-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P5m+8ctxXtSVSzv1ELbUeOhAgyfcJxJUPpbhKejNngOOuI46oaYqngZr+sOC+O+F alfe87nf474BUMWguOX4uw== 0000051396-99-000019.txt : 19990510 0000051396-99-000019.hdr.sgml : 19990510 ACCESSION NUMBER: 0000051396-99-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990507 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MALLINCKRODT INC /MO CENTRAL INDEX KEY: 0000051396 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 361263901 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-00483 FILM NUMBER: 99613184 BUSINESS ADDRESS: STREET 1: 675 MCDONNELL BLVD STREET 2: PO BOX 5840 CITY: ST LOUIS STATE: MO ZIP: 63134 BUSINESS PHONE: 3146542000 MAIL ADDRESS: STREET 1: 7733 FORSYTH BLVD CITY: ST LOUIS STATE: MO ZIP: 63105-1820 FORMER COMPANY: FORMER CONFORMED NAME: MALLINCKRODT INC /MO DATE OF NAME CHANGE: 19970625 FORMER COMPANY: FORMER CONFORMED NAME: MALLINCKRODT GROUP INC DATE OF NAME CHANGE: 19940322 FORMER COMPANY: FORMER CONFORMED NAME: IMCERA GROUP INC DATE OF NAME CHANGE: 19920703 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------------ FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF --- THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1999 OR --- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-483 ------------------------------ MALLINCKRODT INC. (Exact name of registrant as specified in its charter) New York 36-1263901 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 675 McDonnell Boulevard St. Louis, Missouri 63134 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 314-654-2000 ------------------------------ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X. No . Applicable Only To Issuers Involved In Bankruptcy Proceedings During The Preceding Five Years: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes . No . Applicable Only To Corporate Issuers: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 70,997,744 shares excluding 16,127,029 treasury shares as of April 30, 1999. (*) Indicates registered trademark PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited). The accompanying interim condensed consolidated financial statements of Mallinckrodt Inc. (the Company or Mallinckrodt) do not include all disclosures normally provided in annual financial statements. These financial statements, which should be read in conjunction with the consolidated financial statements contained in Mallinckrodt's Annual Report on Form 10-K/A No. 1 for the year ended June 30, 1998, are unaudited but include all adjustments which Mallinckrodt's management considers necessary for a fair presentation. These adjustments consist of normal recurring accruals except as discussed in Notes 1, 2 and 3 of the Notes to Condensed Consolidated Financial Statements. Interim results are not necessarily indicative of the results for the fiscal year. All references to years are to fiscal years ended June 30 unless otherwise stated. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share amounts)
Quarter Ended Nine Months Ended March 31, March 31, --------------------- --------------------- 1999 1998 1999 1998 --------- --------- --------- --------- Net sales $ 675.0 $ 649.8 $1,902.9 $1,711.7 Operating costs and expenses: Cost of goods sold 359.1 344.6 1,025.1 1,016.2 Selling, administrative and general expenses 176.1 190.5 530.7 486.6 Purchased research and development 306.3 Research and development expenses 38.1 42.3 109.4 106.7 Other operating (income) expense, net .1 (5.2) (5.2) (7.5) -------- -------- --------- --------- Total operating costs and expenses 573.4 572.2 1,660.0 1,908.3 -------- -------- --------- --------- Operating earnings (loss) 101.6 77.6 242.9 (196.6) Interest and other nonoperating income (expense), net (.5) 1.6 .2 13.1 Interest expense (21.4) (28.3) (64.5) (75.6) -------- -------- --------- --------- Earnings (loss) from continuing operations before income taxes 79.7 50.9 178.6 (259.1) Income tax provision 25.6 19.0 57.7 19.3 -------- -------- --------- --------- Earnings (loss) from continuing operations 54.1 31.9 120.9 (278.4) Discontinued operations (4.0) 22.6 10.5 -------- -------- --------- --------- Earnings (loss) before cumulative effect of accounting change 54.1 27.9 143.5 (267.9) Cumulative effect of accounting change (8.4) -------- -------- --------- --------- Net earnings (loss) 54.1 27.9 143.5 (276.3) Preferred stock dividends (.1) (.1) (.3) (.3) -------- -------- --------- --------- Available for common shareholders $ 54.0 $ 27.8 $ 143.2 $ (276.6) ======== ======== ========= ========= Basic earnings per common share: Earnings (loss) from continuing operations $ .76 $ .44 $ 1.68 $ (3.83) Discontinued operations (.06) .31 .14 Cumulative effect of accounting change (.11) -------- -------- --------- --------- Net earnings (loss) $ .76 $ .38 $ 1.99 $ (3.80) ======== ======== ========= ========= Diluted earnings per common share: Earnings (loss) from continuing operations $ .75 $ .43 $ 1.68 $ (3.83) Discontinued operations (.05) .31 .14 Cumulative effect of accounting change (.11) -------- -------- --------- --------- Net earnings (loss) $ .75 $ .38 $ 1.99 $ (3.80) ======== ======== ========= ========= (See Notes to Condensed Consolidated Financial Statements on pages 4 through 7.)
