Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Covidien plc | d561570d8k.htm |
| EX-2.1 - EX-2.1 - Covidien plc | d561570dex21.htm |
| EX-99.1 - EX-99.1 - Covidien plc | d561570dex991.htm |
| EX-10.3 - EX-10.3 - Covidien plc | d561570dex103.htm |
| EX-10.2 - EX-10.2 - Covidien plc | d561570dex102.htm |
| EX-10.1 - EX-10.1 - Covidien plc | d561570dex101.htm |
Exhibit 99.2
Unaudited Pro Forma Condensed Consolidated Financial Statements
On June 28, 2013, Covidien completed the distribution of 100% of the outstanding ordinary shares of Mallinckrodt plc to Covidien shareholders. Each Covidien shareholder received one ordinary share of Mallinckrodt for every eight ordinary shares of Covidien held at the close of business on June 19, 2013 (the distribution).
The unaudited pro forma condensed consolidated financial statements were derived from Covidien’s historical consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America and give effect to the distribution of Mallinckrodt. The unaudited pro forma consolidated statements of income for the six months ended March 29, 2013 and for the fiscal years ended September 28, 2012, September 30, 2011 and September 24, 2010 assume that the distribution of Mallinckrodt occurred September 26, 2009, the first day of fiscal 2010. The unaudited pro forma condensed consolidated balance sheet as of March 29, 2013 assumes that the distribution occurred on that date.
The unaudited pro forma consolidated combined financial statements are presented based on currently available information and are intended for informational purposes only. These unaudited pro forma condensed consolidated financial statements are not necessarily indicative of what Covidien’s results of operations or financial condition would have been had the distribution been completed on the dates assumed. In addition, they are not necessarily indicative of Covidien’s future results of operations or financial condition. Beginning in the third quarter of fiscal 2013, Mallinckrodt’s historical financial results for periods prior to the distribution will be reflected in Covidien’s consolidated financial statements as discontinued operations.
The separation and distribution agreement provides for an adjustment payment to potentially be made following the distribution from Mallinckrodt to us, or from us to Mallinckrodt. The purpose of the adjustment payment is to compensate Covidien or Mallinckrodt, as applicable, to the extent that the aggregate of Mallinckrodt’s cash, indebtedness and specified working capital accounts as of the distribution date, as well as the capital expenditures made with respect to Mallinckrodt’s business during fiscal 2013 through the distribution date, deviates from a target. The target will be calculated pursuant to a formula that is set forth in the separation and distribution agreement. An adjustment payment will only be payable if the amount of the adjustment payment exceeds $20 million, in which case the entire amount will be paid. The unaudited pro forma condensed consolidated balance sheet does not reflect any impact of the adjustment payment to potentially be made, as the amount of such adjustment payment is not currently determinable and would represent a financial projection.
The unaudited pro forma condensed consolidated financial statements should be read in conjunction with (i) the audited consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Covidien’s Form 10-K for the year ended September 28, 2012 and (ii) the unaudited condensed consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Covidien’s Form 10-Q for the six months ended March 29, 2013.
Covidien plc
Unaudited Pro Forma Consolidated Statement of Income
Six Months Ended March 29, 2013
(in millions, except per share data)
| Historical | Separation
of Mallinckrodt |
Pro Forma for the Separation |
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| Net sales |
$ | 6,159 | $ | (1,062 | ) | $ | 5,097 | |||||
| Cost of goods sold |
2,616 | (584 | ) | 2,032 | ||||||||
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| Gross profit |
3,543 | (478 | ) | 3,065 | ||||||||
| Selling, general and administrative expenses |
1,909 | (257 | ) | 1,652 | ||||||||
| Research and development expenses |
311 | (78 | ) | 233 | ||||||||
| Restructuring charges, net |
69 | (7 | ) | 62 | ||||||||
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| Operating income |
1,254 | (136 | ) | 1,118 | ||||||||
| Interest expense |
(101 | ) | (1 | ) | (102 | ) | ||||||
| Interest income |
5 | — | 5 | |||||||||
| Other income, net |
17 | 1 | 18 | |||||||||
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| Income from continuing operations before income taxes |
1,175 | (136 | ) | 1,039 | ||||||||
| Income tax expense |
