UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 6, 2015
Mallinckrodt public limited company
(Exact name of registrant as specified in its charter)
Ireland | 001-35803 | 98-1088325 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Perth House, Millenium Way,
Chesterfield, Derbyshire, United Kingdom, S41 8ND
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: +44 124 626 3051
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
As disclosed on July 27, 2015, Mallinckrodt plc ("the Company”) entered into a definitive agreement to sell its Contrast Media and Delivery Systems Imaging ("CMDS") business, which is a part of its Global Medical Imaging segment. As a result, the Company will be reclassifying its CMDS business into discontinued operations. The Company is providing recast historical financial information reflecting this reclassification in the attached Exhibit 99.1. Since the Company has not yet issued its fourth quarter financial statements reflecting this business as a discontinued operation, all of the recast historical financial information included in Exhibit 99.1 is considered non-GAAP financial information.
Exhibit 99.1 contains financial measures, including adjusted net income from continuing operations, adjusted diluted earnings per share, adjusted gross profit,and adjusted SG&A, which are considered "non-GAAP" financial measures under applicable Securities and Exchange Commission rules and regulations. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures is included in the tables furnished as part of Exhibit 99.1.
Adjusted net income from continuing operations, adjusted gross profit and adjusted SG&A represent amounts, prepared in accordance with accounting principles generally accepted in the U.S. (GAAP), adjusted for certain items (on a pre-tax basis for adjusted gross profit and adjusted SG&A and on an after-tax basis for adjusted net income from continuing operations) that management believes are not reflective of the operational performance of the business. Adjustments to GAAP amounts include, as applicable to each measure, restructuring and related charges, net; amortization and impairment charges; discontinued operations; acquisition-related expenses, significant legal and environmental charges and other items identified by the company. Adjusted diluted earnings per share represent adjusted net income divided by the number of diluted shares.
The income tax impact item included in our reconciliation of adjusted net income from continuing operations primarily represents the tax impact of adjustments between net income from continuing operations and adjusted net income as well as U.S. tax payments associated with internal installment sale transactions.
The company has provided these non-GAAP financial measures because they are used by management, along with financial measures in accordance with GAAP, to evaluate the company's operating performance. In addition, the Company believes that they will be used by certain investors to measure Mallinckrodt's operating results. Management believes that presenting these non-GAAP measures provides useful information about the company's performance across reporting periods on a consistent basis by excluding items that the company does not believe are indicative of its core operating performance.
These non-GAAP measures should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP. The company's definition of these non-GAAP measures may differ from similarly titled measures used by others.
Because non-GAAP financial measures exclude the effect of items that will increase or decrease the company's reported results of operations, management strongly encourages investors to review the company's consolidated financial statements and publicly filed reports in their entirety. A reconciliation of certain of these historical non-GAAP financial measures to the most directly comparable GAAP financial measures is included in the tables accompanying this release.
The information in this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. | Exhibit | |
99.1 | Recast Historical Financial Information | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
MALLINCKRODT PUBLIC LIMITED COMPANY | ||||
(registrant) | ||||
Date: | October 6, 2015 | By: | /s/ Matthew K. Harbaugh | |
Matthew K. Harbaugh | ||||
Chief Financial Officer | ||||
EXHIBIT INDEX
Exhibit No. | Exhibit | |
99.1 | Recast Historical Financial Information | |
MALLINCKRODT PLC | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
Nine Months Ended June 26, 2015 | ||||||||||||
(unaudited, in millions, except per share data) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement (1) | Adjusted | |||||||||
Net sales | $ | 2,741.3 | $ | (312.1 | ) | $ | 35.3 | $ | 2,464.5 | |||
Cost of sales | 1,280.6 | (222.9 | ) | 35.3 | 1,093.0 | |||||||
Gross profit | 1,460.7 | (89.2 | ) | — | 1,371.5 | |||||||
Selling, general and administrative expenses | 938.7 | (71.8 | ) | — | 866.9 | |||||||
Research and development expenses | 134.4 | (3.2 | ) | — | 131.2 | |||||||
Restructuring charges, net | 34.0 | (0.6 | ) | — | 33.4 | |||||||
Gains on divestiture and license | (2.6 | ) | — | — | (2.6 | ) | ||||||
Operating income | 356.2 | (13.6 | ) | — | 342.6 | |||||||
Interest expense | (178.7 | ) | — | — | (178.7 | ) | ||||||
Interest income | 0.7 | — | — | 0.7 | ||||||||
Other income (expense), net | 7.7 | 0.3 | — | 8.0 | ||||||||
Income from continuing operations before income taxes | 185.9 | (13.3 | ) | — | 172.6 | |||||||
Income tax (benefit) | (40.2 | ) | (5.4 | ) | — | (45.6 | ) | |||||
Income from continuing operations | 226.1 | (7.9 | ) | — | 218.2 | |||||||
Income from discontinued operations, net of income taxes | 23.4 | 7.9 | — | 31.3 | ||||||||
Net income | $ | 249.5 | $ | — | $ | — | $ | 249.5 | ||||
Basic earnings per share: | ||||||||||||
Income from continuing operations | $ | 1.94 | $ | 1.87 | ||||||||
Income from discontinued operations | 0.20 | 0.27 | ||||||||||
Net income | 2.14 | 2.14 | ||||||||||
Diluted earnings per share: | ||||||||||||
Income from continuing operations | $ | 1.91 | $ | 1.85 | ||||||||
Income from discontinued operations | 0.20 | 0.26 | ||||||||||
Net income | 2.11 | 2.11 | ||||||||||
Weighted-average number of shares outstanding: | ||||||||||||
Basic | 115.5 | 115.5 | ||||||||||
Diluted | 117.1 | 117.1 | ||||||||||
1.Represents historical CMDS-related intercompany transactions that will be Mallinckrodt continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
1
MALLINCKRODT PLC | |||||||||||||
NON-GAAP MEASURES | |||||||||||||
Nine Months Ended June 26, 2015 | |||||||||||||
(unaudited, in millions except per share data) | |||||||||||||
Gross profit | Selling, general and administrative expenses | Income from continuing operations | Diluted net income from continuing operations per share | ||||||||||
GAAP | $ | 1,460.7 | $ | 938.7 | $ | 226.1 | $ | 1.91 | |||||
Reclass to discontinued operations | (89.2 | ) | (71.8 | ) | (7.9 | ) | (0.07 | ) | |||||
Adjusted | 1,371.5 | 866.9 | 218.2 | 1.85 | |||||||||
Adjustments: | |||||||||||||
Intangible asset amortization | 392.4 | (4.3 | ) | 396.7 | 3.39 | ||||||||
Restructuring and related charges, net | — | — | 33.6 | 0.29 | |||||||||
Inventory step-up expense | 39.2 | — | 39.2 | 0.33 | |||||||||
Incremental equity conversion costs | — | (65.0 | ) | 65.0 | 0.56 | ||||||||
Acquisition related expenses | — | (30.6 | ) | 30.6 | 0.26 | ||||||||
Significant legal and environmental charges | — | (66.8 | ) | 66.8 | 0.57 | ||||||||
Income taxes (1) | — | — | (197.9 | ) | (1.69 | ) | |||||||
Dilutive share impact (2) | — | — | (5.9 | ) | (0.03 | ) | |||||||
As adjusted | $ | 1,803.1 | $ | 700.2 | $ | 646.3 | $ | 5.52 | |||||
Percent of net sales | 73.2 | % | 28.4 | % | 26.2 | % | |||||||
1.Includes tax effect of above adjustments and U.S. tax payments associated with installment sale transactions.
2.For the nine months ended June 26, 2015, the diluted net income per share on a GAAP basis is presented on a dilutive basis using the two-class method of calculating net income per share. This method required that $1.9 million of net income from continuing operations to be allocated to participating securities for the nine months ended June 26, 2015. This adjustment reflects this allocation and a similar allocation of the above adjustments. Using the two-class method, the weighted-average number of shares were 117.1 million for the nine months ended June 26, 2015.
