SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
May 20, 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>
Item 5. Other Events
A press release was issued May 20, 1997. The relevant portion of the
text of that release was as follows:
MALLINCKRODT AGREES TO SELL ANIMAL HEALTH BUSINESS
TO SCHERING-PLOUGH
ST. LOUIS, MO, May 19, 1997 - Mallinckrodt Inc. (NYSE:MKG)
announced today that it has signed an agreement to sell its animal
health business to Schering-Plough Corporation for
$405 million in cash. Closing for the transaction, which is subject
to necessary regulatory reviews, is expected to be completed in July.
Ray Holman, Mallinckrodt chairman and chief executive officer,
said, "The agreement to divest the business, approved by our
directors and also by Schering-Plough's board, represents a major
step in aggressively pursuing our strategy to focus on our core
businesses in human healthcare and specialty chemicals. Last August,
we announced our desire to monetize the value of our Tastemaker
flavors joint venture with Hercules Incorporated and our animal
health business," Holman said, "and we are pleased with our
progress."
The Tastemaker divestiture was completed on March 31 and
resulted in a net value to Mallinckrodt of approximately $550
million, including an exchange of stock and debt assumption. At that
time, Mallinckrodt announced plans for incremental share repurchases
of up to $250 million, reinforced its commitment to expand core
businesses and stated that it continued to make progress in the
strategy to divest the animal health business.
"We are pleased that our animal health business will be in the
hands of a global leader. In an industry that is undergoing
aggressive consolidation, it was apparent that the potential for
long-term growth could be better realized if the business was aligned
with a pharmaceutical company that provides access to technology and
other synergies needed to bring products to market in a timely,
cost-efficient way."
Schering-Plough stated, in a separate news release, that
Mallinckrodt's animal health business will be integrated into
Schering-Plough Animal Health (SPAH) to form the world's sixth
largest animal health business.
Effective with the fiscal 1997 third quarter ended March 31,
Mallinckrodt has reclassified the veterinary division to discontinued
operations and reported the reclassification in its Form 10-Q, which
will be filed on or before May 20.
Schering-Plough Corporation is a research-based company engaged
in the discovery, development, manufacturing and marketing of
pharmaceutical and health care products worldwide.
Mallinckrodt Inc. serves healthcare and specialty chemicals
markets worldwide. The company is a major producer of diagnostic
imaging agents, medical devices, pain relief pharmaceuticals,
catalysts, and laboratory and microelectronic chemicals. The St.
Louis, Missouri-based company, with fiscal 1996 net sales of $2.2
billion, sells more than 1,000 products in more than 100 countries.
The Mallinckrodt web site address is (www.mallinckrodt.com).
# # #
<PAGE>
MALLINCKRODT INC.
CONSOLIDATED SALES AND EARNINGS
FISCAL 1997
(in millions, except per share amounts)
<TABLE>
<CAPTION>
Quarter
---------------------------------
Year to
First(1) Second Third Date(1)
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales
Human healthcare $ 361.7 $ 372.4 $ 387.2 $1,121.3
Specialty chemicals 80.5 80.6 82.6 243.7
Intersegment sales (.2) .1 (.1) (.2)
--------- --------- --------- ---------
Consolidated $ 442.0 $ 453.1 $ 469.7 $1,364.8
========= ========= ========= =========
Operating earnings
Human healthcare $ 67.4 $ 68.4 $ 80.6 $ 216.4
Specialty chemicals 5.5 6.0 8.4 19.9
Corporate (6.6) (7.3) (5.5) (19.4)
--------- --------- --------- ---------
66.3 67.1 83.5 216.9
Interest and other
nonoperating income, net 4.5 6.3 4.6 15.4
Interest expense (12.7) (11.9) (11.9) (36.5)
--------- --------- --------- ---------
Earnings from
continuing operations
before income taxes 58.1 61.5 76.2 195.8
Income tax provision 21.5 22.4 26.6 70.5
--------- --------- --------- ---------
Earnings from
continuing operations 36.6 39.1 49.6 125.3
Discontinued operations (1.2) 4.4 (1.0) 2.2
--------- --------- --------- ---------
Net earnings 35.4 43.5 48.6 127.5
Preferred stock dividends (.1) (.1) (.1) (.3)
--------- --------- --------- ---------
Available for common
shareholders $ 35.3 $ 43.4 $ 48.5 $ 127.2
========= ========= ========= =========
Earnings per common share
Continuing operations $ .48 $ .51 $ .66 $ 1.66
Discontinued operations (.01) .06 (.01) .03
--------- --------- --------- ---------
Net earnings $ .47 $ .57 $ .65 $ 1.69
========= ========= ========= =========
Average common shares 75.5 75.8 75.2 75.4
See accompanying notes for additional information.
