Company early adopted. The North America Retail reporting unit has a remaining goodwill balance of $235 million at September 30, 2021. The Company used a discounted cash flow model to estimate the fair value of the reporting unit. Other than management's internal projections of future cash flows, the primary assumptions used in the model were the weighted-average cost of capital and long-term growth rates, which are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement." Although the Company's cash flow forecasts are based on assumptions that are considered reasonable by management and consistent with the plans and estimates management is using to operate the underlying business, there was significant judgment in determining the expected future cash flows attributable to the North America Retail reporting unit.



The Company’s other intangible assets, primarily from business acquisitions valued based on independent appraisals, consisted of (in millions):

<table><tr><td rowspan="2"></td><td colspan="4">September 30, 2021</td><td colspan="4">September 30, 2020</td></tr><tr><td>Gross Carrying Amount</td><td>Accumulated Amortization</td><td>Net</td><td>Gross Carrying Amount</td><td>Accumulated Amortization</td><td>Net</td><td></td><td></td></tr><tr><td>Definite-lived intangible assets</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Technology</td><td>$ 1,464</td><td>$ (629)</td><td>$ 835</td><td>$ 1,332</td><td>$ (497)</td><td>$ 835</td><td></td><td></td></tr><tr><td>Customer relationships</td><td>3,097</td><td>(1,191)</td><td>1,906</td><td>2,773</td><td>(969)</td><td>1,804</td><td></td><td></td></tr><tr><td>Miscellaneous</td><td>750</td><td>(354)</td><td>396</td><td>657</td><td>(268)</td><td>389</td><td></td><td></td></tr><tr><td></td><td>5,311</td><td>(2,174)</td><td>3,137</td><td>4,762</td><td>(1,734)</td><td>3,028</td><td></td><td></td></tr><tr><td>Indefinite-lived intangible assets</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Trademarks/tradenames</td><td>2,332</td><td>—</td><td>2,332</td><td>2,248</td><td>—</td><td>2,248</td><td></td><td></td></tr><tr><td>Miscellaneous</td><td>80</td><td>—</td><td>80</td><td>80</td><td>—</td><td>80</td><td></td><td></td></tr><tr><td></td><td>2,412</td><td>—</td><td>2,412</td><td>2,328</td><td>—</td><td>2,328</td><td></td><td></td></tr><tr><td>Total intangible assets</td><td>$ 7,723</td><td>$ (2,174)</td><td>$ 5,549</td><td>$ 7,090</td><td>$ (1,734)</td><td>$ 5,356</td><td></td><td></td></tr></table>

The Company reviews indefinite-lived intangible assets for impairment during the fourth fiscal quarter or more frequently if events or changes in circumstances indicate the asset might be impaired. Indefinite-lived intangible assets primarily consist of trademarks and tradenames and are tested for impairment using a relief-from-royalty method.

There were no indefinite-lived intangible asset impairments resulting from fiscal 2021 and 2020 annual impairment tests. For fiscal 2021, the estimated fair values of all indefinite-lived intangibles substantially exceeded their carrying values, with the exception of the indefinite-lived trademarks related to the Company's Asia Pacific subscriber businesses. The estimated fair value for the Asia Pacific indefinite-lived trademark was consistent with its carrying value of $38 million.

During the second and third quarters of fiscal 2020, the Company determined that it had a triggering event at each reporting period end 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. No further impairment was required to be recorded in the third quarter of fiscal 2020 as a result of the completed impairment assessment.

Amortization of other intangible assets included within continuing operations for the fiscal years ended September 30, 2021, 2020 and 2019 was $435 million, $386 million and $377 million, respectively. Excluding the impact of any future acquisitions, the Company anticipates amortization for fiscal 2022, 2023, 2024, 2025 and 2026 will be approximately $457 million, $439 million, $424 million, $403 million and $335 million, respectively.

## 9. LEASES

The Company adopted ASU 2016-02, "Leases (Topic 842)" and the related amendments using a modified-retrospective approach as of October 1, 2019.

Most leases contain options to renew or terminate the lease. Right-of-use assets and lease liabilities reflect only the options which the Company is reasonably certain to exercise. Lease expense is recognized on a straight-line basis over the lease term.

The Company has certain real estate leases that contain variable lease payments which are based on changes in the Consumer Price Index (CPI). Additionally, the Company’s leases generally require it to pay for fuel, maintenance, repair, insurance and taxes. These payments are not included in the right-of-use asset or lease liability and are expensed as incurred.



The following table presents the Company’s lease costs for the fiscal years ended September 30, 2021 and 2020 (in millions):

<table><tr><td rowspan="2"></td><td colspan="3">Year Ended September 30,</td></tr><tr><td>2021</td><td>2020</td><td></td></tr><tr><td>Operating lease cost</td><td>$     384</td><td>$     399</td><td></td></tr><tr><td>Variable lease cost</td><td>130</td><td>145</td><td></td></tr><tr><td>Total lease costs</td><td>$     514</td><td>$     544</td><td></td></tr></table>

Total rental expense for continuing operations for the fiscal year ended September 30, 2019 was $452 million.

The following table presents supplemental consolidated statement of financial position information as of September 30, 2021 and 2020 (in millions):

<table><tr><td rowspan="2"></td><td colspan="2">September 30,</td></tr><tr><td>Location of lease balances</td><td>2021</td></tr><tr><td>Operating lease right-of-use assets</td><td>Other noncurrent assets</td><td>$ 1,376</td></tr><tr><td>Operating lease liabilities - current</td><td>Other current liabilities</td><td>319</td></tr><tr><td>Operating lease liabilities - noncurrent</td><td>Other noncurrent liabilities</td><td>1,055</td></tr><tr><td>Weighted-average remaining lease term</td><td></td><td>7 years</td></tr><tr><td>Weighted-average discount rate</td><td></td><td>1.8 %</td></tr></table>

The following table presents supplemental cash flow information related to operating leases for the fiscal years ended September 30, 2021 and 2020 (in millions):

<table><tr><td rowspan="2"></td><td colspan="2">Year Ended September 30,</td></tr><tr><td>2021</td><td>2020</td></tr><tr><td>Cash paid for amounts included in the measurement of lease liability:</td><td></td><td></td></tr><tr><td>Operating cash outflows from operating leases</td><td>$     398</td><td>$     397</td></tr><tr><td>Noncash operating lease activity:</td><td></td><td></td></tr><tr><td>Right-of-use assets obtained in exchange for operating lease liabilities</td><td>515</td><td>467</td></tr></table>

The following table presents maturities of operating lease liabilities as of September 30, 2021 (in millions):

<table><tr><td rowspan="2"></td><td colspan="2">September 30, 2021</td></tr><tr><td>$</td><td>337</td></tr><tr><td>2022</td><td></td><td>275</td></tr><tr><td>2023</td><td></td><td>226</td></tr><tr><td>2024</td><td></td><td>164</td></tr><tr><td>2025</td><td></td><td>115</td></tr><tr><td>2026</td><td></td><td>353</td></tr><tr><td>After 2026</td><td></td><td>1,470</td></tr><tr><td>Total operating lease payments</td><td></td><td>(96)</td></tr><tr><td>Less: Interest</td><td></td><td></td></tr><tr><td>Present value of lease payments</td><td></td><td>$     1,374</td></tr></table>



## 10. DEBT AND FINANCING ARRANGEMENTS

Short-term debt consisted of the following (in millions):

<table><tr><td rowspan="2"></td><td colspan="3">September 30,</td></tr><tr><td>2021</td><td>2020</td><td></td></tr><tr><td>Bank borrowings</td><td>$     8</td><td>$     31</td><td></td></tr><tr><td>Weighted average interest rate on short-term debt outstanding</td><td>0.2 %</td><td>3.4 %</td><td></td></tr></table>

The Company had no commercial paper outstanding as of September 30, 2021 and 2020.

As of September 30, 2021, the Company has a syndicated $2.5 billion committed revolving credit facility, which is scheduled to expire in December 2024, and a syndicated $500 million committed revolving credit facility, which is scheduled to expire in December 2021. As of September 30, 2021, there were no draws on the facilities.



Long-term debt consisted of the following (in millions; due dates by fiscal year):

<table><tr><td rowspan="2"></td><td colspan="2">September 30,</td></tr><tr><td>2021</td><td>2020</td></tr><tr><td>Unsecured notes</td><td></td><td></td></tr><tr><td>JCI plc - 4.25% due in 2021 ($204 million par value)</td><td>$</td><td>204</td></tr><tr><td>JCI Inc. - 4.25% due in 2021 ($53 million par value)</td><td>—</td><td>53</td></tr><tr><td>JCI plc - 3.75% due in 2022 ($171 million par value)</td><td>—</td><td>171</td></tr><tr><td>JCI Inc. - 3.75% due in 2022 ($22 million par value)</td><td>—</td><td>22</td></tr><tr><td>JCI plc - 4.625% due in 2023 ($25 million par value)</td><td>25</td><td>26</td></tr><tr><td>Tyco International Finance S.A. ("TIFSA") - 4.625% due in 2023 ($7 million par value)</td><td>7</td><td>7</td></tr><tr><td>JCI plc - 1.00% due in 2023 (€846 million par value)</td><td>980</td><td>1,039</td></tr><tr><td>JCI plc - 3.625% due in 2024 ($453 million par value)</td><td>453</td><td>453</td></tr><tr><td>JCI Inc. - 3.625% due in 2024 ($31 million par value)</td><td>31</td><td>31</td></tr><tr><td>JCI plc - 1.375% due in 2025 (€423 million par value)</td><td>496</td><td>503</td></tr><tr><td>TIFSA - 1.375% due in 2025 (€54 million par value)</td><td>63</td><td>64</td></tr><tr><td>JCI plc - 3.90% due in 2026 ($487 million par value)</td><td>510</td><td>516</td></tr><tr><td>TIFSA - 3.90% due in 2026 ($51 million par value)</td><td>51</td><td>51</td></tr><tr><td>JCI plc and Tyco Fire &amp; Security Finance S.C.A. ("TFSCA") - 0.375% due in 2027 (€500 million par value)</td><td>577</td><td>583</td></tr><tr><td>JCI plc and TFSCA - 1.75% due in 2030 ($625 million par value)</td><td>623</td><td>623</td></tr><tr><td>JCI plc and TFSCA - 2.00% due in 2031 ($500 million par value)</td><td>496</td><td>—</td></tr><tr><td>JCI plc and TFSCA - 1.00% due in 2032 (€500 million par value)</td><td>578</td><td>584</td></tr><tr><td>JCI plc - 6.00% due in 2036 ($342 million par value)</td><td>339</td><td>339</td></tr><tr><td>JCI Inc. - 6.00% due in 2036 ($8 million par value)</td><td>8</td><td>8</td></tr><tr><td>JCI plc - 5.70% due in 2041 ($190 million par value)</td><td>189</td><td>189</td></tr><tr><td>JCI Inc. - 5.70% due in 2041 ($30 million par value)</td><td>30</td><td>30</td></tr><tr><td>JCI plc - 5.25% due in 2042 ($155 million par value)</td><td>155</td><td>155</td></tr><tr><td>JCI Inc. - 5.25% due in 2042 ($6 million par value)</td><td>6</td><td>6</td></tr><tr><td>JCI plc - 4.625% due in 2044 ($444 million par value)</td><td>441</td><td>441</td></tr><tr><td>JCI Inc. - 4.625% due in 2044 ($6 million par value)</td><td>6</td><td>6</td></tr><tr><td>JCI plc - 5.125% due in 2045 ($477 million par value)</td><td>560</td><td>564</td></tr><tr><td>TIFSA - 5.125% due in 2045 ($23 million par value)</td><td>22</td><td>22</td></tr><tr><td>JCI plc - 6.95% due in 2046 ($32 million par value)</td><td>32</td><td>32</td></tr><tr><td>JCI Inc. - 6.95% due in 2046 ($4 million par value)</td><td>4</td><td>4</td></tr><tr><td>JCI plc - 4.50% due in 2047 ($500 million par value)</td><td>496</td><td>496</td></tr><tr><td>JCI plc - 4.95% due in 2064 ($341 million par value)</td><td>340</td><td>340</td></tr><tr><td>JCI Inc. - 4.95% due in 2064 ($15 million par value)</td><td>15</td><td>15</td></tr><tr><td>JCI plc - Term Loan - ¥25 billion; LIBOR JPY plus 0.40% due in 2022</td><td>223</td><td>237</td></tr><tr><td>Other</td><td>8</td><td>8</td></tr><tr><td>Gross long-term debt</td><td>7,764</td><td>7,822</td></tr><tr><td>Less: current portion</td><td>226</td><td>262</td></tr><tr><td>Less: debt issuance costs</td><td>32</td><td>34</td></tr><tr><td>Net long-term debt</td><td>$ 7,506</td><td>$ 7,526</td></tr></table>



The following table presents maturities of long-term debt as of September 30, 2021 (in millions):

<table><tr><td>2022</td><td>$ 226</td></tr><tr><td>2023</td><td>1,012</td></tr><tr><td>2024</td><td>484</td></tr><tr><td>2025</td><td>559</td></tr><tr><td>2026</td><td>561</td></tr><tr><td>After 2026</td><td>4,922</td></tr><tr><td>Total</td><td>$ 7,764</td></tr></table>

The Company’s long-term debt includes various financial covenants, none of which are expected to restrict future operations.

Total interest paid on both short and long-term debt for continuing operations for the fiscal years ended September 30, 2021, 2020 and 2019 was $242 million, $247 million and $369 million, respectively.

## Financing Arrangements

In September 2021, the Company and its wholly owned subsidiary, TFSCA issued $500 million of sustainability-linked bonds with an initial interest rate of 2.0%, which are due in 2031. Beginning in March 2026, the interest rate payable on the note will be increased by an additional 12.5 basis points per annum if the Scope 1 and Scope 2 emissions sustainability performance target is not met and an additional 12.5 basis points per annum if the Scope 3 emissions sustainability performance target is not met. The proceeds were used for general corporate purposes, including the repayment of near-term indebtedness.

In September 2021, the Company repaid $193 million of 3.75% notes which were due in December 2021, and a €200 million bank term loan which was issued in March 2021 and due in March 2022.

The Company repaid $257 million in principal amount, plus accrued interest, of 4.25% fixed rate notes when they expired in March 2021.

Additionally, during fiscal year 2021, the Company repaid €43 million in principal amount, plus accrued interest, of 1.0% fixed rate notes which were due in September 2023.

## Net Financing Charges

The Company's net financing charges line item in the consolidated statements of income for the years ended September 30, 2021, 2020 and 2019 contained the following components (in millions):

<table><tr><td rowspan="2"></td><td colspan="4">Year Ended September 30,</td></tr><tr><td>2021</td><td colspan="2">2020</td><td>2019</td></tr><tr><td>Interest expense, net of capitalized interest costs</td><td>$     219</td><td>$     240</td><td>$     335</td><td></td></tr><tr><td>Banking and other fees and amortization of bond costs, premiums and discounts</td><td>25</td><td>26</td><td>28</td><td></td></tr><tr><td>Loss on debt extinguishment</td><td>—</td><td>—</td><td>60</td><td></td></tr><tr><td>Interest income</td><td>(9)</td><td>(23)</td><td>(61)</td><td></td></tr><tr><td>Net foreign exchange results for financing activities</td><td>(29)</td><td>(12)</td><td>(12)</td><td></td></tr><tr><td>Net financing charges</td><td>$     206</td><td>$     231</td><td>$     350</td><td></td></tr></table>

## 11. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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



## Cash Flow Hedges

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

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

As cash flow hedges under ASC 815, "Derivatives and Hedging," the hedge gains or losses due to changes in fair value are initially recorded as a component of AOCI and are subsequently reclassified into earnings when the hedged transactions occur and affect earnings. These contracts were highly effective in hedging the variability in future cash flows attributable to changes in currency exchange rates during the fiscal years ended September 30, 2021 and 2020.

The Company had the following outstanding contracts to hedge forecasted commodity purchases (in metric tons):

<table><tr><td rowspan="2">Commodity</td><td colspan="2">Volume Outstanding as of</td></tr><tr><td>September 30, 2021</td><td>September 30, 2020</td></tr><tr><td>Copper</td><td>2,656</td><td>2,497</td></tr><tr><td>Aluminum</td><td>5,159</td><td>3,036</td></tr></table>

In April 2021, the Company entered into two forward-starting interest rate swaps with a combined notional amount of $500 million, in conjunction with its anticipated $500 million note issuance. In September 2021, the Company terminated the swaps as the debt was issued. The fair value of each interest rate swap, which is the difference between the swap's reference rate and the fixed rate of the note issuance, will be amortized to interest expense over the life of the respective note issuance.

## Net Investment Hedges

The Company enters into foreign currency denominated debt obligations to selectively hedge portions of its net investment in non-U.S. subsidiaries. The currency effects of the debt obligations are reflected in the AOCI account within shareholders' equity attributable to Johnson Controls ordinary shareholders where they offset currency gains and losses recorded on the Company's net investments globally. At September 30, 2021, the Company had 2.3 billion of euro-denominated bonds designated as net investment hedges in Europe and 25 billion of yen-denominated debt designated as a net investment hedge in Japan. At September 30, 2020, the Company had 2.4 billion of euro-denominated bonds designated as net investment hedges in Europe and 25 billion of yen-denominated debt designated as a net investment hedge in Japan.

## Derivatives Not Designated as Hedging Instruments

The Company selectively uses equity swaps to reduce market risk associated with certain of its stock-based compensation plans, such as its deferred compensation plans. These equity compensation liabilities increase as the Company’s stock price increases and decrease as the Company’s stock price decreases. In contrast, the value of the swap agreement moves in the opposite direction of these liabilities, allowing the Company to fix a portion of the liabilities at a stated amount. The Company hedged approximately 0.3 million of its ordinary shares, which have a cost basis of $23 million, as of September 30, 2021 and approximately 1.4 million ordinary shares, which had a cost basis of $60 million, as of September 30, 2020.

The Company also holds certain foreign currency forward contracts for which hedge accounting treatment was not elected. The change in fair value of foreign currency exchange derivatives not designated as hedging instruments under ASC 815 are recorded in the consolidated statements of income.



The following table presents the location and fair values of derivative instruments and hedging activities included in the Company’s consolidated statements of financial position (in millions):

<table><tr><td rowspan="2"></td><td colspan="3">Derivatives and Hedging Activities Designated as Hedging Instruments under ASC 815</td><td colspan="3">Derivatives and Hedging Activities Not Designated as Hedging Instruments under ASC 815</td></tr><tr><td>September 30, 2021</td><td colspan="2">September 30, 2020</td><td>September 30, 2021</td><td colspan="2">September 30, 20</td></tr><tr><td>Other current assets</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Foreign currency exchange derivatives</td><td>$ 15</td><td>$ 10</td><td>$ 17</td><td>$ 17</td><td></td><td></td></tr><tr><td>Commodity derivatives</td><td>2</td><td>2</td><td>—</td><td>—</td><td></td><td></td></tr><tr><td>Other noncurrent assets</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Equity swap</td><td>—</td><td>—</td><td>23</td><td>58</td><td></td><td></td></tr><tr><td>Total assets</td><td>$ 17</td><td>$ 12</td><td>$ 40</td><td>$ 75</td><td></td><td></td></tr><tr><td>Other current liabilities</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Foreign currency exchange derivatives</td><td>$ 11</td><td>$ 10</td><td>$ 6</td><td>$ —</td><td></td><td></td></tr><tr><td>Commodity derivatives</td><td>1</td><td>—</td><td>—</td><td>—</td><td></td><td></td></tr><tr><td>Long-term debt</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Foreign currency denominated debt</td><td>2,918</td><td>3,010</td><td>—</td><td>—</td><td></td><td></td></tr><tr><td>Total liabilities</td><td>$ 2,930</td><td>$ 3,020</td><td>$ 6</td><td>$ —</td><td></td><td></td></tr></table>

## Counterparty Credit Risk

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

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

The gross and net amounts of derivative assets and liabilities were as follows (in millions):

<table><tr><td rowspan="2"></td><td colspan="3">Fair Value of Assets</td><td colspan="3">Fair Value of Liabilities</td></tr><tr><td>September 30, 2021</td><td colspan="2">September 30, 2020</td><td>September 30, 2021</td><td colspan="2">September 30, 20</td></tr><tr><td>Gross amount recognized</td><td>$     57</td><td>$     87</td><td>$     2,936</td><td>$     3,020</td><td></td><td></td></tr><tr><td>Gross amount eligible for offsetting</td><td>(16)</td><td>(10)</td><td></td><td>(16)</td><td></td><td>(10)</td></tr><tr><td>Net amount</td><td>$     41</td><td>$     77</td><td>$     2,920</td><td>$     3,010</td><td></td><td></td></tr></table>



## Derivatives Impact on the Statements of Income and Statements of Comprehensive Income

The following table presents the pre-tax gains (losses) recorded in other comprehensive income (loss) related to cash flow hedges for the fiscal years ended September 30, 2021, 2020 and 2019 (in millions):

<table><tr><td rowspan="2">Derivatives in ASC 815 Cash Flow Hedging Relationships</td><td colspan="4">Year Ended September 30,</td></tr><tr><td>2021</td><td>2020</td><td>2019</td><td></td></tr><tr><td>Foreign currency exchange derivatives</td><td>$     15</td><td>$     1</td><td>$     2</td><td></td></tr><tr><td>Commodity derivatives</td><td>4</td><td>6</td><td>(4)</td><td></td></tr><tr><td>Interest rate swap</td><td>(21)</td><td>—</td><td>—</td><td></td></tr><tr><td>Total</td><td>(2)</td><td>$     7</td><td>$      (2)</td><td></td></tr></table>

The following table presents the location and amount of the pre-tax gains (losses) on cash flow hedges reclassified from AOCI into the Company’s consolidated statements of income for the fiscal years ended September 30, 2021, 2020 and 2019 (in millions):

<table><tr><td rowspan="2">Derivatives in ASC 815 Cash Flow Hedging Relationships</td><td rowspan="2">Location of Gain (Loss) Reclassified from AOCI into Income</td><td colspan="4">Year Ended September 30,</td></tr><tr><td>2021</td><td>2020</td><td>2019</td><td></td></tr><tr><td>Foreign currency exchange derivatives</td><td>Cost of sales</td><td>$ 11</td><td>$ (5)</td><td>$ 4</td><td></td></tr><tr><td>Commodity derivatives</td><td>Cost of sales</td><td>3</td><td>2</td><td>(4)</td><td></td></tr><tr><td>Commodity derivatives</td><td>Income from discontinued operations</td><td>—</td><td>—</td><td>(10)</td><td></td></tr><tr><td>Total</td><td></td><td>$ 14</td><td>$ (3)</td><td>$ (10)</td><td></td></tr></table>

The following table presents the location and amount of pre-tax gains (losses) on derivatives not designated as hedging instruments recognized in the Company’s consolidated statements of income for the fiscal years ended September 30, 2021, 2020 and 2019 (in millions):

<table><tr><td rowspan="2">Derivatives Not Designated as Hedging Instruments under ASC 815</td><td rowspan="2">Location of Gain (Loss) Recognized in Income on Derivative</td><td colspan="4">Year Ended September 30,</td></tr><tr><td>2021</td><td>2020</td><td>2019</td><td></td></tr><tr><td>Foreign currency exchange derivatives</td><td>Cost of sales</td><td>$ (6)</td><td>$ (1)</td><td>$ (8)</td><td></td></tr><tr><td>Foreign currency exchange derivatives</td><td>Net financing charges</td><td>174</td><td>87</td><td>(60)</td><td></td></tr><tr><td>Foreign currency exchange derivatives</td><td>Selling, general and administrative</td><td>(2)</td><td>—</td><td>—</td><td></td></tr><tr><td>Foreign currency exchange derivatives</td><td>Income tax provision</td><td>(1)</td><td>—</td><td>(1)</td><td></td></tr><tr><td>Foreign currency exchange derivatives</td><td>Income from discontinued operations</td><td>—</td><td>—</td><td>52</td><td></td></tr><tr><td>Equity swap</td><td>Selling, general and administrative</td><td>28</td><td>(4)</td><td>14</td><td></td></tr><tr><td>Total</td><td></td><td>$ 193</td><td>$ 82</td><td>$ (3)</td><td></td></tr></table>

The pre-tax gains (losses) recorded in foreign currency translation adjustment ("CTA") within other comprehensive income (loss) related to net investment hedges were $42 million, $(12) million and $145 million for the years ended September 30, 2021, 2020 and 2019, respectively. For the years ended September 30, 2021, 2020 and 2019, no gains or losses were reclassified from CTA into income for the Company's outstanding net investment hedges.

## 12. FAIR VALUE MEASUREMENTS

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

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

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

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



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

## Recurring Fair Value Measurements

The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value as of September 30, 2021 and 2020 (in millions):

<table><tr><td rowspan="2"></td><td colspan="5">Fair Value Measurements Using:</td></tr><tr><td>Total as of September 30, 2021</td><td>Quoted Prices in Active Markets (Level 1)</td><td>Significant Other Observable Inputs (Level 2)</td><td>Significant Unobservable Inputs (Level 3)</td><td></td></tr><tr><td>Other current assets</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Foreign currency exchange derivatives</td><td>$ 32</td><td>$ —</td><td>$ 32</td><td>$ —</td><td></td></tr><tr><td>Commodity derivatives</td><td>2</td><td>—</td><td>2</td><td>—</td><td></td></tr><tr><td>Other noncurrent assets</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Deferred compensation plan assets</td><td>63</td><td>63</td><td>—</td><td>—</td><td></td></tr><tr><td>Exchange traded funds (fixed income) \( ^{1} \)</td><td>146</td><td>146</td><td>—</td><td>—</td><td></td></tr><tr><td>Exchange traded funds (equity) \( ^{1} \)</td><td>168</td><td>168</td><td>—</td><td>—</td><td></td></tr><tr><td>Equity swap</td><td>23</td><td>—</td><td>23</td><td>—</td><td></td></tr><tr><td>Total assets</td><td>$ 434</td><td>$ 377</td><td>$ 57</td><td>$ —</td><td></td></tr><tr><td>Other current liabilities</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Foreign currency exchange derivatives</td><td>$ 17</td><td>$ —</td><td>$ 17</td><td>$ —</td><td></td></tr><tr><td>Commodity derivatives</td><td>1</td><td>—</td><td>1</td><td>—</td><td></td></tr><tr><td>Contingent earn-out liabilities</td><td>32</td><td>—</td><td>—</td><td>32</td><td></td></tr><tr><td>Other noncurrent liabilities</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Contingent earn-out liabilities</td><td>50</td><td>—</td><td>—</td><td>50</td><td></td></tr><tr><td>Total liabilities</td><td>$ 100</td><td>$ —</td><td>$ 18</td><td>$ 82</td><td></td></tr></table>



Fair Value Measurements Using:

<table><tr><td></td><td>Total as of September 30, 2020</td><td>Quoted Prices in Active Markets (Level 1)</td><td>Significant Other Observable Inputs (Level 2)</td><td>Significant Unobservable Inputs (Level 3)</td></tr><tr><td>Other current assets</td><td></td><td></td><td></td><td></td></tr><tr><td>Foreign currency exchange derivatives</td><td>$ 27</td><td>$ —</td><td>$ 27</td><td>—</td></tr><tr><td>Exchange traded funds (fixed income) \( ^{1} \)</td><td>19</td><td>19</td><td>—</td><td>—</td></tr><tr><td>Commodity derivatives</td><td>2</td><td>—</td><td>2</td><td>—</td></tr><tr><td>Other noncurrent assets</td><td></td><td></td><td></td><td></td></tr><tr><td>Deferred compensation plan assets</td><td>63</td><td>63</td><td>—</td><td>—</td></tr><tr><td>Exchange traded funds (fixed income) \( ^{1} \)</td><td>143</td><td>143</td><td>—</td><td>—</td></tr><tr><td>Exchange traded funds (equity) \( ^{1} \)</td><td>129</td><td>129</td><td>—</td><td>—</td></tr><tr><td>Equity swap</td><td>58</td><td>—</td><td>58</td><td>—</td></tr><tr><td>Total assets</td><td>$ 441</td><td>$ 354</td><td>$ 87</td><td>$ —</td></tr><tr><td>Other current liabilities</td><td></td><td></td><td></td><td></td></tr><tr><td>Foreign currency exchange derivatives</td><td>$ 10</td><td>$ —</td><td>$ 10</td><td>$ —</td></tr><tr><td>Total liabilities</td><td>$ 10</td><td>$ —</td><td>$ 10</td><td>$ —</td></tr></table>

 \( ^{1} \) Classified as restricted investments for payment of asbestos liabilities. See Note 23, "Commitments and Contingencies" of the notes to consolidated financial statements for further details.

## Valuation Methods

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

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

Equity swaps: The equity swaps are valued under a market approach as the fair value of the swaps is equal to the Company’s stock price at the reporting period date.

Deferred compensation plan assets: Assets held in the deferred compensation plans will be used to pay benefits under certain of the Company's non-qualified deferred compensation plans. The investments primarily consist of mutual funds which are publicly traded on stock exchanges and are valued using a market approach based on the quoted market prices. Unrealized gains (losses) on the deferred compensation plan assets are recognized in the consolidated statements of income where they offset unrealized gains and losses on the related deferred compensation plan liability.

Investments in exchange traded funds: Investments in exchange traded funds are valued using a market approach based on the quoted market prices, where available, or broker/dealer quotes of identical or comparable instruments. Refer to Note 23, "Commitments and Contingencies," of the notes to consolidated financial statements for further information.

Contingent earn-out liabilities: The contingent earn-out liabilities related to the Silent-Aire acquisition were established using a Monte Carlo simulation based on the forecasted operating results and the earn-out formula specified in the purchase agreement.



The following table presents the portion of unrealized gains (losses) recognized in the consolidated statements of income for the years ended September 30, 2021 and 2020 that relate to equity securities still held at September 30, 2021 and 2020 (in millions):

<table><tr><td rowspan="2"></td><td colspan="3">Year Ended September 30,</td></tr><tr><td>2021</td><td>2020</td><td></td></tr><tr><td>Deferred compensation plan assets</td><td>$     7</td><td>$     1</td><td></td></tr><tr><td>Investments in exchange traded funds</td><td>37</td><td>21</td><td></td></tr></table>

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

The fair values of cash and cash equivalents, accounts receivable, short-term debt and accounts payable approximate their carrying values. At September 30, 2021, the fair value of long-term debt was $8.5 billion, including public debt of $8.3 billion and other long-term debt of $0.2 billion. At September 30, 2020, the fair value of long-term debt was $8.6 billion, including public debt of $8.4 billion and other long-term debt of $0.2 billion. The fair value of public debt was determined primarily using market quotes which are classified as Level 1 inputs within the ASC 820 fair value hierarchy. The fair value of other long-term debt was determined using quoted market prices for similar instruments and are classified as Level 2 inputs within the ASC 820 fair value hierarchy.

## 13. STOCK-BASED COMPENSATION

On March 10, 2021, the shareholders of the Company approved the Johnson Controls International plc 2021 Equity and Incentive Plan, which terminated the 2012 Share and Incentive Plan, as amended in September 2016 (collectively, the "Plans"). The Plans authorize stock options, stock appreciation rights, restricted (non-vested) stock/units, performance shares, performance units and other stock-based awards. The Compensation and Talent Development Committee of the Company's Board of Directors determines the types of awards to be granted to individual participants and the terms and conditions of the awards. As of September 30, 2021, there were 55 million shares of the Company's common stock reserved and 54 million shares available for issuance under the 2021 Equity and Incentive Plan.

The Company has four share-based compensation awards, which are described below. For the fiscal years ended September 30, 2021, 2020 and 2019, compensation cost charged against income for continuing operations, excluding the offsetting impact of outstanding equity swaps, for those plans was approximately $97 million, $66 million and $103 million, respectively, all of which was recorded in selling, general and administrative expenses.

The total income tax benefit recognized for continuing operations in the consolidated statements of income for share-based compensation arrangements was approximately $24 million, $16 million and $26 million for the fiscal years ended September 30, 2021, 2020 and 2019, respectively. The tax impact from the exercise and vesting of equity settled awards was $12 million of tax benefit, less than $1 million of tax benefit and $6 million of tax expense for the fiscal years ended September 30, 2021, 2020 and 2019, respectively. The Company does not settle stock options granted under share-based payment arrangements to cash.

## Stock Options

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

The fair value of each option is estimated on the date of grant using a Black-Scholes option valuation model that uses the assumptions noted in the following table. The expected life of options represents the period of time that options granted are expected to be outstanding, assessed separately for executives and non-executives. The risk-free interest rate for periods during the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Expected volatility is based on the historical volatility of the Company's stock since October 2016 blended with the historical volatility of certain peer companies' stock prior to October 2016 over the most recent period corresponding to the expected life as of the grant date. The expected dividend yield is based on the expected annual dividend as a percentage of the market value of the Company's ordinary shares as of the grant date. The Company uses historical data to estimate option exercises and employee terminations within the valuation model.



<table><tr><td rowspan="2"></td><td colspan="3">Year Ended September 30,</td></tr><tr><td>2021</td><td>2020</td><td>2019</td></tr><tr><td>Expected life of option (years)</td><td>6.5</td><td>6.5</td><td>6.4</td></tr><tr><td>Risk-free interest rate</td><td>0.60%</td><td>1.67%</td><td>2.77%</td></tr><tr><td>Expected volatility of the Company’s stock</td><td>27.60%</td><td>22.40%</td><td>21.80%</td></tr><tr><td>Expected dividend yield on the Company’s stock</td><td>2.28%</td><td>2.49%</td><td>3.29%</td></tr></table>

A summary of stock option activity at September 30, 2021, and changes for the year then ended, is presented below:

<table><tr><td></td><td>Weighted Average Option Price</td><td>Shares Subject to Option</td><td>Weighted Average Remaining Contractual Life (years)</td><td>Aggregate Intrinsic Value (in millions)</td></tr><tr><td>Outstanding, September 30, 2020</td><td>$ 37.14</td><td>10,114,905</td><td></td><td></td></tr><tr><td>Granted</td><td>45.69</td><td>932,678</td><td></td><td></td></tr><tr><td>Exercised</td><td>36.70</td><td>(4,840,511)</td><td></td><td></td></tr><tr><td>Forfeited or expired</td><td>37.16</td><td>(256,061)</td><td></td><td></td></tr><tr><td>Outstanding, September 30, 2021</td><td>$ 38.84</td><td>5,951,011</td><td>5.9</td><td>$ 174</td></tr><tr><td>Exercisable, September 30, 2021</td><td>$ 37.01</td><td>3,536,889</td><td>4.3</td><td>$ 110</td></tr></table>

The weighted-average grant-date fair value of options granted during the fiscal years ended September 30, 2021, 2020 and 2019 was $9.36, $7.29 and $5.56, respectively.

The total intrinsic value of options exercised during the fiscal years ended September 30, 2021, 2020 and 2019 was approximately $94 million, $30 million and $73 million, respectively.

In conjunction with the exercise of stock options, the Company received cash payments for the fiscal years ended September 30, 2021, 2020 and 2019 of approximately $178 million, $75 million and $171 million, respectively.

At September 30, 2021, the Company had approximately $10 million of total unrecognized compensation cost related to non-vested stock options granted for continuing operations which is expected to be recognized over a weighted-average period of 1.6 years.

## Stock Appreciation Rights ("SARs")

SARs vest under the same terms and conditions as stock option awards; however, they are settled in cash for the difference between the market price on the date of exercise and the exercise price. As a result, SARs are recorded in the Company’s consolidated statements of financial position as a liability until the date of exercise.

The fair value of each SAR award is estimated using a similar method described for stock options. The fair value of each SAR award is recalculated at the end of each reporting period and the liability and expense are adjusted based on the new fair value.

The assumptions used to determine the fair value of the SAR awards at September 30, 2021 were as follows:

Expected life of SAR (years) 0.01 - 4.29

Risk-free interest rate 0.07% - 0.88%

Expected volatility of the Company’s stock 27.60%

Expected dividend yield on the Company’s stock 2.28%



A summary of SAR activity at September 30, 2021, and changes for the year then ended, is presented below:

<table><tr><td></td><td>Weighted Average SAR Price</td><td>Shares Subject to SAR</td><td>Weighted Average Remaining Contractual Life (years)</td><td>Aggregate Intrinsic Value (in millions)</td></tr><tr><td>Outstanding, September 30, 2020</td><td>$ 30.14</td><td>212,637</td><td></td><td></td></tr><tr><td>Granted</td><td>45.69</td><td>35,254</td><td></td><td></td></tr><tr><td>Exercised</td><td>28.16</td><td>(88,600)</td><td></td><td></td></tr><tr><td>Forfeited or expired</td><td>32.45</td><td>(18,708)</td><td></td><td></td></tr><tr><td>Outstanding, September 30, 2021</td><td>$ 34.99</td><td>140,583</td><td>3.1</td><td>$ 5</td></tr><tr><td>Exercisable, September 30, 2021</td><td>$ 31.40</td><td>105,329</td><td>1.0</td><td>$ 4</td></tr></table>

In conjunction with the exercise of SARs granted, the Company made payments of $3 million, $2 million and $3 million during the fiscal years ended September 30, 2021, 2020 and 2019, respectively.

## Restricted (Non-vested) Stock / Units

Restricted stock or restricted stock units are typically share settled unless the employee is a non-U.S. employee, in which case the awards are settled in cash. Restricted awards typically vest over a period of three years from the grant date. The Plans allow for different vesting terms on specific grants with approval by the Compensation and Talent Development Committee. The fair value of each share-settled restricted award is based on the closing market value of the Company's ordinary shares on the date of grant. The fair value of each cash-settled restricted award is recalculated at the end of each reporting period based on the closing market value of the Company's ordinary shares at the end of the reporting period, and the liability and expense are adjusted based on the new fair value.

A summary of non-vested restricted stock awards at September 30, 2021, and changes for the fiscal year then ended, is presented below:

<table><tr><td></td><td>Weighted Average Price</td><td>Shares/Units Subject to Restriction</td></tr><tr><td>Non-vested, September 30, 2020</td><td>$ 38.58</td><td>3,229,879</td></tr><tr><td>Granted</td><td>48.29</td><td>1,865,566</td></tr><tr><td>Vested</td><td>37.80</td><td>(1,439,284)</td></tr><tr><td>Forfeited</td><td>41.32</td><td>(321,724)</td></tr><tr><td>Non-vested, September 30, 2021</td><td>$ 44.06</td><td>3,334,437</td></tr></table>

At September 30, 2021, the Company had approximately $103 million of total unrecognized compensation cost related to non-vested restricted stock arrangements granted for continuing operations which is expected to be recognized over a weighted-average period of 2.0 years.

## Performance Share Awards

Performance-based share unit ("PSU") awards are generally contingent on the achievement of predetermined performance goals over a performance period of three years as well as on the award holder's continuous employment until the vesting date. The PSUs are also indexed to the achievement of specified levels of total shareholder return versus a peer group over the performance period. Each PSU that is earned is settled with shares of the Company's ordinary shares following the completion of the performance period.

The fair value of each PSU is estimated on the date of grant using a Monte Carlo simulation that uses the assumptions noted in the following table. The risk-free interest rate for periods during the contractual life of the PSU is based on the U.S. Treasury yield curve in effect at the time of grant. For fiscal years ended 2021 and 2020, the expected volatility is based on the historical volatility of the Company's stock over the most recent three-year period as of the grant date. For fiscal year ended 2019, the



expected volatility is based on the historical volatility of the Company's stock since October 2016 blended with the historical volatility of certain peer companies' stock prior to October 2016 over the most recent three-year period as of the grant date.

Year Ended September 30,

<table><tr><td></td><td>2021</td><td>2020</td><td>2019</td></tr><tr><td>Risk-free interest rate</td><td>0.20%</td><td>1.60%</td><td>2.76%</td></tr><tr><td>Expected volatility of the Company’s stock</td><td>30.90%</td><td>21.80%</td><td>22.90%</td></tr></table>

A summary of the status of the Company’s non-vested PSUs at September 30, 2021, and changes for the fiscal year then ended, is presented below:

<table><tr><td></td><td>Weighted Average Price</td><td>Shares/Units Subject to PSU</td></tr><tr><td>Non-vested, September 30, 2020</td><td>$ 39.06</td><td>1,617,944</td></tr><tr><td>Granted</td><td>50.53</td><td>410,934</td></tr><tr><td>Vested</td><td>38.75</td><td>(789,129)</td></tr><tr><td>Forfeited</td><td>41.86</td><td>(43,431)</td></tr><tr><td>Non-vested, September 30, 2021</td><td>$ 43.11</td><td>1,196,318</td></tr></table>

At September 30, 2021, the Company had approximately $29 million of total unrecognized compensation cost related to non-vested performance-based share unit awards granted for continuing operations which is expected to be recognized over a weighted-average period of 1.8 years.

## 14. EARNINGS PER SHARE

The following table reconciles the numerators and denominators used to calculate basic and diluted earnings per share (in millions):

<table><tr><td rowspan="2"></td><td colspan="4">Year Ended September 30,</td></tr><tr><td>2021</td><td>2020</td><td>2019</td><td></td></tr><tr><td>Income Available to Ordinary Shareholders</td><td></td><td></td><td></td><td></td></tr><tr><td>Income from continuing operations</td><td>$ 1,513</td><td>$ 631</td><td>$ 1,100</td><td></td></tr><tr><td>Income from discontinued operations</td><td>124</td><td>—</td><td>4,574</td><td></td></tr><tr><td>Basic and diluted income available to shareholders</td><td>$ 1,637</td><td>$ 631</td><td>$ 5,674</td><td></td></tr><tr><td>Weighted Average Shares Outstanding</td><td></td><td></td><td></td><td></td></tr><tr><td>Basic weighted average shares outstanding</td><td>716.6</td><td>751.0</td><td>870.2</td><td></td></tr><tr><td>Effect of dilutive securities:</td><td></td><td></td><td></td><td></td></tr><tr><td>Stock options, unvested restricted stock and unvested performance share awards</td><td>4.5</td><td>2.6</td><td>4.1</td><td></td></tr><tr><td>Diluted weighted average shares outstanding</td><td>721.1</td><td>753.6</td><td>874.3</td><td></td></tr><tr><td>Antidilutive Securities</td><td></td><td></td><td></td><td></td></tr><tr><td>Options to purchase shares</td><td>—</td><td>1.4</td><td>1.4</td><td></td></tr></table>

## 15. EQUITY AND NONCONTROLLING INTERESTS

## Dividends

The authority to declare and pay dividends is vested in the Board of Directors. The timing, declaration and payment of future dividends to holders of the Company's ordinary shares is determined by the Company's Board of Directors and depends upon many factors, including the Company's financial condition and results of operations, the capital requirements of the Company's businesses, industry practice and any other relevant factors.



Under Irish law, dividends may only be paid (and share repurchases and redemptions must generally be funded) out of "distributable reserves." The creation of distributable reserves was accomplished by way of a capital reduction, which the Irish High Court approved on December 18, 2014 and as acquired in conjunction with the Merger.

## Share Repurchase Program

In March 2021, the Company's Board of Directors approved a $4.0 billion increase to the Company's share repurchase authorization, adding to the $2.0 billion remaining as of December 31, 2020 under the prior share repurchase authorization approved in 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. As of September 30, 2021, approximately $5.1 billion remains available under the share repurchase program.

During fiscal year 2021, the Company repurchased and retired approximately $1,307 million of its ordinary shares. During fiscal year 2020, the Company repurchased and retired approximately $2,204 million of its ordinary shares. During fiscal year 2019, the Company repurchased approximately $5,983 million of its ordinary shares, of which $4,035 million of its ordinary shares were purchased through a publicly announced "modified Dutch auction" tender offer and immediately retired, and $1,948 million of its ordinary shares were purchased on an open market and retired in the fourth quarter of fiscal 2019.



Other comprehensive income includes activity relating to discontinued operations. The following schedules present changes in consolidated equity attributable to Johnson Controls and noncontrolling interests (in millions, net of tax):

<table><tr><td></td><td>Equity Attributable to Johnson Controls International plc</td><td>Equity Attributable to Noncontrolling Interests</td><td>Total Equity</td></tr><tr><td>At September 30, 2018</td><td>$ 21,164</td><td>$ 1,294</td><td>22,458</td></tr><tr><td>Total comprehensive income (loss):</td><td></td><td></td><td></td></tr><tr><td>Net income</td><td>5,674</td><td>213</td><td>5,887</td></tr><tr><td>Foreign currency translation adjustments</td><td>(325)</td><td>(17)</td><td>(342)</td></tr><tr><td>Realized and unrealized gains (losses) on derivatives</td><td>7</td><td>(1)</td><td>6</td></tr><tr><td>Pension and postretirement plans</td><td>(6)</td><td>—</td><td>(6)</td></tr><tr><td>Other comprehensive loss</td><td>(324)</td><td>(18)</td><td>(342)</td></tr><tr><td>Comprehensive income</td><td>5,350</td><td>195</td><td>5,545</td></tr><tr><td>Other changes in equity:</td><td></td><td></td><td></td></tr><tr><td>Cash dividends - ordinary shares ($1.04 per share)</td><td>(887)</td><td>—</td><td>(887)</td></tr><tr><td>Dividends attributable to noncontrolling interests</td><td>—</td><td>(132)</td><td>(132)</td></tr><tr><td>Repurchases and retirements of ordinary shares</td><td>(5,983)</td><td>—</td><td>(5,983)</td></tr><tr><td>Divestiture of Power Solutions</td><td>483</td><td>(295)</td><td>188</td></tr><tr><td>Adoption of ASC 606</td><td>(45)</td><td>—</td><td>(45)</td></tr><tr><td>Adoption of ASU 2016-16</td><td>(546)</td><td>—</td><td>(546)</td></tr><tr><td>Other, including options exercised</td><td>230</td><td>1</td><td>231</td></tr><tr><td>At September 30, 2019</td><td>19,766</td><td>1,063</td><td>20,829</td></tr><tr><td>Total comprehensive income:</td><td></td><td></td><td></td></tr><tr><td>Net income</td><td>631</td><td>164</td><td>795</td></tr><tr><td>Foreign currency translation adjustments</td><td>7</td><td>18</td><td>25</td></tr><tr><td>Realized and unrealized gains on derivatives</td><td>4</td><td>4</td><td>8</td></tr><tr><td>Pension and postretirement plans</td><td>8</td><td>—</td><td>8</td></tr><tr><td>Other comprehensive income</td><td>19</td><td>22</td><td>41</td></tr><tr><td>Comprehensive income</td><td>650</td><td>186</td><td>836</td></tr><tr><td>Other changes in equity:</td><td></td><td></td><td></td></tr><tr><td>Cash dividends - ordinary shares ($1.04 per share)</td><td>(780)</td><td>—</td><td>(780)</td></tr><tr><td>Dividends attributable to noncontrolling interests</td><td>—</td><td>(114)</td><td>(114)</td></tr><tr><td>Repurchases and retirements of ordinary shares</td><td>(2,204)</td><td>—</td><td>(2,204)</td></tr><tr><td>Change in noncontrolling interest share</td><td>(83)</td><td>(49)</td><td>(132)</td></tr><tr><td>Adoption of ASC 842</td><td>(5)</td><td>—</td><td>(5)</td></tr><tr><td>Other, including options exercised</td><td>103</td><td>—</td><td>103</td></tr><tr><td>At September 30, 2020</td><td>17,447</td><td>1,086</td><td>18,533</td></tr><tr><td>Total comprehensive income (loss):</td><td></td><td></td><td></td></tr><tr><td>Net income</td><td>1,637</td><td>233</td><td>1,870</td></tr><tr><td>Foreign currency translation adjustments</td><td>357</td><td>19</td><td>376</td></tr><tr><td>Realized and unrealized gains (losses) on derivatives</td><td>(19)</td><td>1</td><td>(18)</td></tr><tr><td>Pension and postretirement plans</td><td>4</td><td>—</td><td>4</td></tr><tr><td>Other comprehensive income</td><td>342</td><td>20</td><td>362</td></tr><tr><td>Comprehensive income</td><td>1,979</td><td>253</td><td>2,232</td></tr><tr><td>Other changes in equity:</td><td></td><td></td><td></td></tr><tr><td>Cash dividends - ordinary shares ($1.07 per share)</td><td>(771)</td><td>—</td><td>(771)</td></tr><tr><td>Dividends attributable to noncontrolling interests</td><td>—</td><td>(142)</td><td>(142)</td></tr><tr><td>Repurchases and retirements of ordinary shares</td><td>(1,307)</td><td>—</td><td>(1,307)</td></tr><tr><td>Change in noncontrolling interest share</td><td>(8)</td><td>(6)</td><td>(14)</td></tr><tr><td>Adoption of ASU 2016-13</td><td>(4)</td><td>—</td><td>(4)</td></tr><tr><td>Other, including options exercised</td><td>226</td><td>—</td><td>226</td></tr><tr><td>At September 30, 2021</td><td>17,562</td><td>1,191</td><td>18,753</td></tr></table>

The Company adopted ASU 2016-13 "Financial Instruments - Credit Losses" effective October 1, 2020. As a result the Company recorded $4 million to beginning retained earnings.