SEGMENT NET SALES | ||||||||||||
Nine Months Ended June 26, 2015 | ||||||||||||
(unaudited, in millions) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement | Adjusted | |||||||||
Specialty Brands | $ | 1,154.1 | $ | — | $ | — | $ | 1,154.1 | ||||
Specialty Generics | 954.9 | — | — | 954.9 | ||||||||
Global Medical Imaging | 603.5 | (283.3 | ) | — | 320.2 | |||||||
2,712.5 | (283.3 | ) | — | 2,429.2 | ||||||||
Other(1) | 28.8 | (28.8 | ) | 35.3 | 35.3 | |||||||
Net sales | $ | 2,741.3 | $ | (312.1 | ) | $ | 35.3 | $ | 2,464.5 | |||
2
1.Historical reported amounts represent CMDS-related transactions with our former parent. Net sales from the ongoing supply agreement represent historical CMDS-related intercompany transactions that will be continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
3
MALLINCKRODT PLC | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
Three Months Ended June 26, 2015 | ||||||||||||
(unaudited, in millions, except per share data) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement (1) | Adjusted | |||||||||
Net sales | $ | 965.1 | $ | (102.2 | ) | $ | 14.4 | $ | 877.3 | |||
Cost of sales | 431.6 | (72.5 | ) | 14.4 | 373.5 | |||||||
Gross profit | 533.5 | (29.7 | ) | — | 503.8 | |||||||
Selling, general and administrative expenses | 332.7 | (21.8 | ) | — | 310.9 | |||||||
Research and development expenses | 45.0 | (1.0 | ) | — | 44.0 | |||||||
Restructuring charges, net | 23.1 | (0.4 | ) | — | 22.7 | |||||||
Gains on divestiture and license | (0.9 | ) | — | — | (0.9 | ) | ||||||
Operating income | 133.6 | (6.5 | ) | — | 127.1 | |||||||
Interest expense | (72.5 | ) | — | — | (72.5 | ) | ||||||
Interest income | 0.2 | — | — | 0.2 | ||||||||
Other income (expense), net | (0.5 | ) | 0.1 | — | (0.4 | ) | ||||||
Income from continuing operations before income taxes | 60.8 | (6.4 | ) | — | 54.4 | |||||||
Income tax expense (benefit) | 3.3 | (4.5 | ) | — | (1.2 | ) | ||||||
Income from continuing operations | 57.5 | (1.9 | ) | — | 55.6 | |||||||
Income from discontinued operations, net of income taxes | 0.5 | 1.9 | — | 2.4 | ||||||||
Net income | $ | 58.0 | $ | — | $ | — | $ | 58.0 | ||||
Basic earnings per share: | ||||||||||||
Income from continuing operations | $ | 0.49 | $ | 0.47 | ||||||||
Income from discontinued operations | — | 0.02 | ||||||||||
Net income | 0.50 | 0.50 | ||||||||||
Diluted earnings per share: | ||||||||||||
Income from continuing operations | $ | 0.48 | $ | 0.47 | ||||||||
Income from discontinued operations | — | 0.02 | ||||||||||
Net income | 0.49 | 0.49 | ||||||||||
Weighted-average number of shares outstanding: | ||||||||||||
Basic | 116.3 | 116.3 | ||||||||||
Diluted | 117.8 | 117.8 | ||||||||||
1.Represents historical CMDS-related intercompany transactions that will be Mallinckrodt continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
4
MALLINCKRODT PLC | |||||||||||||
NON-GAAP MEASURES | |||||||||||||
Three Months Ended June 26, 2015 | |||||||||||||
(unaudited, in millions except per share data) | |||||||||||||
Gross profit | Selling, general and administrative expenses | Income from continuing operations | Diluted net income from continuing operations per share | ||||||||||
GAAP | $ | 533.5 | $ | 332.7 | $ | 57.5 | $ | 0.48 | |||||
Reclass to discontinued operations | (29.7 | ) | (21.8 | ) | (1.9 | ) | (0.02 | ) | |||||
Adjusted | 503.8 | 310.9 | 55.6 | 0.47 | |||||||||
Adjustments: | |||||||||||||
Intangible asset amortization | 147.1 | (1.9 | ) | 149.0 | 1.26 | ||||||||
Restructuring and related charges, net | — | — | 22.7 | 0.19 | |||||||||
Inventory step-up expense | 4.0 | — | 4.0 | 0.03 | |||||||||
Incremental equity conversion costs | — | (19.6 | ) | 19.6 | 0.17 | ||||||||
Acquisition related expenses | — | (23.5 | ) | 23.5 | 0.20 | ||||||||
Significant legal and environmental charges | — | (15.5 | ) | 15.5 | 0.13 | ||||||||
Income taxes (1) | — | — | (49.6 | ) | (0.42 | ) | |||||||
Dilutive share impact (2) | — | — | (1.8 | ) | (0.01 | ) | |||||||
As adjusted | $ | 654.9 | $ | 250.4 | $ | 238.5 | $ | 2.02 | |||||
Percent of net sales | 74.6 | % | 28.5 | % | 27.2 | % | |||||||
1.Includes tax effect of above adjustments and U.S. tax payments associated with installment sale transactions.
2.For the three months ended June 26, 2015, the diluted net income per share on a GAAP basis is presented on a dilutive basis using the two-class method of calculating net income per share. This method required $0.4 million of net income from continuing operations to be allocated to participating securities for the three months ended June 26, 2015. This adjustment reflects this allocation and a similar allocation of the above adjustments. Using the two-class method, the weighted-average number of shares were 117.8 million for the three months ended June 26, 2015.