</TABLE>
<PAGE>
MALLINCKRODT INC.
CONSOLIDATED SALES AND EARNINGS
(in millions, except per share amounts)
<TABLE>
<CAPTION>
Year Ended June 30
-------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996(3) 1995 1994(4) 1993(5) 1992(6)
--------- --------- --------- --------- ---------
Net sales
Human healthcare $1,422.7 $1,336.8 $1,193.2 $1,047.6 $ 854.4
Specialty chemicals 332.0 251.8 155.9 130.9 133.9
Divested operations(2) 27.5
Intersegment sales (.3) (.3) (.7) (.3) (.1)
--------- --------- --------- --------- ---------
Consolidated $1,754.4 $1,588.3 $1,348.4 $1,178.2 $1,015.7
========= ========= ========= ========= =========
Operating earnings(loss)
Human healthcare $ 309.0 $ 276.0 $ 178.1 $ 216.9 $ 166.8
Specialty chemicals 27.9 20.6 12.5 (50.2) 7.5
Divested operations(2) 4.8
Corporate (41.4) (28.8) (30.2) (35.6) (30.6)
Eliminations (.3) .1 .1 (.5)
--------- --------- --------- --------- --------
295.2 267.9 160.5 131.1 148.0
Interest and other
nonoperating income
(expense), net (.2) (4.2) (.4) 2.6 15.3
Interest expense (51.3) (45.1) (34.6) (32.0) (34.8)
--------- --------- --------- --------- ---------
Earnings from
continuing operations
before income taxes 243.7 218.6 125.5 101.7 128.5
Income tax provision 90.0 81.9 46.3 41.3 46.9
--------- --------- --------- --------- --------
Earnings from
continuing operations 153.7 136.7 79.2 60.4 81.6
Discontinued operations 58.2 43.6 24.6 (180.2) 45.9
--------- --------- --------- --------- ---------
Earnings (loss) before
cumulative effect of
accounting changes 211.9 180.3 103.8 (119.8) 127.5
Cumulative effect of
accounting changes (80.6)
--------- --------- --------- --------- ---------
Net earnings (loss) 211.9 180.3 103.8 (200.4) 127.5
Preferred stock
dividends (.4) (.4) (.4) (.4) (.4)
--------- --------- --------- --------- ---------
Available for common
shareholders $ 211.5 $ 179.9 $ 103.4 $ (200.8) $ 127.1
========= ========= ========= ========= =========
Earnings per
common share
Continuing operations $ 2.01 $ 1.76 $ 1.01 $ .77 $ 1.04
Discontinued operations .76 .56 .32 (2.33) .59
Earnings (loss) before --------- --------- -------- --------- ---------
cumulative effect of
accounting changes 2.77 2.32 1.33 (1.56) 1.63
Cumulative effect of
accounting changes (1.04)
--------- --------- -------- --------- ---------
Net earnings (loss) $ 2.77 $ 2.32 $ 1.33 $ (2.60) $ 1.63
========= ========= ======== ========= =========
Average common shares 76.3 77.5 77.6 77.4 77.8
See accompanying notes for additional information.
</TABLE>
<PAGE>
MALLINCKRODT INC.
