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
February 6, 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 February 5, 1997. The relevant portion of
that release was as follows:
MALLINCKRODT ANNOUNCES ROCHE WILL ACQUIRE
TASTEMAKER OPERATIONS; REITERATES FOCUS
ON CORE BUSINESSES, SHARE REPURCHASES
ST. LOUIS, Mo., February 5, 1997 - Mallinckrodt Inc. (NYSE:MKG)
announced today that it has signed an agreement to divest its 50
percent share of the Tastemaker business, a flavors joint venture
with Hercules Incorporated, to Roche, based in Basel, Switzerland.
Closing is anticipated within 60 to 90 days, subject to
receiving necessary regulatory and other customary approvals. The
transaction is expected to have a net value to Mallinckrodt of
approximately $550 million, which includes an exchange of stock and
debt assumption.
Mallinckrodt Chairman and Chief Executive Officer C. Ray Holman
said that the transaction is in line with the company's announcement
last August to divest the Tastemaker flavors business and its animal
health business and the desire to focus on and expand its core
businesses, human healthcare and specialty chemicals.
"We also want our shareholders to benefit from the value created
by the partners with the Tastemaker joint venture," Holman said. "We
expect, during the next 18 months, to make incremental share
repurchases of up to $250 million over and above previously announced
programs, depending on conditions in the open market and other
strategic priorities.
For Tastemaker, we are delighted that the new owner is such an
excellent strategic fit," Holman said. "That business is
well-positioned to realize its full potential."
Mallinckrodt's financial results will be restated to reflect
Tastemaker and related matters as discontinued operations, effective
with the company's recently closed second quarter. The restated
consolidated sales and earnings are shown on the attached tables.
Mallinckrodt Inc. is an international growth company serving
markets in human healthcare and chemicals. Dedicated to improving
healthcare and chemistry, the company is a major producer of
diagnostic imaging agents, medical devices, analgesic
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 2,000 products in more
than 100 countries. Mallinckrodt employs about 10,400 people
worldwide. The Mallinckrodt web site and address is
<www.mallinckrodt.com>.
<PAGE>
MALLINCKRODT INC.
CONSOLIDATED SALES AND EARNINGS
FISCAL 1997
(in millions, except per share amounts)
Quarter
-------------------
Year to
First(1) Second Date(1)
--------- ------ ---------
Net sales
Human healthcare $ 361.7 $ 372.4 $ 734.1
Specialty chemicals 80.5 80.6 161.1
Animal health 99.4 118.1 217.5
Intersegment sales (.2) (.2)
--------- -------- ---------
Consolidated $ 541.4 $ 571.1 $1,112.5
========= ======== =========
Operating earnings (loss)
Human healthcare $ 67.4$ $ 68.4 $ 135.8
Specialty chemicals 5.5 6.0 11.5
Animal health (.1) 9.6 9.5
Corporate (6.6) (7.4) (14.0)
--------- -------- ---------
66.2 76.6 142.8
Interest and other
nonoperating income, net 4.5 6.4 10.9
Interest expense (13.9) (11.8) (25.7)
-------- ------- ---------
Earnings from
continuing operations
before income taxes 56.8 71.2 128.0
Income tax provision 21.0 26.0 47.0
--------- ------- ---------
Earnings from
continuing operations 35.8 45.2 81.0
Discontinued operations (.4) (1.7) (2.1)
--------- ------- ---------
Net earnings 35.4 43.5 78.9
Preferred stock dividends (.1) (.1) (.2)
--------- -------- ---------
Available for common
shareholders $ 35.3 $ 43.4 $ 78.7
========= ======== =========
Earnings per common share
Continuing operations $ .47 $ .59 $ 1.07
Discontinued operations (.02) (.03)
--------- -------- ---------
Net earnings $ .47 $ .57 $ 1.04
========= ======== =========
Average common shares 75.5 75.8 75.6
See accompanying notes for additional information.
<PAGE>
MALLINCKRODT INC.