SEGMENT NET SALES | ||||||||||||
Three Months Ended June 26, 2015 | ||||||||||||
(unaudited, in millions) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement | Adjusted | |||||||||
Specialty Brands | $ | 446.2 | $ | — | $ | — | $ | 446.2 | ||||
Specialty Generics | 307.9 | — | — | 307.9 | ||||||||
Global Medical Imaging | 201.6 | (92.8 | ) | — | 108.8 | |||||||
955.7 | (92.8 | ) | — | 862.9 | ||||||||
Other(1) | 9.4 | (9.4 | ) | 14.4 | 14.4 | |||||||
Net sales | $ | 965.1 | $ | (102.2 | ) | $ | 14.4 | $ | 877.3 | |||
1.Historical reported amounts represent CMDS-related transactions with our former parent. Net sales from the ongoing supply agreement represent historical CMDS-related intercompany transactions that will be continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
5
MALLINCKRODT PLC | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
Three Months Ended March 27, 2015 | ||||||||||||
(unaudited, in millions, except per share data) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement (1) | Adjusted | |||||||||
Net sales | $ | 909.9 | $ | (103.3 | ) | $ | 12.4 | $ | 819.0 | |||
Cost of sales | 421.4 | (77.7 | ) | 12.4 | 356.1 | |||||||
Gross profit | 488.5 | (25.6 | ) | — | 462.9 | |||||||
Selling, general and administrative expenses | 343.5 | (22.8 | ) | — | 320.7 | |||||||
Research and development expenses | 47.0 | (1.3 | ) | — | 45.7 | |||||||
Restructuring charges, net | 3.7 | (0.2 | ) | — | 3.5 | |||||||
Gains on divestiture and license | (0.9 | ) | — | — | (0.9 | ) | ||||||
Operating income | 95.2 | (1.3 | ) | — | 93.9 | |||||||
Interest expense | (57.4 | ) | — | — | (57.4 | ) | ||||||
Interest income | 0.4 | — | — | 0.4 | ||||||||
Other income (expense), net | 4.1 | 0.1 | — | 4.2 | ||||||||
Income from continuing operations before income taxes | 42.3 | (1.2 | ) | — | 41.1 | |||||||
Income tax (benefit) | (34.2 | ) | 0.1 | — | (34.1 | ) | ||||||
Income from continuing operations | 76.5 | (1.3 | ) | — | 75.2 | |||||||
Income from discontinued operations, net of income taxes | 22.3 | 1.3 | — | 23.6 | ||||||||
Net income | $ | 98.8 | $ | — | $ | — | $ | 98.8 | ||||
Basic earnings per share: | ||||||||||||
Income from continuing operations | $ | 0.66 | $ | 0.64 | ||||||||
Income from discontinued operations | 0.19 | 0.20 | ||||||||||
Net income | 0.85 | 0.85 | ||||||||||
Diluted earnings per share: | ||||||||||||
Income from continuing operations | $ | 0.65 | $ | 0.64 | ||||||||
Income from discontinued operations | 0.19 | 0.20 | ||||||||||
Net income | 0.84 | 0.84 | ||||||||||
Weighted-average number of shares outstanding: | ||||||||||||
Basic | 115.6 | 115.6 | ||||||||||
Diluted | 117.2 | 117.2 | ||||||||||
1.Represents historical CMDS-related intercompany transactions that will be Mallinckrodt continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
6
MALLINCKRODT PLC | |||||||||||||
NON-GAAP MEASURES | |||||||||||||
Three Months Ended March 27, 2015 | |||||||||||||
(unaudited, in millions except per share data) | |||||||||||||
Gross profit | Selling, general and administrative expenses | Income from continuing operations | Diluted net income from continuing operations per share | ||||||||||
GAAP | $ | 488.5 | $ | 343.5 | $ | 76.5 | $ | 0.65 | |||||
Reclass to discontinued operations | (25.6 | ) | (22.8 | ) | (1.3 | ) | (0.01 | ) | |||||
Adjusted | 462.9 | 320.7 | 75.2 | 0.64 | |||||||||
Adjustments: | |||||||||||||
Intangible asset amortization | 121.8 | (1.1 | ) | 122.9 | 1.05 | ||||||||
Restructuring and related charges, net | — | — | 3.6 | 0.03 | |||||||||
Inventory step-up expense | 4.4 | — | 4.4 | 0.04 | |||||||||
Incremental equity conversion costs | — | (21.6 | ) | 21.6 | 0.18 | ||||||||
Acquisition related expenses | — | (7.1 | ) | 7.1 | 0.06 | ||||||||
Significant legal and environmental charges | — | (51.3 | ) | 51.3 | 0.44 | ||||||||
Income taxes (1) | — | — | (85.2 | ) | (0.73 | ) | |||||||
Dilutive share impact (2) | — | — | (1.8 | ) | (0.01 | ) | |||||||
As adjusted | $ | 589.1 | $ | 239.6 | $ | 199.1 | $ | 1.70 | |||||
Percent of net sales | 71.9 | % | 29.3 | % | 24.3 | % | |||||||
1.Includes tax effect of above adjustments and U.S. tax payments associated with installment sale transactions.
2.For the three months ended March 27, 2015, the diluted net income per share on a GAAP basis is presented on a dilutive basis using the two-class method of calculating net income per share. This method required $0.7 million of net income from continuing operations to be allocated to participating securities for the three months ended March 27, 2015. This adjustment reflects this allocation and a similar allocation of the above adjustments. Using the two-class method, the weighted-average number of shares were 117.2 million for the three months ended March 27, 2015.
SEGMENT NET SALES | ||||||||||||
Three Months Ended March 27, 2015 | ||||||||||||
(unaudited, in millions) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement | Adjusted | |||||||||
Specialty Brands | $ | 334.3 | $ | — | $ | — | $ | 334.3 | ||||
Specialty Generics | 362.8 | — | — | 362.8 | ||||||||
Global Medical Imaging | 202.6 | (93.1 | ) | — | 109.5 | |||||||
899.7 | (93.1 | ) | — | 806.6 | ||||||||
Other(1) | 10.2 | (10.2 | ) | 12.4 | 12.4 | |||||||
Net sales | $ | 909.9 | $ | (103.3 | ) | $ | 12.4 | $ | 819.0 | |||
1.Historical reported amounts represent CMDS-related transactions with our former parent. Net sales from the ongoing supply agreement represent historical CMDS-related intercompany transactions that will be continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
7
MALLINCKRODT PLC | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
Three Months Ended December 26, 2014 | ||||||||||||
(unaudited, in millions, except per share data) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement (1) | Adjusted | |||||||||
Net sales | $ | 866.3 | $ | (106.6 | ) | $ | 8.5 | $ | 768.2 | |||
Cost of sales | 427.6 | (72.7 | ) | 8.5 | 363.4 | |||||||
Gross profit | 438.7 | (33.9 | ) | — | 404.8 | |||||||
Selling, general and administrative expenses | 262.5 | (27.2 | ) | — | 235.3 | |||||||
Research and development expenses | 42.4 | (0.9 | ) | — | 41.5 | |||||||
Restructuring charges, net | 7.2 | — | — | 7.2 | ||||||||
Gains on divestiture and license | (0.8 | ) | — | — | (0.8 | ) | ||||||
Operating income | 127.4 | (5.8 | ) | — | 121.6 | |||||||
Interest expense | (48.8 | ) | — | — | (48.8 | ) | ||||||
Interest income | 0.1 | — | — | 0.1 | ||||||||
Other income (expense), net | 4.1 | 0.1 | — | 4.2 | ||||||||
Income from continuing operations before income taxes | 82.8 | (5.7 | ) | — | 77.1 | |||||||
Income tax (benefit) | (9.3 | ) | (1.0 | ) | — | (10.3 | ) | |||||
Income from continuing operations | 92.1 | (4.7 | ) | — | 87.4 | |||||||
Income from discontinued operations, net of income taxes | 0.6 | 4.7 | — | 5.3 | ||||||||
Net income | $ | 92.7 | $ | — | $ | — | $ | 92.7 | ||||
Basic earnings per share: | ||||||||||||
Income from continuing operations | $ | 0.79 | $ | 0.75 | ||||||||
Income from discontinued operations | 0.01 | 0.05 | ||||||||||
Net income | 0.80 | 0.80 | ||||||||||
Diluted earnings per share: | ||||||||||||
Income from continuing operations | $ | 0.78 | $ | 0.74 | ||||||||
Income from discontinued operations | 0.01 | 0.05 | ||||||||||
Net income | 0.79 | 0.79 | ||||||||||
Weighted-average number of shares outstanding: | ||||||||||||
Basic | 114.8 | 114.8 | ||||||||||
Diluted | 116.3 | 116.3 | ||||||||||
1.Represents historical CMDS-related intercompany transactions that will be Mallinckrodt continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
8
MALLINCKRODT PLC | |||||||||||||
NON-GAAP MEASURES | |||||||||||||
Three Months Ended December 26, 2014 | |||||||||||||
(unaudited, in millions except per share data) | |||||||||||||
Gross profit | Selling, general and administrative expenses | Income from continuing operations | Diluted net income from continuing operations per share | ||||||||||
GAAP | $ | 438.7 | $ | 262.5 | $ | 92.1 | $ | 0.78 | |||||
Reclass to discontinued operations | (33.9 | ) | (27.2 | ) | (4.7 | ) | (0.03 | ) | |||||
Adjusted | 404.8 | 235.3 | 87.4 | 0.74 | |||||||||
Adjustments: | |||||||||||||
Intangible asset amortization | 123.5 | (1.3 | ) | 124.8 | 1.07 | ||||||||
Restructuring and related charges, net | — | — | 7.3 | 0.06 | |||||||||
Inventory step-up expense | 30.8 | — | 30.8 | 0.26 | |||||||||
Incremental equity conversion costs | — | (23.8 | ) | 23.8 | 0.20 | ||||||||
Income taxes (1) | — | — | (63.1 | ) | (0.54 | ) | |||||||
Dilutive share impact (2) | — | — | (2.3 | ) | (0.01 | ) | |||||||
As adjusted | $ | 559.1 | $ | 210.2 | $ | 208.7 | $ | 1.79 | |||||
Percent of net sales | 72.8 | % | 27.4 | % | 27.2 | % | |||||||
1.Includes tax effect of above adjustments and U.S. tax payments associated with installment sale transactions.
