

20.	Condensed Consolidating and Combining Financial Statements

In November 2012, MIFSA was formed as a 100%-owned subsidiary of Covidien in connection with the Separation. MIFSA is a holding company established to own, directly or indirectly, substantially all of the operating subsidiaries of the Company, to issue debt securities and to perform treasury operations. At the time of the Separation, MIFSA became a 100%-owned subsidiary of Mallinckrodt plc.

MIFSA is the borrower under the Notes, which are fully and unconditionally guaranteed by Mallinckrodt plc. The following information provides the composition of the Company's comprehensive income, assets, liabilities, equity and cash flows by relevant group within the Company: Mallinckrodt plc as guarantor of the Notes, MIFSA as issuer of the Notes and the operating companies that represent assets of MIFSA. There are no subsidiary guarantees related to the Notes.

Set forth below are the unaudited condensed consolidating financial statements for the three and six months ended March 28, 2014 and as of March 28, 2014 and September 27, 2013, and the unaudited condensed combining financial statements for the three and six months ended March 29, 2013. Eliminations represent adjustments to eliminate investments in subsidiaries and intercompany balances and transactions between or among Mallinckrodt plc, MIFSA and the other subsidiaries. Unaudited condensed consolidating and combining financial information for Mallinckrodt plc and MIFSA, on a standalone basis, has been presented using the equity method of accounting for subsidiaries.

MALLINCKRODT PLC

CONDENSED CONSOLIDATING BALANCE SHEET

As of March 28, 2014

(unaudited, in millions)



	Mallinckrodt plc		Mallinckrodt International Finance S.A.		Other Subsidiaries		Eliminations			Consolidated
Assets
Current Assets:
Cash and cash equivalents	$	0.2	$	86.7	$	248.0	$	—		$	334.9
Accounts receivable, net	—		—		334.2		—			334.2
Inventories	—		—		444.7		—			444.7
Deferred income taxes	—		—		371.7		—			371.7
Prepaid expenses and other current assets	0.5		0.2		146.9		—			147.6
Intercompany receivable	5.9		—		8.3		(14.2		)	—
Total current assets	6.6		86.9		1,553.8		(14.2		)	1,633.1
Property, plant and equipment, net	—		—		997.5		—			997.5
Goodwill	—		—		853.9		—			853.9
Intangible assets, net	—		—		1,715.0		—			1,715.0
Investment in subsidiaries	1,319.4		3,896.9		—		(5,216.3		)	—
Intercompany loan receivable	21.5		—		468.4		(489.9		)	—
Other assets	—		42.0		213.8		—			255.8
Total Assets	$	1,347.5	$	4,025.8	$	5,802.4	$	(5,720.4	)	$	5,455.3

Liabilities and Shareholders' Equity
Current Liabilities:
Current maturities of long-term debt	$	—	$	9.8	$	1.4	$	—		$	11.2
Accounts payable	1.6		—		118.3		—			119.9
Accrued payroll and payroll-related costs	0.1		—		57.9		—			58.0
Accrued branded rebates	—		—		33.6		—			33.6
Accrued and other current liabilities	1.1		21.0		381.0		—			403.1
Intercompany payable	6.3		2.1		5.8		(14.2		)	—
Total current liabilities	9.1		32.9		598.0		(14.2		)	625.8
Long-term debt	—		2,185.2		19.5		—			2,204.7
Pension and postretirement benefits	—		—		104.0		—			104.0
Environmental liabilities	—		—		63.7		—			63.7
Deferred income taxes	—		—		794.8		—			794.8
Other income tax liabilities	—		—		148.1		—			148.1
Intercompany loans payable	—		489.9		—		(489.9		)	—
Other liabilities	—		—		175.8		—			175.8
Total liabilities	9.1		2,708.0		1,903.9		(504.1		)	4,116.9
Shareholders' equity	1,338.4		1,317.8		3,898.5		(5,216.3		)	1,338.4
Total Liabilities and Shareholders' Equity	$	1,347.5	$	4,025.8	$	5,802.4	$	(5,720.4	)	$	5,455.3

MALLINCKRODT PLC

CONDENSED CONSOLIDATING BALANCE SHEET

As of September 27, 2013

(unaudited, in millions)



