Johnson Controls International (JCI) 10-K risk factor changes: FY2020 vs FY2019

Risks [removed: Relating] [added: Related] to [added: Our] Business Operations

General economic, [added: 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.

Global economic [added: and political] conditions affect each of our primary [removed: businesses.][added: businesses and the businesses of our customers and suppliers.]

[removed: As we discuss in greater detail in the specific risk factors for each of our businesses that appear below, any] [added: Any] future financial distress [added: 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.

A worldwide economic downturn and/or disruption of the credit [removed: markets] [added: markets, including the economic downturn and capital market volatility caused by the COVID-19 pandemic,] could reduce our access to capital necessary for our operations and executing our strategic plan.

These factors could in turn temper demand for new HVAC, fire detection and [removed: suppression] [added: suppression,] and security installations.

Levels of industrial capital expenditures for facility expansions and maintenance [removed: turn] [added: are dependent] on general economic conditions, economic conditions within specific industries we serve, expectations of future market behavior and available financing.

The businesses of many of our industrial [removed: customers, particularly oil and gas companies, chemical and petrochemical companies, mining and general industrial companies,] [added: customers] are to varying degrees cyclical and have experienced periodic downturns.

During such economic downturns, [added: including the current economic downturn caused by COVID-19,] customers in these industries [removed: historically have tended] [added: tend] to delay major capital projects, including greenfield construction, maintenance projects and upgrades.

In cases where commodity price risk cannot be naturally offset or hedged through supply based [removed: fixed price] [added: fixed-price] contracts, we use commodity hedge contracts to minimize overall price risk associated with our anticipated commodity purchases.

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

We must also attract, develop and retain individuals with the requisite technical expertise and understanding of [removed: customers'] [added: customers’] needs to develop new technologies and introduce new products, particularly as we increase investment in our digital solutions [removed: businesses.][added: businesses and our OpenBlue platform.]

The failure of our technology, products or services to gain market acceptance due to more attractive offerings by our [added: competitors, the introduction of new] competitors [added: to the market with new] or [added: 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.

[removed: 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 [added: 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.

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, [added: 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.]

For example, existing free trade laws and regulations, such as the [removed: North American Free Trade] [added: 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.

If we experience a problem with the functioning of an important IT system [added: 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.

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 [removed: systems and] [added: systems,] maintenance of backup and protective [removed: systems.][added: systems and the incorporation of cybersecurity design throughout the lifecycle of our products.]

[removed: 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.

Despite our efforts to protect such data, [removed: we] [added: 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 [added: products,] systems, software solutions or networks, unauthorized access, use, disclosure, modification or destruction of information, defective products, production downtimes and operational disruptions.

Agreements relating to the sale of products to government entities may be subject to termination, reduction or modification, either at the convenience of the [removed: government or for failure to perform under the applicable contract.]

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

[removed: Regardless of the merit of such claims, responding to infringement claims can be expensive and time-consuming, and the] [added: The] litigation process is subject to inherent uncertainties, and we may not prevail in litigation matters regardless of the merits of our position.

Global climate change [added: and related regulations] could negatively affect our business.

Increased public awareness and concern regarding global climate change [removed: may] [added: will] result in more regional and/or federal requirements to reduce [removed: or mitigate the effects of] greenhouse gas emissions.

There is a general consensus that greenhouse gas emissions are linked to global climate [removed: changes.][added: change, and that these emissions must be reduced dramatically to avert the worst effects of climate change.]

[removed: Climate changes,] [added: The effects of climate change,] such as extreme weather conditions, create financial [removed: risk] [added: risks] to our business.

[removed: Climate changes] [added: 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.

[removed: The Company] [added: We] could also face indirect financial risks passed through the supply [removed: chain,] [added: chain] and [removed: process] disruptions [removed: due to physical climate changes] [added: that] could result in [removed: price modifications] [added: increased prices] for our products and the resources needed to produce them.

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 [removed: poly fluorinated] [added: 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 [added: 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.

Federal, state and local authorities also regulate a variety of matters, including, but not limited to, health, safety [added: laws governing employee injuries,] and permitting [added: requirements] in addition to the environmental matters discussed above.

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 [added: entity restructuring and judicial relief.]

[removed: If actual liabilities are significantly higher than those recorded, the cost of resolving such liabilities] [added: The COVID-19 pandemic] could have [removed: a material] [added: an] adverse effect on our [added: business,] financial [removed: position,] [added: condition,] results of operations and cash [removed: flows.][added: flows.]

Future [added: potential] changes [removed: in U.S.] [added: to the] tax [removed: law] [added: laws] could adversely affect us [removed: or] [added: and] our [removed: affiliates.][added: U.S. affiliates (including the U.S. affiliates historically owned by Tyco).]

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 [removed: claims] [added: claims,] and employment claims.

If ratings for our debt fall below investment grade, our access to the debt capital markets would become [removed: restricted.][added: restricted and the price we pay to issue debt could increase.]

[removed: Given the significance of the Company's past acquisitions, the] [added: The] goodwill and intangible assets recorded [added: with past acquisitions, including our merger with Tyco,] were significant and impairment of such assets could result in a material adverse impact on our financial condition and results of [removed: operation.][added: operations.]

Risks Related to Economic and Political Conditions

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

In response to this outbreak, the governments of many countries, states, cities and other geographic regions have taken preventive or protective actions, such as imposing restrictions on travel and business operations.

Currently, the effectiveness of economic stabilization efforts and other measures being taken to mitigate the effects of these actions and the spread of COVID-19 remains uncertain.

As a result of the COVID-19 pandemic, we and our affiliates, employees, suppliers, customers and others have been and may continue to be restricted or prevented from conducting normal business activities, including as a result of shutdowns, travel restrictions and other actions that may be requested or mandated by governmental authorities.

Such actions have prevented, and may in the future prevent us from accessing the facilities of our customers to deliver and install products, provide services and complete maintenance.

Although some governments have lifted shutdown orders and similar restrictions, a resurgence in the spread of COVID-19 could cause the reinstitution of such preventive or protective measures.

While a substantial portion of our businesses have been classified as essential in jurisdictions in which facility closures have been mandated, some of our facilities have nevertheless been ordered to close, and we can give no assurance that there will not be additional closures in the future or that our businesses will be classified as essential in each of the jurisdictions in which we operate.

The COVID-19 outbreak has impacted, and may continue to impact, our office locations, manufacturing and servicing facilities and distribution centers, as well as those of our third-party vendors, including the effects of facility closures, reductions in operating hours and other social distancing efforts.

For example, during portions of fiscal year 2020, we experienced temporary reductions of our manufacturing and operating capacity in India, China and Mexico as a result of government-mandated actions to control the spread of COVID-19.

In addition, we have modified our business practices (including employee travel, employee work locations and cancellation of physical participation in meetings, events and conferences), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners and suppliers.

These modifications to our business practices, including any future actions we take, may cause us to experience increases in costs, reductions in productivity and disruptions to our business routines.

Further, we have experienced, and may continue to experience, disruptions or delays in our supply chain as a result of such actions, which have resulted in higher supply chain costs to us in order to maintain the supply of materials and components for our products.

Our management of the impact of COVID-19 has and will continue to require significant investment of time from our management and employees, as well as resources across our global enterprise.

The focus on managing and mitigating the impacts of COVID-19 on our business may cause us to divert or delay the application of our resources toward new initiatives or investments, which may adversely impact our future results of operations.

In addition, issues relating to the COVID-19 pandemic may result in legal claims or litigation against us.

We may also experience impacts from market downturns and changes in consumer behavior related to pandemic fears as a result of COVID-19.

For example, we experienced a decline in demand in our global businesses as a result of the impact of efforts to contain the spread of COVID-19.

In addition, our customers may choose to delay or abandon projects on which we provide products and/or services.

We may also experience adverse impacts on demand and sales volumes from industries that are sensitive to economic downturns and volatility in commodity prices.

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.

For example, in fiscal year 2020, we were required to record an impairment charge of indefinite-lived intangible assets primarily related to our retail business and an impairment of the North America Retail reporting unit's goodwill.

If the COVID-19 pandemic becomes more pronounced in our global markets, experiences a resurgence in markets recovering from the spread of COVID-19, or if another significant natural disaster or pandemic were to occur in the future, our operations in areas impacted by such events could experience further adverse financial impacts due to market changes and other resulting

events and circumstances.

The extent to which the COVID-19 pandemic impacts our financial condition will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19, the longevity of COVID-19, the impact of COVID-19 on economic activity, the actions to contain its impacts on public health, and the global economy and the speed at which economic activity resumes following the lifting of measures designed to mitigate the spread of COVID-19.

The impact of COVID-19 may also exacerbate other risks discussed in Item 1A of 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.

Exchange rates can be volatile and a substantial weakening of foreign currencies against the

Risks Related to Government Regulations

For example, policies are being implemented to curtail the use of high global warming potential refrigerants, increase building energy

efficiency, and shift away from the combustion of fossil fuels as a heating source.

In some cases, these policies may render our existing technology and products noncompliant, particularly within our line of HVAC products and solutions.

As a result, we may be required to make increased capital expenditures to improve our product portfolio to meet new regulations and standards.

While we have been committed to continuous improvements to our product portfolio to meet and exceed anticipated regulatory standard levels, 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.

For example, proposed federal and state 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.

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.

government or for failure to perform under the applicable contract.

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.

In addition, we are increasingly 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.

Cybersecurity incidents aimed at the

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.

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.

For example, the State of California has passed legislation granting residents certain new data privacy rights and regulating the security of Internet of Things devices, which will go into effect in January 2020; European laws require us to have an approved legal mechanism to transfer personal data out of Europe; the European Union General Data Protection Regulation, which took effect in May 2018, superseded prior European Union data protection legislation and imposes more stringent requirements in how we collect and process personal data and provides for significantly greater penalties for noncompliance; and several other countries have

passed laws that require personal data relating to their citizens to be maintained on local servers and impose additional data transfer restrictions.

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.

If it became necessary for us to resort to litigation to protect our intellectual property rights, any proceedings could be burdensome and costly, and we may not prevail.

entity restructuring and judicial relief.

The amounts we have recorded for asbestos-related liabilities and insurance-related assets in the consolidated statements of financial position are based on our current strategy for resolving asbestos claims, currently available information, and a number of variables, 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 and 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 our calculations vary significantly from actual results.

We may be unable to realize the expected benefits of our restructuring actions, which could adversely affect our profitability and operations.

To align our resources with our growth strategies, operate more efficiently and control costs, we periodically announce restructuring plans, which may include workforce reductions, global plant closures and consolidations, asset impairments and other cost reduction initiatives.

We may undertake additional restructuring actions and workforce reductions in the future.

As these plans and actions are complex, unforeseen factors could result in expected savings and benefits to be delayed or not realized to the full extent planned, and our operations and business may be disrupted.

