01—Abstract
Summary
Summary of the 10-K filed November 17, 2009. Cited figures are marked; the original filing is the authoritative source.
Johnson Controls International plc (JCI), filing as Tyco International Ltd. for the fiscal year ended September 25, 2009, reported a net loss of $1.8 billiona on revenues of $17.2 billion.
This performance was significantly impacted by a substantial goodwill and intangible asset impairment charge of $2.7 billionb, primarily driven by the challenging economic environment and weakness in key end markets, particularly in the Electrical and Metal Products segment. Despite revenue decline, the company noted a continued growth in service revenue as a percentage of total revenue, signaling a shift towards more recurring and stable income streams across its ADT Worldwide and Fire Protection Services segments. Looking ahead, Tyco's management highlighted plans to continue portfolio refinement by divesting underperforming businesses and focusing on cost containment and restructuring actions expected to yield significant future savings.
The company also reported a strong cash position and available credit facilities, indicating sufficient liquidity to manage operations and pursue strategic opportunities, including potential acquisitions in its core segments. Investors should note the company's significant international presence and the associated foreign currency exchange rate risks, as well as ongoing legal matters, particularly those related to legacy securities litigation.
02—Key points
Key Highlights
- Reported a net loss of $1.8 billion for the fiscal year ended September 25, 2009, significantly impacted by $2.7 billion in goodwill and intangible asset impairment charges.
- Total revenues for the fiscal year were $17.2 billion, a decrease from $20.2 billion in the prior year, reflecting adverse economic conditions and a 14.7% revenue decline.
- Service revenue continued to grow as a percentage of total revenue, reaching 39% (from 35% in FY2008), indicating a strategic shift towards more stable recurring revenue streams.
- The ADT Worldwide segment, comprising 41% of revenue, saw service revenue decline 5.4% and product revenue fall 16.6% year-over-year.
- The Electrical and Metal Products segment experienced a significant revenue decrease of 38.7%, driven by lower volumes and selling prices for steel products amidst a declining commercial market.
- The company ended the fiscal year with a strong cash balance of $2.4 billion and maintained $1.69 billion in available credit facilities, ensuring sufficient liquidity.
- Tyco is undertaking restructuring and portfolio refinement efforts, including plans to sell a business within the ADT Worldwide segment, to improve future profitability and strategic alignment.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2009, Johnson Controls International plc lost $0.11.
- Revenue$16.88B100.0%
- Cost of revenue−$10.87B64.4%
- Gross profit$6.01B35.6%
- Operating costs−$7.52B44.5%
- Operating income−$1.51B8.9%
- Interest, other & tax−$292.0M1.7%
- Net income−$1.80B10.7%
04—Financials
Financial Highlights
Figures from 10-KFY2009filed November 17, 2009Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $16.88B$19.73B | −14.4% |
| Cost of Revenue | $10.87B$12.78B | −14.9% |
| Gross Profit | $6.01B$6.95B | −13.5% |
| R&D Expenses | $116.00M$125.00M | −7.2% |
| SG&A Expenses | $4.60B$4.82B | −4.7% |
| Operating Income | -$1.51B$1.90B | −179.4% |
| Interest Expense | $301.00M$396.00M | −24.0% |
| Net Income | -$1.80B$1.55B | −215.8% |
| EPS (Basic) | $-3.80$3.21 | −218.4% |
| EPS (Diluted) | $-3.80$3.19 | −219.1% |
| Shares Outstanding (Basic) | 473.00M484.00M | −2.3% |
| Shares Outstanding (Diluted) | 473.00M488.00M | −3.1% |
05—Questions
Frequently Asked Questions
What was the primary driver of Tyco's net loss in fiscal year 2009?
The primary driver of Tyco's net loss of $1.8 billion for the fiscal year ended September 25, 2009, was a significant goodwill and intangible asset impairment charge of $2.7 billion. This impairment was recognized due to challenging economic conditions and weakness in various end markets, particularly impacting the Electrical and Metal Products segment.
How did the global economic downturn affect Tyco's financial performance?
The global economic downturn negatively impacted Tyco's financial performance, leading to a 14.7% decrease in net revenue to $17.2 billion. Demand for products and services declined, especially in commercial markets and the Electrical and Metal Products segment. Foreign currency exchange rate fluctuations also contributed to revenue decline, with the strengthening U.S. dollar negatively affecting reported revenues from international operations.
What is Tyco's strategy for improving financial performance in the near future?
Tyco's strategy includes continued cost containment and restructuring actions, which are expected to generate significant future cost savings. The company also plans to refine its business portfolio by divesting underperforming businesses and focusing on strategic acquisitions in its core ADT Worldwide, Fire Protection Services, and Flow Control segments. Growth in key emerging markets is also a focus.
What is the significance of the increase in service revenue as a percentage of total revenue?
The increase in service revenue as a percentage of total revenue (from 35% to 39%) is significant because service revenue, particularly recurring revenue from monitoring and maintenance contracts in segments like ADT Worldwide and Fire Protection Services, is generally more stable and predictable than product sales. This shift indicates a move towards a more resilient and consistent revenue model.
06—Continue