	Mallinckrodt plc		Mallinckrodt International Finance S.A.		Other Subsidiaries		Eliminations			Consolidated
Assets
Current Assets:
Cash and cash equivalents	$	1.2	$	56.5	$	217.8	$	—		$	275.5
Accounts receivable, net	—		—		400.8		—			400.8
Inventories	—		—		403.1		—			403.1
Deferred income taxes	—		—		171.1		—			171.1
Prepaid expenses and other current assets	1.0		—		133.4		—			134.4
Intercompany receivable	2.7		—		12.2		(14.9		)	—
Total current assets	4.9		56.5		1,338.4		(14.9		)	1,384.9
Property, plant and equipment, net	—		—		997.4		—			997.4
Goodwill	—		—		532.0		—			532.0
Intangible assets, net	—		—		422.1		—			422.1
Investment in subsidiaries	1,266.1		2,520.4		—		(3,786.5		)	—
Intercompany loan receivable	—		2.4		409.6		(412.0		)	—
Other assets	—		11.2		209.0		—			220.2
Total Assets	$	1,271.0	$	2,590.5	$	3,908.5	$	(4,213.4	)	$	3,556.6

Liabilities and Shareholders' Equity
Current Liabilities:
Current maturities of long-term debt	$	—	$	—	$	1.5	$	—		$	1.5
Accounts payable	0.1		—		120.8		—			120.9
Accrued payroll and payroll-related costs	0.1		—		66.4		—			66.5
Accrued branded rebates	—		—		34.6		—			34.6
Accrued and other current liabilities	0.6		18.3		357.8		—			376.7
Intercompany payable	12.2		—		2.7		(14.9		)	—
Total current liabilities	13.0		18.3		583.8		(14.9		)	600.2
Long-term debt	—		898.1		20.2		—			918.3
Pension and postretirement benefits	—		—		108.0		—			108.0
Environmental liabilities	—		—		39.5		—			39.5
Deferred income taxes	—		—		310.1		—			310.1
Other income tax liabilities	—		—		153.1		—			153.1
Intercompany loans payable	2.4		409.6		—		(412.0		)	—
Other liabilities	—		—		171.8		—			171.8
Total liabilities	15.4		1,326.0		1,386.5		(426.9		)	2,301.0
Shareholders' equity	1,255.6		1,264.5		2,522.0		(3,786.5		)	1,255.6
Total Liabilities and Shareholders' Equity	$	1,271.0	$	2,590.5	$	3,908.5	$	(4,213.4	)	$	3,556.6

MALLINCKRODT PLC

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

For the three months ended March 28, 2014

(unaudited, in millions)



	Mallinckrodt plc			Mallinckrodt International Finance S.A.			Other Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	—		$	557.8		$	—		$	557.8
Cost of sales	—			—			295.2			—			295.2
Gross profit	—			—			262.6			—			262.6
Selling, general and administrative expenses	7.9			0.1			186.1			—			194.1
Research and development expenses	—			—			41.4			—			41.4
Separation costs	0.6			—			2.0			—			2.6
Restructuring charges, net	—			—			21.7			—			21.7
Gains on divestiture and license	—			—			(0.9		)	—			(0.9		)
Operating (loss) income	(8.5		)	(0.1		)	12.3			—			3.7

Interest expense	—			(12.8		)	0.4			—			(12.4		)
Interest income	—			—			0.5			—			0.5
Other income (expense), net	22.3			—			(22.7		)	—			(0.4		)
Intercompany interest and fees	(0.9		)	—			0.9			—			—
Equity in net income of subsidiaries	(1.1		)	11.7			—			(10.6		)	—
Income (loss) from continuing operations before income taxes	11.8			(1.2		)	(8.6		)	(10.6		)	(8.6		)
Income tax expense (benefit)	0.2			(0.1		)	(20.4		)	—			(20.3		)
Income (loss) from continuing operations	11.6			(1.1		)	11.8			(10.6		)	11.7
Loss from discontinued operations, net of income taxes	—			—			(0.1		)	—			(0.1		)
Net income (loss)	11.6			(1.1		)	11.7			(10.6		)	11.6
Other comprehensive loss, net of tax	(2.3		)	(2.3		)	(2.4		)	4.7			(2.3		)
Comprehensive income (loss)	$	9.3		$	(3.4	)	$	9.3		$	(5.9	)	$	9.3

MALLINCKRODT PLC

CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME

For the three months ended March 29, 2013

(unaudited, in millions)



