EX-99.2 3 a16-20376_1ex99d2.htm EX-99.2

Exhibit 99.2

 


 

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

 

Spin-Off of Adient

 

On October 31, 2016 (the “Distribution Date”), Johnson Controls International plc (the “Company” or “Johnson Controls”) completed the spin-off of its automotive seating and interiors business, Adient plc (“Adient”), to its shareholders (the “Spin-Off”). On October 31, 2016, each of the Company’s shareholders of record as of the close of business on October 19, 2016 (the “Record Date”), received one ordinary share of Adient for every ten ordinary shares of Johnson Controls held at the close of business on the Record Date. Johnson Controls shareholders will receive cash in lieu of fractional shares of Adient (if any). Adient is now an independent public company trading under the symbol “ADNT” on the New York Stock Exchange.

 

After the Distribution Date, the Company does not beneficially own any ordinary shares of Adient and will no longer consolidate Adient within its financial results. Beginning in the first quarter of fiscal 2017, Adient’s historical financial results for periods prior to the Distribution Date will be reflected in the Company’s consolidated financial statements as a discontinued operation (the “Adient Discontinued Operations”).

 

Unaudited Pro Forma Consolidated Financial Information

 

The following unaudited pro forma consolidated financial statements as of June 30, 2016, and for the nine months ended June 30, 2016 and for each of the years ended September 30, 2015, 2014 and 2013, reflect adjustments to the Company’s historical financial results related to the:

 

·                  Spin-Off and related events. The unaudited pro forma consolidated statements of income for the nine months ended June 30, 2016 and the year ended September 30, 2015 give effect to the Spin-Off and related events as if they occurred at the beginning of this period on October 1, 2014. The unaudited pro forma consolidated statement of financial position gives effect to the Spin-Off and related events as if they occurred as of June 30, 2016, the Company’s latest balance sheet date.

 

·                  Adient Discontinued Operation. The unaudited pro forma consolidated statements of income reflect the removal of the Adient Discontinued Operation historical results in all periods presented.

 

The unaudited pro forma consolidated statements of income (i) are presented based on information currently available, (ii) are intended for informational purposes only, (iii) are not necessarily indicative of and do not purport to represent what the Company’s operating results would have been had the Spin-Off and related events occurred as described or what the Company’s future operating results will be after giving effect to these events, and (iv) do not reflect all actions that may be undertaken by the Company after the Spin-Off and disposition of Adient.

 

The unaudited pro forma consolidated financial statements and the accompanying notes should be read together with:

 

·                  Historical financial statements of Johnson Controls as of and for the year ended September 30, 2015 and the related notes included in Johnson Controls’ Annual Report on Form 10-K for the year ended September 30, 2015 that Johnson Controls filed with the Securities and Exchange Commission (“SEC”) on November 18, 2015, portions of which (including Part I, Item 1. Business, and the following items from Part II of the Annual Report: Item 6. Selected Financial Data, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 8. Financial Statements and Supplementary Data) were recast in Johnson Controls’ Current Report on Form 8-K filed with the SEC on March 3, 2016;

 


 

·                  Separate historical financial statements of Johnson Controls as of and for the nine months ended June 30, 2016 and the related notes included in Johnson Controls’ Quarterly Report on Form 10-Q for the period ended June 30, 2016 that Johnson Controls filed with the SEC on July 29, 2016; and

 

·                  Adient’s audited annual and unaudited interim combined financial statements and accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Adient’s Registration Statement on Form 10 filed with the SEC on April 27, 2016 and most recently amended on September 20, 2016.

 

In the enclosed unaudited pro forma consolidated statements of income and unaudited pro forma consolidated statement of financial positon, the amounts reflected in the columns presented are described below:

 

Historical Johnson Controls

 

This column reflects Johnson Controls’ historical financial statements for the periods presented and does not reflect any adjustments related to the Spin-Off and related events.

 

The historical Johnson Controls consolidated statement of financial position as of June 30, 2016 and the consolidated statement of income for the nine months ended June 30, 2016 were derived from the Company’s unaudited interim consolidated financial statements included in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2016. The historical Johnson Controls consolidated statements of income for each of the years ended September 30, 2015, 2014 and 2013, were derived from the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K (portions of which were recast in Johnson Controls’ Current Report on Form 8-K filed with the SEC on March 3, 2016 as previously noted) for the year ended September 30, 2015.

