01—Abstract
Summary
Summary of the 10-K filed November 12, 2010. Cited figures are marked; the original filing is the authoritative source.
Johnson Controls International plc (JCI), formerly Tyco International Ltd., reported a net revenue of $17.0 billiona for the fiscal year ended September 23, 2010, a slight increase from the previous year, driven by favorable foreign currency exchange rates.
The company operates across five key segments: ADT Worldwide (security systems), Flow Control (valves, pipes), Fire Protection Services, Electrical and Metal Products, and Safety Products. Significant strategic initiatives were underway, including the acquisition of Brink's Home Security Holdings, Inc. (Broadview Security) for approximately $2.0 billionb, which was integrated into the ADT Worldwide segment to enhance its residential security business. Additionally, Tyco announced plans to sell a 51% interest in its Electrical and Metal Products business, moving towards a more focused portfolio of three core businesses: Tyco Security Solutions, Tyco Fire Protection, and Flow Control.
The company also exited its European water business, classifying it as discontinued operations. Despite a challenging economic environment, the company emphasized its growing service revenue, which represented 41%c of total net revenue, and recurring revenue streams, particularly within the ADT segment, aiming for operational efficiencies and cost containment to drive future performance.
02—Key points
Key Highlights
- Net revenue for fiscal year 2010 was $17.0 billion, a slight increase driven by favorable foreign currency exchange rates.
- Acquisition of Brink's Home Security Holdings (Broadview Security) for approximately $2.0 billion, integrated into the ADT Worldwide segment to bolster residential security offerings.
- Strategic shift towards a three-core-business model (Tyco Security Solutions, Tyco Fire Protection, Flow Control) with the planned sale of a 51% interest in the Electrical and Metal Products business.
- ADT Worldwide segment experienced revenue growth driven by recurring services (monitoring and maintenance), which constituted approximately 58% of its total revenue.
- Flow Control segment saw a revenue decrease primarily due to reduced volume in its valves business amidst weaker end-market demand.
- Fire Protection Services segment's revenue slightly declined, impacted by commercial market weakness but supported by growth in service revenue.
- The company continues to focus on operational efficiencies and cost containment measures across its segments to navigate the economic landscape.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Johnson Controls International plc kept $0.10.
- Revenue$11.02B100.0%
- Cost of revenue−$7.40B67.2%
- Gross profit$3.62B32.8%
- Operating costs−$3.00B27.2%
- Operating income$615.0M5.6%
- Interest, other & tax$515.0M4.7%
- Net income$1.13B10.3%
Where FY2010 revenue went
$11.02B- Cost of revenue: $7.40B, 67% of revenue
- SG&A: $2.95B, 27% of revenue
- Operating income: $615.0M, 5.6% of revenue
- R&D: $113.0M, 1.0% of revenue
Kept 5.6% as operating incomeOperating income $615.0M · 5.6%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed November 12, 2010Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $11.02B$16.88B | −34.7% |
| Cost of Revenue | $7.40B$10.87B | −31.9% |
| Gross Profit | $3.62B$6.01B | −39.9% |
| R&D Expenses | $113.00M$116.00M | −2.6% |
| SG&A Expenses | $2.95B$4.60B | −35.9% |
| Operating Income | $615.00M-$1.51B | +140.8% |
| Interest Expense | $279.00M$301.00M | −7.3% |
| Net Income | $1.13B-$1.80B | +162.8% |
| EPS (Basic) | $2.33$-3.80 | +161.3% |
| EPS (Diluted) | $2.31$-3.80 | +160.8% |
| Shares Outstanding (Basic) | 485.00M473.00M | +2.5% |
| Shares Outstanding (Diluted) | 488.00M473.00M | +3.2% |
05—Questions
Frequently Asked Questions
What were the key strategic moves made by Tyco International in fiscal year 2010?
In fiscal year 2010, Tyco International completed the significant acquisition of Brink's Home Security Holdings (Broadview Security) for $2.0 billion, integrating it into its ADT Worldwide segment. The company also announced plans to divest a 51% interest in its Electrical and Metal Products business, signaling a strategic move towards a more focused portfolio. Additionally, Tyco exited its European water business, which was classified as discontinued operations.
How did the economic environment impact Tyco's segments in 2010?
The company noted continued weakness in commercial markets, which affected installation and service revenues in ADT Worldwide and Fire Protection Services. The Flow Control segment experienced reduced volume in its valves business due to decreased demand in its end markets. Despite these challenges, the company highlighted the resilience of its recurring revenue streams, particularly in ADT Worldwide, which grew due to an increase in customer accounts.
What is the company's outlook regarding future growth and capital allocation?
Tyco anticipates using its cash flow to fund internal growth, enhance productivity, pursue strategic acquisitions in its core ADT Worldwide, Fire Protection Services, and Flow Control businesses, and return capital to shareholders through dividends and share repurchases. The company had a new $1 billion share repurchase program approved in September 2010, following the near completion of its previous program.
Are there any significant ongoing legal or regulatory matters that investors should be aware of?
The filing mentions ongoing discussions with the DOJ and SEC regarding potential FCPA violations, the resolution of which remains uncertain and could involve material fines or penalties. Additionally, the company faces various other legal proceedings, including product liability claims and asbestos-related litigation, for which it has reserved amounts. While management believes these matters will not have a material adverse effect on the company's financial position, results of operations, or cash flows, they represent potential risks.
06—Continue