<PAGE>
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
August 10, 2000
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.)
675 McDonnell Boulevard, St. Louis, MO 63134
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, (314) 654-2000
including area code
<PAGE>
Item 5. Other Events
A press release was issued August 10, 2000. The relevant portion of the text of
that release was as follows:
MALLINCKRODT REPORTS FISCAL YEAR 2000 EPS FROM CONTINUING OPERATIONS OF $2.96,
UP 23 PERCENT OVER PRIOR YEAR
ST. LOUIS, MO., August 10, 2000 - Mallinckrodt Inc. (NYSE:MKG) today reported
fiscal year 2000 earnings from continuing operations of $205 million, or $2.96
per share on a diluted basis, compared with $173 million, or $2.40 per share,
last year. Excluding a net nonrecurring gain, earnings were $201 million, or
$2.90 per share, representing increases of 16 percent and 21 percent,
respectively. The net nonrecurring gain resulted from the sale of HemoCue, a
blood testing equipment company; divestiture of the medical gas business; a
charge for consolidation of respiratory manufacturing operations; and the write-
down of an investment in an equity security related to the imaging business.
Fiscal 2000 cash earnings per share, defined as earnings from continuing
operations, excluding net nonrecurring gains plus amortization, were $4.08 per
share.
Net sales for fiscal 2000 were $2.7 billion compared to $2.6 billion in
fiscal 1999. Excluding sales from divested businesses, sales increased 6 percent
over the prior year. Sales to customers outside the United States were $857
million, or 32 percent of total company sales.
"We are extremely pleased with our fiscal year results," said C. Ray
Holman, chairman and CEO. "This is the eighth consecutive quarter in which we
have exceeded earnings expectations. We're also pleased that our working capital
initiatives have resulted in a significant improvement in both inventory and
receivables turnover. Mallinckrodt's consistent financial performance is one of
many reasons Tyco values and is interested in acquiring the strong healthcare
business we have built over the last three years."
Fourth Quarter Performance
Net sales for the fourth quarter of fiscal 2000 increased 3 percent to $698
million, compared with $679 million for the fourth quarter of fiscal 1999.
Excluding sales from divested businesses, sales increased 8 percent over the
same quarter last year. Sales to customers outside the United States were $217
million, or 31 percent of total company sales.
Earnings from continuing operations for the fourth quarter of fiscal 2000
were $63 million, or 93 cents per share on a diluted basis, representing
increases of 20 percent and 27 percent, respectively, over the $52 million, or
73 cents per share, reported for the same quarter last year.
<PAGE>
Segment Results
Mallinckrodt's Respiratory segment reported fourth-quarter sales of $284
million, compared with $295 million in the fourth quarter of fiscal 1999.
Excluding divested businesses, Respiratory sales growth was 7 percent.
Respiratory operating earnings, excluding the charge for manufacturing
consolidations and the impact of divested businesses, were $50 million, which
represents a 51 percent increase over the $33 million earned in the same quarter
last year. Strong market acceptance of new pulse oximetry and alternate care
products contributed to Respiratory's performance.
The Pharmaceuticals segment reported an 18 percent increase in fourth-
quarter sales of $208 million, compared with $176 million in the fourth quarter
last year. Operating earnings were $39 million, a 30 percent increase over the
$30 million reported in the same quarter last year. Fourth quarter results
reflect the continued strength of the bulk and dosage pharmaceuticals
operations.
Mallinckrodt's Imaging segment reported fourth-quarter sales of $206
million, a 1 percent decline from the $208 million reported in the fourth
quarter of fiscal 1999. Imaging operating earnings declined to $15 million,
from $29 million last year, due to lower manufacturing volume and costs of
implementing alternate synthesis for ioversol, the raw material for Optiray.
Proposed Merger
On June 28, 2000, Mallinckrodt and Tyco International Ltd. entered into a
definitive agreement under which Tyco will acquire Mallinckrodt. The merger is
expected to close this fall following the necessary shareholder and regulatory
approvals.