On December 22, 2017, the President of the United States signed into law a bill commonly referred to as the "Tax Cuts and Jobs Act" (the "TCJA"), which made significant changes to certain U.S. tax laws relevant to us and our affiliates.

While interpretations of the provisions of the TCJA continue to be subject to uncertainty, and regulatory guidance on certain aspects of the TCJA has not yet been issued, the TJCA is expected to have an adverse effect on the U.S. federal income taxation of our and our affiliates’

operations, including limiting or eliminating various deductions or credits (including interest expense deductions and deductions relating to employee compensation), imposing taxes on certain cross-border payments or transfers, imposing taxes on certain earnings of non-U.S. entities on a current basis, changing the timing of the recognition of income or its character, limiting asset basis under certain circumstances, and imposing additional corporate taxes under certain circumstances to combat perceived base erosion issues, among other changes.

The TCJA and any related legislation or regulations, as well as any other future changes in U.S. tax laws, could adversely affect the U.S. federal income taxation of our and our affiliates’ ongoing operations and may also adversely affect the integration efforts relating to, and potential synergies from, past strategic transactions, as described below.

Any such changes and related consequences could have a material adverse impact on our financial results and cash flows.

See Note 18, “Income Taxes,” of the notes to consolidated financial statements for additional information on the impact the TCJA had on our business, financial performance and results of operations.

Future tightening in the credit markets and a reduced level of liquidity in many financial markets due to turmoil in the financial and banking industries could affect our access to the debt capital markets or the price we pay to issue debt.

We may be unable to complete or integrate acquisitions or joint ventures effectively, which may adversely affect our growth, profitability and results of operations.

Additionally, we may not be successful in integrating acquired businesses or joint ventures into our existing operations and achieving projected synergies which could result in impairment of assets, including goodwill and acquired intangible assets.

If we were to use equity securities to finance a future acquisition, our then-current shareholders would experience dilution.

We are also subject to applicable antitrust laws and must avoid anticompetitive behavior.

These and other factors related to acquisitions and joint ventures may negatively and adversely impact our growth, profitability and results of operations.

We are subject to business continuity risks associated with centralization of certain administrative functions.

We have been regionally centralizing certain administrative functions, primarily in North America, Europe and Asia, to improve efficiency and reduce costs.

To the extent that these central locations are disrupted or disabled, key business processes, such as invoicing, payments and general management operations, could be interrupted, which could have an adverse impact on our business.

In an attempt to reduce this risk, our installation, service and monitoring agreements and other contracts contain provisions limiting our liability in such circumstances, and we typically maintain product liability insurance to mitigate the risk that our products and services fail to operate as expected.

However, in the event of litigation, it is possible that contract limitations may be deemed not applicable or unenforceable, that our insurance coverage is not adequate, or that insurance carriers deny coverage of our claims.

Police departments could refuse to respond to calls from monitored security service companies.

Police departments in a limited number of jurisdictions do not respond to calls from monitored security service companies, either as a matter of policy or by local ordinance.

We have offered affected customers the option of receiving responses from private guard companies, in most cases through contracts with us, which increases the overall cost to customers.

If more police departments, whether inside or outside the U.S., were to refuse to respond or be prohibited from responding to calls from monitored security service companies, our ability to attract and retain customers could be negatively impacted and our results of operations and cash flow could be adversely affected.

We may fail to realize the anticipated benefits of the business combination between Johnson Controls, Inc. and Tyco International plc.

The success of the Merger will depend on, among other things, our ability to combine the legacy businesses of Johnson Controls and Tyco in a manner that realizes anticipated synergies and facilitates growth opportunities, and achieves the projected stand-alone cost savings and revenue growth trends identified by us.

This discussion summarizes the significant factors affecting the consolidated operating results, financial condition and liquidity of the Company for the [removed: three-year period] [added: fiscal year] ended September 30, [removed: 2019.][added: 2020.]

FISCAL [removed: YEAR 2019 COMPARED] [added: YEAR 2020 COMPARED] TO FISCAL [removed: YEAR 2018][added: YEAR 2019]

[removed: Net Sales][added: | Net sales | | | | | | $ | — | | | | |]

| | [added: | |] Year Ended September 30, | | | | | | | | | | [added: | | | | |]

| (in millions) | [removed: 2019] | | [added: 2020] | | [removed: 2018] | | | | [added: 2019 | | | | | |] Change | | [added: |]

| Net sales | [added: | |] $ | [removed: 23,968] [added: 22,317] | | | [added: | |] $ | [removed: 23,400] [added: 23,968] | | | [removed: 2] | [added: | \-7 | |] % |

The [removed: increase] [added: decrease] in net sales was due to [removed: higher] [added: lower] organic sales [removed: ($1,181 million) and acquisitions ($22] [added: ($1,543] million), [removed: partially offset by] the unfavorable impact of foreign currency translation [removed: ($463] [added: ($150] million) and lower sales due to business divestitures [removed: ($172] [added: ($11 million), partially offset by acquisitions ($53] million).

Excluding the impact of foreign currency translation and business acquisitions and divestitures, [added: consolidated] net sales [removed: increased 5%] [added: decreased 6%] as compared to the prior [removed: year.][added: year due to lower demand, primarily attributable to the COVID-19 pandemic.]

[removed: Cost of Sales /] [added: |] Gross [removed: Profit][added: profit | | | | | | — | | | | | |]

| Cost of sales | [added: | |] $ | [removed: 16,275] [added: 14,906] | | | [added: | |] $ | [removed: 15,733] [added: 16,275] | | | [removed: 3] | [added: | \-8 | |] % |

| Gross profit | [removed: 7,693] | | [added: 7,411] | | [removed: 7,667] | | | | [removed: —] [added: 7,693] | [added: | | | | | \-4 | |] % |

| % of sales | [removed: 32.1] | | [added: 33.2 | |] % | | [removed: 32.8] | | [added: 32.1 | |] % | | | | [added: | | |]

Cost of sales [removed: increased] and gross profit [added: both decreased and gross profit] as a percentage of sales [removed: decreased] [added: increased] by [removed: 70] [added: 110] basis points.

Net mark-to-market adjustments had a net [removed: unfavorable] [added: favorable] year-over-year impact on cost of sales of [removed: $123] [added: $40] million [removed: ($128] [added: ($88] million [removed: charge] [added: loss] in fiscal [removed: 2019] [added: 2020] compared to a [removed: $5] [added: $128] million [removed: charge] [added: loss] in fiscal [removed: 2018)] [added: 2019)] primarily due to a [removed: decrease] [added: more significant reduction] in discount rates in the [removed: current] [added: prior] year.

Foreign currency translation had a favorable impact on cost of sales of approximately [removed: $304] [added: $100] million.

[removed: Selling, General] [added: | Selling, general] and [removed: Administrative Expenses][added: administrative expenses | | | $ | 5,665 | | | | | $ | 6,244 | | | | | \-9 | | % |]

| % of sales | [removed: 26.1] | | [added: 25.4 | |] % | | [removed: 24.1] | | [added: 26.1 | |] % | | | | [added: | | |]

Selling, general and administrative expenses ("SG&A") [removed: increased] [added: decreased] by [removed: $602] [added: $579] million, and SG&A as a percentage of sales [removed: increased] [added: decreased] by [removed: 200] [added: 70] basis points.

The net mark-to-market adjustments had a net [removed: unfavorable] [added: favorable] year-over-year impact on SG&A of [removed: $519] [added: $304] million [removed: ($490] [added: ($186] million loss in fiscal [removed: 2019] [added: 2020] compared to a [removed: $29] [added: $490] million [removed: gain] [added: loss] in fiscal [removed: 2018)] [added: 2019)] primarily due to a [removed: decrease] [added: more significant reduction] in discount rates in the [removed: current] [added: prior] year.

Foreign currency translation had [removed: a favorable] [added: an unfavorable] impact on [removed: SG&A] [added: equity income] of [removed: $94] [added: $3] million.

[removed: Restructuring] [added: | Restructuring] and [removed: Impairment Costs][added: impairment costs | | | $ | 783 | | | | | $ | 235 | | | | | * | | |]

Refer to Note [added: 7, "Goodwill and Other Intangible Assets," Note] 16, "Significant Restructuring and Impairment Costs," and Note 17, "Impairment of Long-Lived Assets," of the notes to consolidated financial statements for further disclosure related to the Company's restructuring plans and impairment costs.

[removed: Net Financing Charges][added: | Net financing charges | | | $ | 231 | | | | | $ | 350 | | | | | \-34 | | % |]

Refer to Note 9, "Debt and Financing Arrangements," of the notes to consolidated financial statements for [removed: further disclosure related to the Company's net financing charges.][added: additional information.]

[removed: Equity Income][added: | Equity income | | | $ | 171 | | | | | $ | 192 | | | | | \-11 | | % |]

The [removed: increase] [added: decrease] in equity income was primarily due to [removed: higher] [added: lower] income at certain partially-owned affiliates [removed: within the Building Solutions EMEA/LA segment and] [added: of] the Johnson Controls - Hitachi joint [removed: venture.][added: venture primarily due to the unfavorable impact of the COVID-19 pandemic.]

[removed: Income Tax Provision][added: | Income tax provision (benefit) | | | $ | 108 | | | | | $ | (233) | | | | | * | | |]

| | [added: | |] Year Ended September 30, | | | | | | | | | [added: | | | | | |]

| (in millions) | [removed: 2019] | | [added: 2020] | | [removed: 2018] | | | | [added: 2019 | | | | | |] Change | [added: | |]

| Effective tax rate | [removed: \-22] | | [added: 12 | |] % | | [removed: 13] | | [added: \-22 | |] % | | | [added: | | | |]

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

[removed: The] [added: For fiscal 2019, the] effective rate for continuing operations [removed: is] [added: was] below the statutory rate [removed: of 12.5% for fiscal 2019] 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.

[removed: The] [added: For fiscal 2020, the] effective [added: tax] rate for continuing operations [removed: is above] [added: was 12% and was lower than] the statutory [added: tax] rate [removed: of 12.5% for fiscal 2018] primarily due to [added: tax audit reserve adjustments,] the [removed: discrete net impacts of U.S. Tax Reform, final] income tax effects of [removed: the completed divestiture of the Scott Safety business and] [added: mark-to-market adjustments,] valuation allowance [removed: adjustments,] [added: adjustments and the benefits of continuing global tax planning initiatives,] partially offset by [removed: tax audit closures,] [added: a discrete] tax [removed: benefits due] [added: charge related] to [removed: change in entity tax status,] the [removed: benefits] [added: remeasurement] of [removed: continuing global] [added: deferred] tax [removed: planning initiatives] [added: assets] and [added: liabilities as a result of Swiss] tax [added: reform, the tax impact of an impairment charge and tax] rate differentials.

