SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
November 3, 1997
Mallinckrodt Inc.
(Exact name of registrant as specified in its charter)
New York 1-483 36-1263901
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
7733 Forsyth Boulevard, St. Louis, MO 63105-1820
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, (314) 854-5200
including area code
<PAGE>
Items 1 - 6 Not Applicable
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
This amendment provides the pro forma financial information
pursuant to Article 11 of Regulation S-X for the period ended June
30, 1997, which was not included in the Company's Form 8-K filed on
September 5, 1997, since the information for the period was not
determinable at such time.
Mallinckrodt Inc.
Unaudited Pro Forma Condensed Consolidated Financial Statements
On August 28, 1997, Mallinckrodt Inc. (Mallinckrodt) acquired
Nellcor Puritan Bennett Incorporated (Nellcor) through an agreement
to purchase for cash all the outstanding shares of common stock of
Nellcor for $28.50 per share. The aggregate purchase price of the
Nellcor acquisition was approximately $1.9 billion.
The acquisition was accounted for using the purchase method of
accounting. Allocations of the purchase price have been determined
based upon preliminary estimates of fair value, and therefore, are
subject to change. Adjustments, which could be significant, will be
made during the allocation period based upon a detailed review of the
fair value of assets and liabilities acquired. In addition, the
integration of Nellcor into Mallinckrodt will result in additional
liabilities being recorded as part of the acquisition accounting.
The following Unaudited Pro Forma Condensed Consolidated Financial
Statements are based upon the historical financial statements of
Mallinckrodt and Nellcor, and have been prepared under the
assumptions set forth in the accompanying Notes to Unaudited Pro
Forma Condensed Consolidated Financial Statements. The Unaudited Pro
Forma Condensed Consolidated Statement of Operations for the year
ended June 30, 1997 has been prepared as if the purchase transaction
and the related financing had occurred at the beginning of fiscal
1997. The Unaudited Pro Forma Condensed Consolidated Balance Sheet
as of June 30, 1997 has been prepared as if the purchase had occurred
at that date. The pro forma adjustments are based upon available
information and certain assumptions that management believes are
reasonable.
The Unaudited Pro Forma Condensed Consolidated Financial
Statements do not purport to represent what Mallinckrodt's financial
position or the results of operation would have been if consummation
of the acquisition had occurred on the dates indicated or which may
be achieved in the future. Management is currently developing a
detailed integration plan. Anticipated cost savings and related
liabilities from the integration of the two companies have not been
reflected in this presentation.
The Unaudited Pro Forma Condensed Consolidated Financial
Statements should be read in conjunction with the historical
financial statements and accompanying notes for Mallinckrodt and
Nellcor.
<PAGE>
Mallinckrodt Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Year Ended June 30, 1997
(In millions, except share and per share amounts)
<TABLE>
<CAPTION>
Pro Forma
Mallinckrodt Nellcor Adjustments Combined
------------ ------- ----------- --------
<S> <C> <C> <C> <C>
Net sales................... $1,861.2 $778.6 $2,639.8
Operating costs and
expenses:
Cost of goods sold........ 1,017.6 410.8 $ (1.1) (A) 1,427.3
Selling, administrative
and general expenses..... 428.7 219.6 52.0 (A) 700.3
Research and development
expenses................. 108.0 57.4 (A) 165.4
Restructuring charges..... 9.7 9.7
Merger and related costs.. 21.7 21.7
Other operating (income)
expense, net............. (7.2) (7.2)
--------- -------- -------- ---------
Total operating costs and
expenses................... 1,547.1 719.2 50.9 2,317.2
--------- -------- -------- ---------
Operating earnings.......... 314.1 59.4 (50.9) 322.6
Interest income and other
nonoperating income
(expense), net............. 22.0 1.3 (22.0) (B) 1.3
Interest expense............ (48.1) (1.1) (69.0) (C) (118.2)
--------- -------- -------- ---------
Earnings from continuing
operations before
income taxes............... 288.0 59.6 (141.9) 205.7
Income tax provision........ 102.3 20.8 (43.6) (D) 79.5
--------- -------- -------- ---------
Earnings from continuing
operations................. 185.7 38.8 (98.3) 126.2
Discontinued operations..... 4.4 (4.4) (E)
--------- -------- -------- ---------
Net earnings................ 190.1 38.8 (102.7) 126.2
Preferred stock dividends... (.4) (.4)
--------- -------- -------- ---------
Available for common
shareholders............... $ 189.7 $ 38.8 $(102.7) $ 125.8
========= ======== ======== =========
Earnings per common share
Net earnings................ $ 2.53 $ 1.68
========= =========
Shares used to compute
earnings per share (F)..... 75,060,227 75,060,227
=========== ===========
</TABLE>
(The accompanying Notes are an integral part of the Unaudited Pro
Forma Condensed Consolidated Financial Statements.)
<PAGE>
Mallinckrodt Inc.
Notes to Unaudited Pro Forma
Condensed Consolidated Statement of Operations
Year Ended June 30, 1997
(A) Intangible and goodwill amortization expense related to the
acquisition, less amortization expense previously recorded by
Nellcor. Intangibles and goodwill are amortized on a straight-
line basis over 10 to 30 years (weighted average life of 22
years). The amortization expense is based on preliminary
allocation and further adjustments, which may be significant and
will include integration accruals, are expected during the
allocation period.
The $75.4 million step-up of Nellcor's inventory to fair value
at date of acquisition and the $398.3 million purchased in-
process research and development are not reflected in this
Unaudited Pro Forma Condensed Consolidated Statement of
Operations. These amounts will be charged to operations during
fiscal 1998.
