

4.	Discontinued Operations and Divestitures

Discontinued Operations

Nuclear Imaging: During the fourth quarter of fiscal 2016, the Company announced that it had entered into a definitive agreement to sell its Nuclear Imaging business to IBAM, which is expected to be completed during the first half of calendar 2017. The Nuclear Imaging business was deemed to be held for sale and the financial results of this business are presented as a discontinued operation.

The following table summarizes the financial results of the Nuclear Imaging business for fiscal years 2016, 2015 and 2014 as presented in the consolidated statements of income:



	Fiscal Year
Major line items constituting income (loss) from discontinued operations	2016		2015			2014
Net sales	$	418.6	$	423.8		$	431.7
Cost of sales	216.6		193.1			256.1
Selling, general and administrative	83.7		89.6			111.5
Restructuring charges, net	2.3		(4.6		)	13.4
Non-restructuring impairment charges	—		—			124.5
Other	5.7		37.7			45.5
Income (loss) from discontinued operations	110.3		108.0			(119.3		)
Income tax expense	49.0		36.4			2.5
Income (loss) from discontinued operations, net of income taxes	$	61.3	$	71.6		$	(121.8	)

The fiscal 2014 non-restructuring impairment charge of $124.5 million includes charges of $119.5 million associated with goodwill. Further discussion of this impairment charge is included within Note 11.

The fiscal 2016 income tax expense of $49.0 million was impacted by tax expense of $11.7 million associated with the rate difference between Domestic and International jurisdictions, $14.4 million of tax expense associated with accrued income tax liabilities and uncertain tax positions, and $0.9 million of tax expense associated with permanently nondeductible, nontaxable, and other items. The fiscal 2015 income tax expense of $36.4 million was impacted by $14.3 million of tax expense associated with the rate difference between Domestic and International jurisdictions and $0.4 million of tax expense associated with permanently nondeductible, nontaxable, and other items. The fiscal 2014 income tax expense of $2.5 million was impacted by receiving no tax benefit on an impairment of $119.5 million, by $3.1 million of tax expense associated with the rate difference between Domestic and International jurisdictions, by a $1.3 million of tax benefit associated with accrued income tax liabilities and uncertain tax positions, and $0.7 million of tax expense associated with permanently nondeductible, nontaxable, and other items. Fiscal 2016 reflects $0.1 million of Domestic current income tax expense, $52.5 million of International current income tax expense, and $3.6 million of International deferred income tax benefit. Fiscal 2015 reflects $0.1 million of Domestic current income tax expense, $27.8 million of International current income tax expense, and $8.6 million of International deferred income tax expense. Fiscal 2014 reflects $18.6 million of Domestic current income tax expense, $1.0 million of International current income tax benefit, $7.8 million of Domestic deferred income tax benefit, and $7.4 million of International deferred income tax benefit. Domestic reflects U.K. in fiscal 2016 and 2015, and U.S. federal and state in fiscal 2014.

The following table summarizes the assets and liabilities of the Nuclear Imaging business that are classified as held for sale on the consolidated balance sheets as of September 30, 2016 and September 25, 2015:



	September 30, 2016		September 25, 2015
Carrying amounts of major classes of assets included as part of discontinued operations
Accounts receivable	$	53.7	$	58.9
Inventories	19.0		19.7
Property, plant and equipment, net	189.0		198.3
Other current and non-current assets	47.1		41.7
Total assets classified as held for sale in the balance sheet	$	308.8	$	318.6

Carrying amounts of major classes of liabilities included as part of discontinued operations
Accounts payable	$	17.7	$	16.2
Other current and non-current liabilities	103.1		94.2
Total liabilities classified as held for sale in the balance sheet	$	120.8	$	110.4

The following table summarizes significant cash and non-cash transactions of the Nuclear Imaging business that are included within the consolidated statements of cash flows for the fiscal years 2016, 2015 and 2014:



	Fiscal Year
	2016		2015		2014
Depreciation	$	20.9	$	13.1	$	17.9
Capital expenditures	9.7		7.6		8.1
Non-cash impairment charges	—		—		124.5

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

CMDS: On November 27, 2015, the Company completed the sale of the CMDS business to Guerbet S.A. ("Guerbet") for cash consideration of approximately $270.0 million, subject to net working capital adjustments.

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

The following table summarizes the financial results of the CMDS business for fiscal 2016, 2015 and 2014 as presented in the consolidated statements of income:



	Fiscal Year
Major line items constituting income (loss) from discontinued operations	2016			2015			2014
Net sales	$	61.0		$	413.8		$	495.8
Cost of sales	46.9			306.4			352.9
Selling, general and administrative	20.3			97.5			97.1
Restructuring charges, net	—			0.3			47.2
Non-restructuring impairment charges	—			—			204.0
Other	1.2			4.7			4.1
(Loss) income from discontinued operations	(7.4		)	4.9			(209.5		)
Gain on disposal of discontinued operations	95.3			—			—
Income from discontinued operations, before income taxes	87.9			4.9			(209.5		)
Income tax expense (benefit)	(2.5		)	10.8			(34.7		)
Income (loss) from discontinued operations net of tax	$	90.4		$	(5.9	)	$	(174.8	)

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 2016 income tax benefit of $2.5 million impacted by a $0.4 million benefit related to adjust the fiscal 2015 accrual for taxes paid in connection with the $95.3 million gain on the disposition and a $2.1 million benefit related to the $7.4 million loss from discontinued operations. 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. Fiscal 2016 reflects $0.9 million of International current income tax expense, $3.4 million of International deferred income tax benefit, and none being allocable to the Domestic income tax provision. 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. Domestic reflects U.K. in fiscal 2016 and 2015, and U.S. federal and state in fiscal 2014.

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 30, 2016 and September 25, 2015:



	September 30, 2016		September 25, 2015
Carrying amounts of major classes of assets included as part of discontinued operations
Accounts receivable	$	—	$	68.5
Inventories	—		86.3
Property, plant and equipment, net	—		60.3
Intangible assets, net	—		27.7
Other current and non-current assets	—		57.1
Total assets classified as held for sale in the balance sheet	$	—	$	299.9

Carrying amounts of major classes of liabilities included as part of discontinued operations
Accounts payable	$	—	$	22.0
Other current and non-current liabilities	—		50.8
Total liabilities classified as held for sale in the balance sheet	$	—	$	72.8

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 2016, 2015 and 2014:



	Fiscal Year
	2016		2015		2014
Depreciation	$	—	$	15.5	$	18.9
Amortization	—		2.3		7.5
Capital expenditures	1.6		9.5		12.3
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") 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 2016, 2015, and 2014, the Company recorded a gain, net of tax, of $3.0 million, and losses, net of tax, of $0.1 million, and $0.7 million, respectively. The gains and losses were primarily related to the indemnification obligations to the purchaser, which are discussed in Note 17.

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 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.