Mallinckrodt will hold a special meeting of shareholders in New York City
on September 19, 2000, to consider and vote on the proposed merger. The Company
plans to begin mailing definitive proxy materials to shareholders over the next
few days.
Mallinckrodt Inc. is a global manufacturer and marketer of specialty
medical products designed to sustain breathing, diagnose disease and relieve
pain. Named one of America's most admired medical products and equipment
companies by Fortune magazine, Mallinckrodt does business in more than 100
countries. In fiscal 2000, combined net sales were $2.7 billion for
Mallinckrodt's respiratory, imaging and pharmaceutical product lines. Based in
St. Louis, Missouri, Mallinckrodt's website address is <www.mallinckrodt.com>.
This news release contains forward-looking statements that involve risks and
uncertainties. These statements are based on current expectations; actual
results may differ materially. Among the factors that could cause actual
results to differ materially from those projected are the following: 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,
<PAGE>
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; 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.
# # #
Mallinckrodt Inc.
/s/ Roger A. Keller
ROGER A. KELLER
Vice President, Secretary
and General Counsel
DATE: August 10, 2000
<PAGE>
MALLINCKRODT INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share and per share amounts)
<TABLE>
<CAPTION>
Quarter Ended Year Ended
June 30, June 30,
----------------------------- ------------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales.................................................... $ 697.9 $ 678.9 $ 2,652.8 $ 2,584.8
Operating costs and expenses:
Cost of goods sold......................................... 381.4 354.8 1,474.5 1,379.9
Selling, general and administrative expenses............... 179.7 186.3 704.7 717.3
Research and development expenses.......................... 40.4 42.8 145.8 152.2
------------- ------------- ------------- -------------
Total operating costs and expenses........................... 601.5 583.9 2,325.0 2,249.4
------------- ------------- ------------- -------------
Operating earnings........................................... 96.4 95.0 327.8 335.4
Nonoperating income, net..................................... 7.6 1.3 42.2 4.0
Interest expense............................................. (19.6) (20.5) (74.6) (85.0)
------------- ------------- ------------- -------------
Earnings from continuing operations before income taxes...... 84.4 75.8 295.4 254.4
Income tax provision......................................... 21.8 23.8 90.4 81.5
------------- ------------- ------------- -------------
Earnings from continuing operations.......................... 62.6 52.0 205.0 172.9
Discontinued operations...................................... .7 23.3
------------- ------------- ------------- -------------
Net earnings................................................. 62.6 52.7 205.0 196.2
Preferred stock dividends.................................... (.1) (.1) (.4) (.4)
------------- ------------- ------------- -------------
Available for common shareholders............................ $ 62.5 $ 52.6 $ 204.6 $ 195.8
============= ============= ============= =============
Basic earnings per common share:
Earnings from continuing operations........................ $ .93 $ .73 $ 2.97 $ 2.41
Discontinued operations.................................... .01 .32
------------- ------------- ------------- -------------
Net earnings............................................... $ .93 $ .74 $ 2.97 $ 2.73
============= ============= ============= =============
Average common shares........................................ 67,350,839 70,963,260 68,864,515 71,634,420
Diluted earnings per common share:
Earnings from continuing operations........................ $ .93 $ .73 $ 2.96 $ 2.40
Discontinued operations.................................... .01 .32
------------- ------------- ------------- -------------
Net earnings............................................... $ .93 $ .74 $ 2.96 $ 2.72
============= ============= ============= =============
Average common shares........................................ 67,541,220 71,408,672 69,141,476 71,898,875
Actual shares outstanding at end of period................... 67,606,917 70,702,689
</TABLE>
(See accompanying notes to financial results.)
<PAGE>
MALLINCKRODT INC.