The fiscal [removed: 2019] [added: 2020] effective tax rate [removed: decreased] [added: increased] as compared to [removed: the] fiscal [removed: 2018 effective tax rate] [added: 2019] primarily due to the discrete tax [removed: items described below and tax planning initiatives.][added: items.]

The fiscal year [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] 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 [removed: 18, "Income Taxes,"] [added: 8, "Leases,"] of the notes to consolidated financial statements for [removed: further details.][added: information related to the Company's leases.]

| Income from discontinued operations, net of tax | [added: | |] $ | [removed: 4,598] [added: —] | | | [added: | |] $ | [removed: 1,034] [added: 4,598] | | | [added: | |] * | [added: | |]

[removed: Income Attributable] [added: | Income attributable] to [removed: Noncontrolling Interests][added: noncontrolling interests | | | | | | — | | | | | |]

| Income from continuing operations attributable to noncontrolling interests | [added: | |] $ | [removed: 189] [added: 164] | | | [added: | |] $ | [removed: 174] [added: 189] | | | [removed: 9] | [added: | \-13 | |] % |

| Income from discontinued operations attributable to noncontrolling interests | [removed: 24] | | [added: —] | | [removed: 47] | | | | [removed: \-49] [added: 24] | [removed: %] | [added: | | | | * | | |]

The Company engineers, manufactures and commissions 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, 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.

A detailed discussion of the 2019 to 2018 year-over-year changes are not included herein and can be found in the Management's Discussion and Analysis section in the Company's 2019 Annual Report on Form 10-K filed November 21, 2019.

Impact of COVID-19 pandemic

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

In response to this outbreak, the governments of many countries, states, cities and other geographic regions have taken preventative or protective actions, such as imposing restrictions on travel and business operations.

The Company’s affiliates, employees, suppliers, customers and others have been and may continue to be restricted or prevented from conducting normal business activities, including as a result of shutdowns, travel restrictions and other actions that may be requested or mandated by governmental authorities.

Such actions have and may in the future prevent the Company from accessing the facilities of its customers to deliver and install products, provide services and complete maintenance.

In addition, some of the Company’s customers have chosen to delay or abandon projects on which the Company provides products and/or services as a result of such actions.

Although some governments have lifted shutdown orders and similar restrictions, a resurgence in the spread of COVID-19 could cause the reinstitution of such preventive or protective measures.

While a substantial portion of the Company's businesses have been classified as an essential business in jurisdictions in which facility closures have been mandated, some of its facilities have nevertheless been ordered to close, and we can give no assurance that there will not be additional closures in the future or that our businesses will be classified as essential in each of the jurisdictions in which we operate.

In response to the challenges presented by COVID-19, the Company has focused its efforts on preserving the health and safety of its employees and customers, as well as maintaining the continuity of its operations.

The Company has modified its business practices in response to the COVID-19 outbreak, including restricting non-essential employee travel, implementation of remote work protocols, and cancellation of physical participation in meetings, events and conferences.

The Company has also instituted preventive measures at its facilities, including enhanced health and safety protocols, temperature screening, requiring face coverings for all employees and encouraging employees to follow similar protocols when away from work.

The Company has adopted a multifaceted framework to guide its decision making when evaluating the readiness of its facilities to safely reopen and operate, and will continue to monitor and audit its facilities to ensure that they are in compliance with the Company’s COVID-19 safety requirements.

In the second quarter of fiscal 2020, the Company experienced a temporary reduction of its manufacturing and operating capacity in China as a result of government-mandated actions to control the spread of COVID-19.

In the third quarter of fiscal 2020, the Company experienced similar reductions as a result of government-mandated actions in India and Mexico.

During the fourth quarter of fiscal 2020, the Company’s facilities were generally able to operate at normal levels, though its manufacturing capacity in India continues to be reduced as a result of continued lockdowns in the region.

The Company has experienced, and may continue to experience, disruptions or delays in its supply chain as a result of government-mandated actions, which has resulted in higher supply chain costs to the Company in order to maintain the supply of materials and components for its products.

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

While these actions have generally been successful in preserving the Company’s supply chain and manufacturing capacity, the potential resurgence of COVID-19 in various jurisdictions could lead to further disruptions.

The Company experienced a decline in demand and volumes in its global businesses as a result of the impact of efforts to contain the spread of COVID-19.

Specifically, the Company experienced lower demand due to restricted access to customer sites to perform service and installation work as well as reduced discretionary capital spending by the Company's customers.

In response, the Company quickly moved to execute temporary and permanent cost mitigation actions to offset a portion of the impact of COVID-19 on the demand for its products and services, such as deferring or reducing capital expenditures, implementing cost structure changes, short-term furloughing of salaried employees and limiting discretionary spending including corporate expense.

These measures were in addition to the Company's previously disclosed fiscal 2020 restructuring plan.

Although the Company intends that the temporary cost mitigation actions initiated in fiscal 2020 will cease in fiscal 2021, the necessity of future cost mitigation actions will depend on the continued impact of COVID-19, which is highly uncertain.

The global pandemic has also provided the Company with the opportunity to help its customers prepare to re-open by delivering solutions and support that enhance the safety and increase the efficiency of their operations.

The Company has seen an increase in demand for its products and solutions that promote building health and optimize customers’ infrastructure, including thermal cameras, indoor air quality, location-based services for contact tracing and touchless access control.

During the second quarter of fiscal 2020, the Company determined that it had a triggering event requiring assessment of impairment for certain of its indefinite-lived intangible assets due to declines in revenue directly attributable to the COVID-19 pandemic.

During the third quarter of fiscal 2020, the Company determined that it had a triggering event requiring assessment of impairment for certain of its indefinite-lived intangible assets, long-lived assets and goodwill due to declines in revenue and further declines in forecasted cash flows in its North America Retail reporting unit directly attributable to the COVID-19 pandemic.

As a result, the Company recorded an impairment charge of $424 million related to the Company's North America Retail reporting unit's goodwill within restructuring and impairment costs in the consolidated statements of income in the third quarter of fiscal 2020.

There were no indefinite-lived intangibles or goodwill impairments resulting from the fiscal 2020 annual impairment tests performed in the fourth quarter of fiscal 2020.

However, it is possible that future changes in such circumstances, including a more prolonged and/or severe COVID-19 pandemic, would require the Company to record additional non-cash impairment charges.

The Company continues to actively monitor its liquidity position and working capital needs.

The Company believes that, following its implementation of liquidity and cost mitigation actions in fiscal 2020, it remains in a solid overall capital resources and liquidity position that is adequate to meet its projected needs.

As a result, following a review of its liquidity position, the Company resumed its share repurchase program in July 2020, which had been suspended in March 2020.

In September 2020, the Company issued $1.8 billion of senior notes.

A portion of the proceeds, together with cash from operations, were used to repay short-term debt obligations incurred by the Company at the onset of the pandemic to preserve its near-term financial flexibility, as well as repay or redeem other near term-indebtedness.

The extent to which the COVID-19 outbreak continues to impact the Company’s results of operations and financial condition will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity and longevity of COVID-19, the resurgence of COVID-19 in regions that have begun to recover from the initial impact of the pandemic, the impact of COVID-19 on economic activity, and the actions to contain its impact on

public health and the global economy.

The Company provides facility systems and services including comfort and energy management for the residential and non-residential buildings markets, security products and services, and fire detection and suppression products and services.

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

The increase in organic sales related to higher volumes across all segments.

Gross profit increased due to higher volumes across all segments, partially offset by business divestitures and higher operating costs.

| Selling, general and administrative expenses | $ | 6,244 | | | $ | 5,642 | | | 11 | % |

The increase in SG&A was primarily due to net mark-to-market adjustments, a $114 million gain on sale of the Scott Safety business in the Global Products segment in the prior year and a current year environmental charge, partially offset by productivity savings and cost synergies, net of incremental investments, and a current year tax indemnification reserve release.

| Restructuring and impairment costs | $ | 235 | | | $ | 255 | | | \-8 | % |

| Net financing charges | $ | 350 | | | $ | 401 | | | \-13 | % |

| Equity income | $ | 192 | | | $ | 177 | | | 8 | % |

| | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Income tax provision (benefit) | $ | (233 | ) | | $ | 197 | | | * |

* Measure not meaningful

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

Refer to Note 3, "Discontinued Operations," of the notes to consolidated financial statements for further information regarding the Company's discontinued operations.

| Comprehensive income attributable to Johnson Controls | $ | 5,350 | | | $ | 1,689 | | | * |

SEGMENT ANALYSIS

On October 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." The new standard requires the mark-to-market of marketable securities investments previously recorded within accumulated other comprehensive income on the statement of financial position be recorded in the statement of income on a prospective basis beginning as of the adoption date.

As these restricted investments do not relate to the underlying operating performance of its business, the Company’s definition of segment earnings excludes the mark-to-market adjustments beginning in the first quarter of fiscal 2019.

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

| | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | $ | 23,968 | | | $ | 23,400 | | | 2 | % | | $ | 3,041 | | | $ | 3,138 | | | \-3 | % |

| | |

| --- | --- |

unfavorable impact of foreign currency translation ($143 million).

The increase in volumes was primarily attributable to higher building management, HVAC and refrigeration equipment, and specialty products sales.

Segment EBITA:

FISCAL YEAR 2018 COMPARED TO FISCAL YEAR 2017

| Net sales | $ | 23,400 | | | $ | 22,835 | | | 2 | % |

The increase in net sales was due to higher sales ($1,004 million) and the favorable impact of foreign currency translation ($316 million), partially offset by lower sales due to business divestitures ($755 million).

The increase in sales related to higher volumes across all segments.

Excluding the impact of foreign currency translation, business divestitures and nonrecurring purchase accounting adjustments, net sales increased 5% as compared to the prior year.

Refer to the segment analysis below within Item 7 for a discussion of net sales by segment.

| Cost of sales | $ | 15,733 | | | $ | 15,305 | | | 3 | % |

| % of sales | 32.8 | | % | | 33.0 | | % | | | |

Cost of sales increased and gross profit as a percentage of sales decreased by 20 basis points.

Gross profit increased due to prior year nonrecurring purchase accounting adjustments ($68 million), and higher volumes and favorable mix across all segments, partially offset by business divestitures and higher operating costs.

Net mark-to-market adjustments had a net unfavorable year-over-year impact on cost of sales of $45 million ($5 million charge in fiscal 2018 compared to a $40 million gain in fiscal 2017) primarily due to a decrease in U.S. investment returns.

| | |

| --- | --- |

Johnson Controls International plc, headquartered in Cork, Ireland, is a global diversified technology and [removed: multi industrial leader] [added: multi-industrial leader,] serving a wide range of customers in more than 150 countries.

In 2016, Johnson Controls, Inc. and Tyco completed their combination (the [removed: "Merger").][added: "Merger"), combining Johnson Controls portfolio of building efficiency solutions with Tyco’s portfolio of fire and security solutions.]

