EX-99.3 4 psdivestitureproformafinan.htm EXHIBIT 99.3 Exhibit


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:

•
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

•
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.