ST. LOUIS, Aug. 10 /PRNewswire/ -- Mallinckrodt Inc. (NYSE: MKG) today
reported fiscal year 2000 earnings from continuing operations of $205 million,
or $2.96 per share on a diluted basis, compared with $173 million, or
$2.40 per share, last year. Excluding a net nonrecurring gain, earnings were
$201 million, or $2.90 per share, representing increases of 16 percent and
21 percent, respectively. The net nonrecurring gain resulted from the sale of
HemoCue, a blood testing equipment company; divestiture of the medical gas
business; a charge for consolidation of respiratory manufacturing operations;
and the write-down of an investment in an equity security related to the
imaging business.
Fiscal 2000 cash earnings per share, defined as earnings from continuing
operations, excluding net nonrecurring gains plus amortization, were $4.08 per
share.
Net sales for fiscal 2000 were $2.7 billion compared to $2.6 billion in
fiscal 1999. Excluding sales from divested businesses, sales increased 6
percent over the prior year. Sales to customers outside the United States
were $857 million, or 32 percent of total company sales.
"We are extremely pleased with our fiscal year results," said C. Ray
Holman, chairman and CEO. "This is the eighth consecutive quarter in which we
have exceeded earnings expectations. We're also pleased that our working
capital initiatives have resulted in a significant improvement in both
inventory and receivables turnover. Mallinckrodt's consistent financial
performance is one of many reasons Tyco values and is interested in acquiring
the strong healthcare business we have built over the last three years."
Fourth Quarter Performance
Net sales for the fourth quarter of fiscal 2000 increased 3 percent to
$698 million, compared with $679 million for the fourth quarter of fiscal
1999. Excluding sales from divested businesses, sales increased 8 percent
over the same quarter last year. Sales to customers outside the United States
were $217 million, or 31 percent of total company sales.
Earnings from continuing operations for the fourth quarter of fiscal 2000
were $63 million, or 93 cents per share on a diluted basis, representing
increases of 20 percent and 27 percent, respectively, over the $52 million, or
73 cents per share, reported for the same quarter last year.
Segment Results
Mallinckrodt's Respiratory segment reported fourth-quarter sales of
$284 million, compared with $295 million in the fourth quarter of fiscal 1999.
Excluding divested businesses, Respiratory sales growth was 7 percent.
Respiratory operating earnings, excluding the charge for manufacturing
consolidations and the impact of divested businesses, were $50 million, which
represents a 51 percent increase over the $33 million earned in the same
quarter last year. Strong market acceptance of new pulse oximetry and
alternate care products contributed to Respiratory's performance.
The Pharmaceuticals segment reported an 18 percent increase in fourth-
quarter sales of $208 million, compared with $176 million in the fourth
quarter last year. Operating earnings were $39 million, a 30 percent increase
over the $30 million reported in the same quarter last year. Fourth quarter
results reflect the continued strength of the bulk and dosage pharmaceuticals
operations.
Mallinckrodt's Imaging segment reported fourth-quarter sales of
$206 million, a 1 percent decline from the $208 million reported in the fourth
quarter of fiscal 1999. Imaging operating earnings declined to $15 million,
from $29 million last year, due to lower manufacturing volume and costs of
implementing alternate synthesis for ioversol, the raw material for Optiray.
Proposed Merger
On June 28, 2000, Mallinckrodt and Tyco International Ltd. entered into a
definitive agreement under which Tyco will acquire Mallinckrodt. The merger
is expected to close this fall following the necessary shareholder and
regulatory approvals.
Mallinckrodt will hold a special meeting of shareholders in New York City
on September 19, 2000, to consider and vote on the proposed merger. The
Company plans to begin mailing definitive proxy materials to shareholders over
the next few days.
Mallinckrodt Inc. is a global manufacturer and marketer of specialty
medical products designed to sustain breathing, diagnose disease and relieve
pain. Named one of America's most admired medical products and equipment
companies by Fortune magazine, Mallinckrodt does business in more than 100
countries. In fiscal 2000, combined net sales were $2.7 billion for
Mallinckrodt's respiratory, imaging and pharmaceutical product lines. Based
in St. Louis, Missouri, Mallinckrodt's website address is
http://www.mallinckrodt.com .