The Company is a global [removed: market] leader in engineering, [removed: developing,] manufacturing and [removed: installing] [added: commissioning] building products and [removed: systems around the world,] [added: systems,] including [added: residential and commercial] HVAC equipment, [removed: HVAC controls, energy-management] [added: industrial refrigeration] systems, [added: controls,] security systems, fire detection systems and fire suppression solutions.

The Company further serves customers by providing technical [removed: services] [added: services, including maintenance, repair, retrofit and replacement of equipment] (in the HVAC, security and fire-protection space), energy-management consulting and data-driven [added: “smart building” services and] solutions [removed: via] [added: powered by] its [removed: data-enabled business.][added: digital platforms and capabilities.]

The Company sells [added: and installs] its [removed: integrated] [added: commercial HVAC] control systems, security systems, fire-detection systems, equipment and services primarily through its extensive [added: direct channel, consisting of a] global network of sales and service [removed: offices, with operations in approximately 70 countries.][added: offices.]

Significant sales are also generated through global third-party channels, such as distributors of air-conditioning, [removed: security, fire-detection] [added: controls, security] and [removed: commercial HVAC systems.][added: fire-detection products.]

The Company’s large base of current customers leads to significant repeat business for the [added: maintenance,] retrofit and replacement markets.

Trusted [removed: Buildings] [added: building] brands, such as YORK®, Hitachi Air Conditioning, *Metasys*®, Ansul, *Ruskin®*, Titus®, Frick®, PENN®, Sabroe®, Simplex® and Grinnell® give the Company the most diverse portfolio in the building technology industry.

[removed: Competitors for HVAC equipment, security, fire-detection, fire suppression and controls in the residential and non-residential marketplace include many regional, national and international providers; larger] [added: Larger] competitors include Honeywell International, Inc.; Siemens Building Technologies, an operating group of Siemens AG; Schneider Electric SA; Carrier [removed: Corporation, a subsidiary of United Technologies] [added: Global] Corporation; Trane [removed: Incorporated, a subsidiary of Ingersoll-Rand Public Limited Company;] [added: Technologies plc;] Daikin Industries, Ltd.; Lennox International, Inc.; GC Midea Holding Co, Ltd. and Gree Electric Appliances, Inc. In addition to HVAC equipment, the Company competes in a highly fragmented HVAC services [removed: market, which is dominated by local providers.][added: market.]

The loss of any individual contract [added: or customer] would not have a material adverse effect on the Company.

At September 30, [removed: 2019,] [added: 2020,] the backlog was [removed: $9.2] [added: $9.4] billion, of which [removed: $8.9] [added: $9.2] billion [removed: is] [added: was] attributable to the field business.

At September 30, [removed: 2019,] [added: 2020,] remaining performance obligations were $14.4 billion, which is [removed: $5.2] [added: $5.0] billion higher than the Company's backlog of [removed: $9.2] [added: $9.4] billion.

Differences between the Company’s remaining performance obligations and backlog are primarily due [removed: to:][added: to the following:]

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

[removed: | • |] [added: -] 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 [removed: |]

[removed: | • |] [added: -] 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. [removed: |]

Raw materials used by the businesses in connection with their operations, including steel, aluminum, brass, copper, polypropylene and certain flurochemicals used in fire suppression agents, were readily available during fiscal [removed: 2019, and the Company expects such availability to continue.][added: 2020.]

In fiscal [removed: 2020,] [added: 2021,] commodity prices could fluctuate throughout the year and could significantly affect the results of operations.

Laws addressing the protection of the environment [removed: (environmental laws)] and workers’ safety and health [removed: (worker safety laws)] govern the Company’s ongoing global operations.

[removed: Environmental] [added: Regulatory] Capital Expenditures

The Company’s ongoing environmental compliance program [removed: often] [added: also] results in capital expenditures.

[removed: Environmental] [added: Regulatory and environmental] considerations are a part of all significant capital expenditure decisions; however, expenditures in fiscal [removed: 2019] [added: 2020] related solely to [removed: environmental] [added: regulatory] compliance were not material.

It is management’s opinion that the amount of any future capital expenditures related [removed: solely] to [removed: environmental] compliance [added: 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.

The Company's operations are subject to numerous federal, state and local laws and regulations, both within and outside the U.S., in areas such [removed: as:] [added: 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 [added: laws directed specifically toward the alarm and fire suppression industries.]

As of September 30, [removed: 2019,] [added: 2020,] the Company employed approximately [removed: 104,000] [added: 97,000] people worldwide, of which approximately [removed: 39,000] [added: 36,000] were employed in the United States and approximately [removed: 65,000] [added: 61,000] were outside the United States.

Approximately [removed: 22,000] [added: 21,000] employees are covered by collective bargaining agreements or works councils and the Company believes that its relations with the labor unions are generally good.

The Company also makes available, free of charge, its [removed: Ethics Policy,] [added: 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 [removed: form upon request.]

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.

In 2016, Johnson Controls 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.

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, refrigeration, integrated electronic security, and integrated fire detection and suppression systems for commercial, industrial, retail, small business, institutional and governmental customers in North America.

Building Solutions North America also provides energy efficiency solutions and technical services, including inspection, scheduled maintenance, and repair and replacement of mechanical and control systems, as well as data-driven “smart building” solutions, to non-residential building and industrial applications in the North American marketplace.

*Building Solutions EMEA/LA:* Building Solutions EMEA/LA designs, sells, installs, and services HVAC, controls, 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, 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 and produces heating and air conditioning for residential and commercial applications, and markets products and refrigeration systems to replacement and new construction market customers globally.

The Global Products business also designs, manufactures and sells fire protection and security products, including intrusion security, anti-theft devices, and access control and video management systems, for commercial, industrial, retail, residential, small business, institutional and governmental customers worldwide.

Global Products also includes the Johnson Controls-Hitachi joint venture.

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

The Company is also able to leverage its installed base to generate sales for its service business.

The Company provides data-driven services and solutions to create smarter, safer and more sustainable buildings.

In fiscal 2020, the Company launched OpenBlue, a digitally driven suite of connected solutions that delivers impactful sustainability, new occupant experiences, and respectful 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.

In fiscal 2020, approximately 35% of sales originated from product offerings, 38% of sales originated from installations and 27% of sales originated from service offerings.

Competitors for HVAC equipment, security, fire detection, fire suppression and controls in the residential and non-residential marketplace include many regional, national and international providers.

Business Strategy

The Company’s business strategy is to sustain and expand its position as a global diversified technology and multi-industrial leader in HVAC, industrial refrigeration, fire protection, security and building management systems by offering a full spectrum of products and solutions for customer buildings across the globe.

The Company executes its strategy by creating growth platforms, driving operational improvements and creating a high performance culture.

The Company has strong starting 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 prevalent trends in the buildings industry, including sustainability and energy efficiency, urbanization in smarter and safer buildings and infrastructure.

The Company has three strategic priorities:

*Leading position in commercial HVAC equipment:* Leverage the technological advantages created by the Company’s chiller and rooftop platforms and continued investment in emerging areas such as heat pumps, into leading positions in commercial HVAC.

The Company intends to pursue both organic and inorganic opportunities to expand its global commercial HVAC position.

*Leading position in building management systems*: Strengthen the existing portfolio of individual core systems across controls, fire and security while leading the migration towards flatter architectures and convergence, and building out the capabilities to be a leader in smart buildings which result in lower cost, autonomous and higher value customer outcomes.

*Growth enabled by digital*: Integrate digital capabilities into our products, including predictive analytics, digital twin technology and “smart building” applications, to provide differentiated capabilities and drive growth.

Leverage differentiated capabilities including services innovation enabled by digital, tiered service offerings and efficient service delivery, coupled with the company’s large installed base to accelerate service growth.

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 across the globe.

Towards this end, the Company’s field businesses are focused on commercial excellence, technology-enabled services and execution rigor.

The Company expects such availability to continue.

From time to time, the Company takes action to protect its businesses by asserting its intellectual property rights against third-party infringers.

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.

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

Human Capital Management

The Company believes that success of its mission is realized by the engagement and empowerment of its employees to serve and win with clients, everywhere, every day.

The Company creates intelligent buildings, efficient energy solutions and integrated infrastructure that work seamlessly together to deliver on the promise of smart cities and communities.

On November 13, 2018, the Company entered into a Stock and Asset Purchase Agreement (“Purchase Agreement”) with BCP Acquisitions LLC (“Purchaser”).

The Purchaser is a newly-formed entity controlled by investment funds managed by Brookfield Capital Partners LLC.

Pursuant to the Purchase Agreement, on the terms and subject to the conditions therein, the Company agreed to sell, and Purchaser agreed to acquire, the Company’s Power Solutions business for a purchase price of $13.2 billion.

The transaction closed on April 30, 2019 with net cash proceeds of $11.6 billion after tax and transaction-related expenses.

During the first quarter of fiscal 2019, the Company determined that its Power Solutions business met the criteria to be classified as a discontinued operation and, as a result, Power Solutions' historical financial results are reflected in the Company's consolidated financial statements as a discontinued operation, and assets and liabilities were retrospectively reclassified as assets and liabilities held for sale.

Finally, the Company has a strong presence in the North American residential air conditioning and heating systems market and is a global market leader in industrial refrigeration products.

In addition, the new commercial construction market is also important.

In fiscal 2019, approximately 26% of its sales originated from its service offerings.

In the first quarter of fiscal 2019, the Company adopted Accounting Standards Codification ("ASC") 606, “Revenue from Contracts with Customers,” and as a result is required to disclose remaining performance obligations.

| | |

| --- | --- |

laws directed specifically toward the alarm and fire suppression industries.

Employees

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 [removed: 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.]

On October 17, 2019, the court heard oral [removed: argument] [added: arguments] on the motion to dismiss and took the matter under advisement.