241 | (38 | ) | 203 | ||||||||
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| Income from continuing operations |
$ | 934 | $ | (98 | ) | $ | 836 | |||||
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| Basic earnings per share from continuing operations |
$ | 1.98 | $ | 1.77 | ||||||||
| Diluted earnings per share from continuing operations |
$ | 1.96 | $ | 1.75 | ||||||||
| Weighted-average number of shares outstanding: |
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| Basic |
472 | 472 | ||||||||||
| Diluted |
476 | 476 | ||||||||||
Covidien plc
Unaudited Pro Forma Consolidated Statement of Income
Fiscal Year Ended September 28, 2012
(in millions, except per share data)
| Historical | Separation of Mallinckrodt |
Pro Forma for the Separation |
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| Net sales |
$ | 11,852 | $ | (2,001 | ) | $ | 9,851 | |||||
| Cost of goods sold |
5,038 | (1,094 | ) | 3,944 | ||||||||
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| Gross profit |
6,814 | (907 | ) | 5,907 | ||||||||
| Selling, general and administrative expenses |
3,686 | (425 | ) | 3,261 | ||||||||
| Research and development expenses |
623 | (144 | ) | 479 | ||||||||
| Restructuring charges, net |
91 | (9 | ) | 82 | ||||||||
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| Operating income |
2,414 | (329 | ) | 2,085 | ||||||||
| Interest expense |
(206 | ) | — | (206 | ) | |||||||
| Interest income |
16 | (1 | ) | 15 | ||||||||
| Other income, net |
25 | — | 25 | |||||||||
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| Income from continuing operations before income taxes |
2,249 | (330 | ) | 1,919 | ||||||||
| Income tax expense |
347 | (65 | ) | 282 | ||||||||
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| Income from continuing operations |
$ | 1,902 | $ | (265 | ) | $ | 1,637 | |||||
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| Basic earnings per share from continuing operations |
$ | 3.96 | $ | 3.40 | ||||||||
| Diluted earnings per share from continuing operations |
$ | 3.92 | $ | 3.37 | ||||||||
| Weighted-average number of shares outstanding: |
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| Basic |
481 | 481 | ||||||||||
| Diluted |
486 | 486 | ||||||||||
Covidien plc
Unaudited Pro Forma Consolidated Statement of Income
Fiscal Year Ended September 30, 2011
(in millions, except per share data)
| Historical | Separation
of Mallinckrodt |
Pro Forma for the Separation |
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| Net sales |
$ | 11,574 | $ | (1,967 | ) | $ | 9,607 | |||||
| Cost of goods sold |
4,996 | (1,110 | ) | 3,886 | ||||||||
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| Gross profit |
6,578 | (857 | ) | 5,721 | ||||||||
| Selling, general and administrative expenses |
3,538 | (374 | ) | 3,164 | ||||||||
| Research and development expenses |
554 | (142 | ) | 412 | ||||||||
| Restructuring charges, net |
122 | (8 | ) | 114 | ||||||||
| Shareholder settlement income |
(11 | ) | — | (11 | ) | |||||||
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| Operating income |
2,375 | (333 | ) | 2,042 | ||||||||
| Interest expense |
(203 | ) | — | (203 | ) | |||||||
| Interest income |
22 | (3 | ) | 19 | ||||||||
| Other income, net |
22 | — | 22 | |||||||||
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| Income from continuing operations before income taxes |
2,216 | (336 | ) | 1,880 | ||||||||
| Income tax expense |
333 | (34 | ) | 299 | ||||||||
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| Income from continuing operations |
$ | 1,883 | $ | (302 | ) | $ | 1,581 | |||||
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| Basic earnings per share from continuing operations |
$ | 3.82 | $ | 3.21 | ||||||||
| Diluted earnings per share from continuing operations |
$ | 3.79 | $ | 3.18 | ||||||||
| Weighted-average number of shares outstanding: |
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| Basic |
493 | 493 | ||||||||||
| Diluted |
497 | 497 | ||||||||||
Covidien plc
Unaudited Pro Forma Consolidated Statement of Income
Fiscal Year Ended September 24, 2010
(in millions, except per share data)
| Historical | Separation
of Mallinckrodt |
Pro Forma for the Separation |
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| Net sales |
$ | 10,429 | $ | (1,991 | ) | $ | 8,438 | |||||
| Cost of goods sold |
4,624 | (1,131 | ) | 3,493 | ||||||||
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| Gross profit |
5,805 | (860 | ) | 4,945 | ||||||||
| Selling, general and administrative expenses |
3,219 | (394 | ) | 2,825 | ||||||||
| Research and development expenses |
447 | (114 | ) | 333 | ||||||||
| Restructuring charges, net |
76 | (10 | ) | 66 | ||||||||