This news release contains forward-looking statements that involve risks
and uncertainties. These statements are based on current expectations; actual
results may differ materially. Among the factors that could cause actual
results to differ materially from those projected are the following: the
effect of business and economic conditions; the impact of competitive products
and continued pressure on prices realized by the company for its products;
constraints on supplies of raw materials used in manufacturing certain of the
company's products; capacity constraints limiting the production of certain
products; difficulties or delays in the development, production, testing, and
marketing of products; difficulties or delays in receiving required
governmental or regulatory approvals; market acceptance issues, including the
failure of products to generate anticipated sales levels; difficulties in
rationalizing acquired businesses and in realizing related cost savings and
other benefits; the effects of and changes in trade, monetary and fiscal
policies, laws and regulations; foreign exchange rates and fluctuations in
those rates; the costs and effects of legal and administrative proceedings,
including environmental proceedings and patent disputes involving the company;
and the risk factors reported from time to time in the company's SEC reports.
The company undertakes no obligation to update any forward-looking statements
as a result of future events or developments.
MALLINCKRODT INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share and per share amounts)
Quarter Ended Year Ended
June 30, June 30,
2000 1999 2000 1999
Net sales $697.9 $678.9 $2,652.8 $2,584.8
Operating costs and expenses:
Cost of goods sold 381.4 354.8 1,474.5 1,379.9
Selling, general and
administrative expenses 179.7 186.3 704.7 717.3
Research and development
expenses 40.4 42.8 145.8 152.2
Total operating costs and
expenses 601.5 583.9 2,325.0 2,249.4
Operating earnings 96.4 95.0 327.8 335.4
Nonoperating income, net 7.6 1.3 42.2 4.0
Interest expense (19.6) (20.5) (74.6) (85.0)
Earnings from continuing
operations before income
taxes 84.4 75.8 295.4 254.4
Income tax provision 21.8 23.8 90.4 81.5
Earnings from continuing
operations 62.6 52.0 205.0 172.9
Discontinued operations .7 23.3
Net earnings 62.6 52.7 205.0 196.2
Preferred stock dividends (.1) (.1) (.4) (.4)
Available for common
shareholders $62.5 $52.6 $204.6 $195.8
Basic earnings per common share:
Earnings from continuing
operations $.93 $.73 $2.97 $ 2.41
Discontinued operations .01 .32
Net earnings $.93 $.74 $2.97 $ 2.73
Average common shares 67,350,839 70,963,260 68,864,515 71,634,420
Diluted earnings per
common share:
Earnings from continuing
operations $.93 $.73 $2.96 $ 2.40
Discontinued operations .01 .32
Net earnings $.93 $.74 $2.96 $ 2.72
Average common shares 67,541,220 71,408,672 69,141,476 71,898,875
Actual shares outstanding
at end of period 67,606,917 70,702,689
(See accompanying notes to financial results.)
MALLINCKRODT INC.
CONSOLIDATED BALANCE SHEETS
(In millions)
June 30,
2000 1999
Assets
Current assets:
Cash and cash equivalents $25.9 $32.7
Trade receivables, less allowances
of $18.2 in 2000 and $17.9 in 1999 487.8 490.9
Inventories 447.1 530.3
Deferred income taxes 93.8 54.7
Other current assets 79.7 61.3
Total current assets 1,134.3 1,169.9
Investments and other noncurrent assets 101.4 67.2
Property, plant and equipment, net 853.3 870.7
Goodwill and other intangible assets, net 1,370.8 1,545.3
Deferred income taxes 9.1 4.3
Total assets $3,468.9 $3,657.4
Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt $403.6 $383.8
Accounts payable 250.1 221.2
Accrued liabilities 366.5 459.5
Income taxes payable 42.6 77.3
Deferred income taxes 1.1 1.2
Total current liabilities 1,063.9 1,143.0
Long-term debt, less current maturities 540.9 742.5
Deferred income taxes 391.1 363.0
Postretirement benefits 166.1 166.5
Other noncurrent liabilities and
deferred credits 166.1 182.0
Total liabilities 2,328.1 2,597.0
Total shareholders' equity 1,140.8 1,060.4
Total liabilities and shareholders' equity $3,468.9 $3,657.4
(See accompanying notes to financial results.)
