JOHNSON CONTROLS INTERNATIONAL PLC Annual Report For the Year Ended September 30, 2018 TABLE OF CONTENTS Page Directors' Report 4 Independent Auditors' Report 45 Consolidated Statement of Income 52 Consolidated Statement of Comprehensive Income (Loss) 53 Consolidated Statement of Financial Position 54 Consolidated Statement of Cash Flows 55 Consolidated Statement of Shareholders' Equity Attributable to Johnson Controls Ordinary Shareholders 56 Notes to Consolidated Financial Statements 57 Company Balance Sheet 122 Company Statement of Changes in Equity 123 Notes to Company Financial Statements 124 JOHNSON CONTROLS INTERNATIONAL PLC DIRECTORS' REPORT For the Financial Year Ended September 30, 2018 The directors present their report and the audited consolidated financial statements for the financial year ended September 30, 2018, which are set out on pages 45 to 120, and audited parent company financial statements for the financial year ended September 30, 2018, which are set out on pages 121 to 132. The directors have elected to prepare the consolidated financial statements of Johnson Controls International plc and its subsidiaries (hereinafter referred to as "Johnson Controls" or the "Group") in accordance with Section 279 of the Companies Act 2014 (the "Act"), which provides that a true and fair view of the state of affairs and profit or loss may be given by preparing the financial statements in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), as defined in Section 279 of the Act, to the extent that the use of those principles in the preparation of the financial statements does not contravene any provision of the Act or of any regulations made thereunder. The directors have elected to prepare the Johnson Controls International plc parent company ("Johnson Controls Ireland" or "Parent Company") financial statements in accordance with Financial Reporting Standard 102, "The Financial Reporting Standard applicable in the UK and Ireland" ("FRS 102"), together with the Companies Act 2014. DIRECTORS' COMPLIANCE STATEMENT The directors acknowledge that they are responsible for securing the Parent Company’s compliance with its relevant obligations. The directors confirm that the Parent Company has: 1. Drawn up a compliance policy statement setting out the Parent Company’s policies respecting compliance by the Parent Company with its relevant obligations. 2. Put in place appropriate arrangements or structures that are designed to secure material compliance with the Parent Company’s relevant obligations. 3. Conducted a review during the financial year ended September 30, 2018 of the arrangements and structures referred to at 2 above. STATEMENT OF DIRECTORS’ RESPONSIBILITIES The directors are responsible for preparing the Directors’ Report and the financial statements in accordance with Irish law. Irish law requires the directors to prepare financial statements for each financial year giving a true and fair view of the Group’s assets, liabilities and financial position at the end of the financial year and the profit or loss of the Group for the financial year. Under that law the directors have prepared the financial statements in accordance with Irish Generally Accepted Accounting Practice (accounting standards issued by the UK Financial Reporting Council, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and Irish law). Under Irish law, the directors shall not approve the financial statements unless they are satisfied that they give a true and fair view of the Group’s assets, liabilities and financial position as at the end of the financial year and the profit or loss of the Group for the financial year. In preparing these financial statements, the directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable and prudent; • state whether the financial statements have been prepared in accordance with applicable accounting standards and identify the standards in question, subject to any material departures from those standards being disclosed and explained in the notes to the financial statements; and • prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Group will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to: • correctly record and explain the transactions of the Group; • enable, at any time, the assets, liabilities, financial position and profit or loss of the Group to be determined with reasonable accuracy; and • enable the directors to ensure that the financial statements comply with the Companies Act 2014 and enable those financial statements to be audited. The directors are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s website. Legislation in Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. BASIS OF PRESENTATION The accompanying financial statements have been prepared in United States dollars and reflect the consolidated operations of the Group. Unless otherwise indicated, references to 2018 and 2017 are to Johnson Control's financial years ending September 30, 2018 ("fiscal 2018") and 2017 ("fiscal 2017"), respectively. PRINCIPAL ACTIVITIES Johnson Controls International plc, headquartered in Cork, Ireland, is a global diversified technology and multi industrial leader serving a wide range of customers in more than 150 countries. The Group creates intelligent buildings, efficient energy solutions, integrated infrastructure and next generation transportation systems that work seamlessly together to deliver on the promise of smart cities and communities. The Group is committed to helping our customers win and creating greater value for all of its stakeholders through strategic focus on our buildings and energy growth platforms. Johnson Controls was originally incorporated in the state of Wisconsin in 1885 as Johnson Electric Service Company to manufacture, install and service automatic temperature regulation systems for buildings. The Group was renamed to Johnson Controls, Inc. in 1974. In 1978, the Group acquired Globe-Union, Inc., a Wisconsin-based manufacturer of automotive batteries for both the replacement and original equipment markets. The Group entered the automotive seating industry in 1985 with the acquisition of Michigan-based Hoover Universal, Inc. In 2005, the Group acquired York International, a global supplier of heating, ventilating, air-conditioning ("HVAC") and refrigeration equipment and services. In 2014, the Group acquired Air Distribution Technologies, Inc. ("ADTi"), one of the largest independent providers of air distribution and ventilation products in North America. On October 1, 2015, the Group formed a joint venture with Hitachi to expand its building related product offerings. In the fourth quarter of fiscal 2016, Johnson Controls, Inc. ("JCI Inc.") and Tyco 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. The acquisition of Tyco brings together best-in-class product, technology and service capabilities across controls, fire, security, HVAC and power solutions, to serve various end-markets including large institutions, commercial buildings, retail, industrial, small business and residential. The combination of the Tyco and Johnson Controls buildings platforms creates opportunities for near-term growth through cross-selling, complementary branch and channel networks, and expanded global reach for established businesses. The new Company benefits by combining innovation capabilities and pipelines involving new products, advanced solutions for smart buildings and cities, value-added services driven by advanced data and analytics. On October 31, 2016, the Group completed the spin-off of its Automotive Experience business by way of the transfer of the Automotive Experience Business from Johnson Controls to Adient plc ("Adient") and the issuance of ordinary shares of Adient directly to holders of Johnson Controls ordinary shares on a pro rata basis. Prior to the open of business on October 31, 2016, each of the Group's shareholders received one ordinary share of Adient plc for every 10 ordinary shares of Johnson Controls held as of the close of business on October 19, 2016, the record date for the distribution. Group shareholders received cash in lieu of fractional shares of Adient, if any. Following the separation and distribution, Adient plc is now an independent