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.

| | |

| --- | --- |

[removed: FORM 10-K][added: FORM 10-K]

| ☑ | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For the Fiscal Year [removed: Ended September] [added: Ended September] 30, [removed: 2019][added: 2020]

| ☐ | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For [removed: The] [added: the] Transition Period From [removed: ________] [added: _____] To [removed: ________][added: _____]

Commission File [removed: Number 001-13836][added: Number 001-13836]

| Ireland | | | [added: | | | | | |] 98-0390500 | [added: | |]

| (Jurisdiction of Incorporation) | | | [added: | | | | | |] (I.R.S. Employer Identification No.) | [added: | |]

[removed: Cork, Ireland, T12] [added: | One Albert Quay, Cork, Ireland, T12] X8N6 [added: | | | | | | | | | (353) 21-423-5000 | | |]

[added: |] (Address of [removed: principal executive offices] [added: Principal Executive Offices] and [removed: postal code)][added: Postal Code) | | | | | | | | | (Registrant's Telephone Number) | | |]

| Title of Each Class | [added: | |] Trading Symbol | [added: | |] Name of Each Exchange on Which Registered | [added: | |]

| Ordinary Shares, Par Value $0.01 | [added: | |] JCI | [added: | |] New York Stock Exchange | [added: | |]

| Large accelerated filer | | [added: | | | |] þ | | [added: | | | |] Accelerated filer | | [added: | | | |] ¨ | [added: | |]

| Non-accelerated filer | | [added: | | | |] ¨ | | | | | [added: | Smaller reporting company | | | | | | ☐ | | |]

| Emerging growth company | | [removed: ☐] | | [removed: Smaller reporting company] | | ☐ | [added: | | | | | | | | | | | | | |]

As of March 31, [removed: 2019,] [added: 2020,] the aggregate market value of Johnson Controls International plc Common Stock held by non-affiliates of the registrant was approximately [removed: $33.1] [added: $20.0] billion based on the closing sales price as reported on the New York Stock Exchange.

As of October 31, [removed: 2019, 771,419,761] [added: 2020, 723,907,803] ordinary shares, par value $0.01 per share, were outstanding.

Portions of the definitive Proxy Statement to be delivered to shareholders in connection with the annual general meeting of shareholders to be held on March [removed: 4, 2020] [added: 10, 2021] are incorporated by reference into Part III.

Year [removed: Ended September] [added: Ended September] 30, [removed: 2019][added: 2020]

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| [CAUTIONARY STATEMENTS FOR FORWARD-LOOKING [removed: INFORMATION](#sEFA694B056D152DD9F241BFE49828159)] [added: INFORMATION](#ia888b0e6cc554f529ea823313ac2ca2f_10)] | | [removed: [3](#sEFA694B056D152DD9F241BFE49828159)] | [added: | | | [3](#ia888b0e6cc554f529ea823313ac2ca2f_10) | | |]

| ITEM 1. | [removed: [BUSINESS](#sBB94D239121B5E63BF2DE5DFA2D8BF77)] | [removed: [3](#sBB94D239121B5E63BF2DE5DFA2D8BF77)] | [added: [BUSINESS](#ia888b0e6cc554f529ea823313ac2ca2f_16) | | | [3](#ia888b0e6cc554f529ea823313ac2ca2f_16) | | |]

| ITEM 1A. | [added: | |] [RISK [removed: FACTORS](#s3389C842C9D35705A6743311590BFBBA)] [added: FACTORS](#ia888b0e6cc554f529ea823313ac2ca2f_19)] | [removed: [6](#s3389C842C9D35705A6743311590BFBBA)] | [added: | [9](#ia888b0e6cc554f529ea823313ac2ca2f_19) | | |]

| ITEM 1B. | [added: | |] [UNRESOLVED STAFF [removed: COMMENTS](#s8845D5D2906F5C89822BC0923F74BC1D)] [added: COMMENTS](#ia888b0e6cc554f529ea823313ac2ca2f_22)] | [removed: [21](#s8845D5D2906F5C89822BC0923F74BC1D)] | [added: | [22](#ia888b0e6cc554f529ea823313ac2ca2f_22) | | |]

| ITEM 2. | [removed: [PROPERTIES](#s4B1B895691C25A33B70CAAEC3E736219)] | [removed: [21](#s4B1B895691C25A33B70CAAEC3E736219)] | [added: [PROPERTIES](#ia888b0e6cc554f529ea823313ac2ca2f_25) | | | [22](#ia888b0e6cc554f529ea823313ac2ca2f_25) | | |]

| ITEM 3. | [added: | |] [LEGAL [removed: PROCEEDINGS](#sE3BCD8AD81D352A29CED937A4EAD49C8)] [added: PROCEEDINGS](#ia888b0e6cc554f529ea823313ac2ca2f_28)] | [removed: [21](#sE3BCD8AD81D352A29CED937A4EAD49C8)] | [added: | [22](#ia888b0e6cc554f529ea823313ac2ca2f_28) | | |]

| ITEM 4. | [added: | |] [MINE SAFETY [removed: DISCLOSURES](#s76B93BDEC2E9529B91ABA18AE861832E)] [added: DISCLOSURES](#ia888b0e6cc554f529ea823313ac2ca2f_31)] | [removed: [22](#s76B93BDEC2E9529B91ABA18AE861832E)] | [added: | [23](#ia888b0e6cc554f529ea823313ac2ca2f_31) | | |]

| | [added: | |] [EXECUTIVE OFFICERS OF THE [removed: REGISTRANT](#s5F644519880D5BD9B2F98CD8BC2F8D59)] [added: REGISTRANT](#ia888b0e6cc554f529ea823313ac2ca2f_34)] | [removed: [22](#s5F644519880D5BD9B2F98CD8BC2F8D59)] | [added: | [23](#ia888b0e6cc554f529ea823313ac2ca2f_34) | | |]

| [PART [removed: II.](#s4D0D59A33B6D5C3F85C5C1B264955299)] [added: II.](#ia888b0e6cc554f529ea823313ac2ca2f_37)] | | | [added: | | | | | |]

| ITEM 5. | [added: | |] [MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY [removed: SECURITIES](#sB015F47DF3BC51F9ABD1001DFAC09C01)] [added: SECURITIES](#ia888b0e6cc554f529ea823313ac2ca2f_40)] | [removed: [23](#sB015F47DF3BC51F9ABD1001DFAC09C01)] | [added: | [25](#ia888b0e6cc554f529ea823313ac2ca2f_40) | | |]

| ITEM 6. | [added: | |] [SELECTED FINANCIAL [removed: DATA](#s8874FD2B386F51D5B2CB9417EDA5253D)] [added: DATA](#ia888b0e6cc554f529ea823313ac2ca2f_43)] | [removed: [26](#s8874FD2B386F51D5B2CB9417EDA5253D)] | [added: | [27](#ia888b0e6cc554f529ea823313ac2ca2f_43) | | |]

| ITEM 7. | [added: | |] [MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF [removed: OPERATIONS](#s17448D1E917F5D77AAF1CF2B7F379BB0)] [added: OPERATIONS](#ia888b0e6cc554f529ea823313ac2ca2f_46)] | [removed: [27](#s17448D1E917F5D77AAF1CF2B7F379BB0)] | [added: | [28](#ia888b0e6cc554f529ea823313ac2ca2f_46) | | |]

| ITEM 7A. | [added: | |] [QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET [removed: RISK](#s403FED538BCA5C858B65057EADD8D871)] [added: RISK](#ia888b0e6cc554f529ea823313ac2ca2f_184)] | [removed: [47](#s403FED538BCA5C858B65057EADD8D871)] | [added: | [45](#ia888b0e6cc554f529ea823313ac2ca2f_184) | | |]

| ITEM 8. | [added: | |] [FINANCIAL STATEMENTS AND SUPPLEMENTARY [removed: DATA](#s980A2A7C011F5E9EAB7E89DA87287444)] [added: DATA](#ia888b0e6cc554f529ea823313ac2ca2f_187)] | [removed: [48](#s980A2A7C011F5E9EAB7E89DA87287444)] | [added: | [46](#ia888b0e6cc554f529ea823313ac2ca2f_187) | | |]

| ITEM 9. | [added: | |] [CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL [removed: DISCLOSURE](#s9CCEFE7E2E8D55D4BB199588C6BC5D87)] [added: DISCLOSURE](#ia888b0e6cc554f529ea823313ac2ca2f_319)] | [removed: [118](#s9CCEFE7E2E8D55D4BB199588C6BC5D87)] | [added: | [113](#ia888b0e6cc554f529ea823313ac2ca2f_319) | | |]

| ITEM 9A. | [added: | |] [CONTROLS AND [removed: PROCEDURES](#sB420D9E34E4059CF924DE8689DE861B1)] [added: PROCEDURES](#ia888b0e6cc554f529ea823313ac2ca2f_322)] | [removed: [118](#sB420D9E34E4059CF924DE8689DE861B1)] | [added: | [113](#ia888b0e6cc554f529ea823313ac2ca2f_322) | | |]

| ITEM 9B. | [added: | |] [OTHER [removed: INFORMATION](#s9B5D9B1B4EE85FF9A7FA1F0AF86C91F3)] [added: INFORMATION](#ia888b0e6cc554f529ea823313ac2ca2f_325)] | [removed: [119](#s9B5D9B1B4EE85FF9A7FA1F0AF86C91F3)] | [added: | [114](#ia888b0e6cc554f529ea823313ac2ca2f_325) | | |]

| [PART [removed: III.](#s77FD2081CC1E568FB1F026F327D261C3)] [added: III.](#ia888b0e6cc554f529ea823313ac2ca2f_328)] | | | [added: | | | | | |]

| ITEM 10. | [added: | |] [DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE [removed: GOVERNANCE](#s68A107E931565ED0BA21CB79B7E7F352)] [added: GOVERNANCE](#ia888b0e6cc554f529ea823313ac2ca2f_331)] | [removed: [119](#s68A107E931565ED0BA21CB79B7E7F352)] | [added: | [114](#ia888b0e6cc554f529ea823313ac2ca2f_331) | | |]

| ITEM 11. | [added: | |] [EXECUTIVE [removed: COMPENSATION](#s4A417F31C5625A489AA8E07C062F2883)] [added: COMPENSATION](#ia888b0e6cc554f529ea823313ac2ca2f_334)] | [removed: [119](#s4A417F31C5625A489AA8E07C062F2883)] | [added: | [114](#ia888b0e6cc554f529ea823313ac2ca2f_334) | | |]

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| 4.25% Senior Notes due 2021 | | | JCI21B | | | New York Stock Exchange | | |

| 3.750% Senior Notes due 2021 | | | JCI21C | | | New York Stock Exchange | | |

| 4.625% Notes due 2023 | | | JCI23 | | | New York Stock Exchange | | |

| 1.000% Senior Notes due 2023 | | | JCI23A | | | New York Stock Exchange | | |

| 3.625% Senior Notes due 2024 | | | JCI24A | | | New York Stock Exchange | | |

| 1.375% Notes due 2025 | | | JCI25A | | | New York Stock Exchange | | |

| 3.900% Notes due 2026 | | | JCI26A | | | New York Stock Exchange | | |

| 0.375% Senior Notes due 2027 | | | JCI27 | | | New York Stock Exchange | | |

| 1.750% Senior Notes due 2030 | | | JCI30 | | | New York Stock Exchange | | |

| 1.000% Senior Notes due 2032 | | | JCI32 | | | New York Stock Exchange | | |

| 6.000% Notes due 2036 | | | JCI36A | | | New York Stock Exchange | | |

| 5.70% Senior Notes due 2041 | | | JCI41B | | | New York Stock Exchange | | |

| 5.250% Senior Notes due 2041 | | | JCI41C | | | New York Stock Exchange | | |

| 4.625% Senior Notes due 2044 | | | JCI44A | | | New York Stock Exchange | | |

| 5.125% Notes due 2045 | | | JCI45B | | | New York Stock Exchange | | |

| 6.950% Debentures due December 1, 2045 | | | JCI45A | | | New York Stock Exchange | | |

| 4.500% Senior Notes due 2047 | | | JCI47 | | | New York Stock Exchange | | |

| 4.950% Senior Notes due 2064 | | | JCI64A | | | New York Stock Exchange | | |

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Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting

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

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| [PART I.](#ia888b0e6cc554f529ea823313ac2ca2f_13) | | | | | | | | |

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One Albert Quay

(353) 21-423-5000

(Registrant's telephone number)

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| [PART I.](#sFE74A3CE6056541DB1DCE65B6DA05CD1) | | |

| | [INDEX TO EXHIBITS](#sF9D46E7685F7522E825A8088D2891E66) | [123](#sF9D46E7685F7522E825A8088D2891E66) |

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The Company [removed: conducts its operations] [added: has properties] in approximately [removed: 70] [added: 65] countries throughout the world, with its world headquarters located in Cork, Ireland and its North American operational headquarters located in Milwaukee, Wisconsin USA.