MALLINCKRODT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Year Ended June 30,
2000 1999
Cash Flows - Operating Activities
Net earnings $205.0 $196.2
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation 123.6 130.6
Amortization 81.6 84.5
Postretirement benefits (.5) (2.6)
Gains on asset disposals (54.4) (39.7)
Deferred income taxes (29.9) 13.6
Write-down of investment in equity security 10.5
335.9 382.6
Changes in operating assets and liabilities:
Trade receivables (7.3) (9.2)
Inventories 72.3 (62.2)
Other current assets (18.0) 4.5
Accounts payable, accrued liabilities
and income taxes payable, net (84.7) (112.2)
Other noncurrent liabilities and deferred credits 7.5 8.1
Other, net (31.0) (18.0)
Net cash provided by operating activities 274.7 193.6
Cash Flows - Investing Activities
Capital expenditures (149.2) (116.9)
Proceeds from asset disposals 220.4 75.4
Acquisition spending (1.0) (3.5)
Purchase of investments and intangible assets (27.2) (11.5)
Proceeds from redemption and sale of investments 89.8
Net cash provided by investing activities 43.0 33.3
Cash Flows - Financing Activities
Increase (decrease) in notes payable 19.1 (126.2)
Payments on long-term debt (201.5) (8.1)
Issuance of common stock 21.2 6.1
Acquisition of treasury stock (117.8) (74.0)
Dividends paid (45.5) (43.9)
Redemption of common stock purchase rights (3.6)
Net cash used by financing activities (324.5) (249.7)
Decrease in cash and cash equivalents (6.8) (22.8)
Cash and cash equivalents at beginning of year 32.7 55.5
Cash and cash equivalents at end of year $25.9 $32.7
(See accompanying notes to financial results.)
MALLINCKRODT INC.
NOTES TO INTERIM FINANCIAL RESULTS
Mallinckrodt Inc. and its subsidiaries, collectively, are called the
"Company" or "Mallinckrodt." All references to years are to fiscal years
ended June 30 unless otherwise stated. Certain amounts in the prior year
were reclassified to conform to the current year presentation. All
earnings per share amounts are calculated on a diluted basis unless
otherwise stated.
(a) On January 21, 2000, the Company sold its medical gas business, which
was part of the Respiratory segment. The transaction resulted in a
$17.7 million pretax gain included in nonoperating income, net,
$5.5 million net of tax for the year ended June 30, 2000.
(b) Included in operating earnings for the quarter and year ended June
30, 2000 are pretax charges of $2.7 million and $18.2 million,
respectively, associated with product line rationalizations and the
consolidation of certain manufacturing facilities within the
Respiratory segment. The charge during the quarter ended June 30,
2000 is primarily associated with employee transition bonuses and
other items expensed as incurred.
(c) On December 16, 1999, the Company sold its blood analysis product
line, which was part of the Respiratory segment. The transaction
resulted in a $27.3 million pretax gain, $16.9 million net of tax.
The pretax gain is included in nonoperating income, net for the year
ended June 30, 2000.
(d) During the quarter ended December 31, 1999, the Company recorded a
pretax charge of $10.5 million, $6.5 million net of tax, associated
with the write-down of an investment in an equity security due to a
decline in fair value considered to be other than temporary. The
pretax charge is included in nonoperating income, net for the year
ended June 30, 2000.
(e) The nonrecurring items discussed above had the following impact on
results of operations for the quarter and year ended June 30, 2000
(in millions).
Quarter Year
Ended Ended
June 30, June 30,
2000 2000
Operating earnings
Respiratory manufacturing consolidation $(2.7) $(18.2)
Nonoperating income, net
Sale of medical gas business .3 17.7
Sale of blood analysis product line .4 27.3
Write-down of investment in equity security (10.5)
Earnings from continuing operations before
income taxes $(2.0) $16.3
Earnings from continuing operations $(1.6) $4.0
(f) On July 31, 1998, the Company completed the sale of the remaining
chemical additives business of the catalyst and chemical additives
division, which was reclassified to discontinued operations in June
1998. The transaction resulted in a $37.0 million gain on sale,
$23.3 million net of taxes, which was included in discontinued
operations for the year ended June 30, 1999. Earnings from
operations were zero for the one month of operations in 1999.
MALLINCKRODT INC.
BUSINESS PROFILE
(Dollars in millions)
Quarter Ended June 30, Year Ended June 30,
% %
2000 1999 Change 2000 1999 Change
Net sales
Respiratory $284.4 $294.6 (3) $1,132.5 $1,143.9 (1)
Imaging 205.9 208.3 (1) 769.5 779.8 (1)
Pharmaceuticals 207.6 176.0 18 750.8 661.1 14
$697.9 $678.9 3 $2,652.8 $2,584.8 3
Operating earnings
Respiratory $47.6 $42.4 12 $146.4 $137.6 6
Imaging 14.5 28.7 (49) 83.8 119.3 (30)
Pharmaceuticals 39.2 30.2 30 120.3 103.3 16
101.3 101.3 -- 350.5 360.2 (3)
Corporate expense (4.9) (6.3) 22 (22.7) (24.8) 8
$96.4 $95.0 1 $327.8 $335.4 (2)
MALLINCKRODT INC.