2.For the three months ended December 26, 2014, the diluted net income per share on a GAAP basis is presented on a dilutive basis using the two-class method of calculating net income per share. This method required that $0.9 million of net income from continuing operations to be allocated to participating securities for the three months ended December 26, 2014. This adjustment reflects this allocation and a similar allocation of the above adjustments. Using the two-class method, the weighted-average number of shares were 116.3 million for the three months ended December 26, 2014.
SEGMENT NET SALES | ||||||||||||
Three Months Ended December 26, 2014 | ||||||||||||
(unaudited, in millions) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement | Adjusted | |||||||||
Specialty Brands | $ | 373.6 | $ | — | $ | — | $ | 373.6 | ||||
Specialty Generics | 284.2 | — | — | 284.2 | ||||||||
Global Medical Imaging | 199.3 | (97.4 | ) | — | 101.9 | |||||||
857.1 | (97.4 | ) | — | 759.7 | ||||||||
Other(1) | 9.2 | (9.2 | ) | 8.5 | 8.5 | |||||||
Net sales | $ | 866.3 | $ | (106.6 | ) | $ | 8.5 | $ | 768.2 | |||
1.Historical reported amounts represent CMDS-related transactions with our former parent. Net sales from the ongoing supply agreement represent historical CMDS-related intercompany transactions that will be continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
9
MALLINCKRODT PLC | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
Fiscal Year Ended September 26, 2014 | ||||||||||||
(unaudited, in millions, except per share data) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement (1) | Adjusted | |||||||||
Net sales | $ | 2,540.4 | $ | (495.8 | ) | $ | 37.4 | $ | 2,082.0 | |||
Cost of sales | 1,337.3 | (352.9 | ) | 37.4 | 1,021.8 | |||||||
Gross profit | 1,203.1 | (142.9 | ) | — | 1,060.2 | |||||||
Selling, general and administrative expenses | 842.1 | (97.1 | ) | — | 745.0 | |||||||
Research and development expenses | 166.9 | (3.4 | ) | — | 163.5 | |||||||
Restructuring charges, net | 128.6 | (47.2 | ) | — | 81.4 | |||||||
Non-restructuring impairment charges | 355.6 | (204.0 | ) | — | 151.6 | |||||||
Separation costs | 9.6 | — | — | 9.6 | ||||||||
Gains on divestiture and license | (15.6 | ) | 0.6 | — | (15.0 | ) | ||||||
Operating (loss) | (284.1 | ) | 208.2 | — | (75.9 | ) | ||||||
Interest expense | (82.6 | ) | — | — | (82.6 | ) | ||||||
Interest income | 1.5 | — | — | 1.5 | ||||||||
Other income (expense), net | 1.8 | 1.3 | — | 3.1 | ||||||||
Loss from continuing operations before income taxes | (363.4 | ) | 209.5 | — | (153.9 | ) | ||||||
Income tax (benefit) | (44.8 | ) | 34.7 | (10.1 | ) | |||||||
Loss from continuing operations | (318.6 | ) | 174.8 | — | (143.8 | ) | ||||||
Loss from discontinued operations, net of income taxes | (0.7 | ) | (174.8 | ) | — | (175.5 | ) | |||||
Net loss | $ | (319.3 | ) | $ | — | $ | — | $ | (319.3 | ) | ||
Basic earnings per share: | ||||||||||||
Loss from continuing operations | $ | (4.91 | ) | $ | (2.22 | ) | ||||||
Loss from discontinued operations | (0.01 | ) | (2.70 | ) | ||||||||
Net loss | (4.92 | ) | (4.92 | ) | ||||||||
Diluted earnings per share: | ||||||||||||
Loss from continuing operations | $ | (4.91 | ) | $ | (2.22 | ) | ||||||
Loss from discontinued operations | (0.01 | ) | (2.70 | ) | ||||||||
Net loss | (4.92 | ) | (4.92 | ) | ||||||||
Weighted-average number of shares outstanding: | ||||||||||||
Basic | 64.9 | 64.9 | ||||||||||
Diluted | 64.9 | 64.9 | ||||||||||
1.Represents historical CMDS-related intercompany transactions that will be Mallinckrodt continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
10
MALLINCKRODT PLC | |||||||||||||
NON-GAAP MEASURES | |||||||||||||
Fiscal Year Ended September 26, 2014 | |||||||||||||
(unaudited, in millions except per share data) | |||||||||||||
Gross profit | Selling, general and administrative expenses | Income (loss) from continuing operations | Diluted net income from continuing operations per share | ||||||||||
GAAP | $ | 1,203.1 | $ | 842.1 | $ | (318.6 | ) | $ | (4.91 | ) | |||
Reclass to discontinued operations | (142.9 | ) | (97.1 | ) | 174.8 | 2.69 | |||||||
Adjusted | 1,060.2 | 745.0 | (143.8 | ) | (2.22 | ) | |||||||
Adjustments: | |||||||||||||
Intangible asset amortization | 153.8 | (1.0 | ) | 154.8 | 2.36 | ||||||||
Restructuring and related charges, net | — | — | 81.9 | 1.25 | |||||||||
Non-restructuring impairment | — | — | 151.6 | 2.31 | |||||||||
Inventory step-up expense | 25.7 | — | 25.7 | 0.39 | |||||||||
Incremental equity conversion costs | — | (13.0 | ) | 13.0 | 0.20 | ||||||||
Separation costs | — | — | 9.6 | 0.15 | |||||||||
Up-front and milestone payments (1) | — | — | 5.0 | 0.08 | |||||||||
Acquisition related expenses | — | (65.1 | ) | 65.1 | 0.99 | ||||||||
Significant legal and environmental charges | (14.3 | ) | (49.6 | ) | 35.3 | 0.54 | |||||||
Gain on intellectual property license | — | — | (11.7 | ) | (0.18 | ) | |||||||
Income taxes (2) | — | — | (94.2 | ) | (1.43 | ) | |||||||
Dilutive share impact (3) | — | — | (0.8 | ) | (0.01 | ) | |||||||
As adjusted | $ | 1,225.4 | $ | 616.3 | $ | 291.5 | $ | 4.44 | |||||
Percent of net sales | 58.9 | % | 29.6 | % | 14.0 | % | |||||||
1.As charge related to a milestone payment prior to regulatory approval this amount is included within research & development expenses.
2.Includes tax effect of above adjustments and certain effects associated with acquisitions.
3.For fiscal 2014, the diluted net income per share on a GAAP basis and diluted net income per share impacts of each adjustment are calculated using 64.9 million shares, which assumes no dilution from outstanding equity awards as they would have been antidilutive on a GAAP basis. The non-GAAP adjusted diluted net income per share is presented on a dilutive basis using the two-class method of calculating net income per share. Using the two-class method the weighted-average number of shares was 65.7 million.
