EX-99.1 2 mnkexhibit991nucleardohist.htm EXHIBIT 99.1 Exhibit


MALLINCKRODT PLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Nine Months Ended June 24, 2016
(unaudited, in millions, except per share data)
 
 
 
 
 
GAAP Historical As Reported
Reclass to Discontinued Operations
Adjusted
Net sales
$
2,803.4

$
(309.8
)
$
2,493.6

Cost of sales
1,290.8

(162.0
)
1,128.8

Gross profit
1,512.6

(147.8
)
1,364.8

Selling, general and administrative expenses
722.1

(64.6
)
657.5

Research and development expenses
198.3

(4.0
)
194.3

Restructuring charges, net
29.1

(2.6
)
26.5

Non-restructuring impairment charges
16.9

—

16.9

Gains on divestiture and license
(0.5
)
0.5

—

Operating income
546.7

(77.1
)
469.6

Interest expense
(290.6
)
—

(290.6
)
Interest income
0.8

—

0.8

Other income (expense), net
—

—

—

Income from continuing operations before income taxes
256.9

(77.1
)
179.8

Income tax (benefit)
(175.0
)
(24.2
)
(199.2
)
Income from continuing operations
431.9

(52.9
)
379.0

Income from discontinued operations, net of income taxes
96.8

52.9

149.7

Net income
$
528.7

$
—

$
528.7

 
 
 
 
Basic earnings per share:
 
 
 
Income from continuing operations
$
3.87

 
$
3.39

Income from discontinued operations
0.87

 
1.34

Net income
4.73

 
4.73

Diluted earnings per share:
 
 
 
Income from continuing operations
$
3.84

 
$
3.37

Income from discontinued operations
0.86

 
1.33

Net income
4.70

 
4.70

Weighted-average number of shares outstanding:
 
 
 
Basic
111.7

 
111.7

Diluted
112.6

 
112.6

 
 
 
 
 
 
 
 

1


MALLINCKRODT PLC
NON-GAAP MEASURES
Nine Months Ended June 24, 2016
(unaudited, in millions except per share data)
 
 
 
 
 
 
 
Gross profit
Selling, general and administrative expenses
Income from continuing operations
 
Diluted
income from continuing operations
per share
GAAP
$
1,512.6

$
722.1

$
431.9

 
$
3.84

Reclass to discontinued operations
(147.8
)
(64.6
)
(52.9
)
 
(0.47
)
Adjusted
1,364.8

657.5

379.0

 
3.37

Adjustments:
 
 
 
 
 
Intangible asset amortization
518.8

(5.4
)
524.2

 
4.66

Restructuring and related charges, net
1.2

(1.8
)
29.5

 
0.26

Inventory step-up expense
20.9

—

20.9

 
0.19

Non-restructuring impairment charges
—

—

16.9

 
0.15

Change in contingent consideration fair value
—

10.6

(10.6
)
 
(0.09
)
Acquisition related expenses
—

(3.1
)
3.1

 
0.03

Significant legal and environmental charges
—

(11.5
)
11.5

 
0.10

Income taxes (1)
—

—

(320.8
)
 
(2.85
)
As adjusted
$
1,905.7

$
646.3

$
653.7

 
$
5.81

 
 
 
 
 
 
Percent of net sales
76.4
%
25.9
%
26.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.Includes tax effects of above adjustments as well as the elimination of deferred tax benefits recognized upon pay down of intercompany installment notes created by internal sales of acquired intangible assets.

SEGMENT NET SALES
Nine Months Ended June 24, 2016
(unaudited, in millions)
 
 
 
 
 
GAAP Historical As Reported
Reclass to Discontinued Operations
Adjusted
Specialty Brands
$
1,667.5

$
—

$
1,667.5

Specialty Generics
785.4

—

785.4

Nuclear Imaging
309.8

(309.8
)
—

 
2,762.7

(309.8
)
2,452.9

Other
40.7

—

40.7

Net sales
$
2,803.4

$
(309.8
)
$
2,493.6

 
 
 
 
 
 
 
 


2


MALLINCKRODT PLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended June 24, 2016
(unaudited, in millions, except per share data)
 
 
 
 
 
GAAP Historical As Reported
Reclass to Discontinued Operations
Adjusted
Net sales
$
970.6