The Company adopted ASC 842, "Leases" effective October 1, 2019. As a result, the Company recorded $5 million to beginning retained earnings, which relates primarily to adoption day impairment of previously exited facilities.

The Company adopted ASC 606, "Revenue from Contracts with Customers" effective October 1, 2018. As a result, the Company recorded $45 million to beginning retained earnings, which relates primarily to deferred revenue recorded for the Power Solutions business for certain battery core returns that represent a material right provided to customers.

The Company adopted ASU 2016-16, "Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other Than Inventory" effective October 1, 2018. As a result, the Company recognized deferred taxes of $546 million related to the tax effects of all intra-entity sales of assets other than inventory on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of October 1, 2018.

The following schedules present changes in AOCI attributable to Johnson Controls (in millions, net of tax):

<table><tr><td rowspan="2"></td><td colspan="4">Year Ended September 30,</td></tr><tr><td>2021</td><td>2020</td><td>2019</td><td></td></tr><tr><td>Foreign currency translation adjustments</td><td></td><td></td><td></td><td></td></tr><tr><td>Balance at beginning of period</td><td>$ (778)</td><td>$ (785)</td><td>$ (939)</td><td></td></tr><tr><td>Divestiture of Power Solutions</td><td>—</td><td>—</td><td>479</td><td></td></tr><tr><td>Aggregate adjustment for the period (net of tax effect of $0, $1 and $0)</td><td>357</td><td>7</td><td>(325)</td><td></td></tr><tr><td>Balance at end of period</td><td>(421)</td><td>(778)</td><td>(785)</td><td></td></tr><tr><td>Realized and unrealized gains (losses) on derivatives</td><td></td><td></td><td></td><td></td></tr><tr><td>Balance at beginning of period</td><td>2</td><td>(2)</td><td>(13)</td><td></td></tr><tr><td>Divestiture of Power Solutions (net of tax effect of $0, $0 and $1)</td><td>—</td><td>—</td><td>4</td><td></td></tr><tr><td>Current period changes in fair value (net of tax effect of $5, $1 and $1)</td><td>(8)</td><td>3</td><td>(1)</td><td></td></tr><tr><td>Reclassification to income (net of tax effect of $3, $0 and $2) \(^{(1)}</td><td>(11)</td><td>1</td><td>8</td><td></td></tr><tr><td>Balance at end of period</td><td>(17)</td><td>2</td><td>(2)</td><td></td></tr><tr><td>Realized and unrealized gains (losses) on marketable securities</td><td></td><td></td><td></td><td></td></tr><tr><td>Balance at beginning of period</td><td>—</td><td>—</td><td>8</td><td></td></tr><tr><td>Adoption of ASU 2016-01 \( ^{(2)} \)</td><td>—</td><td>—</td><td>(8)</td><td></td></tr><tr><td>Balance at end of period</td><td>—</td><td>—</td><td>—</td><td></td></tr><tr><td>Pension and postretirement plans</td><td></td><td></td><td></td><td></td></tr><tr><td>Balance at beginning of period</td><td>—</td><td>(8)</td><td>(2)</td><td></td></tr><tr><td>Reclassification to income (net of tax effect of $0, $1) and $0)</td><td>(3)</td><td>(1)</td><td>—</td><td></td></tr><tr><td>Other changes (net of tax effect of $1, $4 and $0)</td><td>7</td><td>9</td><td>(6)</td><td></td></tr><tr><td>Balance at end of period</td><td>4</td><td>—</td><td>(8)</td><td></td></tr><tr><td>Accumulated other comprehensive loss, end of period</td><td>$ (434)</td><td>$ (776)</td><td>$ (795)</td><td></td></tr></table>

(1) Refer to Note 11, "Derivative Instruments and Hedging Activities," of the notes to consolidated financial statements for disclosure of the line items in the consolidated statements of income affected by reclassifications from AOCI into income related to derivatives.

(2) The Company adopted ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities" effective October 1, 2018 and, as a result, reclassified $8 million of unrealized gains on marketable securities to retained earnings.



## 16. RETIREMENT PLANS

## Pension Benefits

The Company has non-contributory defined benefit pension plans covering certain U.S. and non-U.S. employees. The benefits provided are primarily based on years of service and average compensation or a monthly retirement benefit amount. Certain of the Company’s U.S. pension plans have been amended to prohibit new participants from entering the plans and no longer accrue benefits. Funding for U.S. pension plans equals or exceeds the minimum requirements of the Employee Retirement Income Security Act of 1974. Funding for non-U.S. plans observes the local legal and regulatory limits. Also, the Company makes contributions to union-trusted pension funds for construction and service personnel.

Information for pension plans with accumulated benefit obligations ("ABO") in excess of plan assets (in millions):

<table><tr><td rowspan="2"></td><td colspan="3">September 30,</td></tr><tr><td>2021</td><td>2020</td><td></td></tr><tr><td>Accumulated benefit obligation</td><td>$     4,402</td><td>$     5,539</td><td></td></tr><tr><td>Fair value of plan assets</td><td>3,841</td><td>4,528</td><td></td></tr></table>

Information for pension plans with projected benefit obligations ("PBO") in excess of plan assets (in millions):

<table><tr><td rowspan="2"></td><td colspan="3">September 30,</td></tr><tr><td>2021</td><td>2020</td><td></td></tr><tr><td>Projected benefit obligation</td><td>$     4,519</td><td>$     5,643</td><td></td></tr><tr><td>Fair value of plan assets</td><td>3,954</td><td>4,570</td><td></td></tr></table>

In fiscal 2021, total employer contributions to the defined benefit pension plans were $65 million, none of which were voluntary contributions made by the Company. The Company expects to contribute approximately $42 million in cash to its defined benefit pension plans in fiscal 2022. Projected benefit payments from the plans as of September 30, 2021 are estimated as follows (in millions):

<table><tr><td>2022</td><td>$</td><td>329</td></tr><tr><td>2023</td><td></td><td>298</td></tr><tr><td>2024</td><td></td><td>285</td></tr><tr><td>2025</td><td></td><td>280</td></tr><tr><td>2026</td><td></td><td>284</td></tr><tr><td>2027 - 2031</td><td></td><td>1,387</td></tr></table>

## Postretirement Benefits

The Company provides certain health care and life insurance benefits for eligible retirees and their dependents primarily in the U.S. and Canada. Most non-U.S. employees are covered by government sponsored programs, and the cost to the Company is not significant.

Eligibility for coverage is based on meeting certain years of service and retirement age qualifications. These benefits may be subject to deductibles, co-payment provisions and other limitations, and the Company has reserved the right to modify these benefits.

The health care cost trend assumption does not have a significant effect on the amounts reported.



Information for postretirement plans with accumulated postretirement benefit obligations ("APBO") in excess of plan assets (in millions):

<table><tr><td rowspan="2"></td><td colspan="3">September 30,</td></tr><tr><td>2021</td><td colspan="2">2020</td></tr><tr><td>Accumulated postretirement benefit obligation</td><td>$ 96</td><td>$ 105</td><td></td></tr><tr><td>Fair value of plan assets</td><td>38</td><td></td><td>34</td></tr></table>

In fiscal 2021, total employer contributions to the postretirement plans were $3 million. The Company expects to contribute approximately $3 million in cash to its postretirement plans in fiscal 2022 for continuing operations. Projected benefit payments from the plans as of September 30, 2021 are estimated as follows (in millions):

<table><tr><td>2022</td><td>$</td><td>11</td></tr><tr><td>2023</td><td></td><td>11</td></tr><tr><td>2024</td><td></td><td>11</td></tr><tr><td>2025</td><td></td><td>10</td></tr><tr><td>2026</td><td></td><td>10</td></tr><tr><td>2027 - 2031</td><td></td><td>38</td></tr></table>

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 ("Act") includes a prescription drug benefit under Medicare as well as a federal subsidy to sponsors of retiree health care benefit plans providing a benefit that is at least actuarially equivalent to Medicare Part D.1. Under the Act, the Medicare subsidy amount is received directly by the plan sponsor and not the related plan. Further, the plan sponsor is not required to use the subsidy amount to fund postretirement benefits and may use the subsidy for any valid business purpose. Projected subsidy receipts are estimated to be less than $1 million per year over the next ten years.

## Defined Contribution Plans

The Company sponsors various defined contribution savings plans that allow employees to contribute a portion of their pre-tax and/or after-tax income in accordance with plan specified guidelines. Under specified conditions, the Company will contribute to certain savings plans based on predetermined percentages of compensation earned by the employee and/or will match a percentage of the employee contributions up to certain limits. The Company temporarily suspended contributions in fiscal 2021 and 2020 in response to the COVID-19 pandemic. Defined contribution plan contributions charged to expense for continuing and discontinued operations amounted to $118 million, $104 million and $198 million for the fiscal years ended 2021, 2020 and 2019, respectively.

## Multiemployer Benefit Plans

The Company contributes to multiemployer benefit plans based on obligations arising from collective bargaining agreements related to certain of its hourly employees in the U.S. These plans provide retirement benefits to participants based on their service to contributing employers. The benefits are paid from assets held in trust for that purpose. The trustees typically are responsible for determining the level of benefits to be provided to participants as well as for such matters as the investment of the assets and the administration of the plans.

The risks of participating in these multiemployer benefit plans are different from single-employer benefit plans in the following aspects:

• Assets contributed to the multiemployer benefit plan by one employer may be used to provide benefits to employees of other participating employers.

- If a participating employer stops contributing to the multiemployer benefit plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

- If the Company stops participating in some of its multiemployer benefit plans, the Company may be required to pay those plans an amount based on its allocable share of the underfunded status of the plan, referred to as a withdrawal liability.



The Company participates in approximately 275 multiemployer benefit plans, none of which are individually significant to the Company. The number of employees covered by the Company’s multiemployer benefit plans has remained consistent over the past three years, and there have been no significant changes that affect the comparability of fiscal 2021, 2020 and 2019 contributions. The Company recognizes expense for the contractually-required contribution for each period. The Company contributed $67 million, $66 million and $69 million to multiemployer benefit plans in fiscal 2021, 2020 and 2019, respectively.

Based on the most recent information available, the Company believes that the present value of actuarial accrued liabilities in certain of these multiemployer benefit plans may exceed the value of the assets held in trust to pay benefits. Currently, the Company is not aware of any significant multiemployer benefit plans for which it is probable or reasonably possible that the Company will be obligated to make up any shortfall in funds. Moreover, if the Company were to exit certain markets or otherwise cease making contributions to these funds, the Company could trigger a withdrawal liability. Currently, the Company is not aware of any multiemployer benefit plans for which it is probable or reasonably possible that the Company will have a significant withdrawal liability. Any accrual for a shortfall or withdrawal liability will be recorded when it is probable that a liability exists and it can be reasonably estimated.

## Plan Assets

The Company’s investment policies employ an approach whereby a mix of equities, fixed income and alternative investments are used to maximize the long-term return of plan assets for a prudent level of risk. The investment portfolio primarily contains a diversified blend of equity and fixed income investments. Equity investments are diversified across U.S. and non-U.S. stocks, as well as growth, value and small to large capitalization. Fixed income investments include corporate and government issues, with short-, mid- and long-term maturities, with a focus on investment grade when purchased and a target duration close to that of the plan liability. Investment and market risks are measured and monitored on an ongoing basis through regular investment portfolio reviews, annual liability measurements and periodic asset/liability studies. The majority of the real estate component of the portfolio is invested in a diversified portfolio of high-quality, operating properties with cash yields greater than the targeted appreciation. Investments in other alternative asset classes, including hedge funds and commodities, diversify the expected investment returns relative to the equity and fixed income investments. As a result of the Company's diversification strategies, there are no significant concentrations of risk within the portfolio of investments.

The Company’s actual asset allocations are in line with target allocations. The Company rebalances asset allocations as appropriate, in order to stay within a range of allocation for each asset category.

The expected return on plan assets is based on the Company’s expectation of the long-term average rate of return of the capital markets in which the plans invest. The average market returns are adjusted, where appropriate, for active asset management returns. The expected return reflects the investment policy target asset mix and considers the historical returns earned for each asset category.



The Company’s plan assets at September 30, 2021 and 2020, by asset category, are as follows (in millions):

<table><tr><td rowspan="2">Asset Category</td><td colspan="5">Fair Value Measurements Using:</td></tr><tr><td>Total as of September 30, 2021</td><td>Quoted Prices in Active Markets (Level 1)</td><td>Significant Other Observable Inputs (Level 2)</td><td>Significant Unobservable Inputs (Level 3)</td><td></td></tr><tr><td>U.S. Pension</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Cash and Cash Equivalents</td><td>$ 75</td><td>$ —</td><td>$ 75</td><td>$ —</td><td></td></tr><tr><td>Equity Securities</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Large-Cap</td><td>185</td><td>185</td><td>—</td><td>—</td><td></td></tr><tr><td>Small-Cap</td><td>215</td><td>215</td><td>—</td><td>—</td><td></td></tr><tr><td>International - Developed</td><td>182</td><td>182</td><td>—</td><td>—</td><td></td></tr><tr><td>International - Emerging</td><td>34</td><td>34</td><td>—</td><td>—</td><td></td></tr><tr><td>Fixed Income Securities</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Government</td><td>286</td><td>98</td><td>188</td><td>—</td><td></td></tr><tr><td>Corporate/Other</td><td>1,279</td><td>1,279</td><td>—</td><td>—</td><td></td></tr><tr><td>Total Investments in the Fair Value Hierarchy</td><td>2,256</td><td>$ 1,993</td><td>$ 263</td><td>$ —</td><td></td></tr><tr><td>Real Estate Investments Measured at Net Asset Value*</td><td>280</td><td></td><td></td><td></td><td></td></tr><tr><td>Due to Broker</td><td>(77)</td><td></td><td></td><td></td><td></td></tr><tr><td>Total Plan Assets</td><td>$ 2,459</td><td></td><td></td><td></td><td></td></tr><tr><td>Non-U.S. Pension</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Cash and Cash Equivalents</td><td>$ 151</td><td>$ 151</td><td>$ —</td><td>$ —</td><td></td></tr><tr><td>Equity Securities</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Large-Cap</td><td>197</td><td>23</td><td>174</td><td>—</td><td></td></tr><tr><td>International - Developed</td><td>128</td><td>30</td><td>98</td><td>—</td><td></td></tr><tr><td>International - Emerging</td><td>2</td><td>—</td><td>2</td><td>—</td><td></td></tr><tr><td>Fixed Income Securities</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Government</td><td>1,123</td><td>77</td><td>1,046</td><td>—</td><td></td></tr><tr><td>Corporate/Other</td><td>597</td><td>320</td><td>277</td><td>—</td><td></td></tr><tr><td>Hedge Fund</td><td>27</td><td>—</td><td>27</td><td>—</td><td></td></tr><tr><td>Real Estate</td><td>14</td><td>14</td><td>—</td><td>—</td><td></td></tr><tr><td>Total Investments in the Fair Value Hierarchy</td><td>2,239</td><td>$ 615</td><td>$ 1,624</td><td>$ —</td><td></td></tr><tr><td>Real Estate Investments Measured at Net Asset Value*</td><td>105</td><td></td><td></td><td></td><td></td></tr><tr><td>Total Plan Assets</td><td>$ 2,344</td><td></td><td></td><td></td><td></td></tr><tr><td>Postretirement</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Cash and Cash Equivalents</td><td>$ 5</td><td>$ 5</td><td>$ —</td><td>$ —</td><td></td></tr><tr><td>Equity Securities</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Large-Cap</td><td>24</td><td>—</td><td>24</td><td>—</td><td></td></tr><tr><td>Small-Cap</td><td>8</td><td>—</td><td>8</td><td>—</td><td></td></tr><tr><td>International - Developed</td><td>19</td><td>—</td><td>19</td><td>—</td><td></td></tr><tr><td>International - Emerging</td><td>12</td><td>—</td><td>12</td><td>—</td><td></td></tr><tr><td>Fixed Income Securities</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Government</td><td>20</td><td>—</td><td>20</td><td>—</td><td></td></tr><tr><td>Corporate/Other</td><td>56</td><td>—</td><td>56</td><td>—</td><td></td></tr><tr><td>Commodities</td><td>17</td><td>—</td><td>17</td><td>—</td><td></td></tr><tr><td>Real Estate</td><td>11</td><td>—</td><td>11</td><td>—</td><td></td></tr><tr><td>Total Plan Assets</td><td>$ 172</td><td>$ 5</td><td>$ 167</td><td>$ —</td><td></td></tr></table>



Fair Value Measurements Using:

<table><tr><td>Asset Category</td><td>Total as of September 30, 2020</td><td>Quoted Prices in Active Markets (Level 1)</td><td>Significant Other Observable Inputs (Level 2)</td><td>Significant Unobservable Inputs (Level 3)</td></tr><tr><td>U.S. Pension</td><td></td><td></td><td></td><td></td></tr><tr><td>Cash and Cash Equivalents</td><td>$ 36</td><td>$ —</td><td>$ 36</td><td>$ —</td></tr><tr><td>Equity Securities</td><td></td><td></td><td></td><td></td></tr><tr><td>Large-Cap</td><td>198</td><td>198</td><td>—</td><td>—</td></tr><tr><td>Small-Cap</td><td>255</td><td>255</td><td>—</td><td>—</td></tr><tr><td>International - Developed</td><td>220</td><td>220</td><td>—</td><td>—</td></tr><tr><td>International - Emerging</td><td>33</td><td>33</td><td>—</td><td>—</td></tr><tr><td>Fixed Income Securities</td><td></td><td></td><td></td><td></td></tr><tr><td>Government</td><td>382</td><td>159</td><td>223</td><td>—</td></tr><tr><td>Corporate/Other</td><td>1,386</td><td>1,386</td><td>—</td><td>—</td></tr><tr><td>Total Investments in the Fair Value Hierarchy</td><td>2,510</td><td>$ 2,251</td><td>$ 259</td><td>$ —</td></tr><tr><td>Real Estate Investments Measured at Net Asset Value*</td><td>276</td><td></td><td></td><td></td></tr><tr><td>Due to Broker</td><td>(80)</td><td></td><td></td><td></td></tr><tr><td>Total Plan Assets</td><td>$ 2,706</td><td></td><td></td><td></td></tr><tr><td>Non-U.S. Pension</td><td></td><td></td><td></td><td></td></tr><tr><td>Cash and Cash Equivalents</td><td>$ 178</td><td>$ 178</td><td>$ —</td><td>$ —</td></tr><tr><td>Large-Cap</td><td>357</td><td>23</td><td>334</td><td>—</td></tr><tr><td>International - Developed</td><td>226</td><td>52</td><td>174</td><td>—</td></tr><tr><td>International - Emerging</td><td>4</td><td>—</td><td>4</td><td>—</td></tr><tr><td>Fixed Income Securities</td><td></td><td></td><td></td><td></td></tr><tr><td>Government</td><td>704</td><td>64</td><td>640</td><td>—</td></tr><tr><td>Corporate/Other</td><td>652</td><td>321</td><td>331</td><td>—</td></tr><tr><td>Hedge Fund</td><td>49</td><td>—</td><td>49</td><td>—</td></tr><tr><td>Real Estate</td><td>27</td><td>27</td><td>—</td><td>—</td></tr><tr><td>Total Investments in the Fair Value Hierarchy</td><td>2,197</td><td>$ 665</td><td>$ 1,532</td><td>$ —</td></tr><tr><td>Real Estate Investments Measured at Net Asset Value*</td><td>16</td><td></td><td></td><td></td></tr><tr><td>Total Plan Assets</td><td>$ 2,213</td><td></td><td></td><td></td></tr><tr><td>Postretirement</td><td></td><td></td><td></td><td></td></tr><tr><td>Cash and Cash Equivalents</td><td>$ 5</td><td>$ 5</td><td>$ —</td><td>$ —</td></tr><tr><td>Equity Securities</td><td></td><td></td><td></td><td></td></tr><tr><td>Large-Cap</td><td>23</td><td>—</td><td>23</td><td>—</td></tr><tr><td>Small-Cap</td><td>7</td><td>—</td><td>7</td><td>—</td></tr><tr><td>International - Developed</td><td>16</td><td>—</td><td>16</td><td>—</td></tr><tr><td>International - Emerging</td><td>10</td><td>—</td><td>10</td><td>—</td></tr><tr><td>Fixed Income Securities</td><td></td><td></td><td></td><td></td></tr><tr><td>Government</td><td>19</td><td>—</td><td>19</td><td>—</td></tr><tr><td>Corporate/Other</td><td>53</td><td>—</td><td>53</td><td>—</td></tr><tr><td>Commodities</td><td>12</td><td>—</td><td>12</td><td>—</td></tr><tr><td>Real Estate</td><td>8</td><td>—</td><td>8</td><td>—</td></tr><tr><td>Total Plan Assets</td><td>$ 153</td><td>$ 5</td><td>$ 148</td><td>$ —</td></tr></table>

* The fair value of certain investments in real estate do not have a readily determinable fair value and requires the fund managers to independently arrive at fair value by calculating net asset value ("NAV") per share. In order to calculate NAV per



share, the fund managers value the real estate investments using any one, or a combination of, the following methods: independent third party appraisals, discounted cash flow analysis of net cash flows projected to be generated by the investment and recent sales of comparable investments. Assumptions used to revalue the properties are updated every quarter. Due to the fact that the fund managers calculate NAV per share, the Company utilizes a practical expedient for measuring the fair value of its real-estate investments, as provided for under ASC 820, "Fair Value Measurement." In applying the practical expedient, the Company is not required to further adjust the NAV provided by the fund manager in order to determine the fair value of its investment as the NAV per share is calculated in a manner consistent with the measurement principles of ASC 946, "Financial Services - Investment Companies," and as of the Company's measurement date. The Company believes this is an appropriate methodology to obtain the fair value of these assets. For the component of the real estate portfolio under development, the investments are carried at cost until they are completed and valued by a third party appraiser. In accordance with ASU No. 2015-07, "Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)," investments for which fair value is measured using the net asset value per share practical expedient should be disclosed separate from the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of total plan assets to the amounts presented in the notes to consolidated financial statements.

The following is a description of the valuation methodologies used for assets measured at fair value. Certain assets are held within commingled funds which are valued at the unitized NAV or percentage of the net asset value as determined by the manager of the fund. These values are based on the fair value of the underlying net assets owned by the fund.

Cash and Cash Equivalents: The fair value of cash and cash equivalents is valued at cost.

Equity Securities: The fair value of equity securities is determined by direct quoted market prices. The underlying holdings are direct quoted market prices on regulated financial exchanges.

Fixed Income Securities: The fair value of fixed income securities is determined by direct or indirect quoted market prices. If indirect quoted market prices are utilized, the value of assets held in separate accounts is not published, but the investment managers report daily the underlying holdings. The underlying holdings are direct quoted market prices on regulated financial exchanges.

Commodities: The fair value of the commodities is determined by quoted market prices of the underlying holdings on regulated financial exchanges.

Hedge Funds: The fair value of hedge funds is accounted for by the custodian. The custodian obtains valuations from underlying managers based on market quotes for the most liquid assets and alternative methods for assets that do not have sufficient trading activity to derive prices. The Company and custodian review the methods used by the underlying managers to value the assets. The Company believes this is an appropriate methodology to obtain the fair value of these assets.

Real Estate: The fair value of real estate is determined by quoted market prices of the underlying Real Estate Investment Trusts ("REITs"), which are securities traded on an open exchange.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

There were no Level 3 assets as of September 30, 2021 or 2020 or any Level 3 asset activity during fiscal 2021 or 2020.



## Funded Status

The table that follows contains the ABO and reconciliations of the changes in the PBO, the changes in plan assets and the funded status (in millions):

<table><tr><td rowspan="3">September 30,</td><td colspan="6">Pension Benefits</td><td colspan="2">Postretirement Benefits</td></tr><tr><td colspan="2">U.S. Plans</td><td colspan="2">Non-U.S. Plans</td><td rowspan="2">2021</td><td rowspan="2">2020</td><td rowspan="2">2021</td><td rowspan="2">2020</td></tr><tr><td>2021</td><td>2020</td><td>2021</td><td>2020</td></tr><tr><td>Accumulated Benefit Obligation</td><td>$ 2,629</td><td>$ 3,217</td><td>$ 2,540</td><td>$ 2,627</td><td>$ —</td><td>$ —</td><td></td><td></td></tr><tr><td>Change in Projected Benefit Obligation</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Projected benefit obligation at beginning of year</td><td>$ 3,217</td><td>$ 3,115</td><td>$ 2,726</td><td>$ 2,652</td><td>$ 146</td><td>$ 174</td><td></td><td></td></tr><tr><td>Service cost</td><td>—</td><td>—</td><td>27</td><td>25</td><td>1</td><td>1</td><td></td><td></td></tr><tr><td>Interest cost</td><td>47</td><td>67</td><td>32</td><td>36</td><td>2</td><td>4</td><td></td><td></td></tr><tr><td>Plan participant contributions</td><td>—</td><td>—</td><td>3</td><td>3</td><td>3</td><td>4</td><td></td><td></td></tr><tr><td>Other divestitures</td><td>—</td><td>—</td><td>—</td><td>(2)</td><td>—</td><td>—</td><td></td><td></td></tr><tr><td>Actuarial (gain) loss</td><td>(52)</td><td>298</td><td>(103)</td><td>7</td><td>(13)</td><td>(3)</td><td></td><td></td></tr><tr><td>Amendments made during the year</td><td>—</td><td>—</td><td>(6)</td><td>—</td><td>—</td><td>(13)</td><td></td><td></td></tr><tr><td>Benefits and settlements paid</td><td>(583)</td><td>(263)</td><td>(124)</td><td>(109)</td><td>(17)</td><td>(21)</td><td></td><td></td></tr><tr><td>Estimated subsidy received</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td><td>1</td><td></td><td></td></tr><tr><td>Curtailment</td><td>—</td><td>—</td><td>(3)</td><td>(8)</td><td>—</td><td>—</td><td></td><td></td></tr><tr><td>Other</td><td>—</td><td>—</td><td>(2)</td><td>4</td><td>—</td><td>—</td><td></td><td></td></tr><tr><td>Currency translation adjustment</td><td>—</td><td>—</td><td>75</td><td>118</td><td>1</td><td>(1)</td><td></td><td></td></tr><tr><td>Projected benefit obligation at end of year</td><td>$ 2,629</td><td>$ 3,217</td><td>$ 2,625</td><td>$ 2,726</td><td>$ 123</td><td>$ 146</td><td></td><td></td></tr><tr><td>Change in Plan Assets</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Fair value of plan assets at beginning of year</td><td>$ 2,706</td><td>$ 2,736</td><td>$ 2,213</td><td>$ 2,098</td><td>$ 153</td><td>$ 163</td><td></td><td></td></tr><tr><td>Actual return on plan assets</td><td>333</td><td>228</td><td>125</td><td>75</td><td>30</td><td>4</td><td></td><td></td></tr><tr><td>Employer and employee contributions</td><td>3</td><td>5</td><td>65</td><td>56</td><td>6</td><td>7</td><td></td><td></td></tr><tr><td>Benefits paid</td><td>(108)</td><td>(112)</td><td>(79)</td><td>(73)</td><td>(17)</td><td>(21)</td><td></td><td></td></tr><tr><td>Settlement payments</td><td>(475)</td><td>(151)</td><td>(45)</td><td>(36)</td><td>—</td><td>—</td><td></td><td></td></tr><tr><td>Other</td><td>—</td><td>—</td><td>(1)</td><td>—</td><td>—</td><td>—</td><td></td><td></td></tr><tr><td>Currency translation adjustment</td><td>—</td><td>—</td><td>66</td><td>93</td><td>—</td><td>—</td><td></td><td></td></tr><tr><td>Fair value of plan assets at end of year</td><td>$ 2,459</td><td>$ 2,706</td><td>$ 2,344</td><td>$ 2,213</td><td>$ 172</td><td>$ 153</td><td></td><td></td></tr><tr><td>Funded status</td><td>$ (170)</td><td>$ (511)</td><td>$ (281)</td><td>$ (513)</td><td>$ 49</td><td>$ 7</td><td></td><td></td></tr><tr><td>Amounts recognized in the statement of financial position consist of:</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Prepaid benefit cost</td><td>$ 44</td><td>$ 32</td><td>$ 79</td><td>$ 29</td><td>$ 107</td><td>$ 78</td><td></td><td></td></tr><tr><td>Accrued benefit liability</td><td>(214)</td><td>(543)</td><td>(360)</td><td>(542)</td><td>(58)</td><td>(71)</td><td></td><td></td></tr><tr><td>Net amount recognized</td><td>$ (170)</td><td>$ (511)</td><td>$ (281)</td><td>$ (513)</td><td>$ 49</td><td>$ 7</td><td></td><td></td></tr><tr><td>Weighted Average Assumptions (1)</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Discount rate (2)</td><td>2.50%</td><td>2.25%</td><td>1.80%</td><td>1.35%</td><td>2.30%</td><td>1.90%</td><td></td><td></td></tr><tr><td>Rate of compensation increase</td><td>N/A</td><td>N/A</td><td>2.85%</td><td>2.75%</td><td>N/A</td><td>N/A</td><td></td><td></td></tr><tr><td>Interest crediting rate</td><td>N/A</td><td>N/A</td><td>1.45%</td><td>1.50%</td><td>N/A</td><td>N/A</td><td></td><td></td></tr></table>

(1) Plan assets and obligations are determined based on a September 30 measurement date at September 30, 2021 and 2020.

(2) The Company considers the expected benefit payments on a plan-by-plan basis when setting assumed discount rates. As a result, the Company uses different discount rates for each plan depending on the plan jurisdiction, the demographics of participants and the expected timing of benefit payments. For the U.S. pension and postretirement



plans, the Company uses a discount rate provided by an independent third party calculated based on an appropriate mix of high quality bonds. For the non-U.S. pension and postretirement plans, the Company consistently uses the relevant country specific benchmark indices for determining the various discount rates. The Company has elected to utilize a full yield curve approach in the estimation of service and interest components of net periodic benefit cost (credit) for pension and other postretirement for plans that utilize a yield curve approach. The full yield curve approach applies the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows.

The fiscal 2021 net actuarial gains related to changes in the benefit obligation were the result of the increase in the discount rates globally. The fiscal 2020 net actuarial losses related to changes in the benefit obligation were primarily driven by the decrease in the U.S. discount rates.

## Accumulated Other Comprehensive Income

The amounts in AOCI in the consolidated statements of financial position, exclusive of tax impacts, that have not yet been recognized as components of net periodic benefit credit at September 30, 2021 and 2020 related to pension and postretirement benefits are $8 million and $5 million, respectively.

## Net Periodic Benefit Cost

The table that follows contains the components of net periodic benefit costs, which are primarily recorded in selling, general and administrative expenses in the consolidated statements of income (in millions):

<table><tr><td rowspan="3">Year ended September 30,</td><td colspan="10">Pension Benefits</td></tr><tr><td colspan="4">U.S. Plans</td><td colspan="4">Non-U.S. Plans</td><td colspan="2">Postretirement Benefits</td></tr><tr><td>2021</td><td>2020</td><td>2019</td><td>2021</td><td>2020</td><td>2019</td><td>2021</td><td>2020</td><td>2021</td><td></td></tr><tr><td>Components of Net Periodic Benefit Cost (Credit):</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Service cost</td><td>$ —</td><td>$ —</td><td>$ 8</td><td>$ 27</td><td>$ 25</td><td>$ 22</td><td>$ 1</td><td>$ 1</td><td>$ 1</td><td></td></tr><tr><td>Interest cost</td><td>47</td><td>67</td><td>108</td><td>32</td><td>36</td><td>54</td><td>2</td><td>4</td><td>6</td><td></td></tr><tr><td>Expected return on plan assets</td><td>(171)</td><td>(180)</td><td>(199)</td><td>(112)</td><td>(111)</td><td>(105)</td><td>(8)</td><td>(9)</td><td>(9)</td><td></td></tr><tr><td>Net actuarial (gain) loss</td><td>(214)</td><td>244</td><td>361</td><td>(115)</td><td>43</td><td>236</td><td>(35)</td><td>2</td><td>17</td><td></td></tr><tr><td>Amortization of prior service cost (credit)</td><td>—</td><td>—</td><td>—</td><td>1</td><td>1</td><td>—</td><td>(4)</td><td>(3)</td><td>—</td><td></td></tr><tr><td>Curtailment gain</td><td>—</td><td>—</td><td>—</td><td>(3)</td><td>(8)</td><td>—</td><td>—</td><td>—</td><td>—</td><td></td></tr><tr><td>Settlement (gain) loss</td><td>—</td><td>6</td><td>13</td><td>(1)</td><td>—</td><td>4</td><td>—</td><td>—</td><td>—</td><td></td></tr><tr><td>Special termination benefit cost</td><td>—</td><td>—</td><td>—</td><td>2</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td><td></td></tr><tr><td>Net periodic benefit cost (credit)</td><td>(338)</td><td>137</td><td>291</td><td>(169)</td><td>(14)</td><td>211</td><td>(44)</td><td>(5)</td><td>15</td><td></td></tr><tr><td>Net periodic benefit cost related to discontinued operations</td><td>—</td><td>—</td><td>(2)</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td><td></td></tr><tr><td>Net periodic benefit cost (credit) included in continuing operations</td><td>$ (338)</td><td>$ 137</td><td>$ 289</td><td>$ (169)</td><td>$ (14)</td><td>$ 211</td><td>$ (44)</td><td>$ (5)</td><td>$ 15</td><td></td></tr><tr><td>Expense Assumptions:</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Discount rate</td><td>2.25 %</td><td>2.95 %</td><td>4.10 %</td><td>1.35 %</td><td>1.50 %</td><td>2.45 %</td><td>1.90 %</td><td>2.65 %</td><td>3.80 %</td><td></td></tr><tr><td>Expected return on plan assets</td><td>6.50 %</td><td>6.90 %</td><td>7.10 %</td><td>4.90 %</td><td>5.20 %</td><td>5.20 %</td><td>5.30 %</td><td>5.70 %</td><td>5.65 %</td><td></td></tr><tr><td>Rate of compensation increase</td><td>N/A</td><td>N/A</td><td>3.50 %</td><td>2.75 %</td><td>2.80 %</td><td>2.95 %</td><td>N/A</td><td>N/A</td><td>N/A</td><td></td></tr><tr><td>Interest crediting rate</td><td>N/A</td><td>N/A</td><td>N/A</td><td>1.50 %</td><td>1.50 %</td><td>1.55 %</td><td>N/A</td><td>N/A</td><td>N/A</td><td></td></tr></table>



## 17. SIGNIFICANT RESTRUCTURING AND IMPAIRMENT COSTS

To better align its resources with its growth strategies and reduce the cost structure of its global operations in certain underlying markets, the Company commits to various restructuring plans as necessary. Restructuring plans generally result in charges for workforce reductions, plant closures, asset impairments and other related costs which are reported as restructuring and impairment costs in the Company's consolidated statements of income. The other related costs consist primarily of consulting costs incurred as a direct result of the restructuring initiatives. The Company expects the restructuring actions to reduce cost of sales and SG&A due to reduced employee-related costs, depreciation and amortization expense.

In fiscal 2021, the Company committed to a significant restructuring plan ("2021 Plan"). During the year ended September 30, 2021, the Company recorded $242 million of restructuring and impairment costs in the consolidated statements of income. The total amount expected to be incurred for this restructuring plan is $385 million across all segments and at Corporate. Of the restructuring and impairment costs recorded in the year ended September 30, 2021, $91 million related to the Global Products segment, $70 million related to the Building Solutions North America segment, $29 million related to the Building Solutions EMEA/LA segment, $28 million related to the Building Solutions Asia Pacific segment and $24 million related to Corporate.

The following table summarizes the changes in the Company’s 2021 Plan reserve, included primarily within other current liabilities in the consolidated statements of financial position (in millions):

<table><tr><td></td><td>Employee Severance and Termination Benefits</td><td colspan="2">Long-Lived Asset Impairments</td><td>Other</td><td>Total</td></tr><tr><td>Original reserve</td><td>$     68</td><td>$     98</td><td>$     76</td><td>$     242</td><td></td></tr><tr><td>Utilized—cash</td><td>(28)</td><td>—</td><td>(51)</td><td>(79)</td><td></td></tr><tr><td>Utilized—noncash</td><td>—</td><td>(98)</td><td>—</td><td>(98)</td><td></td></tr><tr><td>Balance at September 30, 2021</td><td>$     40</td><td>$     25</td><td>$     65</td><td></td><td></td></tr></table>

In fiscal 2020, the Company committed to a significant restructuring plan ("2020 Plan") and recorded $297 million of restructuring and impairment costs in the consolidated statements of income. This is the total amount incurred to date and the total amount expected to be incurred for this restructuring plan. Of the restructuring and impairment costs recorded, $136 million related to the Global Products segment, $64 million related to the Building Solutions North America segment, $49 million related to the Building Solutions Asia Pacific segment, $43 million related to the Building Solutions EMEA/LA segment and $5 million related to Corporate. The restructuring actions were substantially complete in fiscal 2021.

The following table summarizes the changes in the Company’s 2020 Plan reserve, included within other current liabilities in the consolidated statements of financial position (in millions):

<table><tr><td></td><td>Employee Severance and Termination Benefits</td><td colspan="2">Long-Lived Asset Impairments</td><td>Other</td><td>Total</td></tr><tr><td>Original reserve</td><td>$     196</td><td>$     96</td><td>$     5</td><td>$     297</td><td></td></tr><tr><td>Utilized—cash</td><td>(92)</td><td>—</td><td>(3)</td><td>(95)</td><td></td></tr><tr><td>Utilized—noncash</td><td>—</td><td>(96)</td><td>—</td><td>(96)</td><td></td></tr><tr><td>Currency translation</td><td>2</td><td>—</td><td>—</td><td>2</td><td></td></tr><tr><td>Balance at September 30, 2020</td><td>106</td><td>—</td><td>2</td><td>108</td><td></td></tr><tr><td>Utilized—cash</td><td>(69)</td><td>—</td><td>(2)</td><td>(71)</td><td></td></tr><tr><td>Balance at September 30, 2021</td><td>$     37</td><td>$     35</td><td>$     35</td><td>$     37</td><td></td></tr></table>

Also included in restructuring and impairment costs in the consolidated statements of income in fiscal 2020 are goodwill impairment related to the North America Retail reporting unit of $424 million and indefinite-lived intangible asset impairments of $62 million. Refer to Note 8, "Goodwill and Other Intangible Assets," of the notes to consolidated financial statements for further information regarding these impairments.



The Company's fiscal 2021 and 2020 restructuring plans included workforce reductions of approximately 10,000 employees. Restructuring charges associated with employee severance and termination benefits are paid over the severance period granted to each employee or on a lump sum basis in accordance with individual severance agreements. As of September 30, 2021, approximately 7,800 of the employees have been separated from the Company pursuant to the restructuring plans.

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

## 18. IMPAIRMENT OF LONG-LIVED ASSETS

In fiscal 2021, the Company concluded it had triggering events requiring assessment of impairment for certain of its long-lived assets in conjunction with its restructuring actions announced in fiscal 2021. As a result, the Company reviewed the long-lived assets for impairment and recorded $98 million of asset impairment charges within restructuring and impairment costs in the consolidated statements of income. Of the total impairment charges, $50 million related to the Global Products segment, $33 million related to the Building Solutions North America segment, $6 million related to Corporate assets, $5 million related to the Building Solutions EMEA/LA segment and $4 million related to the Building Solutions Asia Pacific segment. Refer to Note 17, "Significant Restructuring and Impairment Costs," of the notes to consolidated financial statements for additional information. The impairments were measured under a market approach utilizing an appraisal to determine fair values of the impaired assets. This method is consistent with the methods the Company employed in prior periods to value other long-lived assets. The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement."

In fiscal 2020, the Company concluded it had triggering events requiring assessment of impairment for certain of its long-lived assets caused by the economic impacts of the COVID-19 pandemic on the North America Retail asset group. The Company performed a quantitative impairment analysis and determined there was no impairment of long-lived assets as of September 30, 2020.

In fiscal 2020, the Company concluded it had a triggering event requiring assessment of impairment for certain of its long-lived assets in conjunction with its restructuring actions announced in fiscal 2020. As a result, the Company reviewed the long-lived assets for impairment and recorded $81 million of asset impairment charges within restructuring and impairment costs in the consolidated statements of income. Of these impairment charges, $42 million related to the Global Products segment, $24 million related to the Building Solutions Asia Pacific segment and $15 million related to the Building Solutions North America segment. The impairments were primarily measured under a market approach utilizing an appraisal to determine fair values of the impaired assets. This method is consistent with the methods the Company employed in prior periods to value other long-lived assets. The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement."

In fiscal 2019 and again in 2020, the Company concluded it had a triggering event requiring assessment of impairment for certain of its long-lived assets in conjunction with the plans to dispose of a business within its Global Products segment that met the criteria to be classified as held for sale. Assets and liabilities held for sale are required to be recorded at the lower of carrying value or fair value less any costs to sell. Accordingly, the Company recorded impairment charges of $250 million, including $15 million in fiscal 2020 and $235 million in fiscal 2019, within restructuring and impairment costs in the consolidated statements of income to write down the carrying value of the assets held for sale to fair value less any costs to sell. The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement."

Refer to Note 17, "Significant Restructuring and Impairment Costs," of the notes to consolidated financial statements for additional information. The impairments were measured under a market approach utilizing an appraisal to determine fair values of the impaired assets. This method is consistent with the methods the Company employed in prior periods to value other long-lived assets. The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement."

At September 30, 2021, 2020 and 2019, the Company concluded it did not have any other triggering events requiring assessment of impairment of its long-lived assets. Refer to Note 1, "Summary of Significant Accounting Policies," and Note 8, "Goodwill and Other Intangible Assets," of the notes to consolidated financial statements for discussion of the Company's goodwill and indefinite-lived intangibles impairment testing.



## 19. INCOME TAXES

The more significant components of the Company’s income tax provision from continuing operations are as follows (in millions):

<table><tr><td rowspan="2"></td><td colspan="4">Year Ended September 30,</td></tr><tr><td>2021</td><td colspan="2">2020</td><td>2019</td></tr><tr><td>Tax expense at Ireland statutory rate</td><td>$     327</td><td>$     113</td><td>$     132</td><td></td></tr><tr><td>U.S. state income tax, net of federal benefit</td><td>34</td><td>8</td><td>15</td><td></td></tr><tr><td>Income subject to the U.S. federal tax rate</td><td>3</td><td>(92)</td><td>(110)</td><td></td></tr><tr><td>Income subject to rates different than the statutory rate</td><td>30</td><td>99</td><td>38</td><td></td></tr><tr><td>Reserve and valuation allowance adjustments</td><td>66</td><td>(70)</td><td>(284)</td><td></td></tr><tr><td>Intercompany intellectual property transfer</td><td>417</td><td>—</td><td>—</td><td></td></tr><tr><td>Restructuring and impairment costs</td><td>(9)</td><td>50</td><td>(24)</td><td></td></tr><tr><td>Income tax provision (benefit)</td><td>$     868</td><td>$     108</td><td>$      (233)</td><td></td></tr></table>

The statutory tax rate in Ireland of 12.5% is being used as a comparison since the Company is domiciled in Ireland.

For fiscal 2021, the effective tax rate for continuing operations was 33% and was higher than the statutory tax rate primarily due to the tax impacts of an intercompany transfer of certain of the Company’s intellectual property rights, valuation allowance adjustments, the income tax effects of mark-to-market adjustments and tax rate differentials, partially offset by the benefits of continuing global tax planning initiatives.

For fiscal 2020, the effective tax rate for continuing operations was 12% and was lower than the statutory tax rate primarily due to tax audit reserve adjustments, the income tax effects of mark-to-market adjustments, valuation allowance adjustments and the benefits of continuing global tax planning initiatives, partially offset by 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.

For fiscal 2019, the effective rate for continuing operations was below the statutory rate primarily due to tax audit reserve adjustments, the income tax effects of mark-to-market adjustments, a tax indemnification reserve release, the tax benefits of an asset held for sale impairment charge and continuing global tax planning initiatives, partially offset by 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 and tax rate differentials.

