FOOTNOTES
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1.
Financial Summary
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In the first quarter
of fiscal 2017, the Company began evaluating the performance of its
business units primarily on segment earnings before interest, taxes
and amortization (EBITA), which represents income from continuing
operations before income taxes and noncontrolling interests,
excluding general corporate expenses, intangible asset
amortization, net financing charges, significant restructuring and
impairment costs, and the net mark-to-market adjustments related to
pension and postretirement plans. Historical information has
been revised to present the comparable periods on a consistent
basis. Also in the first quarter of fiscal 2017, the Company
began reporting the Automotive Experience business as a
discontinued operation, which required retrospective application to
previously reported financial information. As a result, the
segment EBITA amounts shown below are for continuing operations and
exclude the Automotive Experience business. In addition, the
financial results for the three and six months ended March 31, 2016
exclude the Tyco business.
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(in millions;
unaudited)
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Three Months Ended
March 31,
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Six Months Ended
March 31,
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2017
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2016
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2017
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2016
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Actual
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Adjusted
Non-GAAP
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Actual
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Adjusted
Non-GAAP
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Actual
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Adjusted
Non-GAAP
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Actual
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Adjusted
Non-GAAP
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Net sales
(1)
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Building Technologies
& Solutions
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$
5,571
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$
5,541
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$
3,150
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$
3,150
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$
10,757
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$
10,737
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$
6,106
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$
6,106
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Power
Solutions
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1,696
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1,696
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1,583
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1,583
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3,596
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3,596
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3,323
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3,323
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Net sales
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$
7,267
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$
7,237
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$
4,733
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$
4,733
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$
14,353
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$
14,333
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$
9,429
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$
9,429
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Segment EBITA
(1)
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Building Technologies
& Solutions
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$
653
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$
628
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$
276
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$
282
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$
1,088
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$
1,206
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$
475
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$
493
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Power
Solutions
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303
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303
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282
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282
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692
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693
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642
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642
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Segment EBITA
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956
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931
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558
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564
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1,780
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1,899
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1,117
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1,135
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Corporate expenses
(2)
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(240)
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(128)
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(110)
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(75)
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(433)
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(236)
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(197)
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(143)
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Amortization of
intangible assets (3)
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(126)
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(92)
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(20)
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(20)
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(275)
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(195)
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(40)
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(40)
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Mark-to-market gain
for pension plans (4)
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18
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-
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-
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-
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135
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-
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-
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-
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Restructuring and
impairment costs (5)
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(99)
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-
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(60)
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-
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(177)
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-
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(60)
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-
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EBIT (6)
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509
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711
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368
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469
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1,030
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1,468
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820
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952
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Net financing charges
(7)
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(116)
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(116)
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(71)
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(71)
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(252)
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(235)
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(137)
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(137)
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Income from
continuing operations before income taxes
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393
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595
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297
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398
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778
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1,233
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683
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815
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Income tax provision
(8)
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(508)
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(89)
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(41)
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(70)
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(481)
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(185)
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(124)
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(141)
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Income (loss) from
continuing operations
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(115)
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506
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256
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328
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297
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1,048
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559
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674
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Income from
continuing operations attributable to
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noncontrolling interests
(9)
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(33)
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(33)
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(38)
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(45)
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(73)
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(73)
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(61)
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(74)
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Net income (loss)
from continuing operations attributable to JCI
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$
(148)
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$
473
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$
218
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$
283
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$
224
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$
975
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$
498
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$
600
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Building
Technology & Solutions- Provides facility systems and
services including comfort, energy and security management for the
non-residential buildings market, and provides heating,
ventilating, and air conditioning products and services, security
products and services, fire detection and suppression products and
services, and life safety products for the residential and
non-residential building markets.
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Power
Solutions- Services both automotive original equipment
manufacturers and the battery aftermarket by providing advanced
battery technology, coupled with systems engineering, marketing and
service expertise.