At September 30, [removed: 2019,] [added: 2020,] these properties totaled approximately 44 million square feet of floor space of which 18 million square feet are owned and 26 million square feet are leased.

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Pursuant to General Instruction G(3) of Form 10-K, the following list of executive officers of the Company as of November [removed: 21, 2019] [added: 16, 2020] 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 [removed: 4, 2020.][added: 10, 2021.]

*Tomas Brannemo*, [removed: 48, was elected] [added: 49, has served as] Vice President and President, Building Solutions, Europe, Middle East, Africa and Latin America [removed: in] [added: since] September 2019.

*John Donofrio*, [removed: 57,] [added: 58,] has served as Executive Vice President and General Counsel of the Company since November 15, 2017.

Ellis*, [removed: 63, was elected] [added: 64, has served as] Executive Vice President and Chief Customer & Digital [removed: Officer, effective] [added: Officer since] October 2019.

*Visal Leng*, [removed: 49, was elected] [added: 50, has served as] Vice President and President, Building Solutions, Asia Pacific [removed: in] [added: since] September 2018.

*Lynn Minella*, [removed: 61,] [added: 62,] has served as Executive Vice President and Chief Human Resources Officer since June 2017.

Oliver, [removed: 60*,] [added: 61*,] 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 [added: of Johnson Controls and Tyco] in September 2016.

Mr. Oliver also serves as a Director on the board of Raytheon [removed: Company, a company specializing in cybersecurity] [added: Technologies, an aerospace] and defense [removed: throughout the world.][added: company.]

[removed: Rushing*, 53,] [added: *Nathan Manning*, 44,] was elected Vice President and President, Building Solutions, North America in [removed: November 2016.][added: October 2020.]

Stief*, [removed: 63,] [added: 64,] has served as Vice Chairman and Chief Financial Officer since November 2019.

*Robert VanHimbergen,* [removed: 43,] [added: 44,] has served as Vice President and Corporate Controller since December 2017.

[removed: His most recent position was serving as the Chief] Financial Officer of Yanfeng Automotive Interiors, an Adient joint venture, formed in 2015.

Williams,* [removed: 58,] [added: 59,] has served as Vice President and President, Global Products, Building Technologies and Solutions since July 2019.

*Olivier Leonetti,* 55, was elected Executive Vice President and Chief Financial Officer-Elect in September 2020 and will assume the role of Chief Financial Officer and Principal Financial Officer on the date immediately following the filing of this Annual Report on Form 10-K.

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.

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.

*Ganesh Ramaswamy, 52,* 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.

As previously disclosed, Mr. Leonetti will succeed Mr. Stief as the Company’s Chief Financial Officer and Principal Financial Officer on the date immediately following the filing of this Annual Report on Form 10-K.

His most recent position was serving as the Chief

*Rodney M.

From 2015 to November 2016 he served as Global Vice President and General Manager, Global Products - Direct Expansion, overseeing the integration of Johnson Controls, Inc.’s joint venture with Hitachi Air Conditioning.

Prior thereto, from 2013 to 2015 he was Vice President and General Manager, Products and Distribution North America and from 2009 to 2013 he was Vice President and General Manager of Unitary Products.

Mr. Rushing first joined Johnson Controls, Inc. in 1990, and has held a number of roles of increasing responsibility in its field and product organization.

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| [removed: Title of Class] | [added: | |] Number of Record Holders [removed: as of September 30, 2019] | [added: | |]

| Ordinary Shares, $0.01 par value | [removed: 35,367] | [added: | 33,602 | | |]

In March 2019, the Company's Board of Directors approved an [removed: additional] $8.5 billion increase to its existing share repurchase authorization, subject to the completion of the previously announced sale of the Company's Power Solutions business, which closed on April 30, 2019.

As of September 30, [removed: 2019,] [added: 2020,] approximately [removed: $4.6] [added: $2.4] billion remains available under the share repurchase program.

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, [removed: 2019.][added: 2020.]

| Period | [added: | |] Total Number of Shares Purchased | | | [added: | | |] Average Price Paid per Share | | | | [added: | |] Total Number of Shares Purchased as Part of the Publicly Announced Program | | | [added: | | |] Approximate Dollar Value of Shares that May Yet be Purchased under the Programs | | |

During the three months ended September 30, [removed: 2019,] [added: 2020,] acquisitions of shares by the Company from certain employees in order to satisfy employee tax withholding requirements in connection with the vesting of restricted shares were not material.

This graph assumes the investment of $100 on September 30, [removed: 2014] [added: 2015] and the reinvestment of all dividends since that date.

[removed: ][added: ]

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| --- | --- | --- | --- | --- | --- |

| Title of Class | | | as of October 31, 2020 | | |

During fiscal year 2020, the Company repurchased approximately $2.2 billion of its ordinary shares on an open market.

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| 7/1/20 - 7/31/20 | | | | | | | | | | | | | | | | | | | | | | | |

| Purchases by Company | | | 7,582,369 | | | | | | $ | 35.74 | | | | | 7,582,369 | | | | | | $ | 2,827,957,020 | |

| 8/1/20 - 8/31/20 | | | | | | | | | | | | | | | | | | | | | | | |

| Purchases by Company | | | 4,606,669 | | | | | | 39.62 | | | | | | 4,606,669 | | | | | | 2,645,430,057 | | |

| 9/1/20 - 9/30/20 | | | | | | | | | | | | | | | | | | | | | | | |

| Purchases by Company | | | 6,824,919 | | | | | | 41.54 | | | | | | 6,824,919 | | | | | | 2,361,931,131 | | |

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.

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| | | Dividends | | | | | | |

| | | 2019 | | | | 2018 | | |

| First Quarter | | $ | 0.26 | | | $ | 0.26 | |

| Second Quarter | | 0.26 | | | | 0.26 | | |

| Third Quarter | | 0.26 | | | | 0.26 | | |

| Fourth Quarter | | 0.26 | | | | 0.26 | | |

| Year | | $ | 1.04 | | | $ | 1.04 | |

In November 2018, the Company's Board of Directors approved a $1 billion increase to its existing share repurchase authorization.

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 publicly announced "modified Dutch auction" tender offer and $1,948 million of its ordinary shares were purchased on an open market.

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| 7/1/19 - 7/31/19 | | | | | | | | | | | | | |

| Purchases by Company | 7,004,690 | | | $ | 41.39 | | | 7,004,690 | | | $ | 5,136,315,065 | |

| 8/1/19 - 8/31/19 | | | | | | | | | | | | | |

| Purchases by Company | 7,225,000 | | | 42.08 | | | | 7,225,000 | | | 4,832,308,943 | | |

| 9/1/19 - 9/30/19 | | | | | | | | | | | | | |

| Purchases by Company | 6,130,000 | | | 43.43 | | | | 6,130,000 | | | 4,566,076,675 | | |

The Company’s transfer agent’s contact information is as follows:

EQ Shareowner Services

P.O. Box 64874

St. Paul, MN 55164-0874

(877) 602-7397

The following selected financial data reflects the results of operations, financial position data and ordinary share information for the fiscal years ended September 30, [removed: 2015] [added: 2016] through September 30, [removed: 2019] [added: 2020] (dollars in millions, except per share data).

| | [added: | |] Year ended September 30, | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| | [added: | | 2020 | | | | | |] 2019 | | | | [added: | |] 2018 | | | | [removed: 2017] | | [added: 2017] | | [removed: 2016] | | | | [removed: 2015] [added: 2016] | | |

| OPERATING RESULTS | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Net sales | [added: | |] $ | [removed: 23,968] [added: 22,317] | | | [added: | |] $ | [removed: 23,400] [added: 23,968] | | | [added: | |] $ | [removed: 22,835] [added: 23,400] | | | [added: | |] $ | [removed: 14,184] [added: 22,835] | | | [added: | |] $ | [removed: 10,510] [added: 14,184] | |

| Segment EBITA (1) | [added: | | 2,948 | | | | | |] 3,041 | | | | [added: | |] 3,138 | | | | [removed: 2,831] | | [added: 2,831] | | [removed: 1,427] | | | | [removed: 1,086] [added: 1,427] | | |

| Income (loss) from continuing operations attributable to Johnson Controls (6) | [added: | | 631 | | | | | |] 1,100 | | | | [added: | |] 1,175 | | | | [removed: 672] | | [added: 672] | | [removed: (10] | | [removed: )] | | [removed: 42] [added: (10)] | | |

| Net income (loss) attributable to Johnson Controls | [added: | | 631 | | | | | |] 5,674 | | | | [added: | |] 2,162 | | | | [removed: 1,611] | | [added: 1,611] | | [removed: (868] | | [removed: )] | | [removed: 1,563] [added: (868)] | | |

| Earnings (loss) per share from continuing operations (6) | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Basic | [added: | |] $ | [removed: 1.26] [added: 0.84] | | | [added: | |] $ | [removed: 1.27] [added: 1.26] | | | [added: | |] $ | [removed: 0.72] [added: 1.27] | | | [added: | |] $ | [removed: (0.01] [added: 0.72] | [removed: )] | | [added: | |] $ | [removed: 0.06] [added: (0.01)] | |

| Diluted | [added: | | 0.84 | | | | | |] 1.26 | | | | [added: | |] 1.26 | | | | [removed: 0.71] | | [added: 0.71] | | [removed: (0.01] | | [removed: )] | | [removed: 0.06] [added: (0.01)] | | |

| Return on average shareholders’ equity attributable to Johnson Controls (2) (6) | [removed: 5] | | [added: 3 | |] % | | [removed: 6] | | [added: 5 | |] % | | [removed: 3] | | [added: 6 | |] % | | [removed: —] | | [added: 3 | |] % | | [added: | |] — | | % |