## Valuation Allowances

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

In the fourth quarter of fiscal 2021, as a result of an intercompany transfer of certain of the Company’s intellectual property rights, the Company determined that it is more likely than not that certain deferred tax assets of Switzerland would be realized, and it was more likely than not that certain deferred tax assets of Canada would not be realized. The valuation allowance adjustments resulted in a $39 million net benefit to income tax expense in the three month period ended September 30, 2021.

In the second quarter of fiscal 2021, due to changes in forecasted taxable income, the Company recorded a discrete tax charge of $105 million related to valuation allowances on certain Mexico deferred tax assets now considered unrealizable.

In the fourth quarter of fiscal 2020, the Company performed an analysis related to the realizability of its worldwide deferred tax assets. As a result, and after considering feasible tax planning initiatives and other positive and negative evidence, the Company determined that it was more likely than not that certain deferred tax assets primarily within the U.S. would not be realized, and it is more likely than not that certain deferred tax assets of Canada would be realized. The valuation allowance adjustments resulted in a $26 million net benefit to income tax expense in the three month period ended September 30, 2020.



In the fourth quarter of fiscal 2019, the Company performed an analysis related to the realizability of its worldwide deferred tax assets. As a result, and after considering feasible tax planning initiatives and other positive and negative evidence, the Company determined that it was more likely than not that certain deferred tax assets primarily within the U.S., Belgium, Japan and the United Kingdom would not be realized, and it is more likely than not that certain deferred tax assets of the U.S. and France will be realized. The valuation allowance adjustments resulted in an immaterial net impact to income tax expense for the three-month period ended September 30, 2019.

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.

## Uncertain Tax Positions

The Company is subject to income taxes in the U.S. and numerous non-U.S. jurisdictions. Judgment is required in determining its worldwide provision for income taxes and recording the related assets and liabilities. In the ordinary course of the Company’s business, there are many transactions and calculations where the ultimate tax determination is uncertain. The Company is regularly under audit by tax authorities.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):

<table><tr><td rowspan="2"></td><td colspan="4">Year Ended September 30,</td></tr><tr><td>2021</td><td>2020</td><td>2019</td><td></td></tr><tr><td>Beginning balance, October 1</td><td>$     2,528</td><td>$     2,451</td><td>$     2,358</td><td></td></tr><tr><td>Additions for tax positions related to the current year</td><td>240</td><td>128</td><td>433</td><td></td></tr><tr><td>Additions for tax positions of prior years</td><td>33</td><td>129</td><td>347</td><td></td></tr><tr><td>Reductions for tax positions of prior years</td><td>(6)</td><td>(27)</td><td>(88)</td><td></td></tr><tr><td>Settlements with taxing authorities</td><td>(24)</td><td>(54)</td><td>—</td><td></td></tr><tr><td>Statute closings and audit resolutions</td><td>(45)</td><td>(99)</td><td>(599)</td><td></td></tr><tr><td>Ending balance, September 30</td><td>$     2,726</td><td>$     2,528</td><td>$     2,451</td><td></td></tr></table>

The amount of gross tax effected unrecognized tax benefits that, if recognized, would impact the effective tax rate was $2,268 million, $2,132 million, and $2,121 million as of September 30, 2021, 2020 and 2019, respectively. Total net accrued interest was approximately $252 million, $205 million, and $181 million (net of tax benefit) at September 30, 2021, 2020 and 2019, respectively.

During fiscal 2020, tax audit resolutions resulted in a $44 million net benefit to income tax expense.

During fiscal 2019, the Company settled tax examinations impacting fiscal years 2015 to 2016 and adjusted various tax audit reserves which resulted in a $586 million net benefit to income tax expense in the fourth quarter. In the third quarter of fiscal 2019, the Company recorded a discrete charge related to newly enacted regulations related to U.S. Tax Reform and a discrete charge related to non-U.S. tax examinations which impacted the Company’s reserves for uncertain tax positions resulting in a $226 million net charge to income tax expense.

In the U.S., fiscal years 2017 through 2018 are currently under exam by the Internal Revenue Service (“IRS”) for certain legal entities. Additionally, the Company is currently under exam in the following major non-U.S. jurisdictions for continuing operations:

<table><tr><td>Tax Jurisdiction</td><td>Tax Years Covered</td></tr><tr><td>Belgium</td><td>2015 - 2020</td></tr><tr><td>China</td><td>2017 - 2019</td></tr><tr><td>Germany</td><td>2007 - 2018</td></tr><tr><td>Luxembourg</td><td>2017 - 2018</td></tr><tr><td>Mexico</td><td>2015 - 2020</td></tr><tr><td>United Kingdom</td><td>2014 - 2015, 2017 - 2018</td></tr></table>



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

## Other Tax Matters

In the fourth quarter of fiscal 2021, the Company completed an intercompany transfer of certain of the Company’s intellectual property rights which resulted in a net tax charge of $417 million.

During fiscal 2021, the Company incurred charges for restructuring and impairment costs for continuing operations of $242 million. Refer to Note 17, "Significant Restructuring and Impairment Costs," and Note 18, "Impairment of Long-Lived Assets," of the notes to consolidated financial statements for additional information. These costs generated tax benefits of $39 million, which reflects the Company's current tax position in these jurisdictions.

During fiscal 2021, 2020 and 2019, the Company recorded mark-to-market gains (losses) of $402 million, $(274) million and $(618) million, respectively. These gains (losses) generated tax expense (benefit) of $93 million, $(65) million and $(130) million, respectively, which reflects the Company's current tax position in these jurisdictions.

During fiscal 2020, the Company incurred charges for restructuring and impairment costs for continuing operations of $783 million. Refer to Note 8, "Goodwill and Other Intangible Assets," Note 17, "Significant Restructuring and Impairment Costs," and Note 18, "Impairment of Long-Lived Assets," of the notes to consolidated financial statements for additional information. These costs generated tax benefits of $48 million, which reflects the Company's current tax position in these jurisdictions.

During fiscal 2020 and 2019, the Company recorded transaction and integration costs for continuing operations of $135 million and $317 million, respectively. These costs generated tax benefits of $18 million and $35 million, respectively, which reflects the Company's current tax position in these jurisdictions.

During fiscal 2019, the Company recorded a $235 million impairment charge related to assets held for sale. Refer to Note 18, "Impairment of Long-Lived Assets," of the notes to consolidated financial statements for further information regarding the impairment charge. The impairment charge generated a $53 million tax benefit. Also during fiscal 2019, the Company released a $226 million tax indemnification reserve, which was recorded within selling, general and administrative expenses in the consolidated statements of income. The reserve release generated no income tax expense.

## Impacts of Tax Legislation and Change in Statutory Tax Rates

On March 27, 2020, in response to the COVID-19 pandemic, the “Coronavirus Aid, Relief and Economic Security Act” (“CARES”) was signed into law by the President of the United States. The CARES Act includes, among other things, U.S. corporate income tax provisions related to net operating loss carryback periods, alternative minimum tax credits, modifications to interest deduction limitations and technical corrections on tax depreciation methods for qualified improvement property. A majority of non-U.S. countries have also introduced various COVID-19 related corporate income tax relief provisions. The Company does not expect either the U.S. or non-U.S. corporate income tax provisions to have a material effect on its financial statements.

In the first quarter of fiscal 2020, the Company recorded a noncash discrete tax charge of $30 million due to the remeasurement of deferred tax assets and liabilities related to Switzerland and the canton of Schaffhausen. On September 28, 2018, the Swiss Parliament approved the Federal Act on Tax Reform and AHV Financing (“TRAF”), which was subsequently approved by the Swiss electorate on May 19, 2019. During the fourth quarter of fiscal 2019, the Swiss Federal Council enacted TRAF which became effective for the Company on January 1, 2020. The impacts of the federal enactment did not have a material impact to the Company’s financial statements. TRAF also provides for parameters which enable the Swiss cantons to adjust tax rates and establish new regulations for companies. As of September 30, 2019, the canton of Schaffhausen had not concluded its public referendum; however, the enactment did occur during the first quarter of fiscal 2020.

During the fiscal years ended 2021, 2020 and 2019, other tax legislation was adopted in various jurisdictions. These law changes did not have a material impact on the Company's consolidated financial statements.



## Continuing Operations

Selected income tax data related to continuing operations were as follows (in millions):

<table><tr><td rowspan="2"></td><td colspan="4">Year Ended September 30,</td></tr><tr><td>2021</td><td colspan="2">2020</td><td>2019</td></tr><tr><td>Components of income (loss) from continuing operations before income taxes:</td><td></td><td></td><td></td><td></td></tr><tr><td>U.S.</td><td>$ 543</td><td>$ (385)</td><td>$ (259)</td><td></td></tr><tr><td>Non-U.S.</td><td>2,071</td><td>1,288</td><td>1,315</td><td></td></tr><tr><td>Income from continuing operations before income taxes</td><td>$ 2,614</td><td>$ 903</td><td>$ 1,056</td><td></td></tr><tr><td>Components of the provision (benefit) for income taxes:</td><td></td><td></td><td></td><td></td></tr><tr><td>Current</td><td></td><td></td><td></td><td></td></tr><tr><td>U.S. federal</td><td>$ 459</td><td>$ 309</td><td>$ (1,025)</td><td></td></tr><tr><td>U.S. state</td><td>108</td><td>72</td><td>(33)</td><td></td></tr><tr><td>Non-U.S.</td><td>265</td><td>264</td><td>213</td><td></td></tr><tr><td></td><td>832</td><td>645</td><td>(845)</td><td></td></tr><tr><td>Deferred</td><td></td><td></td><td></td><td></td></tr><tr><td>U.S. federal</td><td>(7)</td><td>(382)</td><td>412</td><td></td></tr><tr><td>U.S. state</td><td>46</td><td>(43)</td><td>84</td><td></td></tr><tr><td>Non-U.S.</td><td>(3)</td><td>(112)</td><td>116</td><td></td></tr><tr><td></td><td>36</td><td>(537)</td><td>612</td><td></td></tr><tr><td>Income tax provision (benefit)</td><td>$ 868</td><td>$ 108</td><td>$ (233)</td><td></td></tr><tr><td>Income taxes paid (refunded)</td><td>$ 504</td><td>$ (386)</td><td>$ 377</td><td></td></tr></table>

At September 30, 2021 and 2020, the Company recorded within the consolidated statements of financial position in other current assets approximately $120 million and $252 million, respectively, of income tax assets. At September 30, 2021 and 2020, the Company recorded within the consolidated statements of financial position in other current liabilities approximately $201 million and $243 million, respectively, of accrued income tax liabilities.

The Company has not provided U.S. or non-U.S. income taxes on approximately $22.8 billion of outside basis differences of consolidated subsidiaries of Johnson Controls International plc. The Company is indefinitely reinvested in these basis differences. The reduction of the outside basis differences via the sale or liquidation of these subsidiaries and/or distributions could create taxable income. The Company's intent is to reduce the outside basis differences only when it would be tax efficient. Given the numerous ways in which the basis differences may be reduced, it is not practicable to estimate the amount of unrecognized withholding taxes and deferred tax liability on the outside basis differences.

Deferred taxes were classified in the consolidated statements of financial position as follows (in millions):

<table><tr><td rowspan="2"></td><td colspan="3">September 30,</td></tr><tr><td>2021</td><td colspan="2">2020</td></tr><tr><td>Other noncurrent assets</td><td>$ 755</td><td>$</td><td>862</td></tr><tr><td>Other noncurrent liabilities</td><td>(443)</td><td></td><td>(385)</td></tr><tr><td>Net deferred tax asset</td><td>$ 312</td><td>$</td><td>477</td></tr></table>



Temporary differences and carryforwards which gave rise to deferred tax assets and liabilities included (in millions):

<table><tr><td rowspan="2"></td><td colspan="3">September 30,</td></tr><tr><td>2021</td><td colspan="2">2020</td></tr><tr><td>Deferred tax assets</td><td></td><td></td><td></td></tr><tr><td>Accrued expenses and reserves</td><td>$ 407</td><td>$ 474</td><td></td></tr><tr><td>Employee and retiree benefits</td><td>148</td><td>286</td><td></td></tr><tr><td>Property, plant and equipment</td><td>369</td><td>182</td><td></td></tr><tr><td>Net operating loss and other credit carryforwards</td><td>6,293</td><td>6,306</td><td></td></tr><tr><td>Research and development</td><td>42</td><td>112</td><td></td></tr><tr><td>Operating lease liabilities</td><td>334</td><td>304</td><td></td></tr><tr><td>Other, net</td><td>28</td><td>99</td><td></td></tr><tr><td></td><td>7,621</td><td>7,763</td><td></td></tr><tr><td>Valuation allowances</td><td>(5,853)</td><td>(5,518)</td><td></td></tr><tr><td></td><td>1,768</td><td>2,245</td><td></td></tr><tr><td>Deferred tax liabilities</td><td></td><td></td><td></td></tr><tr><td>Subsidiaries, joint ventures and partnerships</td><td>346</td><td>730</td><td></td></tr><tr><td>Intangible assets</td><td>776</td><td>734</td><td></td></tr><tr><td>Operating lease right-of-use assets</td><td>334</td><td>304</td><td></td></tr><tr><td></td><td>1,456</td><td>1,768</td><td></td></tr><tr><td>Net deferred tax asset</td><td>$ 312</td><td>$ 477</td><td></td></tr></table>

At September 30, 2021, the Company had available net operating loss carryforwards of approximately $23.7 billion, of which $13.2 billion will expire at various dates between 2022 and 2041, and the remainder has an indefinite carryforward period. The Company had available U.S. foreign tax credit carryforwards at September 30, 2021 of $35 million which will expire in 2030. The valuation allowance, generally, is for loss and credit carryforwards for which realization is uncertain because it is unlikely that the losses and/or credits will be realized given the lack of sustained profitability and/or limited carryforward periods in certain countries.

## 20. SEGMENT INFORMATION

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

Building Solutions North America: Building Solutions North America designs, sells, installs and services HVAC, controls, building management, refrigeration, integrated electronic security and integrated fire-detection and suppression systems for commercial, industrial, retail, small business, institutional and governmental customers in the United States and Canada. Building Solutions North America also provides energy efficiency solutions and technical services, including inspection, scheduled maintenance, and repair and replacement of mechanical and controls systems, as well as data-driven “smart building” solutions, to non-residential building and industrial applications in the United States and Canadian marketplace.

Building Solutions EMEA/LA: Building Solutions EMEA/LA designs, sells, installs, and services HVAC, controls, building management, refrigeration, integrated electronic security, integrated fire-detection and suppression systems, and provides technical services, including data-driven “smart building” solutions, to markets in Europe, the Middle East, Africa and Latin America.

Building Solutions Asia Pacific: Building Solutions Asia Pacific designs, sells, installs, and services HVAC, controls, building management, refrigeration, integrated electronic security, integrated fire-detection and suppression systems, and provides technical services, including data-driven “smart building” solutions, to the Asia Pacific marketplace.

Global Products: Global Products designs, manufactures and sells HVAC equipment, controls software and software services for residential and commercial applications to commercial, industrial, retail, residential, small business, institutional and



governmental customers worldwide. In addition, Global Products designs, manufactures and sells refrigeration equipment and controls globally. The Global Products business also designs, manufactures and sells fire protection, fire suppression and security products, including intrusion security, anti-theft devices, access control, and video surveillance and management systems, for commercial, industrial, retail, residential, small business, institutional and governmental customers worldwide. Global Products includes the Johnson Controls-Hitachi joint venture.

Management evaluates the performance of its business segments primarily on segment earnings before interest, taxes and amortization ("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.

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

<table><tr><td rowspan="2"></td><td colspan="4">Year Ended September 30,</td></tr><tr><td>2021</td><td colspan="2">2020</td><td>2019</td></tr><tr><td>Net Sales</td><td></td><td></td><td></td><td></td></tr><tr><td>Building Solutions North America</td><td>$     8,685</td><td>$     8,605</td><td>$     9,031</td><td></td></tr><tr><td>Building Solutions EMEA/LA</td><td>3,727</td><td>3,440</td><td>3,655</td><td></td></tr><tr><td>Building Solutions Asia Pacific</td><td>2,654</td><td>2,403</td><td>2,658</td><td></td></tr><tr><td>Global Products</td><td>8,602</td><td>7,869</td><td>8,624</td><td></td></tr><tr><td>Total net sales</td><td>$     23,668</td><td>$     22,317</td><td>$     23,968</td><td></td></tr></table>

<table><tr><td>Segment EBITA</td><td>2021</td><td>2020</td><td>2019</td></tr><tr><td>Building Solutions North America (1)</td><td>$     1,204</td><td>$     1,157</td><td>$     1,153</td></tr><tr><td>Building Solutions EMEA/LA (2)</td><td>391</td><td>338</td><td>368</td></tr><tr><td>Building Solutions Asia Pacific (3)</td><td>349</td><td>319</td><td>341</td></tr><tr><td>Global Products (4)</td><td>1,441</td><td>1,134</td><td>1,179</td></tr><tr><td>Total segment EBITA</td><td>$     3,385</td><td>$     2,948</td><td>$     3,041</td></tr><tr><td>Amortization of intangible assets</td><td>(435)</td><td>(386)</td><td>(377)</td></tr><tr><td>Corporate expenses (5)</td><td>(290)</td><td>(371)</td><td>(405)</td></tr><tr><td>Net financing charges</td><td>(206)</td><td>(231)</td><td>(350)</td></tr><tr><td>Restructuring and impairment costs</td><td>(242)</td><td>(783)</td><td>(235)</td></tr><tr><td>Net mark-to-market adjustments</td><td>402</td><td>(274)</td><td>(618)</td></tr><tr><td>Income from continuing operations before income taxes</td><td>$     2,614</td><td>$     903</td><td>$     1,056</td></tr></table>

<table><tr><td rowspan="2"></td><td colspan="4">September 30,</td></tr><tr><td>2021</td><td>2020</td><td>2019</td><td></td></tr><tr><td>Assets</td><td></td><td></td><td></td><td></td></tr><tr><td>Building Solutions North America (6)</td><td>$     15,317</td><td>$     15,215</td><td>$     15,562</td><td></td></tr><tr><td>Building Solutions EMEA/LA (7)</td><td>5,241</td><td>4,989</td><td>4,786</td><td></td></tr><tr><td>Building Solutions Asia Pacific (8)</td><td>2,783</td><td>2,720</td><td>2,657</td><td></td></tr><tr><td>Global Products (9)</td><td>15,328</td><td>13,882</td><td>13,945</td><td></td></tr><tr><td></td><td>38,669</td><td>36,806</td><td>36,950</td><td></td></tr><tr><td>Assets held for sale</td><td>156</td><td>147</td><td>158</td><td></td></tr><tr><td>Unallocated</td><td>3,065</td><td>3,862</td><td>5,179</td><td></td></tr><tr><td>Total</td><td>$     41,890</td><td>$     40,815</td><td>$     42,287</td><td></td></tr></table>



<table><tr><td rowspan="2"></td><td colspan="4">Year Ended September 30,</td></tr><tr><td>2021</td><td colspan="2">2020</td><td>2019</td></tr><tr><td>Depreciation/Amortization</td><td></td><td></td><td></td><td></td></tr><tr><td>Building Solutions North America</td><td>$     245</td><td>$     233</td><td>$     233</td><td></td></tr><tr><td>Building Solutions EMEA/LA</td><td>103</td><td>102</td><td>112</td><td></td></tr><tr><td>Building Solutions Asia Pacific</td><td>25</td><td>24</td><td>23</td><td></td></tr><tr><td>Global Products</td><td>432</td><td>414</td><td>396</td><td></td></tr><tr><td></td><td>805</td><td>773</td><td>764</td><td></td></tr><tr><td>Corporate</td><td>40</td><td>49</td><td>61</td><td></td></tr><tr><td>Continuing Operations</td><td>845</td><td>822</td><td>825</td><td></td></tr><tr><td>Discontinued Operations</td><td>—</td><td>—</td><td>32</td><td></td></tr><tr><td>Total</td><td>$     845</td><td>$     822</td><td>$     857</td><td></td></tr><tr><td></td><td></td><td></td><td></td><td></td></tr><tr><td></td><td colspan="4">Year Ended September 30,</td></tr><tr><td></td><td>2021</td><td colspan="2">2020</td><td>2019</td></tr><tr><td>Capital Expenditures</td><td></td><td></td><td></td><td></td></tr><tr><td>Building Solutions North America</td><td>$     87</td><td>$     93</td><td>$     119</td><td></td></tr><tr><td>Building Solutions EMEA/LA</td><td>128</td><td>99</td><td>93</td><td></td></tr><tr><td>Building Solutions Asia Pacific</td><td>31</td><td>36</td><td>26</td><td></td></tr><tr><td>Global Products</td><td>265</td><td>191</td><td>310</td><td></td></tr><tr><td></td><td>511</td><td>419</td><td>548</td><td></td></tr><tr><td>Corporate</td><td>41</td><td>24</td><td>38</td><td></td></tr><tr><td>Continuing Operations</td><td>552</td><td>443</td><td>586</td><td></td></tr><tr><td>Discontinued Operations</td><td>—</td><td>—</td><td>197</td><td></td></tr><tr><td>Total</td><td>$     552</td><td>$     443</td><td>$     783</td><td></td></tr></table>

(1) Building Solutions North America segment EBITA for the year ended September 30, 2021 and 2020 excludes $70 million and $520 million, respectively, of restructuring and impairment costs. For the year ended September 30, 2021, Building Solutions North America includes $5 million of equity income. For the year ended September 30, 2020, Building Solutions North America includes $1 million of equity losses.

(2) Building Solutions EMEA/LA segment EBITA for the years ended September 30, 2021 and 2020 excludes $29 million and $59 million, respectively, of restructuring and impairment costs. For the years ended September 30, 2021, 2020 and 2019, Building Solutions EMEA/LA segment EBITA includes $5 million, $6 million and $12 million, respectively, of equity income.

(3) Building Solutions Asia Pacific segment EBITA for the year ended September 30, 2021 and 2020 excludes $28 million and $56 million, respectively, of restructuring and impairment costs. For the years ended September 30, 2021, 2020 and 2019, Building Solutions Asia Pacific segment EBITA includes $1 million, less than $1 million and less than $1 million, respectively, of equity income.

(4) Global Products segment EBITA for the years ended September 30, 2021, 2020 and 2019 excludes $91 million, $143 million and $235 million, respectively, of restructuring and impairment costs. For the years ended September 30, 2021, 2020 and 2019, Global Products segment EBITA includes $250 million, $166 million and $179 million, respectively, of equity income.

(5) Corporate expenses for the year ended September 30, 2021 and 2020 excludes $24 million and $5 million, respectively, of restructuring and impairment costs.



(6) Buildings Solutions North America assets as of September 30, 2021, 2020 and 2019 include $8 million, $7 million and $8 million, respectively, of investments in partially-owned affiliates.

(7) Building Solutions EMEA/LA assets as of September 30, 2021, 2020 and 2019 include $111 million, $108 million and $109 million, respectively, of investments in partially-owned affiliates.

(8) Building Solutions Asia Pacific assets as of September 30, 2021, 2020 and 2019 include $2 million, $2 million, and $6 million, respectively, of investments in partially-owned affiliates.

(9) Global Products assets as of September 30, 2021, 2020 and 2019 include $945 million, $797 million and $730 million, respectively, of investments in partially-owned affiliates.

In fiscal years 2021, 2020 and 2019, no customer exceeded 10% of consolidated net sales.

## Geographic Segments

Financial information relating to the Company’s operations by geographic area is as follows (in millions):

<table><tr><td rowspan="2"></td><td colspan="4">Year Ended September 30,</td></tr><tr><td>2021</td><td colspan="2">2020</td><td>2019</td></tr><tr><td>Net Sales</td><td></td><td></td><td></td><td></td></tr><tr><td>United States</td><td>$ 11,577</td><td>$ 11,371</td><td>$ 11,973</td><td></td></tr><tr><td>Europe</td><td>4,069</td><td>3,523</td><td>3,697</td><td></td></tr><tr><td>Asia Pacific</td><td>5,748</td><td>5,285</td><td>5,888</td><td></td></tr><tr><td>Other Non-U.S.</td><td>2,274</td><td>2,138</td><td>2,410</td><td></td></tr><tr><td>Total</td><td>$ 23,668</td><td>$ 22,317</td><td>$ 23,968</td><td></td></tr><tr><td>Long-Lived Assets (Year-end)</td><td></td><td></td><td></td><td></td></tr><tr><td>United States</td><td>$ 1,638</td><td>$ 1,713</td><td>$ 1,824</td><td></td></tr><tr><td>Europe</td><td>436</td><td>278</td><td>261</td><td></td></tr><tr><td>Asia Pacific</td><td>727</td><td>667</td><td>866</td><td></td></tr><tr><td>Other Non-U.S.</td><td>427</td><td>401</td><td>397</td><td></td></tr><tr><td>Total</td><td>$ 3,228</td><td>$ 3,059</td><td>$ 3,348</td><td></td></tr></table>

In fiscal 2021, the Company changed the basis for the net sales attribution to geographic areas from the location of the assets producing the sales to the location where the sale originated to better align with the Company’s business activities. The prior year amounts have been revised to conform to the current year presentation. Long-lived assets by geographic location consist of net property, plant and equipment.

## 21. NONCONSOLIDATED PARTIALLY-OWNED AFFILIATES

Investments in the net assets of nonconsolidated partially-owned affiliates are stated in the "Investments in partially-owned affiliates" line in the consolidated statements of financial position as of September 30, 2021 and 2020. Equity in the net income of nonconsolidated partially-owned affiliates is stated in the "Equity income" line in the consolidated statements of income for the years ended September 30, 2021, 2020 and 2019.



The table below presents aggregated summarized financial data for the Company’s nonconsolidated partially-owned affiliates which were considered significant subsidiaries in fiscal 2019, but not in fiscal 2021 or 2020 due to the adoption of SEC Final Rule Release No. 33-10786. The summarized income statement data for the year ended September 30, 2019 included in the table below represents 100% of the results of such nonconsolidated partially-owned affiliates accounted for under the equity method (in millions):

<table><tr><td></td><td>Year Ended September 30, 2019</td></tr><tr><td>Net sales</td><td>$ 3,882</td></tr><tr><td>Gross profit</td><td>1,070</td></tr><tr><td>Net income</td><td>411</td></tr><tr><td>Income attributable to noncontrolling interests</td><td>13</td></tr><tr><td>Net income attributable to the entity</td><td>398</td></tr></table>

## 22. GUARANTEES

Certain of the Company's subsidiaries at the business segment level have guaranteed the performance of third-parties and provided financial guarantees for uncompleted work and financial commitments. The terms of these guarantees vary with end dates ranging from the current fiscal year through the completion of such transactions and would typically be triggered in the event of nonperformance. Performance under the guarantees, if required, would not have a material effect on the Company's financial position, results of operations or cash flows.

The Company offers warranties to its customers depending upon the specific product and terms of the customer purchase agreement. A typical warranty program requires that the Company replace defective products within a specified time period from the date of sale. The Company records an estimate for future warranty-related costs based on actual historical return rates and other known factors. Based on analysis of return rates and other factors, the Company's warranty provisions are adjusted as necessary. The Company monitors its warranty activity and adjusts its reserve estimates when it is probable that future warranty costs will be different than those estimates.

The Company’s product warranty liability for continuing operations is recorded in the consolidated statements of financial position in other current liabilities if the warranty is less than one year and in other noncurrent liabilities if the warranty extends longer than one year.

The changes in the carrying amount of the Company’s total product warranty liability for continuing operations for the fiscal years ended September 30, 2021 and 2020 were as follows (in millions). Extended warranty for which deferred revenue is recorded is not included in the table below, but rather included within the contract balances table in the Note 4, "Revenue Recognition," of the notes to consolidated financial statements for all periods presented.

<table><tr><td rowspan="2"></td><td colspan="2">Year Ended September 30,</td></tr><tr><td>2021</td><td>2020</td></tr><tr><td>Balance at beginning of period</td><td>$ 167</td><td>$ 156</td></tr><tr><td>Accruals for warranties issued during the period</td><td>91</td><td>71</td></tr><tr><td>Accruals related to pre-existing warranties</td><td>11</td><td>9</td></tr><tr><td>Settlements made (in cash or in kind) during the period</td><td>(77)</td><td>(71)</td></tr><tr><td>Currency translation</td><td>—</td><td>2</td></tr><tr><td>Balance at end of period</td><td>$ 192</td><td>$ 167</td></tr></table>



## 23. COMMITMENTS AND CONTINGENCIES

## Environmental Matters

The Company accrues for potential environmental liabilities when it is probable a liability has been incurred and the amount of the liability is reasonably estimable. As of September 30, 2021, reserves for environmental liabilities for continuing operations totaled $102 million, of which $48 million was recorded within other current liabilities and $54 million was recorded within other noncurrent liabilities in the consolidated statements of financial position. Reserves for environmental liabilities for continuing operations totaled $130 million at September 30, 2020, of which $61 million was recorded within other current liabilities and $69 million was recorded within other noncurrent liabilities in the consolidated statements of financial position.

Tyco Fire Products L.P. (“Tyco Fire Products”), in coordination with the Wisconsin Department of Natural Resources ("WDNR"), has been conducting an environmental assessment of its Fire Technology Center ("FTC") located in Marinette, Wisconsin and surrounding areas in the City of Marinette and Town of Peshitigo, Wisconsin. In connection with the assessment, perfluorooctane sulfonate ("PFOS") and perfluorooctanoic acid ("PFOA") and/or other per- and polyfluoroalkyl substances ("PFAS") have been detected at the FTC and in groundwater and surface water outside of the boundaries of the FTC. Tyco Fire Products continues to investigate the extent of potential migration of these compounds and is working with WDNR to address these issues insofar as they related to this migration.

During the third quarter of 2019, the Company increased its environmental reserves, which included $140 million related to remediation efforts to be undertaken to address contamination relating to fire-fighting foams containing PFAS compounds at or near the FTC, as well as the continued remediation of arsenic and other contaminants at the Tyco Fire Products Stanton Street manufacturing facility also located in Marinette, Wisconsin (the “Stanton Street Facility”). The Company is not able to estimate a possible loss or range of loss in excess of the established accruals at this time.

A substantial portion of the increased reserves relates to remediation resulting from the use of fire-fighting foams containing PFAS at the FTC. The use of firefighting foams at the FTC was primarily for training and testing purposes in order to ensure that such products sold by the Company’s affiliates, Chemguard, Inc. ("Chemguard") and Tyco Fire Products, were effective at suppressing high intensity fires that may occur at military installations, airports or elsewhere. The reserve was recorded in the quarter ended June 30, 2019 following a comprehensive review by independent environmental consultants related to the presence of PFAS at or near the FTC, as well as remediation discussions with the WDNR.

On June 21, 2019, the WDNR announced that it had received from the Wisconsin Department of Health Services (“WDHS”) a recommendation for groundwater quality standards as to, among other compounds, PFOA and PFOS. The WDHS recommended a groundwater enforcement standard for PFOA and PFOS of 20 parts per trillion. On August 22, 2019, the Governor of Wisconsin issued an executive order that, among other things, directed the WDNR to create a PFAS Coordinating Council and to work with other Wisconsin agencies (including WDHS) to establish final groundwater quality standards based on the WDHS’s prior recommendation. On November 6, 2020, WDNR received further recommendations from WDHS regarding individual standards for 12 additional PFAS and a combined standard for four additional PFAS, PFOA, and PFOS.

In July 2019, the Company received a letter from the WDNR directing the expansion of the evaluation of PFAS in the Marinette region to include (1) biosolids sludge produced by the City of Marinette Waste Water Treatment Plant and spread on certain fields in the area and (2) the Menominee and Peshitigo Rivers. Tyco Fire Products voluntarily responded to the WDNR's letter to request additional necessary information. On October 16, 2019, the WDNR issued a "Notice of Noncompliance" to Tyco Fire Products and Johnson Controls, Inc. regarding the WDNR's July 3, 2019 letter. The letter stated that "if you fail to take the actions required by Wis. Stat. § 292.11 to address this contamination, the DNR will move forward under Wis. Stat. § 292.31 to implement the SI workplan and evaluate further environmental enforcement actions and cost recovery under Wis. Stat. § 292.31(8)." The WDNR issued a further letter regarding the issue on November 4, 2019. In February 2020, the WDNR sent a letter to Tyco Fire Products and Johnson Controls, Inc. further directing the expansion of the evaluation of PFAS in the Marinette region to include investigation activities south and west of the previously defined FTC study area. In September 2021, the WDNR sent an additional "Notice of Noncompliance" to Tyco Fire Products and Johnson Controls, Inc. concerning land-applied biosolids, which reviewed and responded to the Company's biosolids investigation conducted to date. Tyco Fire Products and Johnson Controls, Inc. believe that they have complied with all applicable environmental laws and regulations. The Company cannot predict what regulatory or enforcement actions, if any, might result from the WDNR's actions, or the consequences of any such actions.

In May 2021, as part of Tyco Fire Products' ongoing investigation and remediation program, WDNR approved Tyco Fire Products' proposed Groundwater Extraction and Treatment System ("GETS"), a permanent groundwater remediation system that will extract groundwater that contains PFAS, treat it using advanced filtration systems, and return the treated water to the



environment. Tyco Fire Products has commenced construction on the GETS. Tyco Fire Products also has started the process of removing PFAS-affected soil from the FTC.

In December 2020, the Company received a notice from the Wisconsin Department of Justice (“WDOJ”) that the WDOJ was considering a potential civil enforcement action against the Company relating to environmental matters at the FTC including, but not limited to, the investigation and remediation of PFAS at or near the FTC as discussed above and the Company’s alleged failure to timely report the presence of PFAS chemicals at the FTC. Such enforcement action could seek civil monetary penalties and/or injunctive relief. The Company is presently unable to predict the duration, scope, or results of any potential civil enforcement action that may result, the consequences of any such action, or the nature of any resolution of these potential claims with the WDOJ.

Tyco Fire Products has been engaged in remediation activities at the Stanton Street Facility since 1990. Its corporate predecessor, Ansil Incorporated (“Ansil”) manufactured arsenic-based agricultural herbicides at the Stanton Street Facility, which resulted in significant arsenic contamination of soil and groundwater on the site and in parts of the adjoining Menominee River. In 2009, Ansil entered into an Administrative Consent Order (the "Consent Order") with the U.S. Environmental Protection Agency to address the presence of arsenic at the site. Under this agreement, Tyco Fire Products' principal obligations are to contain the arsenic contamination on the site, pump and treat on-site groundwater, dredge, treat and properly dispose of contaminated sediments in the adjoining river areas, and monitor contamination levels on an ongoing basis. Activities completed under the Consent Order since 2009 include the installation of a subsurface barrier wall around the facility to contain contaminated groundwater, the installation of a groundwater extraction and treatment system and the dredging and offsite disposal of treated river sediment. The increase in the reserve related to the Stanton Street Facility in the third quarter of 2019 was recorded following a further review of the Consent Order, which resulted in the identification of several structural upgrades needed to preserve the effectiveness of prior remediation efforts. In addition to ongoing remediation activities, the Company is also working with the WDNR to investigate the presence of PFAS at or near the Stanton Street Facility as part of the evaluation of PFAS in the Marinette region.

Potential environmental liabilities accrued by the Company do not take into consideration possible recoveries of future insurance proceeds. They do, however, take into account the likely share other parties will bear at remediation sites. It is difficult to estimate the Company's ultimate level of liability at many remediation sites due to the large number of other parties that may be involved, the complexity of determining the relative liability among those parties, the uncertainty as to the nature and scope of the investigations and remediation to be conducted, the uncertainty in the application of law and risk assessment, the various choices and costs associated with diverse technologies that may be used in corrective actions at the sites, and the often quite lengthy periods over which eventual remediation may occur. It is possible that technological, regulatory or enforcement developments, the results of additional environmental studies or other factors could change the Company's expectations with respect to future charges and cash outlays, and such changes could be material to the Company's future results of operations, financial condition or cash flows. Nevertheless, the Company does not currently believe that any claims, penalties or costs in addition to the amounts accrued will have a material adverse effect on the Company's financial position, results of operations or cash flows. In addition, the Company has identified asset retirement obligations for environmental matters that are expected to be addressed at the retirement, disposal, removal or abandonment of existing owned facilities. The Company recorded conditional asset retirement obligations for continuing operations of $29 million at both September 30, 2021 and 2020.

## Asbestos Matters

The Company and certain of its subsidiaries, along with numerous other third parties, are named as defendants in personal injury lawsuits based on alleged exposure to asbestos containing materials. These cases have typically involved product liability claims based primarily on allegations of manufacture, sale or distribution of industrial products that either contained asbestos or were used with asbestos containing components.

As of September 30, 2021, the Company's estimated asbestos-related net liability recorded on a discounted basis within the Company's consolidated statements of financial position was $80 million. The net liability within the consolidated statements of financial position was comprised of a liability for pending and future claims and related defense costs of $458 million, of which $58 million was recorded in other current liabilities and $400 million was recorded in other noncurrent liabilities. The Company also maintained separate cash, investments and receivables related to insurance recoveries within the consolidated statements of financial position of $378 million, of which $13 million was recorded in other current assets and $365 million was recorded in other noncurrent assets. Assets included $6 million of cash and $314 million of investments, which have all been designated as restricted. In connection with the recognition of liabilities for asbestos-related matters, the Company records asbestos-related insurance recoveries that are probable; the amount of such recoveries recorded at September 30, 2021 was $58 million.



As of September 30, 2020, the Company's estimated asbestos-related net liability recorded on a discounted basis within the Company's consolidated statements of financial position was $115 million. The net liability within the consolidated statements of financial position was comprised of a liability for pending and future claims and related defense costs of $483 million, of which $49 million was recorded in other current liabilities and $434 million was recorded in other noncurrent liabilities. The Company also maintained separate cash, investments and receivables related to insurance recoveries within the consolidated statements of financial position of $368 million, of which $39 million was recorded in other current assets and $329 million was recorded in other noncurrent assets. Assets included $9 million of cash and $291 million of investments, which have all been designated as restricted. In connection with the recognition of liabilities for asbestos-related matters, the Company records asbestos-related insurance recoveries that are probable; the amount of such recoveries recorded at September 30, 2020 was $68 million.

The Company's estimate of the liability and corresponding insurance recovery for pending and future claims and defense costs is based on the Company's historical claim experience, and estimates of the number and resolution cost of potential future claims that may be filed and is discounted to present value from 2068 (which is the Company's reasonable best estimate of the actuarially determined time period through which asbestos-related claims will be filed against Company affiliates). Asbestos-related defense costs are included in the asbestos liability. The Company's legal strategy for resolving claims also impacts these estimates. The Company considers various trends and developments in evaluating the period of time (the look-back period) over which historical claim and settlement experience is used to estimate and value claims reasonably projected to be made through 2068. At least annually, the Company assesses the sufficiency of its estimated liability for pending and future claims and defense costs by evaluating actual experience regarding claims filed, settled and dismissed, and amounts paid in settlements. In addition to claims and settlement experience, the Company considers additional quantitative and qualitative factors such as changes in legislation, the legal environment, and the Company's defense strategy. The Company also evaluates the recoverability of its insurance receivable on an annual basis. The Company evaluates all of these factors and determines whether a change in the estimate of its liability for pending and future claims and defense costs or insurance receivable is warranted.

The amounts recorded by the Company for asbestos-related liabilities and insurance-related assets are based on the Company's strategies for resolving its asbestos claims, currently available information, and a number of estimates and assumptions. Key variables and assumptions include the number and type of new claims that are filed each year, the average cost of resolution of claims, the identity of defendants, the resolution of coverage issues with insurance carriers, amount of insurance, and the solvency risk with respect to the Company's insurance carriers. Many of these factors are closely linked, such that a change in one variable or assumption will impact one or more of the others, and no single variable or assumption predominately influences the determination of the Company's asbestos-related liabilities and insurance-related assets. Furthermore, predictions with respect to these variables are subject to greater uncertainty in the later portion of the projection period. Other factors that may affect the Company's liability and cash payments for asbestos-related matters include uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, reforms of state or federal tort legislation and the applicability of insurance policies among subsidiaries. As a result, actual liabilities or insurance recoveries could be significantly higher or lower than those recorded if assumptions used in the Company's calculations vary significantly from actual results.

## Insurable Liabilities

The Company records liabilities for its workers' compensation, product, general and auto liabilities. The determination of these liabilities and related expenses is dependent on claims experience. For most of these liabilities, claims incurred but not yet reported are estimated by utilizing actuarial valuations based upon historical claims experience. At September 30, 2021 and 2020, the insurable liabilities totaled $325 million and $363 million, respectively, of which $77 million and $83 million was recorded within other current liabilities, $22 million and $22 million was recorded within accrued compensation and benefits, and $226 million and $258 million was recorded within other noncurrent liabilities in the consolidated statements of financial position, respectively. The Company records receivables from third party insurers when recovery has been determined to be probable. The amount of such receivables recorded at September 30, 2021 were $20 million, of which $5 million was recorded within other current assets and $15 million was recorded within other noncurrent assets, respectively. The amount of such receivables recorded at September 30, 2020 were $21 million, of which $5 million was recorded within other current assets and $16 million was recorded within other noncurrent assets, respectively. The Company maintains captive insurance companies to manage its insurable liabilities.

## Aqueous Film-Forming Foam ("AFFF") Litigation

Two of the Company's subsidiaries, Chemguard and Tyco Fire Products, have been named, along with other defendant manufacturers, suppliers and distributors, and, in some cases, certain subsidiaries of the Company affiliated with Chemguard



and Tyco Fire Products, in a number of class action and other lawsuits relating to the use of fire-fighting foam products by the U.S. Department of Defense (the "DOD") and others for fire suppression purposes and related training exercises. Plaintiffs generally allege that the firefighting foam products contain or break down into the chemicals PFOS and PFOA and/or other PFAS compounds and that the use of these products by others at various airbases, airports and other sites resulted in the release of these chemicals into the environment and ultimately into communities' drinking water supplies neighboring those airports, airbases and other sites. Plaintiffs generally seek compensatory damages, including damages for alleged personal injuries, medical monitoring, diminution in property values, investigation and remediation costs, and natural resources damages, and also seek punitive damages and injunctive relief to address remediation of the alleged contamination.

PFOA, PFOS, and other PFAS compounds are being studied by the United States Environmental Protection Agency ("EPA") and other environmental and health agencies and researchers. The EPA has not issued binding regulatory limits, but had initially stated that it would propose regulatory standards for PFOS and PFOA in drinking water by the end of 2019, in accordance with its PFAS Action Plan released in February 2019, and issued interim recommendations for addressing PFOA and PFOS in groundwater in December 2019. While those studies continue, the EPA has issued a health advisory level for PFOA and PFOS in drinking water. In March 2021, EPA published its final determination to regulate PFOS and PFOA in drinking water. The EPA also announced in January 2021 that it will issue an advance notice of proposed rulemaking to solicit public comment on whether the agency should take additional regulatory steps to address PFAS contamination, including designating PFOA and PFOS and other PFAS as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act and seeking comment on whether PFOA and PFOS and other PFAS should be subject to regulation as hazardous waste under the Resource Conservation and Recovery Act. The Agency reissued those actions in February 2021. Both PFOA and PFOS are types of synthetic chemical compounds that have been present in firefighting foam. However, both are also present in many existing consumer products. According to EPA, PFOA and PFOS have been used to make carpets, clothing, fabrics for furniture, paper packaging for food and other materials (e.g., cookware) that are resistant to water, grease or stains.

In September 2018, Tyco Fire Products and Chemguard filed a Petition for Multidistrict Litigation with the United States Judicial Panel on Multidistrict Litigation ("JPML") seeking to consolidate all existing and future federal cases into one jurisdiction. On December 7, 2018, the JPML issued an order transferring various AFFF cases to a multi-district litigation ("MDL") before the United States District Court for the District of South Carolina. Additional cases have been identified for transfer to or are being directly filed in the MDL.

## AFFF Putative Class Actions

Chemguard and Tyco Fire Products are named in 32 putative class actions in federal courts originating from Colorado, Delaware, Florida, Massachusetts, New York, Pennsylvania, Washington, New Hampshire, South Carolina, the District of Columbia, Guam, West Virginia, Michigan, Texas and South Dakota. All of these cases except one have been direct-filed in or transferred to the MDL.

## AFFF Individual or Mass Actions

There are more than 1,700 individual or “mass” actions pending that were filed in state or federal court in various states including California, Colorado, New York, Pennsylvania, New Mexico, Missouri, Arizona, Texas, and South Carolina against Chemguard and Tyco Fire Products and other defendants in which the plaintiffs generally seek compensatory damages, including damages for alleged personal injuries, medical monitoring, and alleged diminution in property values. The cases involve plaintiffs from various states including approximately 7,000 plaintiffs in Colorado and more than 1,700 other plaintiffs. All but fourteen of these matters have been transferred to or directly-filed in the MDL: One case filed in federal court in West Virginia has been tagged for transfer to the MDL. Two cases initially filed in state court in Alaska have been removed to federal court and tagged for transfer to the MDL. Nine cases have recently been filed in state court in New York, and it is anticipated that they will be removed to federal court and transferred to the MDL. One case, Young v. Chemguard et al., was filed in superior court in Maricopa County, Arizona, removed to the United States District Court, District of Arizona, and tagged to the MDL, but was remanded to state court prior to being transferred to the MDL. The decision to remand the case to state court is currently being appealed. The final case, Forbach et al. v. Chemguard et al., was filed in superior court in Coonino County, Arizona, and is proceeding to initial discovery.

Many of the additional filed actions were directly filed in South Carolina by plaintiffs who were among the 660 plaintiffs the Company had previously disclosed to have made filings in Pennsylvania state court.



## AFFF Municipal Cases

Chemguard and Tyco Fire Products have been named as defendants in approximately 144 cases in federal and state courts involving municipal or water provider plaintiffs in Alaska, Alabama, Arizona, California, Colorado, Connecticut, Florida, Idaho, Illinois, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Virginia, Washington, West Virginia, Wisconsin, the District of Columbia, and several municipalities or water providers from various states who direct-filed complaints in South Carolina. All but nine of these cases have been transferred to or directly filed in the MDL, and it is anticipated that the remaining cases will be transferred to the MDL. These municipal plaintiffs generally allege that the use of the defendants' fire-fighting foam products at fire training academies, municipal airports, Air National Guard bases, or Navy or Air Force bases released PFOS and PFOA into public water supply wells, allegedly requiring remediation of public property.