CONDENSED CONSOLIDATED BALANCE SHEETS (In millions, except share and per share amounts)
March 31, June 30, 1999 1998 ---------- ---------- Assets Current assets: Cash and cash equivalents $ 59.7 $ 55.5 Trade receivables, less allowances of $22.7 at March 31 and $16.7 at June 30 493.3 486.3 Inventories 527.8 470.0 Deferred income taxes 110.1 95.2 Other current assets 60.7 61.5 Net current assets of discontinued operations 4.8 --------- --------- Total current assets 1,251.6 1,173.3 Investments and other noncurrent assets, less allowances of $8.4 at March 31 and $5.8 at June 30 65.3 154.5 Property, plant and equipment, net 878.6 894.9 Goodwill, net 955.6 987.0 Technology, net 343.1 364.3 Other intangible assets, net 268.3 282.1 Net noncurrent assets of discontinued operations 12.4 Deferred income taxes 4.4 4.6 --------- --------- Total assets $3,766.9 $3,873.1 ========= ========= Liabilities and Shareholders' Equity Current liabilities: Short-term debt $ 310.3 $ 311.4 Accounts payable 185.7 215.0 Accrued liabilities 444.8 532.0 Income taxes payable 85.0 122.3 Deferred income taxes 1.2 1.4 --------- --------- Total current liabilities 1,027.0 1,182.1 Long-term debt, less current maturities 944.1 944.5 Deferred income taxes 403.0 396.2 Postretirement benefits 169.3 169.2 Other noncurrent liabilities and deferred credits 180.0 175.2 --------- --------- Total liabilities 2,723.4 2,867.2 --------- --------- Shareholders' equity: 4 Percent cumulative preferred stock 11.0 11.0 Common stock, par value $1, authorized 300,000,000 shares; issued 87,124,773 shares 87.1 87.1 Capital in excess of par value 314.1 315.2 Reinvested earnings 1,147.6 1,039.7 Accumulated other comprehensive expense (91.6) (72.6) Treasury stock, at cost (424.7) (374.5) --------- --------- Total shareholders' equity 1,043.5 1,005.9 --------- --------- Total liabilities and shareholders' equity $3,766.9 $3,873.1 ========= ========= (See Notes to Condensed Consolidated Financial Statements on pages 4 through 7.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Nine Months Ended March 31, --------------------- 1999 1998 --------- --------- Cash Flows - Operating Activities Net earnings (loss) $143.5 $(276.3) Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities: Depreciation 93.4 91.9 Amortization 63.5 57.9 Postretirement benefits .1 6.0 Gains on asset disposals (39.8) (15.8) Deferred income taxes (3.1) (30.5) Write-off of purchased research and development 308.3 Sale of inventory stepped up to fair value at acquisition 75.4 Write-off of pre-operating costs 12.5 --------- --------- 257.6 229.4 Changes in operating assets and liabilities: Trade receivables (7.3) 3.7 Inventories (59.5) (26.8) Other current assets 5.9 53.9 Accounts payable, accrued liabilities and income taxes payable, net (158.5) (153.0) Other noncurrent liabilities and deferred credits 5.2 26.9 Other, net (13.6) (14.6) --------- --------- Net cash provided by operating activities 29.8 119.5 --------- --------- Cash Flows - Investing Activities Capital expenditures (83.0) (110.3) Acquisition spending (3.5) (1,790.3) Proceeds from asset disposals 72.9 29.6 Proceeds from redemption of investments 86.1 5.0 --------- --------- Net cash provided (used) by investing activities 72.5 (1,866.0) --------- --------- Cash Flows - Financing Activities Increase in short-term debt 3.1 616.4 Proceeds from long-term debt 404.7 Payments on long-term debt (8.0) (3.9) Issuance of Mallinckrodt common stock 2.5 17.0 Acquisition of treasury stock (60.0) (9.7) Dividends paid (32.1) (36.3) Redemption of common stock purchase rights (3.6) --------- --------- Net cash provided (used) by financing activities (98.1) 988.2 --------- --------- Increase (decrease) in cash and cash equivalents 4.2 (758.3) Cash and cash equivalents at beginning of period 55.5 808.3 --------- --------- Cash and cash equivalents at end of period $ 59.7 $ 50.0 ========= ========= (See Notes to Condensed Consolidated Financial Statements on pages 4 through 7.) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. On August 28, 1997, the Company acquired Nellcor Puritan Bennett Incorporated (Nellcor) through an agreement to purchase for cash all the outstanding shares of common stock of Nellcor. The aggregate purchase price of the Nellcor acquisition was approximately $1.9 billion. The acquisition was accounted for under the purchase method of accounting and, accordingly, the results of operations of Nellcor have been included in the Company's consolidated financial statements since September 1, 1997. The purchase price of the acquisition was allocated to the assets acquired and liabilities assumed based upon generally accepted accounting principles and estimated fair values at the date of acquisition. In connection with the Company's filing of a shelf registration for debt securities in December 1997, Mallinckrodt was engaged in discussions with the staff of the Securities and Exchange Commission (SEC) regarding the purchase price allocation related to the acquisition of Nellcor. On January 26, 1999, the Company concluded these discussions with the SEC and, as a result, has agreed to recalculate and restate the amount of purchase price allocated to purchased research and development under a methodology preferred by the SEC. The amount of purchased research and development charged to operations in the first quarter of 1998 of $398.3 million has been reduced by $90 million to $308.3 million. Of this amount, $306.3 million related to ongoing operations and $2.0 million related to operations classified as discontinued operations. This one-time noncash acquisition-related cost had no tax benefit. A corresponding $90 million increase in goodwill is being amortized on a straight- line basis over the previously established 30-year amortization period beginning in September 1997. The sale of Nellcor inventories, which were stepped up to fair value in connection with the allocation of purchase price, resulted in charges of $75.4 million, $46.7 million net of taxes for the nine months ended March 31, 1998. Of the pre-tax amount, $74.4 million related to ongoing operations and the remainder related to operations classified as discontinued operations. In addition, results for the quarter and nine months ended March 31, 1998 included Nellcor integration charges of $12.5 million, $8.3 million net of taxes, and $19.2 million, $12.6 million net of taxes, respectively. During 1998, in connection with management's plan to integrate Mallinckrodt and Nellcor into one company, the Company recorded additional purchase liabilities of $50.1 million, $30.8 million net of related tax benefit, which were included in the acquisition cost allocation and related goodwill. The principal actions of the plan included Nellcor employee severance of $37.2 million, Nellcor employee relocation costs of $3.8 million and the elimination of contractual obligations of Nellcor, which had no future economic benefit, of $9.1 million. Approximately $40.6 million of cash expenditures have been incurred through March 31, 1999 and liabilities of $9.5 million related to the Nellcor integration plan remained in accrued liabilities at March 31, 1999. The majority of the remaining cash expenditures are expected to occur in 1999. Any reductions in the estimated liability for these integration activities would be offset against the related goodwill. During 1998, the Company recorded a pretax charge of $19.1 million associated with exiting certain activities related to Mallinckrodt operations that were identified in the Nellcor integration plan. The charge included $17.1 million related to Mallinckrodt employee severance costs and facility exit costs of $2.0 million. Approximately $11.0 million of cash expenditures have been incurred through March 31, 1999. The majority of the remaining cash expenditures are expected to occur in 1999 and no material adjustments to the original reserve are anticipated. 