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(1) The Company's
press release contains financial information regarding adjusted net
sales, adjusted segment EBITA and adjusted segment EBITA margins,
which are non-GAAP performance measures. The Company's
definition of adjusted segment EBITA excludes special items because
these costs are not considered to be directly related to the
underlying operating performance of its business units.
Management believes these non-GAAP measures are useful to investors
in understanding the ongoing operations and business trends of the
Company.
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The following is the
three months ended March 31, 2017 and 2016 reconciliation of net
sales, segment EBITA and segment EBITA margin as reported to
adjusted net sales, adjusted segment EBITA and adjusted segment
EBITA margin (unaudited):
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(in
millions)
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Building
Technologies & Solutions
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Power
Solutions
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Consolidated
JCI plc
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2017
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2016
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2017
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2016
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2017
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2016
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Net sales as
reported
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$
5,571
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$
3,150
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$
1,696
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$
1,583
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$
7,267
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$
4,733
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Adjusting
items:
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Nonrecurring
purchase accounting impacts
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(30)
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-
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-
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-
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(30)
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-
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Adjusted net
sales
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$
5,541
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$
3,150
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$
1,696
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$
1,583
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$
7,237
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$
4,733
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Segment EBITA as
reported
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$
653
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$
276
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$
303
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$
282
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$
956
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$
558
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Segment EBITA margin
as reported
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11.7%
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8.8%
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17.9%
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17.8%
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13.2%
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11.8%
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Adjusting
items:
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Transaction
costs
|
10
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1
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-
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-
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10
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1
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Integration
costs
|
16
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|
5
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-
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-
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|
16
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5
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Nonrecurring
purchase accounting impacts
|
(51)
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-
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-
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-
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(51)
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-
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Adjusted segment
EBITA
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$
628
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$
282
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$
303
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$
282
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$
931
|
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$
564
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Adjusted segment
EBITA margin
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11.3%
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9.0%
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17.9%
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17.8%
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12.9%
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11.9%
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The following is the
six months ended March 31, 2017 and 2016 reconciliation of net
sales, segment EBITA and segment EBITA margin as reported to
adjusted net sales, adjusted segment EBITA and adjusted segment
EBITA margin (unaudited):
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(in
millions)
|
Building
Technologies & Solutions
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Power
Solutions
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Consolidated
JCI plc
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2017
|
|
2016
|
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2017
|
|
2016
|
|
2017
|
|
2016
|
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|
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Net sales as
reported
|
$
10,757
|
|
$
6,106
|
|
$
3,596
|
|
$
3,323
|
|
$
14,353
|
|
$
9,429
|
|
|
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|
|
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Adjusting
items:
|
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Nonrecurring
purchase accounting impacts
|
(20)
|
|
-
|
|
-
|
|
-
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|
(20)
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|
-
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|
|
Adjusted net
sales
|
$
10,737
|
|
$
6,106
|
|
$
3,596
|
|
$
3,323
|
|
$
14,333
|
|
$
9,429
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
Segment EBITA as
reported
|
$
1,088
|
|
$
475
|
|
$
692
|
|
$
642
|
|
$
1,780
|
|
$
1,117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment EBITA margin
as reported
|
10.1%
|
|
7.8%
|
|
19.2%
|
|
19.3%
|
|
12.4%
|
|
11.8%
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusting
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
Transaction
costs
|
27
|
|
10
|
|
1
|
|
-
|
|
28
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Integration
costs
|
30
|
|
8
|
|
-
|
|
-
|
|
30
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonrecurring
purchase accounting impacts
|
61
|
|
-
|
|
-
|
|
-
|
|
61
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment
EBITA
|
$
1,206
|
|
$
493
|
|
$
693
|
|
$
642
|
|
$
1,899
|
|
$
1,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment
EBITA margin
|
11.2%
|
|
8.1%
|
|
19.3%
|
|
19.3%
|
|
13.2%
|
|
12.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Adjusted
Corporate expenses for the three months ended March 31, 2017
excludes $95 million of integration costs and $17 million of
transaction costs. Adjusted Corporate expenses for the six
months ended March 31, 2017 excludes $145 million of integration
costs, $48 million of transaction costs and $4 million of
separation costs. Adjusted Corporate expenses for the three
months ended March 31, 2016 excludes $18 million of transaction
costs and $17 million of separation costs. Adjusted Corporate
expenses for the six months ended March 31, 2016 excludes $35
million of separation costs and $19 million of transaction
costs.