In May 2018, the Company was also notified by the Widefield Water and Sanitation District in Colorado Springs, Colorado that it may assert claims regarding its remediation costs in connection with PFOS and PFOA contamination allegedly resulting from the use of those products at the Peterson Air Force Base.

## State or U.S. Territory Attorneys General Litigation related to AFFF

In June 2018, the State of New York filed a lawsuit in New York state court (State of New York v. The 3M Company et al No. 904029-18 (N.Y. Sup. Ct., Albany County)) against a number of manufacturers, including affiliates of the Company, with respect to alleged PFOS and PFOA contamination purportedly resulting from firefighting foams used at locations across New York, including Stewart Air National Guard Base in Newburgh and Gabreski Air National Guard Base in Southampton, Plattsburgh Air Force Base in Plattsburgh, Griffiss Air Force Base in Rome, and unspecified "other" sites throughout the State. The lawsuit seeks to recover costs and natural resource damages associated with contamination at these sites. This suit has been removed to the United States District Court for the Northern District of New York and transferred to the MDL.

In February 2019, the State of New York filed a second lawsuit in New York state court (State of New York v. The 3M Company et al (N.Y. Sup. Ct., Albany County)), against a number of manufacturers, including affiliates of the Company, with respect to alleged PFOS and PFOA contamination purportedly resulting from firefighting foams used at additional locations across New York. This suit has been removed to the United States District Court for the Northern District of New York and transferred to the MDL. In July 2019, the State of New York filed a third lawsuit in New York state court (State of New York v. The 3M Company et al (N.Y. Sup. Ct., Albany County)), against a number of manufacturers, including affiliates of the Company, with respect to alleged PFOS and PFOA contamination purportedly resulting from firefighting foams used at further additional locations across New York. This suit has been removed to the United States District Court for the Northern District of New York and transferred to the MDL. In November 2019, the State of New York filed a fourth lawsuit in New York state court (State of New York v. The 3M Company et al (N.Y. Sup. Ct., Albany County)), against a number of manufacturers, including affiliates of the Company, with respect to alleged PFOS and PFOA contamination purportedly resulting from firefighting foams used at further additional locations across New York. This suit has been removed to the United States District Court for the Northern District of New York and transferred to the MDL.

In January 2019, the State of Ohio filed a lawsuit in Ohio state court (State of Ohio v. The 3M Company et al., No. G-4801-CI-021804752-000 (Court of Common Pleas of Lucas County, Ohio)) against a number of manufacturers, including affiliates of the Company, with respect to PFOS and PFOA contamination allegedly resulting from the use of firefighting foams at various specified and unspecified locations across Ohio. The lawsuit seeks to recover costs and natural resource damages associated with the contamination. This lawsuit has been removed to the United States District Court for the Northern District of Ohio and transferred to the MDL.

In addition, in May and June 2019, three other states filed lawsuits in their respective state courts against a number of manufacturers, including affiliates of the Company, with respect to PFOS and PFOA contamination allegedly resulting from the use of firefighting foams at various specified and unspecified locations across their jurisdictions (State of New Hampshire v. The 3M Company et al.; State of Vermont v. The 3M Company et al.; State of New Jersey v. The 3M Company et al.). All three of these suits have been removed to federal court and transferred to the MDL.

In September 2019, the government of Guam filed a lawsuit in the superior court of Guam against a number of manufacturers, including affiliates of the Company, with respect to PFOS and PFOA contamination allegedly resulting from the use of firefighting foams at various locations within its jurisdiction. This complaint has been removed to federal court and transferred to the MDL.



In November 2019, the government of the Commonwealth of the Northern Mariana Islands filed a lawsuit in the superior court of the Northern Mariana Islands against a number of manufacturers, including affiliates of the Company, with respect to PFOS and PFOA contamination allegedly resulting from the use of firefighting foams at various locations within its jurisdiction. This complaint has been removed to federal court and transferred to the MDL.

In August 2020, Attorney General of the State of Michigan filed two substantially similar lawsuits—one in federal court and one in state court—against a number of manufacturers, including affiliates of the Company, with respect to PFOS and PFOA contamination allegedly resulting from the use of firefighting foams at various locations within the State. The federal action has been transferred to the MDL, and the state court action has been removed to federal court and transferred to the MDL.

In December 2020, the State of Mississippi filed a lawsuit against a number of manufacturers and other defendants, including affiliates of the Company, with respect to PFOS and PFOA damage of the State's land and natural resources allegedly resulting from the use of firefighting foams at various locations throughout the State. This complaint was direct-filed in the MDL in South Carolina.

In April 2021, the State of Alaska filed a lawsuit in the superior court of the State of Alaska against a number of manufacturers and other defendants, including affiliates of the Company, with respect to PFOS and PFOA damage of the State's land and natural resources allegedly resulting from the use of firefighting foams at various locations throughout the State. The State's case has been removed to federal court and transferred to the MDL. The State of Alaska has also named a number of manufacturers and other defendants, including affiliates of the Company, as third-party defendants in two cases brought by individuals against the State. These two cases have been removed to federal court and tagged for transfer to the MDL.

In early November 2021, the Attorney General of the State of North Carolina filed four individual lawsuits in the superior courts of the State of North Carolina against a number of manufacturers and other defendants, including affiliates of the Company, with respect to PFOS and PFOA damage of the State's land, natural resources, and property allegedly resulting from the use of firefighting foams at four separate locations throughout the State. It is anticipated that these four cases will be removed to federal court and tagged for transfer to the MDL.

AFFF Matters Related to the Tyco Fire Products Fire Technology Center in Marinette, Wisconsin

Tyco Fire Products and Chemguard are defendants in one lawsuit in Marinette County, Wisconsin alleging damages due to the historical use of AFFF products at Tyco's Fire Technology Center in Marinette, Wisconsin. The putative class action, Joan & Richard Campbell for themselves and on behalf of other similarly situated v. Tyco Fire Products LP and Chemguard Inc., et al. (Marinette County Circuit Court, filed Dec. 17, 2018) alleges PFAS (including PFOA/PFOS) contaminated groundwater migrated off Tyco's property and into residential drinking water wells causing both personal injuries and property damage to the plaintiffs; Tyco and Chemguard removed this case to the United States District Court for the Eastern District of Wisconsin and it has been transferred to the MDL. On January 7, 2021, the parties agreed to settle the lawsuit. The court conducted a hearing regarding the proposed settlement in May 2021 and issued a final order approving an amended settlement agreement and dismissing the case with prejudice in August 2021. The final settlement provides that Tyco will pay up to $15 million to compensate Town of Pesthigo residents who live in the area affected by PFAS from the FTC for claims related to loss of real property value and/or exposure. The settlement does not constitute an admission of wrongdoing by Tyco or Chemguard.

## Other AFFF Related Matters

In March 2020, the Kalispel Tribe of Indians (a federally recognized Tribe) and two tribal corporations filed a lawsuit in the United States District Court for the Eastern District of Washington against a number of manufacturers, including affiliates of the Company, and the United States with respect to PFAS contamination allegedly resulting from the use and disposal of AFFF by the United States Air Force at and around Fairchild Air Force Base in eastern Washington. This case has been transferred to the MDL.

The Company is vigorously defending the above matters and believes that it has meritorious defenses to class certification and the claims asserted, including statutes of limitations, the government contractor defense, various medical and scientific defenses, and other factual and legal defenses. The government contractor defense is a form of immunity available to government contractors that produced products for the United States government pursuant to the government's specifications. Tyco and Chemguard have insurance that has been in place for many years and the Company is pursuing this coverage for these matters. However, there are numerous factual and legal issues to be resolved in connection with these claims, and it is extremely difficult to predict the outcome or ultimate financial exposure, if any, represented by these matters, and there can be no assurance that any such exposure will not be material.



## Other Matters

The Company is involved in various lawsuits, claims and proceedings incident to the operation of its businesses, including those pertaining to product liability, environmental, safety and health, intellectual property, employment, commercial and contractual matters, and various other casualty matters. Although the outcome of litigation cannot be predicted with certainty and some lawsuits, claims or proceedings may be disposed of unfavorably to us, it is management's opinion that none of these will have a material adverse effect on the Company's financial position, results of operations or cash flows. Costs related to such matters were not material to the periods presented.

## 24. RELATED PARTY TRANSACTIONS

In the ordinary course of business, the Company enters into transactions with related parties, such as equity affiliates. Such transactions consist of facility management services, the sale or purchase of goods and other arrangements.

The following table presents net sales to and purchases from related parties for the years ended September 30, 2021, 2020 and 2019 (in millions):

<table><tr><td rowspan="2"></td><td colspan="4">Year Ended September 30,</td></tr><tr><td>2021</td><td colspan="2">2020</td><td>2019</td></tr><tr><td>Net sales to related parties</td><td>$     185</td><td>$     194</td><td>$     217</td><td></td></tr><tr><td>Purchases from related parties</td><td>185</td><td>85</td><td>66</td><td></td></tr></table>

The following table presents receivables from and payables to related parties in the consolidated statements of financial position (in millions):

<table><tr><td rowspan="2"></td><td colspan="3">September 30,</td></tr><tr><td>2021</td><td>2020</td><td></td></tr><tr><td>Receivable from related parties</td><td>$     73</td><td>$     48</td><td></td></tr><tr><td>Payable to related parties</td><td>45</td><td>11</td><td></td></tr></table>

Additionally, the Company leases certain facilities used in its operations from a related party. As of September 30, 2021, the right-of-use asset associated with these leases was $11 million and the lease liability was $10 million. Amounts paid for these leases were not material.



## JOHNSON CONTROLS INTERNATIONAL PLC AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In millions)

<table><tr><td>Year Ended September 30,</td><td>2021</td><td>2020</td><td>2019</td></tr><tr><td>Accounts Receivable - Allowance for Expected Credit Losses (1)</td><td></td><td></td><td></td></tr><tr><td>Balance at beginning of period</td><td>$     173</td><td>$     173</td><td>$     169</td></tr><tr><td>Provision (income) charged to costs and expenses</td><td>(3)</td><td>20</td><td>37</td></tr><tr><td>Accounts charged off, net of recoveries</td><td>(65)</td><td>(21)</td><td>(21)</td></tr><tr><td>Divestiture of businesses</td><td>—</td><td>—</td><td>(10)</td></tr><tr><td>Currency translation</td><td>1</td><td>1</td><td>(2)</td></tr><tr><td>Other (including impact of adoption of ASU 2016-13)</td><td>4</td><td>—</td><td>—</td></tr><tr><td>Balance at end of period</td><td>$     110</td><td>$     173</td><td>$     173</td></tr><tr><td>Deferred Tax Assets - Valuation Allowance</td><td></td><td></td><td></td></tr><tr><td>Balance at beginning of period</td><td>$     5,518</td><td>$     5,068</td><td>$     5,088</td></tr><tr><td>Allowance provision for new operating and other loss carryforwards</td><td>505</td><td>624</td><td>195</td></tr><tr><td>Allowance provision (benefits)</td><td>(170)</td><td>(174)</td><td>(215)</td></tr><tr><td>Balance at end of period</td><td>$     5,853</td><td>$     5,518</td><td>$     5,068</td></tr></table>

(1) Allowance for doubtful accounts as of September 30, 2020 and 2019, prior to the adoption of ASU 2016-13.

## ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

## ITEM 9A CONTROLS AND PROCEDURES

## Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluations, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing, summarizing, and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act, and that information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

## Management’s Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s internal control over financial reporting based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, the Company’s management has concluded that, as of September 30, 2021, the Company’s internal control over financial reporting was effective.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the Company’s consolidated financial statements and the effectiveness of internal control over financial reporting as of September 30, 2021 as stated in its report which is included in Item 8 of this Form 10-K and is incorporated by reference herein.

Management has excluded Silent-Aire from its assessment of internal control over financial reporting as of September 30, 2021 given its acquisition date of Silent-Aire in May 2021. Silent-Aire is a wholly owned subsidiary of the Company whose total assets and total revenues excluded from our assessment represent less than 1% each of the related consolidated financial statement amounts as of and for the year ended September 30, 2021.

## Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2021, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

## ITEM 9B OTHER INFORMATION

None.

## ITEM 9C DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

None.

## PART III

In response to Part III, Items 10, 11, 12, 13 and 14, parts of the Company’s definitive proxy statement (to be filed pursuant to Regulation 14A within 120 days after Registrant’s fiscal year-end of September 30, 2021) for its annual meeting to be held on March 9, 2022, are incorporated by reference in this Form 10-K.

## ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information relating to directors and nominees of Johnson Controls is set forth under the caption “Proposal Number One” in Johnson Controls’ proxy statement for its annual meeting of shareholders to be held on March 9, 2022 (the “Johnson Controls Proxy Statement”) and is incorporated by reference herein. Information about executive officers is included in Part I, Item 4 of this Annual Report on Form 10-K. The information required by Items 405, 407(c)(3), (d)(4) and (d)(5) of Regulation S-K is contained under the captions “Governance of the Company - Nomination of Directors and Board Diversity,” “Governance of the Company - Board Committees”, and “Committees of the Board - Audit Committee” of the Johnson Controls Proxy Statement and such information is incorporated by reference herein.

## Code of Ethics

Johnson Controls has adopted a code of ethics for directors, officers (including the Company’s principal executive officer, principal financial officer and principal accounting officer) and employees, known as Values First, The Johnson Controls Code of Ethics. The Code of Ethics is available on the Company’s website at www.valuesfirst.johnsoncontrols.com. The Company posts any amendments to or waivers of its Code of Ethics (to the extent applicable to the Company’s directors or executive officers) at the same location on the Company’s website. In addition, copies of the Code of Ethics may be obtained in print without charge upon written request by any stockholder to the office of the Company at One Albert Quay, Cork, Ireland.

## ITEM 11 EXECUTIVE COMPENSATION

The information required by Item 402 of Regulation S-K is contained under the captions “Compensation Discussion & Analysis” (excluding the information under the caption “Compensation Committee Report on Executive Compensation”), “Executive Compensation Tables” and “Compensation of Non-Employee Directors” of the Johnson Controls Proxy Statement. Such information is incorporated by reference.

The information required by Items 407(e)(4) and (e)(5) of Regulation S-K is contained under the captions “Committees of the Board - Compensation Committee Interlocks and Insider Participation” and “Compensation Discussion & Analysis - Compensation Committee Report on Executive Compensation” of the Johnson Controls Proxy Statement. Such information



(other than the Compensation Committee Report on Executive Compensation, which shall not be deemed to be “filed”) is incorporated by reference.

## ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information in the Johnson Controls Proxy Statement set forth under the caption "Security Ownership of Certain Beneficial Owners and Management" is incorporated herein by reference.

On March 10, 2021, the shareholders of the Company approved the Johnson Controls International plc 2021 Equity and Incentive Plan, which terminated the 2012 Share and Incentive Plan, as amended in September 2016 (collectively, the "Plans"). Both plans authorize stock options, stock appreciation rights, restricted (non-vested) stock/units, performance shares, performance units and other stock-based awards. The Compensation and Talent Development Committee of the Company's Board of Directors determines the types of awards to be granted to individual participants and the terms and conditions of the awards.

The following table provides information about the Company's equity compensation plans as of September 30, 2021:

<table><tr><td></td><td>(a)</td><td>(b)</td><td>(c)</td></tr><tr><td></td><td>Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights</td><td>Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights</td><td>Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))</td></tr><tr><td>Plan Category</td><td></td><td></td><td></td></tr><tr><td>Equity compensation plans approved by shareholders</td><td>5,951,011</td><td>38.84</td><td>54,253,453</td></tr><tr><td>Equity compensation plans not approved by shareholders</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Total</td><td>5,951,011</td><td>38.84</td><td>54,253,453</td></tr></table>

## ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information in the Johnson Controls Proxy Statement set forth under the captions “Committees of the Board,” “Governance of the Company - Director Independence,” and “Governance of the Company - Other Directorships, Conflicts and Related Party Transactions,” is incorporated herein by reference.

## ITEM 14 PRINCIPAL ACCOUNTING FEES AND SERVICES

The information in the Johnson Controls Proxy Statement set forth under “Proposal Number Two” related to the appointment of auditors is incorporated herein by reference.



## PART IV

## ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES

<table><tr><td>Page in Form 10-K</td></tr><tr><td>(a) The following documents are filed as part of this Form 10-K:</td></tr><tr><td>(1) Financial Statements</td></tr><tr><td>Report of Independent Registered Public Accounting Firm</td></tr><tr><td>Consolidated Statements of Income for the years ended September 30, 2021, 2020 and 2019</td></tr><tr><td>Consolidated Statements of Comprehensive Income (Loss) for the years ended September 30, 2021, 2020 and 2019</td></tr><tr><td>Consolidated Statements of Financial Position at September 30, 2021 and 2020</td></tr><tr><td>Consolidated Statements of Cash Flows for the years ended September 30, 2021, 2020 and 2019</td></tr><tr><td>Consolidated Statements of Shareholders&#x27; Equity for the years ended September 30, 2021, 2020 and 2019</td></tr><tr><td>Notes to Consolidated Financial Statements</td></tr><tr><td>(2) Financial Statement Schedule</td></tr><tr><td>For the years ended September 30, 2021, 2020 and 2019:</td></tr><tr><td>Schedule II - Valuation and Qualifying Accounts</td></tr><tr><td>(3) Exhibits</td></tr><tr><td>Reference is made to the separate exhibit index contained on page 118 filed herewith.</td></tr></table>

All other schedules are omitted because they are not applicable, or the required information is shown in the financial statements or notes thereto.

Financial statements of 50% or less-owned companies have been omitted because the proportionate share of their revenue or profit before income taxes is individually less than 20% of the respective consolidated amounts and investments in such companies are less than 20% of consolidated total assets.

## ITEM 16 FORM 10-K SUMMARY

Not applicable.



## Johnson Controls International plc
Index to Exhibits

(a) (1) and (2) Financial Statements and Supplementary Data - See Item 8

(b) Exhibit Index:

<table><tr><td>Exhibit</td><td>Title</td></tr><tr><td>2.1</td><td>Separation and Distribution Agreement, dated as of September 8, 2016, by and between Johnson Controls International plc and Adient Limited (incorporated by reference to Exhibit 2.1 to the registrant&#x27;s Current Report on Form 8-K filed September 9, 2016)</td></tr><tr><td>2.2</td><td>Agreement and Plan of Merger by and among Johnson Controls, Inc., Johnson Controls International plc (formerly Tyco International plc) and Jagara Merger Sub LLC, dated as of January 24, 2016 (incorporated by reference to Exhibit 2.1 to the registrant&#x27;s Current Report on Form 8-K filed January 27, 2016)</td></tr><tr><td>2.3</td><td>Merger Agreement, dated as of May 30, 2014, between Tyco International Ltd., and Johnson Controls International plc (formerly Tyco International plc) (incorporated by reference to Exhibit 2.1 to the registrant&#x27;s Current Report on Form 8-K filed on June 4, 2014)</td></tr><tr><td>3.1</td><td>Memorandum and Articles of Association of Johnson Controls International plc, as amended by special resolutions dated September 8, 2014, August 17, 2016 and March 7, 2018 (incorporated by reference to Exhibit 3.1 to the registrant&#x27;s Quarterly Report on Form 10-Q filed on May 3, 2018)</td></tr><tr><td>4.1</td><td>Assumption and Accession Agreement, dated as of November 17, 2014, by Johnson Controls International plc (formerly Tyco International plc) (incorporated by reference to Exhibit 4.1 to the registrant&#x27;s current report on Form 8-K filed on November 17, 2014)</td></tr><tr><td>4.2</td><td>Indenture, dated December 28, 2016, between Johnson Controls International plc and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the registrant&#x27;s current report on Form 8-K filed on December 28, 2016)</td></tr><tr><td>4.3</td><td>First Supplemental Indenture, dated December 28, 2016, between Johnson Controls International plc, and U.S. Bank National Association, as trustee, and Elavon Financial Services DAC, UK Branch, as paying agent for the New Euro Notes attaching forms of 2.355% Senior Notes due 2017 (retired; no longer outstanding), 7.125% Senior Notes due 2017 (retired; no longer outstanding), 1.400% Senior Notes due 2017 (retired, no longer outstanding as of November 2, 2017), 3.750% Notes due 2018 (retired; no longer outstanding), 5.000% Senior Notes due 2020 (retired; no longer outstanding), 4.25% Senior Notes due 2021 (retired; no longer outstanding), 3.750% Senior Notes due 2021 (retired; no longer outstanding), 3.625% Senior Notes due 2024, 6.000% Notes due 2036, 5.70% Senior Notes due 2041, 5.250% Senior Notes due 2041, 4.625% Senior Notes due 2044, 6.950% Debentures due December 1, 2045, 4.950% Senior Notes due 2064, 4.625% Notes due 2023, 1.375% Notes due 2025, 3.900% Notes due 2026, and 5.125% Notes due 2045 (incorporated by reference to Exhibit 4.2 to the registrant&#x27;s current report on Form 8-K filed on December 28, 2016)</td></tr><tr><td>4.4</td><td>Second Supplemental Indenture, dated February 7, 2017, between Johnson Controls International plc and U.S. Bank National Association, as trustee, attaching form of 4.500% Senior Notes due 2047 (incorporated by reference to Exhibit 4.2 to the registrant&#x27;s Current Report on Form 8-K filed on February 7, 2017)</td></tr><tr><td>4.5</td><td>Third Supplemental Indenture, dated March 15, 2017, among Johnson Controls International plc, U.S. Bank National Association, as trustee and Elavon Financial Services DAC, UK Branch, as paying agent, attaching form of 1.000% Senior Notes due 2023 (incorporated by reference to Exhibit 4.2 to the registrant&#x27;s Current Report on Form 8-K filed on March 15, 2017)</td></tr><tr><td>4.6</td><td>Fifth Supplemental Indenture, dated September 11, 2020, among Johnson Controls International plc, Tyco Fire &amp; Security Finance S.C.A. and U.S. Bank National Association, as trustee, attaching form of the 1.750% Senior Notes due 2030 (incorporated by reference to Exhibit 4.2 to the registrant&#x27;s Current Report on Form 8-K filed on September 11, 2020)</td></tr><tr><td>4.7</td><td>Sixth Supplemental Indenture, dated September 15, 2020, among Johnson Controls International plc, Tyco Fire &amp; Security Finance S.C.A., U.S. Bank National Association, as trustee, and Elavon Financial Services DAC, as paying agent, attaching forms of the 0.375% Senior Notes due 2027 and the 1.000% Senior Notes due 2032 (incorporated by reference to Exhibit 4.2 to the registrant&#x27;s Current Report on Form 8-K filed on September 15, 2020)</td></tr></table>



## Johnson Controls International plc
Index to Exhibits

<table><tr><td>Exhibit</td><td>Title</td></tr><tr><td>4.8</td><td>Seventh Supplemental Indenture, dated September 16, 2021, among Johnson Controls International plc, Tyco Fire &amp; Security Finance S.C.A. and U.S. Bank National Association, as trustee, attaching form of the 2.000% Sustainability-Linked Senior Notes due 2031 (incorporated by reference to Exhibit 4.2 to the registrant&#x27;s Current Report on Form 8-K filed on September 16, 2021)</td></tr><tr><td>4.9</td><td>Description of the Ordinary Shares of Johnson Controls International plc (filed herewith)</td></tr><tr><td>4.10</td><td>Description of the Johnson Controls International plc Notes (filed herewith)</td></tr><tr><td>4.11</td><td>Description of the Johnson Controls International plc and Tyco Fire &amp; Security Finance S.C.A. Notes (filed herewith)</td></tr><tr><td>4.12</td><td>Miscellaneous long-term debt agreements and financing leases with banks and other creditors and debenture indentures.*</td></tr><tr><td>4.13</td><td>Miscellaneous industrial development bond long-term debt issues and related loan agreements and leases.*</td></tr><tr><td>10.1</td><td>Credit Agreement, dated as of December 5, 2019, among Johnson Controls International plc, certain of its subsidiaries, party thereto from time to time, the lenders party thereto from time to time, and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the registrant&#x27;s Current Report filed December 6, 2019)</td></tr><tr><td>10.2</td><td>Stock and Asset Purchase Agreement, dated as of November 13, 2018, by and between Johnson Controls International plc and BCP Acquisitions LLC (incorporated by reference to Exhibit 2.1 to the registrant&#x27;s Current Report filed November 13, 2018)</td></tr><tr><td>10.3</td><td>Tax Matters Agreement, dated as of September 8, 2016, by and between Johnson Controls International plc and Adient Limited (incorporated by reference to Exhibit 10.2 to the registrant&#x27;s Current Report on Form 8-K filed on September 9, 2016)</td></tr><tr><td>10.4</td><td>Employee Matters Agreement, dated as of September 8, 2016, by and between Johnson Controls International plc and Adient Limited (incorporated by reference to Exhibit 10.3 to the registrant&#x27;s Current Report on Form 8-K filed on September 9, 2016)</td></tr><tr><td>10.5</td><td>Tax Sharing Agreement, dated September 28, 2012 by and among Pentaire Ltd., Johnson Controls International plc (formerly Tyco International Ltd.), Tyco International Finance S.A. and The ADT Corporation (incorporated by reference to Exhibit 10.1 to the registrant&#x27;s Current Report on Form 8-K filed on October 1, 2012) (Commission File No. 1-13836)</td></tr><tr><td>10.6</td><td>Non-Income Tax Sharing Agreement dated September 28, 2012 by and among Johnson Controls International plc (formerly Tyco International Ltd.), Tyco International Finance S.A. and The ADT Corporation (incorporated by reference to Exhibit 10.2 to the registrant&#x27;s Current Report on Form 8-K filed on October 1, 2012) (Commission File No. 1-13836)</td></tr><tr><td>10.7</td><td>Trademark Agreement, dated as of September 25, 2012, by and among ADT Services GmbH, ADT US Holdings, Inc., Johnson Controls International plc (formerly Tyco International Ltd.) and The ADT Corporation (incorporated by reference to Exhibit 10.3 to the registrant&#x27;s Current Report on Form 8-K filed on October 1, 2012) (Commission File No. 1-13836)</td></tr><tr><td>10.8</td><td>Form of Deed of Indemnification between Johnson Controls International plc (formerly Tyco International plc) and certain of its directors and officers (incorporated by reference to Exhibit 10.4 to the registrant&#x27;s Current Report on Form 8-K filed on September 6, 2016)</td></tr></table>



## Johnson Controls International plc
Index to Exhibits

<table><tr><td>Exhibit</td><td>Title</td></tr><tr><td>10.9</td><td>Form of Indemnification Agreement between Tyco Fire &amp; Security (US) Management, Inc. and certain directors and officers of Johnson Controls International plc (incorporated by reference to Exhibit 10.5 to the registrant&#x27;s Current Report on Form 8-K filed on September 6, 2016)</td></tr><tr><td>10.10</td><td>Johnson Controls International plc 2012 Share and Incentive Plan, amended and restated as of March 8, 2017 (incorporated by reference to Exhibit 10.2 to the registrant&#x27;s Quarterly Report on Form 10-Q filed on May 4, 2017)**</td></tr><tr><td>10.11</td><td>Johnson Controls International plc 2007 Stock Option Plan (incorporated by reference to Exhibit 10.7 to the registrant&#x27;s Current Report on Form 8-K filed on September 6, 2016)**</td></tr><tr><td>10.12</td><td>Johnson Controls International plc 2012 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.6 to the registrant&#x27;s Current Report on Form 8-K filed on September 6, 2016)**</td></tr><tr><td>10.13</td><td>Johnson Controls International plc 2021 Equity and Incentive Plan (incorporated by reference to Annex B to the registrant&#x27;s Definitive Proxy Statement on Schedule 14A filed on January 22, 2021)**</td></tr><tr><td>10.14</td><td>Johnson Controls International plc Severance and Change in Control Policy for Officers, amended and restated March 11, 2021 (Incorporated by reference to Exhibit 10.4 to the registrant&#x27;s Quarterly Report on Form 10-Q filed on April 30, 2021)**</td></tr><tr><td>10.15</td><td>Johnson Controls International plc Executive Deferred Compensation Plan, as amended and restated March 11, 2021 (Incorporated by reference to Exhibit 10.5 to the registrant&#x27;s Quarterly Report on Form 10-Q filed on April 30, 2021)**</td></tr><tr><td>10.16</td><td>Johnson Controls International plc Retirement Restoration Plan, as amended and restated March 11, 2021 (incorporated by reference to Exhibit 10.7 to the registrant&#x27;s Quarterly Report on Form 10-Q filed on April 30, 2021)**</td></tr><tr><td>10.17</td><td>Tyco Supplemental Savings and Retirement Plan as amended and restated effective January 1, 2018 (incorporated by reference to Exhibit 10.2 to the registrant&#x27;s Current Report on Form 8-K filed on September 19, 2017)**</td></tr><tr><td>10.18</td><td>Johnson Controls International plc Executive Compensation Incentive Recoupment Policy effective December 10, 2020 (incorporated by reference to Exhibit 10.3 to the registrant&#x27;s Quarterly Report on Form 10-Q filed on January 29, 2021)**</td></tr><tr><td>10.19</td><td>Letter Agreement between Johnson Controls International plc and George R. Oliver dated December 8, 2017 (Incorporated by reference to Exhibit 10.1 to the registrant&#x27;s Current Report on Form 8-K filed on December 11, 2017)**</td></tr><tr><td>10.20</td><td>Form of terms and conditions for Option / SAR Awards, Restricted Stock / Unit Awards, Performance Share Awards under the Johnson Controls International plc 2012 Share and Incentive Plan for periods commencing December 6, 2018 (incorporated by reference to Exhibit 10.2 to the registrant&#x27;s Quarterly Report on Form 10-Q filed February 1, 2019)**</td></tr><tr><td>10.21</td><td>Form of terms and conditions for Option / SAR Awards, and Restricted Stock / Unit Awards, under the Johnson Controls International plc 2012 Share and Incentive Plan commencing December 6, 2018 applicable to Mr. Stief (incorporated by reference to Exhibit 10.3 to the registrant&#x27;s Quarterly Report on Form 10-Q filed February 1, 2019)**</td></tr><tr><td>10.22</td><td>Form of Option/SAR Award for Executive Officers (incorporated by reference to Exhibit 10.24 to the registrant&#x27;s Annual Report on Form 10-K for the fiscal year ended September 30, 2019 filed on November 21, 2019)**</td></tr></table>



Johnson Controls International plc
Index to Exhibits

<table><tr><td>Exhibit</td><td>Title</td></tr><tr><td>10.23</td><td>Form of terms and conditions for Option / SAR Awards, Restricted Stock / Unit Awards, Performance Share Awards under the Johnson Controls International plc 2012 Share and Incentive Plan for fiscal 2018 (incorporated by reference to Exhibit 10.3 to the registrant&#x27;s Quarterly Report on Form 10-Q filed on February 2, 2018)**</td></tr><tr><td>10.24</td><td>Form of terms and conditions for Option / SAR Awards, and Restricted Stock / Unit Awards, under the Johnson Controls International plc 2012 Share and Incentive Plan for fiscal 2018 applicable to Messrs. Oliver and Stief (incorporated by reference to Exhibit 10.4 to the registrant&#x27;s Quarterly Report on Form 10-Q filed on February 2, 2018)**</td></tr><tr><td>10.25</td><td>Form of terms and conditions for Option / SAR Awards, Restricted Stock / Unit Awards, Performance Share Awards under the Johnson Controls International plc 2012 Share and Incentive Plan for periods commencing on September 2, 2016 (incorporated by reference to Exhibit 10.33 to the registrant&#x27;s Annual Report on Form 10-K for the fiscal year ended September 30, 2016 filed on November 23, 2016)**</td></tr><tr><td>10.26</td><td>Form of terms and conditions for Option / SAR Awards, and Restricted Stock / Unit Awards, under the Johnson Controls International plc 2012 Share and Incentive Plan for periods commencing on September 2, 2016 applicable to Messrs. Molinaroli, Oliver and Stief (incorporated by reference to Exhibit 10.1 to registrant&#x27;s Quarterly Report on Form 10-Q filed on February 8, 2017)**</td></tr><tr><td>10.27</td><td>Form of terms and conditions for Option Awards, Restricted Unit Awards, Performance Share Awards under the 2012 Share and Incentive Plan for fiscal 2016 (incorporated by reference to Exhibit 10.2 to the registrant&#x27;s Current Report on Form 8-K filed on October 13, 2015)**</td></tr><tr><td>10.28</td><td>Form of terms and conditions for Option Awards, Restricted Unit Awards, Performance Share Awards under the 2012 Stock and Incentive Plan for fiscal 2015 (incorporated by reference to Exhibit 10.9 to the registrant&#x27;s Annual Report on Form 10-K for the fiscal year ended September 26, 2014 filed on November 14, 2014) (Commission File No. 1-13836)**</td></tr><tr><td>10.29</td><td>Form of terms and conditions for Option Awards, Restricted Unit Awards, Performance Share Awards under the 2012 Stock and Incentive Plan for fiscal 2014 (incorporated by reference to Exhibit 10.9 to the registrant&#x27;s Annual Report on Form 10-K filed on for the year ended September 27, 2013 filed on November 14, 2013) (Commission File No. 1-13836)**</td></tr><tr><td>10.30</td><td>Johnson Controls, Inc. 2012 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1(a) to Johnson Controls, Inc.s Current Report on Form 8-K filed January 28, 2013) (Commission File No. 1-5097)**</td></tr><tr><td>10.31</td><td>Form of option/stock appreciation right agreement for Johnson Controls, Inc. 2012 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1(c) to Johnson Controls, Inc.s Current Report on Form 8-K filed November 21, 2013) (Commission File No. 1-5097)**</td></tr><tr><td>10.32</td><td>Restrictive covenants applicable to equity award agreements beginning December 2019 (incorporated by reference to Exhibit 10.3 to the registrant&#x27;s Quarterly Report on Form 10-Q filed on January 31, 2020)</td></tr><tr><td>10.33</td><td>Form of terms and conditions for Option / SAR Awards, Restricted Stock / Unit Awards, Performance Share Awards under the Johnson Controls International plc 2012 Share and Incentive Plan for fiscal 2021 (incorporated by reference to Exhibit 10.1 to the registrant&#x27;s Quarterly Report on Form 10-Q filed on January 29, 2021)</td></tr><tr><td>10.34</td><td>Form of terms and conditions for Performance Share Award under the Johnson Controls International plc 2012 Share and Incentive Plan for fiscal 2021 applicable to Mr. Stief (incorporated by reference to Exhibit 10.2 to the registrant&#x27;s Quarterly Report on Form 10-Q filed on January 29, 2021)</td></tr></table>



Johnson Controls International plc
Index to Exhibits

<table><tr><td>Exhibit</td><td>Title</td></tr><tr><td>10.35</td><td>Form of terms and conditions for Option / SAR Awards, Restricted Stock / Unit Awards, Performance Share Awards under the Johnson Controls International plc 2021 Equity and Incentive Plan (incorporated by reference to Exhibit 10.2 to the registrant&#x27;s Quarterly Report on Form 10-Q filed on April 30, 2021)</td></tr><tr><td>10.36</td><td>Form of terms and conditions for Restricted Stock Units for Directors under the Johnson Controls International plc 2021 Equity and Incentive Plan (incorporated by reference to Exhibit 10.3 to the registrant&#x27;s Quarterly Report on Form 10-Q filed on April 30, 2021)</td></tr><tr><td>21.1</td><td>Subsidiaries of Johnson Controls International plc (filed herewith)</td></tr><tr><td>22.1</td><td>Co-Issuer of Debt Securities (filed herewith)</td></tr><tr><td>23.1</td><td>Consent of Independent Public Accounting Firm (filed herewith)</td></tr><tr><td>31.1</td><td>Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)</td></tr><tr><td>31.2</td><td>Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)</td></tr><tr><td>32.1</td><td>Certification by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)</td></tr><tr><td>101</td><td>Financial statements from the Annual Report on Form 10-K of Johnson Controls International plc for the fiscal year ended September 30, 2021 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 Flow, (v) the Consolidated Statements of Shareholders&#x27; Equity Attributable to Johnson Controls Ordinary Shareholders and (vi) Notes to Consolidated Financial Statements (filed herewith)</td></tr><tr><td>*</td><td>These instruments are not being filed as exhibits herewith because none of the long-term debt instruments authorizes the issuance of debt in excess of 10% of the total assets of Johnson Controls International plc and its subsidiaries on a consolidated basis. Johnson Controls International plc agrees to furnish a copy of each agreement to the Securities and Exchange Commission upon request.</td></tr><tr><td>**</td><td>Management contract or compensatory plan.</td></tr></table>



## SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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

By /s/ Olivier Leonetti

Olivier Leonetti

Executive Vice President and
Chief Financial Officer

Date: November 15, 2021

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below as of November 15, 2021, by the following persons on behalf of the registrant and in the capacities indicated:

/s/ George R. Oliver
George R. Oliver
Chairman and Chief Executive Officer
(Principal Executive Officer)

/s/ Robert M. VanHimbergen
Robert M. VanHimbergen
Vice President and Corporate Controller
(Principal Accounting Officer)

/s/ Pierre Cohade
Pierre Cohade
Director

/s/ Pierre Cohade
Pierre Cohade
Director

/s/ Jean Blackwell
Jean Blackwell
Director

/s/ Pierre Cohade
Pierre Cohade
Director

/s/ Jean Blackwell

/s/ Pierre Cohade
Pierre Cohade
Director

/s/ Jean Blackwell

/s/

/s/ Juan Pablo del Valle Perochena
Juan Pablo del Valle Perochena
Director

/s/ Juan Pablo del Valle Perochena
Juan Pablo del Valle Perochena
Director



# DESCRIPTION OF ORDINARY SHARES

The following description of the material terms of our ordinary shares is based on the provisions of our Irish memorandum and articles of association. This description is not complete and is subject to the applicable provisions of Irish law and our memorandum and articles of association, which are incorporated by reference as exhibits to this Annual Report on Form 10-K. The transfer agent and registrar for our ordinary shares is Equiniti Trust Company. Our ordinary shares are listed on the New York Stock Exchange under the ticker symbol “JCI.”

## Capital Structure

## Authorized and Issued Share Capital

Our authorized share capital is $22,000,000 and €40,000, divided into 2,000,000,000 ordinary shares with a par value of $0.01 per share, 200,000,000 preferred shares with a par value of $0.01 per share, and 40,000 ordinary A shares with a par value of €1.00 per share. The authorized share capital includes 40,000 ordinary A shares with a par value of €1.00 per share in order, at the time of its incorporation, to satisfy statutory requirements for the incorporation of all Irish public limited companies. We may issue shares subject to the maximum amount prescribed by JCI’s authorized share capital contained in its memorandum and articles of association.

As a matter of Irish company law, the directors of a company may issue new ordinary or preferred shares (including the grant of options and issue of warrants) without shareholder approval once authorized to do so by the memorandum and articles of association of the company or by an ordinary resolution adopted by the shareholders at a general meeting. An ordinary resolution requires over 50% of the votes cast by a company’s shareholders at a general meeting. The authority conferred can be granted for a maximum period of five years, at which point it will lapse unless renewed by the shareholders of the company by an ordinary resolution. The board of directors is authorized, under an annual authorization by shareholders pursuant to an ordinary resolution, to issue ordinary shares subject to a maximum of approximately 33% of our issued share capital. The current annual authorization will expire at the earlier of the date of our annual general meeting in 2022 or September 10, 2022 unless renewed (a renewal of the authorization will be proposed at our annual general meeting in 2022, which if approved would expire on the date of our annual general meeting in 2023 or 18 months after the date of our 2022 annual general meeting (whichever is earlier)).

Notwithstanding this authority, under the Irish Takeover Rules the board of directors would not be permitted to issue any shares, during a period when an offer has been made for us or is believed to be imminent unless the issue is (i) approved by shareholders at a general meeting, (ii) consented to by the Irish Takeover Panel on the basis it would not constitute action frustrating the offer, (iii) consented to by the Irish Takeover Panel and approved by the holders of more than 50% of the voting rights in JCI, (iv) consented to by the Irish Takeover Panel in circumstances where a contract for the issue of the shares had been entered into prior to that period, or (v) consented to by the Irish Takeover Panel in circumstances where the issue of the shares was decided by the directors of JCI prior to that period and either action has been taken to implement the issuance (whether in part or in full) prior to such period or the issuance was otherwise in the ordinary course of business.

The board of directors has previously represented that it will not, without prior shareholder approval, approve the issuance or use of any of the preferred shares for any defensive or anti-takeover purpose or for the purpose of implementing any shareholder rights plan. Within these limits, the board of directors may approve the issuance or use of preferred shares for capital raising, financing or acquisition needs or opportunities that has the effect of making a takeover of us or other acquisition transaction more difficult or costly, as could also be the case if the board of directors were to issue additional ordinary shares.

The authority to issue preferred shares provides us with the flexibility to consider and respond to future business needs and opportunities as they arise from time to time, including in connection with capital raising, financing, and acquisition transactions or opportunities.

The authorized but unissued share capital may be increased or reduced by way of an ordinary resolution of our shareholders. The shares comprising our authorized share capital may be divided into shares of such par value as the



resolution shall prescribe. The rights and restrictions to which the ordinary shares will be subject are prescribed in our memorandum and articles of association.

Irish law does not recognize fractional shares held of record; accordingly, our memorandum and articles of association do not provide for the issuance of fractional shares, and our official Irish register will not reflect any fractional shares.

## Dividends

Under Irish law, dividends and distributions may only be made from distributable reserves. Distributable reserves, broadly, means our accumulated realized profits less our accumulated realized losses. In addition, no distribution or dividend may be made unless our net assets are equal to, or in excess of, the aggregate of our called up share capital plus undistributable reserves and the distribution does not reduce our net assets below such aggregate. Undistributable reserves include the share premium account, the par value of shares acquired by us and the amount by which our accumulated unrealized profits, so far as not previously utilized by any capitalization, exceed our accumulated unrealized losses, so far as not previously written off in a reduction or reorganization of capital.

The determination as to whether or not we have sufficient distributable reserves to fund a dividend must be made by reference to our “relevant financial statements.” The “relevant financial statements” will be either the last set of unconsolidated annual audited financial statements or unaudited financial statements prior to the declaration of a dividend prepared in accordance with the Irish Companies Act, which give a “true and fair view” of our unconsolidated financial position and accord with accepted accounting practice. The relevant financial statements must be filed in the Companies Registration Office (the official public registry for companies in Ireland).

The mechanism as to who declares a dividend and when a dividend shall become payable is governed by our articles of association, which authorize the directors to declare such dividends as appear justified from our profits without the approval of the shareholders at a general meeting. The board of directors may also recommend a dividend to be approved and declared by the shareholders at a general meeting. Although the shareholders may direct that the payment be made by distribution of assets, shares or cash, no dividend issued may exceed the amount recommended by the directors. The dividends can be declared and paid in the form of cash or non-cash assets.

Our directors may deduct from any dividend payable to any shareholder all sums of money (if any) payable by him or her to us in relation to our shares. Our directors are also entitled to issue shares with preferred rights to participate in dividends we declare. The holders of such preferred shares may, depending on their terms, be entitled to claim arrears of a declared dividend out of subsequently declared dividends in priority to ordinary shareholders.

## Preemptive Rights and Advance Subscription Rights

Certain statutory pre-emption rights apply automatically in favor of our shareholders where our shares are to be issued for cash (including pursuant to non-compensatory options). Statutory preemption rights do not apply (i) where shares are issued for non-cash consideration (such as in a stock-for-stock acquisition), (ii) to the issue of non-equity shares (that is, shares that have the right to participate only up to a specified amount in any income or capital distribution) or (iii) where shares are issued pursuant to an employee option or similar equity plan. In addition, and without prejudice to any existing authorities granted to the board of directors, the board of directors is authorized, under an annual authorization by shareholders pursuant to a special resolution, to issue ordinary shares without the application of preemption rights of up to approximately 5% of our issued share capital. The current annual authorization will expire at the earlier of the date of our annual general meeting in 2022 or September 10, 2022 unless renewed (a renewal of the authorization will be proposed at our annual general meeting in 2022, which if approved would expire on the date of our annual general meeting in 2023 or 18 months after the date of our 2022 annual general meeting (whichever is earlier)).

A special resolution requires not less than 75% of the votes cast by our shareholders at a general meeting. If the opt-out is not renewed, shares issued for cash must be offered to our pre-existing shareholders pro rata to their



existing shareholding in accordance with the statutory preemption rights described above before the shares can be issued to any new shareholders.

## Issuance of Warrants and Options

Our articles of association provide that, subject to any shareholder approval requirement under any laws, regulations or the rules of any stock exchange to which we are subject, the board is authorized, from time to time, in its discretion, to grant such persons, for such periods and upon such terms as the board deems advisable, options to purchase such number of shares of any class or classes or of any series of any class as the board may deem advisable, and to cause warrants or other appropriate instruments evidencing such options to be issued. The issuance of warrants or options is subject to the same requirements for shareholder authority and statutory preemption rights as applies to the issue of ordinary shares described under the headings “-Capital Structure- Authorized and Issued Share Capital” and “-Preemptive Rights and Advance Subscription Rights” in this summary and the number of shares capable of being issued under options and warrants are aggregated with the number of shares issued under those authorizations for determining the utilization of those authorizations. The board may issue shares upon exercise of warrants or options without shareholder approval or authorization provided that the original warrants or options were issued when valid authorization was in place.

## Share Repurchases and Redemptions

## Overview

Article 3 of our articles of association provides that any ordinary share which we have acquired or agreed to acquire shall be deemed to be a redeemable share. Accordingly, for Irish company law purposes, the repurchase of ordinary shares by us will technically be effected as a redemption of those shares as described below. If our articles of association did not contain Article 3(d), repurchases of our ordinary shares would be subject to many of the same rules that apply to purchases of our ordinary shares by subsidiaries described below, including the shareholder approval requirements described below and the requirement that any on-market purchases be effected on a “recognized stock exchange.” Except where otherwise noted, when we refer to repurchasing or buying back our ordinary shares, we are referring to the redemption of ordinary shares by us pursuant to Article 3(d) of the articles of association or the purchase of our ordinary shares by a subsidiary of ours, in each case in accordance with our articles of association and Irish company law as described below.

## Repurchases and Redemptions by Us

Under Irish law, a company can issue redeemable shares and redeem them out of distributable reserves or the proceeds of a new issue of shares for that purpose. The issue of redeemable shares may only be made by us where the nominal value of the issued share capital that is not redeemable is not less than 10% of the aggregate of the par value and share premium in respect of the allotment of our shares together with the par value of any shares acquired by us. All redeemable shares must also be fully paid and the terms of redemption of the shares must provide for payment on redemption. Redeemable shares may, upon redemption, be cancelled or held in treasury. Shareholder approval will not be required to redeem our ordinary shares. Our board of directors will also be entitled to issue preferred shares which may be redeemed at either our option or the that of the shareholder, depending on the terms of such preferred shares.

