Condensed Consolidating Financial Statements

12 Months Ended

Dec. 27, 2019

Condensed Consolidating Financial Statements [Abstract]

Condensed Consolidating Financial Statements

23. Condensed Consolidating Financial Statements

MIFSA is an indirectly 100.0%-owned subsidiary of Mallinckrodt plc established to own, directly or indirectly, substantially all of the operating subsidiaries of the Company, to issue debt securities and to perform treasury operations.

MIFSA is the borrower under the April 2023 Notes, which are fully and unconditionally guaranteed by Mallinckrodt plc. The following information provides the composition of the Company's comprehensive operations, assets, liabilities, equity and cash flows by relevant group within the Company: Mallinckrodt plc as guarantor of the April 2023 Notes, MIFSA as issuer of the April 2023 Notes and the operating companies that represent assets of MIFSA. There are no subsidiary guarantees related to the April 2023 Notes.

Set forth below are the condensed consolidating balance sheets as of December 27, 2019 and December 28, 2018 and condensed consolidating statements of comprehensive operations and cash flows for the fiscal three years ended December 27, 2019. Eliminations represent adjustments to eliminate investments in subsidiaries and intercompany balances and transactions between or among Mallinckrodt plc, MIFSA and the other subsidiaries. Condensed consolidating 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 December 27, 2019

(in millions)

	Mallinckrodt plc		Mallinckrodt International Finance S.A.		Other Subsidiaries		Eliminations			Consolidated
Assets
Current Assets:
Cash and cash equivalents	$	0.8	$	124.7	$	665.4	$	—		$	790.9
Accounts receivable, net	—		—		577.5		—			577.5
Inventories	—		—		312.1		—			312.1
Prepaid expenses and other current assets	9.0		0.3		140.9		—			150.2
Intercompany receivable	138.8		31.8		249.1		(419.7		)	—
Total current assets	148.6		156.8		1,945.0		(419.7		)	1,830.7
Property, plant and equipment, net	—		—		896.5		—			896.5
Intangible assets, net	—		—		7,018.0		—			7,018.0
Investment in subsidiaries	1,602.0		7,457.6		2,812.0		(11,871.6		)	—
Intercompany loan receivable	416.5		—		1,782.8		(2,199.3		)	—
Other assets	—		—		593.7		—			593.7
Total Assets	$	2,167.1	$	7,614.4	$	15,048.0	$	(14,490.6	)	$	10,338.9
										—
Liabilities and Shareholders' Equity
Current Liabilities:
Current maturities of long-term debt	$	—	$	614.2	$	19.4	$	—		$	633.6
Accounts payable	0.1		—		139.7		—			139.8
Accrued payroll and payroll-related costs	—		—		105.2		—			105.2
Accrued interest	—		29.4		33.5		—			62.9
Accrued and other current liabilities	2.3		0.4		482.7		—			485.4
Intercompany payable	180.6		10.5		228.6		(419.7		)	—
Total current liabilities	183.0		654.5		1,009.1		(419.7		)	1,426.9
Long-term debt	—		1,946.4		2,794.8		—			4,741.2
Pension and postretirement benefits	—		—		62.4		—			62.4
Environmental liabilities	—		—		60.0		—			60.0
Deferred income taxes	—		—		11.0		—			11.0
Other income tax liabilities	—		—		227.1		—			227.1
Opioid-related litigation settlement liability	43.4		—		1,600.0		—			1,643.4
Intercompany loans payable	—		2,199.3		—		(2,199.3		)	—
Other liabilities	—		2.2		224.0		—			226.2
Total liabilities	226.4		4,802.4		5,988.4		(2,619.0		)	8,398.2
Shareholders' equity	1,940.7		2,812.0		9,059.6		(11,871.6		)	1,940.7
Total Liabilities and Shareholders' Equity	$	2,167.1	$	7,614.4	$	15,048.0	$	(14,490.6	)	$	10,338.9

MALLINCKRODT PLC

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 28, 2018

(in millions)

