Discontinued Operations and Divestitures

12 Months Ended

Sep. 25, 2015

Discontinued Operations [Abstract]

Discontinued Operations and Divestitures

4. Discontinued Operations and Divestitures

Discontinued Operations

CMDS: During the fourth quarter of fiscal 2015, the Company announced that it had entered into a definitive agreement to sell its CMDS business to Guerbet in a transaction valued at approximately $270.0 million, which is expected to be completed during the first quarter of fiscal 2016. As of September 25, 2015, the CMDS business is deemed to be held for sale and the financial results of this business are presented as a discontinued operation. The CMDS business has been eliminated from the Global Medical Imaging segment, which has been renamed Nuclear Imaging.

Subsequent to the sale of the CMDS business, the Company will continue to supply certain products under a supply agreement with Guerbet.

The following table summarizes the financial results of the CMDS discontinued operations for the fiscal years ended September 25, 2015, September 26, 2014 and September 27, 2013 as presented in the consolidated statements of operations and comprehensive income:

	Fiscal Year
Major line items constituting income (loss) from discontinued operations	2015			2014			2013
Net sales	$	413.8		$	495.8		$	549.3
Cost of sales	306.4			352.9			346.7
Selling, general and administrative	97.5			97.1			114.0
Restructuring charges, net	0.3			47.2			9.5
Non-restructuring impairment charges	—			204.0			—
Other	4.7			4.1			8.4
Income (loss) from discontinued operations	4.9			(209.5		)	70.7
Income tax expense (benefit)	10.8			(34.7		)	21.1
Income (loss) from discontinued operations net of tax	$	(5.9	)	$	(174.8	)	$	49.6

The fiscal 2014 non-restructuring impairment charge of $204.0 million includes charges of $51.4 million associated with property, plant and equipment, $52.4 million associated with intangible assets and $100.2 million associated with goodwill. Further discussion of these impairment charges are included within Notes 10 and 11.

The fiscal 2015 income tax expense of $10.8 million was impacted by approximately $10.0 million of tax expense related to taxes paid, or anticipated to be paid, in connection with the disposition. The fiscal 2014 income tax benefit of $34.7 million was impacted by receiving a tax benefit of $36.2 million on impairment of $204.0 million, by $3.0 million of tax expense associated with the rate difference between U.S. and non-U.S. jurisdictions, $2.5 million of tax benefit associated with nonrecurring valuation allowances, $0.9 million of tax expense associated with accrued income tax liabilities and uncertain tax positions, and $2.0 million of tax expense associated with permanently nondeductible, nontaxable, and other items. The fiscal 2013 income tax expense of $21.1 million was impacted by $0.7 million of tax benefit associated with the rate difference between U.S. and non-U.S. jurisdictions and $2.9 million of tax benefit associated with permanently nondeductible, nontaxable, and other items. Fiscal 2015 reflects $14.9 million of International current income tax expense, $4.4 million of International deferred income tax benefit, and none being allocable to the Domestic income tax provision. Fiscal 2014 reflects $10.4 million of Domestic current income tax expense, $6.6 million of International current income tax benefit, $35.6 million of Domestic deferred income tax benefit, and $3.0 million of International deferred income tax benefit. Fiscal 2013 reflects $5.6 million of Domestic current income tax expense, $10.7 million of International current income tax expense, $5.4 million of Domestic deferred income tax expense, and $0.5 million of International deferred income tax benefit. Domestic reflects U.K. in fiscal 2015, and U.S. federal and state in fiscal 2014 and 2013.

The following table summarizes the assets and liabilities of the CMDS business that are classified as held for sale on the consolidated balance sheets as of September 25, 2015 and September 26, 2014:

	September 25, 2015		September 26, 2014
Carrying amounts of major classes of assets included as part of discontinued operations
Accounts receivable	$	68.5	$	68.9
Inventories	86.3		90.2
Property, plant and equipment, net	60.3		62.4
Intangible assets, net	27.7		30.0
Other current and non-current assets	57.1		60.5
Total assets classified as held for sale in the balance sheet	$	299.9	$	312.0
Carrying amounts of major classes of liabilities included as part of discontinued operations
Accounts payable	$	22.0	$	18.0
Other current and non-current liabilities	50.8		50.7
Total liabilities classified as held for sale in the balance sheet	$	72.8	$	68.7

The following table summarizes significant cash and non-cash transactions of the CMDS business that are included within the consolidated statements of cash flows for the fiscal years ended September 25, 2015, September 26, 2014 and September 27, 2013:

	Fiscal Year
	2015		2014		2013
Depreciation	$	15.5	$	18.9	$	16.0
Amortization	2.3		7.5		7.5
Capital expenditures	9.5		12.3		17.4
Non-cash impairment charges	—		204.0		—

All other notes to the consolidated financial statements that were impacted by this discontinued operation have been reclassified accordingly.

Mallinckrodt Baker: During fiscal 2010, the Specialty Chemicals business (formerly known as "Mallinckrodt Baker"), which was part of the Company's Specialty Pharmaceuticals segment, was sold because its products and customer bases were not aligned with the Company's long-term strategic objectives. This business met the discontinued operations criteria and, accordingly, was included in discontinued operations for all periods presented. During fiscal 2015, 2014 and 2013, the Company recorded a loss, net of tax, of $0.1 million, a loss of $0.7 million, and a gain of $1.0 million, respectively. These gains and losses were primarily related to the indemnification obligations to the purchaser, which are discussed in Note 18.

Other: Prior to the Separation, the Company provided and accrued for an indemnification, to the purchaser of a certain legal entity, to indemnify it for tax obligations should the tax basis of certain assets not be recognized. The Company believes that, under the terms of the agreement between the parties, this indemnification obligation has expired. As such, the Company eliminated this liability and recorded a $22.5 million benefit, during fiscal 2015, in discontinued operations within the consolidated and combined statement of income.

License of Intellectual Property

The Company was involved in patent disputes with a counterparty relating to certain intellectual property related to extended-release oxymorphone. In December 2013, the counterparty agreed to pay the Company an upfront cash payment of $4.0 million and contractually obligated future payments of $8.0 million through July 2018, in exchange for the withdrawal of all claims associated with the intellectual property and a license to utilize the Company's intellectual property. The Company has completed the earnings process associated with the agreement and recorded an $11.7 million gain, included within gains on divestiture and license, during fiscal 2014.