2. The Company sold certain chemical additive product lines in the second quarter of 1998. In the fourth quarter of 1998, the Company sold its catalyst business and Aero Systems division. In June 1998, the Company committed to the sale of the remaining chemical additives business of the catalysts and chemical additives division, and closing of the sale occurred on July 31, 1998. The transaction resulted in a $37.0 million gain on sale, $22.6 million net of taxes, which was included in discontinued operations for the nine months ended March 31, 1999. Earnings from operations were zero for the one month of operations. Included in discontinued operations for the nine months ended March 31, 1998 are the earnings from operations of the catalysts and chemical additives and Aero Systems divisions, which included $12.1 million of after-tax earnings from operations, $2.6 million of after-tax acquisition accounting charges, and a gain of $8.9 million after taxes resulting from the sale of chemical additive product lines, offset by a one-time, after-tax charge of $7.9 million related to settlement costs from the June 30, 1997 sale of the animal health segment. 3. The Company elected to early adopt the provisions of the American Institute of Certified Public Accountants (AICPA) SOP 98-5, "Reporting on the Costs of Start-Up Activities" (SOP 98-5), in its financial statements for the year ended June 30, 1998. The effect of adoption of SOP 98-5 was to record a charge of $8.4 million, net of taxes, for the cumulative effect of an accounting change to expense costs that had previously been capitalized prior to July 1, 1997. 4. On October 6, 1994, Augustine Medical, Inc. (Augustine) commenced a patent infringement litigation against Mallinckrodt Inc. and its wholly owned subsidiary, Mallinckrodt Medical, Inc. (collectively, the Company) in the U.S. District Court for the District of Minnesota. Specifically, Augustine alleged that the Company's sale of all five models of its convective warming blankets infringes certain claims of one or more of Augustine's patents. The Company filed counterclaims against Augustine in connection with the above actions alleging unfair competition, antitrust violations, and invalidity of the asserted patents, among other things. The liability phase of the case was tried to a jury in August 1997 and the verdict was that the Company's blankets infringe certain Augustine patents under the doctrine of equivalents, but do not literally infringe the patents. There was also a finding of no willful infringement. On September 22, 1997, the jury awarded damages in the amount of $16.8 million for the period ended September 30, 1997 and the judge put in place an injunction which stopped the Company from manufacturing and selling blankets in the United States. The Company appealed the jury verdicts of liability and damages to the Court of Appeals for the Federal Circuit (a special court for patent appeals that does not involve a jury). The Court of Appeals has stayed the injunction pending the outcome of the Company's appeal, and the Company continues to sell and manufacture blankets in the United States. With the advice of outside counsel, the Company believes there was insufficient evidence of equivalents presented and, consequently, for this and other reasons the verdicts were in error. The Company has worked vigorously in the Appeals Court to overturn the verdicts and believes that it has strong arguments that its blankets do not infringe Augustine's patents. Based on all the facts available to management, the Company believes that it is reasonably possible but not probable that the jury verdict and the trial court injunction will be upheld on appeal. If damages were assessed in the same manner as determined by the jury for sales subsequent to September 30, 1997 plus interest on the estimated total, the total liability would approximate $30.3 million at March 31, 1999. The Company has not recorded an accrual for payment of the damages, because an unfavorable outcome in this litigation is, in management's opinion, reasonably possible but not probable. See Part II, Item 1 "Legal Proceedings" for additional information about this and related claims by Augustine against the Company. 5. The Company is subject to various investigations, claims and legal proceedings covering a wide range of matters that arise in the ordinary course of its business activities. In addition, the Company is in varying stages of active investigation or remediation of alleged or acknowledged contamination at 23 currently or previously owned or operated sites and at 15 off- site locations where its waste was taken for treatment or disposal. See Part II, Item 1 "Legal Proceedings" for additional information about legal proceedings involving the Company. Once the Company becomes aware of its potential environmental liability at a particular site, the measurement of the related environmental liabilities to be recorded is based on an evaluation of currently available facts such as the extent and types of hazardous substances at a site, the range of technologies that can be used for remediation, evolving standards of what constitutes acceptable remediation, presently enacted laws and regulations, engineers and environmental specialists' estimates of the range of expected clean-up costs that may be incurred, prior experience in remediation of contaminated sites, and the progress to date on remediation in process. While the current law potentially imposes joint and several liability upon each party at a Superfund site, the Company's contribution to clean up these sites is expected to be limited, given the number of other companies which have also been named as potentially responsible parties and the volumes of waste involved. A reasonable basis for apportionment of costs among responsible parties is determined and the likelihood of contribution by other parties is established. If it is considered probable that the Company will only have to pay its expected share of the total clean-up, the recorded liability reflects the Company's expected share. In determining the probability of contribution, the Company considers the solvency of the parties, whether responsibility is disputed, existence of an allocation agreement, status of current action, and experience to date regarding similar matters. Current information and developments are regularly assessed by the Company, and accruals are adjusted on a quarterly basis, as required, to provide for the expected impact of these environmental matters. The Company has established accruals only for those matters that are in its view probable and estimable. Based upon information currently available, management believes that existing accruals are sufficient to satisfy any known environmental liabilities, and that it is not reasonably possible at this time that any additional liabilities will result from the resolution of these matters that would have a material adverse effect on the Company's consolidated results of operations or financial position. 6. The following table sets forth the computation of basic and diluted earnings (loss) from continuing operations per common share (in millions, except shares and per share amounts).