|
|
|
|
|
|
|
|
|
|
(3) Adjusted
amortization of intangible assets for the three and six months
ended March 31, 2017 excludes $34 million and $80 million,
respectively, of nonrecurring asset amortization related to Tyco
purchase accounting.
|
|
|
|
|
|
|
|
|
|
(4) The three and six
months ended March 31, 2017 pension mark-to-market gains of $18
million and $135 million, respectively, due to lump sum payouts for
certain U.S. pension plans are excluded from the adjusted non-GAAP
results.
|
|
|
|
|
|
|
|
|
|
(5) The three and six
months ended March 31, 2017 restructuring and impairment charges of
$99 million and $177 million, respectively, are excluded from the
adjusted non-GAAP results. The three and six months ended
March 31, 2016 restructuring and impairment charge of $60 million
is excluded from the adjusted non-GAAP results.
|
|
|
|
|
|
|
|
|
|
(6) Management
defines earnings before interest and taxes (EBIT) as income from
continuing operations before net financing charges, income taxes
and noncontrolling interests.
|
|
|
|
|
|
|
|
|
|
(7) Adjusted net
financing charges for the six months ended March 31, 2017 exclude
$17 million of transaction costs related to the debt exchange
offers.
|
|
|
|
|
|
|
|
|
|
(8) Adjusted income
tax provision for the three months ended March 31, 2017 excludes
the non-cash tax charge of $457 million related to establishment of
a deferred tax liability on the outside basis difference of the
Company's investment in certain subsidiaries of the Scott Safety
business and the tax provisions for the pension mark-to-market gain
of $8 million and Tyco nonrecurring purchase accounting impacts of
$5 million, partially offset by the tax benefits of integration
costs of $25 million, restructuring and impairment costs of $20
million and transaction costs of $6 million. Adjusted income
tax provision for the six months ended March 31, 2017 excludes the
non-cash tax charge of $457 million related to establishment of a
deferred tax liability on the outside basis difference of the
Company's investment in certain subsidiaries of the Scott Safety
business and the tax provision for the pension mark-to-market gains
of $54 million, partially offset by the tax benefits of changes in
entity tax status of $101 million, Tyco nonrecurring purchase
accounting impacts of $38 million, restructuring and impairment
costs of $34 million, integration costs of $32 million and
transaction costs of $10 million. Adjusted income tax
provision for the three months ended March 31, 2016 excludes the
tax benefits related to the first quarter impact of the reduction
in the Company's annual effective tax rate of $15 million,
restructuring and impairment costs of $12 million, transaction
costs of $1 million and integration costs of $1 million.
Adjusted income tax provision for the six months ended March 31,
2016 excludes the tax benefits of restructuring and impairment
costs of $12 million, transaction costs of $3 million, integration
costs of $1 million and separation costs of $1 million.
|
|
|
|
|
|
|
|
|
|
(9) Adjusted income
from continuing operations attributable to noncontrolling interests
for the three months ended March 31, 2016 excludes $6 million for
the noncontrolling interest impact of restructuring and impairment
costs and $1 million for the noncontrolling interest impact of
integration costs. Adjusted income from continuing operations
attributable to noncontrolling interests for the six months ended
March 31, 2016, excludes $7 million for the noncontrolling interest
impact of transaction/integration costs and $6 million for the
noncontrolling interest impact of restructuring and impairment
costs.
|
|
|
|
|
|
|
|
|
2.
