XML 54 R22.htm IDEA: XBRL DOCUMENT v3.19.3
Equity and Noncontrolling Interests (Notes)
 12 Months Ended
Sep. 30, 2019
Stockholders' Equity Note [Abstract]  
EQUITY AND NONCONTROLLING INTERESTS EQUITY AND NONCONTROLLING INTERESTS

Dividends

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

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

Share Repurchase Program

In November 2018, the Company's Board of Directors approved a $1 billion increase to its existing share repurchase authorization. In March 2019, the Company's Board of Directors approved an additional $8.5 billion increase to its existing share repurchase authorization, subject to the completion of the previously announced sale of the Company's Power Solutions business, which closed on April 30, 2019. The share repurchase program does not have an expiration date and may be amended or terminated by the Board of Directors at any time without prior notice.

On May 1, 2019, the Company announced a "modified Dutch auction" tender offer for up to $4.0 billion of its ordinary shares with a price range between $36.00 and $40.00 per share. The tender offer expired on May 31, 2019. Through the tender offer, the Company accepted for payment 102 million shares at a purchase price of $39.25 per share, for a total of approximately $4,035 million, including fees and commissions. The shares purchased through the tender offer were immediately retired. Ordinary shares were reduced by the number of shares retired at $0.01 par value per share. The excess purchase price over par value was recorded in retained earnings in the consolidated statements of financial position.

In addition to the equity tender offer described above, during fiscal year 2019, the Company repurchased and retired approximately $1,948 million of its ordinary shares. As of September 30, 2019, approximately $4.6 billion remains available under the share repurchase program. During fiscal years 2018 and 2017, the Company repurchased approximately $300 million and $651 million of its ordinary shares, respectively.


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, 2016
$
24,118

 
$
972

 
$
25,090

Total comprehensive income (loss):
 
 
 
 
 
Net income
1,611

 
164

 
1,775

Foreign currency translation adjustments
108

 
(18
)
 
90

Realized and unrealized gains (losses) on derivatives
(14
)
 
1

 
(13
)
Realized and unrealized gains on marketable securities
5

 
—

 
5

Other comprehensive income (loss)
99

 
(17
)
 
82

Comprehensive income
1,710

 
147

 
1,857

Other changes in equity:
 
 
 
 
 
Cash dividends - ordinary shares ($1.00 per share)
(938
)
 
—

 
(938
)
Dividends attributable to noncontrolling interests
—

 
(56
)
 
(56
)
Repurchases of ordinary shares
(651
)
 
—

 
(651
)
Change in noncontrolling interest share
—

 
(5
)
 
(5
)
Spin-off of Adient
(4,038
)
 
(138
)
 
(4,176
)
Other, including options exercised
246

 
—

 
246

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



As previously disclosed, during the quarter ended December 31, 2018, the Company adopted ASC 606, "Revenue from Contracts with Customers." 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.

As previously disclosed, during the quarter ended December 31, 2018, the Company adopted ASU 2016-16, "Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other Than Inventory." 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.

As previously disclosed, during the quarter ended December 31, 2017, the Company adopted ASU No. 2016-09. 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 vestings on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of October 1, 2017.

On October 31, 2016, the Company completed the Adient spin-off. As a result of the spin-off, the Company divested net assets of approximately $4.0 billion.

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, 2019 and 2018, 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
 
Year Ended September 30, 2017
Beginning balance, September 30
$
211

 
$
234

Net income
35

 
44

Foreign currency translation adjustments
(3
)
 
13

Realized and unrealized losses on derivatives
(9
)
 
(1
)
Dividends
(3
)
 
(43
)
Reclassification to noncontrolling interest
(231
)
 
—

Spin-off of Adient
—

 
(36
)
Ending balance, September 30
$
—

 
$
211




The following schedules present changes in AOCI attributable to Johnson Controls (in millions, net of tax):
 
Year Ended September 30, 2019
 
Year Ended September 30, 2018
 
Year Ended September 30, 2017
 
 
 
 
 
 
Foreign currency translation adjustments
 
 
 
 
 
Balance at beginning of period
$
(939
)
 
$
(481
)
 
$
(1,152
)
Divestiture of Power Solutions
479

 
—

 
—

Aggregate adjustment for the period (net of tax effect of $0, $(3) and $1) *
(325
)
 
(458
)
 
108

Adient spin-off impact (net of tax effect of $0)
—

 
—

 
563

Balance at end of period
(785
)
 
(939
)
 
(481
)
 
 
 
 
 
 
Realized and unrealized gains (losses) on derivatives
 
 
 
 
 
Balance at beginning of period
(13
)
 
6

 
4

Divestiture of Power Solutions (net of tax effect of $1, $0 and $0)
4

 
—

 
—

Current period changes in fair value (net of tax effect of $(1), $(4) and $4)
(1
)
 
(8
)
 
9

Reclassification to income (net of tax effect of $2, $(5) and $(10)) **
8

 
(11
)
 
(23
)
Adient spin-off impact (net of tax effect of $0, $0 and $6)
—

 
—

 
16

Balance at end of period
(2
)
 
(13
)
 
6

 
 
 
 
 
 
Realize and unrealized gains (losses) on marketable securities
 
 
 
 
 
Balance at beginning of period
8

 
4

 
(1
)
Adoption of ASU 2016-01 ***
(8
)
 
—

 
—

Current period changes in fair value (net of tax effect of $0, $1 and $1)
—

 
5

 
5

Reclassification to income (net of tax effect of $0, $(1) and $0) ****
—

 
(1
)
 
—

Balance at end of period
—

 
8

 
4

 
 
 
 
 
 
Pension and postretirement plans
 
 
 
 
 
Balance at beginning of period
(2
)
 
(2
)
 
(4
)
Other changes (net of tax effect of $0)
(6
)
 
—

 
—

Adient spin-off impact (net of tax effect of $0)
—

 
—

 
2

Balance at end of period
(8
)
 
(2
)
 
(2
)
 
 
 
 
 
 
Accumulated other comprehensive loss, end of period
$
(795
)
 
$
(946
)
 
$
(473
)

* 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.

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

*** As previously disclosed, during the quarter ended December 31, 2018, the Company adopted ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." As a result the Company reclassified $8 million of unrealized gains on marketable securities to retained earnings as of October 1, 2018.

**** 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.