01—Abstract
Summary
Summary of the 10-K filed November 27, 2007. Cited figures are marked; the original filing is the authoritative source.
Johnson Controls International plc (JCI), reporting as Tyco International Ltd. for the fiscal year ending September 27, 2007, has undergone a significant strategic transformation with the spin-off of its Healthcare and Electronics businesses (Covidien and Tyco Electronics) into separate publicly traded companies.
This strategic move has reshaped the company's operational focus, now centered on five core segments: ADT Worldwide, Fire Protection Services, Flow Control, Safety Products, and Electrical and Metal Products. The company emphasizes its leading market positions, global reach, diverse product portfolio, and a stable, recurring revenue base as key competitive strengths.
Management is focused on expanding its customer base, generating new business from existing customers, improving productivity and efficiency, and pursuing disciplined acquisitions to drive growth and enhance profitability. Despite significant restructuring costs and the material weakness identified in internal controls over financial reporting related to income taxes, the company highlights its strong cash flow generation and experienced management team, led by CEO Ed Breen, who have navigated significant operational changes and corporate governance improvements.
02—Key points
Key Highlights
- Completion of the spin-off of Covidien and Tyco Electronics, creating three independent, publicly traded companies, with Tyco now focused on security, fire, flow control, and industrial products.
- Restructuring of the business into five core segments: ADT Worldwide, Fire Protection Services, Flow Control, Safety Products, and Electrical and Metal Products.
- Significant net revenue growth of 8.3% to $18.8 billion, driven by strong performance across all segments, particularly Flow Control and ADT Worldwide.
- A substantial charge of $2.862 billion related to a class action settlement was a major factor impacting reported net income for the year.
- Identified a material weakness in internal control over financial reporting related to accounting for income taxes, with ongoing remediation efforts.
- Strong cash flow generation noted, providing financial flexibility for investments and acquisitions.
- Exploration of divestitures for under-performing or non-strategic businesses, including the approved divestiture of Infrastructure Services.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2007, Johnson Controls International plc lost $0.09.
- Revenue$18.48B100.0%
- Cost of revenue−$8.49B46.0%
- Gross profit$9.98B54.0%
- Operating costs−$11.71B63.4%
- Operating income−$1.73B9.4%
- Interest, other & tax−$10.0M0.1%
- Net income−$1.74B9.4%
04—Financials
Financial Highlights
Figures from 10-KFY2007filed November 27, 2007Financial Statements
| Revenue | $18.48B |
| Cost of Revenue | $8.49B |
| Gross Profit | $9.98B |
| SG&A Expenses | $4.78B |
| Operating Income | -$1.73B |
| Interest Expense | $313.00M |
| Net Income | -$1.74B |
| EPS (Basic) | $-3.52 |
| EPS (Diluted) | $-3.52 |
| Shares Outstanding (Basic) | 495.00M |
| Shares Outstanding (Diluted) | 495.00M |
05—Questions
Frequently Asked Questions
What was the major strategic change for Tyco International during fiscal year 2007?
The most significant strategic event was the completion of the spin-off of its Healthcare and Electronics businesses, Covidien and Tyco Electronics, respectively. This created three independent companies and allowed Tyco to focus on its remaining core businesses: ADT Worldwide, Fire Protection Services, Flow Control, Safety Products, and Electrical and Metal Products.
What impacted the company's net income significantly in fiscal year 2007?
The company reported a net loss primarily due to a substantial charge of $2.862 billion related to a class action settlement. Additionally, there were significant separation costs, goodwill impairment charges, and losses on early extinguishment of debt that impacted the reported financial results.
What are the company's primary business segments after the spin-offs?
After the spin-offs, the company's five primary operating segments are ADT Worldwide (security systems and services), Fire Protection Services (fire detection and suppression systems), Flow Control (valves, pipes, and related products), Safety Products (fire suppression, breathing apparatus, security products), and Electrical and Metal Products (tubing, pipe, and cable products).
Did the company experience revenue growth in fiscal year 2007?
Yes, net revenue increased by 8.3% to $18.8 billion compared to the prior year. This growth was broad-based across all reporting segments, with notable contributions from Flow Control and ADT Worldwide.
Are there any material weaknesses in internal controls reported?
Yes, the company identified a material weakness in internal control over financial reporting relating to its accounting for income taxes. Management is undertaking remediation efforts to address this issue.
06—Continue