2016 Supplemental Combined Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a result of the
reverse merger between JCI and Tyco, which closed on September 2,
2016, the Company is providing supplemental combined financial
information. As supplemental information that management
believes will be useful to investors, the Company has provided
unaudited selected historical information which combines JCI's
historical Building Efficiency business with historical Tyco
results of operations as if these businesses had been operated
together during the periods presented.
The merger is accounted for as a reverse acquisition with JCI
considered to be acquiring Tyco for accounting purposes. As a
result, the amounts reflected in Column A in the below table
present the historical results of JCI, revised for the reporting
changes described within footnote 1 above. The amounts in
Column B reflect the impact of the special items, as set forth in
the notes to the table and within footnote 1 above. The amounts in
Column C reflect the inclusion of Tyco's historical results for the
period prior to the merger on an adjusted basis.
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the avoidance of
doubt, this supplemental combined information is not intended to
be, and was not, prepared on a basis consistent with the unaudited
pro forma condensed combined financial information in Exhibit 99.3
to the Company's Current Report on Form 8-K/A filed October 3, 2016
with the U.S. Securities and Exchange Commission (the "Pro Forma
8-K/A Filing"), which provides the pro forma financial information
required by Item 9.01(b) of Form 8-K. The supplemental combined
information is intentionally different from, but does not
supersede, the pro forma financial information in the Pro Forma
8-K/A Filing.
In addition, the supplemental combined information does not purport
to indicate the results that actually would have been obtained had
the JCI and Tyco businesses been operated together on the basis of
the new segment structure during the periods presented, or which
may be realized in the future.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts Adjusted
for Certain Special Items
The supplemental combined information includes line items, such as
net sales, income from continuing operations before income taxes,
income tax provision, noncontrolling interest, net income and
diluted EPS, that have been adjusted for the special items set
forth in the notes to the table. Such amounts should be viewed in
addition to, and not in lieu of, net sales, income from continuing
operations before income taxes, income tax provision,
noncontrolling interest, net income and diluted EPS and other
financial measures on an unadjusted basis. In addition, per share
amounts presented in the tables take into account the effects of
(i) the issuance of ordinary shares to JCI shareholders in
connection with the merger, and (ii) the consolidation of Tyco
ordinary shares immediately prior to the merger. As a result, share
counts reflect shares outstanding as of September 2, 2016
immediately following the consummation of the merger
transaction.
The Company's management believes that these adjusted amounts, when
considered together with the unadjusted amounts, provide
information that is useful to investors in understanding
period-over-period operating results separate and apart from items
that may, or could, have a disproportionate positive or negative
impact on results in any particular period. The Company's
management also believes that these adjusted amounts enhance the
ability of investors to analyze trends in the Company's underlying
business and to better understand the Company's performance. In