 

Adient Discontinued Operations

 

The unaudited pro forma financial information related to the Adient Discontinued Operations has been prepared in accordance with the discontinued operations guidance in Accounting Standards Codification 205, “Financial Statement Presentation” and therefore does not reflect what Johnson Controls’ or Adient’s results of operations would have been on a stand-alone basis and are not necessarily indicative of Johnson Controls’ or Adient’s future results of operations. As such, the unaudited pro forma combined financial statements of income do not allocate any general corporate overhead expenses of Johnson Controls to Adient.

 

The information in the Adient Discontinued Operations column in the unaudited pro forma consolidated statements of income was prepared based on the Johnson Controls’ interim unaudited and annual audited financial statements and only include costs that are directly attributable to the operating results of Adient.

 

Pro Forma Adjustments

 

The unaudited pro forma consolidated financial statements as of and for the nine months ended June 30, 2016 and the year ended September 30, 2015 include the following additional pro forma adjustments which are further described in the accompanying notes:

 

·                  Adjustment to remove non-recurring Spin-Off separation costs incurred to date from the unaudited pro forma consolidated statements of income.

 

·                  Recognition of the recapitalization of equity to reflect the distribution of the Adient net assets, including a $3,000 million dividend from Adient to Johnson Controls.

 


 

JOHNSON CONTROLS INTERNATIONAL PLC

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME

NINE MONTHS ENDED JUNE 30, 2016

(in millions, except share data)

 

 

 

Historical
Johnson
Controls

 

Adient
Discontinued
Operations

 

Pro Forma
Adjustments

 

Pro Forma
Johnson
Controls
Continuing
Operations

 

Net sales

 

 

 

 

 

 

 

 

 

Products and systems

 

$

24,772

 

$

(12,893

)

$

—

 

$

11,879

 

Services

 

2,704

 

—

 

—

 

2,704

 

 

 

27,476

 

(12,893

)

—

 

14,583

 

Cost of sales

 

 

 

 

 

 

 

 

 

Products and systems

 

20,369

 

(11,610

)

—

 

8,759

 

Services

 

1,858

 

—

 

—

 

1,858

 

 

 

22,227

 

(11,610

)

—

 

10,617

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

5,249

 

(1,283

)

—

 

3,966

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

(3,411

)

770

 

46

(a)

(2,595

)

Restructuring and impairment costs

 

(331

)

244

 

—

 

(87

)

Net financing charges

 

(211

)

9

 

—

 

(202

)

Equity income

 

387

 

(260

)

—

 

127

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

1,683

 

(520

)

46

 

1,209

 

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

1,203

 

(1,054

)

2

(b)

151

 

 

 

 

 

 

 

 

 

 

 

Net income from continuing operations

 

480

 

534

 

44

 

1,058

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations attributable to noncontrolling interests

 

177

 

(61

)

—

 

116

 

 

 

 

 

 

 

 

 

 

 

Net income from continuing operations attributable to Johnson Controls

 

$

303

 

$

595

 

$

44

 

$

942

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to Johnson Controls from continuing operations

 

$

0.47

 

 

 

 

 

$

1.46

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Johnson Controls from continuing operations

 

$

0.47

 

 

 

 

 

$

1.45

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

647.0

 

 

 

 

 

647.0

 

Diluted

 

651.5

 

 

 

 

 

651.5

 

 


 

JOHNSON CONTROLS INTERNATIONAL PLC

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME

FISCAL YEAR ENDED SEPTEMBER 30, 2015

(in millions, except share data)

 

 

 

Historical
Johnson
Controls

 

Adient
Discontinued
Operations

 

Pro Forma
Adjustments

 

Pro Forma
Johnson
Controls
Continuing
Operations

 

Net sales

 

 

 

 

 

 

 

 

 

Products and systems

 

$

33,513

 

$

(20,079

)

$

—

 

$

13,434

 

Services

 

3,666

 

—

 

—

 

3,666

 

 

 

37,179

 

(20,079

)

—

 

17,100

 

Cost of sales

 

 

 

 

 

 

 

 

 

Products and systems

 

28,214

 

(18,163

)

—

 

10,051

 

Services

 

2,518

 

—

 

—

 

2,518

 

 

 

30,732

 

(18,163

)

—

 

12,569

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

6,447

 

(1,916

)

—

 

4,531

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

(3,986

)

795

 

2

(a)

(3,189

)

Restructuring and impairment costs

 

(397

)

182

 

—

 

(215

)

Net financing charges

 

