01—Abstract
Summary
Summary of the 10-K filed November 13, 2015. Cited figures are marked; the original filing is the authoritative source.
Johnson Controls International plc's (JCI) 2015 10-K filing, filed under the name Tyco International plc at the time, details a global provider of security, fire detection and suppression, and life safety products.
The company operates through three main segments: North America Integrated Solutions & Services (NA ISS), Rest of World Integrated Solutions & Services (ROW ISS), and Global Products. Total revenue for the fiscal year ended September 24, 2015, was $9.9 billiona. Key operational themes include a continued focus on integrated solutions and services, global market presence with over 50% of revenue generated outside North America, and ongoing efforts in restructuring and cost containment.
The company also faces significant challenges and risks, including environmental remediation costs, asbestos-related litigation, and tax disputes with the IRS, which significantly impacted the prior fiscal year's financial results. The filing also highlights the company's strategic shift from a holding company to a more focused operating entity.
02—Key points
Key Highlights
- Revenue for the fiscal year ended September 24, 2015, was $9.9 billion, a 4.2% decrease from the prior year, largely impacted by foreign currency fluctuations and divestitures.
- The company operates across three segments: North America Integrated Solutions & Services (39% of revenue), Rest of World Integrated Solutions & Services (35% of revenue), and Global Products (26% of revenue).
- Significant financial events during the year included a $452 million decline in asbestos-related charges and a $289 million in restructuring and repositioning charges.
- The company reported a strong balance sheet with $1.4 billion in cash and cash equivalents and $4.0 billion in shareholder's equity as of September 25, 2015.
- Global Products segment showed organic revenue growth of 2.6%, driven by security and life safety businesses, despite an overall unfavorable impact from foreign currency exchange rates.
- Significant ongoing legal and environmental matters include an estimated $33 million in environmental remediation costs and a reported net asbestos-related liability of $28 million as of September 25, 2015.
- The company is actively managing its capital structure, issuing new debt and redeeming existing notes, aiming to lower its weighted-average interest rate.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Johnson Controls International plc kept $0.09.
- Revenue$17.10B100.0%
- Cost of revenue−$12.57B73.5%
- Gross profit$4.53B26.5%
- Operating costs−$3.65B21.3%
- Operating income$884.0M5.2%
- Interest, other & tax$679.0M4.0%
- Net income$1.56B9.1%
Where FY2015 revenue went
$17.10B- Cost of revenue: $12.57B, 74% of revenue
- SG&A: $3.19B, 19% of revenue
- Operating income: $884.0M, 5.2% of revenue
- R&D: $134.0M, 0.8% of revenue
- Other operating costs: $322.0M, 1.9% of revenue
Kept 5.2% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed November 13, 2015Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $17.10B$10.33B | +65.5% |
| Cost of Revenue | $12.57B$32.44B | −61.3% |
| Gross Profit | $4.53B$6.30B | −28.1% |
| R&D Expenses | $134.00M$193.00M | −30.6% |
| SG&A Expenses | $3.19B$4.22B | −24.3% |
| Operating Income | $884.00M$700.00M | +26.3% |
| Interest Expense | $275.00M$254.00M | +8.3% |
| Net Income | $1.56B$1.22B | +28.6% |
| EPS (Basic) | $2.39$1.82 | +31.3% |
| EPS (Diluted) | $2.36$1.80 | +31.1% |
| Shares Outstanding (Basic) | 655.20M666.90M | −1.8% |
| Shares Outstanding (Diluted) | 661.50M674.80M | −2.0% |
05—Questions
Frequently Asked Questions
What were the primary drivers of revenue change in fiscal year 2015?
Net revenue decreased by 4.2% to $9.9 billion. Key factors included a significant unfavorable impact from foreign currency exchange rates ($622 million), divestitures ($67 million), partially offset by acquisitions ($199 million) and 0.6% organic revenue growth.
What are the major legal and environmental liabilities the company is addressing?
The company is managing significant asbestos-related liabilities, with a net liability of $28 million recorded as of September 25, 2015, and ongoing environmental remediation efforts, primarily at the Marinette, Wisconsin facility, with an estimated best estimate of $33 million in remedial costs. Additionally, the company is contesting significant tax adjustments proposed by the IRS regarding intercompany debt transactions.
How is the company managing its financial structure and debt?
The company issued new debt totaling approximately $2.06 billion in Euro and U.S. Dollar notes and used the proceeds to redeem older, higher-interest debt. This refinancing effort is expected to lower the weighted-average interest rate on its long-term debt to 3.7%.
What is the company's strategy for future growth?
The company is focused on growth through innovation, expanding its integrated solutions and services offerings, and continuing to streamline operations for improved efficiency. A significant part of its growth strategy also involves expanding operations in emerging markets.
06—Continue