addition, the Company may utilize adjusted amounts as guides in
forecasting, budgeting and long-term planning processes and to
measure operating performance for compensation purposes. Adjusted
amounts should be considered in addition to, and not as a
substitute for, or superior to, unadjusted
amounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except
per share data; unaudited)
|
|
|
Three Months Ended
March 31, 2016
|
|
Six Months Ended
March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
A
|
|
B
|
|
C
|
|
D
|
|
A
|
|
B
|
|
C
|
|
D
|
|
|
|
|
|
|
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Building Technologies
& Solutions
|
|
|
$
3,150
|
|
$
-
|
|
$
2,325
|
|
$
5,475
|
|
$
6,106
|
|
$
-
|
|
$
4,695
|
|
$
10,801
|
|
|
|
|
|
|
|
Power
Solutions
|
|
|
1,583
|
|
-
|
|
-
|
|
1,583
|
|
3,323
|
|
-
|
|
-
|
|
3,323
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
4,733
|
|
$
-
|
|
$
2,325
|
|
$
7,058
|
|
$
9,429
|
|
$
-
|
|
$
4,695
|
|
$
14,124
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Building Technologies
& Solutions
|
|
|
$
276
|
|
$
6
|
|
$
353
|
|
$
635
|
|
$
475
|
|
$
18
|
|
$
701
|
|
$
1,194
|
|
|
|
|
|
|
|
Power
Solutions
|
|
|
282
|
|
-
|
|
-
|
|
282
|
|
642
|
|
-
|
|
-
|
|
642
|
|
|
|
|
|
|
|
Segment EBITA
|
|
|
558
|
|
6
|
|
353
|
|
917
|
|
1,117
|
|
18
|
|
701
|
|
1,836
|
|
|
|
|
|
|
|
Corporate
expenses
|
|
|
(110)
|
|
35
|
|
(55)
|
|
(130)
|
|
(197)
|
|
54
|
|
(110)
|
|
(253)
|
|
|
|
|
|
|
|
Amortization of
intangible assets
|
|
|
(20)
|
|
-
|
|
(87)
|
|
(107)
|
|
(40)
|
|
-
|
|
(173)
|
|
(213)
|
|
|
|
|
|
|
|
Restructuring and
impairment costs
|
|
|
(60)
|
|
60
|
|
-
|
|
-
|
|
(60)
|
|
60
|
|
-
|
|
-
|
|
|
|
|
|
|
|
EBIT
|
|
|
368
|
|
101
|
|
211
|
|
680
|
|
820
|
|
132
|
|
418
|
|
1,370
|
|
|
|
|
|
|
|
Net financing
charges
|
|
|
(71)
|
|
-
|
|
(43)
|
|
(114)
|
|
(137)
|
|
-
|
|
(88)
|
|
(225)
|
|
|
|
|
|
|
|
Income from
continuing operations before income taxes
|
|
|
297
|
|
101
|
|
168
|
|
566
|
|
683
|
|
132
|
|
330
|
|
1,145
|
|
|
|
|
|
|
|
Income tax
provision
|
|
|
(41)
|
|
(29)
|
|
(26)
|
|
(96)
|
|
(124)
|
|
(17)
|
|
(53)
|
|
(194)
|
|
|
|
|
|
|
|
Noncontrolling
interest
|
|
|
(38)
|
|
(7)
|
|
1
|
|
(44)
|
|
(61)
|
|
(13)
|
|
1
|
|
(73)
|
|
|
|
|
|
|
|
Net income
|
|
|
$
218
|
|
$
65
|
|
$
143
|
|
$
426
|
|
$
498
|
|
$
102
|
|
$
278
|
|
$
878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares
|
|
|
652.1
|
|
|
|
|
|
940
|
|
652.5
|
|
|
|
|
|
940
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
|
$
0.33
|
|
|
|
|
|
$
0.45
|
|
$
0.76
|
|
|
|
|
|
$
0.93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A - Johnson Controls,
as reported.
|
|
|
|
|
B - Adjusted to
exclude special items because these costs are not considered to be
directly related to the underlying operating performance of the
Company. Management believes these non-GAAP measures are useful to
investors in better understanding the ongoing operations and
business trends of the Company. The special items are
described by line item in footnote 1 above. The income tax
provision and noncontrolling interest adjustments are a result of
the special items discussed in footnote 1.
|
|
|
|
|
C - Includes Tyco
adjusted non-GAAP results for the three and six months ended March
31, 2016, as if the merger occurred October 1, 2015. Tyco's first
three fiscal quarters of 2016 ended on the last Friday of December,
March and June, while JCI's fiscal quarters ended on the last day
of each such month. Because the historical statements of income of
each company represent full and equivalent quarterly periods, no
adjustments were made to align the fiscal quarters. The
income tax provision also includes an adjustment to arrive at an
annualized 17% tax rate for fiscal 2016 as a combined
company.
