Equity and Noncontrolling Interests (Notes)

12 Months Ended

Sep. 30, 2020

Stockholders' Equity Note [Abstract]

Dividends

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

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

Share Repurchase Program

In March 2019, the Company's Board of Directors approved an $8.5 billion increase to its existing share repurchase authorization, subject to the completion of the previously announced sale of the Company's Power Solutions business, which closed on April 30, 2019. The share repurchase program does not have an expiration date and may be amended or terminated by the Board of Directors at any time without prior notice. As of September 30, 2020, approximately $2.4 billion remains available under the share repurchase program.

During fiscal year 2020, the Company repurchased and retired approximately $2,204 million of its ordinary shares. During fiscal year 2019, the Company repurchased approximately $5,983 million of its ordinary shares, of which $4,035 million of its ordinary shares were purchased through a publicly announced "modified Dutch auction" tender offer and immediately retired, and $1,948 million of its ordinary shares were purchased on an open market and retired in the fourth quarter of fiscal 2019. During fiscal year 2018, the Company repurchased approximately $300 million of its ordinary shares.

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


	Equity Attributable to Johnson Controls International plc		Equity Attributable to Noncontrolling Interests		Total Equity
At September 30, 2017	$	20,447	$	920	$	21,367
Total comprehensive income (loss):
Net income	2,162		186		2,348
Foreign currency translation adjustments	(458)		(22)		(480)
Realized and unrealized losses on derivatives	(19)		(1)		(20)
Realized and unrealized gains on marketable securities	4		—		4
Other comprehensive loss	(473)		(23)		(496)
Comprehensive income	1,689		163		1,852
Other changes in equity:
Cash dividends - ordinary shares ($1.04 per share)	(968)		—		(968)
Dividends attributable to noncontrolling interests	—		(43)		(43)
Repurchases of ordinary shares	(300)		—		(300)
Change in noncontrolling interest share	—		23		23
Adoption of ASU 2016-09	179		—		179
Reclassification from redeemable noncontrolling interest	—		231		231
Other, including options exercised	117		—		117
At September 30, 2018	21,164		1,294		22,458
Total comprehensive income (loss):
Net income	5,674		213		5,887
Foreign currency translation adjustments	(325)		(17)		(342)
Realized and unrealized gains (losses) on derivatives	7		(1)		6
Pension and postretirement plans	(6)		—		(6)
Other comprehensive loss	(324)		(18)		(342)
Comprehensive income	5,350		195		5,545
Other changes in equity:
Cash dividends - ordinary shares ($1.04 per share)	(887)		—		(887)
Dividends attributable to noncontrolling interests	—		(132)		(132)
Repurchases and retirements of ordinary shares	(5,983)		—		(5,983)
Divestiture of Power Solutions	483		(295)		188
Adoption of ASC 606	(45)		—		(45)
Adoption of ASU 2016-16	(546)		—		(546)
Other, including options exercised	230		1		231
At September 30, 2019	19,766		1,063		20,829
Total comprehensive income:
Net income	631		164		795
Foreign currency translation adjustments	7		18		25
Realized and unrealized gains on derivatives	4		4		8
Pension and postretirement plans	8		—		8
Other comprehensive income	19		22		41
Comprehensive income	650		186		836
Other changes in equity:
Cash dividends - ordinary shares ($1.04 per share)	(780)		—		(780)
Dividends attributable to noncontrolling interests	—		(114)		(114)
Repurchases and retirements of ordinary shares	(2,204)		—		(2,204)
Change in noncontrolling interest share	(83)		(49)		(132)
Adoption of ASC 842	(5)		—		(5)
Other, including options exercised	103		—		103
At September 30, 2020	$	17,447	$	1,086	$	18,533

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

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

The Company adopted ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" effective October 1, 2017. As a result, the Company recognized deferred tax assets of $179 million related to certain operating loss carryforwards resulting from the exercise of employee stock options and restricted stock vesting on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of October 1, 2017.

The Company consolidates certain subsidiaries in which the noncontrolling interest party has within their control the right to require the Company to redeem all or a portion of its interest in the subsidiary. The redeemable noncontrolling interests are reported at their estimated redemption value. Any adjustment to the redemption value impacts retained earnings but does not impact net income. Redeemable noncontrolling interests which are redeemable only upon future events, the occurrence of which is not currently probable, are recorded at carrying value. As of September 30, 2020 and 2019, the Company does not have any subsidiaries for which the noncontrolling interest party has within their control the right to require the Company to redeem any portion of its interests.

The following schedules present changes in the redeemable noncontrolling interests (in millions):


	Year Ended September 30, 2018
Beginning balance, September 30	$	211
Net income	35
Foreign currency translation adjustments	(3)
Realized and unrealized losses on derivatives	(9)
Dividends	(3)
Reclassification to noncontrolling interest	(231)

Ending balance, September 30	$	—

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


	Year Ended September 30,
	2020		2019		2018

Foreign currency translation adjustments
Balance at beginning of period	$	(785)	$	(939)	$	(481)
Divestiture of Power Solutions	—		479		—
Aggregate adjustment for the period (net of tax effect of $1, $0 and $(3)) (1)	7		(325)		(458)

Balance at end of period	(778)		(785)		(939)

Realized and unrealized gains (losses) on derivatives
Balance at beginning of period	(2)		(13)		6
Divestiture of Power Solutions (net of tax effect of $0, $1 and $0)	—		4		—
Current period changes in fair value (net of tax effect of $1, $(1) and $(4))	3		(1)		(8)
Reclassification to income (net of tax effect of $0, $2 and $(5)) (2)	1		8		(11)

Balance at end of period	2		(2)		(13)

Realized and unrealized gains (losses) on marketable securities
Balance at beginning of period	—		8		4
Adoption of ASU 2016-01 (3)	—		(8)		—
Current period changes in fair value (net of tax effect of $0, $0 and $1)	—		—		5
Reclassification to income (net of tax effect of $0, $0 and $(1)) (4)	—		—		(1)
Balance at end of period	—		—		8

Pension and postretirement plans
Balance at beginning of period	(8)		(2)		(2)
Reclassification to income (net of tax effect of $(1), $0 and $0)	(1)		—		—
Other changes (net of tax effect of $4, $0 and $0)	9		(6)		—

Balance at end of period	—		(8)		(2)

Accumulated other comprehensive loss, end of period	$	(776)	$	(795)	$	(946)

(1) During fiscal 2018, $12 million of cumulative CTA was recognized as part of the divestiture-related gain recognized as part of the divestiture of Scott Safety.

(2) Refer to Note 10, "Derivative Instruments and Hedging Activities," of the notes to consolidated financial statements for disclosure of the line items in the consolidated statements of income affected by reclassifications from AOCI into income related to derivatives.

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

(4) During fiscal 2018, the Company sold certain marketable common stock for approximately $3 million. As a result, the Company recorded $2 million of realized gains within selling, general and administrative expenses.