

4.	Discontinued Operations and Divestitures

Discontinued Operations

Specialty Generics Disposal Group: On February 22, 2018, the Specialty Generics Disposal Group met the criteria for held for sale classification and discontinued operation presentation upon commencement of a process to dispose of the group.

The following table summarizes the financial results of the Specialty Generics Disposal Group presented in the unaudited condensed consolidated statements of income:



	Three Months Ended
Major line items constituting income from discontinued operations	March 30, 2018		March 31, 2017
Net sales	$	182.7	$	250.9
Cost of sales	112.0		131.2
Selling, general and administrative expenses	18.8		21.1
Research and development cost	17.9		16.8
Restructuring charges, net	5.1		6.9
Other income, net	—		1.4
Income from discontinued operations	28.9		76.3
Income tax expense	6.8		2.5
Income from discontinued operations, net of income taxes	$	22.1	$	73.8

The following table summarizes the assets and liabilities of the Specialty Generics Disposal Group that are classified as held for sale on the unaudited condensed consolidated balance sheets:



	March 30, 2018		December 29, 2017
Carrying amounts of major classes of assets included as part of discontinued operations
Accounts receivable	$	183.3	$	170.4
Inventories	212.8		211.7
Property, plant and equipment, net	551.2		553.6
Intangible assets, net	112.3		114.0
Other current and non-current assets	83.4		84.5
Total assets classified as held for sale in the balance sheet	$	1,143.0	$	1,134.2

Carrying amounts of major classes of liabilities included as part of discontinued operations
Accounts payable	$	40.6	$	36.0
Other current and non-current liabilities	119.1		126.6
Total liabilities classified as held for sale in the balance sheet	$	159.7	$	162.6

The following table summarizes significant cash and non-cash transactions of the Specialty Generics Disposal Group that are included within the unaudited condensed consolidated statements of cash flows for the respective periods:



	Three Months Ended
	March 30, 2018		March 31, 2017
Depreciation	$	8.9	$	15.5
Amortization	1.7		5.3
Capital expenditures	8.7		16.3

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

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 consideration of approximately $574.0 million, up to $77.0 million of contingent consideration and the assumption of certain liabilities. The Company recorded a pre-tax gain on the sale of the Nuclear Imaging business of $369.3 million during the three months ended March 31, 2017, which excluded any potential proceeds from the contingent consideration.

The following table summarizes the financial results of the Nuclear Imaging business presented in the unaudited condensed consolidated statements of income:



	Three Months Ended
Major line items constituting income from discontinued operations	March 30, 2018		March 31, 2017
Net sales	$	—	$	31.6
Cost of sales	—		15.6
Selling, general and administrative expenses	—		7.8
Other	—		(0.2		)
Income from discontinued operations	—		8.4
Gain on divestiture of discontinued operations	—		369.3
Income from discontinued operations, before income taxes	—		377.7
Income tax expense	—		5.4
Income from discontinued operations, net of income taxes	$	—	$	372.3

During the three months ended March 31, 2017, there was income tax expense of $1.1 million associated with the $369.3 million gain on divestiture and a $4.3 million income tax expense 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 following table summarizes significant cash and non-cash transactions of the Nuclear Imaging business that are included within the unaudited condensed consolidated statements of cash flows for the respective periods:



	Three Months Ended
	March 30, 2018		March 31, 2017
Depreciation	$	—	$	—
Capital expenditures	—		0.3

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

Divestitures

On March 16, 2018, the Company completed the sale of a portion of its Hemostasis business, inclusive of its PreveLeak™ Surgical Sealant ("PreveLeak") and RECOTHROM® Thrombin topical (Recombinant) ("Recothrom") products to Baxter International, Inc. ("Baxter") for approximately $185.0 million, with a base payment of $153.0 million, inclusive of existing inventory and subject to a closing inventory adjustment, with the remainder in potential future milestones. Baxter assumed other expenses, including contingent liabilities associated with PreveLeak. During the three months ended March 30, 2018, the Company recorded a pre-tax gain on the sale of less than $0.1 million, which excluded any potential proceeds from the potential future milestones and reflected a post-sale closing inventory adjustment of $14.3 million. The financial results of the PreveLeak and Recothrom operations 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 $49.9 million and goodwill of $51.5 million, from the Specialty Brands segment, ascribed to the PreveLeak and Recothrom operations. The remaining items included in the gain calculation are primarily attributable to inventory transferred, contingent consideration transferred and transaction costs incurred by the Company.

On March 17, 2017, the Company completed the sale of its Intrathecal Therapy business to Piramal Enterprises Limited's subsidiary in the United Kingdom ("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 was due one year from the transaction closing date. During the three months ended March 31, 2017, the Company recorded a pre-tax gain on the sale of the business of $59.1 million, which excluded any potential proceeds from the contingent consideration. On February 28, 2018, the Company received $154.0 million from Piramal for the settlement of the aforementioned note receivable.

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 $3.9 million remains in accrued and other current liabilities on the unaudited condensed consolidated balance sheet as of March 30, 2018. The remaining items included in the gain calculation are attributable to inventory transferred and transaction costs incurred by the Company.