|
|
|
|
|
D - Combined
financial information as if the merger with Tyco was completed on
October 1, 2015. Reflects annual 17% tax rate and 940 million share
count.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3. Organic
Adjusted Net Sales Growth Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The components of the
changes in adjusted net sales for the three months ended March 31,
2017 versus the three months ended March 31, 2016, including
organic net sales, is shown below (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Combined Adjusted
Net
Sales for the Three
Months Ended
March 31, 2016
|
|
Foreign
Currency
|
|
Acquisitions/
Divestitures, Net
|
|
Lead
Impact
|
|
Organic Net
Sales
|
|
Adjusted Net Sales
for the Three Months Ended
March 31, 2017
|
|
Building Technologies
& Solutions
|
$
5,475
|
|
$
(21)
|
|
-0.4%
|
|
$
(51)
|
|
-0.9%
|
|
$
-
|
|
-
|
|
$
138
|
|
2.5%
|
|
$
5,541
|
|
1.2%
|
|
Power
Solutions
|
1,583
|
|
(4)
|
|
-0.3%
|
|
-
|
|
-
|
|
127
|
|
8.0%
|
|
(10)
|
|
-0.6%
|
|
1,696
|
|
7.1%
|
|
Total net
sales
|
$
7,058
|
|
$
(25)
|
|
-0.4%
|
|
$
(51)
|
|
-0.7%
|
|
$
127
|
|
1.8%
|
|
$
128
|
|
1.8%
|
|
$
7,237
|
|
2.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The components of the
changes in adjusted net sales for the six months ended March 31,
2017 versus the six months ended March 31, 2016, including organic
net sales, is shown below (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Combined Adjusted Net
Sales for the Six
Months Ended
March 31, 2016
|
|
Foreign
Currency
|
|
Acquisitions/
Divestitures, Net
|
|
Lead
Impact
|
|
Organic Net
Sales
|
|
Adjusted Net Sales
for the Six Months Ended
March 31, 2017
|
|
Building Technologies
& Solutions
|
$
10,801
|
|
$
(67)
|
|
-0.6%
|
|
$
(101)
|
|
-0.9%
|
|
$
-
|
|
-
|
|
$
104
|
|
1.0%
|
|
$
10,737
|
|
-0.6%
|
|
Power
Solutions
|
3,323
|
|
(15)
|
|
-0.5%
|
|
-
|
|
-
|
|
174
|
|
5.2%
|
|
114
|
|
3.4%
|
|
3,596
|
|
8.2%
|
|
Total net
sales
|
$
14,124
|
|
$
(82)
|
|
-0.6%
|
|
$
(101)
|
|
-0.7%
|
|
$
174
|
|
1.2%
|
|
$
218
|
|
1.5%
|
|
$
14,333
|
|
1.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.
Diluted Earnings Per Share Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company's press
release contains financial information regarding adjusted earnings
per share, which is a non-GAAP performance measure. The
adjusting items include transaction/integration/separation
costs, nonrecurring purchase accounting impacts related to
the Tyco merger, mark-to-market gain for pension plans,
restructuring and impairment costs, and discrete tax items.
The Company excludes these items because they are not considered to
be directly related to the underlying operating performance of the
Company. Management believes these non-GAAP measures are
useful to investors in understanding the ongoing operations and
business trends of the Company.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of
diluted earnings per share as reported to diluted adjusted earnings
per share for the respective periods is shown below
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
Attributable to JCI plc
|
|
Net Income
Attributable to JCI plc from Continuing Operations
|
|
Net Income
Attributable to JCI plc
|
|
Net Income
Attributable to JCI plc from Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
March 31,
|
|
March 31,
|
|
March 31,
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share as reported for JCI plc
|
$
(0.16)
|
|
$
(0.81)
|
|
$
(0.16)
|
|
$
0.33
|
|
$
0.19
|
|
$