CONSOLIDATED BALANCE SHEETS
(In millions)
<TABLE>
<CAPTION>
June 30,
--------------------
2000 1999
-------- --------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents ....................... $ 25.9 $ 32.7
Trade receivables, less allowances of $18.2 in
2000 and $17.9 in 1999 ........................ 487.8 490.9
Inventories ..................................... 447.1 530.3
Deferred income taxes ........................... 93.8 54.7
Other current assets ............................ 79.7 61.3
-------- --------
Total current assets ................................ 1,134.3 1,169.9
Investments and other noncurrent assets ............. 101.4 67.2
Property, plant and equipment, net .................. 853.3 870.7
Goodwill and other intangible assets, net ........... 1,370.8 1,545.3
Deferred income taxes ............................... 9.1 4.3
-------- --------
Total assets ........................................ $3,468.9 $3,657.4
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt .................................. $ 403.6 $ 383.8
Accounts payable ................................. 250.1 221.2
Accrued liabilities .............................. 366.5 459.5
Income taxes payable ............................. 42.6 77.3
Deferred income taxes ............................ 1.1 1.2
-------- --------
Total current liabilities ............................ 1,063.9 1,143.0
Long-term debt, less current maturities .............. 540.9 742.5
Deferred income taxes ................................ 391.1 363.0
Postretirement benefits .............................. 166.1 166.5
Other noncurrent liabilities and deferred credits .... 166.1 182.0
-------- --------
Total liabilities .................................... 2,328.1 2,597.0
Total shareholders' equity ........................... 1,140.8 1,060.4
-------- --------
Total liabilities and shareholders' equity ........... $3,468.9 $3,657.4
======== ========
</TABLE>
(See accompanying notes to financial results.)
<PAGE>
<TABLE>
<CAPTION>
MALLINCKRODT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Year Ended June 30,
-------------------------------------------
2000 1999
---------------- ---------------------
<S> <C> <C>
Cash Flows - Operating Activities
Net earnings................................................. $ 205.0 $ 196.2
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation............................................. 123.6 130.6
Amortization............................................. 81.6 84.5
Postretirement benefits.................................. (.5) (2.6)
Gains on asset disposals................................. (54.4) (39.7)
Deferred income taxes.................................... (29.9) 13.6
Write-down of investment in equity security.............. 10.5
--------- ---------
335.9 382.6
Changes in operating assets and liabilities:
Trade receivables....................................... (7.3) (9.2)
Inventories............................................. 72.3 (62.2)
Other current assets.................................... (18.0) 4.5
Accounts payable, accrued liabilities and income
taxes payable, net.................................... (84.7) (112.2)
Other noncurrent liabilities and deferred credits....... 7.5 8.1
Other, net.............................................. (31.0) (18.0)
--------- ---------
Net cash provided by operating activities.................... 274.7 193.6
--------- ---------
Cash Flows - Investing Activities
Capital expenditures......................................... (149.2) (116.9)
Proceeds from asset disposals................................ 220.4 75.4
Acquisition spending......................................... (1.0) (3.5)
Purchase of investments and intangible assets................ (27.2) (11.5)
Proceeds from redemption and sale of investments............. 89.8
--------- ---------
Net cash provided by investing activities.................... 43.0 33.3
--------- ---------
Cash Flows - Financing Activities
Increase (decrease) in notes payable......................... 19.1 (126.2)
Payments on long-term debt................................... (201.5) (8.1)
Issuance of common stock..................................... 21.2 6.1
Acquisition of treasury stock................................ (117.8) (74.0)
Dividends paid............................................... (45.5) (43.9)
Redemption of common stock purchase rights................... (3.6)
--------- ---------
Net cash used by financing activities........................ (324.5) (249.7)
---------- ---------
Decrease in cash and cash equivalents........................ (6.8) (22.8)
Cash and cash equivalents at beginning of year............... 32.7 55.5
--------- ---------
Cash and cash equivalents at end of year..................... $ 25.9 $ 32.7
========= =========
</TABLE>
(See accompanying notes to financial results.)
<PAGE>
MALLINCKRODT INC.
NOTES TO INTERIM FINANCIAL RESULTS
Mallinckrodt Inc. and its subsidiaries, collectively, are called the "Company"
or "Mallinckrodt." All references to years are to fiscal years ended June 30
unless otherwise stated. Certain amounts in the prior year were reclassified to
conform to the current year presentation. All earnings per share amounts are
calculated on a diluted basis unless otherwise stated.