Repurchased and redeemed shares may be cancelled or held as treasury shares. The nominal value of treasury shares held by us at any time must not exceed 10% of the nominal value of our issued share capital. While we hold shares as treasury shares, we cannot exercise any voting rights in respect of those shares. We may cancel or reissue treasury shares subject to certain conditions.

## Purchases by Our Subsidiaries

Under Irish law, it may be permissible for an Irish or non-Irish subsidiary to purchase our shares either on-market or off-market. A general authority of our shareholders is required to allow a subsidiary of ours to make on-market purchases of our ordinary shares; however, as long as this general authority has been granted, no specific shareholder authority for a particular on-market purchase by a subsidiary of our ordinary shares is required. Such an



authority has been adopted by our shareholders. We have sought such general authority, which must expire no later than 18 months after the date on which it was granted, at previous annual general meetings and expect to seek to renew such authority at subsequent annual general meetings. In order for a subsidiary of ours to make an on-market purchase of our shares, such shares must be purchased on a “recognized stock exchange.” The New York Stock Exchange, on which our shares are listed, is a recognized stock exchange for this purpose under Irish company law. For an off-market purchase by a subsidiary of ours, the proposed purchase contract must be authorized by special resolution of our shareholders before the contract is entered into. The person whose shares are to be bought back cannot vote in favor of the special resolution and, from the date of the notice of the meeting at which the resolution approving the contract is to be proposed, the purchase contract must be on display or must be available for inspection by shareholders at our registered office.

The number of shares held by our subsidiaries at any time will count as treasury shares and will be included in any calculation of the permitted treasury share threshold of 10% of the aggregate of the par value and share premium in respect of the allotment of our shares together with the par value of any shares acquired by us. While a subsidiary holds our shares, it cannot exercise any voting rights in respect of those shares. The acquisition of our shares by a subsidiary must be funded out of distributable reserves of the subsidiary.

## Lien on Shares, Calls on Shares and Forfeiture of Shares

Our articles of association provide that we will have a first and paramount lien on every share for all moneys payable, whether presently due or not, in respect of such share. Subject to the terms of their allotment, directors may call for any unpaid amounts in respect of any shares to be paid, and if payment is not made, the shares may be forfeited. These provisions are standard inclusions in the articles of association of an Irish company limited by shares, such as us.

## Bonus Shares

Under our articles of association, the board of directors may resolve to capitalize any amount credited to any reserve or fund available for distribution or the share premium account or other undistributable reserve of ours for issuance and distribution to shareholders as fully paid up bonus shares on the same basis of entitlement as would apply in respect of a dividend distribution.

## Consolidation and Division; Subdivision

Under our articles of association, we may by ordinary resolution consolidate and divide all or any of our share capital into shares of larger par value than its existing shares or subdivide our shares into smaller amounts than is fixed by our articles of association.

## Reduction of Share Capital

We may, by ordinary resolution, reduce our authorized but unissued share capital in any way and reduce the nominal value of any of its shares. We also may, by special resolution and subject to confirmation by the Irish High Court (or as otherwise permitted under the Irish Companies Act), reduce or cancel our issued share capital in any way.

## General Meetings of Shareholders

We are generally required to hold an annual general meeting at intervals of no more than fifteen months, provided that an annual general meeting is held in each calendar year, no more than nine months after our fiscal year-end.

Our articles of association provide that shareholder meetings may be held outside of Ireland (subject to compliance with the Irish Companies Act). Where a company holds its annual general meeting or extraordinary general meeting outside of Ireland, the Irish Companies Act requires that the company, at its own expense, make all necessary arrangements to ensure that members can by technological means participate in the meeting without leaving Ireland (unless all of the members entitled to attend and vote at the meeting consent in writing to the meeting being held outside of Ireland).



Extraordinary general meetings may be convened by (i) the board of directors, (ii) on requisition of the shareholders holding not less than 10% of the paid up share capital of our shares carrying voting rights or (iii) on requisition of our auditors. Extraordinary general meetings are generally held for the purposes of approving shareholder resolutions as may be required from time to time.

Notice of a general meeting must be given to all of our shareholders and to our auditors. Our articles of association provide that the maximum notice period is 60 days. The minimum notice periods are 21 days' notice in writing for an annual general meeting or an extraordinary general meeting to approve a special resolution and 14 days' notice in writing for any other extraordinary general meeting. In each case the notice period excludes the date of mailing, the date of the meeting and is in addition to two days for deemed delivery where this is by electronic means. General meetings may be called by shorter notice, but only with the consent of our auditors and all of the shareholders entitled to attend and vote thereat. Because of the 21-day and 14-day requirements described in this paragraph, our articles of association include provisions reflecting these requirements of Irish law.

In the case of an extraordinary general meeting convened by our shareholders, the proposed purpose of the meeting must be set out in the requisition notice. The requisition notice can contain any resolution. Upon receipt of this requisition notice, the board of directors has 21 days to convene a meeting of our shareholders to vote on the matters set out in the requisition notice. This meeting must be held within two months of the receipt of the requisition notice. If the board of directors does not convene the meeting within such 21-day period, the requisitioning shareholders, or any of them representing more than one half of the total voting rights of all of them, may themselves convene a meeting, which meeting must be held within three months of the receipt of the requisition notice.

The only matters which must, as a matter of Irish company law, be transacted at an annual general meeting are the presentation of the annual accounts, balance sheet and reports of the directors and auditors, the appointment of auditors and the fixing of the auditor's remuneration (or delegation of same). If no resolution is made in respect of the reappointment of an auditor at an annual general meeting, the previous auditor will be deemed to have continued in office. Directors are elected by the affirmative vote of a majority of the votes cast by shareholders at an annual general meeting and, pursuant to our articles of association, serve for one-year terms. Any nominee for director who does not receive a majority of the votes cast is not elected to the board. However, because Irish law requires a minimum of two directors at all times, in the event that an election results in no directors being elected, each of the two nominees receiving the greatest number of votes in favor of his or her election shall hold office until his or her successor shall be elected. In the event that an election results in only one director being elected, that director shall be elected and shall serve for a one-year term, and the nominee receiving the greatest number of votes in favor of their election shall hold office until his or her successor shall be elected.

If the directors become aware that our net assets are half or less of the amount of our called-up share capital, the directors must convene an extraordinary general meeting of our shareholders not later than 28 days from the date that they learn of this fact. This meeting must be convened for the purposes of considering whether any, and if so what, measures should be taken to address the situation.

## Voting

## General

Where a poll is demanded at a general meeting, every shareholder shall have one vote for each ordinary share that he or she holds as of the record date for the meeting. Voting rights on a poll may be exercised by shareholders registered in our share register as of the record date for the meeting or by a duly appointed proxy of such a registered shareholder, which proxy need not be a shareholder. Where interests in shares are held by a nominee trust company this company may exercise the rights of the beneficial holders on their behalf as their proxy. All proxies must be appointed in the manner prescribed by the Irish Companies Act. Our articles of association permit the appointment of proxies by the shareholders to be notified by us electronically, when permitted by the directors.

Our articles of association provide that all resolutions shall be decided by a show of hands unless a poll is demanded by the chairman, by at least three shareholders as of the record date for the meeting or by any shareholder or shareholders holding not less than 10% of the total voting rights of ours as of the record date for the



meeting. Each of our shareholders of record as of the record date for the meeting has one vote at a general meeting on a show of hands.

In accordance with our articles of association, our directors may from time to time cause us to issue preferred shares. These preferred shares may have such voting rights as may be specified in the terms of such preferred shares (e.g., they may carry more votes per share than ordinary shares or may entitle their holders to a class vote on such matters as may be specified in the terms of the preferred shares).

Treasury shares will not be entitled to vote at general meetings of shareholders

## Supermajority Voting

Irish company law requires “special resolutions” of the shareholders at a general meeting to approve certain matters. A special resolution requires not less than 75% of the votes cast by our shareholders at a general meeting. This may be contrasted with “ordinary resolutions,” which require a simple majority of the votes cast by our shareholders at a general meeting. Examples of matters requiring special resolutions include:

• amending our objects;

• amending our memorandum and articles of association;

• approving the change of our name;

• authorizing the entering into of a guarantee or provision of security in connection with a loan, quasi-loan or credit transaction to a director or connected person;

• opting out of pre-emption rights on the issuance of new shares;

• re-registration from a public limited company as a private company;

• variation of class rights attached to classes of shares;

• purchase of own shares off-market;

• the reduction of share capital;

• resolving that we be wound up by the Irish courts;

• resolving in favor of a shareholders’ voluntary winding-up;

• re-designation of shares into different share classes; and

• setting the re-issue price of treasury shares.

A scheme of arrangement with shareholders requires a court order from the Irish High Court and the approval of (1) 75% of the voting shareholders by value and (2) 50% in number of the voting shareholders, at a meeting called to approve the scheme.

## Variation of Class Rights Attaching to Shares

Variation of all or any special rights attached to any class of our shares is addressed in our articles of association as well as the Irish Companies Act. Any variation of class rights attaching to our issued shares must be approved by a special resolution of the shareholders of the class affected.

## Quorum for General Meetings

The presence, in person or by proxy, of the holders of our ordinary shares outstanding which entitle the holders to a majority of the voting power of shares outstanding constitutes a quorum for the conduct of business. No business may take place at a general meeting if a quorum is not present in person or by proxy. The board of directors



has no authority to waive quorum requirements stipulated in our articles of association. Abstentions and broker non-votes will be counted as present for purposes of determining whether there is a quorum in respect of the proposals.

## Inspection of Books and Records

Under Irish law, shareholders have the right to: (1) receive a copy of our memorandum and articles of association and any act of the Irish Government which alters our memorandum of association; (2) inspect and obtain copies of our minutes of general meetings and resolutions; (3) inspect and receive a copy of the register of shareholders, register of directors and secretaries, register of directors' interests and other statutory registers maintained by us; (4) receive copies of financial statements and directors' and auditors' reports which have previously been sent to shareholders prior to an annual general meeting; and (5) receive financial statements of a subsidiary company of ours which have previously been sent to shareholders prior to an annual general meeting for the preceding ten years. Our auditors will also have the right to inspect all of our books, records and vouchers. The auditors' report must be circulated to the shareholders with our audited financial statements 21 days before the annual general meeting and must be laid before the shareholders at our annual general meeting.

## Acquisitions and Appraisal Rights

There are a number of mechanisms for acquiring an Irish public limited company, including:

- a court-approved scheme of arrangement under the Irish Companies Act. A scheme of arrangement with shareholders requires a court order from the Irish High Court and the approval of: (1) 75% of the voting shareholders by value; and (2) greater than 50% in number of the voting shareholders, at a meeting called to approve the scheme;

through a tender offer by a third party for all of our shares. Where the holders of 80% or more of our shares have accepted an offer for their shares, the remaining shareholders may be statutorily required to also transfer their shares. If the bidder does not exercise its “squeeze out” right, then the non-accepting shareholders also have a statutory right to require the bidder to acquire their shares on the same terms. If our shares were listed on the Irish Stock Exchange or another regulated stock exchange in the European Union, this threshold would be increased to 90%; and

- by way of a merger with an EEA-incorporated company under the E.U. Cross Border Merger Directive (Directive 2005/56/EC of the European Parliament and of the Council on cross-border mergers of limited liability companies). Such a merger must be approved by a special resolution (there is no statutory merger regime pursuant to Irish law for mergers between an Irish company and a company based outside of the European Economic Area, but Irish law nevertheless allows for the transfer of all assets and liabilities in accordance with an agreement such as the merger agreement).

Under Irish law, there is no requirement for a company’s shareholders to approve a sale, lease or exchange of all or substantially all of a company’s property and assets. However, our articles of association provide that the affirmative vote of the holders of a majority of the outstanding voting shares on the relevant record date is required to approve a sale, lease or exchange of all or substantially all of its property or assets.

## Disclosure of Interests in Shares

Under the Irish Companies Act, there is a notification requirement for shareholders who acquire or cease to be interested in 3% of the shares of an Irish public limited company. A shareholder of ours must therefore make such a notification to us if as a result of a transaction the shareholder will be interested in 3% or more of our shares; or if as a result of a transaction a shareholder who was interested in more than 3% of our shares ceases to be so interested. Where a shareholder is interested in more than 3% of our shares, any alteration of his or her interest that brings his or her total holding through the nearest whole percentage number, whether an increase or a reduction, must be notified to us. The relevant percentage figure is calculated by reference to the aggregate par value of the shares in which the shareholder is interested as a proportion of the entire par value of our share capital. Where the percentage level of the shareholder's interest does not amount to a whole percentage this figure may be rounded down to the next whole number. All such disclosures should be notified to us within 5 business days of the transaction or alteration of the shareholder's interests that gave rise to the requirement to notify. Where a person



fails to comply with the notification requirements described above no right or interest of any kind whatsoever in respect of any of our shares concerned, held by such person, shall be enforceable by such person, whether directly or indirectly, by action or legal proceeding. However, such person may apply to the court to have the rights attaching to the shares concerned reinstated.

In addition to the above disclosure requirement, under the Irish Companies Act we may by notice in writing require a person whom we know or have reasonable cause to believe to be, or at any time during the three years immediately preceding the date on which such notice is issued, to have been interested in shares comprised in our relevant share capital to: (a) indicate whether or not it is the case, and (b) where such person holds or has during that time held an interest in our shares, to give such further information as may be required by us including particulars of such person's own past or present interests in our shares. Any information given in response to the notice is required to be given in writing within such reasonable time as may be specified in the notice.

Where such a notice is served by us on a person who is or was interested in our shares and that person fails to give us any information required within the reasonable time specified, we may apply to court for an order directing that the affected shares be subject to certain restrictions.

Under the Irish Companies Act, the restrictions that may be placed on the shares by the court are as follows:

• any transfer of those shares, or in the case of unissued shares any transfer of the right to be issued with shares and any issue of shares, shall be void;

• no voting rights shall be exercisable in respect of those shares;

• no further shares shall be issued in right of those shares or in pursuance of any offer made to the holder of those shares; and

• no payment shall be made of any sums due from us on those shares, whether in respect of capital or otherwise.

Where our shares are subject to these restrictions, the court may order the shares to be sold and may also direct that the shares shall cease to be subject to these restrictions. Failure to comply with such a court order is a criminal offence.

## Anti-Takeover Provisions

## Business Combinations with Interested Shareholders

Our articles of association include a provision similar to Section 203 of the Delaware General Corporation Law, which generally prohibits us from engaging in a business combination with an interested shareholder for a period of three years following the date the person became an interested shareholder, unless, in general:

• our board of directors approved the transaction which resulted in the shareholder becoming an interested shareholder;

upon consummation of the transaction which resulted in the shareholder becoming an interested shareholder, the shareholder owned at least 85% of the voting shares outstanding at the time of commencement of such transaction, excluding for purposes of determining the number of voting shares outstanding (but not the outstanding voting shares owned by the interested shareholder), voting shares owned by persons who are directors and also officers and by certain employee share plans; or

• the business combination is approved by our board of directors and authorized at an annual or extraordinary general meeting of shareholders by a special resolution, excluding for this purpose any votes cast by the interested shareholder.

A “business combination” is generally defined as a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested shareholder. An “interested shareholder” is generally defined as a person who, together with affiliates and associates, owns or, within three years prior to the date in question, owned 15% or more of our outstanding voting shares.



## Shareholder Rights Plans and Share Issuances

Irish law does not expressly prohibit companies from issuing share purchase rights or adopting a shareholder rights plan as an anti-takeover measure. However, there is no directly relevant case law on the validity of such plans under Irish law, and shareholder approval may be required under Irish law to implement such a plan. In addition, such a plan would be subject to the Irish Takeover Rules described below.

Subject to the Irish Takeover Rules described below, the board also has power to issue any of our authorized and unissued shares on such terms and conditions as it may determine and any such action should be taken in our best interests. It is possible, however, that the terms and conditions of any issue of preferred shares could discourage a takeover or other transaction that holders of some or a majority of the ordinary shares believe to be in their best interests or in which holders might receive a premium for their shares over the then market price of the shares. The board of directors represents that, it will not, without prior shareholder approval, approve the issuance or use of any of the preferred shares for any defensive or anti-takeover purpose or for the purpose of implementing any shareholder rights plan. Within these limits, the board of directors may approve the issuance or use of preferred shares for capital raising, financing or acquisition needs or opportunities that has the effect of making a takeover of us or other acquisition transactions more difficult or costly, as could also be the case if the board of directors were to issue additional ordinary shares.

## Irish Takeover Rules and Substantial Acquisition Rules

A transaction by virtue of which a third party is seeking to acquire 30% or more of the voting rights of our shares will be governed by the Irish Takeover Panel Act 1997 and the Irish Takeover Rules made thereunder and will be regulated by the Irish Takeover Panel. The “General Principles” of the Irish Takeover Rules and certain important aspects of the Irish Takeover Rules are described below.

## General Principles

The Irish Takeover Rules are built on the following General Principles which will apply to any transaction regulated by the Irish Takeover Panel:

• in the event of an offer, all classes of shareholders of the target company should be afforded equivalent treatment and, if a person acquires control of a company, the other holders of securities must be protected;

• the holders of securities in the target company must have sufficient time to allow them to make an informed decision regarding the offer;

- the board of a company must act in the interests of the company as a whole. If the board of the target company advises the holders of securities as regards the offer it must advise on the effects of the implementation of the offer on employment, employment conditions and the locations of the target company’s place of business;

• false markets in the securities of the target company or any other company concerned by the offer must not be created;

• a bidder can only announce an offer after ensuring that he or she can fulfill in full the consideration offered;

- a target company may not be hindered longer than is reasonable by an offer for its securities. This is a recognition that an offer will disrupt the day-to-day running of a target company particularly if the offer is hostile and the board of the target company must divert its attention to resist the offer; and

- a “substantial acquisition” of securities (whether such acquisition is to be effected by one transaction or a series of transactions) will only be allowed to take place at an acceptable speed and shall be subject to adequate and timely disclosure.

## Mandatory Bid



Under certain circumstances, a person who acquires our shares or other voting rights may be required under the Irish Takeover Rules to make a mandatory cash offer for our remaining outstanding shares at a price not less than the highest price paid for the shares by the acquirer (or any parties acting in concert with the acquirer) during the previous 12 months. This mandatory bid requirement is triggered if, unless the Panel otherwise consents, an acquisition of shares would (i) increase the aggregate holding of an acquirer (including the holdings of any parties acting in concert with the acquirer) to shares representing 30% or more of the voting rights in us, or (ii) in the case of a person holding (together with its concert parties) shares representing 30% or more of the voting rights in us, after giving effect to the acquisition, increase the percentage of the voting rights held by that person (together with its concert parties) by 0.05% within a 12-month period. Any person (excluding any parties acting in concert with the holder) holding shares representing more than 50% of the voting rights of a company is not subject to these mandatory offer requirements in purchasing additional securities.

## Voluntary Bid; Requirements to Make a Cash Offer and Minimum Price Requirements

A voluntary offer is an offer that is not a mandatory offer. If a bidder or any of its concert parties acquire our ordinary shares within the period of three months prior to the commencement of the offer period, the offer price must be not less than the highest price paid for our ordinary shares by the bidder or its concert parties during that period. The Irish Takeover Panel has the power to extend the “look back” period to 12 months if the Irish Takeover Panel, having regard to the General Principles, believes it is appropriate to do so.

If the bidder or any of its concert parties has acquired our ordinary shares (i) during the period of 12 months prior to the commencement of the offer period which represent more than 10% of our total ordinary shares or (ii) at any time after the commencement of the offer period, the offer shall be in cash (or accompanied by a full cash alternative) and the price per ordinary share shall be not less than the highest price paid by the bidder or its concert parties during, in the case of (i), the period of 12 months prior to the commencement of the offer period and, in the case of (ii), the offer period. The Irish Takeover Panel may apply this rule to a bidder who, together with its concert parties, has acquired less than 10% of our total ordinary shares in the 12-month period prior to the commencement of the offer period if the Panel, having regard to the General Principles, considers it just and proper to do so.

An offer period will generally commence from the date of the first announcement of the offer or proposed offer.

## Substantial Acquisition Rules

The Irish Takeover Rules also contain rules governing substantial acquisitions of shares which restrict the speed at which a person may increase his or her holding of shares and rights over shares to an aggregate of between 15% and 30% of the voting rights of our shares. Except in certain circumstances, an acquisition or series of acquisitions of shares or rights over shares representing 10% or more of the voting rights of our shares is prohibited, if such acquisition(s), when aggregated with shares or rights already held, would result in the acquirer holding 15% or more but less than 30% of the voting rights of our shares and such acquisitions are made within a period of seven days. These rules also require accelerated disclosure of acquisitions of shares or rights over shares relating to such holdings.

## Frustrating Action

Under the Irish Takeover Rules, our board of directors is not permitted to take any action which might frustrate an offer for our shares once the board of directors has received an approach which may lead to an offer or has reason to believe an offer is imminent except as noted below. Potentially frustrating actions such as (i) the issue of shares, options or convertible securities, (ii) material acquisitions or disposals, (iii) entering into contracts other than in the ordinary course of business or (iv) any action, other than seeking alternative offers, which may result in frustration of an offer, are prohibited during the course of an offer or at any time during which the board has reason to believe an offer is imminent. Exceptions to this prohibition are available where:

• the action is approved by the offeree at a general meeting; or

• with the consent of the Irish Takeover Panel where:



• the Irish Takeover Panel is satisfied the action would not constitute a frustrating action;

- the holders of 50% of the voting rights state in writing that they approve the proposed action and would vote in favor of it at a general meeting;

• the action is taken in accordance with a contract entered into prior to the announcement of the offer; or

- the decision to take such action was made before the announcement of the offer and either has been at least partially implemented or is in the ordinary course of business.

## Corporate Governance

Our articles of association delegate the day-to-day management of us to the board of directors. The board of directors may then delegate the management of us to committees, executives or to a management team, but regardless, the directors will remain responsible, as a matter of Irish law, for the proper management of our affairs.

Our corporate governance guidelines and general approach to corporate governance as reflected in our memorandum and articles of association and our internal policies and procedures are guided by U.S. practice and applicable federal securities laws and regulations and the requirements of the New York Stock Exchange. Although we are an Irish public limited company, we are not subject to the listing rules of Euronext Dublin or the listing rules of the U.K. Listing Authority and we are therefore not subject to, nor will we adopt, the U.K. Corporate Governance Code, any guidelines issued by the Investment Association or the Pre-Emption Group Statement of Principles, or any other non-statutory Irish or U.K. governance standards or guidelines. While there are many similarities and overlaps between the U.S. corporate governance standards applied by us and the U.K. Corporate Governance Code and other Irish/U.K. governance standards or guidelines, there are differences, in particular relating to the extent of the authorization to issue share capital and effect share repurchases that may be granted to the board and the criteria for determining the independence of directors.

## Duration; Dissolution; Rights upon Liquidation

Our duration is unlimited. We may be dissolved and wound up at any time by way of either a shareholders’ voluntary winding up or a creditors’ winding up. In the case of a shareholders’ voluntary winding up, the consent of not less than 75% of the votes cast by our shareholders is required. We may also be dissolved by way of court order on the application of a creditor or the Director of Corporate Enforcement (where the court is satisfied on a petition of the Director of Corporate Enforcement that it is in the public interest that we should be would up), or by the Companies Registration Office (by way of strike-off) as an enforcement measure where we have failed to file certain returns.

The rights of the shareholders to a return of our assets on dissolution or winding up, following the settlement of all claims of creditors, may be prescribed in our memorandum and articles of association or the terms of any preferred shares issued by our directors from time to time. The holders of preferred shares in particular may have the right to priority in a dissolution or winding up of us. If the articles of association contain no specific provisions in respect of a dissolution or winding up then, subject to the priorities of any creditors, the assets will be distributed to shareholders in proportion to the paid-up par value of the shares held. Our articles of association provide that our ordinary shareholders are entitled to participate pro rata in a winding up, but their right to do so may be subject to the rights of any preferred shareholders to participate under the terms of any series or class of preferred shares.

## Stock Exchange Listing

Our ordinary shares are listed on the New York Stock Exchange under the symbol “ICI”.

## Uncertificated Shares

Pursuant to the Irish Companies Act a shareholder is entitled to be issued a share certificate on request and subject to payment of a nominal fee.



## Transfer and Registration of Shares

Our share register is maintained by its transfer agent. Registration in this share register is determinative of membership in us. A shareholder of ours who holds shares beneficially is not the holder of record of such shares. Instead, the depository (for example, Cede & Co., as nominee for DTC) or other nominee is the holder of record of such shares. Accordingly, a transfer of shares from a person who holds such shares beneficially to a person who also holds such shares beneficially through the same depository or other nominee will not be registered in our official share register, as the depository or other nominee will remain the record holder of such shares.

A written instrument of transfer is required under Irish law in order to register on our official share register any transfer of shares (i) from a person who holds such shares directly to any other person, (ii) from a person who holds such shares beneficially to a person who holds such shares directly, or (iii) from a person who holds such shares beneficially to another person who holds such shares beneficially where the transfer involves a change in the depository or other nominee that is the record owner of the transferred shares. An instrument of transfer also is required for a shareholder who directly holds shares to transfer those shares into his or her own broker account (or vice versa). Such instruments of transfer may give rise to Irish stamp duty, which must be paid prior to registration of the transfer on our official Irish share register.

We may, in our absolute discretion, pay or cause one of our affiliates to pay any stamp duty. Our articles of association provide that, in the event of any such payment, we shall be entitled to (i) seek reimbursement from the buyer, (ii) set-off the amount of the stamp duty against future dividends on such shares, and (iii) claim a first and permanent lien on our ordinary shares acquired by such buyer and any dividends paid on such shares. Parties to a share transfer may assume that any stamp duty arising in respect of a transaction in our ordinary shares has been paid unless one or both of such parties is otherwise notified by us.

Our articles of association delegate to our Secretary (or his or her nominee) the authority to execute an instrument of transfer on behalf of a transferring party. In order to help ensure that the official share register is regularly updated to reflect trading of our ordinary shares occurring through normal electronic systems, we regularly produce any required instruments of transfer in connection with any transactions for which we pay stamp duty (subject to the reimbursement and set-off rights described above). In the event that we notify one or both of the parties to a share transfer that we believe stamp duty is required to be paid in connection with such transfer and that we will not pay such stamp duty, such parties may either themselves arrange for the execution of the required instrument of transfer (and may request a form of instrument of transfer from us for this purpose) or request that we execute an instrument of transfer on behalf of the transferring party in a form determined by us. In either event, if the parties to the share transfer have the instrument of transfer duly stamped (to the extent required) and then provide it to our transfer agent, the transferee will be registered as the legal owner of the relevant shares on our official Irish share register (subject to the matters described below).

Our directors have general discretion to decline to register an instrument of transfer unless the transfer is in respect of one class of shares only, the instrument of transfer is accompanied by the certificate of shares to which it relates and such other evidence as the directors may reasonably require to show the right of the transferor to make the transfer, a fee of €10 or such lesser sum is paid to us, the instrument of transfer is in favor of not more than four transferees and it is lodged at our registered office or such other place as the board of directors may appoint.

The registration of transfers may be suspended by the directors at such times and for such period, not exceeding in the whole 30 days in each year, as the directors may from time to time determine.

## Formation; Fiscal Year; Registered Office

We were incorporated in Ireland as a public limited company on May 9, 2014 (under the name “Tyco International plc”) with company registration number 543654. Our fiscal year ends on September 30 of each year and our registered address is One Albert Quay, Cork, T12 X8N6. Ireland.

## No Sinking Fund

The ordinary shares have no sinking fund provisions.



## No Liability for Further Calls or Assessments

When the ordinary shares are issued, they will be duly and validly issued, fully paid and nonassessable.



## DESCRIPTION OF JCI PLC NOTES

Capitalized terms used in this "Description of JCI plc Notes" and not otherwise defined have the meanings set forth under the heading "—Definitions" below. For purposes of this "Description of JCI plc Notes" section, (a) the terms "JCI plc," "we," and "us" refer only to Johnson Controls International plc, a public limited company organized under the laws of Ireland, and its successors permitted by the terms of the JCI plc Indenture (as defined below) and (b) the term "Johnson Controls" refers to Johnson Controls International plc and its consolidated subsidiaries.

For purposes of this description, the “JCI plc Notes” mean the following series of notes issues by JCI plc:

<table><tr><td>Initial Aggregate Principal Amount (millions)</td><td>Series of JCI plc Notes</td></tr><tr><td>€1,000</td><td>1.00% Senior Notes due 2023</td></tr><tr><td>$500</td><td>3.625% Senior Notes due 2024</td></tr><tr><td>$400</td><td>6.000% Notes due 2036</td></tr><tr><td>$300</td><td>5.70% Senior Notes due 2041</td></tr><tr><td>$250</td><td>5.250% Senior Notes due 2041</td></tr><tr><td>$450</td><td>4.625% Senior Notes due 2044</td></tr><tr><td>$125</td><td>6.950% Debentures due December 1, 2045</td></tr><tr><td>$450</td><td>4.950% Senior Notes due 2064</td></tr><tr><td>$42.166</td><td>4.625% Notes due 2023</td></tr><tr><td>€500</td><td>1.375% Notes due 2025</td></tr><tr><td>$750</td><td>3.900% Notes due 2026</td></tr><tr><td>$750</td><td>5.125% Notes due 2045</td></tr><tr><td>$500</td><td>4.500% Senior Notes Due 2047</td></tr></table>

Each series of JCI plc Notes is a series of debt securities that were issued under an Indenture and a supplemental indenture thereto (collectively, the "JCI plc Indenture"), between JCI plc and U.S. Bank National Association, as trustee (the "Trustee"). Elavon Financial Services DAC, UK Branch, as paying agent for the JCI plc 1.375% Notes due 2025 and 1.000% Senior Notes due 2023 (collectively, the "JCI plc Euro Notes"), is also a party to the supplemental indentures related to the issuance of the JCI plc Euro Notes. We also entered into separate agency agreements among us, Elavon Financial Services DAC, UK Branch, as paying agent for the JCI plc Euro Notes, and (1) Elavon Financial Services DAC, as transfer agent and security registrar for the JCI plc notes other than the 1.000% Senior Notes due 2023 and 4.500% Senior Notes Due 2047 and (2) U.S. Bank National Association as transfer agent, security registrar and Trustee for the 1.000% Senior Notes due 2023 and 4.500% Senior Notes Due 2047. The terms of the JCI plc Notes include those expressly set forth in such notes and the JCI plc Indenture and those made part of the JCI plc Indenture by reference to the Trust Indenture Act.

This description is a summary of the material provisions of the JCI plc Notes and the JCI plc Indenture. This description does not restate those agreements and instruments in their entirety. You are encouraged to read the applicable JCI plc Notes and the JCI plc Indenture, as supplemented, which is filed as an exhibit to this Annual Report on Form 10-K, carefully and in their entirety as they contain information not included in this summary.

## General

The JCI plc Notes are unsecured, unsubordinated obligations of JCI plc. The Notes rank senior in right of payment to JCI plc's existing and future indebtedness and other obligations that are expressly subordinated in right of payment to the Notes; equal in right of payment to JCI plc's existing and future indebtedness and other obligations that are not so subordinated; effectively junior to any of JCI plc's secured indebtedness and other obligations to the extent of the value of the assets securing such indebtedness or other obligations; and structurally junior to all existing and future indebtedness and other obligations incurred by JCI plc's subsidiaries.

The JCI plc Notes (other than the JCI plc Euro Notes) (the "JCI plc Dollar Notes") were issued in book-entry form, represented by Dollar Global Securities (as defined below), and delivered through the facilities of DTC. The JCI plc Euro Notes were issued in book-entry form, represented by Euro Global Securities (as defined below) deposited with or on behalf of a common depositary on behalf of Clearstream and Euroclear and registered in the name of the nominee of the common depositary for the accounts of Clearstream and Euroclear.



The JCI plc Dollar Notes were issued in registered form without interest coupons and only in denominations of $2,000 and whole multiples of $1,000 in excess thereof. The JCI plc Euro Notes were issued in registered form without interest coupons and only in denominations of €100,000 and whole multiples of €1,000 in excess thereof.

The table below sets forth the interest rate and calculation method, interest payment dates, and maturity date for each series of JCI plc Notes. Interest with respect to each series of JCI plc Notes is payable on each interest payment date to the holders of record at the close of business on each corresponding record date indicated below.

<table><tr><td>Series of JCI plc Notes</td><td>Interest Rate and Calculation Method</td><td>Interest Payment Dates</td><td>Record Dates</td><td>Maturity Date</td></tr><tr><td>1.00% Senior Notes due 2023</td><td>1.00% per annum, calculated based on the actual number of days in the period for which interest is being calculated and the actual number of days from and including the last date on which interest was paid (or March 15, 2017, if no interest has been paid), to but excluding the next scheduled interest payment date (ACTUAL/ACTUAL (ICMA)).</td><td>September 15</td><td>Preceding September 1</td><td>September 15, 2023</td></tr><tr><td>3.625% Senior Notes due 2024</td><td>3.625% per annum, calculated on the basis of a 360-day year consisting of twelve 30-day months</td><td>January 2 and July 2</td><td>Preceding December 18 and June 18, respectively</td><td>July 2, 2024</td></tr><tr><td>6.000% Notes due 2036</td><td>6.000% per annum, calculated on the basis of a 360-day year consisting of twelve 30-day months</td><td>January 15 and July 15</td><td>Preceding January 1 and July 1, respectively</td><td>January 15, 2036</td></tr><tr><td>5.70% Senior Notes due 2041</td><td>5.70% per annum, calculated on the basis of a 360-day year consisting of twelve 30-day months</td><td>March 1 and September 1</td><td>Preceding February 15 and August 15, respectively</td><td>March 1, 2041</td></tr><tr><td>5.250% Senior Notes due 2041</td><td>5.250% per annum, calculated on the basis of a 360-day year consisting of twelve 30-day months</td><td>June 1 and December 1</td><td>Preceding May 15 and November 15, respectively</td><td>December 1, 2041</td></tr><tr><td>4.625% Senior Notes due 2044</td><td>4.625% per annum, calculated on the basis of a 360-day year consisting of twelve 30-day months</td><td>January 2 and July 2</td><td>Preceding December 18 and June 18, respectively</td><td>July 2, 2044</td></tr><tr><td>6.950% Debentures due December 1, 2045</td><td>6.950% per annum, calculated on the basis of a 360-day year consisting of twelve 30-day months</td><td>June 1 and December 1</td><td>Preceding May 15 and November 15, respectively</td><td>December 1, 2045</td></tr><tr><td>4.950% Senior Notes due 2064</td><td>4.950% per annum, calculated on the basis of a 360-day year consisting of twelve 30-day months</td><td>January 2 and July 2</td><td>Preceding December 18 and June 18, respectively</td><td>July 2, 2064</td></tr><tr><td>4.625% Notes due 2023</td><td>4.625% per annum, calculated on the basis of a 360-day year consisting of twelve 30-day months</td><td>January 15 and July 15</td><td>Preceding January 1 and July 1, respectively</td><td>January 15, 2023</td></tr><tr><td>1.375% Notes due 2025</td><td>1.375% per annum, calculated based on the actual number of days in the period for which interest is being calculated and the actual number of days from and including the last date on which interest was paid (or February 25, 2016, if no interest has been paid), to but excluding the next scheduled interest payment date (ACTUAL/ACTUAL (ICMA)).</td><td>February 25</td><td>Preceding February 10</td><td>February 25, 2025</td></tr><tr><td>3.900% Notes due 2026</td><td>3.900% per annum, calculated on the basis of a 360-day year consisting of twelve 30-day months</td><td>February 14 and August 14</td><td>Preceding February 1 and August 1, respectively</td><td>February 14, 2026</td></tr><tr><td>5.125% Notes due 2045</td><td>5.125% per annum, calculated on the basis of a 360-day year consisting of twelve 30-day months</td><td>March 14 and September 14</td><td>Preceding March 1 and September 1, respectively</td><td>September 14, 2045</td></tr><tr><td>4.500 Senior Notes due 2047</td><td>4.500% per annum, calculated on the basis of a 360-day year consisting of twelve 30-day months</td><td>February 15 and August 15</td><td>Preceding February 1 and August 1, respectively</td><td>February 15, 2047</td></tr></table>

Except as provided below, the JCI plc Notes are not subject to redemption, repurchase or repayment at the option of any holder thereof, upon the occurrence of any particular circumstance or otherwise. The JCI plc Notes do not have the benefit of any sinking fund. The JCI plc Notes are not convertible into or exchangeable for shares or other securities of JCI plc.

## JCI plc Indenture May Be Used for Future Issuances

We may, without the consent of the then existing holders of the JCI plc Notes of any series, "re-open" any series of JCI plc Notes and issue additional JCI plc Notes of such series, which additional JCI plc Notes will have the same terms as the JCI plc Notes of such series except for the issue price, issue date and, under some circumstances, the first interest payment date; provided that, if such additional JCI plc Notes are not fungible with the JCI plc Notes of the applicable series for U.S. federal income tax purposes, such additional JCI plc Notes will have a separate CUSIP, ISIN and/or other identifying number, as applicable. Additional JCI plc Notes issued in this manner will form a single series with the JCI plc Notes of the applicable series.

In addition, the JCI plc Indenture does not limit the amount of debt securities that can be issued thereunder and provides that debt securities of any series may be issued thereunder up to the aggregate principal amount that we may authorize from time to time. All debt securities issued as a series, including those issued pursuant to any reopening of a series, will vote together as a single class. Debt securities issued pursuant to the JCI plc Indenture may have terms that differ from those of the JCI plc Notes, as set forth in Section 2.01 of the JCI plc Indenture.



## Issuance of JCI plc Euro Notes in Euros

All payments of interest and principal, including payments made upon any redemption or repurchase of the JCI plc Euro Notes, will be payable in euros. If the euro is unavailable to us due to the imposition of exchange controls or other circumstances beyond our control or if the euro is no longer being used by the then member states of the European Monetary Union that have adopted the euro as their currency or for the settlement of transactions by public institutions of or within the international banking community, then all payments in respect of the JCI plc Euro Notes will be made in U.S. dollars until the euro is again available to us or so used. In such circumstances, the amount payable on any date in euros will be converted into U.S. dollars at the rate mandated by the U.S. Federal Reserve Board as of the close of business on the second business day prior to the relevant payment date or, in the event the U.S. Federal Reserve Board has not mandated a rate of conversion, on the basis of the then most recent U.S. dollar/euro exchange rate available on or prior to the second business day prior to the relevant payment date as determined by JCI plc in its sole discretion. Any payment in respect of the JCI plc Euro Notes so made in U.S. dollars will not constitute an Event of Default (as defined below) under the JCI plc Euro Notes or the JCI plc Indenture. Neither the Trustee nor the paying agent for the JCI plc Euro Notes shall have any responsibility for any calculation or conversion in connection with the foregoing.

## Optional Redemption

## JCI plc Dollar Notes

Prior to the applicable Par Call Date set forth in the table below, JCI plc may, at its option, redeem the JCI plc Dollar Notes of any series (other than the JCI plc Dollar Notes designated as "non-par callable" under the caption "Par Call Date" and/or "non-callable prior to maturity" under the caption "Applicable Spread" in the table below), in whole at any time or in part from time to time (in $1,000 increments, provided that any remaining principal amount thereof shall be at least the minimum authorized denomination thereof), at a redemption price equal to the greater of (the "Applicable Par Call Date Notes Premium"):

(i) 100% of the principal amount of the JCI plc Dollar Notes of the applicable series to be redeemed, and

(ii) as determined by the Quotation Agent and delivered to the Trustee in writing, the sum of the present values of the remaining scheduled payments of principal and interest thereon that would be due if the applicable JCI plc Dollar Notes matured on the applicable Par Call Date (exclusive of interest accrued to the redemption date), discounted to the redemption date (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Redemption Treasury Rate plus the Applicable Spread set forth in the table below, plus, in either situation (i) or (ii), accrued and unpaid interest, if any, thereon to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

On or after the applicable Par Call Date, JCI plc may, at its option, redeem the JCI plc Dollar Notes of any series (other than the JCI plc Dollar Notes designated as "non-par callable" under the caption "Par Call Date" and/or "non-callable prior to maturity" under the caption "Applicable Spread" in the table below), in whole at any time or in part from time to time (in $1,000 increments, provided that any remaining principal amount thereof shall be at least the minimum authorized denomination thereof), at a redemption price equal to 100% of the principal amount of the JCI plc Dollar Notes of the applicable series to be redeemed, plus accrued and unpaid interest, if any, thereon to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

JCI plc may, at its option, redeem each series of JCI plc Dollar Notes designated as "non-par callable" under the caption "Par Call Date" and not designated as "non-callable prior to maturity" under the caption "Applicable Spread" in the table below, in whole at any time or in part from time to time (in $1,000 increments, provided that any remaining principal amount thereof shall be at least the minimum authorized denomination thereof), at a redemption price equal to the greater of (the "Applicable Non-Par Call Date Notes Premium"):

(i) 100% of the principal amount of the JCI plc Dollar Notes of the applicable series to be redeemed, and

(ii) as determined by the Quotation Agent and delivered to the Trustee in writing, the sum of the present values of the remaining scheduled payments of principal and interest thereon (exclusive of interest accrued to the redemption date), discounted to the redemption date (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Redemption Treasury Rate plus the Applicable Spread set forth in the table below, plus, in either situation (i) or (ii), accrued and unpaid interest, if any, thereon to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

Each series of JCI plc Dollar Notes designated as "non-callable prior to maturity" under the caption "Applicable Spread" in the table below is not redeemable prior to maturity.



The Par Call Date, Applicable Spread and minimum authorized denominations for each series of JCI plc Dollar Notes are as follows:

<table><tr><td>Series of JCI plc Dollar Notes</td><td>Par Call Date</td><td>Applicable Spread</td><td>Minimum Authorized Denominations</td></tr><tr><td>3.625% Senior Notes due 2024</td><td>April 2, 2024 (three months prior to the maturity date)</td><td>15 basis points</td><td>$ 2,000</td></tr><tr><td>6.000% Notes due 2036</td><td>non-par callable</td><td>25 basis points</td><td>$ 2,000</td></tr><tr><td>5.70% Senior Notes due 2041</td><td>non-par callable</td><td>20 basis points</td><td>$ 2,000</td></tr><tr><td>5.250% Senior Notes due 2041</td><td>June 1, 2041 (six months prior to the maturity date)</td><td>35 basis points</td><td>$ 2,000</td></tr><tr><td>4.625% Senior Notes due 2044</td><td>January 2, 2044 (six months prior to the maturity date)</td><td>20 basis points</td><td>$ 2,000</td></tr><tr><td>6.950% Debentures due 2045</td><td>non-par callable</td><td>non-callable prior to maturity</td><td>$ 2,000</td></tr><tr><td>4.950% Senior Notes due 2064</td><td>January 2, 2064 (six months prior to the maturity date)</td><td>25 basis points</td><td>$ 2,000</td></tr><tr><td>4.625% Notes due 2023</td><td>October 15, 2022 (three months prior to the maturity date)</td><td>20 basis points</td><td>$ 2,000</td></tr><tr><td>3.900% Notes due 2026</td><td>November 14, 2025 (three months prior to the maturity date)</td><td>30 basis points</td><td>$ 2,000</td></tr><tr><td>5.125% Notes due 2045</td><td>March 14, 2045 (six months prior to the maturity date)</td><td>35 basis points</td><td>$ 2,000</td></tr><tr><td>4.500 Senior Notes due 2047</td><td>August 15, 2046 (six months prior to the maturity date)</td><td>25 basis points</td><td>$ 2,000</td></tr></table>

"Adjusted Redemption Treasury Rate," with respect to any redemption date for the JCI plc Dollar Notes of any series, means the rate equal to the semiannual equivalent yield to maturity or interpolated (on a 30/360 day count basis) yield to maturity of the Comparable Redemption Treasury Issue, assuming a price for the Comparable Redemption Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Redemption Treasury Price for such redemption date.

"Comparable Redemption Treasury Issue" means the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term of the JCI plc Dollar Notes to be redeemed that would be utilized at the time of selection and in accordance with customary financial practice in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such JCI plc Dollar Notes.

"Comparable Redemption Treasury Price," with respect to any redemption date for the JCI plc Dollar Notes of any series, means (i) the average of the Redemption Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Redemption Reference Treasury Dealer Quotations (unless there is more than one highest or lowest quotation, in which case only one such highest and/or lowest quotation shall be excluded), or (ii) if the Quotation Agent obtains fewer than four such Redemption Reference Treasury Dealer Quotations, the average of all such Redemption Reference Treasury Dealer Quotations.

"Independent Investment Banker" means one of the Redemption Reference Treasury Dealers appointed by us.

"Quotation Agent" means a Redemption Reference Treasury Dealer appointed as such agent by JCI plc.

"Redemption Reference Treasury Dealer" means (1) each of Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated (with respect to the JCI plc Dollar Notes other than the 4.500 Senior Notes due 2047) and J.P. Morgan Securities LLC (with respect to the 4.500 Senior Notes due 2047) (or their respective Affiliates that are Primary Treasury Dealers (as defined below)) and their respective successors and (2) two other Primary Treasury Dealers selected by JCI plc after consultation with the Independent Investment Banker; provided, however, that if any of the foregoing shall cease to be a primary U.S. government securities dealer in New York City (a "Primary Treasury Dealer"), JCI plc will substitute therefor another Primary Treasury Dealer.

"Redemption Reference Treasury Dealer Quotations," with respect to each Redemption Reference Treasury Dealer and any redemption date for the JCI plc Dollar Notes of any series, means the average, as determined by the Quotation Agent, of the bid and offer prices at 11:00 a.m., New York City time, for the Comparable Redemption Treasury Issue (expressed in each case as a percentage of its principal amount) for settlement on the redemption date quoted in writing to the Quotation Agent by such Redemption Reference Treasury Dealer on the third business day preceding such redemption date.

