Exhibit 99.3
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
On April 30, 2019 (the “Divestiture Date”), Johnson Controls International plc (the “Company” or “Johnson Controls”) completed the sale of its battery business ("Power Solutions"), to BCP Acquisitions LLC for net cash proceeds of approximately $11.6 billion.
During the first quarter of fiscal 2019, the Company determined that its Power Solutions business met the criteria to be classified as a discontinued operation (the "Power Solutions Discontinued Operations").
Unaudited Pro Forma Consolidated Financial Information
The following unaudited pro forma consolidated financial statements as of December 31, 2018, and for the three months ended December 31, 2018 and for each of the years ended September 30, 2018, 2017 and 2016, reflect adjustments to the Company’s historical financial results related to the:
| |
| • | Power Solutions divestiture and related events. The unaudited pro forma consolidated statements of income for the three months ended December 31, 2018 and the year ended September 30, 2018 give effect to the Power Solutions divestiture and related events as if they occurred at the beginning of this period on October 1, 2017. The unaudited pro forma consolidated statement of financial position gives effect to the Power Solutions divestiture and related events as if they occurred as of December 31, 2018, the Company’s latest balance sheet date. |
| |
| • | Power Solutions Discontinued Operations. The unaudited pro forma consolidated statements of income reflect the removal of the Power Solutions Discontinued Operations 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 Power Solutions divestiture 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 divestiture of Power Solutions. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.
The unaudited pro forma consolidated financial statements and the accompanying notes should be read together with:
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| • | Historical financial statements of Johnson Controls as of and for the year ended September 30, 2018 and the related notes included in Johnson Controls’ Annual Report on Form 10-K for the year ended September 30, 2018 that Johnson Controls filed with the Securities and Exchange Commission (“SEC”) on November 20, 2018; and |
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| • | Separate historical financial statements of Johnson Controls as of and for the three months ended December 31, 2018 and the related notes included in Johnson Controls’ Quarterly Report on Form 10-Q for the period ended December 31, 2018 that Johnson Controls filed with the SEC on February 1, 2019. In those historical financial statements, Power Solutions was classified as a discontinued operation for all periods presented. |
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. The historical Johnson Controls consolidated statement of financial position as of December 31, 2018 and the consolidated statement of income for the three months ended December 31, 2018 were derived from the Company’s unaudited interim consolidated financial statements included in its Quarterly Report on Form 10-Q for the quarter ended December 31, 2018. The historical Johnson Controls consolidated statements of income for each of the years ended September 30, 2018, 2017 and 2016, were derived from the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended September 30, 2018.
Power Solutions Discontinued Operations
The unaudited pro forma financial information related to the Power Solutions 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 Power Solutions' results of operations would have been on a stand-alone basis and are not necessarily indicative of Johnson Controls’ or Power Solutions’ future results of operations. As such, the unaudited pro forma consolidated statements of income do not allocate any general corporate overhead expenses of Johnson Controls to the Power Solutions Discontinued Operations.
The information in the Power Solutions Discontinued Operations column in the unaudited pro forma consolidated statements of income was prepared based on the Johnson Controls’ annual audited financial statements and only include costs that are directly attributable to the operating results of Power Solutions.
Power Solutions was classified as a discontinued operation within Johnson Controls’ historical consolidated statement of income for the three months ended December 31, 2018, and as a result a Power Solutions Discontinued Operations adjustment was not needed to determine pro forma continuing operations for the three months ended December 31, 2018.
Pro Forma Adjustments
The unaudited pro forma consolidated statement of financial position as of December 31, 2018 include additional pro forma adjustments which are further described in the accompanying notes.