$
(104.0
)
$
866.6

Cost of sales
429.3

(51.5
)
377.8

Gross profit
541.3

(52.5
)
488.8

Selling, general and administrative expenses
248.4

(23.5
)
224.9

Research and development expenses
76.1

(1.3
)
74.8

Restructuring charges, net
14.1

(0.1
)
14.0

Gains on divestiture and license
(0.2
)
0.2

—

Operating income
202.9

(27.8
)
175.1

Interest expense
(95.6
)
—

(95.6
)
Interest income
0.4

—

0.4

Other income (expense), net
(1.3
)
—

(1.3
)
Income from continuing operations before income taxes
106.4

(27.8
)
78.6

Income tax (benefit)
(89.3
)
(8.8
)
(98.1
)
Income from continuing operations
195.7

(19.0
)
176.7

Income from discontinued operations, net of income taxes
3.6

19.0

22.6

Net income
$
199.3

$
—

$
199.3

 
 
 
 
Basic earnings per share:
 
 
 
Income from continuing operations
$
1.80

 
$
1.63

Income from discontinued operations
0.03

 
0.21

Net income
1.84

 
1.84

Diluted earnings per share:
 
 
 
Income from continuing operations
$
1.79

 
$
1.62

Income from discontinued operations
0.03

 
0.21

Net income
1.82

 
1.82

Weighted-average number of shares outstanding:
 
 
 
Basic
108.6

 
108.6

Diluted
109.4

 
109.4

 
 
 
 
 
 
 
 




3


MALLINCKRODT PLC
NON-GAAP MEASURES
Three Months Ended June 24, 2016
(unaudited, in millions except per share data)
 
 
 
 
 
 
 
Gross profit
Selling, general and administrative expenses
Income from continuing operations
 
Diluted income from continuing operations
per share
GAAP
$
541.3

$
248.4

$
195.7

 
$
1.79

Reclass to discontinued operations
(52.5
)
(23.5
)
(19.0
)
 
(0.17
)
Adjusted
488.8

224.9

176.7

 
1.62

Adjustments:
 
 
 
 
 
Intangible asset amortization
174.0

(1.8
)
175.8

 
1.61

Restructuring and related charges, net
0.6

(0.7
)
15.2

 
0.14

Inventory step-up expense
2.6

—

2.6

 
0.02

Change in contingent consideration fair value
—

4.3

(4.3
)
 
(0.04
)
Acquisition related expenses
—

(0.1
)
0.1

 
—

Income taxes (1)
—

—

(144.3
)
 
(1.32
)
As adjusted
$
666.0

$
226.6

$
221.8

 
$
2.03

 
 
 
 
 
 
Percent of net sales
76.9
%
26.1
%
25.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.Includes tax effects of above adjustments as well as the elimination of deferred tax benefits recognized upon pay down of intercompany installment notes created by internal sales of acquired intangible assets.

SEGMENT NET SALES
Three Months Ended June 24, 2016
(unaudited, in millions)
 
 
 
 
 
GAAP Historical As Reported
Reclass to Discontinued Operations
Adjusted
Specialty Brands
$
589.3

$
—

$
589.3

Specialty Generics
263.4

—

263.4

Nuclear Imaging
104.0

(104.0
)
—

 
956.7

(104.0
)
852.7

Other
13.9

—

13.9

Net sales
$
970.6

$
(104.0
)
$
866.6

 
 
 
 
 
 
 
 


4


MALLINCKRODT PLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 25, 2016
(unaudited, in millions, except per share data)
 
 
 
 
 
GAAP Historical As Reported
Reclass to Discontinued Operations
Adjusted
Net sales
$
918.0

$
(102.2
)
$
815.8

Cost of sales
438.4

(47.7
)
390.7

Gross profit
479.6

(54.5
)
425.1

Selling, general and administrative expenses
231.2

(21.9
)
209.3

Research and development expenses
58.6

(0.5
)
58.1

Restructuring charges, net
8.7

(0.3
)
8.4

Non-restructuring impairment charges
16.9

—

16.9

Gains on divestiture and license
(0.2
)
0.2

—

Operating income
164.4

(32.0
)
132.4

Interest expense
(97.2
)
—

(97.2
)
Interest income
0.2

—

0.2

Other income (expense), net
(0.7
)
—

(0.7
)
Income from continuing operations before income taxes
66.7

(32.0
)
34.7

Income tax (benefit)
(53.6
)
(10.2
)
(63.8
)
Income from continuing operations
120.3

(21.8
)
98.5

(Loss) income from discontinued operations, net of income taxes
(2.0
)
21.8

19.8

Net income
$
118.3

$
—

$
118.3

 
 
 
 
Basic earnings per share:
 