Quarter Ended Nine Months Ended March 31, March 31, --------------------- --------------------- 1999 1998 1999 1998 -------- -------- -------- -------- Numerator: Earnings (loss) from continuing operations $ 54.1 $ 31.9 $120.9 $(278.4) Preferred stock dividends (.1) (.1) (.3) (.3) -------- -------- -------- -------- Numerator for basic and diluted earnings (loss) per share-- income (loss) available to common shareholders $ 54.0 $ 31.8 $120.6 $(278.7) ======== ======== ======== ======== Denominator: Denominator for basic earnings (loss) per share--weighted- average shares 71,301,412 73,080,647 71,858,140 72,837,966 Potential dilutive common shares-- employee stock options 296,611 695,921 204,136 ---------- ---------- ---------- ---------- Denominator for diluted earnings (loss) per share-- adjusted weighted- average shares 71,598,023 73,776,568 72,062,276 72,837,966 ========== ========== ========== ========== Basic earnings (loss) from continuing operations per common share $ .76 $ .44 $ 1.68 $ (3.83) ===== ===== ====== ======== Diluted earnings (loss) from continuing operations per common share $ .75 $ .43 $ 1.68 $ (3.83) ===== ===== ====== ========
The diluted share base for the nine months ended March 31, 1998 excluded incremental shares related to employee stock options of 719,496. These shares were excluded due to their antidilutive effect as a result of the Company's loss from continuing operations during this period. 7. The components of inventory included the following as of March 31, 1999: (In millions) Raw materials and supplies $244.6 Work in process 55.4 Finished goods 227.8 ------ $527.8 ====== 8. The Company has authorized and issued 100,000 shares, 98,330 outstanding at March 31, 1999, of par value $100, 4 percent cumulative preferred stock. The Company has authorized 1,400,000 shares, par value $1, of series preferred stock, none of which was outstanding during 1999 and 1998. Shares included in treasury stock were: March 31, June 30, 1999 1998 ---------- ---------- Common stock 16,164,451 13,941,638 4 Percent cumulative preferred stock 1,670 1,670 9. In February 1999, the Board of Directors of the Company approved the redemption of the Company's non-voting common stock purchase rights at the redemption price of five cents per right effective March 15, 1999. 10. Supplemental cash flow information for the nine months ended March 31 included: (In millions) 1999 1998 ------ ------ Interest paid $ 71.8 $ 65.3 Income taxes paid 113.8 67.8 Noncash investing and financing activities: Issuance of stock for investment plan match 6.0 9.8 Restricted stock and directors' plan awards .1 10.1 Assumption of liabilities related to an acquisition .5 452.5 Principal amount of debt assumed by buyer related to a divestiture 1.0 11. Effective July 1, 1998, the Company adopted Financial Accounting Standards Board Statement No. 130, "Reporting Comprehensive Income" (SFAS 130). SFAS 130 establishes new rules for the reporting and display of comprehensive income and its components. Comprehensive income includes net income and other comprehensive income/(expense). Other comprehensive income/(expense) includes foreign currency translation adjustments and unrealized gains and losses on investments which prior to adoption were reported separately in shareholders' equity. A comparison of comprehensive income and its components follows: (In millions)
Quarter Ended Nine Months Ended March 31, March 31, --------------------- --------------------- 1999 1998 1999 1998 -------- -------- --------- -------- Net Earnings (loss) $ 54.1 $ 27.9 $143.5 $(276.3) Other comprehensive income/(expense): Currency translation adjustment (28.0) (10.3) (15.3) (26.1) Net unrealized gain (loss) on investment securities (.5) 1.5 (5.9) .1 Tax benefit related to items of other comprehensive income .2 2.2 ------- ------- -------- -------- Other comprehensive expense, net of tax (28.3) (8.8) (19.0) (26.0) ------- ------- -------- -------- Total comprehensive income (loss) $ 25.8 $ 19.1 $ 124.5 $(302.3) ======= ======= ======== ========
As of March 31, 1999, the cumulative balances for currency translation adjustment loss and the unrealized loss on investment securities were $86.4 million and $5.2 million, respectively. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. [1] All references to years are to fiscal years ended June 30 unless otherwise stated. Certain amounts in the prior year have been reclassified to conform to the current year presentation. All earnings per share amounts are calculated on a diluted basis unless otherwise stated. Results of Operations Overview - -------- As disclosed in previous filings, in connection with the Company's filing of a shelf registration for debt securities, Mallinckrodt was engaged in discussions with the staff of the SEC regarding the purchase price allocation related to the acquisition of Nellcor. The Company has concluded these discussions with the SEC and, as a result, has agreed to recalculate and restate the amount of purchase price allocated to purchased research and development under a methodology preferred by the SEC. The amount of purchased research and development charged to operations in the first quarter of 1998 of $398.3 million has been reduced by $90 million to $308.3 million. A corresponding $90 million increase in goodwill is being amortized on a straight-line basis over the previously established 30-year amortization period beginning in September 1997. The effects of this change on previously reported consolidated financial statements are shown in the Company's Annual Report on Form 10-K/A No. 1 for the year ended June 30, 1998. Management's Discussion and Analysis of Financial Condition and Results of Operations reflects these adjustments in all the periods of 1999 and 1998 presented and discussed below. - --------------------------------- [1] CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Our discussion and analysis in this quarterly report contain some forward-looking statements. Forward-looking statements do not relate strictly to historical or current facts, but rather give our current expectations or forecasts of future events. Forward-looking statements may be identified by their use of words such as "plans," "expects," "will," "anticipates," "believes," and other words of similar meaning. Such statements may address, among other things, the Company's strategy for growth, product development, regulatory approvals, the outcome of contingencies such as legal proceedings, market position, expenditures, and financial results. Forward-looking statements are based on current expectations of future events. Such statements involve risks and uncertainties and actual results could differ materially from those discussed. Among the factors that could cause actual results to differ materially from those projected in any such forward-looking statements are as follows: the effect of business and economic conditions; the impact of competitive products and continued pressure on prices realized by the Company for its products; constraints on supplies of raw materials used in manufacturing certain of the Company's products; capacity constraints limiting the production of certain products; difficulties or delays in the development, production, testing, and marketing of products; difficulties or delays in receiving required governmental or regulatory approvals; market acceptance issues, including the failure of products to generate anticipated sales levels; difficulties in rationalizing acquired businesses and in realizing related cost savings and other benefits; the effects of and changes in trade, monetary, and fiscal policies, laws, and regulations; foreign exchange rates and fluctuations in those rates; the costs and effects of legal and administrative proceedings, including environmental proceedings and patent disputes involving the Company; difficulties or delays in addressing "Year 