(288

)

14

 

—

 

(274

)

Equity income

 

375

 

(295

)

—

 

80

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

2,151

 

(1,220

)

2

 

933

 

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

600

 

(529

)

—

 

71

 

 

 

 

 

 

 

 

 

 

 

Net income from continuing operations

 

1,551

 

(691

)

2

 

862

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations attributable to noncontrolling interests

 

112

 

(66

)

—

 

46

 

 

 

 

 

 

 

 

 

 

 

Net income from continuing operations attributable to Johnson Controls

 

$

1,439

 

$

(625

)

$

2

 

$

816

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to Johnson Controls from continuing operations

 

$

2.20

 

 

 

 

 

$

1.25

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Johnson Controls from continuing operations

 

$

2.18

 

 

 

 

 

$

1.23

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

655.2

 

 

 

 

 

655.2

 

Diluted

 

661.5

 

 

 

 

 

661.5

 

 


 

JOHNSON CONTROLS INTERNATIONAL PLC

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME

FISCAL YEAR ENDED SEPTEMBER 30, 2014

(in millions, except share data)

 

 

 

Historical
Johnson Controls

 

Adient
Discontinued
Operations

 

Pro Forma
Johnson Controls
Continuing
Operations

 

Net sales

 

 

 

 

 

 

 

Products and systems

 

$

34,978

 

$

(22,032

)

$

12,946

 

Services

 

3,771

 

—

 

3,771

 

 

 

38,749

 

(22,032

)

16,717

 

Cost of sales

 

 

 

 

 

 

 

Products and systems

 

29,910

 

(20,039

)

9,871

 

Services

 

2,534

 

—

 

2,534

 

 

 

32,444

 

(20,039

)

12,405

 

 

 

 

 

 

 

 

 

Gross profit

 

6,305

 

(1,993

)

4,312

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

(4,216

)

1,222

 

(2,994

)

Restructuring and impairment costs

 

(324

)

159

 

(165

)

Net financing charges

 

(244

)

18

 

(226

)

Equity income

 

395

 

(285

)

110

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

1,916

 

(879

)

1,037

 

 

 

 

 

 

 

 

 

Income tax provision

 

407

 

(314

)

93

 

 

 

 

 

 

 

 

 

Net income from continuing operations

 

1,509

 

(565

)

944

 

 

 

 

 

 

 

 

 

Income from continuing operations attributable to noncontrolling interests

 

105

 

(67

)

38

 

 

 

 

 

 

 

 

 

Net income from continuing operations attributable to Johnson Controls

 

$

1,404

 

$

(498

)

$

906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to Johnson Controls from continuing operations

 

$

2.11

 

 

 

$

1.36

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Johnson Controls from continuing operations

 

$

2.08

 

 

 

$

1.34

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

Basic

 

666.9

 

 

 

666.9

 

Diluted

 

674.8

 

 

 

674.8

 

 


 

JOHNSON CONTROLS INTERNATIONAL PLC

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME

FISCAL YEAR ENDED SEPTEMBER 30, 2013

(in millions, except share data)

 

 

 

Historical
Johnson Controls

 

Adient
Discontinued
Operations

 

Pro Forma
Johnson Controls
Continuing
Operations

 

Net sales

 

 

 

 

 

 

 

Products and systems

 

$

33,092

 

$

(20,461

)

$

12,631

 

Services

 

4,053

 

—

 

4,053

 

 

 

37,145

 

(20,461

)

16,684

 

Cost of sales

 

 

 

 

 

 

 

Products and systems

 

28,189

 

(18,833

)

9,356

 

Services

 

2,810

 

—

 

2,810

 

 

 

30,999

 

(18,833

)

12,166

 

 

 

 

 

 

 

 

 

Gross profit

 

6,146

 

(1,628

)

4,518

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

(3,627

)

1,097

 

(2,530

)

Restructuring and impairment costs

 

(903

)

712

 

(191

)

Net financing charges

 

(247

)

12

 

(235

)

Equity income

 

399

 

(303

)

96

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

1,768

 

(110

)

1,658

 

 

 

 

 

 

 

 

 

Income tax provision

 

674

 

(206

)

468

 

 

 

 

 

 

 

 

 

Net income from continuing operations

 

1,094

 

96

 

1,190

 

 

 

 

 

 

 

 

 

Income from continuing operations attributable to noncontrolling interests

 

102

 

(58

)

44

 

 

 

 

 