 
 
Income from continuing operations
$
1.08

 
$
0.89

(Loss) income from discontinued operations
(0.02
)
 
0.18

Net income
1.06

 
1.06

Diluted earnings per share:
 
 
 
Income from continuing operations
$
1.07

 
$
0.88

(Loss) income from discontinued operations
(0.02
)
 
0.18

Net income
1.06

 
1.06

Weighted-average number of shares outstanding:
 
 
 
Basic
111.1

 
111.1

Diluted
112.0

 
112.0

 
 
 
 
 
 
 
 


5


MALLINCKRODT PLC
NON-GAAP MEASURES
Three Months Ended March 25, 2016
(unaudited, in millions except per share data)
 
 
 
 
 
 
 
Gross profit
Selling, general and administrative expenses
Income from continuing operations
 
Diluted income from continuing operations
per share
GAAP
$
479.6

$
231.2

$
120.3

 
$
1.07

Reclass to discontinued operations
(54.5
)
(21.9
)
(21.8
)
 
(0.19
)
Adjusted
425.1

209.3

98.5

 
0.88

Adjustments:
 
 
 
 
 
Intangible asset amortization
173.2

(1.8
)
175.0

 
1.56

Restructuring and related charges, net
0.6

(1.1
)
10.1

 
0.09

Inventory step-up expense
2.1

—

2.1

 
0.02

Non-restructuring impairment charges
—

—

16.9

 
0.15

Acquisition related expenses
—

(1.9
)
1.9

 
0.02

Change in contingent consideration fair value
—

6.3

(6.3
)
 
(0.06
)
Income taxes (1)
—

—

(95.4
)
 
(0.85
)
As adjusted
$
601.0

$
210.8

$
202.8

 
$
1.81

 
 
 
 
 
 
Percent of net sales
73.7
%
25.8
%
24.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.Includes tax effects of above adjustments as well as the elimination of deferred tax benefits recognized upon pay down of intercompany installment notes created by internal sales of acquired intangible assets.

SEGMENT NET SALES
Three Months Ended March 25, 2016
(unaudited, in millions)
 
 
 
 
 
GAAP Historical As Reported
Reclass to Discontinued Operations
Adjusted
Specialty Brands
$
535.0

$
—

$
535.0

Specialty Generics
264.4

—

264.4

Nuclear Imaging
102.2

(102.2
)
—

 
901.6

(102.2
)
799.4

Other
16.4

—

16.4

Net sales
$
918.0

$
(102.2
)
$
815.8

 
 
 
 
 
 
 
 


6


MALLINCKRODT PLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended December 25, 2015
(unaudited, in millions, except per share data)
 
 
 
 
 
GAAP Historical As Reported
Reclass to Discontinued Operations
Adjusted
Net sales
$
914.8

$
(103.6
)
$
811.2

Cost of sales
423.1

(62.8
)
360.3

Gross profit
491.7

(40.8
)
450.9

Selling, general and administrative expenses
242.5

(19.2
)
223.3

Research and development expenses
63.6

(2.2
)
61.4

Restructuring charges, net
6.3

(2.2
)
4.1

Gains on divestiture and license
(0.1
)
0.1

—

Operating income
179.4

(17.3
)
162.1

Interest expense
(97.8
)
—

(97.8
)
Interest income
0.2

—

0.2

Other income (expense), net
2.0

—

2.0

Income from continuing operations before income taxes
83.8

(17.3
)
66.5

Income tax (benefit)
(32.1
)
(5.2
)
(37.3
)
Income from continuing operations
115.9

(12.1
)
103.8

Income from discontinued operations, net of income taxes
95.2

12.1

107.3

Net income
$
211.1

$
—

$
211.1

 
 
 
 
Basic earnings per share:
 
 
 
Income from continuing operations
$
1.00

 
$
0.90

Income from discontinued operations
0.82

 
0.93

Net income
1.83

 
1.83

Diluted earnings per share:
 
 
 
Income from continuing operations
$
1.00

 
$
0.89

Income from discontinued operations
0.82

 
0.92

Net income
1.82

 
1.82

Weighted-average number of shares outstanding:
 
 
 
Basic
115.4

 
115.4

Diluted
116.3

 
116.3

 
 
 
 
 
 
 
 

7


MALLINCKRODT PLC
NON-GAAP MEASURES
Three Months Ended December 25, 2015
(unaudited, in millions except per share data)
 
 
 
 
 
 
 
Gross profit
Selling, general and administrative expenses
Income from continuing operations
 