11
MALLINCKRODT PLC | ||||||||||||
SEGMENT NET SALES | ||||||||||||
Fiscal Year Ended September 26, 2014 | ||||||||||||
(unaudited, in millions) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement | Adjusted | |||||||||
Specialty Brands | $ | 413.5 | $ | — | $ | — | $ | 413.5 | ||||
Specialty Generics | 1,199.4 | — | — | 1,199.4 | ||||||||
Global Medical Imaging | 881.5 | (449.8 | ) | — | 431.7 | |||||||
2,494.4 | (449.8 | ) | — | 2,044.6 | ||||||||
Other(1) | 46.0 | (46.0 | ) | 37.4 | 37.4 | |||||||
Net sales | $ | 2,540.4 | $ | (495.8 | ) | $ | 37.4 | $ | 2,082.0 | |||
1.Historical reported amounts represent CMDS-related transactions with our former parent. Net sales from the ongoing supply agreement represent historical CMDS-related intercompany transactions that will be continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
12
MALLINCKRODT PLC | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
Three Months Ended September 26, 2014 | ||||||||||||
(unaudited, in millions, except per share data) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement (1) | Adjusted | |||||||||
Net sales | $ | 789.3 | $ | (120.0 | ) | $ | 4.4 | $ | 673.7 | |||
Cost of sales | 388.7 | (82.6 | ) | 4.4 | 310.5 | |||||||
Gross profit | 400.6 | (37.4 | ) | — | 363.2 | |||||||
Selling, general and administrative expenses | 280.5 | (28.8 | ) | — | 251.7 | |||||||
Research and development expenses | 43.8 | 1.2 | — | 45.0 | ||||||||
Restructuring charges, net | 75.1 | (21.2 | ) | — | 53.9 | |||||||
Non-restructuring impairment charges | 355.6 | (204.0 | ) | — | 151.6 | |||||||
Separation costs | 3.0 | — | — | 3.0 | ||||||||
Gains on divestiture and license | (0.9 | ) | 0.1 | — | (0.8 | ) | ||||||
Operating loss | (356.5 | ) | 215.3 | — | (141.2 | ) | ||||||
Interest expense | (37.7 | ) | — | — | (37.7 | ) | ||||||
Interest income | 0.4 | — | — | 0.4 | ||||||||
Other income (expense), net | 2.7 | 0.3 | — | 3.0 | ||||||||
Loss from continuing operations before income taxes | (391.1 | ) | 215.6 | — | (175.5 | ) | ||||||
Income tax (benefit) | (38.7 | ) | 36.7 | — | (2.0 | ) | ||||||
Loss from continuing operations | (352.4 | ) | 178.9 | — | (173.5 | ) | ||||||
Loss from discontinued operations, net of income taxes | — | (178.9 | ) | — | (178.9 | ) | ||||||
Net loss | $ | (352.4 | ) | $ | — | $ | — | $ | (352.4 | ) | ||
Basic earnings per share: | ||||||||||||
Loss from continuing operations | $ | (4.14 | ) | $ | (2.04 | ) | ||||||
Loss from discontinued operations | — | (2.10 | ) | |||||||||
Net loss | (4.14 | ) | (4.14 | ) | ||||||||
Diluted earnings per share: | ||||||||||||
Loss from continuing operations | $ | (4.14 | ) | $ | (2.04 | ) | ||||||
Loss from discontinued operations | — | (2.10 | ) | |||||||||
Net loss | (4.14 | ) | (4.14 | ) | ||||||||
Weighted-average number of shares outstanding: | ||||||||||||
Basic | 85.2 | 85.2 | ||||||||||
Diluted | 85.2 | 85.2 | ||||||||||
1.Represents historical CMDS-related intercompany transactions that will be Mallinckrodt continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
13
MALLINCKRODT PLC | |||||||||||||
NON-GAAP MEASURES | |||||||||||||
Three Months Ended September 26, 2014 | |||||||||||||
(unaudited, in millions except per share data) | |||||||||||||
Gross profit | Selling, general and administrative expenses | Income (loss) from continuing operations | Diluted net income from continuing operations per share | ||||||||||
GAAP | $ | 400.6 | $ | 280.5 | $ | (352.4 | ) | $ | (4.14 | ) | |||
Reclass to discontinued operations | (37.4 | ) | (28.8 | ) | 178.9 | 2.10 | |||||||
Adjusted | 363.2 | 251.7 | (173.5 | ) | (2.04 | ) | |||||||
Adjustments: | |||||||||||||
Intangible asset amortization | 83.7 | (0.8 | ) | 84.5 | 0.98 | ||||||||
Restructuring and related charges, net | — | — | 53.8 | 0.62 | |||||||||
Non-restructuring impairment charges | — | — | 151.6 | 1.75 | |||||||||
Inventory step-up expense | 15.1 | — | 15.1 | 0.17 | |||||||||
Incremental equity conversion costs | — | (13.0 | ) | 13.0 | 0.15 | ||||||||
Separation costs | — | — | 3.0 | 0.03 | |||||||||
Acquisition related expenses | — | (30.0 | ) | 30.0 | 0.35 | ||||||||
Significant legal and environmental charges | (14.3 | ) | (15.0 | ) | 0.7 | 0.01 | |||||||
Income taxes (1) | — | — | (40.0 | ) | (0.46 | ) | |||||||
Dilutive share impact (2) | (1.2 | ) | (0.01 | ) | |||||||||
As adjusted | $ | 447.7 | $ | 192.9 | $ | 137.0 | $ | 1.59 | |||||
Percent of net sales | 66.5 | % | 28.6 | % | 20.3 | % | |||||||
1.Includes tax effect of above adjustments and certain effects associated with acquisitions.
2.For the three months ended September 26, 2014, the diluted net income per share on a GAAP basis and diluted net income per share impacts of each adjustment are calculated using 85.2 million shares, which assumes no dilution from outstanding equity awards as they would have been antidilutive on a GAAP basis. The non-GAAP adjusted diluted net income per share is presented on a dilutive basis using the two-class method of calculating net income per share. Using the two-class method the weighted-average number of shares was 86.4 million
14
MALLINCKRODT PLC | ||||||||||||
SEGMENT NET SALES | ||||||||||||
Three Months Ended September 26, 2014 | ||||||||||||
(unaudited, in millions) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement | Adjusted | |||||||||
Specialty Brands | $ | 213.9 | $ | — | $ | — | $ | 213.9 | ||||
Specialty Generics | 350.9 | — | — | 350.9 | ||||||||
Global Medical Imaging | 213.4 | (108.9 | ) | — | 104.5 | |||||||
778.2 | (108.9 | ) | — | 669.3 | ||||||||
Other(1) | 11.1 | (11.1 | ) | 4.4 | 4.4 | |||||||
Net sales | $ | 789.3 | $ | (120.0 | ) | $ | 4.4 | $ | 673.7 | |||
1.Historical reported amounts represent CMDS-related transactions with our former parent. Net sales from the ongoing supply agreement represent historical CMDS-related intercompany transactions that will be continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
15
MALLINCKRODT PLC | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
Three Months Ended June 27, 2014 | ||||||||||||
(unaudited, in millions, except per share data) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement (1) | Adjusted | |||||||||
Net sales | $ | 653.1 | $ | (128.4 | ) | $ | 5.4 | $ | 530.1 | |||
Cost of sales | 368.8 | (98.2 | ) | 5.4 | 276.0 | |||||||
Gross profit | 284.3 | (30.2 | ) | — | 254.1 | |||||||
Selling, general and administrative expenses | 221.3 | (20.0 | ) | — | 201.3 | |||||||
Research and development expenses | 42.7 | (1.7 | ) | — | 41.0 | |||||||
Restructuring charges, net | 23.8 | (1.9 | ) | — | 21.9 | |||||||
Separation costs | 1.8 | — | — | 1.8 | ||||||||
Gains on divestiture and license | (0.9 | ) | 0.3 | — | (0.6 | ) | ||||||
Operating loss | (4.4 | ) | (6.9 | ) | — | (11.3 | ) | |||||
Interest expense | (22.7 | ) | — | — | (22.7 | ) | ||||||
Interest income | 0.3 | — | — | 0.3 | ||||||||
Other income (expense), net | 0.1 | 0.3 | — | 0.4 | ||||||||
Loss from continuing operations before income taxes | (26.7 | ) | (6.6 | ) | — | (33.3 | ) | |||||