 

 

 

 

Net income from continuing operations attributable to Johnson Controls

 

$

992

 

$

154

 

$

1,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to Johnson Controls from continuing operations

 

$

1.45

 

 

 

$

1.68

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Johnson Controls from continuing operations

 

$

1.44

 

 

 

$

1.66

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

Basic

 

683.7

 

 

 

683.7

 

Diluted

 

689.2

 

 

 

689.2

 

 


 

JOHNSON CONTROLS INTERNATIONAL PLC

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS OF JUNE 30, 2016

(in millions)

 

 

 

Historical
Johnson
Controls

 

Adient
Discontinued
Operations

 

Pro Forma
Adjustments

 

Pro Forma
Johnson
Controls
Continuing
Operations

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

467

 

$

(120

)

$

2,827

(a), (c)

$

3,174

 

Accounts receivable - net

 

6,170

 

(2,132

)

—

 

4,038

 

Inventories

 

2,972

 

(704

)

—

 

2,268

 

Assets held for sale

 

17

 

—

 

—

 

17

 

Other current assets

 

2,221

 

(778

)

—

 

1,443

 

Current assets

 

11,847

 

(3,734

)

2,827

 

10,940

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment - net

 

6,374

 

(2,124

)

—

 

4,250

 

Goodwill

 

7,093

 

(2,374

)

—

 

4,719

 

Other intangible assets - net

 

1,568

 

(117

)

—

 

1,451

 

Investments in partially-owned affiliates

 

2,665

 

(1,694

)

—

 

971

 

Other noncurrent assets

 

2,332

 

(407

)

—

 

1,925

 

Total assets

 

$

31,879

 

$

(10,450

)

$

2,827

 

$

24,256

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term debt

 

$

2,189

 

$

(522

)

$

—

 

$

1,667

 

Current portion of long-term debt

 

670

 

(71

)

—

 

599

 

Accounts payable

 

5,455

 

(2,502

)

—

 

2,953

 

Accrued compensation and benefits

 

1,093

 

(409

)

—

 

684

 

Other current liabilities

 

3,479

 

(962

)

—

 

2,517

 

Current liabilities

 

12,886

 

(4,466

)

—

 

8,420

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

5,139

 

(276

)

—

 

4,863

 

Pension and postretirement benefits

 

727

 

(88

)

—

 

639

 

Other noncurrent liabilities

 

2,353

 

(360

)

—

 

1,993

 

Long-term liabilities

 

8,219

 

(724

)

—

 

7,495

 

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

251

 

(49

)

—

 

202

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

718

 

—

 

—

 

718

 

Capital in excess of par value

 

3,119

 

—

 

—

 

3,119

 

Retained earnings

 

10,575

 

(5,666

)

2,827

(a), (c)

7,736

 

Treasury stock, at cost

 

(3,639

)

—

 

—

 

(3,639

)

Accumulated other comprehensive loss

 

(1,174

)

586

 

—

 

(588

)

Shareholders’ equity attributable to Johnson Controls

 

9,599

 

(5,080

)

2,827

 

7,346

 

Noncontrolling interests

 

924

 

(131

)

—

 

793

 

Total equity

 

10,523

 

(5,211

)

2,827

 

8,139

 

Total liabilities and equity

 

$

31,879

 

$

(10,450

)

$

2,827

 

$

24,256

 

 


 

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 

The unaudited pro forma consolidated financial statements as of June 30, 2016 and for the nine months ended June 30, 2016 and the latest fiscal year ended September 30, 2015 include the following Spin-Off-related adjustments:

 

(a)               Removal of $46 million of Adient separation costs in the nine months ended June 30, 2016 and $2 million of Adient separation costs in the year ended September 30, 2015. These costs directly relate to the Spin-Off of Adient and will not recur and as such, have been removed from the unaudited pro forma consolidated statements of income. On the unaudited pro forma consolidated statement of financial position, we have reflected a pro forma accrual of approximately $173 million of estimated Adient separation costs that the Company expects to incur subsequent to June 30, 2016 to complete the Spin-Off.

 

(b)               The tax effects of pro forma adjustment (a) reflect the tax benefit recorded at the time the costs were incurred.

 

(c)                In connection with the Adient Spin-off, Adient has obtained $3,500 million in debt financing. Approximately $500 million of the proceeds of such financing remain with Adient following the Spin-Off, with approximately $3,000 million distributed to the Company prior to the completion of the Spin-Off.