	Mallinckrodt plc		Mallinckrodt International Finance S.A.		Other Subsidiaries		Eliminations			Consolidated
Assets
Current Assets:
Cash and cash equivalents	$	0.4	$	140.8	$	207.7	$	—		$	348.9
Accounts receivable, net	—		—		623.3		—			623.3
Inventories	—		—		322.3		—			322.3
Prepaid expenses and other current assets	3.9		0.2		128.6		—			132.7
Intercompany receivable	131.1		29.2		1,087.9		(1,248.2		)	—
Total current assets	135.4		170.2		2,369.8		(1,248.2		)	1,427.2
Property, plant and equipment, net	—		—		982.0		—			982.0
Intangible assets, net	—		—		8,282.8		—			8,282.8
Investment in subsidiaries	2,481.6		25,506.1		8,362.1		(36,349.8		)	—
Intercompany loan receivable	497.7		—		12,343.0		(12,840.7		)	—
Other assets	—		—		185.3		—			185.3
Total Assets	$	3,114.7	$	25,676.3	$	32,525.0	$	(50,438.7	)	$	10,877.3
Liabilities and Shareholders' Equity
Current Liabilities:
Current maturities of long-term debt	$	—	$	22.1	$	0.3	$	—		$	22.4
Accounts payable	0.1		—		147.4		—			147.5
Accrued payroll and payroll-related costs	—		—		124.0		—			124.0
Accrued interest	—		48.7		28.9		—			77.6
Accrued and other current liabilities	0.6		0.4		571.2		—			572.2
Intercompany payable	226.7		827.8		193.7		(1,248.2		)	—
Total current liabilities	227.4		899.0		1,065.5		(1,248.2		)	943.7
Long-term debt	—		3,566.9		2,502.3		—			6,069.2
Pension and postretirement benefits	—		—		60.5		—			60.5
Environmental liabilities	—		—		59.7		—			59.7
Deferred income taxes	—		—		324.3		—			324.3
Other income tax liabilities	—		—		228.0		—			228.0
Intercompany loans payable	—		12,840.7		—		(12,840.7		)	—
Other liabilities	—		7.6		297.0		—			304.6
Total liabilities	227.4		17,314.2		4,537.3		(14,088.9		)	7,990.0
Shareholders' equity	2,887.3		8,362.1		27,987.7		(36,349.8		)	2,887.3
Total Liabilities and Shareholders' Equity	$	3,114.7	$	25,676.3	$	32,525.0	$	(50,438.7	)	$	10,877.3

MALLINCKRODT PLC

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE OPERATIONS

Fiscal year ended December 27, 2019

(in millions)

	Mallinckrodt plc			Mallinckrodt International Finance S.A.			Other Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	—		$	3,162.5		$	—		$	3,162.5
Cost of sales	1.9			—			1,739.2			—			1,741.1
Gross (loss) profit	(1.9		)	—			1,423.3			—			1,421.4
Selling, general and administrative expenses	43.9			1.6			785.5			—			831.0
Research and development expenses	5.2			—			344.2			—			349.4
Restructuring charges, net	—			—			(1.7		)	—			(1.7		)
Non-restructuring impairment charges	—			—			388.0			—			388.0
Loss on divestiture	4.2			—			29.3			—			33.5
Opioid-related litigation settlement charge	43.4			—			1,600.0			—			1,643.4
Operating loss	(98.6		)	(1.6		)	(1,722.0		)	—			(1,822.2		)
Interest expense	(5.8		)	(282.1		)	(235.9		)	214.8			(309.0		)
Interest income	9.8			1.3			213.2			(214.8		)	9.5
Gains on debt extinguishment, net	—			420.9			45.7			—			466.6
Other income, net	9.2			—			54.4			—			63.6
Intercompany interest and fees	(20.4		)	(0.1		)	20.5			—			—
Equity in net income of subsidiaries	(895.8		)	(933.4		)	(787.0		)	2,616.2			—
Loss from continuing operations before income taxes	(1,001.6		)	(795.0		)	(2,411.1		)	2,616.2			(1,591.5		)
Benefit from income taxes	(5.1		)	(2.6		)	(576.6		)	—			(584.3		)
Loss from continuing operations	(996.5		)	(792.4		)	(1,834.5		)	2,616.2			(1,007.2		)
Income from discontinued operations, net of income taxes	—			5.4			5.3			—			10.7
Net loss	(996.5		)	(787.0		)	(1,829.2		)	2,616.2			(996.5		)
Other comprehensive income, net of tax	15.9			15.9			30.0			(45.9		)	15.9
Comprehensive loss	$	(980.6	)	$	(771.1	)	$	(1,799.2	)	$	2,570.3		$	(980.6	)