Diluted income from continuing operations
per share
GAAP
$
491.7

$
242.5

$
115.9

 
$
1.00

Reclass to discontinued operations
(40.8
)
(19.2
)
(12.1
)
 
(0.10
)
Adjusted
450.9

223.3

103.8

 
0.89

Adjustments:
 
 
 
 
 
Intangible asset amortization
171.6

(1.8
)
173.4

 
1.49

Restructuring and related charges, net
—

—

4.2

 
0.04

Inventory step-up expense
16.2

—

16.2

 
0.14

Acquisition related expenses
—

(1.1
)
1.1

 
0.01

Significant legal and environmental charges
—

(11.5
)
11.5

 
0.10

Income taxes (1)
—

—

(81.1
)
 
(0.70
)
As adjusted
$
638.7

$
208.9

$
229.1

 
$
1.97

 
 
 
 
 
 
Percent of net sales
78.7
%
25.8
%
28.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.Includes tax effects of above adjustments as well as the elimination of deferred tax benefits recognized upon pay down of intercompany installment notes created by internal sales of acquired intangible assets.

SEGMENT NET SALES
Three Months Ended December 25, 2015
(unaudited, in millions)
 
 
 
 
 
GAAP Historical As Reported
Reclass to Discontinued Operations
Adjusted
Specialty Brands
$
543.2

$
—

$
543.2

Specialty Generics
257.6

—

257.6

Nuclear Imaging
103.6

(103.6
)
—

 
904.4

(103.6
)
800.8

Other
10.4

—

10.4

Net sales
$
914.8

$
(103.6
)
$
811.2

 
 
 
 
 
 
 
 



8


MALLINCKRODT PLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Fiscal Year Ended September 25, 2015
(unaudited, in millions, except per share data)
 
 
 
 
 
GAAP Historical As Reported
Reclass to Discontinued Operations
Adjusted
Net sales
$
3,346.9

$
(423.8
)
$
2,923.1

Cost of sales
1,493.3

(193.1
)
1,300.2

Gross profit
1,853.6

(230.7
)
1,622.9

Selling, general and administrative expenses
1,113.4

(89.6
)
1,023.8

Research and development expenses
241.5

(38.2
)
203.3

Restructuring charges, net
40.4

4.6

45.0

Gains on divestiture and license
(3.5
)
0.5

(3.0
)
Operating income
461.8

(108.0
)
353.8

Interest expense
(255.6
)
—

(255.6
)
Interest income
1.0

—

1.0

Other income (expense), net
8.1

—

8.1

Income from continuing operations before income taxes
215.3

(108.0
)
107.3

Income tax (benefit)
(92.9
)
(36.4
)
(129.3
)
Income from continuing operations
308.2

(71.6
)
236.6

Income from discontinued operations, net of income taxes
16.5

71.6

88.1

Net income
$
324.7

$
—

$
324.7

 
 
 
 
Basic earnings per share:
 
 
 
Income from continuing operations
$
2.64

 
$
2.03

Income from discontinued operations
0.14

 
0.75

Net income
2.78

 
2.78

Diluted earnings per share:
 
 
 
Income from continuing operations
$
2.61

 
$
2.00

Income from discontinued operations
0.14

 
0.75

Net income
2.75

 
2.75

Weighted-average number of shares outstanding:
 
 
 
Basic
115.8

 
115.8

Diluted
117.2

 
117.2

 
 
 
 
 
 
 
 

9


MALLINCKRODT PLC
NON-GAAP MEASURES
Fiscal Year Ended September 25, 2015
(unaudited, in millions except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
Selling, general and administrative expenses
Income (loss) from continuing operations
 
Diluted income from continuing operations
per share
GAAP
$
1,853.6

$
1,113.4

$
308.2

 
$
2.61

Reclass to discontinued operations
(230.7
)
(89.6
)
(71.6
)
 
(0.61
)
Adjusted
1,622.9

1,023.8

236.6

 
2.00

Adjustments:
 
 
 
 
 
Intangible asset amortization
544.0

(6.3
)
550.3

 
4.70

Restructuring and related charges, net
—

—

45.3

 
0.39

Inventory step-up expense
44.1

—

44.1

 
0.38

Incremental equity conversion costs
—

(80.6
)
80.6

 
0.69

Acquisition related expenses
—

(53.4
)
53.4

 
0.46

Significant legal and environmental charges
—

(86.3
)
86.3

 
0.74

Income taxes (1)
—

—

(294.7
)
 