CONSOLIDATED SALES AND EARNINGS
FISCAL 1996
(in millions, except per share amounts)
<TABLE>
<CAPTION>
Quarter
---------------------------------------
<S> <C> <C> <C> <C> <C>
First Second(3) Third Fourth Year
-------- --------- -------- -------- ---------
Net sales
Human healthcare $ 316.1 $ 331.9 $ 374.3 $ 400.4 $1,422.7
Specialty chemicals 75.1 80.3 86.1 90.5 332.0
Intersegment sales (.1) (.1) (.1) (.3)
-------- --------- -------- -------- ---------
Consolidated $ 391.1 $ 412.2 $ 460.3 $ 490.8 $1,754.4
======== ========= ======== ======== =========
Operating earnings
Human healthcare $ 62.0 $ 68.4 $ 81.6 $ 97.0 $ 309.0
Specialty chemicals 4.6 5.5 7.4 10.4 27.9
Corporate (7.5) (7.1) (8.6) (18.2) (41.4)
Eliminations (.1) (.2) (.3)
-------- --------- -------- -------- ---------
59.0 66.6 80.4 89.2 295.2
Interest and other
nonoperating income
(expense), net (.4) (.5) (.7) 1.4 (.2)
Interest expense (10.6) (12.9) (15.6) (12.2) (51.3)
-------- --------- -------- -------- ---------
Earnings from
continuing operations
before income taxes 48.0 53.2 64.1 78.4 243.7
Income tax provision 18.0 20.0 23.7 28.3 90.0
-------- --------- -------- -------- ---------
Earnings from
continuing operations 30.0 33.2 40.4 50.1 153.7
Discontinued operations 9.2 24.1 8.0 16.9 58.2
-------- --------- -------- -------- ---------
Net earnings 39.2 57.3 48.4 67.0 211.9
Preferred stock
dividends (.1) (.1) (.1) (.1) (.4)
-------- --------- -------- -------- ---------
Available for common
shareholders $ 39.1 $ 57.2 $ 48.3 $ 66.9 $ 211.5
======== ========= ======== ======== =========
Earnings per common
share
Continuing operations $ .38 $ .43 $ .53 $ .66 $ 2.01
Discontinued operations .12 .32 .11 .23 .76
-------- --------- -------- -------- --------
Net earnings $ .50 $ .75 $ .64 $ .89 $ 2.77
======== ========= ======== ======== ========
Average common shares 77.9 76.4 75.5 75.4 76.3
Net earnings per share for the four quarters of fiscal 1996 are more than
full year per share results by $.01 from a decrease in common shares
outstanding.
See accompanying notes for additional information.
</TABLE>
<PAGE>
MALLINCKRODT INC.
CONSOLIDATED OPERATING COSTS AND EXPENSES
FISCAL 1997
(in millions)
<TABLE>
<CAPTION>
Quarter
----------------------------------
<S> <C> <C> <C> <C>
Year to
First(1) Second Third Date
--------- --------- --------- ----------
Net sales $ 442.0 $ 453.1 $ 469.7 $1,364.8
========= ========= ========= ==========
Operating costs and
expenses:
Cost of goods sold $ 242.0 $ 248.8 $ 257.9 $ 748.7
Selling, administrative
and general expenses 105.8 109.0 104.9 319.7
Research and development
expenses 28.8 27.1 26.8 82.7
Other operating (income)
expense, net (.9) 1.1 (3.4) (3.2)
-------- -------- -------- ---------
Total operating costs and
expenses 375.7 386.0 386.2 1,147.9
-------- -------- -------- ---------
Operating earnings $ 66.3 $ 67.1 $ 83.5 $ 216.9
======== ======== ======== =========
See accompanying notes for additional information.
</TABLE>
<PAGE>
MALLINCKRODT INC.
CONSOLIDATED OPERATING COSTS AND EXPENSES
(in millions)
<TABLE>
<CAPTION>
Year Ended June 30
-------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996(3) 1995 1994(4) 1993(5) 1992(6)
--------- --------- --------- --------- ---------
Net sales $1,754.4 $1,588.3 $1,348.4 $1,178.2 $1,015.7
======== ======== ======== ======== ========
Operating costs and
expenses:
Cost of goods sold $ 956.8 $ 864.8 $ 708.4 $ 623.6 $ 549.6
Selling, administrative
and general expenses 420.8 378.0 335.9 316.1 278.0
Research and development
expenses 86.1 77.7 72.6 64.7 50.1
Restructuring charge 73.9 51.3
Other operating
income, net (4.5) (.1) (2.9) (8.6) (10.0)
-------- --------- --------- --------- -------
Total operating costs
and expenses 1,459.2 1,320.4 1,187.9 1,047.1 867.7
-------- --------- --------- --------- -------
Operating earnings $ 295.2 $ 267.9 $ 160.5 $ 131.1 $ 148.0
========= ========= ======== ========= =======
See accompanying notes for additional information.