CONSOLIDATED SALES AND EARNINGS
(in millions, except per share amounts)
<TABLE>
<CAPTIONS>
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
Animal health 455.8 454.9 429.5 448.6 469.6
Divested operations(2) 27.5
Intersegment sales (.3) (.3) (.7) (.3) (.1)
-------- --------- --------- ---------- ---------
Consolidated $2,210.2 $2,043.2 $1,777.9 $1,626.8 $1,485.3
========= ======== ========= ========== =========
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
Animal health 34.9 28.7 1.0 (276.6) 29.8
Divested operations(2) 4.8
Corporate (41.4) (28.8) (30.2) (35.6) (30.6)
Eliminations (.3) .2 .1 (.5)
--------- --------- -------- ---------- --------
330.1 296.7 161.5 (145.5) 177.8
Interest and other
nonoperating income
(expense), net (.3) (4.2) (.4) 2.6 15.3
Interest expense (56.2) (55.5) (40.0) (37.4) (39.9)
--------- --------- -------- ---------- --------
Earnings (loss) from
continuing operations
before income taxes 273.6 237.0 121.1 (180.3) 153.2
Income tax provision
(benefit) 101.0 88.8 44.6 (36.6) 55.9
--------- --------- -------- ---------- --------
Earnings (loss) from
continuing operations 172.6 148.2 76.5 (143.7) 97.3
Discontinued operations 39.3 32.1 27.3 23.9 30.2
--------- -------- -------- ---------- --------
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 (loss) per
common share
Continuing operations $ 2.26 $ 1.91 $ .98 $ (1.86) $ 1.24
Discontinued operations .51 .41 .35 .30 .39
-------- -------- ------- --------- -------
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
</TABLE>
See accompanying notes for additional information.
<PAGE>
MALLINCKRODT INC.
CONSOLIDATED SALES AND EARNINGS
FISCAL 1996
(in millions, except per share amounts)
<TABLE>
<CAPTIONS>
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
Animal health 101.0 116.0 112.4 126.4 455.8
Intersegment sales (.1) (.2) (.3)
--------- --------- -------- --------- ---------
Consolidated $ 492.1 $ 528.2 $ 572.6 $ 617.3 $2,210.2
========= ========= ======== ========= =========
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
Animal health 5.0 4.2 7.6 18.1 34.9
Corporate (7.5) (7.1) (8.6) (18.2) (41.4)
Eliminations (.1) (.2) (.3)
--------- --------- -------- -------- ---------
64.0 70.8 88.0 107.3 330.1
Interest and other
nonoperating income
(expense), net (.4) (.5) (.7) 1.3 (.3)
Interest expense (13.9) (14.7) (14.9) (12.7) (56.2)
--------- --------- -------- -------- ---------
Earnings from
continuing operations
before income taxes 49.7 55.6 72.4 95.9 273.6
Income tax provision 18.6 20.9 26.8 34.7 101.0
--------- --------- -------- -------- ---------
Earnings from
continuing operations 31.1 34.7 45.6 61.2 172.6
Discontinued operations 8.1 22.6 2.8 5.8 39.3
--------- --------- -------- -------- ---------
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 $ .40 $ .45 $ .60 $ .81 $ 2.26
Discontinued operations .10 .30 .04 .08 .51
--------- --------- -------- --------- ---------
Net earnings $ .50 $ .75 $ .64 $ .89 $ 2.77
========= ========= ======== ========= =========
Average common shares 77.9 76.4 75.5 75.4 76.3
</TABLE>
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.
<PAGE>
MALLINCKRODT INC.
CONSOLIDATED OPERATING COSTS AND EXPENSES
FISCAL 1997
(in millions)
Quarter
-------------------
Year to
First(1) Second Date
--------- ------- ---------
Net sales $541.4 $571.1 $1,112.5
========= ======= =========
Operating costs and
expenses:
Cost of goods sold $296.3 $307.9 $604.2
Selling, administrative
and general expenses 146.4 151.4 297.8
Research and development
expenses 36.0 34.2 70.2
Other operating (income)
expense, net (3.5) 1.0 (2.5)
--------- ------- ---------
Total operating costs and
expenses 475.2 494.5 969.7
--------- ------- ---------
Operating earnings $ 66.2 $ 76.6 $ 142.8
========= ======= =========
See accompanying notes for additional information.