JOHNSON CONTROLS INTERNATIONAL PLC
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED DECEMBER 31, 2018
(in millions, except per share data)
|
| | | | |
| | | Pro Forma Johnson Controls Continuing Operations |
| | |
| | |
| | |
| Net sales | | |
| Products and systems | | $ | 3,922 |
|
| Services | | 1,542 |
|
| | | 5,464 |
|
| Cost of sales | | |
| Products and systems | | 2,824 |
|
| Services | | 915 |
|
| | | 3,739 |
|
| | | |
| Gross profit | | 1,725 |
|
| | | |
| Selling, general and administrative expenses | | (1,438 | ) |
| Net financing charges | | (85 | ) |
| Equity income | | 42 |
|
| | | |
| Income from continuing operations before income taxes | | 244 |
|
| | | |
| Income tax provision | | 108 |
|
| | | |
| Net income from continuing operations | | 136 |
|
| | | |
Income from continuing operations attributable to noncontrolling interests | | 29 |
|
| | | |
Net income from continuing operations attributable to Johnson Controls | | $ | 107 |
|
| | | |
| | | |
Basic earnings per share attributable to Johnson Controls from continuing operations | | $ | 0.12 |
|
| | | |
Diluted earnings per share attributable to Johnson Controls from continuing operations | | $ | 0.12 |
|
| | | |
| Weighted average number of shares outstanding: | | |
| Basic | | 921.6 |
| Diluted | | 925.2 |
JOHNSON CONTROLS INTERNATIONAL PLC
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FISCAL YEAR ENDED SEPTEMBER 30, 2018
(in millions, except per share data)
|
| | | | | | | | | | | |
| | Historical Johnson Controls | | Power Solutions Discontinued Operations | | Pro Forma Johnson Controls Continuing Operations |
| | | |
| | | |
| | | |
| Net sales | | | | | |
| Products and systems | $ | 25,332 |
| | $ | (8,000 | ) | | $ | 17,332 |
|
| Services | 6,068 |
| | — |
| | 6,068 |
|
| | 31,400 |
| | (8,000 | ) | | 23,400 |
|
| Cost of sales | | | | | |
| Products and systems | 18,602 |
| | (6,287 | ) | | 12,315 |
|
| Services | 3,418 |
| | — |
| | 3,418 |
|
| | 22,020 |
| | (6,287 | ) | | 15,733 |
|
| | | | | | |
| Gross profit | 9,380 |
| | (1,713 | ) | | 7,667 |
|
| | | | | | |
| Selling, general and administrative expenses | (6,010 | ) | | 368 |
| | (5,642 | ) |
| Restructuring and impairment costs | (263 | ) | | 8 |
| | (255 | ) |
| Net financing charges | (441 | ) | | 40 |
| | (401 | ) |
| Equity income | 235 |
| | (58 | ) | | 177 |
|
| | | | | | |
| Income from continuing operations before income taxes | 2,901 |
| | (1,355 | ) | | 1,546 |
|
| | | | | | |
| Income tax provision | 518 |
| | (321 | ) | | 197 |
|
| | | | | | |
| Net income from continuing operations | 2,383 |
| | (1,034 | ) | | 1,349 |
|
| | | | | | |
Income from continuing operations attributable to noncontrolling interests | 221 |
| | (47 | ) | | 174 |
|
| | | | | | |
Net income from continuing operations attributable to Johnson Controls | $ | 2,162 |
| | $ | (987 | ) | | $ | 1,175 |
|
| | | | | | |
| | | | | | |
Basic earnings per share attributable to Johnson Controls from continuing operations | $ | 2.34 |
| | | | $ | 1.27 |
|
| | | | | | |
Diluted earnings per share attributable to Johnson Controls from continuing operations | $ | 2.32 |
| | | | $ | 1.26 |
|
| | | | | | |
| Weighted average number of shares outstanding: | | | | | |
| Basic | 925.7 | | | | 925.7 |
| Diluted | 931.7 | | | | 931.7 |
JOHNSON CONTROLS INTERNATIONAL PLC
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FISCAL YEAR ENDED SEPTEMBER 30, 2017
(in millions, except per share data)
|
| | | | | | | | | | | |
| | Historical Johnson Controls | | Power Solutions Discontinued Operations | | Pro Forma Johnson Controls Continuing Operations |
| | | |
| | | |
| | | |
| Net sales | | | | | |
| Products and systems | $ | 24,099 |