(2.51
)
Dilutive share impact (2)
—

—

(6.6
)
 
(0.06
)
As adjusted
$
2,211.0

$
797.2

$
795.3

 
$
6.79

 
 
 
 
 
 
Percent of net sales
75.6
%
27.3
%
27.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.Includes tax effects of above adjustments as well as the elimination of deferred tax benefits recognized upon pay down of intercompany installment notes created by internal sales of acquired intangible assets.
2.For the fiscal year ended September 25, 2015, the diluted income from continuing operations per share on a GAAP basis was required to be calculated using the two-class method. This method required $2.0 million of income from continuing operations be allocated to participating securities for the fiscal year ended September 25, 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 fiscal year ended September 25, 2015.

MALLINCKRODT PLC
SEGMENT NET SALES
Fiscal Year Ended September 25, 2015
(unaudited, in millions)
 
 
 
 
 
GAAP Historical As Reported
Reclass to Discontinued Operations
Adjusted
Specialty Brands
$
1,622.8

$
—

$
1,622.8

Specialty Generics
1,251.6

—

1,251.6

Nuclear Imaging
423.8

(423.8
)
—

 
3,298.2

(423.8
)
2,874.4

Other
48.7

—

48.7

Net sales
$
3,346.9

$
(423.8
)
$
2,923.1

 
 
 
 
 
 
 
 

10


MALLINCKRODT PLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended September 25, 2015
(unaudited, in millions, except per share data)
 
 
 
 
 
GAAP Historical As Reported
Reclass to Discontinued Operations
Adjusted
Net sales
$
882.4

$
(103.6
)
$
778.8

Cost of sales
400.3

(47.3
)
353.0

Gross profit
482.1

(56.3
)
425.8

Selling, general and administrative expenses
285.9

(18.6
)
267.3

Research and development expenses
70.9

(9.1
)
61.8

Restructuring charges, net
7.0

(2.5
)
4.5

Gains on divestiture and license
(0.9
)
0.1

(0.8
)
Operating income
119.2

(26.2
)
93.0

Interest expense
(76.9
)
—

(76.9
)
Interest income
0.3

—

0.3

Other income (expense), net
0.1

—

0.1

Income from continuing operations before income taxes
42.7

(26.2
)
16.5

Income tax (benefit)
(47.3
)
(9.3
)
(56.6
)
Income from continuing operations
90.0

(16.9
)
73.1

(Loss) income from discontinued operations, net of income taxes
(14.8
)
16.9

2.1

Net loss
$
75.2

$
—

$
75.2

 
 
 
 
Basic earnings per share:
 
 
 
Income from continuing operations
$
0.77

 
$
0.62

Income (loss) from discontinued operations
(0.13
)
 
0.02

Net income
0.64

 
0.64

Diluted earnings per share:
 
 
 
Income from continuing operations
$
0.76

 
$
0.62

Income (loss) from discontinued operations
(0.13
)
 
0.02

Net income
0.63

 
0.63

Weighted-average number of shares outstanding:
 
 
 
Basic
116.5

 
116.5

Diluted
117.8

 
117.8

 
 
 
 
 
 
 
 



11


MALLINCKRODT PLC
NON-GAAP MEASURES
Three Months Ended September 25, 2015
(unaudited, in millions except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
Selling, general and administrative expenses
Income (loss) from continuing operations
 
Diluted income from continuing operations
per share
GAAP
$
482.1

$
285.9

$
90.0

 
$
0.76

Reclass to discontinued operations
(56.3
)
(18.6
)
(16.9
)
 
(0.14
)
Adjusted
425.8

267.3

73.1

 
0.62

Adjustments:
 
 
 
 
 
Intangible asset amortization
151.7

(1.9
)
153.6

 
1.30

Restructuring and related charges, net
—

—

4.6

 
0.04

Inventory step-up expense
4.9

—

4.9

 
0.04

Incremental equity conversion costs
—

(15.6
)
15.6

 
0.13

Acquisition related expenses
—

(22.8
)
22.8

 
0.19

Significant legal and environmental charges
—

(19.5
)
19.5

 
0.17

Income taxes (1)
—

—

(95.0
)
 
(0.81
)
Dilutive share impact (2)
—

—

(1.2
)
 
(0.01
)
As adjusted
$
582.4

$
207.5

$
197.9

 
$
1.68

 
 
 
 
 
 
Percent of net sales
74.8
%
26.6
%
25.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.Includes tax effects of above adjustments as well as the elimination of deferred tax benefits recognized upon pay down of intercompany installment notes created by internal sales of acquired intangible assets.
2.For the three months ended September 25, 2015, the diluted income from continuing operations per share on a GAAP basis was required to be calculated using the two-class method. This method required $0.4 million of income from continuing operations to be allocated to participating securities for the three months ended September 25, 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 September 25, 2015.