## JCI plc Euro Notes

Prior to November 25, 2024 (three months prior to the maturity date), JCI plc may, at its option, redeem the JCI plc 1.375% Notes due 2025, in whole at any time or in part from time to time (in €1,000 increments, provided that any remaining principal amount thereof shall be at least the minimum authorized denomination of €100,000), at a redemption price equal to the greater of (the "1.375%



Notes due 2025 Premium") (i) 100% of the principal amount of the JCI plc 1.375% Notes due 2025 to be redeemed and (ii) the sum of the present values of the Remaining Scheduled Payments (as defined below) discounted to the redemption date, on an annual basis (ACTUAL/ACTUAL (ICMA)), at a rate equal to the Treasury Rate (as defined below) plus 20 basis points plus, in either case, accrued and unpaid interest, if any, thereon to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

On or after November 25, 2024 (three months prior to their maturity date), JCI plc may, at its option, redeem the JCI plc 1.375% Notes due 2025, in whole at any time or in part from time to time (in €1,000 increments, provided that any remaining principal amount thereof shall be at least the minimum authorized denomination of €100,000), at a redemption price equal to 100% of the principal amount of the JCI plc 1.375% Notes due 2025 to be redeemed, plus accrued and unpaid interest, if any, thereon to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

Prior to June 15, 2023 (three months prior to the maturity date), JCI plc may, at its option, redeem the JCI plc 1.000% Senior Notes due 2023, in whole at any time or in part from time to time (in €1,000 increments, provided that any remaining principal amount thereof shall be at least the minimum authorized denomination of €100,000), at a redemption price equal to the greater of the "1.000% Notes due 2023 Premium" and, collectively with the 1.375% Notes due 2025 Premium, the "Applicable Euro Notes Premium") (i) 100% of the principal amount of the JCI plc 1.000% Senior Notes due 2023 to be redeemed and (ii) the sum of the present values of the Remaining Scheduled Payments (as defined below) discounted to the redemption date, on an annual basis (ACTUAL/ACTUAL (ICMA)), at a rate equal to the Treasury Rate (as defined below) plus 20 basis points plus, in either case, accrued and unpaid interest, if any, thereon to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

On or after June 15, 2023 (three months prior to their maturity date), JCI plc may, at its option, redeem the JCI plc 1.000% Senior Notes due 2023, in whole at any time or in part from time to time (in €1,000 increments, provided that any remaining principal amount thereof shall be at least the minimum authorized denomination of €100,000), at a redemption price equal to 100% of the principal amount of the JCI plc 1.000% Senior Notes due 2023 to be redeemed, plus accrued and unpaid interest, if any, thereon to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

"Treasury Rate" means the rate per annum (which, if less than zero, shall be deemed to be zero) equal to the annual equivalent yield to maturity of the Reference Bond (as defined below), assuming a price for the Reference Bond (expressed as a percentage of its principal amount) equal to the middle market price of the Reference Bond prevailing at 11:00 a.m. (London time) on the third business day preceding such redemption date as determined by us or an independent investment bank appointed by us.

"Reference Bond" means, in relation to any Treasury Rate calculation, a German government bond whose maturity is closest to the maturity of the applicable JCI plc Euro Notes, or if we or an independent investment bank appointed by us considers that such similar bond is not in issue, such other German government bond as we or an independent investment bank appointed by us, with the advice of three brokers of, and/or market makers in, German government bonds selected by us or an independent investment bank appointed by us, determine to be appropriate for determining the Treasury Rate.

"Remaining Scheduled Payments" means, with respect to each JCI plc Euro Note to be redeemed, the remaining scheduled payments of principal of and interest on the relevant JCI plc Euro Note that would be due after the related redemption date but for the redemption. If that redemption date is not an interest payment date with respect to a JCI plc Euro Note, the amount of the next succeeding scheduled interest payment on the relevant JCI plc Euro Note will be reduced by the amount of interest accrued on the JCI plc Euro Note to the redemption date.

## Redemption Upon Changes in Withholding Taxes

JCI plc may redeem all, but not less than all, of the JCI plc Notes of any series under the following conditions:

- if there is an amendment to, or change in, the laws or regulations of a Relevant Taxing Jurisdiction (as defined below) or any change in the application or official interpretation of such laws, including any action taken by, or a change in published administrative practice of, a taxing authority or a holding by a court of competent jurisdiction, regardless of whether such action, change or holding is with respect to JCI plc, which amendment or change is announced on or after the date of issuance of the applicable JCI plc Notes (or, in the case of any Relevant Taxing Jurisdiction that becomes a Relevant Taxing Jurisdiction after the date of issuance of the applicable JCI plc Notes, after such later date);



- as a result of such amendment or change, JCI plc becomes, or there is a material probability that JCI plc will become, obligated to pay Additional Amounts (as defined below), on the next payment date with respect to the JCI plc Notes of such series;

- JCI plc delivers to the Trustee a written opinion of independent tax counsel to JCI plc of recognized standing to the effect that JCI plc has, or there is a material probability that it will become obligated, to pay Additional Amounts as a result of a change, amendment, official interpretation or application described above; and

- following the delivery of the opinion described in the previous bullet point, JCI plc provides notice of redemption not less than 30 days, but not more than 90 days, prior to the redemption date. The notice of redemption cannot be given more than 90 days before the earliest date on which JCI plc would be otherwise required to pay Additional Amounts, and the obligation to pay Additional Amounts must still be in effect when the notice is given.

Upon the occurrence of each of the bullet points above, JCI plc may redeem the JCI plc Notes of such series at a redemption price equal to 100% of the principal amount thereof, together with accrued and unpaid interest, if any, thereon to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

The foregoing provisions shall apply mutatis mutandis to any Successor Person (as defined below) to JCI plc.

## Notice of Redemption

Notice of any redemption will be mailed, or delivered electronically if the JCI plc Notes are held by any depositary, at least 30 days but not more than 90 days before the date fixed for such redemption to each holder of JCI plc Notes of a series to be redeemed. If less than all the JCI plc Notes of such series are to be redeemed, the Trustee will select the outstanding JCI plc Notes of such series to be redeemed in accordance with a method that complies with the requirements, if any, of any stock exchange on which such JCI plc Notes are listed, and the applicable procedures of the depositary, if the JCI plc Notes of such series are held by any depositary; provided, however, that with respect to any JCI plc Notes not listed on any stock exchange and/or held by a depositary, the Trustee will select such JCI plc Notes by lot or by such other method that the Trustee considers fair and appropriate.

Interest on such JCI plc Notes or portions of JCI plc Notes will cease to accrue on and after the date fixed for redemption, unless JCI plc defaults in the payment of such redemption price and accrued interest (if any) with respect to any such JCI plc Note or portion thereof.

If any redemption date of any JCI plc Note is not a business day, then payment of principal and interest may be made on the next succeeding business day with the same force and effect as if made on the nominal redemption date and no interest will accrue for the period after such nominal date.

## Payment of Additional Amounts

All payments in respect of the JCI plc Notes will be made by JCI plc free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, levies, imposts, assessments or governmental charges of whatever nature ("Taxes") unless the withholding or deduction of such Taxes is required by law.

In the event that JCI plc is required to withhold or deduct any amount for or on account of any Taxes imposed or levied by or on behalf of Ireland or any other jurisdiction (other than the United States of America) in which JCI plc is organized, resident or doing business for tax purposes or from or through which payments by or on behalf of JCI plc are made, or any political subdivision or any authority thereof or therein (each, but not including the United States of America or any political subdivision or any authority thereof or therein, a "Relevant Taxing Jurisdiction") from any payment made under or with respect to any JCI plc Note, JCI plc will pay such additional amounts ("Additional Amounts") so that the net amount received by each holder of JCI plc Notes (including Additional Amounts) after such withholding or deduction will equal the amount that such holder would have received if such Taxes had not been required to be withheld or deducted.

Additional Amounts will not be payable with respect to a payment made to a holder of JCI plc Notes or a holder of beneficial interests in Global Securities where such holder is subject to taxation on such payment by the Relevant Taxing Jurisdiction for any reason other than such Person's mere ownership of the JCI plc Notes or beneficial interests or for or on account of:

- any Taxes that are imposed or withheld solely because such holder or a fiduciary, settlor, beneficiary, or member of such holder if such holder is an estate, trust, partnership, limited liability company or other fiscally transparent entity, or a Person holding a power over an estate or trust administered by a fiduciary holder:



is or was present or engaged in, or is or was treated as present or engaged in, a trade or business in the Relevant Taxing Jurisdiction or has or had a permanent establishment in the Relevant Taxing Jurisdiction;

- has or had any present or former connection (other than the mere fact of ownership of such JCI plc Notes) with the Relevant Taxing Jurisdiction, including being or having been a national citizen or resident thereof, being treated as being or having been a resident thereof or being or having been physically present therein;

• any estate, inheritance, gift, transfer, excise, personal property or similar Taxes imposed with respect to the JCI plc Notes;

- any Taxes imposed solely as a result of the presentation of such JCI plc Notes, where presentation is required, for payment on a date more than 30 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever is later, except to the extent that the beneficiary or holder thereof would have been entitled to the payment of Additional Amounts had such JCI plc Notes been presented for payment on any date during such 30-day period;

- any Taxes imposed or withheld solely as a result of the failure of such holder or any other Person to comply with applicable certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connection with the Relevant Taxing Jurisdiction, if such compliance is required by statute or regulation of the Relevant Taxing Jurisdiction as a precondition to relief or exemption from such Taxes;

- any Taxes that are payable by any method other than withholding or deduction by JCI plc or any paying agent from payments in respect of such JCI plc Notes;

- any Taxes required to be withheld by any paying agent from any payment in respect of any JCI plc Notes if such payment can be made without such withholding by at least one other paying agent;

- any withholding or deduction for Taxes which would not have been imposed if the relevant JCI plc Notes had been presented to another paying agent in a Member State of the European Union;

- any withholding or deduction required pursuant to sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (or any amended or successor provisions), any regulations, rules, practices or agreements entered into pursuant thereto, official interpretations thereof or any law implementing an intergovernmental approach thereto; or

• any combination of the above conditions.

Additional Amounts also will not be payable to any holder of JCI plc Notes or the holder of a beneficial interest in a global JCI plc Note that is a fiduciary, partnership, limited liability company or other fiscally transparent entity, or to such holder that is not the sole holder of such JCI plc Note or holder of such beneficial interests in such JCI plc Note, as the case may be. This exception, however, will apply only to the extent that a beneficiary or settlor with respect to the fiduciary, or a beneficial owner or member of the partnership, limited liability company or other fiscally transparent entity, would not have been entitled to the payment of an Additional Amount had the beneficiary, settlor, beneficial owner or member received directly its beneficial or distributive share of the payment.

## JCI plc also:

• will make such withholding or deduction of Taxes;

• will remit the full amount of Taxes so deducted or withheld to the relevant tax authority in accordance with all applicable laws;

- will use its commercially reasonable efforts to obtain from each relevant tax authority imposing such Taxes certified copies of tax receipts evidencing the payment of any Taxes so deducted or withheld; and

upon request, will make available to the holders of the JCI plc Notes, within 90 days after the date the payment of any Taxes deducted or withheld is due pursuant to applicable law, certified copies of tax receipts evidencing such payment by JCI plc (unless, notwithstanding JCI plc's efforts to obtain such receipts, the same are not obtainable).

At least 30 days prior to each date on which any payment under or with respect to the JCI plc Notes of a series is due and payable, if JCI plc will be obligated to pay Additional Amounts with respect to such payment, JCI plc will deliver to the Trustee an Officer's Certificate stating the fact that such Additional Amounts will be payable, the amounts so payable and such other information as is necessary to enable the Trustee to pay such Additional Amounts to holders of such JCI plc Notes on the payment date.

In addition, JCI plc will pay any stamp, issue, registration, documentary or other similar taxes and duties, including interest, penalties and Additional Amounts with respect thereto, payable in a Relevant Taxing Jurisdiction in respect of the creation, issue, offering, enforcement, redemption or retirement of the JCI plc Notes.



The foregoing provisions shall survive any termination or the discharge of the JCI plc Indenture and shall apply mutatis mutandis to any Successor Person to JCI plc.

Whenever in the JCI plc Indenture, any JCI plc Notes, or in this "Description of JCI plc Notes" there is mentioned, in any context, the payment of principal, premium, if any, redemption price, repurchase price, interest or any other amount payable under or with respect to any JCI plc Notes, such mention shall be deemed to include the payment of Additional Amounts to the extent payable in the particular context.

## Offer to Repurchase Upon Change of Control Triggering Event

Upon the occurrence of a Change of Control Triggering Event with respect to a series of JCI plc Notes (other than the 6.000% Notes due 2036, the 7.125% Notes Due July 15, 2017 and the 6.950% Debentures due December 1, 2045), unless we have exercised our right to redeem the JCI plc Notes of such series by giving irrevocable notice on or prior to the 30th day after the Change of Control Triggering Event in accordance with the JCI plc Indenture, each holder of JCI plc Notes of such series will have the right to require us to purchase all or a portion of such holder's JCI plc Notes of such series pursuant to the offer described below (the "Change of Control Offer"), at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, thereon to, but excluding, the date of purchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date) (the "Change of Control Payment"). If the Change of Control Payment Date (as defined below) falls on a day that is not a business day, the related payment of the Change of Control Payment will be made on the next business day as if it were made on the date such payment was due, and no interest will accrue on the amounts so payable for the period from and after such date to the next business day.

Within 30 days following the date upon which the Change of Control Triggering Event occurs or, at our option, prior to any Change of Control but after the public announcement of the pending Change of Control, we will be required to send, by first class mail, or deliver electronically if the applicable JCI plc Notes are held by any depositary, a notice to each holder of JCI plc Notes of the applicable series, with a copy to the Trustee, which notice will govern the terms of the Change of Control Offer. Such notice will state, among other things, the purchase date, which must be no earlier than 30 days nor later than 60 days from the date such notice is mailed or delivered electronically (or, in the case of a notice mailed or delivered electronically prior to the date of consummation of a Change of Control, no earlier than 30 days nor later than 60 days from the date of the Change of Control Triggering Event), other than as may be required by law (the "Change of Control Payment Date"). The notice, if mailed or delivered electronically prior to the date of consummation of the Change of Control, will state that the Change of Control Offer is conditioned on the Change of Control being consummated on or prior to the Change of Control Payment Date.

On the Change of Control Payment Date, we will, to the extent lawful:

• accept or cause a third party to accept for payment all JCI plc Notes of the applicable series properly tendered pursuant to the Change of Control Offer;

- deposit or cause a third party to deposit with the applicable paying agent an amount equal to the Change of Control Payment in respect of all JCI plc Notes of the applicable series properly tendered; and

- deliver or cause to be delivered to the Trustee the JCI plc Notes of the applicable series properly accepted together with an Officer's Certificate stating the aggregate principal amount of JCI plc Notes of each series being repurchased.

We will not be required to make a Change of Control Offer with respect to the JCI plc Notes of the applicable series if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for such an offer made by us and such third party purchases all the JCI plc Notes of the applicable series properly tendered and not withdrawn under its offer. In addition, we will not repurchase any JCI plc Notes of the applicable series if there has occurred and is continuing on the Change of Control Payment Date an Event of Default under the JCI plc Indenture, other than a Default in the payment of the Change of Control Payment on the Change of Control Payment Date.

We must comply in all material respects with the requirements of Rule 14e-1 under the Exchange Act, and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the JCI plc Notes of the applicable series as a result of a Change of Control Triggering Event. To the extent that the provisions of any such securities laws or regulations conflict with the Change of Control Offer provisions of the JCI plc Notes of the applicable series, we will be required to comply with those securities laws and regulations and will not be deemed to have breached our obligations under the Change of Control Offer provisions of the JCI plc Notes of such series by virtue of any such conflict.

The definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of "all or substantially all" of the properties or assets of JCI plc and its subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase "substantially all," there is no precise, established definition of the phrase under applicable law. Accordingly, the applicability of the requirement that we offer to repurchase the JCI plc Notes as a result of a sale,



lease, transfer, conveyance or other disposition of less than all of the assets of JCI plc and its subsidiaries taken as a whole to another "person" or "group" (as those terms are used in Section 13(d)(3) of the Exchange Act) may be uncertain.

## Other Provisions of the JCI plc Euro Notes

Claims against JCI plc for the payment of principal or Additional Amounts, if any, of the JCI plc Euro Notes will be prescribed ten years after the applicable due date for payment thereof. Claims against JCI plc for the payment of interest, if any, of the JCI plc Euro Notes will be prescribed five years after the applicable due date for payment of interest.

## Certain Covenants

The JCI plc Indenture contains the following covenants:

## Limitation on Liens

JCI plc will not, and will not permit any Restricted Subsidiary to, issue, incur, assume or guarantee any Indebtedness that is secured by a lien upon any asset that at the time of such issuance, assumption or guarantee constitutes a Principal Property, or any shares of stock or of Indebtedness issued by any Restricted Subsidiary, whether now owned or hereafter acquired, without effectively providing that, for so long as such lien shall continue in existence with respect to such secured Indebtedness, the JCI plc Notes and any other debt securities issued pursuant to the Indenture and any supplement thereto (together with, if JCI plc shall so determine, any other Indebtedness of JCI plc ranking equally with the JCI plc Notes and any other debt securities issued pursuant to the Indenture and any supplement thereto, it being understood that for purposes hereof, Indebtedness which is secured by a lien and Indebtedness which is not so secured shall not, solely by reason of such lien, be deemed to be of different ranking) shall be equally and ratably secured by a lien ranking ratably with or equal to (or at JCI plc's option prior to) such secured Indebtedness; provided, however, that the foregoing covenant shall not apply to:

• liens existing on the date the JCI plc Notes of the applicable series are first issued;

• liens on the stock, assets or Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary, unless created in contemplation of such Person becoming a Restricted Subsidiary;

• liens on any assets or Indebtedness of a Person existing at the time such Person is merged with or into or consolidated with or acquired by JCI plc or a Restricted Subsidiary or at the time of a purchase, lease or other acquisition of the assets of a corporation or firm as an entirety or substantially as an entirety by JCI plc or any Restricted Subsidiary; provided, however, that no such lien shall extend to any other Principal Property of JCI plc or such Restricted Subsidiary prior to such acquisition or to any other Principal Property thereafter acquired other than additions to such acquired property;

• liens on any Principal Property existing at the time of acquisition thereof by JCI plc or any Restricted Subsidiary, or liens to secure the payment of the purchase price of such Principal Property by JCI plc or any Restricted Subsidiary, or to secure any Indebtedness incurred, assumed or guaranteed by JCI plc or a Restricted Subsidiary for the purpose of financing all or any part of the purchase price of such Principal Property or improvements or construction thereon, which Indebtedness is incurred, assumed or guaranteed prior to, at the time of or within one year after such acquisition, or in the case of real property, completion of such improvement or construction or commencement of full operation of such property, whichever is later; provided, however, that in the case of any such acquisition, construction or improvement, the lien shall not apply to any other Principal Property, other than the Principal Property so acquired, constructed or improved, and accessions thereto and improvements and replacements thereof and the proceeds of the foregoing;

• liens securing Indebtedness owing by any Restricted Subsidiary to JCI plc or a subsidiary thereof;

- liens in favor of the United States of America or any State thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State thereof, or in favor of any other country or any political subdivision thereof, to secure partial, progress, advance or other payments pursuant to any contract, statute, rule or regulation or to secure any Indebtedness incurred or guaranteed for the purpose of financing all or any part of the purchase price, or, in the case of real property, the cost of construction or improvement, of the Principal Property subject to such liens, including liens incurred in connection with pollution control, industrial revenue or similar financings;

• pledges, liens or deposits under workers' compensation or similar legislation, and liens thereunder that are not currently dischargeable, or in connection with bids, tenders, contracts, other than for the payment of money, or leases to which JCI plc or any Restricted Subsidiary is a party, or to secure the public or statutory obligations of JCI plc or any Restricted Subsidiary, or in connection with obtaining or maintaining self-insurance, or to obtain the benefits of any law, regulation or arrangement pertaining to unemployment insurance, old age pensions, social security or similar matters, or to secure surety, performance, appeal or customs bonds to which JCI plc or any Restricted Subsidiary is a party, or in litigation or other proceedings in connection with the matters heretofore referred to in this clause, such as interpleader proceedings, and other similar pledges, liens or deposits made or incurred in the ordinary course of business;

• liens created by or resulting from any litigation or other proceeding that is being contested in good faith by appropriate proceedings, including liens arising out of judgments or awards against JCI plc or any Restricted Subsidiary with respect



to which JCI plc or such Restricted Subsidiary in good faith is prosecuting an appeal or proceedings for review or for which the time to make an appeal has not yet expired; or final unappealable judgment liens which are satisfied within 15 days of the date of judgment; or liens incurred by JCI plc or any Restricted Subsidiary for the purpose of obtaining a stay or discharge in the course of any litigation or other proceeding to which JCI plc or such Restricted Subsidiary is a party;

- liens for taxes or assessments or governmental charges or levies not yet due or delinquent; or that can thereafter be paid without penalty, or that are being contested in good faith by appropriate proceedings; landlords' liens on property held under lease; and any other liens or charges incidental to the conduct of the business of JCI plc or any Restricted Subsidiary, or the ownership of their respective assets, that were not incurred in connection with the borrowing of money or the obtaining of advances or credit and that, in the opinion of the Board of Directors of JCI plc, do not materially impair the use of such assets in the operation of the business of JCI plc or such Restricted Subsidiary or the value of such Principal Property for the purposes of such business;

- liens to secure JCI plc's or any Restricted Subsidiary's obligations under agreements with respect to spot, forward, future and option transactions, entered into in the ordinary course of business;

- liens not permitted by the foregoing clauses, inclusive, if at the time of, and after giving effect to, the creation or assumption of any such lien, the aggregate amount of all outstanding Indebtedness of JCI plc and its Restricted Subsidiaries, without duplication, secured by all such liens not so permitted by the foregoing bullets, inclusive, together with the Attributable Debt in respect of Sale and Lease-Back Transactions permitted by the first bullet under "Limitation on Sale and Lease-Back Transactions" below, do not exceed the greater of $100,000,000 and 10% of Consolidated Net Worth; and

- any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part, of any lien referred to in the foregoing bullets inclusive; provided, however, that the principal amount of Indebtedness secured thereby unless otherwise excepted under the foregoing bullets shall not exceed the principal amount of Indebtedness so secured at the time of such extension, renewal or replacement (plus any premium, fee, cost, expense or charge payable in connection with any such extension, renewal or replacement), and that such extension, renewal or replacement shall be limited to all or a part of the assets, or any replacements therefor, that secured the lien so extended, renewed or replaced, plus improvements and construction on such assets.

## Limitation on Sale and Lease-Back Transactions

JCI plc will not, and will not permit any Restricted Subsidiary to, enter into any Sale and Lease-Back Transaction unless:

- JCI plc or such Restricted Subsidiary, at the time of entering into a Sale and Lease-Back Transaction, would be entitled to incur Indebtedness secured by a lien on the Principal Property to be leased in an amount at least equal to the Attributable Debt in respect of such Sale and Lease-Back Transaction, without equally and ratably securing the JCI plc Notes of the applicable series pursuant to the covenant described under "Limitations on Liens" above; or

- the direct or indirect proceeds of the sale of the Principal Property to be leased are at least equal to the fair value of such Principal Property, as determined by JCI plc's Board of Directors in good faith, and an amount equal to the net proceeds from the sale of the assets so leased is applied, within 180 days of the effective date of any such Sale and Lease-Back Transaction, to the purchase or acquisition (or, in the case of real property, commencement of the construction) of assets or to the retirement (other than at maturity or pursuant to a mandatory sinking fund or mandatory redemption or prepayment provision) of the JCI plc Notes and any other debt securities issued pursuant to the Indenture and any supplement thereto or of Funded Indebtedness ranking on a parity with or senior to the JCI plc Notes and any other debt securities issued pursuant to the Indenture and any supplement thereto; provided that there shall be credited to the amount of net proceeds required to be applied pursuant to this provision an amount equal to the sum of (i) the principal amount of the JCI plc Notes and any other debt securities issued pursuant to the Indenture and any supplement thereto delivered within 180 days of the effective date of such Sale and Lease-Back Transaction to the Trustee for retirement and cancellation and (ii) the principal amount of other Funded Indebtedness voluntarily retired by JCI plc within such 180-day period, excluding retirements of the JCI plc Notes and any other debt securities issued pursuant to the Indenture and any supplement thereto and other Funded Indebtedness at maturity or pursuant to mandatory sinking fund or mandatory redemption or prepayment provisions.

## Merger and Consolidation

JCI plc will not, directly or indirectly, consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets in one or a series of related transactions to, any Person, unless:

(1) the resulting, surviving or transferee Person (the "Successor Person") will be a corporation, limited liability company, public limited company, limited partnership or other entity organized and existing under the laws of (u) the United States of America, any State thereof or the District of Columbia, (v) Ireland, (w) England and Wales, (x) Jersey, (y) any member state of the European Union as in effect on the date the JCI plc Notes of the applicable series are first issued or



(z) Switzerland; provided that the Successor Person (if not JCI plc) will expressly assume, by a supplemental indenture, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all the obligations of JCI plc under the JCI plc Notes of the applicable series and the JCI plc Indenture;

(2) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Person or any Restricted Subsidiary as a result of such transaction as having been incurred by the Successor Person or such Restricted Subsidiary at the time of such transaction), no Default shall have occurred and be continuing; and

(3) JCI plc shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel under the JCI plc Indenture, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the JCI plc Indenture.

Notwithstanding the foregoing, (A) any conveyance, transfer or lease of assets between or among JCI plc and its subsidiaries shall not be prohibited under the JCI plc Indenture and (B) JCI plc may, directly or indirectly, consolidate with or merge with or into an Affiliate incorporated solely for the purpose of reincorporating JCI plc in another jurisdiction within the United States of America, any State thereof or the District of Columbia, Ireland, England and Wales, Jersey, any member state of the European Union as in effect on the date the JCI plc Notes of the applicable series are first issued or Switzerland to realize tax or other benefits.

The Successor Person will succeed to, and be substituted for, and may exercise every right and power of, JCI plc under the JCI plc Indenture, and the predecessor issuer, other than in the case of a lease, will be automatically released from all obligations under the JCI plc Notes and the JCI plc Indenture, including, without limitation, the obligation to pay the principal of and interest on the JCI plc Notes of the applicable series.

## Reports by JCI plc

So long as any JCI plc Notes are outstanding, JCI plc shall file with the Trustee, within 15 days after JCI plc is required to file with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) that JCI plc may be required to file with the SEC pursuant to Section 13 or Section 15(d) of the Exchange Act. JCI plc shall be deemed to have complied with the previous sentence to the extent that such information, documents and reports are filed with the SEC via EDGAR, or any successor electronic delivery procedure; provided, however, that the Trustee shall have no obligation whatsoever to determine whether or not such information, documents or reports have been filed pursuant to the EDGAR system (or its successor). Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including JCI plc's compliance with any of its covenants under the JCI plc Indenture (as to which the Trustee is entitled to rely exclusively on Officer's Certificates).

JCI plc will furnish to the Trustee on or before 120 days after the end of each fiscal year an Officer's Certificate stating that in the course of the performance by the signers of their duties as Officers of JCI plc, they would normally have knowledge of any Default by JCI plc in the performance or fulfillment or observance of any covenants or agreements contained in the JCI plc Indenture during the preceding fiscal year, stating whether or not they have knowledge of any such Default and, if so, specifying each such Default of which the signers have knowledge and the nature thereof.

## Listing

The JCI plc Notes are listed on the New York Stock Exchange. We have no obligation to maintain such listing, and we may delist the JCI plc Notes at any time.

## Events of Default

As to any series of JCI plc Notes, an "Event of Default" means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(1) failure to pay any interest on the JCI plc Notes of that series when due, which failure continues for 30 days;

(2) failure to pay principal or premium, if any, with respect to the JCI plc Notes of that series when due;

(3) failure on the part of JCI plc to observe or perform any other covenant, warranty or agreement in the JCI plc Notes of that series, or in the JCI plc Indenture as it relates to the JCI plc Notes of that series, other than a covenant, warranty or agreement, a Default in whose performance or whose breach is specifically dealt with elsewhere in the section of the JCI plc



Indenture governing Events of Default, if the failure continues for 90 days after written notice by the Trustee or the holders of at least 25% in aggregate principal amount of the JCI plc Notes of that series then outstanding;

(4) an Event of Default with respect to any other series of debt securities issued under the JCI plc Indenture or an uncured or unwaived failure to pay principal of or interest on any of our other obligations for borrowed money beyond any period of grace with respect thereto if, in either case, (a) the aggregate principal amount thereof is in excess of $200,000,000; and (b) the default in payment is not being contested by us in good faith and by appropriate proceedings; and

(5) specified events of bankruptcy, insolvency, receivership or reorganization.

However, the Event of Default in clause (4) above is subject to the following:

- if such Event of Default with respect to such other series of debt securities issued under the JCI plc Indenture or such default in payment with respect to such other obligations for borrowed money shall be remedied or cured by JCI plc or waived by the requisite holders of such other series of debt securities or such other obligations for borrowed money, then the Event of Default under the JCI plc Indenture by reason thereof shall be deemed likewise to have been thereupon remedied, cured or waived without further action upon the part of either the Trustee or any of the holders of JCI plc Notes; and

- subject to certain duties, responsibilities and rights of the Trustee under the JCI plc Indenture, the Trustee shall not be charged with knowledge of any such Event of Default with respect to such other series of debt securities issued under the JCI plc Indenture or such payment default with respect to such other obligations for borrowed money unless written notice thereof shall have been given to a Trust Officer of the Trustee by JCI plc, by the holder or an agent of the holder of such other obligations for borrowed money, by the trustee then acting under any indenture or other instrument under which such payment default with respect to such other obligations for borrowed money shall have occurred, or by the holders of not less than 25% in aggregate principal amount of outstanding debt securities of such other series.

## Notice and Declaration of Defaults

The JCI plc Indenture provides that the Trustee will, within the later of 90 days after the occurrence of a Default with respect to any series for which there are JCI plc Notes outstanding which is continuing and which is known to a Trust Officer of the Trustee, or 60 days after such Default is actually known to such Trust Officer of the Trustee or written notice of such Default is received by the Trustee, give to the holders of such JCI plc Notes notice, by mail as the names and addresses of such holders appear on the security register, or electronically if such JCI plc Notes are held by any depositary, of all uncured Defaults known to it, including events specified above without grace periods, unless such Defaults shall have been cured before the giving of such notice; provided, that except in the case of Default in the payment of the principal of, premium, if any, or interest on any of the JCI plc Notes of any series, or in the payment of any sinking fund installment with respect to the JCI plc Notes of any series, the Trustee shall be protected in withholding such notice to the holders if the Trustee in good faith determines that withholding of such notice is in the interests of the holders of the JCI plc Notes of such series.

The Trustee or the holders of not less than 25% in aggregate principal amount of the outstanding JCI plc Notes of any series may declare the JCI plc Notes of that series immediately due and payable upon the occurrence of any Event of Default. The holders of a majority in principal amount of the outstanding JCI plc Notes of all series issued under the JCI plc Indenture and any supplement thereto affected by such waiver (voting as one class), on behalf of the holders of all of the JCI plc Notes of all such series, may waive any existing Default and its consequences, except a Default in the payment of principal, premium, if any, or interest, including sinking fund payments (provided, however, that only holders of a majority in principal amount of the JCI plc Notes of an applicable series may rescind an acceleration with respect to such series and its consequences, including any related payment default that resulted from such acceleration).

## Actions upon Default

In case an Event of Default with respect to any series of JCI plc Notes occurs and is continuing, the JCI plc Indenture provides that the Trustee will be under no obligation to exercise any of its rights or powers under the JCI plc Indenture at the request, order or direction of any of the holders of JCI plc Notes outstanding of any series unless the applicable holders have offered to the Trustee reasonable security and indemnity, satisfactory to the Trustee in its sole discretion, against any loss, liability or expense which may be incurred thereby. The right of a holder to institute a proceeding with respect to the JCI plc Notes of the applicable series is subject to conditions precedent including notice and indemnity to the Trustee, but the right of any holder of any applicable JCI plc Note to receive payment of the principal of, and premium, if any, and interest on their due dates or to institute suit for the enforcement thereof shall not be impaired or affected without the consent of such holder.



The holders of a majority in aggregate principal amount of the JCI plc Notes outstanding of the series in Default will have the right to direct the time, method and place for conducting any proceeding for any remedy available to the Trustee or exercising any power or trust conferred on the Trustee, in each case with respect to such series. Any direction by such holders will be in accordance with law and the provisions of the JCI plc Indenture. Subject to certain provisions of the JCI plc Indenture, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith, by a Trust Officer or Trust Officers of the Trustee, shall determine that the action or proceeding so directed may not be lawfully taken, would involve the Trustee in personal liability, would be materially or unjustly prejudicial to the rights of holders of JCI plc Notes of such series not joining in such direction or would be unduly prejudicial to the interests of the holders of JCI plc Notes and other debt securities issued under the JCI plc Indenture of all series not joining in the giving of such direction. The Trustee will be under no obligation to act in accordance with any such direction unless the applicable holders offer the Trustee reasonable security and indemnity, satisfactory to the Trustee in its sole discretion, against costs, expenses and liabilities which may be incurred thereby.

## Modification of the JCI plc Indenture

JCI plc and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental to the JCI plc Indenture, which shall conform to the provisions of the Trust Indenture Act as then in effect, without the consent of the holders of any series of JCI plc Notes for one or more of the following purposes:

- to cure any ambiguity, defect or inconsistency in the JCI plc Indenture or JCI plc Notes of any series, including making any such changes as are required for the JCI plc Indenture to comply with the Trust Indenture Act;

- to add an additional obligor on the JCI plc Notes or to add a guarantor of any outstanding series of JCI plc Notes, or to evidence the succession of another Person to JCI plc or any additional obligor or guarantor of the JCI plc Notes, or successive successions, and the assumption by the Successor Person of the covenants, agreements and obligations of JCI plc or such obligor or guarantor, as the case may be, pursuant to provisions in the JCI plc Indenture concerning consolidation, merger, the sale of assets or successor entities;

• to provide for uncertificated debt securities in addition to or in place of certificated debt securities;

- to add to the covenants of JCI plc for the benefit of the holders of any outstanding series of JCI plc Notes (and if such covenants are to be for the benefit of less than all outstanding series of debt securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any of JCI plc's rights or powers under the JCI plc Indenture;

- to add any additional Events of Default for the benefit of the holders of any outstanding series of JCI plc Notes (and if such Events of Default are to be applicable to less than all outstanding series, stating that such Events of Default are expressly being included solely to be applicable to such series);

- to change or eliminate any of the provisions of the JCI plc Indenture, provided that any such change or elimination shall not become effective with respect to any outstanding JCI plc Note of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision;

• to secure the JCI plc Notes of any series;

• to make any other change that does not adversely affect the rights of any holder of outstanding JCI plc Notes in any material respect;

- to provide for the issuance of and establish the form and terms and conditions of a series of debt securities, to provide which, if any, of the covenants of JCI plc shall apply to such series, to provide which of the events of default set forth in the base indenture shall apply to such series, to name one or more guarantors and provide for guarantees of such series, to provide for the terms and conditions upon which the guarantee by any guarantor of such series may be released or terminated, or to define the rights of the holders of such series of debt securities;

- to issue additional JCI plc Notes of any series to the extent permitted by the JCI plc Indenture; provided that such additional JCI plc Notes have the same terms as, and be deemed part of the same series as, the applicable series of JCI plc Notes to the extent required under the JCI plc Indenture; or

- to evidence and provide for the acceptance of appointment under the JCI plc Indenture by a successor Trustee with respect to the JCI plc Notes of one or more series and to add to or change any of the provisions of the JCI plc Indenture as shall be necessary to provide for or facilitate the administration of the trust thereunder by more than one Trustee.

In addition, under the JCI plc Indenture, with the consent (evidenced as provided in the JCI plc Indenture) of the holders of not less than a majority in aggregate principal amount of the outstanding debt securities of all series affected by such supplemental indenture or indentures (voting as one class), JCI plc and the Trustee from time to time and at any time may enter into an indenture or indentures supplemental to the JCI plc Indenture for the purpose of adding any provisions to or changing in any manner or eliminating



any of the provisions of the JCI plc Indenture or of any supplemental indenture thereto or of modifying in any manner not covered by the immediately preceding paragraph the rights of the holders of the debt securities of each such series under the JCI plc Indenture. However, the following changes may only be made with the consent of each holder of outstanding JCI plc Notes affected:

- extend a fixed maturity of or any installment of principal of any JCI plc Notes of any series or reduce the principal amount thereof or reduce the amount of principal of any original issue discount security that would be due and payable upon declaration of acceleration of the maturity thereof;

• reduce the rate of or extend the time for payment of interest on any JCI plc Note of any series;

• reduce the premium payable upon the redemption of any JCI plc Note of any series;

• make any JCI plc Note of any series payable in currency other than that stated in the applicable JCI plc Note;

- impair the right to institute suit for the enforcement of any payment in respect of any JCI plc Note of any series on or after the fixed maturity thereof or, in the case of redemption, on or after the redemption date;

- modify the subordination provisions applicable to any JCI plc Note of any series in a manner adverse in any material respect to the holder thereof; or

- reduce the aforesaid percentage of JCI plc Notes of the applicable series, the holders of which are required to consent to any such supplemental indenture or indentures.

A supplemental indenture that changes or eliminates any covenant, event of default set forth in the base indenture or other provision of the JCI plc Indenture that has been expressly included solely for the benefit of one or more particular series of debt securities, if any, or which modifies the rights of the holders of debt securities of such series with respect to such covenant, event of default or other provision, shall be deemed not to affect the rights under the JCI plc Indenture of the holders of securities of any other series.

Notwithstanding anything herein or otherwise, the provisions under the JCI plc Indenture relative to JCI plc's obligation to make any offer to repurchase the JCI plc Notes of any series as a result of a Change of Control Triggering Event as provided under Section 4.08 of the base indenture may be waived or modified with the written consent of the holders of a majority in principal amount of the outstanding debt securities of the applicable series or multiple affected series.

It will not be necessary for the consent of the holders of the JCI plc Notes of any series to approve the particular form of any proposed supplement, amendment or waiver, but it shall be sufficient if such consent approves the substance thereof.

## Information Concerning the Trustee

If an Event of Default with respect to the JCI plc Notes of a series has occurred and is continuing, the Trustee shall exercise with respect to the JCI plc Notes of such series such of the rights and powers vested in it by the JCI plc Indenture, and use the same degree of care and skill in its exercise, as a prudent Person would exercise or use under the circumstances in the conduct of such Person's own affairs. If an Event of Default has occurred and is continuing, the Trustee will be under no obligation to exercise any of its rights or powers under the JCI plc Indenture at the request, order or direction of any holders of JCI plc Notes of the applicable series, unless such holders shall have offered to the Trustee security and indemnity, satisfactory to it in its sole discretion, against any loss, liability or expense which may be incurred thereby, and then only to the extent required by the terms of the JCI plc Indenture. No provision of the JCI plc Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties under the JCI plc Indenture or in the exercise of any of its rights or powers.

The Trustee may resign with respect to the JCI plc Notes of a series at any time by giving a written notice to JCI plc. The holders of a majority in principal amount of the outstanding JCI plc Notes of a particular series may remove the Trustee with respect to such series of JCI plc Notes by notifying JCI plc and the Trustee in writing. JCI plc may remove the Trustee if:

- the Trustee has or acquires a "conflicting interest," within the meaning of Section 310(b) of the Trust Indenture Act, and fails to comply with the provisions of Section 310(b) of the Trust Indenture Act, or otherwise fails to comply with the eligibility requirements provided in the JCI plc Indenture and fails to resign after written request therefor by JCI plc in accordance with the JCI plc Indenture;

• the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any bankruptcy law;

• a custodian or public officer takes charge of the Trustee or its property; or

• the Trustee becomes incapable of acting.



If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee with respect to the JCI plc Notes of any series for any reason, JCI plc shall promptly appoint a successor Trustee with respect to the JCI plc Notes of such series.

A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of the appointment as provided in the JCI plc Indenture.

The Trustee and its Affiliates have engaged, currently are engaged, and may in the future engage in financial or other transactions with JCI plc and our Affiliates in the ordinary course of their respective businesses.

## Payment and Paying Agents

JCI plc will pay the principal of, premium, if any, and interest on the JCI plc Notes at any office of ours or any agency designated by us.

The Trustee was appointed by JCI plc as paying agent with regard to the JCI plc Dollar Notes. The location of the corporate trust office of the Trustee for payment on the JCI plc Dollar Notes is U.S. Bank Global Corporate Trust Services, Attn: Payments, EP-MN-WS2N, 111 Fillmore Ave E, St. Paul, MN 55107-1402.

The paying agent for the JCI plc Euro Notes is Elavon Financial Services DAC, UK Branch. For so long as the JCI plc Euro Notes are in global form, payment of principal and interest on, and any other amount due in respect of, the JCI plc Euro Notes will be made by or to the order of the paying agent on behalf of the common depositary or its nominee as the registered holder thereof. After payment by JCI plc or the paying agent of interest, principal or other amounts in respect of the JCI plc Euro Notes to the common depositary (or its nominee), JCI plc will not have responsibility or liability for such amounts to Euroclear or Clearstream, or to holders or beneficial owners of book-entry interests in the JCI plc Euro Notes.

In addition JCI plc will maintain a transfer agent and a security registrar for the JCI plc Notes. The transfer agent and security registrar for the JCI plc Notes other than the 1.00% Senior Notes due 2023 and 4.500% Senior Notes Due 2047 is Elavon Financial Services DAC. The transfer agent and security registrar for the 1.00% Senior Notes due 2023 and 4.500% Senior Notes Due 2047 is the Trustee.

The security registrar as to any series of JCI plc Notes will maintain a register reflecting ownership of the JCI plc Notes of such series outstanding from time to time, if any, and together with the applicable transfer agent, will make payments on and facilitate transfers of the JCI plc Notes of such series on behalf of JCI plc. No service charge will be made for any registration of transfer or exchange of JCI plc Notes. However, we may require holders to pay any transfer taxes or other similar governmental charges payable in connection with any such transfer or exchange.

JCI plc may change or appoint any paying agent, security registrar or transfer agent with respect to the JCI plc Notes of a series without prior notice to the holders of the JCI plc Notes of such series. JCI plc or any of its subsidiaries may act as paying agent, transfer agent or security registrar in respect of any JCI plc Notes.

## Governing Law

The JCI plc Indenture and any JCI plc Notes issued thereunder shall be deemed to be a contract made under the internal laws of the State of New York, and for all purposes shall be construed in accordance with the laws of the State of New York without regard to conflicts of laws principles that would require the application of any other law. The JCI plc Indenture is subject to the provisions of the Trust Indenture Act that are required to be part of the JCI plc Indenture and shall, to the extent applicable, be governed by such provisions.

## Satisfaction and Discharge of the JCI plc Indenture

The JCI plc Indenture shall cease to be of further effect with respect to a series of JCI plc Notes if, at any time:

(a) JCI plc has delivered or has caused to be delivered to the Trustee for cancellation all JCI plc Notes of such series theretofore authenticated, other than any JCI plc Notes that have been destroyed, lost or stolen and that have been replaced or paid as provided in the JCI plc Indenture, and JCI plc Notes for whose payment funds or governmental obligations have theretofore been deposited in trust or segregated and held in trust by JCI plc and thereupon repaid to JCI plc or discharged from such trust, as provided in the JCI plc Indenture; or

(b) all such JCI plc Notes of a particular series not theretofore delivered to the Trustee for cancellation have become due and payable or are by their terms to become due and payable within one year or are to be called for redemption within



one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and JCI plc shall irrevocably deposit or cause to be deposited with the Trustee as trust funds the entire amount, in funds or governmental obligations, or a combination thereof, sufficient to pay at maturity or upon redemption all JCI plc Notes of such series not theretofore delivered to the Trustee for cancellation, including principal, premium, if any, and interest due or to become due on such date of maturity or redemption date, as the case may be, and if in either case JCI plc shall also pay or cause to be paid all other sums payable under the JCI plc Indenture with respect to such series by JCI plc.

With respect to any redemption of any JCI plc Notes that requires the payment of any premium, the amount deposited pursuant to the above paragraph shall be sufficient for purposes of the JCI plc Indenture to the extent that an amount is so deposited with the Trustee or paying agent, as applicable, equal to such premium, on such JCI plc Notes calculated as of the date of the notice of redemption, with any deficit on the redemption date only required to be deposited with the Trustee or paying agent, as applicable, on or prior to the redemption date.

Notwithstanding the above, JCI plc may not be discharged from the following obligations, which will survive until the date of maturity or the redemption date, as the case may be, for the applicable series of JCI plc Notes:

• to make any interest or principal payments that may be required with respect to the JCI plc Notes of such series;

• to register the transfer or exchange of the JCI plc Notes of such series;

• to execute and authenticate the JCI plc Notes of such series;

• to replace stolen, lost or mutilated JCI plc Notes of such series;

• to maintain an office or agency with respect to the JCI plc Notes of such series;

• to maintain paying agencies with respect to the JCI plc Notes of such series; and

• to appoint new Trustees with respect to the JCI plc Notes of such series as required by the Indenture.

JCI plc also may not be discharged from the following obligations, which will survive the satisfaction and discharge of the applicable series of JCI plc Notes:

• to compensate and reimburse the Trustee in accordance with the terms of the JCI plc Indenture;

• to receive unclaimed payments held by the Trustee for at least one year after the date upon which the principal, if any, or interest on the JCI plc Notes of such series shall have respectively come due and payable and remit those payments to the holders thereof if required; and

• to withhold or deduct taxes as provided in the JCI plc Indenture.

For purposes of this "Description of JCI plc Notes," the term "governmental obligations" shall have the following meaning with respect to the JCI plc Euro Notes: (x) any security which is (i) a direct obligation of the German government or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the German government the payment of which is fully and unconditionally guaranteed by the German government, the central bank of the German government or a governmental agency of the German government, which, in either case (x)(i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (y) certificates, depositary receipts or other instruments which evidence a direct ownership interest in obligations described in clause (x)(i) or (x)(ii) above or in any specific principal or interest payments due in respect thereof.

## Defeasance and Discharge of Obligations

JCI plc's obligations with respect to the JCI plc Notes of any series will be discharged upon compliance with the conditions under the caption "Covenant Defeasance"; provided that JCI plc may not be discharged from the following obligations, which will survive until such date of maturity or the redemption date, as the case may be, for the applicable series of JCI plc Notes:

• to make any interest or principal payments that may be required with respect to the JCI plc Notes of such series;

• to register the transfer or exchange of the JCI plc Notes of such series;

• to execute and authenticate the JCI plc Notes of such series;

• to replace stolen, lost or mutilated JCI plc Notes of such series;

• to maintain an office or agency with respect to the JCI plc Notes of such series;

• to maintain paying agencies with respect to the JCI plc Notes of such series; and



• to appoint new Trustees with respect to the JCI plc Notes of such series as required by the Indenture.