MALLINCKRODT PLC

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE OPERATIONS

Fiscal year ended December 28, 2018

(in millions)

	Mallinckrodt plc			Mallinckrodt International Finance S.A.			Other Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	—		$	3,215.6		$	—		$	3,215.6
Cost of sales	2.0			—			1,742.4			—			1,744.4
Gross (loss) profit	(2.0		)	—			1,473.2			—			1,471.2
Selling, general and administrative expenses	38.8			0.7			794.6			—			834.1
Research and development expenses	4.7			—			356.4			—			361.1
Restructuring charges, net	—			—			103.0			—			103.0
Non-restructuring impairments	—			—			3,893.1			—			3,893.1
Gains on divestiture	—			—			0.8			—			0.8
Operating loss	(45.5		)	(0.7		)	(3,674.7		)	—			(3,720.9		)
Interest expense	(7.8		)	(460.8		)	(63.4		)	161.8			(370.2		)
Interest income	9.5			2.5			158.0			(161.8		)	8.2
Gains on debt extinguishment, net	—			8.5			—			—			8.5
Other income (loss), net	9.9			0.2			12.3			—			22.4
Intercompany interest and fees	(18.5		)	(0.1		)	18.6			—			—
Equity in net income of subsidiaries	(3,561.0		)	(2,726.0		)	(3,170.9		)	9,457.9			—
Loss from continuing operations before income taxes	(3,613.4		)	(3,176.4		)	(6,720.1		)	9,457.9			(4,052.0		)
Benefit from income taxes	(6.4		)	(5.4		)	(418.3		)	—			(430.1		)
Loss from continuing operations	(3,607.0		)	(3,171.0		)	(6,301.8		)	9,457.9			(3,621.9		)
Income from discontinued operations, net of income taxes	—			0.1			14.8			—			14.9
Net loss	(3,607.0		)	(3,170.9		)	(6,287.0		)	9,457.9			(3,607.0		)
Other comprehensive loss, net of tax	(9.9		)	(9.9		)	(20.5		)	30.4			(9.9		)
Comprehensive loss	$	(3,616.9	)	$	(3,180.8	)	$	(6,307.5	)	$	9,488.3		$	(3,616.9	)

MALLINCKRODT PLC

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE OPERATIONS

Fiscal year ended December 29, 2017

(in millions)

	Mallinckrodt plc			Mallinckrodt International Finance S.A.			Other Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	—		$	3,221.6		$	—		$	3,221.6
Cost of sales	2.6			—			1,561.5			—			1,564.1
Gross (loss) profit	(2.6		)	—			1,660.1			—			1,657.5
Selling, general and administrative expenses	59.5			0.7			789.5			—			849.7
Research and development expenses	5.1			—			271.8			—			276.9
Restructuring charges, net	—			—			31.2			—			31.2
Non-restructuring impairments	—			—			63.7			—			63.7
Operating (loss) income	(67.2		)	(0.7		)	560.8			—			492.9
Interest expense	(13.8		)	(353.9		)	(74.2		)	72.8			(369.1		)
Interest income	7.3			1.2			68.9			(72.8		)	4.6
Gains on debt extinguishment, net	—			8.3			—			—			8.3
Other income (expense), net	20.3			(10.0		)	(85.4		)	—			(75.1		)
Intercompany interest and fees	(18.3		)	—			18.3			—			—
Equity in net income of subsidiaries	2,200.0			2,901.8			2,549.9			(7,651.7		)	—
Income from continuing operations before income taxes	2,128.3			2,546.7			3,038.3			(7,651.7		)	61.6
Benefit from income taxes	(6.1		)	(5.3		)	(1,698.2		)	—			(1,709.6		)
Income from continuing operations	2,134.4			2,552.0			4,736.5			(7,651.7		)	1,771.2
(Loss) income from discontinued operations, net of income taxes	—			(2.1		)	365.3			—			363.2
Net income	2,134.4			2,549.9			5,101.8			(7,651.7		)	2,134.4
Other comprehensive income, net of tax	59.6			59.6			118.2			(177.8		)	59.6
Comprehensive income	$	2,194.0		$	2,609.5		$	5,220.0		$	(7,829.5	)	$	2,194.0