MALLINCKRODT PLC
SEGMENT NET SALES
Three Months Ended September 25, 2015
(unaudited, in millions)
 
 
 
 
 
GAAP Historical As Reported
Reclass to Discontinued Operations
Adjusted
Specialty Brands
$
468.7

$
—

$
468.7

Specialty Generics
296.7

—

296.7

Nuclear Imaging
103.6

(103.6
)
—

 
869.0

(103.6
)
765.4

Other
13.4

—

13.4

Net sales
$
882.4

$
(103.6
)
$
778.8

 
 
 
 
 
 
 
 

12


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
Adjusted
Net sales
$
877.3

$
(108.8
)
$
768.5

Cost of sales
373.5

(46.7
)
326.8

Gross profit
503.8

(62.1
)
441.7

Selling, general and administrative expenses
295.0

(22.3
)
272.7

Research and development expenses
59.9

(8.1
)
51.8

Restructuring charges, net
22.7

(0.2
)
22.5

Gains on divestiture and license
(0.9
)
0.2

(0.7
)
Operating income
127.1

(31.7
)
95.4

Interest expense
(72.5
)
—

(72.5
)
Interest income
0.2

—

0.2

Other income (expense), net
(0.4
)
—

(0.4
)
Income from continuing operations before income taxes
54.4

(31.7
)
22.7

Income tax (benefit)
(1.2
)
(10.7
)
(11.9
)
Income from continuing operations
55.6

(21.0
)
34.6

Income from discontinued operations, net of income taxes
2.4

21.0

23.4

Net income
$
58.0

$
—

$
58.0

 
 
 
 
Basic earnings per share:
 
 
 
Income from continuing operations
$
0.47

 
$
0.30

Income from discontinued operations
0.02

 
0.20

Net income
0.50

 
0.50

Diluted earnings per share:
 
 
 
Income from continuing operations
$
0.47

 
$
0.29

Income from discontinued operations
0.02

 
0.20

Net income
0.49

 
0.49

Weighted-average number of shares outstanding:
 
 
 
Basic
116.3

 
116.3

Diluted
117.8

 
117.8

 
 
 
 
 
 
 
 

13


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 income from continuing operations
per share
GAAP
$
503.8

$
295.0

$
55.6

 
$
0.47

Reclass to discontinued operations
(62.1
)
(22.3
)
(21.0
)
 
(0.18
)
Adjusted
441.7

272.7

34.6

 
0.29

Adjustments:
 
 
 
 
 
Intangible asset amortization
147.1

(1.9
)
149.0

 
1.26

Restructuring and related charges, net
—

—

22.5

 
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)
—

—

(1.6
)
 
(0.01
)
As adjusted
$
592.8

$
212.2

$
217.5

 
$
1.85

 
 
 
 
 
 
Percent of net sales
77.1
%
27.6
%
28.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.Includes tax effects of above adjustments as well as the elimination of deferred tax benefits recognized upon pay down of intercompany installment notes created by internal sales of acquired intangible assets.
2.For the three months ended June 26, 2015, the diluted income from continuing operations per share on a GAAP basis was required to be calculated using the two-class method. This method required $0.3 million of 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
Adjusted
Specialty Brands
$
446.2

$
—

$
446.2

Specialty Generics
307.9

—

307.9

Nuclear Imaging
108.8

(108.8
)
—

 
862.9

(108.8
)
754.1

Other
14.4

—

14.4

Net sales
$
877.3

$
(108.8
)
$
768.5

 
 
 
 
 
 
 
 


14


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
Adjusted
Net sales
$
819.0

$
(109.5
)
$
709.5

Cost of sales
356.1

(46.3
)
309.8

Gross profit
462.9

(63.2
)
399.7

Selling, general and administrative expenses
308.4

(23.9
)
284.5

Research and development expenses
58.0

(10.0
)
48.0

Restructuring charges, net
3.5

—

3.5

Gains on divestiture and license
(0.9
)
0.1

(0.8
)
Operating income
93.9

(29.4
)
64.5

Interest expense
(57.4
)
—

(57.4
)
Interest income
0.4

—

0.4

Other income (expense), net
4.2

—

4.2

Income from continuing operations before income taxes
41.1

(29.4
)
11.7

Income tax (benefit)
(34.1
)
(9.5
)
(43.6
)
Income from continuing operations
75.2