(a) On January 21, 2000, the Company sold its medical gas business, which was
part of the Respiratory segment. The transaction resulted in a $17.7
million pretax gain included in nonoperating income, net, $5.5 million net
of tax for the year ended June 30, 2000.
(b) Included in operating earnings for the quarter and year ended June 30, 2000
are pretax charges of $2.7 million and $18.2 million, respectively,
associated with product line rationalizations and the consolidation of
certain manufacturing facilities within the Respiratory segment. The charge
during the quarter ended June 30, 2000 is primarily associated with
employee transition bonuses and other items expensed as incurred.
(c) On December 16, 1999, the Company sold its blood analysis product line,
which was part of the Respiratory segment. The transaction resulted in a
$27.3 million pretax gain, $16.9 million net of tax. The pretax gain is
included in nonoperating income, net for the year ended June 30, 2000.
(d) During the quarter ended December 31, 1999, the Company recorded a pretax
charge of $10.5 million, $6.5 million net of tax, associated with the
write-down of an investment in an equity security due to a decline in fair
value considered to be other than temporary. The pretax charge is included
in nonoperating income, net for the year ended June 30, 2000.
(e) The nonrecurring items discussed above had the following impact on results
of operations for the quarter and year ended June 30, 2000 (in millions).
<TABLE>
<CAPTION>
Quarter Ended Year Ended
June 30, 2000 June 30, 2000
------------- -------------
<S> <C> <C>
Operating earnings
Respiratory manufacturing consolidation .............. $(2.7) $(18.2)
Nonoperating income, net
Sale of medical gas business ......................... .3 17.7
Sale of blood analysis product line .................. .4 27.3
Write-down of investment in equity security .......... (10.5)
----- ------
Earnings from continuing operations before income taxes .. $(2.0) $ 16.3
===== ======
Earnings from continuing operations ...................... $(1.6) $ 4.0
===== ======
</TABLE>
(f) On July 31, 1998, the Company completed the sale of the remaining chemical
additives business of the catalyst and chemical additives division, which
was reclassified to discontinued operations in June 1998. The transaction
resulted in a $37.0 million gain on sale, $23.3 million net of taxes, which
was included in discontinued operations for the year ended June 30, 1999.
Earnings from operations were zero for the one month of operations in 1999.
<PAGE>
MALLINCKRODT INC.
BUSINESS PROFILE
(Dollars in millions)
<TABLE>
<CAPTION>
Quarter Ended June 30, Year Ended June 30,
------------------------------ ----------------------------------
% %
2000 1999 Change 2000 1999 Change
------ ------ -------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Net sales
Respiratory....................... $284.4 $294.6 (3) $1,132.5 $1,143.9 (1)
Imaging........................... 205.9 208.3 (1) 769.5 779.8 (1)
Pharmaceuticals................... 207.6 176.0 18 750.8 661.1 14
------ ------ -------- --------
$697.9 $678.9 3 $2,652.8 $2,584.8 3
====== ====== ======== ========
Operating earnings
Respiratory....................... $ 47.6 $ 42.4 12 $ 146.4 $ 137.6 6
Imaging........................... 14.5 28.7 (49) 83.8 119.3 (30)
Pharmaceuticals................... 39.2 30.2 30 120.3 103.3 16
------ ------ -------- --------
101.3 101.3 -- 350.5 360.2 (3)
Corporate expense................. (4.9) (6.3) 22 (22.7) (24.8) 8
------ ------ -------- --------
$ 96.4 $ 95.0 1 $ 327.8 $ 335.4 (2)
====== ====== ======== ========
</TABLE>
<PAGE>
MALLINCKRODT INC.