| Capital expenditures | [added: | |] $ | [removed: 586] [added: 443] | | | [added: | |] $ | [removed: 645] [added: 586] | | | [added: | |] $ | [removed: 760] [added: 645] | | | [added: | |] $ | [removed: 491] [added: 760] | | | [added: | |] $ | [removed: 418] [added: 491] | |

| Depreciation and amortization | [added: | | 822 | | | | | |] 825 | | | | [added: | |] 824 | | | | [removed: 919] | | [added: 919] | | [removed: 382] | | | | [removed: 240] [added: 382] | | |

| Number of employees | [added: | | 97,000 | | | | | |] 104,000 | | | | [added: | |] 122,000 | | | | [removed: 121,000] | | [added: 121,000] | | [removed: 209,000] | | | | [removed: 139,000] [added: 209,000] | | |

| FINANCIAL POSITION | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Working capital (as defined) (3) | [added: | |] $ | [removed: 975] [added: 147] | | | [added: | |] $ | [removed: 471] [added: 975] | | | [added: | |] $ | [removed: 449] [added: 471] | | | [added: | |] $ | [removed: (619] [added: 449] | [removed: )] | | [added: | |] $ | [removed: (220] [added: (619)] | [removed: )] |

| Total assets | [added: | | 40,815 | | | | | |] 42,287 | | | | [added: | |] 48,797 | | | | [removed: 51,884] | | [added: 51,884] | | [removed: 63,179] | | | | [removed: 29,590] [added: 63,179] | | |

| Long-term debt | [added: | | 7,526 | | | | | |] 6,708 | | | | [added: | |] 9,623 | | | | [removed: 11,885] | | [added: 11,885] | | [removed: 10,966] | | | | [removed: 5,237] [added: 10,966] | | |

| Total debt | [added: | | 7,819 | | | | | |] 7,219 | | | | [added: | |] 10,930 | | | | [removed: 13,465] | | [added: 13,465] | | [removed: 12,636] | | | | [removed: 6,073] [added: 12,636] | | |

| Shareholders' equity attributable to Johnson Controls | [added: | | 17,447 | | | | | |] 19,766 | | | | [added: | |] 21,164 | | | | [removed: 20,447] | | [added: 20,447] | | [removed: 24,118] | | | | [removed: 10,335] [added: 24,118] | | |

| Total debt to capitalization (4) | [removed: 27] | | [added: 31 | |] % | | [removed: 34] | | [added: 27 | |] % | | [removed: 40] | | [added: 34 | |] % | | [removed: 34] | | [added: 40 | |] % | | [removed: 37] | | [added: 34 | |] % |

| Net book value per share (5) | [added: | |] $ | [removed: 25.42] [added: 24.03] | | | [added: | |] $ | [removed: 22.88] [added: 25.42] | | | [added: | |] $ | [removed: 22.03] [added: 22.88] | | | [added: | |] $ | [removed: 25.77] [added: 22.03] | | | [added: | |] $ | [removed: 15.96] [added: 25.77] | |

| ORDINARY SHARE INFORMATION | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Dividends per share | [added: | |] $ | 1.04 | | | [added: | |] $ | 1.04 | | | [added: | |] $ | [removed: 1.00] [added: 1.04] | | | [added: | |] $ | [removed: 1.16] [added: 1.00] | | | [added: | |] $ | [removed: 1.04] [added: 1.16] | |

| Market prices | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| High | [added: | |] $ | [removed: 44.65] [added: 44.82] | | | [added: | |] $ | [removed: 42.60] [added: 44.65] | | | [added: | |] $ | [removed: 46.17] [added: 42.60] | | | [added: | |] $ | [removed: 48.97] [added: 46.17] | | | [added: | |] $ | [removed: 54.52] [added: 48.97] | |

| Low | [added: | | 22.78 | | | | | |] 28.30 | | | | [added: | |] 32.89 | | | | [removed: 36.74] | | [added: 36.74] | | [removed: 30.30] | | | | [removed: 38.48] [added: 30.30] | | |

| Weighted average shares (in millions) | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Basic | [added: | | 751.0 | | | | | |] 870.2 | | | | [added: | |] 925.7 | | | | [removed: 935.3] | | [added: 935.3] | | [removed: 667.4] | | | | [removed: 655.2] [added: 667.4] | | |

| Diluted | [added: | | 753.6 | | | | | |] 874.3 | | | | [added: | |] 931.7 | | | | [removed: 944.6] | | [added: 944.6] | | [removed: 672.6] | | | | [removed: 661.5] [added: 672.6] | | |

| Number of shareholders | [added: | | 33,776 | | | | | |] 35,367 | | | | [added: | |] 37,836 | | | | [removed: 40,260] | | [added: 40,260] | | [removed: 41,299] | | | | [removed: 35,425] [added: 41,299] | | |

[removed: | (1) | Segment] [added: (1)Segment] earnings before interest, taxes and amortization ("EBITA") is calculated as 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. [removed: Refer to Note 19, “Segment Information,” of the notes to consolidated financial statements for a reconciliation of segment EBITA to income from continuing operations before income taxes. |]

[removed: | (2) | Return] [added: (2)Return] on average shareholders’ equity attributable to Johnson Controls represents income from continuing operations attributable to Johnson Controls divided by average shareholders’ equity attributable to Johnson Controls. [removed: |]

[removed: | (3) | Working] [added: (3)Working] capital is defined as current assets less current liabilities, excluding cash, short-term debt, the current portion of long-term debt, and the current portions of assets and liabilities held for sale. [removed: |]

[removed: | (4) | Total] [added: (4)Total] debt to total capitalization represents total debt divided by the sum of total debt and shareholders’ equity attributable to Johnson Controls. [removed: |]

[removed: | (5) | Net] [added: (5)Net] book value per share represents shareholders’ equity attributable to Johnson Controls divided by the number of shares outstanding at the end of the period. [removed: |]

[removed: | (6) | Income] [added: (6)Income] (loss) from continuing operations attributable to Johnson Controls includes [added: $783 million,] $235 million, $255 million, $347 [removed: million, $222] million and [removed: $204] [added: $222] million of significant restructuring and impairment costs in fiscal year [removed: 2019, 2018, 2017, 2016 and 2015, respectively. It also includes $618 million, $(24) million, $(384) million, $341 million and $368 million of net mark-to-market losses (gains) in fiscal year] [added: 2020,] 2019, 2018, [removed: 2017, 2016] [added: 2017] and [removed: 2015,] [added: 2016,] respectively. [removed: The preceding amounts are stated on a pre-tax basis. |]

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Refer to Note 19, “Segment Information,” of the notes to consolidated financial statements for a reconciliation of segment EBITA to income from continuing operations before income taxes.

It also includes $274 million, $618 million, $(24) million, $(384) million and $341 million of net mark-to-market losses (gains) in fiscal year 2020, 2019, 2018, 2017 and 2016, respectively.

The preceding amounts are stated on a pre-tax basis.

Certain amounts have been revised to reflect the retrospective application of the classification of the Power Solutions business as a discontinued operation for all periods presented.

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| | [added: | |] Page | [added: | |]

| [Report of Independent Registered Public Accounting [removed: Firm](#sB8DFECB7C8D752AAB17AB983D3A07C2E)] [added: Firm](#ia888b0e6cc554f529ea823313ac2ca2f_190)] | [removed: [49](#sB8DFECB7C8D752AAB17AB983D3A07C2E)] | [added: | [47](#ia888b0e6cc554f529ea823313ac2ca2f_190) | | |]

| [Consolidated Statements of Income for the years ended September 30, [removed: 201](#sD7E8FB9B514A5D9B82CCBA87DACAA1D2)9, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018](#ia888b0e6cc554f529ea823313ac2ca2f_193)] | [removed: [52](#sD7E8FB9B514A5D9B82CCBA87DACAA1D2)] | [added: | [50](#ia888b0e6cc554f529ea823313ac2ca2f_193) | | |]

| [removed: Consolidated] [added: [Consolidated] Statements of Comprehensive Income (Loss) for the years ended September 30, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018](#ia888b0e6cc554f529ea823313ac2ca2f_199)] | [removed: [53](#sCE5191A9A8345C7FAC06D6FFB8A54EFB)] | [added: | [51](#ia888b0e6cc554f529ea823313ac2ca2f_199) | | |]

| [Consolidated Statements of Financial Position as of September 30, [removed: 201](#s9CDB806442765E8EA5EAEFA0EC286DB7)9] [added: 2020] and [removed: 2018] [added: 2019](#ia888b0e6cc554f529ea823313ac2ca2f_202)] | [removed: [54](#s9CDB806442765E8EA5EAEFA0EC286DB7)] | [added: | [52](#ia888b0e6cc554f529ea823313ac2ca2f_202) | | |]

| [Consolidated Statements of Cash Flows for the years ended September 30, [removed: 201](#s489D6218CDDC57C8B8A5F4C3E51CB828)9, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018](#ia888b0e6cc554f529ea823313ac2ca2f_208)] | [removed: [55](#s489D6218CDDC57C8B8A5F4C3E51CB828)] | [added: | [53](#ia888b0e6cc554f529ea823313ac2ca2f_208) | | |]

| [removed: Consolidated] [added: [Consolidated] Statements of Shareholders' Equity Attributable to Johnson Controls Ordinary Shareholders for the years ended September 30, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018](#ia888b0e6cc554f529ea823313ac2ca2f_211)] | [removed: [56](#s8FEB2929B1E554D29C34C5274E4F9BCB)] | [added: | [54](#ia888b0e6cc554f529ea823313ac2ca2f_211) | | |]

| [Notes to Consolidated Financial [removed: Statements](#s64AAE884F6A85516A260E02155C55F88)] [added: Statements](#ia888b0e6cc554f529ea823313ac2ca2f_217)] | [removed: [57](#s64AAE884F6A85516A260E02155C55F88)] | [added: | [55](#ia888b0e6cc554f529ea823313ac2ca2f_217) | | |]

| [Schedule II - Valuation and Qualifying [removed: Accounts](#s43ABE32964EF5899BECE1407058DDAA8)] [added: Accounts] for the years ended September 30, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018](#ia888b0e6cc554f529ea823313ac2ca2f_316)] | [removed: [118](#s43ABE32964EF5899BECE1407058DDAA8)] | [added: | [113](#ia888b0e6cc554f529ea823313ac2ca2f_316) | | |]

[removed: ][added: ]

We have audited the accompanying consolidated statements of financial position of Johnson Controls International plc and its subsidiaries (the “Company”) as of September 30, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the related consolidated statements of income, [added: of] comprehensive income (loss), [added: of] shareholders’ equity attributable to Johnson Controls ordinary shareholders, and [added: of] cash flows for each of the three years in the period ended September 30, [removed: 2019,] [added: 2020,] 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, [removed: 2019,] [added: 2020,] 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, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the results of its operations and its cash flows for each of the three years in the period ended September 30, [removed: 2019] [added: 2020] 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, [removed: 2019,] [added: 2020,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the COSO.