(19.9
)
55.3

Income from discontinued operations, net of income taxes
23.6

19.9

43.5

Net income
$
98.8

$
—

$
98.8

 
 
 
 
Basic earnings per share:
 
 
 
Income from continuing operations
$
0.64

 
$
0.47

Income from discontinued operations
0.20

 
0.37

Net income
0.85

 
0.85

Diluted earnings per share:
 
 
 
Income from continuing operations
$
0.64

 
$
0.47

Income from discontinued operations
0.20

 
0.37

Net income
0.84

 
0.84

Weighted-average number of shares outstanding:
 
 
 
Basic
115.6

 
115.6

Diluted
117.2

 
117.2

 
 
 
 
 
 
 
 




15


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 income from continuing operations
per share
GAAP
$
462.9

$
308.4

$
75.2

 
$
0.64

Reclass to discontinued operations
(63.2
)
(23.9
)
(19.9
)
 
(0.17
)
Adjusted
399.7

284.5

55.3

 
0.47

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)
—

—

(1.6
)
 
(0.01
)
As adjusted
$
525.9

$
203.4

$
179.4

 
$
1.53

 
 
 
 
 
 
Percent of net sales
74.1
%
28.7
%
25.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.Includes tax effects of above adjustments as well as the elimination of deferred tax benefits recognized upon pay down of intercompany installment notes created by internal sales of acquired intangible assets.
2.For the three months ended March 27, 2015, the diluted income from continuing operations on a GAAP basis was required to be calculated using the two-class method. This method required $0.5 million of 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
Adjusted
Specialty Brands
$
334.3

$
—

$
334.3

Specialty Generics
362.8

—

362.8

Nuclear Imaging
109.5

(109.5
)
—

 
806.6

(109.5
)
697.1

Other
12.4

—

12.4

Net sales
$
819.0

$
(109.5
)
$
709.5

 
 
 
 
 
 
 
 

16


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
Adjusted
Net sales
$
768.2

$
(101.9
)
$
666.3

Cost of sales
363.4

(52.8
)
310.6

Gross profit
404.8

(49.1
)
355.7

Selling, general and administrative expenses
224.1

(24.8
)
199.3

Research and development expenses
52.7

(11.0
)
41.7

Restructuring charges, net
7.2

7.3

14.5

Gains on divestiture and license
(0.8
)
0.1

(0.7
)
Operating income
121.6

(20.7
)
100.9

Interest expense
(48.8
)
—

(48.8
)
Interest income
0.1

—

0.1

Other income (expense), net
4.2

—

4.2

Income from continuing operations before income taxes
77.1

(20.7
)
56.4

Income tax (benefit)
(10.3
)
(6.9
)
(17.2
)
Income from continuing operations
87.4

(13.8
)
73.6

Income from discontinued operations, net of income taxes
5.3

13.8

19.1

Net income
$
92.7

$
—

$
92.7

 
 
 
 
Basic earnings per share:
 
 
 
Income from continuing operations
$
0.75

 
$
0.63

Income from discontinued operations
0.05

 
0.16

Net income
0.80

 
0.80

Diluted earnings per share:
 
 
 
Income from continuing operations
$
0.74

 
$
0.63

Income from discontinued operations
0.05

 
0.16

Net income
0.79

 
0.79

Weighted-average number of shares outstanding:
 
 
 
Basic
114.8

 
114.8

Diluted
116.3

 
116.3

 
 
 
 
 
 
 
 




17


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 income from continuing operations
per share
GAAP
$
404.8

$
224.1

$
87.4

 
$
0.74

Reclass to discontinued operations
(49.1
)
(24.8
)
(13.8
)
 
(0.12
)
Adjusted
355.7

199.3

73.6

 
0.63

Adjustments:
 
 
 
 
 
Intangible asset amortization
123.5

(1.3
)
124.8

 
1.07

Restructuring and related charges, net
—

—

14.6

 
0.13

Inventory step-up expense
30.8

—

30.8

 
0.26

Incremental equity conversion costs
—

(23.8
)
23.8

 
0.20

Income taxes (1)
—

—

(64.9
)
 
(0.56
)
Dilutive share impact (2)
—

—

(2.2
)
 
(0.02
)
As adjusted
$
510.0

$
174.2

$
200.5

 
$
1.72

 
 
