Summary
Johnson Controls International plc (JCI) has entered into a material definitive agreement to settle a class-action lawsuit related to Aqueous Film Forming Foam (AFFF) products. A wholly-owned subsidiary, Tyco Fire Products LP, agreed to a $750 million settlement with a nationwide class of public water systems alleging PFAS contamination. This settlement resolves claims associated with Tyco's AFFF products used in drinking water systems and includes a release of claims against Tyco and related entities. The company recorded a $750 million charge in the quarter ended March 31, 2024, for this settlement. Initial payment of $250 million is expected around May 25, 2024, with the remaining $500 million due six months after preliminary court approval, anticipated in mid-May 2024. JCI expects to recover a substantial portion of this payment through insurance, though the exact amount and timing remain uncertain. The settlement is subject to court approval and other contingencies, with the finalization process expected to take several months. Importantly, this settlement does not cover all potential PFAS-related claims, such as personal injury cases or claims by state attorneys general, which remain subject to ongoing litigation.
Key Highlights
- 1Johnson Controls (JCI) subsidiary Tyco Fire Products LP agreed to a $750 million settlement for PFAS-related claims from public water systems concerning AFFF products.
- 2A $750 million charge was recognized in the quarter ended March 31, 2024, for this settlement.
- 3The settlement is contingent upon preliminary court approval expected around mid-May 2024.
- 4Tyco expects to recover a significant portion of the settlement cost through insurance, although timing and amounts are uncertain.
- 5The settlement includes an initial payment of $250 million due by May 25, 2024.
- 6The agreement excludes certain water systems and does not resolve personal injury claims, property damage cases, or claims by state attorneys general.
- 7The company has discontinued its receivables factoring programs and will fund its working capital needs from operations and other borrowing sources.