(B) Elimination of Mallinckrodt fiscal 1997 domestic interest income
related to cash on hand used to pay for a portion of the
acquisition, plus $0.8 million amortization of debt issuance
cost.
(C) Interest at 6.0 percent on the borrowing to complete the
acquisition. The interest rate is based on the London Interbank
Offered Rate plus a margin dependent upon the Company's senior
debt ratings.
(D) Income taxes have been provided for the adjustments referred to
in (A), (B) and (C). The effective tax rate is adversely
impacted by goodwill amortization expense which is not tax
effected.
(E) Discontinued operations primarily relate to the sale of
businesses and their results of operations that are eliminated
in this statement.
(F) Earnings per common share amounts were computed based upon the
weighted average number of Mallinckrodt common and common
equivalent shares outstanding during the period.
<PAGE>
Mallinckrodt Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
June 30, 1997
(In millions)
<TABLE>
<CAPTION>
Pro Forma
Assets Mallinckrodt Nellcor Adjustments Combined
------------ ------- ----------- ---------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents.. $ 808.5 $ 43.3 $ (751.6)(A) $ 100.2
Trade receivables.......... 356.0 193.2 549.2
Inventories................ 315.9 168.1 75.4 (B) 559.4
Deferred income taxes...... 36.8 20.0 56.8
Other current assets....... 99.6 20.9 120.5
--------- ------- --------- ---------
Total current assets......... 1,616.8 445.5 (676.2) 1,386.1
Investments and long-term
receivables................. 126.0 126.0
Property, plant and
equipment, net.............. 827.9 151.2 10.7 (B) 989.8
Intangible and other assets.. 416.2 60.2 1,570.8 (C) 2,047.2
Deferred income taxes........ .8 16.1 16.9
--------- ------- --------- ---------
Total assets................. $2,987.7 $673.0 $ 905.3 $4,566.0
========= ======= ========= =========
Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt............. $ 11.7 $ 27.2 $1,150.0 (A) $1,188.9
Accounts payable............ 169.3 53.0 222.3
Accrued liabilities......... 396.1 89.8 485.9
Income taxes payable........ 76.4 76.4
Deferred income taxes....... .2 28.7 (D) 28.9
--------- ------- --------- ---------
Total current liabilities..... 653.7 170.0 1,178.7 2,002.4
Long-term debt, less current
maturities................... 545.2 6.0 551.2
Deferred income taxes......... 248.7 206.0 (D) 454.7
Postretirement benefits....... 161.9 161.9
Other noncurrent liabilities
and deferred credits......... 127.0 17.6 144.6
--------- ------- --------- --------
Total liabilities............. 1,736.5 193.6 1,384.7 3,314.8
--------- ------- --------- --------
Shareholders' equity:
4 Percent cumulative
preferred stock............ 11.0 11.0
Common stock................ 87.1 .1 (.1) (E) 87.1
Capital in excess of
par value.................. 305.9 255.4 (255.4) (E) 305.9
Reinvested earnings......... 1,292.6 282.2 (282.2) (E) 1,292.6
Foreign currency
translation................ (49.9) .2 (.2) (E) (49.9)
Treasury stock, at cost..... (395.5) (58.5) 58.5 (E) (395.5)
--------- -------- --------- ---------
Total shareholders' equity.... 1,251.2 479.4 (479.4) 1,251.2
--------- -------- --------- ---------
Total liabilities and
shareholders' equity......... $2,987.7 $ 673.0 $ 905.3 $4,566.0
========= ======== ========= =========
</TABLE>
(The accompanying Notes are an integral part of the Unaudited Pro
Forma Condensed Consolidated Financial Statements.)
<PAGE>
Mallinckrodt Inc.
Notes to Unaudited Pro Forma
Condensed Consolidated Balance Sheet
June 30, 1997
(A) Cash on hand was used to pay for a portion of the acquisition
and the remaining funds required were obtained through
additional borrowing. The Company entered into a $2.0 billion
credit facility consisting of a $400 million two-year term loan
and a $1.6 billion five-year revolving credit facility.
(B) Step-up of Nellcor's tangible assets to fair value at date of
acquisition.
(C) Intangible assets and goodwill related to the acquisition were
$1,604.3 million, less $33.5 million of intangibles and goodwill
previously recorded by Nellcor. The identifiable intangible
assets directly related to the acquisition are $925.4 million
and include in-process research and development, core and
developed technology, trademarks, trade names and the assembled
work force. The residual balance of $678.9 million is goodwill.
The goodwill balance is subject to adjustment during the
allocation period based upon a detailed review of the fair value
of assets and liabilities acquired and completion of the
integration plan, which will result in additional liabilities
being recorded as part of the acquisition accounting.
The purchased in-process research and development of $398.3
million represents the value of medical devices still in the
development stage and not considered to have reached technical
feasibility. This in-process research and development is
reported as an asset on the balance sheet for this pro forma
financial statement presentation only. This balance will be
charged to operations during the first quarter of fiscal 1998.
(D) Current and noncurrent deferred income tax liabilities were
established in conjunction with the inventory, property, plant
and equipment, and intangible assets recorded at date of
acquisition. See (B) and (C) above for additional information.
(E) Shareholders' equity adjustments are the elimination of the
Nellcor equity balances at acquisition.
<PAGE>
SIGNATURE
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 thereunder duly authorized.
Dated: November 3, 1997
Mallinckrodt Inc.
ROGER A. KELLER
Vice President, Secretary
and General Counsel