(0.12)
|
|
$
0.24
|
|
$
0.76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusting
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
costs
|
0.03
|
|
0.03
|
|
0.03
|
|
0.03
|
|
0.10
|
|
0.04
|
|
0.10
|
|
0.04
|
|
|
|
|
|
|
|
|
|
Related tax
impact
|
(0.01)
|
|
-
|
|
(0.01)
|
|
-
|
|
(0.01)
|
|
-
|
|
(0.01)
|
|
-
|
|
|
|
|
|
|
|
|
|
Integration
costs
|
0.12
|
|
0.01
|
|
0.12
|
|
0.01
|
|
0.18
|
|
0.01
|
|
0.18
|
|
0.01
|
|
|
|
|
|
|
|
|
|
Related tax
impact
|
(0.03)
|
|
-
|
|
(0.03)
|
|
-
|
|
(0.03)
|
|
-
|
|
(0.03)
|
|
-
|
|
|
|
|
|
|
|
|
|
Separation
costs
|
-
|
|
0.16
|
|
-
|
|
0.03
|
|
0.09
|
|
0.30
|
|
-
|
|
0.05
|
|
|
|
|
|
|
|
|
|
Related tax
impact
|
-
|
|
(0.01)
|
|
-
|
|
-
|
|
-
|
|
(0.02)
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
Nonrecurring
purchase accounting impacts
|
(0.02)
|
|
-
|
|
(0.02)
|
|
-
|
|
0.15
|
|
-
|
|
0.15
|
|
-
|
|
|
|
|
|
|
|
|
|
Related tax
impact
|
0.01
|
|
-
|
|
0.01
|
|
-
|
|
(0.04)
|
|
-
|
|
(0.04)
|
|
-
|
|
|
|
|
|
|
|
|
|
Mark-to-market
gain for pension plans
|
(0.02)
|
|
-
|
|
(0.02)
|
|
-
|
|
(0.14)
|
|
-
|
|
(0.14)
|
|
-
|
|
|
|
|
|
|
|
|
|
Related tax
impact
|
0.01
|
|
-
|
|
0.01
|
|
-
|
|
0.06
|
|
-
|
|
0.06
|
|
-
|
|
|
|
|
|
|
|
|
|
Restructuring
and impairment costs
|
0.10
|
|
0.34
|
|
0.10
|
|
0.08
|
|
0.19
|
|
0.34
|
|
0.19
|
|
0.08
|
|
|
|
|
|
|
|
|
|
Related tax
impact
|
(0.02)
|
|
(0.03)
|
|
(0.02)
|
|
(0.02)
|
|
(0.04)
|
|
(0.03)
|
|
(0.04)
|
|
(0.02)
|
|
|
|
|
|
|
|
|
|
Discrete tax
items
|
0.48
|
|
1.17
|
|
0.48
|
|
(0.02)
|
|
0.40
|
|
1.20
|
|
0.38
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per
share for JCI plc*
|
$
0.50
|
|
$
0.86
|
|
$
0.50
|
|
$
0.43
|
|
$
1.09
|
|
$
1.71
|
|
$
1.03
|
|
$
0.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* May not sum due to
rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of
the differences between earnings per share as reported and adjusted
earnings per share provided on a forward-looking basis is not
available due to the high variability of the net mark-to-market
adjustments related to pension and postretirement plans and
unpredictability of any other potential adjusting items.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table
reconciles the denominators used to calculate basic and diluted
earnings per share for JCI plc (in millions;
unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding for JCI plc
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
939.2
|
|
648.2
|
|
938.2
|
|
648.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of dilutive
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options, unvested
restricted stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and unvested
performance share awards
|
-
|
|
3.9
|
|
9.8
|
|
4.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding
|
939.2
|
|
652.1
|
|
948.0
|
|
652.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended March 31, 2017, the total number of potential dilutive shares
due to stock options, unvested restricted stock and unvested
performance share awards was 9.4 million. However, these
items were not included in the computation of diluted loss per
share for the three months ended March 31, 2017, since to do so
would decrease the loss per share. On an adjusted diluted
outstanding share basis, inclusion of the effect of dilutive
securities results in diluted weighted average shares outstanding
of 948.6 million for the three months ended March 31,
2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.