| | $ | (7,337 | ) | | $ | 16,762 |
|
| Services | 6,073 |
| | — |
| | 6,073 |
|
| | 30,172 |
| | (7,337 | ) | | 22,835 |
|
| Cost of sales | | | | | |
| Products and systems | 17,220 |
| | (5,528 | ) | | 11,692 |
|
| Services | 3,613 |
| | — |
| | 3,613 |
|
| | 20,833 |
| | (5,528 | ) | | 15,305 |
|
| | | | | | |
| Gross profit | 9,339 |
| | (1,809 | ) | | 7,530 |
|
| | | | | | |
| Selling, general and administrative expenses | (6,158 | ) | | 435 |
| | (5,723 | ) |
| Restructuring and impairment costs | (367 | ) | | 20 |
| | (347 | ) |
| Net financing charges | (496 | ) | | 30 |
| | (466 | ) |
| Equity income | 240 |
| | (83 | ) | | 157 |
|
| | | | | | |
| Income from continuing operations before income taxes | 2,558 |
| | (1,407 | ) | | 1,151 |
|
| | | | | | |
| Income tax provision | 705 |
| | (383 | ) | | 322 |
|
| | | | | | |
| Net income from continuing operations | 1,853 |
| | (1,024 | ) | | 829 |
|
| | | | | | |
Income from continuing operations attributable to noncontrolling interests | 199 |
| | (42 | ) | | 157 |
|
| | | | | | |
Net income from continuing operations attributable to Johnson Controls | $ | 1,654 |
| | $ | (982 | ) | | $ | 672 |
|
| | | | | | |
| | | | | | |
Basic earnings per share attributable to Johnson Controls from continuing operations | $ | 1.77 |
| | | | $ | 0.72 |
|
| | | | | | |
Diluted earnings per share attributable to Johnson Controls from continuing operations | $ | 1.75 |
| | | | $ | 0.71 |
|
| | | | | | |
| Weighted average number of shares outstanding: | | | | | |
| Basic | 935.3 | | | | 935.3 |
| Diluted | 944.6 | | | | 944.6 |
JOHNSON CONTROLS INTERNATIONAL PLC
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FISCAL YEAR ENDED SEPTEMBER 30, 2016
(in millions, except per share data)
|
| | | | | | | | | | | |
| | Historical Johnson Controls | | Power Solutions Discontinued Operations | | Pro Forma Johnson Controls Continuing Operations |
| | | |
| | | |
| | | |
| Net sales | | | | | |
| Products and systems | $ | 18,084 |
| | $ | (6,653 | ) | | $ | 11,431 |
|
| Services | 2,753 |
| | — |
| | 2,753 |
|
| | 20,837 |
| | (6,653 | ) | | 14,184 |
|
| Cost of sales | | | | | |
| Products and systems | 13,323 |
| | (4,960 | ) | | 8,363 |
|
| Services | 1,860 |
| | — |
| | 1,860 |
|
| | 15,183 |
| | (4,960 | ) | | 10,223 |
|
| | | | | | |
| Gross profit | 5,654 |
| | (1,693 | ) | | 3,961 |
|
| | | | | | |
| Selling, general and administrative expenses | (4,190 | ) | | 471 |
| | (3,719 | ) |
| Restructuring and impairment costs | (288 | ) | | 66 |
| | (222 | ) |
| Net financing charges | (289 | ) | | 13 |
| | (276 | ) |
| Equity income | 174 |
| | (48 | ) | | 126 |
|
| | | | | | |
| Income (loss) from continuing operations before income taxes | 1,061 |
| | (1,191 | ) | | (130 | ) |
| | | | | | |
| Income tax provision (benefit) | 197 |
| | (426 | ) | | (229 | ) |
| | | | �� | | |
| Net income from continuing operations | 864 |
| | (765 | ) | | 99 |
|
| | | | | | |
Income from continuing operations attributable to noncontrolling interests | 132 |
| | (23 | ) | | 109 |
|
| | | | | | |
Net income (loss) from continuing operations attributable to Johnson Controls | $ | 732 |
| | $ | (742 | ) | | $ | (10 | ) |
| | | | | | |
| | | | | | |
Basic earnings (loss) per share attributable to Johnson Controls from continuing operations | $ | 1.10 |
| | | | $ | (0.01 | ) |
| | | | | | |
Diluted earnings (loss) per share attributable to Johnson Controls from continuing operations | $ | 1.09 |
| | | | $ | (0.01 | ) |
| | | | | | |
| Weighted average number of shares outstanding: | | | | | |
| Basic | 667.4 | | | | 667.4 |
| Diluted | 672.6 | | | | 667.4 |
JOHNSON CONTROLS INTERNATIONAL PLC
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS OF DECEMBER 31, 2018