MALLINCKRODT PLC

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Fiscal year ended December 27, 2019

(in millions)

	Mallinckrodt plc			Mallinckrodt International Finance S.A.			Other Subsidiaries			Eliminations			Consolidated
Cash Flows From Operating Activities:
Net cash from operating activities	$	(65.9	)	$	46.8		$	765.8		$	(3.8	)	$	742.9
Cash Flows From Investing Activities:
Capital expenditures	—			—			(133.0		)	—			(133.0		)
Proceeds from divestiture, net of cash	—			—			95.1			—			95.1
Intercompany loan investment	91.1			—			(1,124.0		)	1,032.9			—
Investment in subsidiary	—			(975.4		)	—			975.4			—
Other	—			—			29.6			—			29.6
Net cash from investing activities	91.1			(975.4		)	(1,132.3		)	2,008.3			(8.3		)
Cash Flows From Financing Activities:
Issuance of external debt	—			—			695.0			—			695.0
Repayment of external debt	—			(135.2		)	(809.9		)	—			(945.1		)
Debt financing costs	—			(10.1		)	—			—			(10.1		)
Proceeds from exercise of share options	0.6			—			—			—			0.6
Intercompany loan borrowings	(24.9		)	1,057.8			—			(1,032.9		)	—
Intercompany dividends	—			—			(3.8		)	3.8			—
Capital contribution	—			—			975.4			(975.4		)	—
Repurchase of shares	(2.6		)	—			—			—			(2.6		)
Other	2.1			—			(20.0		)	—			(17.9		)
Net cash from financing activities	(24.8		)	912.5			836.7			(2,004.5		)	(280.1		)
Effect of currency rate changes on cash	—			—			0.6			—			0.6
Net change in cash, cash equivalents and restricted cash	0.4			(16.1		)	470.8			—			455.1
Cash, cash equivalents and restricted cash at beginning of period	0.4			140.8			226.3			—			367.5
Cash, cash equivalents and restricted cash at end of period	$	0.8		$	124.7		$	697.1		$	—		$	822.6
Cash and cash equivalents at end of period	$	0.8		$	124.7		$	665.4		$	—		$	790.9
Restricted cash included in other long-term assets at end of period	—			—			31.7			—			31.7
Cash, cash equivalents and restricted cash at end of period	$	0.8		$	124.7		$	697.1		$	—		$	822.6

MALLINCKRODT PLC

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Fiscal year ended December 28, 2018

(in millions)