	Mallinckrodt plc			Mallinckrodt International Finance S.A.			Other Subsidiaries			Eliminations			Combined
Net sales	$	—		$	—		$	585.3		$	—		$	585.3
Cost of sales	—			—			311.8			—			311.8
Gross profit	—			—			273.5			—			273.5
Selling, general and administrative expenses	—			—			160.7			—			160.7
Research and development expenses	—			—			39.2			—			39.2
Separation costs	—			—			14.4			—			14.4
Restructuring charges, net	—			—			6.4			—			6.4
Gains on divestiture and license	—			—			(0.7		)	—			(0.7		)
Operating income	—			—			53.5			—			53.5

Interest expense	—			—			(0.1		)	—			(0.1		)
Interest income	—			—			0.1			—			0.1
Other income (expense), net	—			—			—			—			—
Intercompany interest and fees	—			—			—			—			—
Equity in net income of subsidiaries	34.0			34.0			—			(68.0		)	—
Income from continuing operations before income taxes	34.0			34.0			53.5			(68.0		)	53.5
Income tax expense	—			—			19.0			—			19.0
Income from continuing operations	34.0			34.0			34.5			(68.0		)	34.5
Loss from discontinued operations, net of income taxes	—			—			(0.5		)	—			(0.5		)
Net income	34.0			34.0			34.0			(68.0		)	34.0
Other comprehensive loss, net of tax	(14.5		)	(14.5		)	(10.5		)	25.0			(14.5		)
Comprehensive income	$	19.5		$	19.5		$	23.5		$	(43.0	)	$	19.5

MALLINCKRODT PLC

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

For the six months ended March 28, 2014

(unaudited, in millions)



	Mallinckrodt plc			Mallinckrodt International Finance S.A.			Other Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	—		$	1,098.0		$	—		$	1,098.0
Cost of sales	—			—			579.8			—			579.8
Gross profit	—			—			518.2			—			518.2
Selling, general and administrative expenses	11.9			0.2			328.2			—			340.3
Research and development expenses	—			—			80.4			—			80.4
Separation costs	1.4			—			3.4			—			4.8
Restructuring charges, net	—			—			29.7			—			29.7
Gains on divestiture and license	—			—			(13.8		)	—			(13.8		)
Operating (loss) income	(13.3		)	(0.2		)	90.3			—			76.8

Interest expense	—			(23.3		)	1.1			—			(22.2		)
Interest income	—			—			0.8			—			0.8
Other income (expense), net	23.0			—			(24.0		)	—			(1.0		)
Intercompany interest and fees	(4.0		)	—			4.0			—			—
Equity in net income of subsidiaries	51.5			74.9			—			(126.4		)	—
Income from continuing operations before income taxes	57.2			51.4			72.2			(126.4		)	54.4
Income tax (benefit) expense	—			(0.1		)	(3.6		)	—			(3.7		)
Income from continuing operations	57.2			51.5			75.8			(126.4		)	58.1
Loss from discontinued operations, net of income taxes	—			—			(0.9		)	—			(0.9		)
Net income	57.2			51.5			74.9			(126.4		)	57.2
Other comprehensive loss, net of tax	(2.1		)	(2.1		)	(2.3		)	4.4			(2.1		)
Comprehensive income	$	55.1		$	49.4		$	72.6		$	(122.0	)	$	55.1

MALLINCKRODT PLC

CONDENSED COMBINING STATEMENT OF COMPREHENSIVE INCOME

For the six months ended March 29, 2013

(unaudited, in millions)



	Mallinckrodt plc			Mallinckrodt International Finance S.A.			Other Subsidiaries			Eliminations			Combined
Net sales	$	—		$	—		$	1,089.3		$	—		$	1,089.3
Cost of sales	—			—			582.3			—			582.3
Gross profit	—			—			507.0			—			507.0
Selling, general and administrative expenses	—			—			307.5			—			307.5
Research and development expenses	—			—			77.6			—			77.6
Separation costs	—			—			26.4			—			26.4
Restructuring charges, net	—			—			6.6			—			6.6
Gains on divestiture and license	—			—			(1.4		)	—			(1.4		)
Operating income	—			—			90.3			—			90.3