 
 
 
 
Percent of net sales
76.5
%
26.1
%
30.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.Includes tax effects of above adjustments as well as the elimination of deferred tax benefits recognized upon pay down of intercompany installment notes created by internal sales of acquired intangible assets.
2.For the three months ended December 26, 2014, the diluted income from continuing operations per share on a GAAP basis was required to be calculated using the two-class method. This method required $0.8 million of 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
Adjusted
Specialty Brands
$
373.6

$
—

$
373.6

Specialty Generics
284.2

—

284.2

Nuclear Imaging
101.9

(101.9
)
—

 
759.7

(101.9
)
657.8

Other
8.5

—

8.5

Net sales
$
768.2

$
(101.9
)
$
666.3

 
 
 
 
 
 
 
 



18


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
Adjusted
Net sales
$
2,082.0

$
(431.7
)
$
1,650.3

Cost of sales
1,021.8

(256.1
)
765.7

Gross profit
1,060.2

(175.6
)
884.6

Selling, general and administrative expenses
722.5

(111.5
)
611.0

Research and development expenses
186.0

(45.5
)
140.5

Restructuring charges, net
81.4

(13.4
)
68.0

Separation costs
9.6

—

9.6

Non-restructuring impairment charges
151.6

(124.5
)
27.1

Gains on divestiture and license
(15.0
)
—

(15.0
)
Operating (loss) income
(75.9
)
119.3

43.4

Interest expense
(82.6
)
—

(82.6
)
Interest income
1.5

—

1.5

Other income (expense), net
3.1

—

3.1

(Loss) from continuing operations before income taxes
(153.9
)
119.3

(34.6
)
Income tax (benefit)
(10.1
)
(2.5
)
(12.6
)
(Loss) from continuing operations
(143.8
)
121.8

(22.0
)
(Loss) from discontinued operations, net of income taxes
(175.5
)
(121.8
)
(297.3
)
Net loss
$
(319.3
)
$
—

$
(319.3
)
 
 
 
 
Basic earnings per share:
 
 
 
(Loss) from continuing operations
$
(2.22
)
 
$
(0.34
)
(Loss) from discontinued operations
(2.70
)
 
(4.58
)
Net loss
(4.92
)
 
(4.92
)
Diluted earnings per share:
 
 
 
(Loss) from continuing operations
$
(2.22
)
 
$
(0.34
)
(Loss) from discontinued operations
(2.70
)
 
(4.58
)
Net loss
(4.92
)
 
(4.92
)
Weighted-average number of shares outstanding:
 
 
 
Basic
64.9

 
64.9

Diluted
64.9

 
64.9

 
 
 
 
 
 
 
 




19


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
(Loss) Income from continuing operations
 
Diluted income from continuing operations
per share
GAAP
$
1,060.2

$
722.5

$
(143.8
)
 
$
(2.22
)
Reclass to discontinued operations
(175.6
)
(111.5
)
121.8

 
1.88

Adjusted
884.6

611.0

(22.0
)
 
(0.34
)
Adjustments:
 
 
 
 
 
Intangible asset amortization
153.8

(1.0
)
154.8

 
2.36

Restructuring and related charges, net
—

—

68.2

 
1.04

Non-restructuring impairment
—

—

27.1

 
0.41

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
—

—

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 (1)
—

—

(88.5
)
 
(1.35
)
Dilutive share impact (2)
—

—

(0.8
)
 
(0.01
)
As adjusted
$
1,049.8

$
482.3

$
280.8

 
$
4.27

 
 
 
 
 
 
Percent of net sales
63.6
%
29.2
%
17.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.Includes tax effects of above adjustments.
2.For the fiscal year ended September 26, 2014, the diluted income from continuing operations per share on a GAAP basis was required to be calculated using the two-class method. This method required that none of the loss from continuing operations be allocated to participating securities, as this would have been antidilutive. 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 65.7 million for the fiscal year ended September 26, 2014.
SEGMENT NET SALES
Fiscal Year Ended September 26, 2014
(unaudited, in millions)
 
GAAP Historical As Reported
Reclass to Discontinued Operations
Adjusted
Specialty Brands
$
413.5

$
—

$
413.5

Specialty Generics
1,199.4

—

1,199.4

Nuclear Imaging
431.7

(431.7
)
—

 
2,044.6

(431.7
)
1,612.9

Other
37.4

—

37.4

Net sales
$
2,082.0

$
(431.7
)
$
1,650.3

 
 
 
 
 
 
 
 

20