Income tax (benefit) | (2.4 | ) | (1.9 | ) | — | (4.3 | ) | |||||
Loss from continuing operations | (24.3 | ) | (4.7 | ) | — | (29.0 | ) | |||||
Income from discontinued operations, net of income taxes | 0.2 | 4.7 | — | 4.9 | ||||||||
Net loss | $ | (24.1 | ) | $ | — | $ | — | $ | (24.1 | ) | ||
Basic earnings per share: | ||||||||||||
Loss from continuing operations | $ | (0.42 | ) | $ | (0.50 | ) | ||||||
Income from discontinued operations | — | 0.08 | ||||||||||
Net loss | (0.41 | ) | (0.41 | ) | ||||||||
Diluted earnings per share: | ||||||||||||
Loss from continuing operations | $ | (0.42 | ) | $ | (0.50 | ) | ||||||
Income from discontinued operations | — | 0.08 | ||||||||||
Net loss | (0.41 | ) | (0.41 | ) | ||||||||
Weighted-average number of shares outstanding: | ||||||||||||
Basic | 58.5 | 58.5 | ||||||||||
Diluted | 58.5 | 58.5 | ||||||||||
1.Represents historical CMDS-related intercompany transactions that will be Mallinckrodt continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
16
MALLINCKRODT PLC | |||||||||||||
NON-GAAP MEASURES | |||||||||||||
Three Months Ended June 27, 2014 | |||||||||||||
(unaudited, in millions except per share data) | |||||||||||||
Gross profit | Selling, general and administrative expenses | Income (loss) from continuing operations | Diluted net income from continuing operations per share | ||||||||||
GAAP | $ | 284.3 | $ | 221.3 | $ | (24.3 | ) | $ | (0.42 | ) | |||
Reclass to discontinued operations | (30.2 | ) | (20.0 | ) | (4.7 | ) | (0.08 | ) | |||||
Adjusted | 254.1 | 201.3 | (29.0 | ) | (0.50 | ) | |||||||
Adjustments: | |||||||||||||
Intangible asset amortization | 49.7 | (0.1 | ) | 49.8 | 0.84 | ||||||||
Restructuring and related charges, net | — | — | 22.3 | 0.37 | |||||||||
Inventory step-up expense | 9.5 | — | 9.5 | 0.16 | |||||||||
Separation costs | — | — | 1.8 | 0.03 | |||||||||
Up-front and milestone payments (1) | — | — | 5.0 | 0.08 | |||||||||
Acquisition related expenses | — | (16.6 | ) | 16.6 | 0.28 | ||||||||
Significant legal and environmental charges | — | (11.5 | ) | 11.5 | 0.19 | ||||||||
Income taxes (2) | — | — | (22.8 | ) | (0.38 | ) | |||||||
As adjusted (3) | $ | 313.3 | $ | 173.1 | $ | 64.7 | $ | 1.09 | |||||
Percent of net sales | 59.1 | % | 32.7 | % | 12.2 | % | |||||||
1.As charge related to a milestone payment prior to regulatory approval this amount is included within research & development expenses.
2.Includes tax effect of above adjustments and certain effects associated with acquisitions.
3.For the three months ended June 27, 2014 the weighted-average number of shares reflects 59.5 million shares as compared to 58.5 million shares used in determining diluted earnings per share prepared in accordance with GAAP. The above non-GAAP measure includes 1.0 million shares that would be antidilutive to GAAP diluted earnings per share.
SEGMENT NET SALES | ||||||||||||
Three Months Ended June 26, 2014 | ||||||||||||
(unaudited, in millions) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement | Adjusted | |||||||||
Specialty Brands | $ | 84.9 | $ | — | $ | — | $ | 84.9 | ||||
Specialty Generics | 329.4 | — | — | 329.4 | ||||||||
Global Medical Imaging | 227.1 | (116.7 | ) | — | 110.4 | |||||||
641.4 | (116.7 | ) | — | 524.7 | ||||||||
Other(1) | 11.7 | (11.7 | ) | 5.4 | 5.4 | |||||||
Net sales | $ | 653.1 | $ | (128.4 | ) | $ | 5.4 | $ | 530.1 | |||
1.Historical reported amounts represent CMDS-related transactions with our former parent. Net sales from the ongoing supply agreement represent historical CMDS-related intercompany transactions that will be continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
17
MALLINCKRODT PLC | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
Three Months Ended March 28, 2014 | ||||||||||||
(unaudited, in millions, except per share data) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement (1) | Adjusted | |||||||||
Net sales | $ | 557.8 | $ | (123.7 | ) | $ | 14.6 | $ | 448.7 | |||
Cost of sales | 295.2 | (87.8 | ) | 14.6 | 222.0 | |||||||
Gross profit | 262.6 | (35.9 | ) | — | 226.7 | |||||||
Selling, general and administrative expenses | 194.1 | (21.6 | ) | — | 172.5 | |||||||
Research and development expenses | 41.4 | (1.4 | ) | — | 40.0 | |||||||
Restructuring charges, net | 21.7 | (24.0 | ) | — | (2.3 | ) | ||||||
Separation costs | 2.6 | — | — | 2.6 | ||||||||
Gains on divestiture and license | (0.9 | ) | 0.1 | — | (0.8 | ) | ||||||
Operating income | 3.7 | 11.0 | — | 14.7 | ||||||||
Interest expense | (12.4 | ) | — | — | (12.4 | ) | ||||||
Interest income | 0.5 | — | — | 0.5 | ||||||||
Other income (expense), net | (0.4 | ) | 0.4 | — | — | |||||||
Income (loss) from continuing operations before income taxes | (8.6 | ) | 11.4 | — | 2.8 | |||||||
Income tax (benefit) | (20.3 | ) | 2.9 | — | (17.4 | ) | ||||||
Income from continuing operations | 11.7 | 8.5 | — | 20.2 | ||||||||
Loss from discontinued operations, net of income taxes | (0.1 | ) | (8.5 | ) | — | (8.6 | ) | |||||
Net income | $ | 11.6 | $ | — | $ | — | $ | 11.6 | ||||
Basic earnings per share: | ||||||||||||
Income from continuing operations | $ | 0.20 | $ | 0.35 | ||||||||
Loss from discontinued operations | — | (0.15 | ) | |||||||||
Net income | 0.20 | 0.20 | ||||||||||
Diluted earnings per share: | ||||||||||||
Income from continuing operations | $ | 0.20 | $ | 0.34 | ||||||||
Loss from discontinued operations | — | (0.15 | ) | |||||||||
Net income | 0.20 | 0.20 | ||||||||||
Weighted-average number of shares outstanding: | ||||||||||||
Basic | 58.2 | 58.2 | ||||||||||
Diluted | 59.1 | 59.1 | ||||||||||
1.Represents historical CMDS-related intercompany transactions that will be Mallinckrodt continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
18
MALLINCKRODT PLC | |||||||||||||
NON-GAAP MEASURES | |||||||||||||
Three Months Ended March 28, 2014 | |||||||||||||
(unaudited, in millions except per share data) | |||||||||||||
Gross profit | Selling, general and administrative expenses | Income from continuing operations | Diluted net income from continuing operations per share | ||||||||||
GAAP | $ | 262.6 | $ | 194.1 | $ | 11.7 | $ | 0.20 | |||||
Reclass to discontinued operations | (35.9 | ) | (21.6 | ) | 8.5 | 0.14 | |||||||
Adjusted | 226.7 | 172.5 | 20.2 | 0.34 | |||||||||
Adjustments: | |||||||||||||
Intangible asset amortization | 13.5 | (0.1 | ) | 13.6 | 0.23 | ||||||||
Restructuring and related charges, net | — | — | (2.3 | ) | (0.04 | ) | |||||||
Inventory step-up expense | 1.1 | — | 1.1 | 0.02 | |||||||||
Separation costs | — | — | 2.6 | 0.04 | |||||||||
Acquisition related expenses | — | (18.5 | ) | 18.5 | 0.31 | ||||||||
Significant legal and environmental charges | — | (23.1 | ) | 23.1 | 0.39 | ||||||||
Income taxes (1) | — | — | (30.1 | ) | (0.51 | ) | |||||||
As adjusted | $ | 241.3 | $ | 130.8 | $ | 46.7 | $ | 0.79 | |||||
Percent of net sales | 53.8 | % | 29.2 | % | 10.4 | % | |||||||
1.Includes tax effect of above adjustments and certain effects associated with acquisitions.