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 [removed: on the assessed risk.]

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 [added: accepted accounting principles.]

As described in [removed: Notes 1 and] [added: Note] 7 to the consolidated financial statements, the Company’s consolidated goodwill balance was [removed: $18,178] [added: $17,932] million as of September 30, [removed: 2019.][added: 2020.]

Management reviews goodwill for impairment [removed: as of July 31 of each] [added: during the fourth] fiscal [removed: year,] [added: quarter] or more frequently if events or changes in circumstances indicate the asset might be impaired.

The estimated fair value [removed: of each reporting unit, using a fair value method based on management’s judgments and assumptions,] is [added: then] compared with the carrying amount of each reporting unit, including recorded goodwill.

In estimating the fair value of [removed: each] [added: the] reporting [removed: unit,] [added: units,] management uses multiples of earnings based on the average of published multiples of earnings of comparable entities with similar operations and economic [removed: characteristics, applied] [added: characteristics and applies the multiples] to the Company’s average of historical and future financial [removed: results.][added: results for each reporting unit.]

In addition, the audit effort involved the use of professionals with specialized skill and [removed: knowledge to assist in performing these procedures and evaluating the audit evidence obtained.][added: knowledge.]

[removed: The procedures included testing the effectiveness of controls relating to] management’s goodwill impairment assessment, including controls over the fair value of the Company’s reporting units.

These procedures also included, among others, (i) testing management’s process for developing the fair value estimates, (ii) evaluating the appropriateness of the multiples of earnings [added: model and the discounted cash flow] model, [added: as applicable,] (iii) testing the completeness, accuracy, and relevance of underlying data used in the [removed: model,] [added: models,] and [added: (iv)] evaluating the significant assumptions used by [removed: management, including] [added: management related to] the multiples of earnings of comparable entities with similar operations and economic [removed: characteristics.][added: characteristics, revenue growth rates, discount rates and long-term growth rates.]

[removed: Evaluating] [added: In those instances where management used discounted cash flow analyses, evaluating] management’s assumptions related to [removed: multiples of earnings] [added: the revenue growth rates, discount rates and long-term growth rates] involved evaluating whether the assumptions used by management were reasonable considering (i) [added: current and past financial performance of] the [removed: consistency with] [added: reporting units, (ii)] external [removed: market and] [added: market,] industry [added: and macroeconomic] data, and [removed: (ii)] [added: (iii)] whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of [removed: the Company’s multiples of earnings model] [added: management’s fair value models] and [removed: certain] [added: management’s] significant [removed: assumptions, including] [added: assumptions related to the] multiples of earnings of comparable entities with similar operations and economic [removed: characteristics.][added: characteristics, discount rates used in the weighted-average cost of capital, and long-term growth rates.]

As described in Note 18 to the consolidated financial statements, the Company recorded uncertain tax position liabilities totaling [removed: $2,451] [added: $2,528] million, primarily as a non-current liability, as of September 30, [removed: 2019.][added: 2020.]

The Company is subject to income taxes in the U.S. and [removed: in] numerous foreign jurisdictions.

[removed: the Company has recorded] [added: As disclosed by management,] a liability for [removed: its] [added: the] best estimate of the probable loss on certain of the tax [removed: positions.][added: positions has been recorded by management.]

The principal considerations for our determination that performing procedures relating to uncertain tax positions is a critical audit matter are [removed: there was] [added: (i) the] significant judgment by management in identifying and recording the estimated probable loss for each uncertain tax [removed: position.][added: position; this, in turn, led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate the timely identification and accurate measurement of uncertain tax positions, (ii) 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 (iii) the audit effort involved the use of professionals with specialized skill and knowledge.]

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 [removed: each] uncertain tax [removed: position.][added: positions.]

These procedures also included, among others, (i) [added: for a sample of uncertain tax positions by jurisdiction,] testing the information used in the calculation of the estimate of probable loss [removed: for uncertain tax positions, (ii)] [added: and] testing the calculation of the [removed: liability for uncertain tax positions by jurisdiction, (iii)] [added: estimate of probable loss, (ii)] testing the completeness of management’s assessment of the identification of uncertain tax positions, and [removed: (iv)] [added: (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, [added: and] the application of relevant tax [removed: laws, and estimated interest and penalties.][added: laws.]

| /s/ PricewaterhouseCoopers LLP | [added: | |]

| Milwaukee, Wisconsin | [added: | |]

| | [added: | |] Year Ended September 30, | | | | | | | | | | | [added: | | | |]

| (in millions, except per share data) | [removed: 2019] | | [added: 2020] | | [removed: 2018] | | | | [removed: 2017] [added: 2019] | | | [added: | | | 2018 | | |]

| Net sales | | | | | | | | | | | | [added: | | | | | |]

| Products and systems | [added: | |] $ | [removed: 17,711] [added: 16,253] | | | [added: | |] $ | [removed: 17,332] [added: 17,711] | | | [added: | |] $ | [removed: 16,762] [added: 17,332] | |

| Services | [removed: 6,257] | | [added: 6,064] | | [removed: 6,068] | | | | [removed: 6,073] [added: 6,257] | | | [added: | | | 6,068 | | |]

| | [removed: 23,968] | | [added: 22,317] | | [removed: 23,400] | | | | [removed: 22,835] [added: 23,968] | | | [added: | | | 23,400 | | |]

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accepted accounting principles.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment is a critical audit matter are there was significant judgment by management when developing the fair value of each reporting unit.

This, in turn, led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s significant assumptions, including multiples of earnings of comparable entities with similar operations and economic characteristics.

As described by management,

This, in turn, led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate the timely identification and accurate measurement of uncertain tax positions.

Also, the evaluation of audit evidence available to support the tax liabilities for uncertain tax positions is complex and required significant auditor judgment as the nature of the evidence is often highly subjective.

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| November 21, 2019 |

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

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| Cash paid to prior acquisitions | — | | | | — | | | | (75 | | ) |

| At September 30, 2016 | $ | 24,118 | | | $ | 9 | | | $ | 16,105 | | | $ | 9,177 | | | $ | (20 | ) | | $ | (1,153 | ) |

| Spin-off of Adient | (4,038 | | ) | | — | | | | — | | | | (4,619 | | ) | | — | | | | 581 | | |

The Company creates intelligent buildings, efficient energy solutions and integrated infrastructure that work seamlessly together to deliver on the promise of smart cities and communities.

In the fourth quarter of fiscal 2016, Johnson Controls, Inc. ("JCI Inc.") and Tyco International plc ("Tyco") completed their combination, with JCI Inc. merging with a wholly owned, indirect subsidiary of Tyco (the "Merger").

Following the Merger, Tyco changed its name to “Johnson Controls International plc” and JCI Inc. is a wholly-owned subsidiary of Johnson Controls International plc.

The Merger was accounted for as a reverse acquisition using the acquisition method of accounting in accordance with Accounting Standards Codification ("ASC") 805, "Business Combinations." JCI Inc. was the accounting acquirer for financial reporting purposes.

Accordingly, the historical consolidated financial statements of JCI Inc. for periods prior to this transaction are considered to be the historic financial statements of the Company.

On November 13, 2018, the Company entered into a Stock and Asset Purchase Agreement (“Purchase Agreement”) with BCP Acquisitions LLC (“Purchaser”).

The Purchaser is a newly-formed entity controlled by investment funds managed by Brookfield Capital Partners LLC.

Pursuant to the Purchase Agreement, on the terms and subject to the conditions therein, the Company agreed to sell, and Purchaser agreed to acquire, the Company’s Power Solutions business for a purchase price of $13.2 billion.

The transaction closed on April 30, 2019 with net cash proceeds of $11.6 billion after tax and transaction-related expenses.

Finally, the Company has a strong presence in the North American residential air conditioning and heating systems market and is a global market leader in industrial refrigeration products.

or unwillingness of customers to make required payments.

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.

Refer to Note 17, "Impairment of

Installation

During the first quarter of fiscal 2019, the Company determined that its Power Solutions business met the criteria to be classified as a discontinued operation, which required retrospective application to financial information for all periods presented.

In November 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force)." The ASU requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.

ASU No. 2016-18 was effective retrospectively for the quarter ended December 31, 2018.

As of September 30, 2016, the Company had approximately $2.0 billion of restricted cash related to restricted proceeds deposited into escrow from the issuance of $2.0 billion aggregate principal of unsecured, unsubordinated notes by Adient Global Holdings Ltd., that were released upon the completion of the Adient spin-off in October 2016.

Upon adoption of ASU 2016-18, the release of the restricted proceeds are presented in the fiscal 2017 consolidated statements of cash flow as a financing activity outflow from discontinued operations.

The remaining impact of this guidance did not have a significant impact on the Company's consolidated financial statements for the periods presented, as the restricted cash balance for the fiscal years ended September 30, 2019 and 2018 was $16 million and $15 million, respectively.

In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments." ASU No. 2016-15 provides clarification guidance on eight specific cash flow presentation issues in order to reduce the diversity in practice.

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Based on this evaluation, the Company’s management has concluded that, as of September 30, [removed: 2019,] [added: 2020,] the Company’s internal control over financial reporting was effective.

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, [removed: 2019] [added: 2020] as stated in its report which is included in Item 8 of this Form 10-K and is incorporated by reference herein.

There have been no changes in the Company’s internal control over financial reporting during the quarter ended September 30, [removed: 2019,] [added: 2020,] that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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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, [removed: 2019)] [added: 2020)] for its annual meeting to be held on March [removed: 4, 2020,] [added: 10, 2021,] are incorporated by reference in this Form 10-K.

CFO Succession

As previously disclosed in the Company's Current Report on Form 8-K filed on August 18, 2020, Olivier Leonetti will succeed Brian Stief as the Company's Chief Financial Officer and Principal Financial Officer on the date immediately following the date of the filing of this Annual Report on Form 10-K.

Mr. Stief will remain in the role of Vice Chairman until his retirement.

None.

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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 [removed: stockholders] [added: shareholders] to be held on March [removed: 4, 2020] [added: 10, 2021] (the “Johnson Controls Proxy Statement”) and is incorporated by reference herein.

The information required by Items 405, 407(c)(3), (d)(4) and (d)(5) of Regulation S-K is contained under the captions [removed: “Section 16(a) Beneficial Ownership Reporting Compliance,”] “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.

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 [removed: the] [added: Values First, The Johnson Controls] Code of Ethics.

The Code of Ethics is available on the Company’s website at www.valuesfirst.johnsoncontrols.com.