JCI plc also may not be discharged from the following obligations, which will survive the satisfaction and discharge of the applicable series of JCI plc Notes:

• to compensate and reimburse the Trustee in accordance with the terms of the JCI plc Indenture;

- to receive unclaimed payments held by the Trustee for at least one year after the date upon which the principal, if any, or interest on the JCI plc Notes of such series shall have respectively come due and payable and remit those payments to the holders thereof if required; and

• to withhold or deduct taxes as provided in the JCI plc Indenture.

## Covenant Defeasance

Upon compliance with specified conditions, JCI plc, at its option and at any time, by written notice executed by an Officer delivered to the Trustee, may elect to have its obligations, to the extent applicable, under the covenants described under "—Offer to Repurchase Upon Change of Control Triggering Event" and "—Certain Covenants" above, and the operation of the Event of Default described in clause (4) of the first paragraph under the caption "—Events of Default" above, discharged with respect to all outstanding JCI plc Notes of a series and the JCI plc Indenture insofar as such JCI plc Notes are concerned. For this purpose, such covenant defeasance means that, with respect to the outstanding JCI plc Notes of a series, JCI plc may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference in the JCI plc Indenture to any such covenant or by reason of reference in any such covenant to any other provision of the JCI plc Indenture or in any other document, and such omission to comply shall not constitute a Default or an Event of Default relating to the applicable series of JCI plc Notes. These conditions are:

- JCI plc irrevocably deposits in trust with the Trustee or, at the option of the Trustee, with a trustee satisfactory to the Trustee and JCI plc, as the case may be, under the terms of an irrevocable trust agreement in form and substance satisfactory to the Trustee, funds or governmental obligations or a combination thereof sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay principal of, premium, if any, and interest on the outstanding JCI plc Notes of such series to maturity or redemption, as the case may be, and to pay all other amounts payable by it under the JCI plc Indenture (provided that, with respect to any redemption of any JCI plc Notes that requires the payment of any premium, the amount deposited pursuant to the above paragraph shall be sufficient for purposes of the JCI plc Indenture to the extent that an amount is so deposited with the Trustee or paying agent, as applicable, equal to the such premium on such JCI plc Notes calculated as of the date of the notice of redemption, with any deficit on the redemption date only required to be deposited with the Trustee or paying agent, as applicable, on or prior to the redemption date), provided that (A) the trustee of the irrevocable trust shall have been irrevocably instructed to pay such funds or the proceeds of such governmental obligations to the Trustee and (B) the Trustee shall have been irrevocably instructed to apply such funds or the proceeds of such governmental obligations to the payment of such principal, premium, if any, and interest with respect to the JCI plc Notes of such series;

- JCI plc delivers to the Trustee an Officer's Certificate stating that all conditions precedent specified herein relating to defeasance or covenant defeasance, as the case may be, have been complied with, and an Opinion of Counsel to the same effect;

- no Event of Default shall have occurred and be continuing, and no event which with notice or lapse of time or both would become such an Event of Default shall have occurred and be continuing, on the date of such deposit; and

- JCI plc shall have delivered to the Trustee an Opinion of Counsel (which, in the case of a defeasance, must be based on a change in law) or a ruling received from the U.S. Internal Revenue Service to the effect that the beneficial owners of the JCI plc Notes of such series will not recognize income, gain or loss for U.S. federal income tax purposes as a result of JCI plc's exercise of such defeasance or covenant defeasance and will be subject to U.S. Federal income tax in the same amount and in the same manner and at the same times as would have been the case if such election had not been exercised.

## Definitions

As used in the JCI plc Notes and this "Description of JCI plc Notes," the following defined terms shall have the following meanings with respect to the JCI plc Notes:

"Affiliate", with respect to any specified Person, means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with



respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

"Attributable Debt," in connection with a Sale and Lease-Back Transaction, as of any particular time, means the aggregate of present values (discounted at a rate that, at the inception of the lease, represents the effective interest rate that the lessee would have incurred to borrow over a similar term the funds necessary to purchase the leased assets) of the obligations of JCI plc or any Restricted Subsidiary for net rental payments during the remaining term of the applicable lease, including any period for which such lease has been extended or, at the option of the lessor, may be extended. The term "net rental payments" under any lease of any period shall mean the sum of the rental and other payments required to be paid in such period by the lessee thereunder, not including any amounts required to be paid by such lessee, whether or not designated as rental or additional rental, on account of maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges required to be paid by such lessee thereunder or any amounts required to be paid by such lessee thereunder contingent upon the amount of sales, maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges.

"Board of Directors" means the Board of Directors of JCI plc or any duly authorized committee of such Board of Directors.

"business day" means any day other than a Saturday or Sunday, (1) that is not a day on which banking institutions in the City of New York or London are authorized or obligated by law, executive order or regulation to close, and (2) in respect of the JCI plc Euro Notes, on which the Trans-European Automated Real-time Gross Settlement Express Transfer System (the TARGET2 system), or any successor thereto, is open.

"Change of Control" means the occurrence of any of the following after the date of issuance of the JCI plc Notes of the applicable series:

(1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of our assets and the assets of our subsidiaries taken as a whole to any "person" or "group" (as those terms are used in Section 13(d)(3) of the Exchange Act) other than to us or one of our subsidiaries, other than any such transaction or series of related transactions where holders of our Voting Stock outstanding immediately prior thereto hold Voting Stock of the transferee Person representing a majority of the voting power of the transferee Person's Voting Stock immediately after giving effect thereto;

(2) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" or "group" (as those terms are used in Section 13(d)(3) of the Exchange Act) (other than us or one of our subsidiaries) becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of our Voting Stock representing a majority of the voting power of our outstanding Voting Stock;

(3) we consolidate with, or merge with or into, any Person, or any Person consolidates with, or merges with or into, us, in any such event pursuant to a transaction in which any of our outstanding Voting Stock or Voting Stock of such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where our Voting Stock outstanding immediately prior to such transaction constitutes, or is converted into or exchanged for, Voting Stock representing a majority of the voting power of the Voting Stock of the surviving Person (or its parent) immediately after giving effect to such transaction; or

(4) the adoption by our shareholders of a plan relating to our liquidation or dissolution.

Notwithstanding the foregoing, a transaction will not be deemed to involve a change of control under clause (2) above if (1) we become a direct or indirect wholly-owned subsidiary of a holding company or other Person and (2)(A) the direct or indirect holders of the Voting Stock of such holding company or other Person immediately following that transaction are substantially the same as the holders of our Voting Stock immediately prior to that transaction or (B) immediately following that transaction no person (as that term is used in Section 13(d)(3) of the Exchange Act) (other than a holding company or other Person satisfying the requirements of this sentence) is the beneficial owner, directly or indirectly, of more than 50% of the Voting Stock of such holding company or other Person.

"Change of Control Triggering Event" means, with respect to the applicable series of JCI plc Notes, the JCI plc Notes of such series cease to be rated Investment Grade by each of the Rating Agencies on any date during the period (the "Trigger Period") commencing 60 days prior to the first public announcement by us of any Change of Control (or pending Change of Control) and ending 60 days following consummation of such Change of Control (which Trigger Period will be extended following consummation of a Change of Control for so long as any of the Rating Agencies has publicly announced that it is considering a possible ratings downgrade or withdrawal). However, a Change of Control Triggering Event otherwise arising by virtue of a particular reduction in, or



withdrawal of, rating shall not be deemed to have occurred in respect of a particular Change of Control (and thus shall not be deemed a Change of Control Triggering Event for purposes of the definition of Change of Control Triggering Event) if the Rating Agencies making the reduction in, or withdrawal of, rating to which this definition would otherwise apply do not announce or publicly confirm or inform the Trustee in writing at our request that the reduction or withdrawal was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control shall have occurred at the time of the Change of Control Triggering Event). If a Rating Agency is not providing a rating for the JCI plc Notes of such series at the commencement of any Trigger Period, the JCI plc Notes of such series will be deemed to have ceased to be rated Investment Grade by such Rating Agency during that Trigger Period.

Notwithstanding the foregoing, no Change of Control Triggering Event will be deemed to have occurred in connection with any particular Change of Control unless and until such Change of Control has actually been consummated.

"Consolidated Net Worth" at any date means total assets less total liabilities, in each case appearing on the most recently prepared consolidated balance sheet of JCI plc and its subsidiaries as of the end of a fiscal quarter of JCI plc, prepared in accordance with United States generally accepted accounting principles as in effect on the date of the consolidated balance sheet.

"Consolidated Tangible Assets" at any date means total assets less all intangible assets appearing on the most recently prepared consolidated balance sheet of JCI plc and its subsidiaries as of the end of a fiscal quarter of JCI plc, prepared in accordance with United States generally accepted accounting principles as in effect on the date of the consolidated balance sheet.

"Default" means any event, act or condition that with notice or lapse of time, or both, would constitute an Event of Default.

"Funded Indebtedness" means any Indebtedness of JCI plc or any consolidated subsidiary maturing by its terms more than one year from the date of the determination thereof, including any Indebtedness renewable or extendable at the option of the obligor to a date later than one year from the date of the determination thereof.

"Indebtedness" means, without duplication, the principal amount (such amount being the face amount or, with respect to original issue discount bonds or zero coupon notes, bonds or debentures or similar securities, determined based on the accreted amount as of the date of the most recently prepared consolidated balance sheet of JCI plc and its subsidiaries as of the end of a fiscal quarter of JCI plc prepared in accordance with United States generally accepted accounting principles as in effect on the date of such consolidated balance sheet) of (i) all obligations for borrowed money, (ii) all obligations evidenced by debentures, notes or other similar instruments, (iii) all obligations in respect of letters of credit or bankers acceptances or similar instruments or reimbursement obligations with respect thereto (such instruments to constitute Indebtedness only to the extent that the outstanding reimbursement obligations in respect thereof are collateralized by cash or cash equivalents reflected as assets on a balance sheet prepared in accordance with United States generally accepted accounting principles), (iv) all obligations to pay the deferred purchase price of property or services, except (A) trade and similar accounts payable and accrued expenses, (B) employee compensation, deferred compensation and pension obligations, and other obligations arising from employee benefit programs and agreements or other similar employment arrangements, (C) obligations in respect of customer advances received and (D) obligations in connection with earnout and holdback agreements, in each case in the ordinary course of business, (v) all obligations as lessee to the extent capitalized in accordance with United States generally accepted accounting principles and (vi) all Indebtedness of others consolidated in such balance sheet that is guaranteed by JCI plc or any of its subsidiaries or for which JCI plc or any of its subsidiaries is legally responsible or liable (whether by agreement to purchase indebtedness of, or to supply funds or to invest in, others).

"Intangible assets" means the amount, if any, stated under the headings "Goodwill" and "Other intangible assets, net" or under any other heading of intangible assets separately listed, in each case on the face of the most recently prepared consolidated balance sheet of JCI plc and its subsidiaries as of the end of a fiscal quarter of JCI plc, prepared in accordance with United States generally accepted accounting principles as in effect on the date of the consolidated balance sheet.

"Investment Grade" means a rating of Baa3 or better by Moody's (or its equivalent under any successor rating category of Moody's) and a rating of BBB- or better by S&P (or its equivalent under any successor rating category of S&P), and the equivalent investment grade credit rating from any replacement rating agency or rating agencies selected by us under the circumstances permitting us to select a replacement rating agency and in the manner for selecting a replacement rating agency, in each case as set forth in the definition of "Rating Agency."

"lien" means a mortgage, pledge, security interest, lien or encumbrance.

"Moody's" means Moody's Investors Service, Inc., a subsidiary of Moody's Corporation, and its successors.



"Officer" means any director, any managing director, the chairman or any vice chairman of the Board of Directors, the chief executive officer, the president, the chief financial officer, any vice president, the treasurer, any assistant treasurer, the secretary or any assistant secretary, or any equivalent of the foregoing, of JCI plc or any Person duly authorized to act for or on behalf of JCI plc.

"Officer's Certificate" means a certificate, signed by any Officer of JCI plc, that is delivered to the Trustee in accordance with the terms of the JCI plc Indenture.

"Opinion of Counsel" means a written opinion acceptable to the Trustee from legal counsel licensed in any State of the United States of America and applying the laws of such State. The counsel may be an employee of or counsel to JCI plc.

"Person" means any individual, corporation, partnership, limited liability company, business trust, association, joint-stock company, joint venture, trust, incorporated or unincorporated organization or government or any agency or political subdivision thereof.

"Principal Property" means any manufacturing, processing or assembly plant or any warehouse or distribution facility, or any office or parcel of real property (including fixtures but excluding leases and other contract rights which might otherwise be deemed real property) of JCI plc or any of its subsidiaries that is used by any U.S. Subsidiary of JCI plc and is located in the United States of America (excluding its territories and possessions and Puerto Rico) and (A) is owned by JCI plc or any subsidiary of JCI plc on the date the JCI plc Notes of the applicable series are issued, (B) the initial construction of which has been completed after the date on which the JCI plc Notes of the applicable series are issued, or (C) is acquired after the date on which the JCI plc Notes of the applicable series are issued, in each case, other than any such plants, facilities, warehouses or portions thereof, that in the opinion of the Board of Directors of JCI plc, are not collectively of material importance to the total business conducted by JCI plc and its subsidiaries as an entirety, or that have a net book value (excluding any capitalized interest expense), on the date the JCI plc Notes of the applicable series are issued in the case of clause (A) of this definition, on the date of completion of the initial construction in the case of clause (B) of this definition or on the date of acquisition in the case of clause (C) of this definition, of less than 2.0% of Consolidated Tangible Assets on the consolidated balance sheet of JCI plc and its subsidiaries as of the applicable date.

"Rating Agency" means each of Moody's and S&P; provided, that if any of Moody's or S&P ceases to provide rating services to issuers or investors, we may appoint another "nationally recognized statistical rating organization" as defined under Section 3(a)(62) of the Exchange Act as a replacement for such Rating Agency; provided, that we shall give notice of such appointment to the Trustee.

"Restricted Subsidiary" means any subsidiary of JCI plc that owns or leases a Principal Property.

"Sale and Lease-Back Transaction" means an arrangement with any Person providing for the leasing by JCI plc or a Restricted Subsidiary of any Principal Property whereby such Principal Property has been or is to be sold or transferred by JCI plc or a Restricted Subsidiary to such Person other than JCI plc or any of its subsidiaries; provided, however, that the foregoing shall not apply to any such arrangement involving a lease for a term, including renewal rights, for not more than three years.

"S&P" means Standard & Poor's Global Ratings, a division of S&P Global Inc., and its successors.

"Trust Officer" means any officer within the corporate trust department of the Trustee, including any vice president, senior associate, associate, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such Person's knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of the JCI plc Indenture.

"U.S. Subsidiary" means any subsidiary of JCI plc that was formed under the laws of the United States of America, any State thereof or the District of Columbia (but not any territory thereof).

"Voting Stock" of any specified Person as of any date means the capital stock of such Person that is at the time entitled to vote generally in the election of the board of directors of such Person.



# DESCRIPTION OF JCI PLC AND TFSCA NOTES

Capitalized terms used in this “Description of JCI plc and TFSCA Notes” and not otherwise defined have the meanings set forth under the heading “—Definitions” below. For purposes of this “Description of the JCI plc and TFSCA Notes” section, (a) the terms “JCI plc” or “Company” refer only to Johnson Controls International plc, a public limited company organized under the laws of Ireland, and its successors permitted by the terms of the Indenture, (b) the terms “TFSCA” or “Co-Issuer” refer to Tyco Fire & Security Finance S.C.A., a corporate partnership limited by shares incorporated and organized under the laws of the Grand Duchy of Luxembourg, and its successors permitted by the terms of the Indenture, (c) the terms “Issuers,” “we,” “us” and “our” refer to JCI plc and TFSCA together, and (d) the term “Johnson Controls” refers to JCI plc and its consolidated subsidiaries, including TFSCA.

For purposes of this description:

• “2027 Notes” refers to our 0.375% Senior Notes due 2027

• "2032 Notes" refers to our 1.000% Senior Notes due 2032

• “2030 Notes” refers to our 1.750% Senior Notes due 2030

• “2031 Notes” refers to our 2.000% Sustainability-Linked Senior Notes due 2031

• “Euro Notes” refers to the 2027 Notes and the 2032 Notes

• “Notes” refers to the 2027 Notes, 2030 Notes, 2031 Notes and the 2032 Notes

The Notes constitute separate series of unsecured, unsubordinated debt securities

The 2030 Notes were issued under the Indenture, dated as of December 28, 2016 (the "Base Indenture"), between JCI plc and U.S. Bank National Association, as trustee (the "Trustee") and a Fifth Supplemental Indenture among JCI plc, TFSCA and the Trustee. The Euro Notes were issued under the Base Indenture and a Sixth Supplemental Indenture relating to the Notes among JCI plc, TFSCA, the Trustee and Elavon Financial Services DAC, as paying agent. The 2031 Notes were issued under the Base Indenture and a Seventh Supplemental Indenture among JCI plc, TFSCA and the Trustee (together with the Base Indenture, the Fifth Supplemental Indenture and the Sixth Supplemental Indenture, the "Indenture"). We entered into an agency agreement with respect to the Euro Notes among us, Elavon Financial Services DAC, as paying agent, and U.S. Bank National Association, as transfer agent, security registrar and Trustee.

The terms of the Notes include those expressly set forth in such notes and the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§77aaa-77bbb), as in effect from time to time (the "Trust Indenture Act").

The Euro Notes were each issued in an aggregate initial principal amount of €500,000,000. The 2030 Notes were issued in an aggregate principal amount of $625,000,000. The 2031 Notes were issued in an aggregate principal amount of $500,000,000.

The Issuers are jointly and severally liable for all obligations under the Notes. The Co-Issuer is a wholly-owned consolidated subsidiary of the Company that is 99.924% owned directly by the Company and 0.076% owned by TFSCA's sole general partner and manager, Tyco Fire & Security S.à.r.l., which is itself wholly owned by the Company. The Co-Issuer is a holding company that directly and indirectly holds significantly all of the operating subsidiaries of JCI plc. The Co-Issuer engages in intercompany banking activities on behalf of JCI plc, including engaging in intercompany loan transactions and engaging in currency hedging transactions on behalf of JCI plc and its subsidiaries.



This description is a summary of the material provisions of the Notes and the Indenture. This description does not restate those agreements and instruments in their entirety. We urge you to read the Notes and the Indenture, which are filed as exhibits to this Annual Report on Form 10-K, because they, not the summaries below, define the rights of holders of the Notes.

## General

The Notes are JCI plc’s and the Co-Issuer’s unsecured, unsubordinated obligations. The Notes rank senior in right of payment to JCI plc’s and the Co-Issuer’s existing and future indebtedness and other obligations that are expressly subordinated in right of payment to the Notes; equal in right of payment to JCI plc’s and the Co-Issuer’s existing and future indebtedness and other obligations that are not so subordinated; effectively junior to any of JCI plc’s and the Co-Issuer’s secured indebtedness and other obligations to the extent of the value of the assets securing such indebtedness or other obligations; and structurally junior to all existing and future indebtedness and other obligations incurred by JCI plc’s and the Co-Issuer’s subsidiaries. TFSCA is not a co-issuer in respect of JCI plc’s outstanding senior notes other than the Notes described herein.

The Euro Notes were issued in book-entry form, represented by Global Securities (as defined below), deposited with or on behalf of a common depositary on behalf of Clearstream and Euroclear and registered in the name of the nominee of the common depositary for the accounts of Clearstream and Euroclear. The 2030 Notes and 2031 Notes were issued in book-entry form, represented by Global Securities and delivered through the facilities of DTC.

The Euro Notes were issued in registered form without interest coupons and only in denominations of €100,000 and whole multiples of €1,000 in excess thereof. The 2030 Notes and 2031 Notes were issued in registered form without interest coupons and only in denominations of $2,000 and whole multiples of $1,000 in excess thereof.

Except as provided below, the Notes are not subject to redemption, repurchase or repayment at the option of any holder thereof, upon the occurrence of any particular circumstance or otherwise. The Notes do not have the benefit of any sinking fund. The Notes are not be convertible into or exchangeable for shares or other securities of the Issuers.

For the avoidance of doubt, articles 470-1 to 470-19 of the Luxembourg law of 10 August 1915 relating to commercial companies, as amended, do not apply to the Notes.

## Maturity and Interest

## 2027 Notes and 2032 Notes

The 2027 Notes mature on September 15, 2027 and bear interest at a rate of 0.375% per annum. The 2032 Notes mature on September 15, 2032 and bear interest at a rate of 1.000% per annum. The date from which interest accrued on the Euro Notes was September 15, 2020. Interest in respect of the Euro Notes is payable annually in arrears on September 15 of each year, beginning on September 15, 2021, to the applicable holders of record at the close of business on the September 1 next preceding such interest payment date. The basis upon which interest shall be calculated is the actual number of days in the period for which interest is being calculated and the actual number of days from and including the last date on which interest was paid on such series of the Euro Notes (or September 15, 2020, if no interest has been paid on such series of the Euro Notes), to but excluding the next scheduled interest payment date. This payment convention is referred to as “ACTUAL/ACTUAL (ICMA),” as defined in the statutes, by-laws, rules and recommendations published by the International Capital Markets Association (the “ICMA Rulebook”).



## 2030 Notes

The 2030 Notes mature on September 15, 2030 and bear interest at a rate of 1.750% per annum. The date from which interest accrued on the Notes was September 11, 2020. Interest in respect of the 2030 Notes is payable semi-annually in arrears on March 15 and September 15 of each year, beginning on March 15, 2021, to the applicable holders of record at the close of business on the March 1 and September 1 next preceding such interest payment date. Interest is computed on the basis of a 360-day year comprised of twelve 30-day months.

## 2031 Notes

The rate of interest payable on the 2031 Notes may be subject to adjustment as described below.

The 2031 Notes will mature on September 16, 2031 and bear interest at a rate of 2.000% per annum (the “Initial Interest Rate”), subject to adjustment as described in the paragraph immediately below. The date from which interest accrued on the 2031 Notes was September 16, 2021. Interest in respect of the 2031 Notes is payable semi-annually in arrears on March 16 and September 16 of each year, beginning on March 16, 2022, to the applicable holders of record at the close of business on the March 2 and September 2 next preceding such interest payment date. Interest is computed on the basis of a 360-day year comprised of twelve 30-day months.

From and including March 16, 2026 (or if such day is not a Business Day, the next succeeding Business Day) (the “Interest Rate Step Up Date”), the interest rate payable on the 2032 Notes shall be increased from the Initial Interest Rate by, in aggregate, (i) an additional 12.5 basis points per annum unless the Issuers have notified the Trustee in writing on or before the date that is 15 days prior to the Interest Rate Step Up Date (the “Notification Date”) in the form of an Officer’s Certificate (the “Scope 1 and Scope 2 Emissions Satisfaction Notification”) certifying that such officers have determined that the Issuers have satisfied the Scope 1 and Scope 2 Emissions Sustainability Performance Target and received a related assurance letter from the External Verifier (an “Assurance Letter”) and (ii) an additional 12.5 basis points per annum unless the Issuers have notified the Trustee in writing on or before the Notification Date in the form of an Officer’s Certificate (the “Scope 3 Emissions Satisfaction Notification”) certifying that such officers have determined that the Issuers have satisfied the Scope 3 Emissions Sustainability Performance Target and received a related Assurance Letter from the External Verifier. For the avoidance of doubt, if the Issuers have provided the Trustee with the applicable Satisfaction Notification for each of the two Sustainability Performance Targets on or prior to the Notification Date, then the interest rate payable on the 2031 Notes shall not increase from the Initial Interest Rate pursuant to this paragraph.

The interest rate applicable to the 2031 Notes will only be adjusted on the Notification Date based upon the satisfaction or non-satisfaction of a Sustainability Performance Target on or prior to the Notification Date. Any satisfaction of a Sustainability Performance Target subsequent to the Notification Date or cessation of satisfaction, or any failure to satisfy a Sustainability Performance Target subsequent to the Notification Date will not result in an adjustment to the interest rate payable on the 2031 Notes.

## Certain definitions:

“External Verifier” means one or more qualified independent public accountants or environmental consultants (solely with respect to verifying the Scope 1 and Scope 2 Emissions Sustainability Performance Target and the Scope 3 Emissions Sustainability Performance Target) of recognized national standing designated from time to time by the Issuers to provide limited assurance on Johnson Controls’ Scope 1 and Scope 2 Emissions and/or Scope 3 Emissions.

“GHG Emissions Performance Reference Period” means the fiscal year of JCI plc ending September 30, 2025.



“GHG Protocol” means the second (2nd) revised edition of the GHG Protocol Corporate Accounting and Reporting Standard of the World Business Council for Sustainable Development and World Resources Institute available at https://ghgprotocol.org/sites/default/files/standards/ghg-protocolrevised.pdf. The information contained on this website does not constitute a part of this exhibit and is not incorporated by reference herein. In the event an updated version of the GHG Protocol is published, the Issuers may elect at their option to apply such revised version for the purposes of calculating Scope 1 Emission, Scope 2 Emissions and Scope 3 Emissions.

“Scope 1 and Scope 2 Emissions” means for any period, the total aggregate amount of Scope 1 Emissions and Scope 2 Emissions for such period.

“Scope 1 and Scope 2 Emissions Sustainability Performance Target” means a reduction of Scope 1 and Scope 2 Emissions of 35% during the GHG Emissions Performance Reference Period relative to the Scope 1 and Scope 2 Emissions for JCI plc’s fiscal year 2017, provided that if the Issuers subsequently issue sustainability-linked notes linked to the same Scope 1 and Scope 2 Emissions Sustainability Performance metric and the same SPT Observation Date, but with a higher reduction target, the Scope 1 and Scope 2 Emissions Sustainability Performance Target shall be automatically adjusted upward to equal the Scope 1 and Scope 2 Emissions reduction percentage required by such subsequent sustainability-linked notes.

“Scope 1 Emissions” means, for any period, direct greenhouse gas emissions or equivalent CO \( _{2} \)  emissions attributable to sources that are controlled by Johnson Controls in the operation of its business, which are determined by Johnson Controls in good faith in accordance with the GHG Protocol.

“Scope 2 Emissions” means, for any period, indirect greenhouse gas emissions or equivalent CO \( _{2} \)  emissions occurring from the generation of purchased and imported energy (including electricity and steam) consumed by Johnson Controls in the operation of its business, which are determined by Johnson Controls in good faith in accordance with the GHG Protocol.

“Scope 3 Emissions” means, for any period, indirect greenhouse gas emissions or equivalent CO \( _{2} \)  emissions arising from customers’ downstream use of products sold by Johnson Controls, which are determined by Johnson Controls in good faith in accordance with the GHG Protocol.

“Scope 3 Emissions Sustainability Performance Target” means a reduction of Scope 3 Emissions of 5% during the GHG Emissions Performance Reference Period relative to the Scope 3 Emissions for JCI plc’s fiscal year 2017, provided that if the Issuers subsequently issue sustainability-linked notes linked to the same Scope 3 Emissions Sustainability Performance metric and the same SPT Observation Date, but with a higher reduction target, the Scope 3 Emissions Sustainability Performance Target shall be automatically adjusted upward to equal the Scope 3 Emissions reduction percentage required by such subsequent sustainability-linked notes.

“SPT Observation Date” means September 30, 2025.

“Sustainability Performance Targets” means the Scope 1 and Scope 2 Emissions Sustainability Performance Target and the Scope 3 Emissions Sustainability Performance Target.

## Indenture May Be Used for Future Issuances

We may, without the consent of the then existing holders of the Notes, “re-open” and issue additional Notes of any series, which additional Notes will have the same terms as such series of Notes except for the issue price, issue date and, under some circumstances, the first interest payment date; provided that, if such additional Notes are not fungible with the existing Notes of such series for U.S. federal income tax purposes, such additional Notes will have a separate CUSIP, ISIN and/or other identifying number, as applicable. Additional Notes issued in this manner will form a single series with the applicable series of Notes.

In addition, the Indenture does not limit the amount of debt securities that can be issued thereunder and provides that debt securities of any series may be issued thereunder up to the aggregate principal amount that we



may authorize from time to time. All debt securities issued as a series, including those issued pursuant to any reopening of a series, will vote together as a single class. Debt securities issued pursuant to the Indenture may have terms that differ from those of the Notes, as set forth in Section 2.01 of the Indenture.

## Issuance of Notes in Euros

All payments of interest and principal, including payments made upon any redemption or repurchase of the Euro Notes, are payable in euros. If the euro is unavailable to us due to the imposition of exchange controls or other circumstances beyond our control or if the euro is no longer being used by the then member states of the European Monetary Union that have adopted the euro as their currency or for the settlement of transactions by public institutions of or within the international banking community, then all payments in respect of the Euro Notes will be made in U.S. dollars until the euro is again available to us or so used. In such circumstances, the amount payable on any date in euros will be converted into U.S. dollars at the rate mandated by the U.S. Federal Reserve Board as of the close of business on the second business day prior to the relevant payment date or, in the event the U.S. Federal Reserve Board has not mandated a rate of conversion, on the basis of the then most recent U.S. dollar/euro exchange rate available on or prior to the second business day prior to the relevant payment date as determined by the Issuers in their sole discretion. Any payment in respect of the Euro Notes so made in U.S. dollars will not constitute an Event of Default (as defined below) under the Euro Notes or the Indenture. Neither the Trustee nor the paying agent shall have any responsibility for any calculation or conversion in connection with the foregoing.

## Optional Redemption

## Euro Notes

Prior to July 15, 2027 (the “2027 Par Call Date”), the Issuers may, at their option, redeem the 2027 Notes, in whole at any time or in part from time to time (in €1,000 increments, provided that any remaining principal amount thereof shall be at least the minimum authorized denomination of €100,000), at a redemption price equal to the greater of (i) 100% of the principal amount of the 2027 Notes to be redeemed and (ii) the sum of the present values of the Remaining Scheduled Payments (as defined below) that would be due if the 2027 Notes matured on the 2027 Par Call Date, discounted to the redemption date, on an annual basis (ACTUAL/ACTUAL (ICMA)), at a rate equal to the Treasury Rate (as defined below) plus 20 basis points plus, in either case, accrued and unpaid interest, if any, thereon to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

On or after July 15, 2027, the Issuers may, at their option, redeem the 2027 Notes, in whole at any time or in part from time to time (in €1,000 increments, provided that any remaining principal amount thereof shall be at least the minimum authorized denomination of €100,000), at a redemption price equal to 100% of the principal amount of the 2027 Notes to be redeemed, plus accrued and unpaid interest, if any, thereon to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

Prior to June 15, 2032 (the “2032 Par Call Date”), the Issuers may, at their option, redeem the 2032 Notes, in whole at any time or in part from time to time (in €1,000 increments, provided that any remaining principal amount thereof shall be at least the minimum authorized denomination of €100,000), at a redemption price equal to the greater of (i) 100% of the principal amount of the 2032 Notes to be redeemed and (ii) the sum of the present values of the Remaining Scheduled Payments (as defined below) that would be due if the 2032 Notes matured on the 2032 Par Call Date, discounted to the redemption date, on an annual basis (ACTUAL/ACTUAL (ICMA)), at a rate equal to the Treasury Rate (as defined below) plus 25 basis points plus, in either case, accrued and unpaid interest, if any, thereon to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

On or after June 15, 2032, the Issuers may, at their option, redeem the 2032 Notes, in whole at any time or in part from time to time (in €1,000 increments, provided that any remaining principal amount thereof shall be at least the minimum authorized denomination of €100,000), at a redemption price equal to 100% of the principal amount of the 2032 Notes to be redeemed, plus accrued and unpaid interest, if any, thereon to, but excluding, the redemption



date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

“Treasury Rate” means the rate per annum (which, if less than zero, shall be deemed to be zero) equal to the annual equivalent yield to maturity of the Reference Bond (as defined below), assuming a price for the Reference Bond (expressed as a percentage of its principal amount) equal to the middle market price of the Reference Bond prevailing at 11:00 a.m. (London time) on the third business day preceding such redemption date as determined by us or an independent investment bank appointed by us.

“Reference Bond” means, in relation to any Treasury Rate calculation, a German government bond whose maturity is closest to the maturity of the applicable series of Euro Notes, or if we or an independent investment bank appointed by us considers that such similar bond is not in issue, such other German government bond as we or an independent investment bank appointed by us, with the advice of three brokers of, and/or market makers in, German government bonds selected by us or an independent investment bank appointed by us, determine to be appropriate for determining the Treasury Rate.

“Remaining Scheduled Payments” means, with respect to each Euro Note to be redeemed, the remaining scheduled payments of principal of and interest on the relevant Note that would be due after the related redemption date but for the redemption. If that redemption date is not an interest payment date with respect to a Euro Note, the amount of the next succeeding scheduled interest payment on the relevant Euro Note will be reduced by the amount of interest accrued on the Euro Note to the redemption date.

## 2030 Notes and 2031 Notes

Prior to June 15, 2030 (the “2030 Par Call Date”), the Issuers may, at their option, redeem the 2030 Notes, in whole at any time or in part from time to time, at a redemption price equal to the greater of (i) 100% of the principal amount of the 2030 Notes to be redeemed and (ii) as determined by the Quotation Agent and delivered to the Trustee in writing, the sum of the present values of the remaining scheduled payments of principal and interest thereon that would be due if the 2030 Notes matured on the 2030 Par Call Date (exclusive of interest accrued to the redemption date), discounted to the redemption date (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Redemption Treasury Rate plus 20 basis points, plus, in either case, accrued and unpaid interest, if any, thereon to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

On or after the 2030 Par Call Date, the Issuers may, at their option, redeem the 2030 Notes, in whole at any time or in part from time to time, at a redemption price equal to 100% of the principal amount of the 2030 Notes to be redeemed, plus accrued and unpaid interest, if any, thereon to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

Prior to June 16, 2031 (the “2031 Par Call Date”), the Issuers may, at their option, redeem the 2031 Notes, in whole at any time or in part from time to time, at a redemption price equal to the greater of (i) 100% of the principal amount of the 2031 Notes to be redeemed and (ii) as determined by the Quotation Agent and delivered to the Trustee in writing, the sum of the present values of the remaining scheduled payments of principal and interest thereon that would be due if the 2031 Notes matured on the 2031 Par Call Date (exclusive of interest accrued to the redemption date) (calculated at the Initial Interest Rate until the Interest Rate Step Up Date, at which point, the interest rate shall be deemed to be the interest rate after giving effect to any applicable adjustment described in “—Maturity and Interest” above), discounted to the redemption date (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Redemption Treasury Rate plus 15 basis points, plus, in either case, accrued and unpaid interest, if any, thereon to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

On or after the 2031 Par Call Date, the Issuers may, at their option, redeem the 2031 Notes, in whole at any time or in part from time to time, at a redemption price equal to 100% of the principal amount of the 2031 Notes to be redeemed, plus accrued and unpaid interest, if any, thereon to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).



“Adjusted Redemption Treasury Rate” means, with respect to any redemption date for the 2030 Notes and 2031 Notes, the rate equal to the semiannual equivalent yield to maturity or interpolated (on a 30/360 day count basis) yield to maturity of the Comparable Redemption Treasury Issue, assuming a price for the Comparable Redemption Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Redemption Treasury Price for such redemption date.

“Comparable Redemption Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term of the 2030 Notes and 2031 Notes (as applicable) to be redeemed if the 2030 Notes matured on the 2030 Par Call Date or if the 2031 Notes were redeemed on the 2031 Par Call Date (as applicable) that would be utilized at the time of selection and in accordance with customary financial practice in pricing new issues of corporate debt securities of comparable maturity to such remaining term of the Notes.

“Comparable Redemption Treasury Price,” with respect to any redemption date for the 2030 Notes and 2031 Notes, means (i) the average of the Redemption Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Redemption Reference Treasury Dealer Quotations (unless there is more than one highest or lowest quotation, in which case only one such highest and/or lowest quotation shall be excluded), or (ii) if the Quotation Agent obtains fewer than four such Redemption Reference Treasury Dealer Quotations, the average of all such Redemption Reference Treasury Dealer Quotations.

“Independent Investment Banker” means one of the Redemption Reference Treasury Dealers appointed by JCI plc.

“Quotation Agent” means a Redemption Reference Treasury Dealer appointed as such by JCI plc.

“Redemption Reference Treasury Dealer” means (1) each of Barclays Capital Inc. (with respect to the 2031 Notes), Citigroup Global Markets Inc. and BofA Securities, Inc. (with respect to the 2030 Notes) (or their respective Affiliates that are Primary Treasury Dealers (as defined below)) and their respective successors and (2) two other Primary Treasury Dealers selected by JCI plc after consultation with the Independent Investment Banker; provided, however, that if any of the foregoing shall cease to be a primary U.S. government securities dealer in New York City (a “Primary Treasury Dealer”), JCI plc will substitute therefor another Primary Treasury Dealer.

“Redemption Reference Treasury Dealer Quotations,” with respect to each Redemption Reference Treasury Dealer and any redemption date for the 2030 Notes and 2031 Notes, means the average, as determined by the Quotation Agent, of the bid and offer prices at 11:00 a.m., New York City time, for the Comparable Redemption Treasury Issue (expressed in each case as a percentage of its principal amount) for settlement on the redemption date quoted in writing to the Quotation Agent by such Redemption Reference Treasury Dealer on the third business day preceding such redemption date.

## Redemption Upon Changes in Withholding Taxes

Either or both of the Issuers may redeem all, but not less than all, of the Notes of a series under the following conditions:

- if there is an amendment to, or change in, the laws or regulations of a Relevant Taxing Jurisdiction (as defined below) or any change in the written application or official written interpretation of such laws, including any action taken by, or a change in published administrative practice of, a taxing authority or a holding by a court of competent jurisdiction, regardless of whether such action, change or holding is with respect to either or both of the Issuers, which amendment or change is announced and becomes effective on or after the date of issuance of such series of Notes (or, in the case of any Relevant Taxing Jurisdiction that becomes a Relevant Taxing Jurisdiction after such date of issuance, after such later date);

- as a result of such amendment or change, either or both of the Issuers become, or there is a material probability that either or both of the Issuers will become obligated to pay Additional Amounts (as defined below), on the next payment date with respect to such series of Notes, and such Issuer cannot avoid any



such payment obligation by taking reasonable measures available (including having the other Issuer make payments on the Notes if such action would be reasonable);

- the relevant Issuer delivers to the Trustee a written opinion of independent tax counsel to such Issuer (or Issuers) of recognized standing to the effect that such Issuer (or Issuers) has become, or there is a material probability that it will become, obligated to pay Additional Amounts as a result of a change, amendment, official interpretation or application described above; in addition, before the Issuer mails notice of redemption of the Notes as described below, it will deliver to the Trustee an officer’s certificate to the effect that the obligation to pay Additional Amounts cannot be avoided by such Issuer or cannot avoid any such payment obligation by taking reasonable measures available (including having the other Issuer make payments on the Notes if such action would be reasonable); and

- following the delivery of the opinion described in the previous bullet point, the relevant Issuer (or Issuers) provides notice of redemption for such series of Notes not less than 10 days, but not more than 90 days, prior to the redemption date. The notice of redemption cannot be given more than 90 days before the earliest date on which the Issuer (or Issuers) would be otherwise required to pay Additional Amounts, and the obligation to pay Additional Amounts must still be in effect when the notice is given.

Upon the occurrence of each of the bullet points above, the relevant Issuer (or Issuers) may redeem such series of Notes at a redemption price equal to 100% of the principal amount thereof, together with accrued and unpaid interest, if any, thereon to, but excluding, the redemption date and all Additional Amounts (if any) then due and that will become due on such redemption date as a result of the redemption or otherwise (subject to the right of holders of record on the relevant record date to receive interest due on an interest payment date that is prior to the redemption date and Additional Amounts (if any) in respect thereof).

The foregoing provisions shall apply mutatis mutandis to any Successor Company or Successor Co - Issuer (each as defined below).

## Notice of Redemption

Notice of any redemption of any series of Notes will be mailed, or delivered electronically if the Notes to be redeemed are held by any depositary, at least 10 days but not more than 90 days before the date fixed for such redemption to each holder of Notes to be redeemed. If less than all of a series of Notes are to be redeemed, the Trustee will select the outstanding Notes of such series to be redeemed in accordance with a method that complies with the requirements, if any, of any stock exchange on which the Notes of such series are listed, and the applicable procedures of the depositary, if such Notes are held by any depositary; provided, however, that with respect to any series of Notes not listed on any stock exchange and/or held by a depositary, the Trustee will select such Notes by lot or by such other method that the Trustee considers fair and appropriate.

No Euro Notes of a principal amount of €100,000 or less shall be redeemed in part. No 2030 Notes or 2031 Notes of a principal amount of $2,000 or less shall be redeemed in part. Unless the Issuers default in payment of the redemption price, on and after the redemption date, interest will cease to accrue on Notes or portions thereof called for redemption. Additionally, at any time, the Issuers may repurchase Notes in the open market and may hold such Notes or surrender such Notes to the trustee for cancellation.

If any redemption date of any Note is not a business day, then payment of principal and interest may be made on the next succeeding business day with the same force and effect as if made on the nominal redemption date and no interest will accrue for the period after such nominal date.

## Payment of Additional Amounts

All payments in respect of the Notes will be made by (or on behalf of) the Issuers free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, levies, imposts, assessments or governmental charges of whatever nature (including, without limitation, penalties and interest and other similar liabilities related thereto) (“Taxes”), unless the withholding or deduction of such Taxes is required by law.



In the event that the Issuers are required to withhold or deduct any amount for or on account of any Taxes imposed or levied by or on behalf of Ireland, Luxembourg or any other jurisdiction (other than the United States) in which either of the Issuers is organized, resident or doing business for tax purposes or from or through which payments by or on behalf of the Issuers are made, or any political subdivision or any authority thereof or therein (each, but not including the United States or any political subdivision or any authority thereof or therein, a “Relevant Taxing Jurisdiction”) from any payment made under or with respect to any Note (including, without limitation, payments of principal, redemption price, purchase price, interest or premium), the Issuers will pay such additional amounts (“Additional Amounts”) so that the net amount received by each holder or beneficial owner of Notes (including Additional Amounts) after such withholding or deduction will equal the amount that such holder or beneficial owner would have received if such Taxes had not been required to be withheld or deducted.

Additional Amounts will not be payable with respect to a payment made to a holder of Notes or a holder of beneficial interests in Global Securities where such holder is subject to taxation on such payment by the Relevant Taxing Jurisdiction for or on account of any Taxes that are imposed or withheld solely because such holder or a fiduciary, settlor, beneficiary, or member of such holder if such holder is an estate, trust, partnership, limited liability company or other fiscally transparent entity, or a Person holding a power over an estate or trust administered by a fiduciary holder:

- is or was present or engaged in, or is or was treated as present or engaged in, a trade or business in the Relevant Taxing Jurisdiction or has or had a permanent establishment or other taxable presence in the Relevant Taxing Jurisdiction;

- has or had any present or former connection (other than the mere fact of ownership of such Notes) with the Relevant Taxing Jurisdiction, including being or having been a national citizen or resident thereof, being treated as being or having been a resident thereof or being or having been physically present therein;

• any estate, inheritance, gift, transfer, personal property or similar Taxes imposed with respect to the Notes;

- any Taxes imposed solely as a result of the presentation of such Notes, where presentation is required, for payment on a date more than 30 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever is later, except to the extent that the beneficiary or holder thereof would have been entitled to the payment of Additional Amounts had such Notes been presented for payment on any date during such 30-day period;

- any Taxes imposed or withheld solely as a result of the failure of such holder or beneficial owner to comply with any written request, made to the holder or a beneficial owner in writing at least 30 days before any such withholding or deduction would be payable, by an Issuer, to provide timely or accurate applicable certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connection of the holder or beneficial owner (to the extent such holder or beneficial owner is legally eligible to do so) with the Relevant Taxing Jurisdiction, if such compliance is required by statute or regulation of the Relevant Taxing Jurisdiction as a precondition to relief or exemption from such Taxes;

- any Taxes that are payable by any method other than withholding or deduction by the Issuers or any paying agent from payments in respect of such Notes;

- has presented the Notes for payment through a bank, encashment agent or paying agent and a withholding or deduction for Taxes arises which would not have been imposed if the Notes had been presented to another bank, encashment agent or paying agent in a different Member State of the European Union;

- any withholding or deduction required pursuant to sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), as of the issue date (or any amended or successor provisions of such sections that is substantively comparable and not materially more onerous to comply with), any regulations, or agreements entered into pursuant to Section 1471(b) of the Code, official



interpretations thereof or any law implemented pursuant to an intergovernmental agreement between a non-U.S. jurisdiction and the United States with respect to the foregoing; or

• any combination of the above conditions.

Additional Amounts also will not be payable for any Taxes that were imposed with respect to any payment on a note to any holder who is a fiduciary or partnership or person other than the sole beneficial owner of such payment to the extent that no Additional Amounts would have been payable had the beneficial owner of the applicable note been the holder of such Note.

The Issuers also:

• will make such withholding or deduction of Taxes;

• will remit the full amount of Taxes so deducted or withheld to the relevant tax authority in accordance with all applicable laws;

- will use their commercially reasonable efforts to obtain from each relevant tax authority imposing such Taxes certified copies of tax receipts evidencing the payment of any Taxes so deducted or withheld; and

- upon request, will make available to the holders of the Notes, within 90 days after the date the payment of any Taxes deducted or withheld is due pursuant to applicable law, certified copies of tax receipts evidencing such payment by the Issuers (unless, notwithstanding the Issuers’ efforts to obtain such receipts, the same are not obtainable, in which case the Issuers will provide other evidence of payments by Issuers).

At least 30 days prior to each date on which any payment under or with respect to the Notes is due and payable, if the Issuers will be obligated to pay Additional Amounts with respect to such payment, the Issuers will deliver to the Trustee an Officer’s Certificate stating the fact that such Additional Amounts will be payable, the amounts so payable and such other information as is necessary to enable the Trustee to pay such Additional Amounts to holders of such Notes on the payment date.

In addition, the Issuers will pay for any present or future stamp, issue, registration, property, excise, transfer, court or documentary or other similar Taxes and duties, including interest, penalties and Additional Amounts with respect thereto, payable in a Relevant Taxing Jurisdiction in respect of the creation, execution, issue, offering, enforcement, redemption or retirement of the Notes or any other document or instrument referred to therein, or the receipt of any payments with respect thereto.

Upon the Issuers’ request, each holder and beneficial owner shall provide a properly completed and executed IRS Form W-9 or IRS Form W-8, as applicable, as would have been applicable if the Issuers were incorporated in the United States of America, any State thereof or the District of Columbia.