SEGMENT NET SALES | ||||||||||||
Three Months Ended March 28, 2014 | ||||||||||||
(unaudited, in millions) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement | Adjusted | |||||||||
Specialty Brands | $ | 55.1 | $ | — | $ | — | $ | 55.1 | ||||
Specialty Generics | 269.2 | — | — | 269.2 | ||||||||
Global Medical Imaging | 222.4 | (112.6 | ) | — | 109.8 | |||||||
546.7 | (112.6 | ) | — | 434.1 | ||||||||
Other(1) | 11.1 | (11.1 | ) | 14.6 | 14.6 | |||||||
Net sales | $ | 557.8 | $ | (123.7 | ) | $ | 14.6 | $ | 448.7 | |||
1.Historical reported amounts represent CMDS-related transactions with our former parent. Net sales from the ongoing supply agreement represent historical CMDS-related intercompany transactions that will be continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
19
MALLINCKRODT PLC | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
Three Months Ended December 27, 2013 | ||||||||||||
(unaudited, in millions, except per share data) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement (1) | Adjusted | |||||||||
Net sales | $ | 540.2 | $ | (123.7 | ) | $ | 13.0 | $ | 429.5 | |||
Cost of sales | 284.6 | (84.3 | ) | 13.0 | 213.3 | |||||||
Gross profit | 255.6 | (39.4 | ) | — | 216.2 | |||||||
Selling, general and administrative expenses | 146.2 | (26.7 | ) | — | 119.5 | |||||||
Research and development expenses | 39.0 | (1.5 | ) | — | 37.5 | |||||||
Restructuring charges, net | 8.0 | (0.1 | ) | — | 7.9 | |||||||
Separation costs | 2.2 | — | — | 2.2 | ||||||||
Gains on divestiture and license | (12.9 | ) | 0.1 | — | (12.8 | ) | ||||||
Operating income | 73.1 | (11.2 | ) | — | 61.9 | |||||||
Interest expense | (9.8 | ) | — | — | (9.8 | ) | ||||||
Interest income | 0.3 | — | — | 0.3 | ||||||||
Other income (expense), net | (0.6 | ) | 0.3 | — | (0.3 | ) | ||||||
Income from continuing operations before income taxes | 63.0 | (10.9 | ) | — | 52.1 | |||||||
Income tax expense | 16.6 | (3.0 | ) | — | 13.6 | |||||||
Income from continuing operations | 46.4 | (7.9 | ) | — | 38.5 | |||||||
Income (loss) from discontinued operations, net of income taxes | (0.8 | ) | 7.9 | — | 7.1 | |||||||
Net income | $ | 45.6 | $ | — | $ | — | $ | 45.6 | ||||
Basic earnings per share: | ||||||||||||
Income from continuing operations | $ | 0.80 | $ | 0.67 | ||||||||
Income (loss) from discontinued operations | (0.01 | ) | 0.12 | |||||||||
Net income | 0.79 | 0.79 | ||||||||||
Diluted earnings per share: | ||||||||||||
Income from continuing operations | $ | 0.79 | $ | 0.66 | ||||||||
Income (loss) from discontinued operations | (0.01 | ) | 0.12 | |||||||||
Net income | 0.78 | 0.78 | ||||||||||
Weighted-average number of shares outstanding: | ||||||||||||
Basic | 57.8 | 57.8 | ||||||||||
Diluted | 58.4 | 58.4 | ||||||||||
1.Represents historical CMDS-related intercompany transactions that will be Mallinckrodt continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
20
MALLINCKRODT PLC | |||||||||||||
NON-GAAP MEASURES | |||||||||||||
Three Months Ended December 27, 2013 | |||||||||||||
(unaudited, in millions except per share data) | |||||||||||||
Gross profit | Selling, general and administrative expenses | Income from continuing operations | Diluted net income from continuing operations per share | ||||||||||
GAAP | $ | 255.6 | $ | 146.2 | $ | 46.4 | $ | 0.79 | |||||
Reclass to discontinued operations | (39.4 | ) | (26.7 | ) | (7.9 | ) | (0.14 | ) | |||||
Adjusted | 216.2 | 119.5 | 38.5 | 0.66 | |||||||||
Adjustments: | |||||||||||||
Intangible asset amortization | 6.9 | — | 6.9 | 0.12 | |||||||||
Restructuring and related charges, net | — | — | 8.0 | 0.14 | |||||||||
Separation costs | — | — | 2.2 | 0.04 | |||||||||
Gain on intellectual property license | — | — | (11.7 | ) | (0.20 | ) | |||||||
Income taxes | — | — | (1.3 | ) | (0.02 | ) | |||||||
As adjusted | $ | 223.1 | $ | 119.5 | $ | 42.6 | $ | 0.73 | |||||
Percent of net sales | 51.9 | % | 27.8 | % | 9.9 | % | |||||||
SEGMENT NET SALES | ||||||||||||
Three Months Ended December 26, 2013 | ||||||||||||
(unaudited, in millions) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement | Adjusted | |||||||||
Specialty Brands | $ | 59.6 | $ | — | $ | — | $ | 59.6 | ||||
Specialty Generics | 249.9 | — | — | 249.9 | ||||||||
Global Medical Imaging | 218.6 | (111.6 | ) | — | 107.0 | |||||||
528.1 | (111.6 | ) | — | 416.5 | ||||||||
Other(1) | 12.1 | (12.1 | ) | 13.0 | 13.0 | |||||||
Net sales | $ | 540.2 | $ | (123.7 | ) | $ | 13.0 | $ | 429.5 | |||
1.Historical reported amounts represent CMDS-related transactions with our former parent. Net sales from the ongoing supply agreement represent historical CMDS-related intercompany transactions that will be continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
21
MALLINCKRODT PLC | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
Fiscal Year Ended September 27, 2013 | ||||||||||||
(unaudited, in millions, except per share data) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement (1) | Adjusted | |||||||||
Net sales | $ | 2,204.5 | $ | (549.3 | ) | $ | 57.1 | $ | 1,712.3 | |||
Cost of sales | 1,179.6 | (346.7 | ) | 57.1 | 890.0 | |||||||
Gross profit | 1,024.9 | (202.6 | ) | — | 822.3 | |||||||
Selling, general and administrative expenses | 609.9 | (114.0 | ) | — | 495.9 | |||||||
Research and development expenses | 165.7 | (7.8 | ) | — | 157.9 | |||||||
Restructuring charges, net | 33.2 | (9.5 | ) | — | 23.7 | |||||||
Separation costs | 74.2 | — | — | 74.2 | ||||||||
Gains on divestiture and license | (2.9 | ) | — | — | (2.9 | ) | ||||||
Operating income | 144.8 | (71.3 | ) | — | 73.5 | |||||||
Interest expense | (19.5 | ) | — | — | (19.5 | ) | ||||||
Interest income | 0.3 | — | — | 0.3 | ||||||||
Other income (expense), net | 0.8 | 0.6 | — | 1.4 | ||||||||
Income from continuing operations before income taxes | 126.4 | (70.7 | ) | — | 55.7 | |||||||
Income tax expense | 68.6 | (21.1 | ) | 47.5 | ||||||||
Income from continuing operations | 57.8 | (49.6 | ) | — | 8.2 | |||||||
Income from discontinued operations, net of income taxes | 1.0 | 49.6 | — | 50.6 | ||||||||
Net income | $ | 58.8 | $ | — | $ | — | $ | 58.8 | ||||
Basic earnings per share: | ||||||||||||
Income (loss) from continuing operations | $ | 1.00 | $ | 0.14 | ||||||||
Income from discontinued operations | 0.02 | 0.88 | ||||||||||
Net income | 1.02 | 1.02 | ||||||||||
Diluted earnings per share: | ||||||||||||
Income (loss) from continuing operations | $ | 1.00 | $ | 0.14 | ||||||||
Income from discontinued operations | 0.02 | 0.88 | ||||||||||
Net income | 1.02 | 1.02 | ||||||||||
Weighted-average number of shares outstanding: | ||||||||||||
Basic | 57.7 | 57.7 | ||||||||||
Diluted | 57.8 | 57.8 | ||||||||||
1.Represents historical CMDS-related intercompany transactions that will be Mallinckrodt continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
22
MALLINCKRODT PLC | |||||||||||||
NON-GAAP MEASURES | |||||||||||||
Fiscal Year Ended September 27, 2013 | |||||||||||||
(unaudited, in millions except per share data) | |||||||||||||
Gross profit | Selling, general and administrative expenses | Income from continuing operations | Diluted net income from continuing operations per share | ||||||||||
GAAP | $ | 1,024.9 | $ | 609.9 | $ | 57.8 | $ | 1.00 | |||||
Reclass to discontinued operations | (202.6 | ) | (114.0 | ) | (49.6 | ) | (0.86 | ) | |||||
Adjusted | 822.3 | 495.9 | 8.2 | 0.14 | |||||||||
Adjustments: | |||||||||||||
Intangible asset amortization | 27.9 | — | 27.9 | 0.48 | |||||||||
Restructuring and related charges, net | — | — | 26.3 | 0.46 | |||||||||
Separation costs | — | — | 74.2 | 1.28 | |||||||||
Up-front and milestone payments (1) | — | — | 5.0 | 0.09 | |||||||||
Income taxes | — | — | (21.3 | ) | (0.37 | ) | |||||||
As adjusted | $ | 850.2 | $ | 495.9 | $ | 120.3 | $ | 2.08 | |||||
Percent of net sales | 49.7 | % | 29.0 | % | 7.0 | % | |||||||
1.As charge related to a milestone payment prior to regulatory approval this amount is included within research & development expenses.