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| Operating income |
2,063 | (342 | ) | 1,721 | ||||||||
| Interest expense |
(199 | ) | — | (199 | ) | |||||||
| Interest income |
22 | (2 | ) | 20 | ||||||||
| Other income, net |
40 | — | 40 | |||||||||
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| Income from continuing operations before income taxes |
1,926 | (344 | ) | 1,582 | ||||||||
| Income tax expense |
363 | (57 | ) | 306 | ||||||||
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| Income from continuing operations |
$ | 1,563 | $ | (287 | ) | $ | 1,276 | |||||
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| Basic earnings per share from continuing operations |
$ | 3.13 | $ | 2.55 | ||||||||
| Diluted earnings per share from continuing operations |
$ | 3.10 | $ | 2.53 | ||||||||
| Weighted-average number of shares outstanding: |
||||||||||||
| Basic |
500 | 500 | ||||||||||
| Diluted |
504 | 504 | ||||||||||
Covidien plc
Unaudited Pro Forma Condensed Consolidated Balance Sheet
At March 29, 2013
(dollars in millions)
| Historical | Separation of Mallinckrodt |
Pro Forma for the Separation |
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| Assets |
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| Current Assets: |
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| Cash and cash equivalents |
$ | 1,683 | $ | 715 | (a) | $ | 2,398 | |||||
| Accounts receivable trade, less allowance for doubtful accounts |
1,830 | (323 | ) | 1,507 | ||||||||
| Inventories |
1,820 | (453 | ) | 1,367 | ||||||||
| Prepaid expenses and other current assets |
1,001 | (166 | ) | 835 | ||||||||
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| Total current assets |
6,334 | (227 | ) | 6,107 | ||||||||
| Property, plant and equipment, net |
2,916 | (968 | ) | 1,948 | ||||||||
| Goodwill |
8,694 | (532 | ) | 8,162 | ||||||||
| Intangible assets, net |
3,204 | (440 | ) | 2,764 | ||||||||
| Due from former parent and affiliate |
597 | — | 597 | |||||||||
| Other assets |
865 | (206 | ) | 659 | ||||||||
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| Total Assets |
$ | 22,610 | $ | (2,373 | ) | $ | 20,237 | |||||
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| Liabilities and Shareholders’ Equity |
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| Current Liabilities: |
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| Current maturities of long-term debt |
$ | 515 | $ | (2 | ) | $ | 513 | |||||
| Accounts payable |
582 | (99 | ) | 483 | ||||||||
| Accrued and other current liabilities |
1,778 | (264 | ) | 1,514 | ||||||||
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| Total current liabilities |
2,875 | (365 | ) | 2,510 | ||||||||
| Long-term debt |
4,562 | (21 | ) | 4,541 | ||||||||
| Income taxes payable |
1,685 | (135 | ) | 1,550 | ||||||||
| Guaranteed contingent tax liabilities |
582 | — | 582 | |||||||||
| Other liabilities |
1,930 | (645 | ) | 1,285 | ||||||||
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| Total Liabilities |
11,634 | (1,166 | ) | 10,468 | ||||||||
| Commitments and contingencies |
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| Shareholders’ Equity: |
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| Preference shares, $0.20 par value, 125,000,000 authorized; none issued |
— | — | — | |||||||||
| Ordinary shares, $0.20 par value, 1,000,000,000 authorized; 486,713,300 issued |
97 | — | 97 | |||||||||
| Ordinary shares held in treasury at cost; 16,465,236 |
(960 | ) | — | (960 | ) | |||||||
| Additional paid-in capital |
7,431 | — | 7,431 | |||||||||
| Retained earnings |
4,192 | (1,251 | ) | 2,941 | ||||||||
| Accumulated other comprehensive income |
216 | 44 | 260 | |||||||||
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| Total Shareholders’ Equity |
10,976 | (1,207 | ) | 9,769 | ||||||||
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| Total Liabilities and Shareholders’ Equity |
$ | 22,610 | $ | (2,373 | ) | $ | 20,237 | |||||
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See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet.
COVIDIEN PLC
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
| (a) | In connection with the separation, on April 11, 2013, Mallinckrodt International Finance S.A. (MIFSA), previously a wholly-owned subsidiary of Covidien, issued $900 million aggregate principal amount of senior notes. Upon completion of the separation on June 28, 2013, MIFSA became a wholly-owned subsidiary of Mallinckrodt plc. While MIFSA retained the debt, Covidien retained most of the net proceeds from the debt offering. Upon separation, Mallinckrodt received only an amount of the net proceeds that, together with cash held by its subsidiaries approximated $168 million. |