2000" problems in the Company's operations, or the inability of a major supplier or customer to continue operations due to such problems (as discussed in Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations); and the risk factors reported from time to time in the Company's SEC reports. The Company undertakes no obligation to update any forward-looking statements as a result of future events or developments. General - ------- The Company recorded earnings from continuing operations and net earnings of $54.1 million, or 75 cents per share for the quarter ended March 31, 1999. Earnings from continuing operations for the same quarter last year were $40.2 million, or 54 cents per share, before charges related to the integration of Nellcor. With those charges, the Company recorded earnings from continuing operations in the third quarter of 1998 of $31.9 million, or 43 cents per share. Integration charges for the quarter ended March 31, 1998 were $12.5 million, $8.3 million net of taxes. Net earnings for the third quarter of 1998 were $27.9 million, or 38 cents per share. Net earnings for the third quarter in 1998 included a loss from discontinued operations of $4.0 million, or 5 cents per share representing a one-time, after-tax charge of $7.9 million related to settlement costs from the June 30, 1997 sale of the animal health segment and a $1.2 million charge related to the sale of chemical additive product lines in the second quarter of 1998, offset by $5.1 million of after-tax earnings from operations of the catalysts and chemical additives and Aero Systems divisions which were reclassified to discontinued operations in 1998. Net sales for the quarter ended March 31, 1999 were $675.0 million or 4 percent greater as compared to $649.8 million for the same period a year earlier. For the nine months ended March 31, 1999, the Company recorded earnings from continuing operations of $120.9 million, or $1.68 per share. For the same period of 1998, the Company recorded a loss from continuing operations of $278.4 million, or a loss of $3.83 per share. The loss included pretax acquisition and integration charges of $399.9 million associated with the Nellcor acquisition. These charges included a one-time charge of $306.3 million for the write- off of purchased research and development at the date of acquisition, which had no offsetting tax benefit, a cost of goods sold charge of $74.4 million, $46.1 million net of taxes recognized during the first and second quarters related to the sale of inventories stepped up to fair value, and a charge related to integration activities of $19.2 million, $12.6 million net of taxes. Excluding the acquisition and integration charges, earnings from continuing operations for the first nine months of 1998 were $86.6 million, or $1.17 per share. Net earnings for the first nine months of 1999 were $143.5 million, or $1.99 per share. This result included a gain of $22.6 million, or 31 cents per share, on the sale of the remaining chemical additives business of the catalysts and chemical additives division, which was reclassified to discontinued operations in 1998. For the first nine months of 1998, the Company recorded a net loss of $276.3 million, or $3.80 per share. In addition to the loss from continuing operations in 1998 discussed above, the Company recorded earnings from discontinued operations of $10.5 million, or 14 cents per share, representing the earnings from operations of the catalysts and chemical additives and Aero Systems divisions, which included $12.1 million of after-tax earnings from operations, $2.6 million of after- tax acquisition accounting charges, and a gain of $8.9 million after taxes resulting from the sale of chemical additive product lines, offset by a one-time, after-tax charge of $7.9 million related to settlement costs from the June 30, 1997 sale of the animal health segment. In addition, the net loss for the period ended March 31, 1998 included an after-tax charge of $8.4 million, or 11 cents per share related to the cumulative effect of an accounting change discussed in Note 3 of the Notes to Condensed Consolidated Financial Statements. Net sales for the first nine months of 1999 were $1.9 billion, up 11 percent from the $1.7 billion in the same period last year, which included only seven months of operations of Nellcor. Sales to customers outside the United States during the nine months ended March 31, 1999 were $616 million, or 32 percent of total sales. The acquisition of Nellcor was accounted for under the purchase method of accounting and, accordingly, the results of operations of Nellcor have been included in the Company's consolidated financial statements since September 1, 1997. The purchase price of the acquisition was allocated to the assets acquired and liabilities assumed based upon generally accepted accounting principles and estimated fair values at the date of acquisition. Actual revenues of some significant acquired in-process projects which were in development by Nellcor at the time of the acquisition have experienced shortfalls when compared to revenue estimates developed as of the acquisition date. These shortfalls are primarily attributable to delays in receiving regulatory clearance to market and/or problems with production ramp up activities which often occur at the early stages of manufacturing a new product. Such revenue shortfalls experienced to date are not indicative of any expected inability of these products to meet customer needs or their long-term revenue expectations. These delays/problems can have an impact on sales for the first several quarters versus the plan established at the date of acquisition because of the typically steep increase in sales which occurs with the introduction of a new product; however, such delays are usually inconsequential over the life of the product. Thus, management believes the delays/problems experienced to date of some significant products will not reduce the expected long-term revenues of these products, but only the timing of the receipt of these revenues. A comparison of sales and operating earnings follows: (In millions)
Quarter Ended Nine Months Ended March 31, March 31, -------------------- --------------------- 1999 1998 1999 1998 -------- -------- --------- --------- Net Sales Respiratory $ 302.5 $ 286.0 $ 849.0 $ 703.6 Imaging 190.7 190.9 568.8 557.3 Pharmaceuticals 181.8 172.9 485.1 450.8 -------- -------- --------- --------- $ 675.0 $ 649.8 $1,902.9 $1,711.7 ======== ======== ========= ========= Operating earnings (loss) Respiratory $ 41.0 $ 26.1 $ 97.7 $ 77.3 Imaging 31.1 38.9 90.6 88.0 Pharmaceuticals 35.5 30.7 73.1 56.2 -------- -------- --------- --------- 107.6 95.7 261.4 221.5 Corporate expense (6.0) (5.6) (18.5) (18.2) -------- -------- --------- --------- 101.6 90.1 242.9 203.3 Acquisition and integration charges (12.5) (399.9) -------- -------- --------- --------- $ 101.6 $ 77.6 $ 242.9 $ (196.6) ======== ======== ========= =========