<PAGE>
MALLINCKRODT INC.
CONSOLIDATED OPERATING COSTS AND EXPENSES
(in millions)
<TABLE>
<CAPTIONS>
Year Ended June 30
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996(3) 1995 1994(4) 1993(5) 1992(6)
--------- --------- --------- -------- --------
Net sales $2,210.2 $2,043.2 $1,777.9 $1,626.8 $1,485.3
======== ========= ======== ======== ========
Operating costs and
expenses:
Cost of goods sold $1,192.8 $1,102.8 $ 931.9 $ 861.6 $ 785.0
Selling, administrative
and general expenses 584.9 552.8 496.7 487.1 446.0
Research and development
expenses 116.2 97.8 95.3 95.4 85.1
Restructuring charge 93.9 334.1
Other operating income, net (13.8) (6.9) (1.4) (5.9) (8.6)
--------- --------- --------- -------- --------
Total operating costs and
expenses 1,880.1 1,746.5 1,616.4 1,772.3 1,307.5
--------- --------- --------- -------- --------
Operating earnings (loss) $ 330.1 $ 296.7 $ 161.5 $(145.5) $ 177.8
========= ========= ========= ======== ========
</TABLE>
See accompanying notes for additional information.
<PAGE>
MALLINCKRODT INC.
CONSOLIDATED OPERATING COSTS AND EXPENSES
FISCAL 1996
(in millions)
<TABLE>
<CAPTIONS>
Quarter
-----------------------------------------
<S> <C> <C> <C> <C> <C>
First Second(3) Third Fourth Year
------- --------- -------- ------- ---------
Net sales $492.1 $528.2 $572.6 $617.3 $2,210.2
======= ========= ======== ======= =========
Operating costs and
expenses:
Cost of goods sold $268.3 $289.1 $311.0 $324.4 $1,192.8
Selling, administrative
and general expenses 138.9 141.0 146.7 158.3 584.9
Research and development
expenses 24.1 31.5 28.9 31.7 116.2
Other operating income, net (3.2) (4.2) (2.0) (4.4) (13.8)
-------- --------- -------- ------- ---------
Total operating costs and
expenses 428.1 457.4 484.6 510.0 1,880.1
-------- --------- -------- ------- --------
Operating Earnings $ 64.0 $ 70.8 $ 88.0 $ 107.3 $ 330.1
======== ========= ======== ======== ========
</TABLE>
See accompanying notes for additional information.
MALLINCKRODT INC.
NOTES TO CONSOLIDATED SALES AND EARNINGS & OPERATING COSTS AND EXPENSES
(1) Results for 1997 included a 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
during the first quarter.
Also during the third quarter of 1997, the Company's Board of Directors
approved a formal plan to divest Fries & Fries, Inc., a wholly owned
subsidiary which owns a fifty percent interest in Tastemaker, the Company's
flavor joint venture with Hercules, Inc. Fries & Fries, Inc.'s $510
million of short-term debt which is outstanding as of January 29, 1997 will
be assumed as part of the divestiture. Results for Fries & Fries, Inc.
have been accounted for as a discontinued operation, and accordingly, prior
period results have been restated.
(2) Divested operations relates primarily to the divested cosmetic and
electronic chemicals businesses.
(3) Results for 1996 included a noncash charge for write-off of purchased
research and development of $3.7 million, $2.3 million after taxes, or $.03
per share, relating to the animal health acquisition of Syntro Corporation
during the second quarter.
Also 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 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 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 charges of $4.8 million, $3.0 million after
taxes, or $.04 per share, related to technical manufacturing control
problems at a Kansas City, Kansas, animal health manufacturing facility.
These charges were more than offset by gains totaling $10.7 million, $6.7
million after taxes, or $.08 per share, from sales of investments.
# # #
Mallinckrodt Inc.
By: ROGER A. KELLER
- ------------------------
Roger A. Keller
Vice President, Secretary
and General Counsel
February 5, 1997