BUSINESS PROFILE RESTATED FOR NONRECURRING ITEMS AND DIVESTED OPERATIONS
(Dollars in millions)
<TABLE>
<CAPTION>
Nonrecurring Ongoing Excluding Divested
As Reported Items Nonrecurring Items Operations
-------------------------- ------------- -------------------------- --------------
% %
2000 1999 Change 2000 1999 2000 1999 Change 2000 1999
--------- -------- ------ ------- ---- -------- -------- ------ ------ ------
Quarter Ended June 30,
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales
Respiratory $ 284.4 $ 294.6 (3) $ 284.4 $ 294.6 (3) $ (.2) $ 29.6
Imaging 205.9 208.3 (1) 205.9 208.3 (1) 2.7
Pharmaceuticals 207.6 176.0 18 207.6 176.0 18
-------- -------- -------- --------
$ 697.9 $ 678.9 3 $ 697.9 $ 678.9 3
======== ======== ======== ========
Operating earnings
Respiratory $ 47.6 $ 42.4 12 $ (2.7) $ 50.3 $ 42.4 19 $ (.2) $ 9.0
Imaging 14.5 28.7 (49) 14.5 28.7 (49) 1.6
Pharmaceuticals 39.2 30.2 30 39.2 30.2 30
Corporate expense (4.9) (6.3) 22 (4.9) (6.3) 22
-------- -------- -------- --------
$ 96.4 $ 95.0 1 $ 99.1 $ 95.0 4
======== ======== ======== ========
Nonoperating income,
net $ 7.6 $ 1.3 $ .7 $ 6.9 $ 1.3
Year Ended June 30,
-----------------------------------------------------------------------------------------
Net sales
Respiratory $1,132.5 $1,143.9 (1) $1,132.5 $1,143.9 (1) $60.1 $121.3
Imaging 769.5 779.8 (1) 769.5 779.8 (1) .9 10.5
Pharmaceuticals 750.8 661.1 14 750.8 661.1 14
-------- -------- -------- --------
$2,652.8 $2,584.8 3 $2,652.8 $2,584.8 3
======== ======== ======== ========
Operating earnings
Respiratory $ 146.4 $ 137.6 6 $(18.2) $ 164.6 $ 137.6 20 $15.0 $ 28.6
Imaging 83.8 119.3 (30) 83.8 119.3 (30) .1 2.6
Pharmaceuticals 120.3 103.3 16 120.3 103.3 16
Corporate expense (22.7) (24.8) 8 (22.7) (24.8) 8
-------- -------- -------- --------
$ 327.8 $ 335.4 (2) $ 346.0 $ 335.4 3
======== ======== ======== ========
Nonoperating income,
net $ 42.2 $ 4.0 $ 34.5 $ 7.7 $ 4.0
</TABLE>
<TABLE>
<CAPTION>
Restated - Excluding
Nonrecurring Items and
Divested Operations
---------------------------
%
2000 1999 Change
-------- -------- ------
----------------------------
<S> <C> <C> <C>
Net sales
Respiratory $ 284.6 $ 265.0 7
Imaging 205.9 205.6 --
Pharmaceuticals 207.6 176.0 18
-------- --------
$ 698.1 $ 646.6 8
======== ========
Operating earnings
Respiratory $ 50.5 $ 33.4 51
Imaging 14.5 27.1 (46)
Pharmaceuticals 39.2 30.2 30
Corporate expense (4.9) (6.3) 22
-------- --------
$ 99.3 $ 84.4 18
======== ========
Nonoperating income,
net $ 6.9 $ 1.3
-----------------------------
Net sales
Respiratory $1,072.4 $1,022.6 5
Imaging 768.6 769.3 --
Pharmaceuticals 750.8 661.1 14
-------- --------
$2,591.8 $2,453.0 6
======== ========
Operating earnings
Respiratory $ 149.6 $ 109.0 37
Imaging 83.7 116.7 (28)
Pharmaceuticals 120.3 103.3 16
Corporate expense (22.7) (24.8) 8
-------- --------
$ 330.9 $ 304.2 9
======== ========
Nonoperating income,
net $ 7.7 $ 4.0
</TABLE>