Operating earnings for the quarter ended March 31, 1999 were $101.6 million, which is a 13 percent improvement over the $90.1 million recorded in the same period of last year before the inclusion of integration charges associated with the acquisition of Nellcor which were discussed previously. Operating earnings for the first nine months of 1999 were $242.9 million, or 19 percent greater than those reported for the first nine months of 1998 before acquisition and integration charges. The Respiratory Group, of which Nellcor is now a part, had sales for the quarter ended March 31, 1999 of $302.5 million, or 6 percent greater than the sales recorded for the same period last year. The year-to-year sales improvement was attributable to volume growth of 4 percent or $10 million, and pricing and exchange rate changes each added one percent. The volume growth of pulse oximetry, ventilation, service, blood analysis, and anesthesiology and respiratory disposables as a group exceeded 9 percent. Sleep, portable ventilation and other product lines had a volume decline primarily due to delayed product introductions and competitive pressures associated with cost reimbursement on existing products in these businesses. These pressures will continue until the new products are introduced over the next several quarters. Operating earnings of this Group for the third quarter were $41.0 million, or 57 percent greater than the $26.1 million reported in the comparable period of 1998. The year-to-year operating earnings improvement is primarily attributable to the higher sales volumes which occurred in those product lines generating the highest margins, and lower expenses. For the first nine months of 1999, Respiratory Group sales increased 21 percent over the same period of last year. The prior year included only seven months of Nellcor sales and operating results. The Group's sales increase of $145.4 million was attributable to volume growth of 21 percent, of which 14 percent was due to the inclusion of only seven months of Nellcor revenue in 1998 and 12 percent was due to volume growth for pulse oximetry, ventilation, service, blood analysis, and anesthesiology and respiratory disposables as a group, partially offset by price declines and lower volumes in sleep, portable ventilation and other product lines for the reasons discussed above. Operating earnings for the Respiratory Group for the first nine months of 1999 were $97.7 million, or 26 percent above the prior year-to-date results of operations. The Imaging Group had sales for the quarter ended March 31, 1999 of $190.7 million, compared with $190.9 million for the comparable prior year period. Sales increases attributable to volume increases in all product lines of 5 percent or $10 million were more than offset by the decline in x-ray contrast media selling prices. Operating earnings for the three-month period ended March 31, 1999 were $31.1 million, or 20 percent below the comparable prior year period primarily as a result of selling price reductions in x-ray contrast media. The Imaging Group's year-to-date sales were $568.8 million, or 2 percent above the sales for the same nine-month period last year. The sales growth is primarily attributable to a $22 million increase in sales of nuclear medicine products. All major product lines contributed to a year-to-date sales volume increase of 6 percent, which was partially offset by price erosion in x-ray contrast media. Although price declines in the x-ray contrast media portion of the business were a less significant factor in the Group's results for the six months ended December 31, 1998 as compared to the comparable prior year period, x-ray contrast media price declines for the three months ended March 31, 1999 were 14 percent as compared to prior year results, and this trend will continue in the fourth quarter of 1999 and into next year. Operating earnings for the first nine months of 1999 were $90.6 million, which is a 3 percent improvement as compared to the same period in the prior year. The Pharmaceuticals Group's sales for the quarter ended March 31, 1999 were $181.8 million, or 5 percent above sales in the comparable prior year period of $172.9 million. The sales increase of $8.9 million was primarily attributable to volume increases in dosage narcotics of $8 million. Operating earnings for this Group were $35.5 million, or 16 percent greater than those recorded in the comparable period last year. The operating earnings improvement was primarily attributable to increased sales volumes of higher margin narcotic products. The Pharmaceuticals Group's sales for the nine-month period ended March 31, 1999 were $485.1 million, or 8 percent above the revenues generated during the comparable period last year. The sales increase of $34.3 million was primarily attributable to volume increases in narcotics of $32 million, which is an increase of 24 percent. Sales volumes of acetaminophen and laboratory and microelectronic chemicals declined 6 percent and 5 percent, respectively. The decline in acetaminophen sales is due to a late flu season in the U.S., while the decline in laboratory and microelectronic chemicals is primarily attributable to the weakness in the microchip industry. Price generated a 2 percent increase in sales for the Group when compared with the first nine months of last year. Operating earnings for the first nine months of 1999 were $73.1 million, or 30 percent above the comparable prior year results of operations primarily as a result of increased sales. Corporate Matters Corporate expense was up 7 percent and 2 percent for the quarter ended March 31, 1999 and first nine months of the year compared to the respective prior year periods. Interest and other nonoperating income, net was $.2 million for the first nine months of 1999, and $13.1 million for the same period last year. In the prior year, the Company generated interest income on cash proceeds from 1997 divestitures invested in interest bearing securities. These cash equivalents were utilized to acquire Nellcor at the end of August 1997. The Company's effective tax rates were 32.1 percent and 37.3 percent for the three-month periods ended March 31, 1999 and 1998, respectively. The Company's effective tax rate for the first nine months of 1999 was 32.3 percent. For the first nine months of the prior year, the Company had a loss from continuing operations of $278.4 million including the one-time noncash write-off of purchased research and development of $306.3 million, which had no tax benefit. Financial Condition The Company's financial resources are expected to continue to be adequate to support existing businesses. Since June 30, 1998, cash and cash equivalents increased $4.2 million. Operations provided $29.8 million of cash, while capital spending totaled $83.0 million. The Company received $72.9 million in proceeds from asset disposals and $86.1 million in proceeds from redemption of investments. The Company's current ratio at March 31, 1999 was 1.2:1. Debt as a percentage of invested capital was 54.6 percent. In December 1997, the Company filed a $500 million shelf debt registration statement which was been declared effective on May 4, 1999. At March 31, 1999, the Company has a $1.0 billion private placement commercial paper program. The program is backed by a $1.0 billion revolving credit facility expiring September 12, 2002. The revolving credit facility was reduced from $1.6 billion to $1.0 billion in September 1998. There was no borrowing outstanding under the revolving credit facility at March 31, 1999. Commercial paper borrowings under this program were $290.2 million as of March 31, 1999. Non-U.S. lines of credit totaling $171.3 million were also available, and borrowings under these lines amounted to $16.7 million at March 31, 1999. The non-U.S. lines are cancelable at any time. The Company's Board of Directors previously authorized repurchase of 47 million shares of common stock and additional repurchases not to exceed cash outlays of $250 million. Share repurchases under these authorizations have totaled 39.4 million shares, including 2.6 million shares during the nine months ended March 31, 1999. Estimated capital spending for the year ending June 30, 1999 is approximately $135 million. Year 2000 Update - ---------------- The Year 2000 issue is the result of date-sensitive devices, systems and computer programs that were deployed using two digits rather than four to define the applicable year. Any such technologies may recognize a year containing "00" as the year 1900 rather than the year 2000. If left unaddressed, this could result in a system failure or miscalculations causing disruptions of operations including, among other things, a temporary inability to process transactions or engage in similar normal business activities. Mallinckrodt has developed and is