SEGMENT NET SALES | ||||||||||||
Fiscal Year Ended September 27, 2013 | ||||||||||||
(unaudited, in millions) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement | Adjusted | |||||||||
Specialty Brands | $ | 206.4 | $ | — | $ | — | $ | 206.4 | ||||
Specialty Generics | 1,011.2 | — | — | 1,011.2 | ||||||||
Global Medical Imaging | 935.7 | (498.1 | ) | — | 437.6 | |||||||
2,153.3 | (498.1 | ) | — | 1,655.2 | ||||||||
Other(1) | 51.2 | (51.2 | ) | 57.1 | 57.1 | |||||||
Net sales | $ | 2,204.5 | $ | (549.3 | ) | $ | 57.1 | $ | 1,712.3 | |||
1.Historical reported amounts represent CMDS-related transactions with our former parent. Net sales from the ongoing supply agreement represent historical CMDS-related intercompany transactions that will be continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
23
MALLINCKRODT PLC | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
Fiscal Year Ended September 28, 2012 | ||||||||||||
(unaudited, in millions, except per share data) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement (1) | Adjusted | |||||||||
Net sales | $ | 2,056.2 | $ | (596.2 | ) | $ | 73.0 | $ | 1,533.0 | |||
Cost of sales | 1,091.4 | (350.3 | ) | 73.0 | 814.1 | |||||||
Gross profit | 964.8 | (245.9 | ) | — | 718.9 | |||||||
Selling, general and administrative expenses | 551.7 | (128.5 | ) | — | 423.2 | |||||||
Research and development expenses | 144.1 | (5.7 | ) | — | 138.4 | |||||||
Restructuring charges, net | 11.2 | 0.7 | — | 11.9 | ||||||||
Separation costs | 25.5 | — | — | 25.5 | ||||||||
Gains on divestiture and license | (2.9 | ) | — | — | (2.9 | ) | ||||||
Operating income | 235.2 | (112.4 | ) | — | 122.8 | |||||||
Interest expense | (0.5 | ) | — | — | (0.5 | ) | ||||||
Interest income | 0.4 | — | — | 0.4 | ||||||||
Other income (expense), net | 1.0 | — | — | 1.0 | ||||||||
Income from continuing operations before income taxes | 236.1 | (112.4 | ) | — | 123.7 | |||||||
Income tax expense | 94.8 | (29.6 | ) | — | 65.2 | |||||||
Income from continuing operations | 141.3 | (82.8 | ) | — | 58.5 | |||||||
Income (loss) from discontinued operations, net of income taxes | (6.7 | ) | 82.8 | — | 76.1 | |||||||
Net income | $ | 134.6 | $ | — | $ | — | $ | 134.6 | ||||
Basic earnings per share: | ||||||||||||
Income from continuing operations | $ | 2.45 | $ | 1.01 | ||||||||
Income (loss) from discontinued operations | (0.12 | ) | 1.32 | |||||||||
Net income | 2.33 | 2.33 | ||||||||||
Diluted earnings per share: | ||||||||||||
Income from continuing operations | $ | 2.45 | $ | 1.01 | ||||||||
Income (loss) from discontinued operations | (0.12 | ) | 1.32 | |||||||||
Net income | 2.33 | 2.33 | ||||||||||
Weighted-average number of shares outstanding: | ||||||||||||
Basic | 57.7 | 57.7 | ||||||||||
Diluted | 57.7 | 57.7 | ||||||||||
1.Represents historical CMDS-related intercompany transactions that will be Mallinckrodt continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
24
MALLINCKRODT PLC | |||||||||||||
NON-GAAP MEASURES | |||||||||||||
Fiscal Year Ended September 28, 2012 | |||||||||||||
(unaudited, in millions except per share data) | |||||||||||||
Gross profit | Selling, general and administrative expenses | Income from continuing operations | Diluted net income from continuing operations per share | ||||||||||
GAAP | $ | 964.8 | $ | 551.7 | $ | 141.3 | $ | 2.45 | |||||
Reclass to discontinued operations | (245.9 | ) | (128.5 | ) | (82.8 | ) | (1.44 | ) | |||||
Adjusted | 718.9 | 423.2 | 58.5 | 1.01 | |||||||||
Adjustments: | |||||||||||||
Intangible asset amortization | 19.8 | — | 19.8 | 0.34 | |||||||||
Restructuring and related charges, net | — | — | 19.9 | 0.34 | |||||||||
Separation costs | — | — | 25.5 | 0.44 | |||||||||
Income taxes | — | — | (14.4 | ) | (0.25 | ) | |||||||
As adjusted | $ | 738.7 | $ | 423.2 | $ | 109.3 | $ | 1.89 | |||||
Percent of net sales | 48.2 | % | 27.6 | % | 7.1 | % | |||||||
SEGMENT NET SALES AND OPERATIONAL GROWTH | ||||||||||||
Fiscal Year Ended September 28, 2012 | ||||||||||||
(unaudited, in millions) | ||||||||||||
GAAP Historical As Reported | Reclass to Discontinued Operations | Effect of Ongoing Supply Agreement | Adjusted | |||||||||
Specialty Brands | $ | 156.4 | $ | — | $ | — | $ | 156.4 | ||||
Specialty Generics | 848.8 | — | — | 848.8 | ||||||||
Global Medical Imaging | 996.8 | (542.0 | ) | — | 454.8 | |||||||
2,002.0 | (542.0 | ) | — | 1,460.0 | ||||||||
Other(1) | 54.2 | (54.2 | ) | 73.0 | 73.0 | |||||||
Net sales | $ | 2,056.2 | $ | (596.2 | ) | $ | 73.0 | $ | 1,533.0 | |||
1.Historical reported amounts represent CMDS-related transactions with our former parent. Net sales from the ongoing supply agreement represent historical CMDS-related intercompany transactions that will be continuing operations under an ongoing supply agreement with the acquirer of the CMDS business.
25