</TABLE>
<PAGE>
MALLINCKRODT INC.
CONSOLIDATED OPERATING COSTS AND EXPENSES
FISCAL 1996
(in millions)
<TABLE>
<CAPTION>
Quarter
---------------------------------------
<S> <C> <C> <C> <C> <C>
First Second(3) Third Fourth Year
-------- --------- -------- -------- --------
Net sales $391.1 $412.2 $460.3 $490.8 $1,754.4
======= ======= ======= ====== ========
Operating costs and
expenses:
Cost of goods sold $215.7 $226.2 $253.0 $261.9 $ 956.8
Selling, administrative
and general expenses 99.4 99.9 106.5 115.0 420.8
Research and development
expenses 18.3 21.0 22.0 24.8 86.1
Other operating
income, net (1.3) (1.5) (1.6) (.1) (4.5)
------- ------- -------- ------- ---------
Total operating cost
and expenses 332.1 345.6 379.9 401.6 1,459.2
------- -------- ------- ------- ---------
Operating earnings $ 59.0 $ 66.6 $ 80.4 $ 89.2 $ 295.2
======= ======== ======= ======= =========
See accompanying notes for additional information.
</TABLE>
<PAGE>
MALLINCKRODT INC.
NOTES TO CONSOLIDATED SALES AND EARNINGS & OPERATING COSTS AND
EXPENSES
(1) Earnings from continuing operations for 1997 included a first
quarter one-time research and development charge of $6.0
million, $3.8 million after taxes, or $.05 per share resulting
from a strategic alliance to develop new magnetic resonance
imaging technology.
On March 31, 1997, the Company disposed of Fries & Fries, Inc. a
wholly owned subsidiary which owned the Company's 50% interest
in Tastemaker, which was the flavor joint venture with Hercules
Inc. The Company recorded a net after tax gain of $270.6
million on the disposal which was included in discontinued
operations.
In addition, on May 15, 1997, the Company's Board of Directors
approved a formal plan to divest the animal health segment. The
Company included an estimated after tax loss on disposal of
$275.3 million in discontinued operations for the third quarter.
Prior period results of Fries & Fries, Inc. and animal health
have been reclassified to discontinued operations.
(2) Divested operations relates primarily to the divested cosmetic
and electronic chemicals businesses.
(3) During the second quarter of 1996, the animal feed ingredients
business was sold. Results for the feed ingredients business
have been accounted for as a discontinued operation, and
accordingly, prior period results have been restated. Other
principal factors affecting discontinued operations were an
after tax gain of $35.4 million on the sale of the feed
ingredients business and an after tax provision for additional
environmental costs of $15.6 million.
(4) Results for 1994 included restructuring charges of $93.9
million, $58.8 million after taxes, or $.76 per share. Pre-tax
charges included in human healthcare and discontinued operations
related to animal health were $73.9 million and $20.0 million,
respectively.
Results for 1994 also included favorable tax adjustments of $3.0
million, or $.04 per share, resulting from U.S. and foreign tax
law changes.
(5) Results for 1993 included restructuring charges of $334.1
million, $242.2 million after taxes, or $3.13 per share. Pre-tax
charges included in human healthcare, specialty chemicals and
discontinued operations related to animal health were $3.4
million, $47.9 million and $282.8 million, respectively.
Results for 1993 also included corporate expense charges of $5.5
million, $3.4 million after taxes, or $.04 per share, from
executive resignations.
(6) Results for 1992 included gains totaling $10.7 million, $6.7
million after taxes, or $.08 per share, from sales of
investments.
# # #
Mallinckrodt Inc.
ROGER A. KELLER
Vice President, Secretary
and General Counsel
DATE: May 20, 1997