implementing a comprehensive program to address the Year 2000 issue. The program has four major focus areas: information technology systems; non-information technology systems; products; and key supplier and business partners. Overall, the Company has completed its assessment in the above described areas, and has substantially completed required modifications, replacements or conversions. Information technology systems are hardware and software which support business applications. Year 2000 compliance for these systems included modification and testing of existing systems and replacement of certain systems with new technologies. Required modifications and replacements and testing thereof are substantially completed. Non-information technology systems (embedded systems) are used in research and development, manufacturing processes and facility management systems. All remediation decisions for critical items are complete and implementation of modifications and replacements deemed appropriate are complete. Compliance status and applicable remediation steps for currently and previously marketed products have been communicated via the Internet using a dedicated web page. Modifications necessary to achieve remediation for such products are available to customers in accordance with the above communicated remediation steps. The Company is also assessing the readiness of its key suppliers and business partners to be Year 2000 compliant. Information requests have been distributed and responses received from virtually all those queried. To augment these evaluations, more detailed reviews of certain key suppliers and business partners are being conducted. This part of the program is over 90 percent complete and, to date, no matters have been identified from the replies received that would appear to materially affect the operations of the Company's businesses. To further recognize potential adverse impact, the Company is developing operating contingency plans to address unanticipated interruptions that could occur in processes, systems and devices that have been assessed, remediated and considered Year 2000 ready by Mallinckrodt and its key suppliers and business partners. Such operating contingency plans are expected to be substantially complete before June 30, 1999. The program to address Year 2000 has been underway since February 1997. Both internal and external resources are being used to assess and modify or replace non-compliant technologies, and to appropriately test Year 2000 modifications and replacements. The program is being funded through operating cash flows. The pretax costs incurred for this effort were approximately $7 million and $1 million in 1998 and 1997, respectively. The Company anticipates expenses of approximately $10 million will be incurred in 1999 to substantially complete the effort. In 2000, the Company anticipates an additional $2 million in pretax costs for program management and to complete monitoring and evaluations of key suppliers and business partners, program verification and contingency planning. The cost of the program and the date on which the Company believes it will complete Year 2000 modifications are based on management's best estimates. Such estimates were derived using software surveys and programs to evaluate calendar date exposures and numerous assumptions of future events, including the continued availability of certain resources and other factors. Because none of these estimates can be guaranteed, actual results could differ materially from those anticipated. Specific factors that might cause such differences include, but are not limited to, the availability and cost of personnel trained in this area, the ability to locate and correct all relevant computer codes, and similar uncertainties. If the modifications and conversions are not made or are not completed timely and operating contingency plans do not work as anticipated, the result could be an interruption, or a failure, of certain normal business activities or operations. Such failures could materially impact and adversely affect the Company's results of operations, liquidity and financial condition. Readers are cautioned that forward-looking statements contained in this Year 2000 Update should be read in conjunction with the Company's disclosures under the heading "CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995" on page 7. European Monetary Union (EMU) - ----------------------------- The euro was introduced on January 1, 1999, at which time the eleven participating EMU member countries established fixed conversion rates between their existing currencies (legacy currencies) and the euro. The legacy currencies will continue to be valid as legal tender through June 30, 2002; thereafter, the legacy currencies will be canceled and euro bills and coins will be used for cash transactions in the participating countries. The Company's European sales offices and various manufacturing and distribution facilities affected by the euro conversion have established plans to address the systems issues raised by the euro currency conversion. The Company's legacy currency systems, which have multi-currency functionality, were modified at minimal expense to enable them to process euro transactions effective January 1, 1999. The Company believes the cost of converting the information technology and other systems to the euro will not be significant, and that such conversions will be completed on a timely basis prior to any anticipated negative impact on the Company's operations. The Company is cognizant of the potential business implications of converting to a common currency; however, it is unable to determine, at this time, the ultimate financial impact of the conversion on its operations, if any, given that the impact will be dependent upon the competitive situations which exist in the various regional markets in which the Company participates and the potential actions which may or may not be taken by the Company's competitors and suppliers. Mallinckrodt believes converting to the euro will have no material impact on the Company's currency exchange cost and/or risk exposure, continuity of contracts or taxation. Item 3. Quantitative and Qualitative Disclosures About Market Risk. The Company has determined that its market risk exposures, which arise primarily from exposures to fluctuations in interest rates and foreign currency rates, are not material to its future earnings, fair value and cash flows. PART II. OTHER INFORMATION Item 1. Legal Proceedings. The Company is subject to various investigations, claims and legal proceedings covering a wide range of matters that arise in the ordinary course of its business activities. In addition, in connection with laws and regulations pertaining to the protection of the environment, the Company is actively involved in the investigation or remediation of alleged or acknowledged contamination at 23 currently or previously owned or operated sites and at 15 off- site locations where its waste was taken for treatment or disposal. These actions are in various stages of development and generally include demands for reimbursement of previously incurred costs, or costs for future investigation and/or for remedial actions. In many instances, the dollar amount of the claim is not specified. For some sites, other potentially responsible parties may be jointly and severally responsible, along with the Company, to pay for any past remediation and other related expenses. For other sites, the Company may be solely responsible for remediation and related costs. The Company anticipates that a portion of these costs will be covered by insurance or third party indemnities. A number of the currently pending matters relate to historic and formerly owned operations of the Company. Each of these matters is subject to various uncertainties, and it is possible that some of these matters will be decided