	Mallinckrodt plc			Mallinckrodt International Finance S.A.			Other Subsidiaries			Eliminations			Consolidated
Cash Flows From Operating Activities:
Net cash from operating activities	$	438.9		$	80.1		$	1,702.5		$	(1,556.0	)	$	665.5
Cash Flows From Investing Activities:
Capital expenditures	—			—			(127.0		)	—			(127.0		)
Acquisitions, net of cash acquired	—			—			(699.9		)	—			(699.9		)
Proceeds from divestiture, net of cash	—			—			313.0			—			313.0
Intercompany loan investment	(385.6		)	(90.1		)	(502.0		)	977.7			—
Investment in subsidiary	—			(220.0		)	—			220.0			—
Other	—			—			33.6			—			33.6
Net cash from investing activities	(385.6		)	(310.1		)	(982.3		)	1,197.7			(480.3		)
Cash Flows From Financing Activities:
Issuance of external debt	—			600.0			90.3			—			690.3
Repayment of external debt	—			(1,289.4		)	(404.2		)	—			(1,693.6		)
Debt financing costs	—			(12.1		)	—			—			(12.1		)
Proceeds from exercise of share options	1.0			—			—			—			1.0
Intercompany loan borrowings	—			977.7			—			(977.7		)	—
Intercompany dividends	—			(814.2		)	(741.8		)	1,556.0			—
Capital contribution	—			—			220.0			(220.0		)	—
Repurchase of shares	(57.5		)	—			—			—			(57.5		)
Other	2.9			—			(26.0		)	—			(23.1		)
Net cash from financing activities	(53.6		)	(538.0		)	(861.7		)	358.3			(1,095.0		)
Effect of currency rate changes on cash	—			—			(1.8		)	—			(1.8		)
Net change in cash, cash equivalents and restricted cash	(0.3		)	(768.0		)	(143.3		)	—			(911.6		)
Cash, cash equivalents and restricted cash at beginning of period	0.7			908.8			369.6			—			1,279.1
Cash, cash equivalents and restricted cash at end of period	$	0.4		$	140.8		$	226.3		$	—		$	367.5
Cash and cash equivalents at end of period	$	0.4		$	140.8		$	207.7		$	—		$	348.9
Restricted cash included in other long-term assets at end of period	—			—			18.6			—			18.6
Cash, cash equivalents and restricted cash at end of period	$	0.4		$	140.8		$	226.3		$	—		$	367.5

MALLINCKRODT PLC

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Fiscal year ended December 29, 2017

(in millions)

	Mallinckrodt plc			Mallinckrodt International Finance S.A.			Other Subsidiaries			Eliminations			Consolidated
Cash Flows From Operating Activities:
Net cash from operating activities	$	1,233.2		$	1,139.4		$	2,274.9		$	(3,920.2	)	$	727.3
Cash Flows From Investing Activities:
Capital expenditures	—			—			(186.1		)	—			(186.1		)
Acquisitions, net of cash acquired	—			—			(76.3		)	—			(76.3		)
Proceeds from disposal of discontinued operations, net of cash	—			—			576.9			—			576.9
Intercompany loan investment	(589.5		)	—			(1,157.9		)	1,747.4			—
Investment in subsidiary	—			(1,475.3		)	—			1,475.3			—
Other	—			—			3.9			—			3.9
Net cash from investing activities	(589.5		)	(1,475.3		)	(839.5		)	3,222.7			318.4
Cash Flows From Financing Activities:
Issuance of external debt	—			1,400.0			65.0			—			1,465.0
Repayment of external debt and capital leases	—			(764.5		)	(152.7		)	—			(917.2		)
Debt financing costs	—			(12.7		)	—			—			(12.7		)
Proceeds from exercise of share options	4.1			—			—			—			4.1
Intercompany loan borrowings	—			1,747.4			—			(1,747.4		)	—
Intercompany dividends	—			(1,170.0		)	(2,750.2		)	3,920.2			—
Capital contribution	—			—			1,475.3			(1,475.3		)	—
Repurchase of shares	(651.7		)	—			—			—			(651.7		)
Other	4.1			—			(21.8		)	—			(17.7		)
Net cash from financing activities	(643.5		)	1,200.2			(1,384.4		)	697.5			(130.2		)
Effect of currency rate changes on cash	—			—			2.5			—			2.5
Net change in cash, cash equivalents and restricted cash	0.2			864.3			53.5			—			918.0
Cash, cash equivalents and restricted cash at beginning of period	0.5			44.5			316.1			—			361.1
Cash, cash equivalents and restricted cash at end of period	$	0.7		$	908.8		$	369.6		$	—		$	1,279.1
Cash and cash equivalents at end of period	$	0.7		$	908.8		$	351.4		$	—		$	1,260.9
Restricted cash included in other long-term assets at end of period	—			—			18.2			—			18.2
Cash, cash equivalents and restricted cash at end of period	$	0.7		$	908.8		$	369.6		$	—		$	1,279.1