10-KPeriod: FY2010

Johnson Controls International plc Annual Report, Year Ended Sep 24, 2010

Filed November 12, 2010For Securities:JCI

Summary

Johnson Controls International plc (JCI), formerly Tyco International Ltd., reported a net revenue of $17.0 billion 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 billion, 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% of total net revenue, and recurring revenue streams, particularly within the ADT segment, aiming for operational efficiencies and cost containment to drive future performance.

Financial Highlights

55 data points
Beta

Revenue

$11.02B

32.8% Gross Margin

Net Income

$1.13B

10.3% Net Margin

EPS (Diluted)

$2.31

Total Assets

$27.07B

Cash & Equivalents

$844.00M

Free Cash Flow

$871.00M

Financial Statements
Beta
Revenue$11.02B
Cost of Revenue$7.40B
Gross Profit$3.62B
R&D Expenses$113.00M
SG&A Expenses$2.95B
Operating Income$615.00M
Interest Expense$279.00M
Net Income$1.13B
EPS (Basic)$2.33
EPS (Diluted)$2.31
Shares Outstanding (Basic)485.00M
Shares Outstanding (Diluted)488.00M

Key Highlights

  • 1Net revenue for fiscal year 2010 was $17.0 billion, a slight increase driven by favorable foreign currency exchange rates.
  • 2Acquisition of Brink's Home Security Holdings (Broadview Security) for approximately $2.0 billion, integrated into the ADT Worldwide segment to bolster residential security offerings.
  • 3Strategic 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.
  • 4ADT Worldwide segment experienced revenue growth driven by recurring services (monitoring and maintenance), which constituted approximately 58% of its total revenue.
  • 5Flow Control segment saw a revenue decrease primarily due to reduced volume in its valves business amidst weaker end-market demand.
  • 6Fire Protection Services segment's revenue slightly declined, impacted by commercial market weakness but supported by growth in service revenue.
  • 7The company continues to focus on operational efficiencies and cost containment measures across its segments to navigate the economic landscape.

Frequently Asked Questions

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.

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.

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.

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.