The foregoing provisions shall survive any termination or the discharge of the Indenture and shall apply mutatis mutandis to any Successor Company or Successor Co-Issuer.

Whenever in the Indenture, any Notes, or in this “Description of JCI plc and TFSCA Notes” there is mentioned, in any context, the payment of principal, premium, if any, redemption price, repurchase price, interest or any other amount payable under or with respect to any Notes, such mention shall be deemed to include the payment of Additional Amounts to the extent payable in the particular context.

## Offer to Repurchase Upon Change of Control Triggering Event

Upon the occurrence of a Change of Control Triggering Event, unless we have exercised our right to redeem the Notes of such series as described above under “—Optional Redemption,” each holder of the Notes will have the right to require us to purchase all or a portion (equal to €100,000 or an integral multiple of €1,000 in excess thereof with respect to the Euro Notes, and equal to $2,000 or an integral multiple of $1,000 in excess thereof with respect to the 2030 Notes and 2031 Notes) of such holder’s Notes pursuant to the offer described below (the “Change of



Control Offer”), at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, thereon to, but excluding, the date of purchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date) (the “Change of Control Payment”). If the Change of Control Payment Date (as defined below) falls on a day that is not a business day, the related payment of the Change of Control Payment will be made on the next business day as if it were made on the date such payment was due, and no interest will accrue on the amounts so payable for the period from and after such date to the next business day.

Within 30 days following the date upon which the Change of Control Triggering Event occurs or, at our option, prior to and conditioned on the occurrence of, any Change of Control, but after the public announcement of the pending Change of Control, we will be required to send, by first class mail, or deliver electronically if the Notes are held by any depositary, a notice to each holder of Notes, with a copy to the Trustee, which notice will govern the terms of the Change of Control Offer. Such notice will state, among other things, the purchase date, which must be no earlier than 30 days nor later than 60 days from the date such notice is mailed or delivered electronically (or, in the case of a notice mailed or delivered electronically prior to the date of consummation of a Change of Control, no earlier than the date of the occurrence of the Change of Control), other than as may be required by law (the “Change of Control Payment Date”). The notice, if mailed or delivered electronically prior to the date of consummation of the Change of Control, will state that the Change of Control Offer is conditioned on the Change of Control being consummated on or prior to the Change of Control Payment Date.

On the Change of Control Payment Date, we will, to the extent lawful:

• accept or cause a third party to accept for payment all Notes properly tendered pursuant to the Change of Control Offer;

• deposit or cause a third party to deposit with the applicable paying agent an amount equal to the Change of Control Payment in respect of all Notes properly tendered; and

• deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officer’s Certificate stating the aggregate principal amount of Notes being repurchased.

We will not be required to make a Change of Control Offer with respect to the Notes if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for such an offer made by us and such third party purchases all the Notes properly tendered and not withdrawn under its offer. In addition, we will not repurchase any Notes if there has occurred and is continuing on the Change of Control Payment Date an Event of Default under the Indenture, other than a Default in the payment of the Change of Control Payment on the Change of Control Payment Date.

We must comply in all material respects with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control Triggering Event. To the extent that the provisions of any such securities laws or regulations conflict with the Change of Control Offer provisions of the Notes, we will be required to comply with those securities laws and regulations and will not be deemed to have breached our obligations under the Change of Control Offer provisions of the Indenture with respect to the Notes by virtue of any such conflict.

The definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of “all or substantially all” of the properties or assets of JCI plc and its subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise, established definition of the phrase under applicable law. Accordingly, the applicability of the requirement that we offer to repurchase the Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of JCI plc and its subsidiaries taken as a whole to another “person” or “group” (as those terms are used in Section 13(d)(3) of the Exchange Act) may be uncertain.

## Other Provisions of the Notes



Claims against the Issuers for the payment of principal or Additional Amounts, if any, of the Notes will be prescribed ten years after the applicable due date for payment thereof. Claims against the Issuers for the payment of interest, if any, of the Notes will be prescribed five years after the applicable due date for payment of interest.

## Certain Covenants

The Indenture contains the following covenants:

## Limitation on Liens

JCI plc will not, and will not permit any Restricted Subsidiary to, issue, incur, assume or guarantee any Indebtedness that is secured by a mortgage, pledge, security interest, lien or encumbrance (each a “lien”) upon any asset that at the time of such issuance, assumption or guarantee constitutes a Principal Property, or any shares of stock or of Indebtedness issued by any Restricted Subsidiary, whether now owned or hereafter acquired, without effectively providing that, for so long as such lien shall continue in existence with respect to such secured Indebtedness, the Notes and any other debt securities issued pursuant to the Base Indenture (together with, if JCI plc shall so determine, any other Indebtedness of JCI plc ranking equally with the Notes and any other debt securities issued pursuant to the Base Indenture, it being understood that for purposes hereof, Indebtedness which is secured by a lien and Indebtedness which is not so secured shall not, solely by reason of such lien, be deemed to be of different ranking) shall be equally and ratably secured by a lien ranking ratably with or equal to (or at JCI plc’s option prior to) such secured Indebtedness; provided, however, that the foregoing covenant shall not apply to:

• liens existing on the date the Notes are first issued;

• liens on the stock, assets or Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary, unless created in contemplation of such Person becoming a Restricted Subsidiary;

• liens on any assets or Indebtedness of a Person existing at the time such Person is merged with or into or consolidated with or acquired by JCI plc or a Restricted Subsidiary or at the time of a purchase, lease or other acquisition of the assets of a corporation or firm as an entirety or substantially as an entirety by JCI plc or any Restricted Subsidiary; provided, however, that no such lien shall extend to any other Principal Property of JCI plc or such Restricted Subsidiary prior to such acquisition or to any other Principal Property thereafter acquired other than additions to such acquired property;

• liens on any Principal Property existing at the time of acquisition thereof by JCI plc or any Restricted Subsidiary, or liens to secure the payment of the purchase price of such Principal Property by JCI plc or any Restricted Subsidiary, or to secure any Indebtedness incurred, assumed or guaranteed by JCI plc or a Restricted Subsidiary for the purpose of financing all or any part of the purchase price of such Principal Property or improvements or construction thereon, which Indebtedness is incurred, assumed or guaranteed prior to, at the time of or within one year after such acquisition, or in the case of real property, completion of such improvement or construction or commencement of full operation of such property, whichever is later; provided, however, that in the case of any such acquisition, construction or improvement, the lien shall not apply to any other Principal Property, other than the Principal Property so acquired, constructed or improved, and accessions thereto and improvements and replacements thereof and the proceeds of the foregoing;

• liens securing Indebtedness owing by any Restricted Subsidiary to JCI plc or a subsidiary thereof;

• liens in favor of the United States of America or any State thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State thereof, or in favor of any other country or any political subdivision thereof, to secure partial, progress, advance or other payments pursuant to any contract, statute, rule or regulation or to secure any Indebtedness incurred or guaranteed for the purpose of financing all or any part of the purchase price, or, in the case of real property, the cost of construction or improvement, of the Principal Property subject to such liens, including liens incurred in connection with pollution control, industrial revenue or similar financings;

• pledges, liens or deposits under workers’ compensation or similar legislation, and liens thereunder that are not currently dischargeable, or in connection with bids, tenders, contracts, other than for the



## Limitation on Sale and Lease-Back Transactions

JCI plc will not, and will not permit any Restricted Subsidiary to, enter into any Sale and Lease-Back Transaction unless:

- JCI plc or such Restricted Subsidiary, at the time of entering into a Sale and Lease-Back Transaction, would be entitled to incur Indebtedness secured by a lien on the Principal Property to be leased in an amount at least equal to the Attributable Debt in respect of such Sale and Lease-Back Transaction, without equally and ratably securing the Notes pursuant to the covenant described under “Limitations on Liens” above; or

- the direct or indirect proceeds of the sale of the Principal Property to be leased are at least equal to the fair value of such Principal Property, as determined by JCI plc's Board of Directors in good faith, and an amount equal to the net proceeds from the sale of the assets so leased is applied, within 180 days of the effective date of any such Sale and Lease-Back Transaction, to the purchase or acquisition (or, in the case of real property, commencement of the construction) of assets or to the retirement (other than at maturity or pursuant to a mandatory sinking fund or mandatory redemption or prepayment provision) of the Notes and any other debt securities issued pursuant to the Base Indenture, or of Funded Indebtedness ranking on a parity with or senior to the Notes and any other debt securities issued pursuant to the Base Indenture; provided that there shall be credited to the amount of net proceeds required to be applied pursuant to this provision an amount equal to the sum of (i) the principal amount of the Notes and any other debt securities issued pursuant to the Base Indenture delivered within 180 days of the effective date of such Sale and Lease-Back Transaction to the Trustee for retirement and cancellation and (ii) the principal amount of other Funded Indebtedness voluntarily retired by JCI plc within such 180-day period, excluding retirements of the Notes and any other debt securities issued pursuant to the Base Indenture and other Funded Indebtedness at maturity or pursuant to mandatory sinking fund or mandatory redemption or prepayment provisions.

## Merger and Consolidation

JCI plc will not, directly or indirectly, consolidate with or merge with or into, or convey, transfer or lease all or substantially all of its assets in one or a series of related transactions to, any Person, unless:

(1) the resulting, surviving or transferee Person (the “Successor Company”) will be a corporation, limited liability company, public limited company, limited partnership or other entity organized and existing under the laws of (u) the United States of America, any State thereof or the District of Columbia, (v) Ireland, (w) England and Wales, (x) Jersey, (y) any member state of the European Union as in effect on the date the Notes are first issued or (z) Switzerland; provided that the Successor Company (if not the Company) will expressly assume, by a supplemental indenture, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all the obligations of the Company under the Notes and the Indenture;

(2) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Company or any Restricted Subsidiary as a result of such transaction as having been incurred by the Successor Company or such Restricted Subsidiary at the time of such transaction), no Default shall have occurred and be continuing; and

(3) the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture.

Notwithstanding the foregoing, (A) any conveyance, transfer or lease of assets between or among the Company and its subsidiaries, including the Co-issuer, shall not be prohibited under the Indenture and (B) the Company may, directly or indirectly, consolidate with or merge with or into an Affiliate incorporated solely for the purpose of reincorporating the Company in another jurisdiction within the United States of America, any State thereof or the District of Columbia, Ireland, England and Wales, Jersey, any member state of the European Union as in effect on the date the Notes are first issued or Switzerland to realize tax or other benefits.



The Successor Company will succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture, and the predecessor issuer, other than in the case of a lease, will be automatically released from all obligations under the Notes and the Indenture, including, without limitation, the obligation to pay the principal of and interest on the Notes.

The Co-Issuer will not, directly or indirectly, consolidate with or merge with or into, or convey, transfer or lease all or substantially all of the Co-Issuer’s assets in one or a series of related transactions to, any Person, unless:

(1) the resulting, surviving or transferee Person (the “Successor Co-Issuer”) will be a corporation, limited liability company, public limited company, limited partnership or other entity organized and existing under the laws of (u) the United States of America, any State thereof or the District of Columbia, (v) Ireland, (w) England and Wales, (x) Jersey, (y) any member state of the European Union as in effect on the date the Notes are first issued or (z) Switzerland; provided that the Successor Co-Issuer (if not the Co-Issuer) will expressly assume, by a supplemental indenture, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all the obligations of the Co-Issuer under the Notes and the Indenture;

(2) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Co-Issuer or any Restricted Subsidiary as a result of such transaction as having been incurred by the Successor Co-Issuer or such Restricted Subsidiary at the time of such transaction), no Default shall have occurred and be continuing; and

(3) the Co-Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture.

Notwithstanding the foregoing, the Co-Issuer may, directly or indirectly, consolidate with or merge with or into an Affiliate incorporated solely for the purpose of reincorporating the Co-Issuer in another jurisdiction within the United States of America, any State thereof or the District of Columbia, Ireland, England and Wales, Jersey, any member state of the European Union as in effect on the date the Notes are first issued or Switzerland to realize tax or other benefits.

The Successor Co-Issuer will succeed to, and be substituted for, and may exercise every right and power of, the Co-Issuer under the Indenture, and the predecessor issuer, other than in the case of a lease, will be automatically released from all obligations under the Notes and the Indenture, including, without limitation, the obligation to pay the principal of and interest on the Notes.

## Reports by JCI plc

So long as any Notes are outstanding, JCI plc shall file with the Trustee, within 15 days after JCI plc is required to file with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) that JCI plc may be required to file with the SEC pursuant to Section 13 or Section 15(d) of the Exchange Act. JCI plc shall be deemed to have complied with the previous sentence to the extent that such information, documents and reports are filed with the SEC via EDGAR, or any successor electronic delivery procedure; provided, however, that the Trustee shall have no obligation whatsoever to determine whether or not such information, documents or reports have been filed pursuant to the EDGAR system (or its successor). Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuers’ compliance with any of their covenants under the Indenture (as to which the Trustee is entitled to rely exclusively on Officer’s Certificates).

The Issuers will furnish to the Trustee on or before 120 days after the end of each fiscal year an Officer’s Certificate stating that in the course of the performance by the signers of their duties as Officers of the Issuers, they would normally have knowledge of any Default by the Issuers in the performance or fulfillment or observance of any covenants or agreements contained in the Indenture during the preceding fiscal year, stating whether or not they



have knowledge of any such Default and, if so, specifying each such Default of which the signers have knowledge and the nature thereof.

## Listing

The Notes are listed on the New York Stock Exchange. We have no obligation to maintain such listing, and we may delist the Notes at any time.

## Events of Default

As to the Notes of each series, an “Event of Default” means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(1) failure to pay any interest on the Notes of such series when due, which failure continues for 30 days;

(2) failure to pay principal or premium, if any, with respect to the Notes of such series when due;

(3) failure on the part of the Issuers to observe or perform any other covenant, warranty or agreement in the Notes of such series, or in the Indenture as it relates to the Notes of such series, other than a covenant, warranty or agreement, a Default in whose performance or whose breach is specifically dealt with elsewhere in the section of the Indenture governing Events of Default, if the failure continues for 90 days after written notice by the Trustee or the holders of at least 25% in aggregate principal amount of the Notes of such series then outstanding;

(4) an Event of Default with respect to any other series of debt securities issued under the Indenture or an uncured or unwaived failure to pay principal of or interest on any of our other obligations for borrowed money beyond any period of grace with respect thereto if, in either case, (a) the aggregate principal amount thereof is in excess of $300,000,000; and (b) the default in payment is not being contested by us in good faith and by appropriate proceedings; and

(5) specified events of bankruptcy, insolvency, receivership or reorganization.

However, the Event of Default in clause (4) above is subject to the following:

- if such Event of Default with respect to such other series of debt securities issued under the Indenture or such default in payment with respect to such other obligations for borrowed money shall be remedied or cured by the Issuers or waived by the requisite holders of such other series of debt securities or such other obligations for borrowed money, then the Event of Default under the Indenture by reason thereof shall be deemed likewise to have been thereupon remedied, cured or waived without further action upon the part of either the Trustee or any of the holders of Notes of such series; and

- subject to certain duties, responsibilities and rights of the Trustee under the Indenture, the Trustee shall not be charged with knowledge of any such Event of Default with respect to such other series of debt securities issued under the Indenture or such payment default with respect to such other obligations for borrowed money unless written notice thereof shall have been given to a Trust Officer of the Trustee by the Issuers, by the holder or an agent of the holder of such other obligations for borrowed money, by the trustee then acting under any indenture or other instrument under which such payment default with respect to such other obligations for borrowed money shall have occurred, or by the holders of not less than 25% in aggregate principal amount of outstanding debt securities of such other series.

## Notice and Declaration of Defaults

The Indenture provides that the Trustee will, within the later of 90 days after the occurrence of a Default with respect to any Notes of a series outstanding which is continuing and which is known to a Trust Officer of the Trustee, or 60 days after such Default is actually known to such Trust Officer of the Trustee or written notice of such



Default is received by the Trustee, give to the holders of the Notes of such series notice, by mail as the names and addresses of such holders appear on the security register, or electronically if the Notes of such series are held by any depositary, of all uncured Defaults known to it, including events specified above without grace periods, unless such Defaults shall have been cured before the giving of such notice; provided that, except in the case of Default in the payment of the principal of, premium, if any, or interest on any of the Notes of a series, the Trustee shall be protected in withholding such notice to the holders if the Trustee in good faith determines that withholding of such notice is in the interests of the holders of the Notes of such series.

The Trustee or the holders of not less than 25% in aggregate principal amount of the outstanding Notes of a series may declare the Notes of such series immediately due and payable upon the occurrence of any Event of Default. The holders of a majority in principal amount of the outstanding debt securities of all series issued under the Base Indenture affected by such waiver (voting as one class), on behalf of the holders of all of the debt securities of all such series, may waive any existing Default and its consequences, except a Default in the payment of principal, premium, if any, or interest, including sinking fund payments (provided, however, that only holders of a majority in aggregate principal amount of the debt securities of an applicable series may rescind an acceleration with respect to such series and its consequences, including any related payment default that resulted from such acceleration).

## Actions upon Default

In case an Event of Default with respect to the Notes of a series occurs and is continuing, the Indenture provides that the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request, order or direction of any of the holders of Notes of such series unless the applicable holders have offered to the Trustee security and indemnity, satisfactory to the Trustee in its sole discretion, against any loss, liability or expense which may be incurred thereby. The right of a holder of any Note of a series to institute a proceeding with respect to the Notes of such series is subject to conditions precedent including notice and indemnity to the Trustee, but the right of any holder of any Note of such series to receive payment of the principal of, and premium, if any, and interest on their due dates or to institute suit for the enforcement thereof shall not be impaired or affected without the consent of such holder.

The holders of a majority in aggregate principal amount of the Notes of a series outstanding will have the right to direct the time, method and place for conducting any proceeding for any remedy available to the Trustee or exercising any power or trust conferred on the Trustee. Any direction by such holders will be in accordance with law and the provisions of the Indenture. Subject to certain provisions of the Indenture, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith, by a Trust Officer or Trust Officers of the Trustee, shall determine that the action or proceeding so directed may not be lawfully taken, would involve the Trustee in personal liability, would be materially or unjustly prejudicial to the rights of holders of Notes of such series not joining in such direction or would be unduly prejudicial to the interests of the holders of the debt securities issued under the Base Indenture of all series not joining in the giving of such direction. The Trustee will be under no obligation to act in accordance with any such direction unless the applicable holders offer the Trustee reasonable security and indemnity, satisfactory to the Trustee in its sole discretion, against costs, expenses and liabilities which may be incurred thereby.

## Modification of the Indenture

The Issuers and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental to the Indenture, which shall conform to the provisions of the Trust Indenture Act as then in effect, without the consent of the holders of the Notes, for one or more of the following purposes:

• to cure any ambiguity, defect or inconsistency in the Indenture or the Notes, including making any such changes as are required for the Indenture to comply with the Trust Indenture Act;

- to add an additional obligor on the Notes or to add a guarantor of the Notes, or to evidence the succession of another Person to the Company or the Co-Issuer or any additional obligor or guarantor of the Notes, or successive successors, and the assumption by any Successor Company or Successor Co-Issuer of the covenants, agreements and obligations of such Company, Co-Issuer or such obligor or guarantor, as the case



may be, pursuant to provisions in the Indenture concerning consolidation, merger, the sale of assets or successor entities;

• to provide for uncertificated debt securities in addition to or in place of certificated debt securities (provided, that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code);

- to add to the covenants of the Issuers for the benefit of the holders of all or any series of Notes (and if such covenants are to be for the benefit of less than all outstanding series of debt securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any of the Issuers' rights or powers under the Indenture;

• to add any additional Events of Default for the benefit of the holders of the Notes of all or any series of Notes (and if such Events of Default are to be applicable to less than all outstanding series, stating that such Events of Default are expressly being included solely to be applicable to such series);

• to change or eliminate any of the provisions of the Indenture, provided that any such change or elimination shall not become effective with respect to any outstanding Notes created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision;

• to secure the Notes;

• to make any other change that does not adversely affect the rights of any holder of the Notes in any material respect;

- to provide for the issuance of and establish the form and terms and conditions of a series of debt securities, to provide which, if any, of the covenants of the Issuers shall apply to such series, to provide which of the events of default set forth in the Base Indenture shall apply to such series, to add a co-issuer, to name one or more guarantors and provide for guarantees of such series, to provide for the terms and conditions upon which the guarantee by any guarantor of such series may be released or terminated, or to define the rights of the holders of such series of debt securities;

- to issue additional Notes to the extent permitted by the Indenture; provided that such additional Notes have the same terms as, and be deemed part of the same series as, the applicable series of Notes to the extent required under the Indenture; or

• to evidence and provide for the acceptance of appointment under the Indenture by a successor Trustee with respect to the Notes and to add to or change any of the provisions of the Indenture as shall be necessary to provide for or facilitate the administration of the trust thereunder by more than one Trustee.

In addition, under the Indenture, with the consent (evidenced as provided in the Indenture) of the holders of not less than a majority in aggregate principal amount of the outstanding debt securities of all series affected by such supplemental indenture or indentries (voting as one class), the Issuers and the Trustee from time to time and at any time may enter into an indenture or indentries supplemental to the Indenture for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture thereto or of modifying in any manner not covered by the immediately preceding paragraph the rights of the holders of the debt securities of each such series under the Indenture. However, the following changes may only be made with the consent of each holder of outstanding Notes of a series affected:

extend a fixed maturity of or any installment of principal of any Notes or reduce the principal amount thereof or reduce the amount of principal of any original issue discount security that would be due and payable upon declaration of acceleration of the maturity thereof;

• reduce the rate of or extend the time for payment of interest on any Notes;

• reduce the premium payable upon the redemption of any Notes;

• make the Notes payable in currency other than that stated in the applicable debt security;

• impair the right to institute suit for the enforcement of any payment in respect of the Notes on or after the fixed maturity thereof or, in the case of redemption, on or after the redemption date;



• reduce the obligation to pay additional amounts or indemnity amounts for Taxes;

• modify the subordination provisions applicable to any Note in a manner adverse in any material respect to the holder thereof; or

• reduce the aforesaid percentage of the Notes, the holders of which are required to consent to any such supplemental indenture or indentures.

A supplemental indenture that changes or eliminates any covenant, event of default set forth in the Base Indenture or other provision of the Indenture that has been expressly included solely for the benefit of one or more particular series of debt securities, if any, or which modifies the rights of the holders of debt securities of such series with respect to such covenant, event of default or other provision, shall be deemed not to affect the rights under the Indenture of the holders of debt securities of any other series.

Notwithstanding anything herein or otherwise, the provisions under the Indenture relative to the Issuers' obligation to make any offer to repurchase the Notes as a result of a Change of Control Triggering Event as provided in Section 4.08 of the Base Indenture may be waived or modified with the written consent of the holders of a majority in principal amount of the outstanding debt securities of the applicable series or multiple affected series.

It will not be necessary for the consent of the holders of the Notes of a series to approve the particular form of any proposed supplement, amendment or waiver, but it shall be sufficient if such consent approves the substance thereof.

## Information Concerning the Trustee

If an Event of Default with respect to a series of the Notes has occurred and is continuing, the Trustee shall exercise with respect to such series of Notes such of the rights and powers vested in it by the Indenture, and use the same degree of care and skill in its exercise, as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs. If an Event of Default has occurred and is continuing, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request, order or direction of any holders of Notes of such series, unless such holders shall have offered to the Trustee security and indemnity, satisfactory to it in its sole discretion, against any loss, liability or expense which may be incurred thereby, and then only to the extent required by the terms of the Indenture. No provision of the Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties under the Indenture or in the exercise of any of its rights or powers.

The Trustee may resign with respect to the Notes by giving a written notice to the Issuers. The holders of a majority in principal amount of the outstanding Notes of a series may remove the Trustee with respect to the Notes of such series by notifying the Issuers and the Trustee in writing. The Issuers may remove the Trustee if:

- the Trustee has or acquires a “conflicting interest,” within the meaning of Section 310(b) of the Trust Indenture Act, and fails to comply with the provisions of Section 310(b) of the Trust Indenture Act, or otherwise fails to comply with the eligibility requirements provided in the Indenture and fails to resign after written request therefor by the Issuers in accordance with the Indenture;

• the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any bankruptcy law;

• a custodian or public officer takes charge of the Trustee or its property; or

• the Trustee becomes incapable of acting.

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee with respect to either series of the Notes for any reason, the Issuers shall promptly appoint a successor Trustee with respect to the Notes of such series.



A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of the appointment as provided in the Indenture.

The Trustee and its Affiliates have engaged, currently are engaged, and may in the future engage in financial or other transactions with the Issuers and our Affiliates in the ordinary course of their respective businesses.

## Payment and Paying Agents

The Issuers will pay the principal of, premium, if any, and interest on the Notes at any office of ours or any agency designated by us.

The paying agent for the Euro Notes is Elavon Financial Services DAC. For so long as the Euro Notes are in global form, payment of principal and interest on, and any other amount due in respect of, the Euro Notes will be made by or to the order of the paying agent on behalf of the common depositary or its nominee as the registered holder thereof. After payment by the Issuers or the paying agent of interest, principal or other amounts in respect of the Euro Notes to the common depositary (or its nominee), the Issuers will not have responsibility or liability for such amounts to Euroclear or Clearstream, or to holders or beneficial owners of book-entry interests in the Euro Notes. The initial paying agent for the 2030 Notes and 2031 Notes is the Trustee.

In addition, the Issuers will maintain a transfer agent and a security registrar for the Notes. The initial transfer agent and security registrar will be the Trustee.

The security registrar as to the Notes will maintain a register reflecting ownership of the Notes outstanding from time to time, if any, and together with the applicable transfer agent, will make payments on and facilitate transfers of the Notes on behalf of the Issuers. No service charge will be made for any registration of transfer or exchange of Notes. However, we may require holders to pay any transfer taxes or other similar governmental charges payable in connection with any such transfer or exchange.

The Issuers may change or appoint any paying agent, security registrar or transfer agent with respect to the Notes without prior notice to the holders of the Notes. The Issuers or any of their subsidiaries may act as paying agent, transfer agent or security registrar in respect of any Notes.

## Governing Law

The Indenture and any Notes issued thereunder shall be deemed to be a contract made under the internal laws of the State of New York, and for all purposes shall be construed in accordance with the laws of the State of New York without regard to conflicts of laws principles that would require the application of any other law. The Indenture is subject to the provisions of the Trust Indenture Act that are required to be part of the Indenture and shall, to the extent applicable, be governed by such provisions.

For the avoidance of doubt, articles 470-1 to 470-19 of the Luxembourg law of 10 August 1915 relating to commercial companies, as amended, do not apply to the Notes.

## Satisfaction and Discharge of the Indenture

The Indenture shall cease to be of further effect with respect to the Notes of either series if, at any time:

(a) The Issuers have delivered or have caused to be delivered to the Trustee for cancellation all Notes of such series theretofore authenticated, other than any Notes of such series that have been destroyed, lost or stolen and that have been replaced or paid as provided in the Indenture, and Notes of such series for whose payment funds or governmental obligations have theretofore been deposited in trust or segregated and held in trust by the Issuers and thereupon repaid to the Issuers or discharged from such trust, as provided in the Indenture; or

(b) all such Notes of such series not theretofore delivered to the Trustee for cancellation have become due and payable or are by their terms to become due and payable within one year or are to be called for



redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Issuers shall irrevocably deposit or cause to be deposited with the Trustee as trust funds the entire amount, in funds or governmental obligations, or a combination thereof, sufficient to pay at maturity or upon redemption all Notes of such series not theretofore delivered to the Trustee for cancellation, including principal, premium, if any, and interest due or to become due on such date of maturity or redemption date, as the case may be, and if in either case the Issuers shall also pay or cause to be paid all other sums payable under the Indenture with respect to such Notes by the Issuers.

With respect to any redemption of any Notes that requires the payment of any premium, the amount deposited pursuant to the above paragraph shall be sufficient for purposes of the Indenture to the extent that an amount is so deposited with the Trustee or paying agent, as applicable, equal to such premium on such Notes calculated as of the date of the notice of redemption, with any deficit on the redemption date only required to be deposited with the Trustee or paying agent, as applicable, on or prior to the redemption date.

Notwithstanding the above, the Issuers may not be discharged from the following obligations, which will survive until the date of maturity or the redemption date, as the case may be, for the Notes:

• to make any interest or principal payments that may be required with respect to the Notes;

• to register the transfer or exchange of the Notes;

• to execute and authenticate the Notes;

• to replace stolen, lost or mutilated Notes;

• to maintain an office or agency with respect to the Notes;

• to maintain paying agencies with respect to the Notes; and

• to appoint new trustees with respect to the Notes as required by the Indenture.

The Issuers also may not be discharged from the following obligations, which will survive the defeasance and discharge of the Notes:

• to compensate and reimburse the Trustee in accordance with the terms of the Indenture;

• to receive unclaimed payments held by the Trustee for at least one year after the date upon which the principal, if any, or interest on the Notes shall have respectively come due and payable and remit those payments to the holders thereof if required; and

• to withhold or deduct taxes as provided in the Indenture.

For purposes of this description the term “governmental obligations” shall have the following meaning with respect to the Euro Notes: (x) any security which is (i) a direct obligation of the German government or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the German government the payment of which is fully and unconditionally guaranteed by the German government, the central bank of the German government or a governmental agency of the German government, which, in either case (x)(i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (y) certificates, depositary receipts or other instruments which evidence a direct ownership interest in obligations described in clause (x)(i) or (x)(ii) above or in any specific principal or interest payments due in respect thereof.

## Defeasance and Discharge of Obligations

The Issuers’ obligations with respect to the Notes will be discharged upon compliance with the conditions under the caption “Covenant Defeasance”; provided that the Issuers may not be discharged from the following obligations, which will survive until such date of maturity or the redemption date, as the case may be, for the Notes:

• to make any interest or principal payments that may be required with respect to the Notes;

• to register the transfer or exchange of the Notes;



• to execute and authenticate the Notes;

• to replace stolen, lost or mutilated Notes;

• to maintain an office or agency with respect to the Notes;

• to maintain paying agencies with respect to the Notes; and

• to appoint new trustees with respect to the Notes as required by the Indenture.

The Issuers also may not be discharged from the following obligations, which will survive the satisfaction and discharge of the Notes:

• to compensate and reimburse the Trustee in accordance with the terms of the Indenture;

• to receive unclaimed payments held by the Trustee for at least one year after the date upon which the principal, if any, or interest on the Notes shall have respectively come due and payable and remit those payments to the holders thereof if required; and

• to withhold or deduct taxes as provided in the Indenture.

## Covenant Defeasance

Upon compliance with specified conditions, the Issuers may, at their option and at any time, by written notice executed by an Officer delivered to the Trustee, elect to have their obligations, to the extent applicable, under the covenants described under “—Offer to Repurchase Upon Change of Control Triggering Event” and “—Certain Covenants” above, and the operation of the Event of Default described in clause (3) of the first paragraph under the caption “—Events of Default” above, discharged with respect to all outstanding Notes of a series and the Indenture insofar as such Notes are concerned. For this purpose, such covenant defeasance means that, with respect to the outstanding Notes of a series, the Issuers may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference in the Indenture to any such covenant or by reason of reference in any such covenant to any other provision of the Indenture or in any other document and such omission to comply shall not constitute a Default or an Event of Default relating to the Notes of such series. These conditions are:

- the Issuers irrevocably deposit in trust with the Trustee or, at the option of the Trustee, with a trustee satisfactory to the Trustee and the Issuers, as the case may be, under the terms of an irrevocable trust agreement in form and substance satisfactory to the Trustee, funds or governmental obligations or a combination thereof sufficient to pay principal of, premium, if any, and interest on the outstanding Notes of such series to maturity or redemption, as the case may be, and to pay all other amounts payable by it under the Indenture (provided that, with respect to any redemption of any Notes of a series that requires the payment of any premium, the amount deposited pursuant to this paragraph shall be sufficient for purposes of the Indenture to the extent that an amount is so deposited with the Trustee or paying agent, as applicable, equal to such premium on such Notes calculated as of the date of the notice of redemption, with any deficit on the redemption date only required to be deposited with the Trustee or paying agent, as applicable, on or prior to the redemption date), provided that (A) the trustee of the irrevocable trust shall have been irrevocably instructed to pay such funds or the proceeds of such governmental obligations to the Trustee and (B) the Trustee shall have been irrevocably instructed to apply such funds or the proceeds of such governmental obligations to the payment of such principal, premium, if any, and interest with respect to the Notes of such series;

- the Issuers deliver to the Trustee an Officer’s Certificate stating that all conditions precedent specified herein relating to defeasance or covenant defeasance, as the case may be, have been complied with, and an Opinion of Counsel to the same effect;

- no Event of Default shall have occurred and be continuing, and no event which with notice or lapse of time or both would become such an Event of Default shall have occurred and be continuing, on the date of such deposit; and



- the Issuers shall have delivered to the Trustee an Opinion of Counsel (which, in the case of a defeasance, must be based on a change in law) or a ruling received from the U.S. Internal Revenue Service to the effect that the beneficial owners of the Notes of a series will not recognize income, gain or loss for U.S. federal income tax purposes as a result of the Issuers' exercise of such defeasance or covenant defeasance and will be subject to U.S. Federal income tax in the same amount and in the same manner and at the same times as would have been the case if such election had not been exercised.

## Definitions

As used in the Notes and this “Description of Notes,” the following defined terms shall have the following meanings with respect to the Notes:

“Affiliate,” with respect to any specified Person, means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Attributable Debt,” in connection with a Sale and Lease-Back Transaction, as of any particular time, means the aggregate of present values (discounted at a rate that, at the inception of the lease, represents the effective interest rate that the lessee would have incurred to borrow over a similar term the funds necessary to purchase the leased assets) of the obligations of JCI plc or any Restricted Subsidiary for net rental payments during the remaining term of the applicable lease, including any period for which such lease has been extended or, at the option of the lessor, may be extended. The term “net rental payments” under any lease of any period shall mean the sum of the rental and other payments required to be paid in such period by the lessee thereunder, not including any amounts required to be paid by such lessee, whether or not designated as rental or additional rental, on account of maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges required to be paid by such lessee thereunder or any amounts required to be paid by such lessee thereunder contingent upon the amount of sales, maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges.

“Board of Directors” means the Board of Directors of the Company or any duly authorized committee of such Board of Directors.

“business day” means any day other than a Saturday or Sunday, (1) that is not a day on which banking institutions in the City of New York or London are authorized or obligated by law, executive order or regulation to close and (2) on which the Trans-European Automated Real-time Gross Settlement Express Transfer System (the TARGET2 system), or any successor thereto, is open.

“Change of Control” means the occurrence of any of the following after the date of issuance of the Notes:

(1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the Company’s assets and the assets of its subsidiaries taken as a whole to any “person” or “group” (as those terms are used in Section 13(d)(3) of the Exchange Act) other than to the Company or one of its subsidiaries, other than any such transaction or series of related transactions where holders of our Voting Stock outstanding immediately prior thereto hold Voting Stock of the transferee Person representing a majority of the voting power of the transferee Person’s Voting Stock immediately after giving effect thereto;

(2) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” or “group” (as those terms are used in Section 13(d)(3) of the Exchange Act) (other than us or one of our subsidiaries) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of the Company’s Voting Stock representing a majority of the voting power of the Company’s outstanding Voting Stock;

(3) the Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which any of the Company’s outstanding Voting Stock or Voting Stock of such other Person is converted into or exchanged for



cash, securities or other property, other than any such transaction where the Company’s Voting Stock outstanding immediately prior to such transaction constitutes, or is converted into or exchanged for, Voting Stock representing a majority of the voting power of the Voting Stock of the surviving Person (or its parent) immediately after giving effect to such transaction; or

(4) the adoption by the Company’s shareholders of a plan relating to our liquidation or dissolution.

Notwithstanding the foregoing, a transaction will not be deemed to involve a change of control under clause (2) above if (1) the Company becomes a direct or indirect wholly-owned subsidiary of a holding company or other Person and (2)(A) the direct or indirect holders of the Voting Stock of such holding company or other Person immediately following that transaction are substantially the same as the holders of the Company’s Voting Stock immediately prior to that transaction or (B) immediately following that transaction no person (as that term is used in Section 13(d)(3) of the Exchange Act) (other than a holding company or other Person satisfying the requirements of this sentence) is the beneficial owner, directly or indirectly, of more than 50% of the Voting Stock of such holding company or other Person.

“Change of Control Triggering Event” means, with respect to the Notes of a series, such Notes cease to be rated Investment Grade by each of the Rating Agencies on any date during the period (the “Trigger Period”) commencing 60 days prior to the first public announcement by us of any Change of Control (or pending Change of Control) and ending 60 days following consummation of such Change of Control (which Trigger Period will be extended following consummation of a Change of Control for so long as any of the Rating Agencies has publicly announced that it is considering a possible ratings downgrade or withdrawal). However, a Change of Control Triggering Event otherwise arising by virtue of a particular reduction in, or withdrawal of, rating shall not be deemed to have occurred in respect of a particular Change of Control (and thus shall not be deemed a Change of Control Triggering Event for purposes of the definition of Change of Control Triggering Event) if the Rating Agencies making the reduction in, or withdrawal of, rating to which this definition would otherwise apply do not announce or publicly confirm or inform the Trustee in writing at our request that the reduction or withdrawal was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control shall have occurred at the time of the Change of Control Triggering Event). If a Rating Agency is not providing a rating for the Notes at the commencement of any Trigger Period, the Notes will be deemed to have ceased to be rated Investment Grade by such Rating Agency during that Trigger Period.

Notwithstanding the foregoing, no Change of Control Triggering Event will be deemed to have occurred in connection with any particular Change of Control unless and until such Change of Control has actually been consummated.

“Consolidated Net Worth” at any date means total assets less total liabilities, in each case appearing on the most recently prepared consolidated balance sheet of the Company and its subsidiaries as of the end of a fiscal quarter of the Company, prepared in accordance with United States generally accepted accounting principles as in effect on the date of the consolidated balance sheet.

“Consolidated Tangible Assets” at any date means total assets less all intangible assets appearing on the most recently prepared consolidated balance sheet of the Company and its subsidiaries as of the end of a fiscal quarter of the Company, prepared in accordance with United States generally accepted accounting principles as in effect on the date of the consolidated balance sheet.

“Default” means any event, act or condition that with notice or lapse of time, or both, would constitute an Event of Default.

“Funded Indebtedness” means any Indebtedness of the Company or any consolidated subsidiary maturing by its terms more than one year from the date of the determination thereof, including any Indebtedness renewable or extendable at the option of the obligor to a date later than one year from the date of the determination thereof.

“Indebtedness” means, without duplication, the principal amount (such amount being the face amount or, with respect to original issue discount bonds or zero coupon notes, bonds or debentures or similar securities, determined based on the accreted amount as of the date of the most recently prepared consolidated balance sheet of the



Company and its subsidiaries as of the end of a fiscal quarter of the Company prepared in accordance with United States generally accepted accounting principles as in effect on the date of such consolidated balance sheet) of (i) all obligations for borrowed money, (ii) all obligations evidenced by debentures, notes or other similar instruments, (iii) all obligations in respect of letters of credit or bankers acceptances or similar instruments or reimbursement obligations with respect thereto (such instruments to constitute Indebtedness only to the extent that the outstanding reimbursement obligations in respect thereof are collateralized by cash or cash equivalents reflected as assets on a balance sheet prepared in accordance with United States generally accepted accounting principles), (iv) all obligations to pay the deferred purchase price of property or services, except (A) trade and similar accounts payable and accrued expenses, (B) employee compensation, deferred compensation and pension obligations, and other obligations arising from employee benefit programs and agreements or other similar employment arrangements, (C) obligations in respect of customer advances received and (D) obligations in connection with earnout and holdback agreements, in each case in the ordinary course of business, (v) all obligations as lessee to the extent capitalized in accordance with United States generally accepted accounting principles and (vi) all Indebtedness of others consolidated in such balance sheet that is guaranteed by JCI plc or any of its subsidiaries or for which JCI plc or any of its subsidiaries is legally responsible or liable (whether by agreement to purchase indebtedness of, or to supply funds or to invest in, others).

“Intangible assets” means the amount, if any, stated under the headings “Goodwill” and “Other intangible assets, net” or under any other heading of intangible assets separately listed, in each case on the face of the most recently prepared consolidated balance sheet of the Company and its subsidiaries as of the end of a fiscal quarter of JCI plc, prepared in accordance with United States generally accepted accounting principles as in effect on the date of the consolidated balance sheet.

“Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any successor rating category of Moody’s) and a rating of BBB– or better by S&P (or its equivalent under any successor rating category of S&P), and the equivalent investment grade credit rating from any replacement rating agency or rating agencies selected by us under the circumstances permitting us to select a replacement rating agency and in the manner for selecting a replacement rating agency, in each case as set forth in the definition of “Rating Agency.”

“Moody’s” means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and its successors.
“Officer” means any manager, director, any managing director, the chairman or any vice chairman of the Board of Directors or a board of managers, as applicable, the chief executive officer, the president, the chief financial officer, any vice president, the treasurer, any assistant treasurer, the secretary or any assistant secretary, or any equivalent of the foregoing, of the Company or the Co-Issuer, as applicable, or any Person duly authorized to act for or on behalf of the Company or the Co-Issuer, as applicable.

“Officer’s Certificate” means a certificate, signed by any Officer of JCI plc and/or the Co-Issuer, as the case may be, that is delivered to the Trustee in accordance with the terms of the Indenture.

“Opinion of Counsel” means a written opinion acceptable to the Trustee from legal counsel licensed in any State of the United States of America and applying the laws of such State. The counsel may be an employee of or counsel to either Issuer.

“Person” means any individual, corporation, partnership, limited liability company, business trust, association, joint-stock company, joint venture, trust, incorporated or unincorporated organization or government or any agency or political subdivision thereof.

“Principal Property” means any manufacturing, processing or assembly plant or any warehouse or distribution facility, or any office or parcel of real property (including fixtures but excluding leases and other contract rights which might otherwise be deemed real property) of JCI plc or any of its subsidiaries that is used by any U.S. Subsidiary of JCI plc and is located in the United States of America (excluding its territories and possessions and Puerto Rico) and (A) is owned by JCI plc or any subsidiary of JCI plc on the date the Notes are issued, (B) the initial construction of which has been completed after the date on which the Notes are issued, or (C) is acquired after the date on which the Notes are issued, in each case, other than any such plants, facilities, warehouses or portions



thereof, that in the opinion of the Board of Directors of JCI plc, are not collectively of material importance to the total business conducted by JCI plc and its subsidiaries as an entirety, or that have a net book value (excluding any capitalized interest expense), on the date the Notes are issued in the case of clause (A) of this definition, on the date of completion of the initial construction in the case of clause (B) of this definition or on the date of acquisition in the case of clause (C) of this definition, of less than 2.0% of Consolidated Tangible Assets on the consolidated balance sheet of JCI plc and its subsidiaries as of the applicable date.

“Rating Agency” means each of Moody’s and S&P; provided, that if any of Moody’s or S&P ceases to provide rating services to issuers or investors, we may appoint another “nationally recognized statistical rating organization” as defined under Section 3(a)(62) of the Exchange Act as a replacement for such Rating Agency; provided, that we shall give notice of such appointment to the Trustee.

“Restricted Subsidiary” means any subsidiary of JCI plc that owns or leases a Principal Property.

“Sale and Lease-Back Transaction” means an arrangement with any Person providing for the leasing by JCI plc or a Restricted Subsidiary of any Principal Property whereby such Principal Property has been or is to be sold or transferred by JCI plc or a Restricted Subsidiary to such Person other than JCI plc or any of its subsidiaries; provided, however, that the foregoing shall not apply to any such arrangement involving a lease for a term, including renewal rights, for not more than three years.

“S&P” means Standard & Poor’s Global Ratings, a division of S&P Global Inc., and its successors.

“Trust Officer” means any officer within the corporate trust department of the Trustee, including any vice president, senior associate, associate, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such Person’s knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of the Indenture.

“U.S. Subsidiary” means any subsidiary of JCI plc that was formed under the laws of the United States of America, any State thereof or the District of Columbia (but not any territory thereof).

“Voting Stock” of any specified Person as of any date means the capital stock of such Person that is at the time entitled to vote generally in the election of the board of directors of such Person.



## JOHNSON CONTROLS INTERNATIONAL PLC

The following is a list of significant subsidiaries of Johnson Controls International plc, as defined by Section 1.02(w) of Regulation S-X, as of September 30, 2021.

<table><tr><td>Name of Company</td><td>Jurisdiction Where Subsidiary is Incorporated</td></tr><tr><td>Johnson Controls Fire Protection LP</td><td>Delaware, United States</td></tr><tr><td>Johnson Controls Security Solutions LLC</td><td>Delaware, United States</td></tr><tr><td>Johnson Controls, Inc.</td><td>Wisconsin, United States</td></tr></table>



## Co-Issuer of Debt Securities

Tyco Fire & Security Finance S.C.A., a subsidiary of Johnson Controls International plc (the “Company”), co-issued with the Company the debt securities listed below:

1.750% Senior Notes due 2030

0.375% Senior Notes due 2027

1.000% Senior Notes due 2032

2.000% Sustainability-Linked Senior Notes due 2031



## CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-236195 and 333-236195-01) and S-8 (Nos. 333-254239, 333-226258, 333-213508, 333-200320 and 333-185004) and Post-Effective Amendment to Registration Statement Form S-4 on Form S-8 (No. 333-210588) of Johnson Controls International plc of our report dated November 15, 2021 relating to the financial statements and financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.



## CERTIFICATIONS

I, George R. Oliver, of Johnson Controls International plc, certify that:

1. I have reviewed this annual report on Form 10-K of Johnson Controls International plc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 15, 2021



## CERTIFICATIONS

I, Olivier Leonetti, of Johnson Controls International plc, certify that:

1. I have reviewed this annual report on Form 10-K of Johnson Controls International plc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 15, 2021

/s/ Olivier Leonetti

Olivier Leonetti

Executive Vice President and
Chief Financial Officer



## CERTIFICATION OF PERIODIC FINANCIAL REPORTS

We, George R. Oliver and Olivier Leonetti, of Johnson Controls International plc, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. the Annual Report on Form 10-K for the year ended September 30, 2021 (Periodic Report) to which this statement is an exhibit fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and

2. information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of Johnson Controls International plc.

Date: November 15, 2021

/s/ George R. Oliver

George R. Oliver
Chairman and Chief Executive Officer

/s/ Olivier Leonetti

Olivier Leonetti
Executive Vice President and Chief
Financial Officer