Mark-to-Market of Pension and Postretirement Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The pension and
postretirement mark-to-market gain or loss for each period is
excluded from adjusted diluted earnings per share. The three
and six months ended March 31, 2017 includes mark-to-market gains
for pension plans of $18 million and $135 million, respectively,
due to lump sum payouts for certain U.S. pension plans. There
was no mark-to-market gain or loss for pension and postretirement
plans in the three or six months ended March 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.
Acquisitions and Divestitures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On March 16, 2017,
the Company announced that it signed a definitive agreement to sell
its Scott Safety business to 3M for approximately $2.0
billion. Net cash proceeds from the transaction are expected
to approximate $1.8 to $1.9 billion. Scott Safety is a leader
in the design, manufacture and sale of high performance respiratory
protection, gas and flame detection, thermal imaging and other
critical products for fire services, law enforcement, industrial,
oil and gas, chemical, armed forces, and homeland defense end
markets. The transaction is expected to close in the second
half of calendar 2017, subject to customary closing conditions
including required regulatory approval. The Scott Safety
business is included within assets held for sale and liabilities
held for sale in the accompanying condensed consolidated statement
of financial position as of March 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On October 31, 2016,
the Company completed the spin-off of its Automotive Experience
business by way of the transfer of the Automotive Experience
business from JCI plc to Adient plc and the issuance of ordinary
shares of Adient plc directly to holders of JCI plc ordinary shares
on a pro rata basis. Following the separation, Adient plc is
now an independent public company trading on the New York Stock
Exchange (NYSE) under the symbol "ADNT." The Company did not retain
any equity interest in Adient plc. Beginning in the first
quarter of fiscal 2017, Adient's historical financial results are
reflected in the Company's consolidated financial statements as a
discontinued operation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On September 2, 2016,
JCI Inc. and Tyco completed their combination which was announced
on January 25, 2016. The merger is accounted for as a reverse
acquisition using the acquisition method of accounting in
accordance with Accounting Standards Codification (ASC) 805,
"Business Combinations." JCI Inc. is the accounting acquirer
for financial reporting purposes. Accordingly, the historical
consolidated financial statements of JCI Inc. for periods prior to
this transaction are considered to be the historical financial
statements of the Company. The total fair value of the
consideration transferred was $19.7 billion. As part of the
transaction in the fiscal 2016 fourth quarter, the Company recorded
$16.4 billion of goodwill and $6.2 billion of intangible assets, of
which $3.9 billion are subject to amortization.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On October 1, 2015,
the Company formed a joint venture with Hitachi to expand its
legacy Building Efficiency product offerings. The Company
acquired a 60 percent ownership stake in the new entity for
approximately $133 million ($563 million purchase price less cash
acquired of $430 million).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7. Income
Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company's
effective tax rate from continuing operations before consideration
of the transaction/integration/separation costs, nonrecurring
purchase accounting impacts related to the Tyco merger,
mark-to-market gains for pension plans, restructuring and
impairment costs, and discrete tax items for the three months
ending March 31, 2017 and 2016 is approximately 15 percent and 18
percent, respectively. The three months ended March 31, 2017
includes a non-cash tax charge of $457 million ($0.48) in
continuing operations related to establishment of a deferred tax
liability on the outside basis difference of the Company's
investment in certain subsidiaries of the Scott Safety
business. The three months ended March 31, 2016 includes a
non-cash tax charge of $780 million ($1.20) in discontinued
operations related to the Company's change in assertion over
permanently reinvested earnings as a result of the spin-off of the
Automotive Experience business and a tax benefit of $15 million
($0.02) in continuing operations related to the first quarter
impact of the reduction in the Company's annual effective tax
rate.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.
Restructuring
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The three and six
months ended March 31, 2017 includes restructuring and impairment
costs of $99 million and $177 million, respectively, related
primarily to workforce reductions, plant closures and asset
impairments in the Building Technologies & Solutions business
and at Corporate. The three and six months ended March 31,
2016 restructuring and impairment costs of $60 million related
primarily to workforce reductions, plant closures and asset
impairments in the Building Technologies & Solutions business
and at Corporate.
|
|
|
|