8-KFinancial Events

Johnson Controls International plc 8-K Report, Material Impairment (Jun 13, 2007)

Filed June 13, 2007For Securities:JCI

Summary

This 8-K filing from Tyco International Ltd. (though filed under the JCI ticker initially, the content clearly pertains to Tyco) on June 12, 2007, reports a significant event: the authorization by the Board of Directors to divest the Power Systems business of its Tyco Electronics Segment. This decision follows an assessment for impairment under SFAS No. 144, which determined that the assets related to the Power Systems business are impaired. Investors should note the estimated pre-tax impairment charge of approximately $500 million, translating to an after-tax charge of roughly $370 million. This charge is expected to be recognized in the three-month period ending June 29, 2007. The divestiture decision is subject to the final determination by the CEO of Tyco Electronics based on specific sale proposal terms.

Key Highlights

  • 1Tyco International Ltd. Board of Directors authorized the divestiture of the Power Systems business within the Tyco Electronics Segment.
  • 2An impairment assessment under SFAS No. 144 was conducted on the Power Systems assets.
  • 3The Power Systems assets have been determined to be impaired.
  • 4An estimated pre-tax impairment charge of approximately $500 million is expected.
  • 5An estimated after-tax impairment charge of approximately $370 million is expected.
  • 6The impairment charge is anticipated to be recorded in the fiscal quarter ending June 29, 2007.
  • 7The final decision on divestiture is contingent on the terms and conditions of any sale proposal, to be determined by the CEO of Tyco Electronics.

Frequently Asked Questions

The primary reason for this 8-K filing is to announce that Tyco International Ltd.'s Board of Directors has authorized the potential divestiture of its Power Systems business and to report a significant impairment charge related to these assets.

The company estimates a pre-tax impairment charge of approximately $500 million, which translates to an after-tax charge of approximately $370 million. This charge will be recognized in the fiscal quarter ending June 29, 2007.

The Board has authorized the divestiture, but the final decision rests with the CEO of Tyco Electronics, who will evaluate specific terms and conditions of any sale proposal. Therefore, the divestiture is not yet confirmed.

The Power Systems business, which is part of the Tyco Electronics Segment, is affected by this report.