Interest expense	—			—			(0.2		)	—			(0.2		)
Interest income	—			—			0.1			—			0.1
Other income (expense), net	—			—			0.2			—			0.2
Intercompany interest and fees	—			—			—			—			—
Equity in net income of subsidiaries	53.2			53.2			—			(106.4		)	—
Income from continuing operations before income taxes	53.2			53.2			90.4			(106.4		)	90.4
Income tax expense	—			—			36.1			—			36.1
Income from continuing operations	53.2			53.2			54.3			(106.4		)	54.3
Loss from discontinued operations, net of income taxes	—			—			(1.1		)	—			(1.1		)
Net income	53.2			53.2			53.2			(106.4		)	53.2
Other comprehensive loss, net of tax	(13.9		)	(13.9		)	(9.9		)	23.8			(13.9		)
Comprehensive income	$	39.3		$	39.3		$	43.3		$	(82.6	)	$	39.3

MALLINCKRODT PLC

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the six months ended March 28, 2014

(unaudited, in millions)



	Mallinckrodt plc			Mallinckrodt International Finance S.A.			Other Subsidiaries			Eliminations			Consolidated
Cash Flows From Operating Activities:
Net cash (used in) provided by operating activities	$	8.6		$	(17.1	)	$	149.7		$	—		$	141.2
Cash Flows From Investing Activities:
Capital expenditures	—			—			(50.7		)	—			(50.7		)
Acquisitions and intangibles, net of cash acquired	—			—			(1,293.2		)	—			(1,293.2		)
Intercompany loan investment	(21.5		)	—			(58.8		)	80.3			—
Repayment of intercompany loan investment	—			2.4			—			(2.4		)	—
Investment in subsidiary	—			(1,300.0		)	—			1,300.0			—
Restricted cash	—			—			4.1			—			4.1
Other	—			—			8.0			—			8.0
Net cash (used in) investing activities	(21.5		)	(1,297.6		)	(1,390.6		)	1,377.9			(1,331.8		)
Cash Flows From Financing Activities:
Issuance of external debt	—			1,296.8			—			—			1,296.8
Repayment of external debt	—			—			(30.1		)	—			(30.1		)
Repayment of capital leases	—			—			(0.7		)	—			(0.7		)
Debt financing costs	—			(32.2		)	—			—			(32.2		)
Excess tax benefit from share-based compensation	—			—			4.0			—			4.0
Proceeds from exercise of share options	16.1			—			—			—			16.1
Purchase of treasury shares	(1.8		)	—			—			—			(1.8		)
Advances from intercompany borrowings	—			80.3			—			(80.3		)	—
Payment on intercompany borrowings	(2.4		)	—			—			2.4			—
Capital contribution	—			—			1,300.0			(1,300.0		)	—
Net cash provided by (used in) financing activities	11.9			1,344.9			1,273.2			(1,377.9		)	1,252.1
Effect of currency rate changes on cash	—			—			(2.1		)	—			(2.1		)
Net increase in cash and cash equivalents	(1.0		)	30.2			30.2			—			59.4
Cash and cash equivalents at beginning of period	1.2			56.5			217.8			—			275.5
Cash and cash equivalents at end of period	$	0.2		$	86.7		$	248.0		$	—		$	334.9

MALLINCKRODT PLC

CONDENSED COMBINING STATEMENT OF CASH FLOWS

For the six months ended March 29, 2013

(unaudited, in millions)



	Mallinckrodt plc		Mallinckrodt International Finance S.A.			Other Subsidiaries			Eliminations		Combined
Cash Flows From Operating Activities:
Net cash (used in) provided by operating activities	$	—	$	(4.8	)	$	(3.0	)	$	—	$	(7.8	)
Cash Flows From Investing Activities:
Capital expenditures	—		—			(76.7		)	—		(76.7		)
Acquisition, net of cash acquired	—		—			(88.1		)	—		(88.1		)
Restricted cash	—		—			0.9			—		0.9
Other	—		—			(1.1		)	—		(1.1		)
Net cash (used in) investing activities	—		—			(165.0		)	—		(165.0		)
Cash Flows From Financing Activities:
Repayment of capital leases	—		—			(0.7		)	—		(0.7		)
Debt financing costs	—		—			(2.3		)	—		(2.3		)
Excess tax benefit from share-based compensation	—		—			3.0			—		3.0
Net transfers from (to) parent	—		4.8			168.0			—		172.8
Net cash provided by (used in) financing activities	—		4.8			168.0			—		172.8
Effect of currency rate changes on cash	—		—			—			—		—
Net increase in cash and cash equivalents	—		—			—			—		—
Cash and cash equivalents at beginning of period	—		—			—			—		—
Cash and cash equivalents at end of period	$	—	$	—		$	—		$	—	$	—