BUSINESS PROFILE RESTATED FOR NONRECURRING ITEMS AND DIVESTED OPERATIONS
(Dollars in millions)
Nonrecurring
As Reported Items
%
2000 1999 Change 2000 1999
Quarter Ended June 30,
Net sales
Respiratory $284.4 $294.6 (3)
Imaging 205.9 208.3 (1)
Pharma-
ceuticals 207.6 176.0 18
$697.9 $678.9 3
Operating
earnings
Respiratory $47.6 $42.4 12 $(2.7)
Imaging 14.5 28.7 (49)
Pharma-
ceuticals 39.2 30.2 30
Corporate
expense (4.9) (6.3) 22
$96.4 $95.0 1
Nonoperating
income, net $7.6 $1.3 $.7
Year Ended June 30,
Net sales
Respiratory $1,132.5 $1,143.9 (1)
Imaging 769.5 779.8 (1)
Pharma-
ceuticals 750.8 661.1 14
$2,652.8 $2,584.8 3
Operating
earnings
Respiratory $146.4 $137.6 6 $ (18.2)
Imaging 83.8 119.3 (30)
Pharma-
ceuticals 120.3 103.3 16
Corporate
expense (22.7) (24.8) 8
$327.8 $335.4 (2)
Nonoperating
income, net $42.2 $4.0 $34.5
Ongoing Excluding Divested
Nonrecurring Items Operations
%
2000 1999 Change 2000 1999
Quarter Ended June 30,
Net sales
Respiratory $284.4 $294.6 (3) $(.2) $ 29.6
Imaging 205.9 208.3 (1) 2.7
Pharma-
ceuticals 207.6 176.0 18
$697.9 $678.9 3
Operating
earnings
Respiratory $50.3 $42.4 19 $(.2) $9.0
Imaging 14.5 28.7 (49) 1.6
Pharma-
ceuticals 39.2 30.2 30
Corporate
expense (4.9) (6.3) 22
$99.1 $95.0 4
Nonoperating
income, net $6.9 $1.3
Year Ended June 30,
Net sales
Respiratory $1,132.5 $1,143.9 (1) $ 60.1 $121.3
Imaging 769.5 779.8 (1) .9 10.5
Pharma-
ceuticals 750.8 661.1 14
$2,652.8 $2,584.8 3
Operating
earnings
Respiratory $164.6 $137.6 20 $ 15.0 $ 28.6
Imaging 83.8 119.3 (30) .1 2.6
Pharma-
ceuticals 120.3 103.3 16
Corporate
expense (22.7) (24.8) 8
$346.0 $335.4 3
Nonoperating
income, net $7.7 $4.0
Restated -- Excluding
Nonrecurring Items and
Divested Operations
%
2000 1999 Change
Quarter Ended June 30,
Net sales
Respiratory $284.6 $265.0 7
Imaging 205.9 205.6 --
Pharma-
ceuticals 207.6 176.0 18
$698.1 $646.6 8
Operating
earnings
Respiratory $50.5 $33.4 51
Imaging 14.5 27.1 (46)
Pharma-
ceuticals 39.2 30.2 30
Corporate
expense (4.9) (6.3) 22
$99.3 $84.4 18
Nonoperating
income,net $6.9 $1.3
Year Ended June 30,
Net sales
Respiratory $1,072.4 $1,022.6 5
Imaging 768.6 769.3 --
Pharma-
ceuticals 750.8 661.1 14
$2,591.8 $2,453.0 6
Operating
earnings
Respiratory $149.6 $109.0 37
Imaging 83.7 116.7 (28)
Pharma-
ceuticals 120.3 103.3 16
Corporate
expense (22.7) (24.8) 8
$330.9 $304.2 9
Nonoperating
income, net $7.7 $4.0
For more information, contact: Media, Barbara Abbett, 314-654-5230, or
e-mail, barbara.abbett@mkg.com; or Investor, Robert Martsching, 314-654-3190,
or e-mail, Invest@mkg.com, both of Mallinckrodt/
SOURCE Mallinckrodt Inc.
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Related links:
http://www.mallinckrodt.com
Company News On-Call:
http://www.prnewswire.com/comp/440950.html or fax,
800-758-5804, ext. 440950
CONTACT:
Media, Barbara Abbett, 314-654-5230, or
e-mail, barbara.abbett@mkg.com; or Investor, Robert Martsching,
314-654-3190, or e-mail, Invest@mkg.com, both of Mallinckrodt
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