

5.	Discontinued Operations and Divestitures

Discontinued Operations

Nuclear Imaging: On January 27, 2017, the Company completed the sale of its Nuclear Imaging business to IBA Molecular ("IBAM") for approximately $690.0 million before tax impacts, including up-front considerations of approximately $574.0 million, up to $77.0 million of contingent considerations and the assumption of certain liabilities. The Company recorded a pre-tax gain on the sale of the business of $362.8 million during fiscal 2017, which excluded any potential proceeds from the contingent consideration. The following table summarizes the financial results of the Nuclear Imaging business for fiscal years 2017, 2016 and 2015 and the three months ended December 30, 2016 as presented in the consolidated statements of income:



	Fiscal Year Ended								Three Months Ended
Major line items constituting income from discontinued operations	December 29, 2017			September 30, 2016		September 25, 2015			December 30, 2016
Net sales	$	31.6		$	418.6	$	423.8		$	99.4
Cost of sales	15.6			216.6		193.1			44.7
Selling, general and administrative	7.8			83.7		89.6			16.4
Restructuring charges, net	—			2.3		(4.6		)	—
Other	(0.2		)	5.7		37.7			0.2
Income from discontinued operations	8.4			110.3		108.0			38.1
Gain on disposal of discontinued operations	362.8			—		—			—
Income from discontinued operations, before income taxes	371.2			110.3		108.0			38.1
Income tax expense	5.2			49.0		36.4			15.3
Income from discontinued operations, net of tax	$	366.0		$	61.3	$	71.6		$	22.8

The fiscal 2017 income tax expense of $0.9 million was associated with the $362.8 million gain on divestiture and a $4.3 million income tax expense was associated with the $8.4 million income from discontinued operations. The tax impact of the gain recognized on divestiture was favorably impacted by a benefit from permanently deductible items. The income tax expense of $4.3 million was impacted by tax expense of $0.8 million associated with the rate difference between United Kingdom ("U.K.") and Non-U.K. jurisdictions, $3.3 million of tax expense associated with accrued income tax liabilities and uncertain tax positions, and $0.2 million of tax expense associated with permanently nondeductible, nontaxable, and other items. 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 U.K. and Non-U.K. 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 U.K. and Non-U.K. jurisdictions and $0.4 million of tax expense associated with permanently nondeductible, nontaxable, and other items. The income tax expense for the three months ended December 30, 2016 of $15.3 million was impacted by tax expense of $4.4 million associated with the rate difference between U.K. and Non-U.K. jurisdictions, $3.3 million of tax expense associated with accrued income tax liabilities and uncertain tax positions, and $0.1 million of tax expense associated with permanently nondeductible, nontaxable, and other items.

Fiscal 2017 reflects $0.2 million of Non-U.K. current income tax benefit, and $5.4 million of Non-U.K. deferred income tax expense. Fiscal 2016 reflects $0.1 million of U.K. current income tax expense, $52.5 million of Non-U.K. current income tax expense, and $3.6 million of Non-U.K. deferred income tax benefit. Fiscal 2015 reflects $0.1 million of U.K. current income tax expense, $27.8 million of Non-U.K. current income tax expense, and $8.6 million of Non-U.K. deferred income tax expense. The three months ended December 30, 2016 reflects $15.8 million of Non-U.K. current income tax expense and $0.5 million of Non-U.K. deferred income tax benefit.

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 at the end of each period:



	December 29, 2017		December 30, 2016
Carrying amounts of major classes of assets included as part of discontinued operations
Accounts receivable	$	—	$	49.6
Inventories	—		20.0
Property, plant and equipment, net	—		188.7
Other current and non-current assets	—		52.6
Total assets classified as held for sale in the balance sheet	$	—	$	310.9

Carrying amounts of major classes of liabilities included as part of discontinued operations
Accounts payable	$	—	$	19.7
Other current and non-current liabilities	—		100.6
Total liabilities classified as held for sale in the balance sheet	$	—	$	120.3

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 2017, 2016 and 2015 and the three months ended December 30, 2016:



	Fiscal Year Ended						Three Months Ended
	December 29, 2017		September 30, 2016		September 25, 2015		December 30, 2016
Depreciation	$	—	$	20.9	$	13.1	$	—
Capital expenditures	0.3		9.7		7.6		2.0

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.

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 2017, 2016 and 2015 and the three months ended December 30, 2016 as presented in the consolidated statements of income:



	Fiscal Year Ended								Three Months Ended
Major line items constituting (loss) income from discontinued operations	December 29, 2017		September 30, 2016			September 25, 2015			December 30, 2016
Net sales	$	—	$	61.0		$	413.8		$	—
Cost of sales	—		46.9			306.4			—
Selling, general and administrative	—		20.3			97.5			—
Restructuring charges, net	—		—			0.3			—
Other	—		1.2			4.7			—
(Loss) income from discontinued operations	—		(7.4		)	4.9			—
Gain on disposal of discontinued operations	—		95.3			—			—
(Loss) income from discontinued operations, before income taxes	—		87.9			4.9			—
Income tax (benefit) expense	—		(2.5		)	10.8			—
(Loss) income from discontinued operations net of tax	$	—	$	90.4		$	(5.9	)	$	—

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. Fiscal 2016 reflects $0.9 million of Non-U.K. current income tax expense, $3.4 million of Non-U.K. deferred income tax benefit, and none being allocable to the U.K. income tax provision. Fiscal 2015 reflects $14.9 million of Non-U.K. current income tax expense, $4.4 million of non-U.K. deferred income tax benefit, and none being allocable to the U.K. income tax provision.

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 2017, 2016 and 2015 and the three months ended December 30, 2016:



	Fiscal Year Ended						Three Months Ended
	December 29, 2017		September 30, 2016		September 25, 2015		December 30, 2016
Depreciation	$	—	$	—	$	15.5	$	—
Amortization	—		—		2.3		—
Capital expenditures	—		1.6		9.5		—

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 2017, 2016 and 2015, the Company recorded a loss, net of tax, of $0.6 million, a gain, net of tax, of $3.0 million and a loss, net of tax of $0.1 million, respectively. The Company recorded a gain of $0.6 million, net of tax, during the three months ended December 30, 2016. The gains and losses were primarily related to the indemnification obligations to the purchaser, which are discussed in Note 18.

Other: Prior to the Company's legal separation from Covidien plc ("Covidien") on June 28, 2013, 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.

Divestitures

On March 17, 2017, the Company completed its sale of its Intrathecal Therapy business to Piramal Enterprises Limited's subsidiary in the U.K., Piramal Critical Care ("Piramal"), for approximately $203.0 million, including fixed consideration of $171.0 million and contingent consideration of up to $32.0 million. The $171.0 million of fixed consideration consisted of $17.0 million received at closing and a $154.0 million note receivable that is due one year from the transaction closing date. The Company recorded a pre-tax gain on the sale of the business of $56.6 million during fiscal 2017, which excluded any potential proceeds from the contingent consideration and reflects a post-sale working capital adjustment. The financial results of the Intrathecal Therapy business are presented within continuing operations as this divestiture did not meet the criteria for discontinued operations classification.

As part of the divestiture and calculation of the gain, the Company wrote off intangible assets of $48.7 million and goodwill of $49.8 million, from the Specialty Brands segment, ascribed to the Intrathecal Therapy business. The Company is committed to reimburse up to $7.3 million of product development expenses incurred by Piramal, of which $6.5 million remains on the consolidated balance sheet as of December 29, 2017. The remaining items included in the gain calculation are attributable to inventory transferred and transaction costs incurred by the Company.

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.