(in millions)
|
| | | | | | | | | | | | | | | |
| | Historical Johnson Controls | | Power Solutions Discontinued Operations | | Pro Forma Adjustments | | Pro Forma Johnson Controls Continuing Operations |
| | | | |
| | | | |
| | | | |
| | | | | | | | |
| Assets | | | | | | | |
| | | | | | | | |
| Cash and cash equivalents | $ | 292 |
| | $ | — |
| | $ | 12,711 |
| (a) | $ | 13,003 |
|
| Accounts receivable - net | 5,442 |
| | — |
| | — |
| | 5,442 |
|
| Inventories | 2,027 |
| | — |
| | — |
| | 2,027 |
|
| Assets held for sale | 3,042 |
| | (3,042 | ) | | — |
| | — |
|
| Other current assets | 1,152 |
| | — |
| | (111 | ) | (b) | 1,041 |
|
| Current assets | 11,955 |
| | (3,042 | ) | | 12,600 |
| | 21,513 |
|
| | | | | | | | |
| Property, plant and equipment - net | 3,314 |
| | — |
| | — |
| | 3,314 |
|
| Goodwill | 18,291 |
| | — |
| | — |
| | 18,291 |
|
| Other intangible assets - net | 6,080 |
| | — |
| | — |
| | 6,080 |
|
| Investments in partially-owned affiliates | 887 |
| | — |
| | — |
| | 887 |
|
| Noncurrent assets held for sale | 5,159 |
| | (5,159 | ) | | — |
| | — |
|
| Other noncurrent assets | 2,330 |
| | — |
| | — |
| | 2,330 |
|
| Total assets | $ | 48,016 |
| | $ | (8,201 | ) | | $ | 12,600 |
| | $ | 52,415 |
|
| | | | | | | | |
| Liabilities and Equity | | | | | | | |
| | | | | | | | |
| Short-term debt | $ | 2,319 |
| | $ | — |
| | $ | — |
| | $ | 2,319 |
|
| Current portion of long-term debt | 1 |
| | — |
| | — |
| | 1 |
|
| Accounts payable | 3,273 |
| | — |
| | — |
| | 3,273 |
|
| Accrued compensation and benefits | 868 |
| | — |
| | — |
| | 868 |
|
| Deferred revenue | 1,378 |
| | — |
| | — |
| | 1,378 |
|
| Liabilities held for sale | 1,636 |
| | (1,636 | ) | | — |
| | — |
|
| Other current liabilities | 2,178 |
| | — |
| | 807 |
| (b) | 2,985 |
|
| Current liabilities | 11,653 |
| | (1,636 | ) | | 807 |
| | 10,824 |
|
| | | | | | | | |
| Long-term debt | 9,588 |
| | — |
| | — |
| | 9,588 |
|
| Pension and postretirement benefits | 569 |
| | — |
| | — |
| | 569 |
|
| Noncurrent liabilities held for sale | 201 |
| | (201 | ) | | — |
| | — |
|
| Other noncurrent liabilities | 4,598 |
| | — |
| | 943 |
| (b) | 5,541 |
|
| Long-term liabilities | 14,956 |
| | (201 | ) | | 943 |
| | 15,698 |
|
| | | | | | | | |
| Ordinary shares | 10 |
| | — |
| | — |
| | 10 |
|
| Ordinary shares held in treasury, at cost | (1,543 | ) | | — |
| | — |
| | (1,543 | ) |
| Capital in excess of par value | 16,579 |
| | — |
| | — |
| | 16,579 |
|
| Retained earnings | 6,136 |
| | (6,515 | ) | | 10,850 |
| (c) | 10,471 |
|
| Accumulated other comprehensive loss | (1,080 | ) | | 442 |
| | — |
| | (638 | ) |
| Shareholders’ equity attributable to Johnson Controls | 20,102 |
| | (6,073 | ) | | 10,850 |
| | 24,879 |
|
| Noncontrolling interests | 1,305 |
| | (291 | ) | | — |
| | 1,014 |
|
| Total equity | 21,407 |
| | (6,364 | ) | | 10,850 |
| | 25,893 |
|
| Total liabilities and equity | $ | 48,016 |
| | $ | (8,201 | ) | | $ | 12,600 |
| | $ | 52,415 |
|
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma consolidated statement of financial position as of December 31, 2018 includes the following Power Solutions divestiture-related adjustments:
| |
| (a) | Represents the cash proceeds received, net of certain transaction costs, in connection with the Power Solutions divestiture. |
| |
| (b) | Represents the Company's income tax impact resulting from the Power Solutions divestiture gain as well as certain separation related costs. |
| |
| (c) | Represents the net effect of the pro forma adjustments described in notes (a) through (b) above, had the transaction closed on December 31, 2018. These amounts are subject to finalization. |