unfavorably against the Company. Previously Reported Matters - --------------------------- The following is a brief discussion of material developments in proceedings previously reported in the Company's Annual Report on Form 10-K for the year ended June 30, 1998, as amended by the Company's Quarterly Reports on Form 10-Q for the quarters ended September 30, 1998 and December 31, 1998. Previously Reported Environmental Matters - ----------------------------------------- Animal Health Business Properties - The Company transferred several facilities to Schering-Plough Corporation (S-P) as part of the sale of the Company's animal health business in June 1997, including facilities in the following South American locations: Buenos Aires, Argentina; Cotia, Brazil; Itu, Brazil; Cali, Colombia; and Luque, Paraguay. During the baseline study performed in connection with the sale, chemical constituents were identified at these sites. Based on the information obtained upon completion of the baseline study, S-P determined that it needed to further delineate the extent of any potential contamination. S-P provided copies of proposed investigations to the Company in late March 1999. The Company has hired outside consultants to assist it in evaluating the environmental requirements of the various countries to determine if additional investigation and/or remediation is necessary or required. The Company does not necessarily agree that additional delineation and/or investigation is necessary. The Company is reviewing the delineation proposals made by S-P and plans to provide comments. Springville, UT - Approval of the Revised Resource Conservation Recovery Act Facility Investigation Work Plan for this site, which was submitted to the Utah Department of Environmental Quality in December 1998, has been delayed. The trial date for the case styled Don Henrichsen, et al v. The ---------------------------- Ensign Bickford Company, et al, which is pending in the U.S. District - ------------------------------ Court for the District of Utah, has been reset for December 1999. The trial was previously scheduled to begin in August 1999. Ensign-Bickford Industries, Inc. and The Ensign Bickford Company (jointly called, EBI) and the Company have received three additional complaints by nearby residents alleging personal property and property damage from migration of contaminants from facility operations. All of the lawsuits have been filed in the U.S. District Court for the District of Utah. The lawsuits are styled as follows: Howard Ruff and Kay Ruff v. Ensign-Bickford Industries, Inc., et al - -------------------------------------------------------------------- (filed February 26, 1999); Charles Bates and Ellen Bates v. Ensign- ---------------------------------------- Bickford Industries, Inc., et al (filed March 9, 1999); and Rodney - -------------------------------- ------ Petersen and Marilyn Petersen v. Ensign-Bickford Industries, Inc. - ----------------------------------------------------------------- (filed April 15, 1999). These suits allege that the Company and EBI's actions in operating the facility caused injury. Answers are due in the Ruff, Bates, and Petersen complaints in early May 1999. ----- ------ -------- The Company and EBI are jointly defending these actions. Previously Reported Other Litigation - ------------------------------------ OPTISON(*) Patent Litigation - Sonus Litigation - The United States Patent Office reexamination proceedings have concluded with the Patent Office confirming patentability of some of the claims in the Sonus Pharmaceuticals, Inc. patents under reexamination. The District Court has now lifted the stay and pretrial discovery has resumed. Trial is scheduled for February 2000. The Company will continue to challenge validity of the Sonus patents in this litigation. DuPont/ImaRx Litigation - Molecular Biosystems, Inc. (MBI), and its marketing partner, Mallinckrodt, were charged with patent infringement of U.S. Patent No. 5,547,656 by ImaRx Pharmaceutical Corp. (ImaRx) and its marketing partner, DuPont Pharmaceuticals (DuPont), for selling OPTISON(*) ultrasound contrast agent, in a suit filed on May 3, 1999 in the U.S. District Court for the District of Delaware. As previously reported, Mallinckrodt and MBI filed an action against ImaRx and DuPont to declare this patent invalid or not infringed in the U.S. District Court for the District of Columbia in July 1997, but that action was dismissed on jurisdictional grounds. Since that time, the patent has undergone reexamination in the United States Patent Office with the Patent Office recently confirming patentability of the claims of the patent. MBI and Mallinckrodt will vigorously defend on the grounds of invalidity and non- infringement. Augustine Medical, Inc. - Europe - Trial of the action filed by Augustine Medical, Inc. in the District Court of The Hague, the Netherlands occurred on December 4, 1998. A decision by the Court that the Company did not infringe Augustine's patents was announced in February 1999. United States - The Company continues to expect a decision by the Court of Appeals for the Federal Circuit in the second quarter of calendar year 1999. Item 2. Changes in Securities and Use of Proceeds. On February 17, 1999, the Company announced the redemption of the rights granted under the Rights Agreement, dated February 19, 1996, as amended as of September 2, 1998, between the Company and the First National Bank of Chicago, as Rights Agent. Each outstanding share of Mallinckrodt common stock represented one right. Shareholders of record on March 15, 1999 were paid five cents per right on March 31, 1999. As of the date hereof, no rights are issued and outstanding. Item 3. Defaults Upon Senior Securities. Not applicable. Item 4. Submission of Matters to a Vote of Security Holders. Not applicable. Item 5. Other Information. Not applicable. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit Number Description - ------- ---------------------------------------------------------- 4.2 (c) Form 8-A/A filed on February 17, 1999 pursuant to Section 12(b) of the Securities Exchange Act of 1934, reflecting the redemption of the rights granted under the Rights Agreement, dated as of February 19, 1996, as amended as of September 2, 1998, between Mallinckrodt and the First National Bank of Chicago, as Rights Agent (incorporated herein by reference to Amendment to Registration Statement on Form 8-A/A dated February 17, 1999). 27 Financial data schedule for the quarter ended March 31, 1999 (filed with this electronic submission) (b) Reports on Form 8-K. During the quarter and through the date of this report, the following reports on Form 8-K were filed. - - Report dated February 17, 1999 under Item 5 regarding the redemption of the common stock rights plan. - - Report dated April 29, 1999 under Item 5 regarding the transfer of the manufacture of OPTISON(*) from Molecular Biosystems, Inc. (MBI) to Mallinckrodt, and the extension of Mallinckrodt's responsibility for funding clinical trials. * * * * * * * * * * * * * * 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 thereunto duly authorized. Mallinckrodt Inc. - --------------------------- Registrant By: /s/ MICHAEL A. ROCCA By: /s/ DOUGLAS A. MCKINNEY ------------------------ --------------------- Michael A. Rocca Douglas A. McKinney Senior Vice President and Vice President and Chief Financial Officer Controller DATE: May 7, 1999 EX-27 2
5 This schedule contains summary financial information extracted from the consolidated balance sheets and consolidated statements of operations of the Company's Form 10-Q, and is qualified in its entirety by reference to such financial statements. 1,000,000 9-MOS JUN-30-1999 MAR-31-1999 60 0 516 23 528 1252 1450 571 3767 1027 944 0 11 87 945 3767 1903 1903 1025 1660 0 0 65 179 58 121 23 0 0 144 1.99 1.99
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